First, let's fire all the managers

The article is deep dive into the organisation of Morning Star. A highly successful tomato processing company in the US. The company excels in terms of operational and financial success, without having any managers. It is radically organised differently, called self-management.

In short the organisational form is concerned around total ownership across peers. Each member of the organisation has negotiation power, can spend the company's money and is responsible for all the things required to do the individuals work. Coordination and integration(Integration in organisation) is achieved vertically and horizontally by each member. Main form of agreement is called the Colleague Letter Of Understanding (CLOU). The CLOUs work for each member to agree on expectations and responsibilities. On unit level a CLOU like system is used to agree on expectations and investments. The CEO is as much a peer as anybody else. Only in extreme situations the CEO will make a decision.

The advantages of self-management described by Hamel are:

• Lower costs
  • No management layer to pay.
• More collegiality
  • No backstabbing and politics dues to absence of promotions.
• Deeper expertise
  • Everyone responsibilities for the work lead to a stronger push for development of each one's skill.
• Greater initiative
  • More freedom leads to higher proactivity.
• Higher loyalty
  • Few people leave the company to competitors.
• Increased flexibility
  • Rapid responses to changing circumstances as people form teams quickly.

Of course, disadvantages exists as well:

• Tougher adjustment
  • This form does not suit everyone. Employees might not can handle it and leave the company
• Longer induction
  • It takes time to fit in. Might take a year to become fully functional.
• Accountability changes
  • Can lead to mediocrity without the right culture of speaking out.
• Growth issues
  • Without a ladder to climb, employees might find it difficult to measure their progress.

[hamel2011hbr] Hamel, G. (2011). First, let’s fire all the managers. Harvard Business Review, 89(12), 48-60.