Innovation as an organization culture has always been a nightmare for organizations. The perfect blend of processes that might nurture innovation in the organization has eluded professionals across the globe. There have been companies that have invested millions of dollars to get the better of the competition year after year.

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A Promotion in next year with 20% Hike he would wait for the entire year and take the promotion.

A Promotion 3-4 Years down the line with 50% hike he might consider a switch this year for 25% hike.

So having a hierarchy structure that ensures the role maturity requirement for a promotion increases only with the hierarchical positions.

The fear of change is also a key factor when an employee determines to change ships midway. The risk taking ability and acceptance of change is something inversely proportional to the level of comfort of an employee in the organization. So while designing the organizational framework, an organization should always key in the factor that what are the essentials which would directly impact the work critically for the all the rest the level of comfort and enhanced risk should be traded of carefully. A great example of a very successful trade-off has been IBM, which has consistently had its attrition rates below the Industry averages by creating a non pushy and comfortable workplace. Though this trade off is dynamic which would always vary with the competition’s response.
With flat organization structure might be the in-trend which appeals to a induct a lot of employees but then this would not keep the internal employees motivated. No matter how much we brag about performance driven organization and related jargon, we can agree in a professionally managed large companies stakeholders are not comfortable with a 28-30 year old with 4-5 years of experience as CEO unless the company is a start-up or the 28-30 Year old is the son/daughter of the promoters. The board always prefer someone experienced (not necessarily old) to take the helm of a corporations.
Concluding the whole issue that though no two organizations can be alike and the basic DNA’s are always different with stakeholder’s expectations, vision and missions set for them. But still an organization should always fine tune the hierarchy such a way with a higher hierarchy for the junior and start of middle level and gradually becoming flatter towards the helm. Because once reaching for the recruitment over the middle level the people tend to judge the organization on how close they are to being a CEO. So a flatter structure finally becomes more appealing and makes the organization a preferred choice of workplace.

Hierarchy Structure

Gekko: Well, I appreciate the opportunity you’re giving me, Mr. Cromwell, as the single largest shareholder in Teldar Paper, to speak.

Well, ladies and gentlemen, we’re not here to indulge in fantasy, but in political and economic reality. America, America has become a second-rate power. Its trade deficit and its fiscal deficit are at nightmare proportions. Now, in the days of the free market, when our country was a top industrial power, there was accountability to the stockholder. The Carnegies, the Mellons, the men that built this great industrial empire, made sure of it because it was their money at stake. Today, management has no stake in the company!

All together, these men sitting up here [Teldar management] own less than 3 percent of the company. And where does Mr. Cromwell put his million-dollar salary? Not in Teldar stock; he owns less than 1 percent. You own the company. That’s right — you, the stockholder. And you are all being royally screwed over by these, these bureaucrats, with their steak lunches, their hunting and fishing trips, their corporate jets and golden parachutes.

Cromwell: This is an outrage! You’re out of line, Gekko!

Gekko: Teldar Paper, Mr. Cromwell, Teldar Paper has 33 different vice presidents, each earning over 200 thousand dollars a year. Now, I have spent the last two months analyzing what all these guys do, and I still can’t figure it out. One thing I do know is that our paper company lost 110 million dollars last year, and I’ll bet that half of that was spent in all the paperwork going back and forth between all these vice presidents.

The new law of evolution in corporate America seems to be survival of the unfittest. Well, in my book you either do it right or you get eliminated.

In the last seven deals that I’ve been involved with, there were 2.5 million stockholders who have made a pretax profit of 12 billion dollars. Thank you.

I am not a destroyer of companies. I am a liberator of them!

The point is, ladies and gentleman, that greed — for lack of a better word — is good.

Greed is right.

Greed works.

Greed clarifies, cuts through, and captures the essence of the evolutionary spirit.

Greed, in all of its forms — greed for life, for money, for love, knowledge — has marked the upward surge of mankind.

And greed — you mark my words — will not only save Teldar Paper, but that other malfunctioning corporation called the USA.

Thank you very much.

Every time I hear about the Government about the austerity in corporate compensation this speech is the first thing that comes to my mind. A classic debate that where the line is drawn, what compensation is justified and what is not. As Gekko points out in the speech that the management owns less of the companies these days, how would one determine what is acceptable and what is not.

This is a classic organization culture issue and an ethics issues. Lately we have seen fall of multiple companies in the great financial meltdown which were known across the world for obscenely high compensation and off the mill bonuses. The compensation earners went out unscathed, however the stakeholders including the investors and the customers burnt the fingers. The greater question is that how we ensure that the corporate management are more responsive and understanding of the stakeholders. A immediate reflexive solution comes to my mind is having greater equity ownership by the management.
Equity based compensation, ESOPS etc. are fairly common and well worked techniques. Though I am not really an expert on the compensation side of business but its not really a rocket science to understand that ESOPs and equity ownership of the management often leads to insider trading and bloating of account books like in the case of Satyam. The point is management looks into the personal gain through the ways which are not enhancing the earnings per share and stockholder value through business (not valuation I must emphasize).
I do not totally disagree with Salman Khursheed emphasizing need for austerity, but I strongly feel that this austerity cannot be attained by caps on compensation or government intervention. This needs to be addressed through the responsible compensation practices. By associating the compensation through value generated through the core business not by a mad race of valuations, accusations and unwarranted risks.

The bottom line is, that irrespective if would want or not, like it or not there would always be a constant struggle between multiple stakeholders to push forward their interests and grab the greater benefit pie from the organization. The only answer to this tug of war lies in stringent and learning processes with detailed checks and balances to ensure a fair bit of the economic benefits to everyone. Though easier said than done this would be an evolving process through out. As Gordon Gekko said Greed, in all of its forms — greed for life, for money, for love, knowledge — has marked the upward surge of mankind. May be this time round the organizations need a Greed to be Just and Fair.

Update: Personally speaking of my own opinion on the kind of compensation outline, the company should actually keep a slot of equity separate with ownership lying with the corporation itself and give a mix of returns on EPS and Valuations averaged over a period of 3 years as a part of management compensation.

1- Sluggish Elephants- these are the mammoth organization which have seem to have been present since eternity. They have a set code for everything a well written process for every possible situation existing. They are gradual changers (I say this because I don’t believe that an organization can be under no change at all). Here a person who is enthusiastic (over enthusiastic when compared to the enthusiasm in the organization) is more likely to be fired for his over enthusiasm which might seem to be a positive trait to a lot of agencies and people external to the organization. An appropriate example of this kind of organization is army, though it is a non business organization, but it is one place where your enthusiasm which if not in accordance to organizational pace and policies might get you fired immediately. Though I don’t mean it is wrong on their part but that is their way of function (may be necessary too) and resembles closely to the situation I am describing in the corporate world.

2- Agile Reptiles- These are the organizations which ride on the wave of change. The organizations which are the agents of change. The organizations which nurture change and believe in the survival through change. The organizations actually need the agents of change to fuel their own growth engine. Actually if a person doesn’t matches the pace of the organization and is not as enthusiastic & motivated as the overall mood of the organization is, there is a high probability that he would find himself lagging behind the organization and would be under a constant fire. A close example is the consulting firms which fuel on change of clients, nature of projects and the industry scenarios. A person who is not very enthusiastic about changing industry, nature of work etc. is most likely to get into the line of fire in such an organization

3- Unpredictable Mice- These are the organizations which remain in a constant state of turmoil; they are the ones which have numerous smaller factions amongst them. These organizations run in a very unpredictable way with not a fixed pattern towards change and enthusiasm. The different factions or units of the organization have a different appetite for enthusiasm and change. In such an organization acceptability of an enthusiast depends upon the faction/ department/ unit he is working in, however on a broader basis the enthusiast if with his enthusiasm produced might be rewarded on the basis of results but might also get fired if the enthusiastic initiative backfired. An appropriate example of such an organization would be the modern IT companies which have known to be the ground for a lot of enthusiasts but also have been constantly under battering for killing enthusiasm in the employees.

Another thing I would like to clarify here is that everywhere I have mentioned organization I have used it as a part of corporate universe which is collectively performing some activities with a vision and objective. So this might be your unit, project team, program, department, company, group of companies etc because the change and enthusiasm is of relevance at every point in the organizational change.

1- The world culture in the term itself speaks volumes. A culture can’t be implemented through processes. A culture needs to be bred with in people through continuous orientation process. So the first part of a learning culture is the people orientation towards learning.

2- A learning culture should not only have a focus that ensures rewarding of continuous learning of people through their experience but also ensuring that the people leveraging their learning are consistently rewarded for their behavior.

3- A learning culture should also ensure that the learning is being converted in real time measurable deliverables like reduction in costs, enhancement in quality etc. If an organization fails to show the rise in this area then there is a high probability that either it is not a learning organization or it is learning a lot more noise than substance.

4- A learning culture should also ensure that knowledge is shared seamlessly and especially in the growth phase the knowledge should effectively be transferred or ramped up to maintain the learning standard across the organization.

I believe only the organization able to sustain above principles can be said as one breeding the Learning Culture.