The concept is deceptively simple: Give the power to the employees and get their input about process improvement. Every organization have informal elements....such as employees asking each other instead of management for help, and coming up with their own strategies.
The research by the consultants at Katzenbach Partners following a Bell Canada engagement supports that theory--survey results showed that only 30 percent of employees depend on managers to solve their problems, and 54 percent cited the positive relationships they have with their co-workers as a factor in successful implementation improvements.
"We started to realize," says Katzenbach principal Zia Kahn, "[the informal organization] was more of an overarching theme that we could capture, [one that] most people recognize but don't take advantage of. [It] can actually be influenced to get performance boosts, and more importantly those performance boosts are really powerful when the informal organization is balancing the formal organization."
And once employees realize that their ideas will be met with openness and respect, a company can achieve an even higher level of success. "Often we find that the adoption of any kind of change is much more powerful when the source of that change comes from within rather than an external best practice," Khan says. "Not only is the answer better because you're finding out what really works, but it can get adopted much more easily and broadly."
Managing the informal organization is that intangible barrier that separates a good company from a great company; how they use teams, how they create the right kinds of networks among their employees, and how they work with customers, vendors and other targeted audiences.
How does Google, the number one company on FORTUNE's 100 best companies to work for, maintain their informal culture as the company gets bigger?
Co-founder Larry Page says, "I think as we get bigger, the way we're going to try to maintain our culture is to make sure we have the right-sized groups. I just visited our new office in the Seattle area. It really felt like Google felt when we were a couple of hundred people. There is sort of a natural size for human organizations, and I think to the extent we're able to create groups that are those sizes, we can retain a lot of that culture."
As human beings, we can only handle so much information at once.
There is a concept in cognitive psychology called the channel capacity, which refers to the amount of space in our brain for certain kinds of information.
There seems to be some limitation built into us either by learning or by the design of our nervous systems, a limit that keeps our channel capacities in this general range, the psychologist George Miller concluded in his famous essay 'The Magical Number Seven.' This is the reason that telephone numbers have seven digits. "Bell wanted a number to be as long as possible so they could have as large a capacity as possible, but not so long that people couldn't remember it," says Jonathan Cohen, a memory researcher at Princeton University.
The same number limitation relates to groups where we are a member.
To be someone's best friend requires a minimum investment of time. More than that, it takes emotional energy. Caring about someone deeply is exhausting. At a certain point, at somewhere between 10 to 15 people, we begin to overload. Mostly, it's a question of our available time and energy.
For example, if you belong to a group of twenty people, there are 190 two-way relationships to keep track of: 19 involving yourself and 171 involving the rest of the group. That's a twentyfold increase in the amount of information processing needed to 'know' the other members of the group. Even a relatively small increase in the size of a group, creates a significant additional social and intellectual burden.
The figure of 150 seems to represent the maximum number of individuals with whom we can have a genuinely social relationship, the kind of relationship that goes with knowing who they are and how they relate to us. To have more than 150 people in a group reduces the ability of each member to be sufficiently familiar with each other that they can work together as a functional unit.
Above 150, you have to impose complicated hierarchies and rules to command loyalty and cohesion. Below 150, it is possible to achieve these same goals informally based upon personal loyalties and direct person-to-person contacts.
When things get larger than 150, people become strangers to one another. When your group gets bigger than 150, you begin to get two or three sub-groups or clans within the larger group. Above 150 people, there begins to be structural impediments to the ability of the group to agree and act with one voice.
So if you have an organization (like a business, school, church or social club) that is approaching the 150 number, be cognizant of the perils of bigness. Adhering to the Rule of 150, you can exploit the bonds of memory and peer pressure. Crossing over the 150 line, you lose that highly effective institutional memory, intimacy and trust that was gained by knowing people well enough to understand their strengths and passions.
Sources: Consulting January/February 2008, FORTUNE February 4, 2008, The Tipping Point by Malcolm Gladwell (Little, Brown and Company)