First, Let’s

Fire All The Managers

By Gary Hamel
(December 2011)
“Why fire managers?”

– Cost of management
• Direct management costs would account for 33% of the
payroll.

– Risk of bad judgements

• Most powerful managers are the ones furthest from
frontline realities.

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“Why fire managers?”

– Slower decision making

• A multi-tiered management structure means more approval
layers and slower responses.

– Disempowering lower level employees

• Cost of Tyranny – the hierarchical structure narrows down
an individual scope of authority, thereby shrinking the
incentive to dream and contribute.

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Hierarchies versus Markets

– Open Source Software Project vs Boeing example

– Managers do what markets cannot; they

amalgamate thousands of disparate contributions
into a single product or service.

– Is it possible to combine the freedom and flexibility

of an open market with the control and co-
ordination of a tightly knit hierarchy?

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 “The Morning Star Company”
• World’s Largest Tomato
Processor
• Founded by Chris Rufer in 1970
(as a Tomato Trucking
Operation)
• Today, it operates three large
plants with 400 employees and
makes an annual turnover of
over $700 million.
• Over the past 20 years, the
volumes, revenues and profits
have grown in double digits.
(Industry average growth – 1%)
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“The Morning Star Company”

Organisational Vision :
“to create a company in which all team members (colleagues) 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.

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“Unpacking the Morning Star Model”

– Make the mission the boss

“I’m driven by my mission and my commitments, not by a
manager.”

– Let employees forge agreements

Colleague Letter of Understanding (CLOU)

– Empower everyone – Truly

“In an organization built on the principles of self-
management, individuals aren’t given power by the higher-
ups; they simply have it.”

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“Unpacking the Morning Star Model”

– Don’t force people into Boxes

“We believe you should do what you’re good at, so we don’t
try to fit people into a job.”

– Competition for Impact, not promotions

There are no hierarchies or titles: “What strengthens my
résumé is more responsibility—not a bigger title.”

– Freedom to Succeed
“If people are free, they will be drawn to what they really like
as opposed to being pushed toward what they have been
told to like”
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“Unpacking the Morning Star Model”

– Clear targets, transparent data

Staffers are provided with all the information they need
to monitor their work and make wise decisions.
– Calculation and consultation
Colleagues have lot of authority but seldom make
unilateral decisions – they consult with their colleagues.
– Conflict resolution and due process
Conflicts are resolved through: One-to-one Meeting,
internal mediator, mediation by a panel of colleagues or
the President himself.
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“Unpacking the Morning Star Model”

– Peer review and the challenge process

Every employee in the company receives feedback from his
or her CLOU colleagues

– Elected Compensation Committees

Developing self-assessment document on CLOU goals, ROI
targets , and other metrics.
Colleagues elect a local compensation committee which sets
the individual compensation level, ensuring that the pay
aligns with value added.

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“Advantages of Self-Management”

– Greater Initiative
“Our organization is driven by Reputational capital”

– Increased Flexibility
“When people are free to act, they’re able to sense those
forces and act in ways that fit best with reality”

– More Collegiality
“There’s less backstabbing, because we’re not competing for
that scarce commodity called a promotion. All you energy
goes into doing the best you can do and into helping your
colleagues,”
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“Advantages of Self-Management”

– Better Judgement
“Since the doers and the thinkers are the same, decisions are
wiser and more timely.”

– More Loyalty
“Ninety percent of them return each year, and the company
has trained seasonal workers in the principles of self-
management.”

– Lower Cost
“Some of the savings go to Morning Star’s fulltime employees,
who earn 10% to 15% more than their counterparts at other
companies do.”
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“Disadvantages of Self-Management”

– Tougher Adjustment
• Its a matter of acculturation rather than capability.
• Longer Induction periods.

– Complexity in Hiring
• “assessing the fit between Morning Star’s philosophy and
the applicant's expectations.”

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“Disadvantages of Self-Management”

– Accountability Challenges
• Getting colleagues to hold one another accountable is a
challenge.
• Training programs stress the fact peer regulation won’t
work without courageous colleagues.

– Growth Issues
• Evaluation of personal development and progress relative
to industry peers is difficult due to the lack of hierarchy.
• Reluctant to acquisitions – concern of diluting company’s
culture.

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“Scalability of the model”

– In Rufer’s words,
• Self management is a work in progress.
• “Ideologically, we’re about 90% of the way there.
Practically, maybe only 70%”

– Author’s belief,
• Most big corporations are collections of teams,
departments and functions – not all of which are equally
interdependent.
• The metamorphosis will take time, energy and passion.

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“The Road to Self-Managment”

Step I Preparation of personal mission statements

Step 2 Small ways to expand employee autonomy

Step 3 Equipping every team with own P & L account

Reducing the distinctions between those who

Step 4 manage and those who are managed

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“We are manager rich. The job of managing includes planning,
organizing, directing, staffing, and controlling, and everyone at
Morning Star is expected to do all these things.

Everyone is a manager of their own mission. They are managers

of the agreements they make with colleagues, they are
managers of the resources they need to get the job done, and
they are managers who hold their colleagues accountable.”

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Self Managed Companies - Examples

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So, Where does this fall into?

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Frederic Laloux – “Reinventing Organizations”

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In Short,

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 Discussion summary

The Morning Star company – Manager-less Organisation

Understanding the Morning Star model
Key Advantages and Disadvantages
Teal Organisations - Position in Evolution

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