Management Styles Essay
The Washington based company has about 300 employees and has opted to shun the traditional organizational structure of managers and direct reporting for a more flat’ and ‘organic’ structure where employees don’t directly report to a superior or manager. Valve believes that this more liberal company structure allows the company to reduce/remove barriers between its employees and their customers (Valve Case Study, 2013). Additionally, Valve does not recruit employees by traditional interview means, preferring to rely on word of mouth and peer appraisals as its means of hiring.
Valve admits to weaknesses in its structure: mentoring and orienting new employees amongst others (Valve Case Study, 2013). The purpose of this report is to more closely examine Valve’s organizational structure, management structure and the company’s culture to identify areas of improvement and make recommendations about how to implement a more effective management structure. Valve’s flat organization structure has made it a successful software company and a desirable place for many of its employees to work.
However, the use of peer-reviewed recruitment, lack of mentoring, accountability of its employees and difficulty in orienting new employees to their unique workplace environment are noticeable weaknesses in their structure. These weaknesses have primarily arisen from neglecting to
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It goes on to say that managers are an integral part of ensuring an organizations success. Whilst there can be no doubt that Valve is a successful company, it remains inefficient in the areas of management and organization structure, which may be holding the company back from reaching its full potential. Whilst Valve states they are not averse to organizational structure, they don’t favor the hierarchical division of labor found in more traditional organizational structures. The four key pillars of management functions: controlling and organizing.
Valve’s flat/organic management structure, where nobody directly reports to anybody else, places responsibility for projects and every day operations in the hands of reject teams called ‘cabals’. Cabals, are large temporary groups organized into multidisciplinary project teams. An employee decides how long they will work in a cabal for. All desks are placed on wheels at Valve, so when an employee is ready to move or decides to work on a different project, they simply wheel over to the next cabal they’ll be working with. Employees are free to choose projects where they believe they can make the greatest contribution to the organization.
This lack of oversight and delegation is neglecting the management function of organizing. The Organizing unction of management is defined in Schemers et al. (2011, p. 20), as the process of assigning tasks, allocating resources and arranging activities to implement plans. Allowing employees at Valve freedom to travel between teams based on where they feel they can make the greatest contribution encourages individual thinking and group thinking as opposed to the result focused thinking of a traditional organization structure with a manager.
Whilst this isn’t necessarily a bad thing per SE, suppose that an employee felt they could make a better contribution in another team and heir current team disagreed with their analysis? Suppose that the team felt that a member wasn’t contributing enough? Having an open dialogue with colleagues is a good thing, but in the absence of a proper method of dispute resolution, it leaves teams vulnerable to infighting and disagreement; which will in turn affect productivity and Valve’s bottom line.
Controlling is the process of measuring work performance, comparing results with objectives and taking corrective action as needed (Schemers et al. 2011, p. 20). In traditional organizations, managers maintain contact with people in the organization, ether information on progress/performance and then use this information to track the progress of the organization relevant to its objectives. Valve’s decision-making process for projects is ‘open’, with all project team members discussing strategy equally amongst themselves.
Whilst this is a flexible approach, it also lacks oversight from a manager whose task it is to track progress and performance. It has been acknowledged (Grouchiness & Cargo, 2010) that ‘in order to avoid the abnormal functioning within an organization, that management develops a system which revised assurances concerning the concept of dominance/direction’. The article (2010) is a good example that within any organizational group, there are sub-groups or factions that are more dominant than others. The less dominant employees may not be heard as often or as clearly as some of their other colleagues.
Their opinions and expertise may not be as valued as the more dominant members of Valve’s project teams. With no formal management or reporting structure in place, it’s hard for Valve them to ensure that nobody is being ‘shut out’ of the decision making process. If an employee was being shut out, at this stage, there is nobody they can refer their complaint to as there isn’t any dispute resolution process in place. The recruitment process at Valve Software differs greatly than that of a traditional hierarchical company.
Rather than having a hiring or HRS department, Valve employees are involved throughout the recruitment process and referrals of friends who currently work in the company are its preferred method of recruitment. The company says it looks for T shaped people who are broad-range generalists with deep expertise in one area. Valve believes that every employee it hires must be capable of running the company. This is a great idea in theory but poor in practice because by its own admission, it hires people with expertise in one area: that of software engineering.
As discussed an American Behavioral Scientist article on hiring processes (Married, 1994), ‘Referrals are more often used together with other approaches than as a sole recruitment strategy; those establishments that rely exclusively on “network hiring” tend to be small, less formalized, and in the private sector. This accurately depicts Valve’s less formal approach to hiring staff. It is suggested in Married (1994), that organizations tend to display a strong proclivity to rely on the same hiring approach to hire different types of employees.
Valve executes exactly this approach. It relies on referrals of current employees and runs the risk of hiring too many similar-thinking employees with similar expertise. Whilst Valve does use employee referrals in conjunction with psychological testing to help select employees, they are probably not doing enough to diversify their knowledge base in areas other than software engineering. Knowledge management is defined in Schemers et al. 2011, p. 79), as the process of using intellectual capital for competitive advantage’.
Knowledge management is really about the way an organization shares information and ensuring that this process is well managed and continually enhanced. Whilst it can be argued that Valve’s open dialogue between employees is a good start, diversifying Valve’s recruitment pool beyond software engineering would ensure the company’s knowledge management is enhanced and strengthened. A diverse pool of employee knowledge could enable Valve to have a tactical advantage over its competitors. There are no performance reviews at Valve Software; rather, peer reviews are conducted to improve employee performance.
Valve uses ‘stack ranking to determine compensation based on who provides the most value to the company. Each project group ranks its own members on skill level, productivity, group and product contribution. Group members are than ranked against one another and then compensated accordingly. Evidence in a study undertaken at the University of Nebraska (Barclay, 2006), suggested that peer performance appraisals are indeed an accurate indication of performance. However, the research does not focus on contributing factors (such as personality clashes) when employees appraise one another’s performance.
There is room for error and discrimination in Valve’s decision to have peer performance reviews rather than the more traditional manager and employee review. Not to mention there is the potential for any unchecked grievances between team members to escalate into disharmony and resentment; which would in turn lead to a loss of productivity and revenue. As discussed in a Journal article on corporate culture (Comer, 2007), having the right oracle culture can be a very powerful way to influence people both at an individual and organizational level.
It is important therefore that a culture of resentment does not build up at Valve. The potential for this is certainly there with employees peer reviewing each other’s work and then, in effect, deciding how valuable each team member is and how much they should be compensated for their work. This tends not to be a problem in traditional organization structures as there are clear-cut methods of dealing with disputes that everyone in the organization is obliged to follow. Mentoring is an area in which Valve has identified that they are weak.
Mentoring is defined in Schemers et al. (2011, p. 298), as ‘assigning early-career employees to more senior ones’. The mentor and minute relationship gives the minute access to advice and allows them to develop their skills in the early stages of their career. As mentoring isn’t formalized at Valve, employees could be missing out on a vital source of knowledge and development that more traditional organizations enjoy. This could potentially have a bad effect on staff retention and on knowledge as the information acquired by longer serving employees is not passed on.
Lack of oversight and lack of dispute resolution are a recurring theme in the analysis of Valve’s organizational structure and need to be addressed by the company effective immediately. A restructuring of the project teams to include at least some oversight of their activities would be in Valve’s best interests and that of its employees. Despite Valve’s preference for a less hierarchical work environment, this team leader’. This team leader should act as a moderator for their team to ensure hat the project teams remain ‘open’ in their dialogue but also fair.
They should also be in charge of mentoring Junior employees through formalized mentoring sessions. They will additionally have the responsibility for directing talent and potential to where they feel it will be best used, no longer leaving this up to the whim of team members. In addition to this, it is recommended that Valve install a HRS department to deal with the issue of peer-reviewed performance and ‘stack ranking. The current process could lead to resentment amongst employees and as a result, should no longer be engaged in-house but under the Jurisdiction of a formalized HRS department.