MLR

Do your departments operate as silos?

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Tension is usually considered a bad thing. But as any engineer will tell you, without tension, most mechanical devices won’t operate successfully.

silos on farm

It is, in fact, the tension that gives devices their power. One gear turns one way while another turns in the opposite direction. It’s this design that allows all the moving parts to work.

The same is true in business. There is a natural tension built into business processes that keeps things moving appropriately.

Many companies have silos where people don’t really understand what other departments are up against. They need more communication, a clearer understanding of the company’s overriding goal, and a better understanding of what it takes to do each job effectively.

For example: The supply chain manager wants to keep inventories down and costs down. That often means ordering far ahead with just-in-time delivery. Rush orders cost money.

On the other hand, the construction manager wants plenty of inventory on site so that his crews won’t have to worry about slowing down due to inadequate inventory of supplies and materials. People standing around costs money.

These two will have natural tension because they want different things. Or do they?

In a well-run company, the goals of the company ultimately drive the decisions that are made and the behaviors of the team. Without the overriding company goal, each department could live in its own world, demanding that the world work the way that is best for that department.

In our example above, the construction manager would never have a slowdown because of materials, but his inventory costs would be excessive. If the supply chain manager had his way, there would be minimal inventory, which would reduce carrying costs and add an occasional delay if the just-in-time process broke down.

Only when both parties are focused on the overriding goal of the company can they come to an optimal solution. Sometimes, that means a compromise – supply chain keeps some buffer inventory stock, while the construction department doesn’t get as much on hand as it would like.

At other times, opportunities may arise that require one department to forgo completely what it needs for the short term. For example, a company may need to turn down sales of certain items in the short run, hurting the sales department, if doing so will enhance the overall profitability of the company.

To overcome the silo effect, consider the following:

  • Communicate the overall company goals to everyone. Let them know that the company goals take precedence over any departmental goals.
  • Make sure your reward systems reinforce the importance of company goals. Don’t reward behaviors that cause divisions and friction
  • Keep your team talking and sharing ideas. It’s about the group effort. Then, you can move past petty disagreements and make business decisions. The balance of power can work in favor of the company as a whole.

Turning tension into a positive takes good leadership, good communication and a lot of hard work. As a company leader, you set the tone. It may be your most important area of focus.