THE STRATEGY OF PEER-BASED COUNCILS | The Myth of Leadership: Creating Leaderless Organizations

Today, work in the rank-based organization is frequently packaged as individual eight-hour-a-day, forty- hour -a-week positions filling specific job descriptions. The work offers minimal flexibility and freedom and fosters very little creativity. Feelings of entitlement abound due to the assumed permanency of static job positions , where success is measured by filling time, not getting results. Work is further organized into functional specialties with higher and lower levels and integrated into divisions in the rank-based company ”an organization of work better suited to the factories of the nineteenth century than today's organizations. Furthermore, career success for members of the workforce is mistakenly measured by how far one climbs up the rank-based corporate ladder, not by how well one develops one's skills and competencies while meeting and exceeding customer needs.

The organization should be seen as a portfolio of goods and services, not as an assortment of jobs organized functionally and separated divisionally. Career success should be measured by results, not by one's ascendance on the ladder of rank-based positions. Management should be seen not as a permanent rank-based leadership position, but as a competency developed and practiced by each member of the organization. And managers should fulfill their role as promoter of cross-fertilization of ideas and best practices between councils and project task forces, not as agents of top-down command and control. Success, both organizationally and individually, needs to be measured by results meeting stakeholder needs, not by acquiring status. It is time for peer-based leadership councils.

The Goals of Peer Councils

When an organization charters peer councils, employees shed their hierarchical roles and begin to see things differently. People from all over the organization get to know one another and learn how to genuinely communicate. People work together productively and cooperate when they share common goals, receive proper information, have the required skill sets, and are able to recognize, utilize, and balance each other's strengths and weaknesses. Some of these necessary elements are generally missing in the rank-based organization, with its centralized authority and top-down command-and-control structure. In the absence of rank-based thinking, a greater sense of community is developed that fosters increased competency in all members of the organization. Peer councils provide the vehicle for this development, with the following goals:

To foster a sense of equal standing and genuine communication among all employees
To allow everyone in the organization to contribute to strategic thinking and decision making
To ensure that everyone in the organization begins to think like an owner
To provide everyone in the organization knowledge-based skills that do not become obsolete

In striving to achieve these goals, peer councils become multiple centers of decision-making authority and responsibility. By distributing power and responsibility throughout the organization, they tap into the whole intelligence and talent latent within the workforce, giving the organization comparative strength over rank-based rivals in a range of factors including those discussed below.

Rank-Based vs. Peer-Based Decision Making

Big Chief or hierarchical decision making might seem to be more expedient and efficient, and in some cases, might be. However, time saved by these types of decision making is often lost to correcting the inevitable mistakes that arise from the narrow range of vision of a single, rank-based decision maker. This is especially the case for complex situations and issues, where the inclusion of many different perspectives is not only helpful, but often necessary, to fully define the problem and identify solutions. With a limited perspective and lack of genuine information, the Big Chief must work with the given dynamics of the rank-based organization and cannot fully grasp the extent of the problem and nature of the solution. Rank-based decision making, however speedy, leads to more bad decisions. So, even where decision making in peer councils might take more time up front, though that is not necessarily the case, the many perspectives of council members shared in the decision-making process generate better problem identification and more effective problem solving. This saves time and resources in the long run.

Harmonizing with a More Conventional Organizational Structure

Companies can be structured in innumerable ways. For example, a company can be organized into different business groups, which represent customers' needs and wants divided either by industry, geographic region, or some mixture of both. The business groups can be further divided into business units, which represent the portfolio of products and services of the company delivered to each strategically focused customer group . Within each business unit are the delivery systems for products and services, each represented by a product or service line. Cross-functional and interdisciplinary project task forces are then organized to take care of the crucial assignments and tasks within the work flow of each product or service line. Finally, project task forces are composed of individual employees with their own sets of interests, skills, and competencies. This collection of parts forms the structure of a company, and as always, feedback and communication are crucial.

Within this structure, conventional, hierarchical reporting lines could be drawn as follows :

Individuals report to project task forces.
Project task forces report to a product line.
Product lines report to a business unit.
Business units report to a business group.
Business groups report to management.

Yet in the peer-based organization, the management of these reporting lines is not rank based, for each area is supervised not by a single rank-based leadership position, but by a peer council. This format allows for the stability of the familiar organizational structure and reporting lines, but adds the innovativeness of the peer councils. The scale and scope as well as variety of these peer councils depend on the unique needs of each individual organization.

Types of Peer Councils

In a peer-based organization, peer councils can be chartered to over-see all aspects of the organization. Following are a few of the many types of peer councils that could be chartered:

The company peer council could oversee the company's strategic vision, values, and core competencies.
The business group peer council could set the company's business objectives and make strategic market and product decisions by being attuned to the needs and desires of each group's customers. It would analyze future trends in business and key markets and design work structures and reporting lines at the business group level.
The business unit peer council could oversee the geographic or industry sector focus for the entire portfolio of the company's products and services. It could make the necessary resource allocations for the various business units and design work structures and reporting lines at the business unit level.
The product line peer council could make product line decisions, and oversee all product and process councils, within each business group. It could design work structures and reporting lines at the product line level. It could partner with major industry players by including them on their councils and task forces. It might oversee a specific product line or service and the related project task forces. The product/process councils make specific operational decisions within their respective product lines or processes, oversee the project task forces, and design work structures and reporting lines at the project task force level.
The employee skills council could oversee individuals' portfolio of skills and competencies and ensure that all individuals within their function are meaningfully engaged on appropriate project teams . This council might make specific skill portfolio decisions ”for example, what types of competencies and skills are needed ”and oversee training and development of people in the organization. It could function as a service council to the business units.

Each council is responsible for ensuring the execution and accountability at its own level. Councils must practice patience, as opposed to surrendering to the quick-fix mentality . They must build trusting relationships, for true freedom requires trust. They must set clear role and goal expectations and identify where help and assistance can be obtained, as well as establish clear accountability. This should ensure the optimum use of everyone's talents.

Council Membership

Here are a few other thoughts to keep in mind in determining council membership:

Councils should be organized across levels, functions, and rank.
Key customers, clients , vendors , and stakeholders should be included on the councils.
Council size should be determined by the exigencies of each particular organization.
Some council memberships should be voluntary, while others should be chosen by council members.

Each council has the authority to charter cross-functional teams for specific projects at its level. There are no " leaders " in the councils, but rather facilitators, who plan and conduct the council meetings. In general, council facilitators should be voluntary positions and periodically rotated , with the expectation that every council member will have a turn in this position.

New Roles Mean New Titles

In the transition to becoming a peer-based organization, the single decision maker is replaced by councils and task forces ”suggesting a change in titles. The CEO stays the CEO but is no longer the chief , but rather the consulting , executive officer. The same shift from "chief" to "consulting" might apply to other senior executives as well ”for instance, the CFO might become the consulting financial officer, and so on. These new titles make clear their new role in an " open and leaderless" organization. Other title changes might occur as follows: the title of vice president might be changed to mentor; the title of director might be changed to facilitator; the title of manager might be changed to coordinator . These new titles reflect the change of culture from rank-based, top-down command-and-control management to a peer-based culture of equal standing.

Councils Must Be Peer Based

Chartering councils but failing to make them peer based, or not involving people from every level and function of the organization, is a big mistake. The first attempt I made at introducing councils was with a well-intentioned CEO of a company that was not performing as well as it might have. We chartered the councils in the critical decision-making areas of the company, but against my wishes no one below management level was allowed to participate on a council. The rank-based chain of command was left in place within the councils, so the organization essentially remained the same rank-based hierarchy it was before.

As I went around explaining the council model to different groups in the organization, they all were excited to have a part in the decision-making process. The idea of contributing to the organization's strategic vision and tactical execution was very motivating for them. This was a company of very bright employees, and most of their knowledge and most of their abilities were being wasted in the traditional typecasting of rank-based thinking ”as reflected in statements such as "Your job is to develop what we tell you to develop and not to think about what or why" and "Your job is to market what the engineers give you."

The employees at every level of the company had good reasons to explain the company's relative lack of success, but their thinking was never solicited. They saw the councils as a possible way to finally make some impact on the success of their company, and so did I. But there was too much resistance from the senior executives, who did not want to give up power and privilege. The well-intentioned CEO was forced to compromise his vision and make the councils rank based. The Big Chiefs still monopolized all decision making and neglected the councils, which were only their traditional rank-based staff in any case, or used them as mere privileged "gofers." This in reality was the same rank-based model as before but with a different name .

The economic situation with this company did not improve. Although the rank-and-file employees would have made a tremendous difference, the rank-based leaders continued to ignore the willingness and ability of those beneath them in rank to assist in solving organizational problems. Soon the rank-based leaders themselves were replaced by the board of directors with other rank-based leaders, and the unfortunate saga continued.