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John Telfer

Inspiring Business Performance

Managing Director

Read more about John Telfer

Internal silos are everywhere – and they come at a high price

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Calling the accounts team a bunch of bean counters or referring to marketing as guardians of the coloured pens may be harmless japes that bounce around many an office. But if HR digs deeper they may well find that serious departmental brick walls, or silos, exist in the organisation that can hinder its progress in terms of process effectiveness and efficiency – or worse, profitability. In cases where these brick walls have been identified and analysed it’s possible to measure the impact of poor engagement between teams, and not simply in terms of process, but in the aftershock on customer service, profitability and talent retention.

Data suggests that focusing on busting departmental silos is the key to HR’s ability to change or shape an organisation through better people performance. Analysis in South Africa by the people management services company Braxton Group has shown how attitudes differ significantly between different sets of departments and industries around a wide range of categories – including timeliness, information quality, trustworthiness, professionalism and impact of service. For example, in retail banking, branch staff evaluations of central services departments highlight above average scores for attitude, communication and reliability, but lower than average for urgency, accessibility and quality of information.

It’s fair to say that the role of a department and persona of the people within it does create natural and inevitable differences between teams. There are obvious contrasts for example between analytical finance people, who will always ‘get back to you’ only when they have all of the relevant figures in front of them, and spontaneous sales teams that ‘need it now’ in order to negotiate and close a deal.

But troublesome silos occur when interdepartmental attitudes slide further than these accepted characteristics. A lack of understanding or cooperation can do much more damage than simply creating cliques. Overlaying an analysis of departmental silos with information about profitability, customer loyalty, performance and employee retention reveals interesting correlations and shows the HR team where they need to focus effort and money to improve performance.

Of course the contextual understanding of how silos relate to other issues like these is essential in giving HR teams a strong business case for investment and change. The starting point should be to benchmark and discover what the average level of performance between different departments is. From this it’s possible to gauge which relationships are succeeding and which have serious flaws. Further surveying of employees’ opinions and analysis can then reveal why. In terms of addressing the big picture issues caused by brick walls, understanding the sequence of effects is vital. A lack of departmental cooperation may be impacting profit, but the solution could lie in other effects which are leading to this – such as the cost of high talent turnover or reductions in employee loyalty impacting service and revenue.

The impact of internal silos goes way beyond simple inefficiencies – it’s really about the effect of internal customer dissatisfaction which comes at a cost. Turning the situation around to the extent of improving profit requires success in breaking down the walls that reduce cooperation and improve employees’ commitment and drive.

Bean counters and coloured pens aside, the accuracy and efficiency of internal business processes and working relationships plays a significant role in the success and profitability of an organisation. Busting silos that stop people supporting these processes effectively is a new critical area where HR can deliver a return in improved performance to the business.

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John Telfer

Managing Director

Read more from John Telfer
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