Sometimes reality stares you in the face and it’s still hard to believe. The collapse of the one-size-fits-all image of a corporate ladder is an example. But the corporate ladder is vanishing, and it’s getting more and more difficult to deny the changing world of work.
The enduring model for how companies have managed their work and their people since the beginning of the industrial revolution, the ladder represented an efficient though inflexible paradigm in which prestige, rewards, access to information, influence, power and so on, tied directly to the rung you occupied. The problem is that we no longer live in an industrial age–nor is the workforce the uniform group it once was.
Organizational structures are flatter. Technological advances and economic trends mean that work is increasingly virtual, globally dispersed and team-based. As a result, productivity and performance increasingly depend on a workforce that is more diverse than ever before, from gender and generation to culture, background and experience.
Taking the ladder’s place is a corporate lattice, in which ideas, development and recognition flow where they need to, along horizontal, vertical and diagonal paths. The lattice makes possible more collaborative and customized ways to structure work, build careers and foster participation.
The ladder arose in a world that presumed work must be done in an office. Organizations adopting a lattice mindset realize that providing more options for when, where and even how work gets done is smart and encourages greater productivity and engagement. At the telecommunications provider Frontier Communications, 30% of the call center agents now work remotely, often from home. They are 25% more productive and have double the retention rate of agents who work in the company’s traditional call centers.
Not only can lattice structures contribute significantly to the bottom line–by increasing productivity while reducing real estate costs and turnover, for example–they also can improve engagement, by providing more options for fitting life into work and work into life. Ladder careers have one direction for growth, development and status: up. The lattice career pursues continued growth, development and organizational influence by creating and valuing career paths that move laterally, diagonally and down, as well as up.
Cisco, for example, builds versatile leaders by moving high-potential executives around the company. Ana Corrales, Cisco’s vice president of global business operations, has made career moves to manufacturing, materials procurement, finance and customer service. “As a result of these experiences, when Ana talks about our business, she really understands how all the pieces work together,” says Randy Pond, Cisco’s executive vice president of operations, systems and processes. “This is the model for our future leaders.”
In the ladder’s heyday communication flowed from the top down in an orderly and controlled manner. In today’s lattice world, information flows more collaboratively and transparently, every which way. The lattice fosters an inclusive culture unconstrained by top-down hierarchy, where everyone can–and indeed, is expected to–contribute. That’s what AT&T’s chief technology officer, John Donovan, was after when he created a social media website that invites every employee to contribute ideas, become a collaborator, provide encouragement, offer feedback and even invest Monopoly-style venture dollars. “This is meritocracy at its best, a highly diverse set of people, in every sense of the word, crowd-sourcing and crowd-storming,” Donovan says. The site has more than 57,000 members and has generated more than 2,000 ideas. The first season’s winning suggestions have been funded and moved from PowerPoint to prototype.
The full power of the lattice emerges when its various strengths–in ways of working, building careers and collaborating–are connected to each other, mutually reinforcing a new formula for high performance. Thomson Reuters, an information services enterprise with $12.9 billion in revenue, illustrates such integration. Its chief financial officer, Bob Daleo, transformed the decentralized finance functions of more than 40 portfolio companies into a more lattice-like, collaborative structure with service bureaus located around the globe. He adopted lattice ways to work, including telecommuting and other flexibility options, to meet the demands of 24/7 global operations. Employee surveys show that 80% of employees rate the company’s flexibility efforts favorably, far more than at other high-performing firms.
Lattice ways to build careers moved the company from its narrow focus on upward progression to a multidimensional career model. “Now someone can go from a business unit to a new geography to a corporate center to a division center, which provides a lot more variety, a lot more challenge and a lot more learning,” says David Turner, executive vice president and chief financial officer of Thomson Reuters Markets.
With employees working in geographically dispersed teams, the old ways of communicating no longer served. Lattice ways to participate moved the organization toward more interactive, transparent communication. In one instance, the finance division gave a role traditionally reserved for management–identifying improvement priorities–to employees, by launching a “pain points” portal where they can voice their views of current challenges for everyone to see. The company appoints teams to address the highest priorities.
Thomson Reuters’ finance department’s effort has so far yielded approximately $50 million in annual savings. It also has helped business leaders make better decisions with improved forecasting and planning, and employee engagement is up. From performance and productivity to adaptability, the lattice model is outperforming the ladder one.
At Deloitte our annual employee survey shows that 90% of workers who experience all three lattice ways are engaged. Contrast that with the results of a major global workforce study by Towers Perrin in 2007-’08 that found just over 60% of employees in surveyed companies were engaged. Engagement is critical: Studies show that companies with high levels of engagement have higher revenue growth and better returns on assets and are more profitable and productive than companies with low levels of engagement.
Continuing to invest in the future using yesteryear’s industrial blueprint is futile. The lattice redefines workplace suppositions, providing a framework for organizing and advancing a company’s existing incremental efforts into a comprehensive, strategic response to the changing world of work.
Efforts to advance a company in any one of these lattice ways are beneficial, but the power of the lattice is amplified by the compounding effect that occurs when these new ways of thinking and acting reinforce one another to improve productivity, innovation and a business’ ability to develop, retain and engage the right kinds of talent. Companies that act now to adopt lattice organization will craft a bold new script for confronting the changing world of work. These forward-looking companies are consigning the corporate ladder reality to where it belongs, in the history books.
Cathleen Benko is vice chairman and chief talent officer, Deloitte LLP, and Molly Anderson is director of talent, Deloitte Services LP. They are co-authors of The Corporate Lattice: Achieving High Performance in the Changing World of Work, published by Harvard Business Review Press.