The organizational structure of businesses, and how this can affect your company’s overall performance, has been an increasingly popular field of business study. One concept that has emerged is that of “silos,” which can best be understood as isolated departments or sections of a company that do not communicate with other departments. Consider this, if your company’s sales department and marketing departments do not regularly interact and communicate, then they are operating as silos. Silos pose a multitude of potential problems for your business, including inefficiency, low employee morale, and less-than-optimal productivity. Silo problems arise in a corporate structure that is purely vertical within departments, rather than a matrix structure in which there are both horizontal, between departments, and vertical connections.
The Problem With Silos
It is easy for a silo mentality to arise and be perpetuated within a company. Employees hired as production workers, unless you as the owner or manager specifically guides them to think otherwise, will usually tend to think of themselves only as production workers, solely concerned with production issues, and unconcerned with the operations and performance of other departments such as sales or human resources. This usually results in a lack of company-wide collaboration and unified vision of overall company goals. Your employees feel isolated from the overall success of your business, which can lead to problems with low employee morale. Rivalries between departments for funding or other resources can arise, further eroding a total team mentality. The overall effects of silos can lead to a host of problems for your company, primarily inefficient operation. For example, if the marketing department does not interact with the sales department, it is considerably less likely that the marketing department will craft marketing and advertising campaigns to help sales personnel overcome the major obstacles they face in closing sales. If the engineering department does not communicate with the production department when designing new products, there may be production problems that could have been avoided with such communication.
Changing the Silo Mentality
As a small business owner, you are the necessary driving force to break down silos and create a more matrix-oriented corporate structure that fosters communication and collaboration across various departments. The business owner or CEO can eliminate silos and increase overall company efficiency and productivity by working to ensure the company’s executive team is united by a common vision of the company’s mission and long-term goals, which are then communicated throughout the company, among department heads, and within departments. One step you can take to emphasize corporate unity and teamwork is to incentivize employees based on the company’s overall performance as opposed to only having incentives based on performance within a department. Rather than just rewarding a production employee who came up with a suggestion for successfully increasing production, reward every employee, from engineering to customer service, for the profitable launch of a new product. Another action designed to increase communication and collaboration is scheduling regular meetings between departments. Obviously related departments such as sales and marketing should meet and discuss problems and ideas regularly, but beyond that, managers of all departments within a company should also meet regularly to reinforce the focus on overall company goals and discuss the best ways to collaborate to achieve those goals. Your company can benefit greatly by eliminating separate silos of operation and encouraging company-wide communication and collaboration.