FIRST, LET’S FIRE ALL THE MANAGERS

KARAN SINGH-16P145
Gary Hamel, through this article proposes the idea that self-management would work for large companies and explains, through the
case of Morning Star Company, that it is possible to have freedom and flexibility in an organization along with control and
coordination. Hamel argues that though it may take considerable amount of time, energy and passion to transform a bureaucratic
organization into an organization built around the principles of self-management, it is indeed possible to have an organization which
is both highly decentralized and precisely synchronized.

In this article, Hamel highlights the hefty tax that is levied on the organization due to the hierarchy of managers, explains the Morning
Star Model of Self-Management, explains various advantages and disadvantages of the Self-Management principle, briefly explains
the roadmap to transform into such an organization and finally argues it is possible for organizations to transform themselves and
enjoy the benefits of both freedom/flexibility and control/coordination.

Hamel talks about the Hefty Tax Levied on Organizations Due to Hierarchy of Managers which includes an increase in overheads
and direct management costs, an increase in risks of taking large calamitous decisions- number of people who can challenge a big
decision gets smaller and the decision making authority may not be aware of actual ground realities, an increase in approval layers
and thus decreases the responsiveness of the organization making it less effective, skewing of decisions if the power is vested with
a single person who has parochial interests and systematic disempowering of lower-level employees in a traditional hierarchical
structure.

Morning Star Company, a leading food processor, has demonstrated how to create an organization that combines managerial
discipline and market centric flexibility without bosses, titles and promotions. Morning Star’s goal, according to its organizational
vision, is to create a company in which all team members “will be self-managing professionals, initiating communications and
the coordination of their activities with fellow colleagues, customers, suppliers, and fellow industry participants, absent
directives from others.”

Gary Hamel has explained the Morning Star Company Model, which the company uses to enjoy both freedom and control.
Employees at Morning Star must come up with their own personal mission statements which explains how they would contribute
towards meeting the organization’s goal. People are truly empowered at Morning Star to acquire, train resources to accomplish
their mission. This includes basic resources such as furniture, stationery etc., project investments as well as human resources
requirements. Every year the employees come together to negotiate Colleague Letter of Understanding(CLOU) which is an
operating plan for fulfilling one’s mission and is negotiated with those associates who are most affected by his/her work. The CLOU
is useful in delivering effective coordination among employees. Employees are encouraged to develop skills, expertise and gain
experience so that they can take on bigger responsibilities and there are no centrally defined roles. The organization allows
employees to make suggestions for improvements in any area and this in turn makes the organization more innovative. Competition
at Morning Star is encouraged through expertise and not promotion and moving up is based on the competency and reputation one
has. To get ahead the employees must master new skills and find new ways to serve the colleagues.

Gary Hamel mentions that the core idea behind the above mentioned operating style is Freedom and goes on to explain that what
else is done by Morning Star to prevent an anarchy-like situation and make it operationally effective. Morning Star understands
that even though it has a high degree of coordination, it requires discipline and responsibility to be effective. For this the company
ensures that all the information required to monitor the work and progress is available to the employees. The information allows
employees to track their success in meeting their associate’s needs. Financial data is available to all the employees to be able to hold
each other accountable and cross-company information is available so that employees are able to understand how their decisions
will affect other areas. Since employees are empowered to spend money to acquire resources, they are also required to build business
cases that includes metric like ROI and Present Value Calculations. Even though employees have authority, they are encouraged to
take decisions as a team and not unilaterally. This leads to continuous calculation, consultation and evaluation of business
decisions. In case of conflicts, instead of having a manager settle the dispute, Morning Star has a system in which conflicts are
resolved through a mediator or a jury system. When there is a concern of non-performance, decision to fire the employee is taken
by the jury and is not in the hands of a single person. The company ensures accountability within its employees and each employee
gets a feedback on his/her CLOU from colleagues. Business units are ranked by their performance and each business unit is required
to defend its performance for the last year especially the ones at the bottom of the ranking. Employees at Morning Star come up
with a self-assessment document outlining how they have performed against the CLOU goals, ROI targets etc. Elected committees
then validate the self-assessments and adds further details and comes up with compensation which is aligned with the overall value
added. All this ensures the right balance of freedom as well as control within the company and therefore the company has
been both efficient and effective over the last 20 years of operation.
Gary also explains the various advantages and disadvantages of self-management through this article. He explains that
implementation of self-management leads to lower costs, more collegiality, higher loyalty, deeper expertise, better decisions and
increased flexibility in an organization. However, some challenges which self-management poses are accountability issues, tougher
adjustment for new employees, need of a longer induction period and personal development issues for employees who want to switch
companies.

Having explained self-management at Morning Star, Gary claims that the model can be put to work in companies of any size and
any organization can form a blend of freedom and control to be more effective and efficient, where the responsibility of managing
would be vested with all the employees rather than a few managers. He has also provided a roadmap to self-management in which
he stresses that it should be demonstrated that self-management does not mean no-management and an anarchy-like situation. It is
way of delegating responsibility in such a way that no one is governed through bosses, titles and promotions and the managing
authority lies with all the employees in entirety.