In the whitepaper Why Silos Damage Customer Experience, service design leader Amy Scott, director of Sedulous Consulting, describes hierarchical silos as follows:“When team members are either inhibited or actively discouraged from engaging senior leaders without going through the correct protocols and channels.”
Hierarchical silos may be feared less than the dreaded cross-departmental/operational silos, but they are equally corrosive, affecting – first and foremost – employee engagement, followed by customer experience and eventually, a business’s bottom line.
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In a 2015 Bain & Company report, ‘Who's responsible for employee engagement?’ a survey of 200,000 employees across 40 companies in 60 countries found that in the majority of businesses, the Employee Net Promoter Score (an indicator for employee engagement) dropped significantly with each organisational layer farther from the CEO.
This scale of disillusion, the research states, is often driven by an abandonment of five key principles:
- Line supervisors leading engagement with their employees.
- Supervisors having the right preparation to hold candid dialogues with teams.
- Teams rallying round the customer.
- Engagement tactics being tailored for different employee segments.
- Engagement being about dialogue, rather than metrics.
The first two points are pertinent, backed up by research in the US from Dale Carnegie Training that states “employees don’t leave companies, they leave people”; and that 80% of employees dissatisfied with their direct manager also feel disengaged by them, whilst 70% lacked belief in their senior leaders as a result of not feeling engaged.
Mark Gregory, founder of Unleash & Engage, believes hierarchical silos should not be about creating an engagement channel directly to the CEO, but creating better lines of engagement through every tier of a business.
“Not many of us have a relationship with the main board of our organisation, or the CEO, or the big influencers of the business. Unless you work in a small organisation. So, the only relationship we formulate with our organisation is with our direct boss, our peers and our team.
“There are two levels to this – fundamentally, the leader has to be able to engage the people they’re leading, and that engagement has to have four sub-components: Trust, clarity of purpose, alignment of systems (removal of bureaucracy) and unleashing talent. But then there’s a second component to leadership: as a leader, it is really difficult for me to engage if I am not engaged myself. Anything on the inside eventually manifests itself on the outside.
“What organisations often do is create leaders that aren’t engaged. We talk about middle management – where stuff just doesn’t get through. That’s often a layer that’s disengaged, because it’s a leadership layer that many businesses often assume doesn’t require engagement. What generally happens is that organisations have employees that will go the extra mile, but often their leaders wont. Engaging the leaders is really an important part of this whole piece.”
Culturally, a less engaged leader means a less engaged workforce, and a less customer-centric organisation. A 2006 Gallup report that examined over 23,000 business units to highlight that companies with engagement levels in the top quartile averaged 12% higher customer advocacy than those in the bottom quartile. Elsewhere, David Ulrich, a professor of business at the Ross School of Business at Michigan, conducted research that demonstrates that for every 10% increase in employee engagement levels, a company’s customer service levels go up by 5%, and profits by 2%.
Gregory Yankelovic, co-founder of Demo Wizard says, for this reason, hierarchical silos exist solely as a cultural issue to be fixed.
That is a purely cultural problem. Company executives cannot possibly be in direct communications with each and every customer their company serves. But if the leadership promotes customer-centric culture, and instil processes that nurture it, this problem can be eliminated.
To do this, companies can create a hierarchy that encourages regular contact with customers regardless of your job role. One example is Metro Bank, which, according to its managing director of retail, Iain Kirkpatrick, purposefully avoids any form of hierarchy to flourish in its business, as the bank expands:
“Local directors and regional directors transcend our business. They have responsibilities right across the business, personal and commercial space. Rather than being focused on one area, it’s their job to manage complexity rather than the customer. If you’re a business customer, that often means you’re a personal customer. You might have an asset finance need or you might be a mortgage customer. It’s our job to make that easier for the customer, so having the right people who can transcend all of that to deliver something more holistic to customers is the most crucial point.
“We’re the only High Street bank that offers a professional banking qualification to our colleagues. We find people with the right attitude to start with, and then we train them in how to be great customer-driven bankers. That creates a culture of working for the customer first.”
Chief customer officer
Amy Scott recommends that businesses with more hierarchical legacy than the relatively-new Metro Bank should help to address the issue by introducing a C-level customer-centric professional such as a chief customer officer (CCO), or a “a single board level executive leading customer experience efforts across business units such as sales, marketing and service, or even over an entire company.”
Someone in a role such as this, Scott states, will help champion the voice of the customer throughout the business, ensuring employees are able to speak and sharing information openly, and create an environment that encourages collaboration regardless of rank.
Jeannie Bliss, founder and president of Customer Bliss, says placing someone in a CCO or equivalent role can help drive leadership accountability.
“There are a number of approaches, and it varies by business. I encourage you to check out my book Chief Customer Officer for more, but here are a few quick ideas:
- Speak the language of the business: “When people begin with CCO work at a new business or in a newly-created role, other senior leaders often look at them quizzically. What is this job? Change is hard for people. To get your colleagues on your side, speak the business language. Talk about the metrics they need to hit. Use the right words. In-group vs. out-group is important in business. You can’t be seen as someone who uses other terms and hits other metrics. It will be hard to get everyone on the same page in that context.
- Tie all metrics back to the customer: “Growth and innovation come from the customer. We should all know this. If you can’t smash the silos, you need to unify them. How do you unify them? Well, the CIO needs a customer metric he/she is judged on. So does the CMO. So does the COO. So on and so forth. Leadership accountability will come as people realize they are being judged on customer-centric metrics. They will evolve around to your ideas and positions. If they aren’t judged on customer-facing elements, it will be a long battle uphill.
- Events: “Get to know people in other divisions. Get to know their teams. Explain your work to them. Listen to them about their work. Build relationships. Build cross-functional teams. Develop leadership accountability through organic relationships and listening. You all work at the same place, right? You all want to be successful and be well-regarded individually. Work together to achieve that. This goes a long way towards silo-smashing.”