Bayer is getting rid of bosses and asking staff to ‘self-organize’

> Stewart Butterfield, former CEO of Slack, recently described a dynamic within tech companies behind much of the over-hiring. He noted on Bloomberg’s Odd Lots podcast in late May that when there’s no real constraint on hiring, “you hire someone, and the first thing that person wants to do is hire other people.” The reason is that “the more people who report to you, the higher your prestige, the more your power in the organization…So every budgeting process is, ‘I really want to hire,’ and that to me is the root of all the excess.”

I’ve seen this first hand. One place where I worked HR even had a table of team size vs manager compensation. When I pointed out that it may not be the best idea to directly incentivize managers to hire more people they were less than understanding. Of course it went totally out of control.

But sadly there just is no counteracting force (except perhaps mr Musk). When you apply for your next job as a manager they will ask you “How big was your team?”, and they won’t be impressed when you say “I managed to keep it down to four people”. It’s just something that resonates very strongly with the primitive side of our brains (“You say you were the chief, how big was your tribe?”).

I am not convinced. Reading the whole article it seems that Bayer is moving to a system better known as QBR, mixed with OKRs and most likely some sort of agile model.

There is no no-hierarchies. Working in a 3 month cadence on an organizational level puts a lot of pressure on all people. Usually QBRs work top down and there is more monitoring along the process.

What sounds great is more or less success theatre as well as inflexibility. No one wants to lack behind in a QBR report. Risking 4 times a year being red flagged in a report sparks fear.

Also approval processes and idea sharing are the first victims of such reorganizations. No one risks a 2 week sprint for some improvement sprint or working on technical debt in tech for example.

I’ve seen this within a company with 100k employees worldwide.

People will regret QBRs.

Usually companies want to get rid of the costs of middle managers, which are usually elder than normal staffers. Also companies want to include younger folks, because they are on average cheaper per resource from a controlling perspective.

Young guns without leadership with delivery pressure by an even older senior management layer means having a large gap and divide between them.

Senior management adds so called assistants to their staff, the hidden layer.

I watched a lot of mobbing at the lower level as a result. Fear of tumbling over mistakes aka receiving a bad performance review is rampant when you need to report all the time results.

Mixing teams every QBR sounds fun, but isn’t. It means even more being in constant competition. Who is the most flexible employee and most successful under different circumstances?

Large organizations are hard to manage. People will very soon miss their middle managers to cover things up in a human way.

QBRs don’t help if there is a clear product strategy missing.

There is no perfect system, but QBRs are some of the most toxic form of working and collaboration that I have witnessed so far.

The problem with too many layers of management is mainly that they stop doing what they should do. Making decisions.

The lowest management layer cannot make any decisions alone, otherwise the next layer would have no reason to exist. The next layer might even have to hand over the decision to one layer above. Up there no one really understands the decision that needs to be made because they are too far away from the actual impact. The result is that the decision is not made at all. Instead they procrastinate by asking for more details about the decision and the options.

If you have only one layer you get a decision very fast.

I seem to recall that the central takeaway from the essay tyranny of structurelessness is that when one affects to dispose of an official, formal and acknowledged power hierarchy, it simply reappears as an unofficial, informal, actively disavowed, and even more paranoid version of its former self.

Using Meta as a source of good management is a fallacy that needs to be tackled.

Meta has only managed to release one new "domestic" product since facebook advertising (threads) and only one of the features released on the main apps has stuck (reels)

there is no strategic direction at meta, its a mass of noise, poor project management and bloated orgs craving for any metric of success other than what makes the user happy.

Meta is only successful because it has one team that brings in >90% of all income(Ads). Not only that but its incredibly good at it. Every other department is effectively a cost center.

Now Bayer might have ossified, given that it actually has a rule book (meta does not, it smears industrial quantities of docs at a wall to see what sticks)

I’ve worked in an environment where there are no managers for 4 1/2 years and it’s been fantastic. Here’s to getting rid of them in most (but certainly not all!) places.

I do sometimes think a self organized hierarchy is better than one organized by fiat. Everyone always will say, "Ah - but then you just get an implicit hierarchy rather than an explicit one" with these types of systems but this isn't necessarily a bad thing. For example, There shouldn't necessarily be one escalation channel for all types of conflict - technical decisions may get resolved differently than intra-personal conflicts.

Or, if you force a team to be under an incompetent leader in a traditional structure, you get a really unhappy unproductive team but in an implicit structure that 'leader' is quickly sidelined when people figure out the quality of their decisions are poor, and if they want to get things done - which most do in a properly incentivized org- they should find another path.

« It is just lots of noise » thats what people told me who know him/worked for him.

The reality is that Bayer is in deep mud with their lawsuit and laying off lots of people in Germany is difficulty. If you pack it under a nice « we are modern, amazing shift » package, then he will get more support and also shareholders will be pleased (for a while). That’s my theory.

I've been in one self-organizing department, and it was one of the worst experiences of my career.

I expect they're going to regret this.

The WSJ article mentions that the CEO mapped out his plan at a cafe with a McKinsey consultant.

No matter how badly this goes, sounds like McKinsey will make out again…

Official post from them on this in January: https://www.bayer.com/media/en-us/bayer-aims-to-sustainably-...

Valve - the PC gaming giant and owner of Steam - is very famously a flat organization. Their Handbook for New Employees[1] that goes into detail about how they operate has made its way out into the world a few times as well.

[1] - https://cdn.cloudflare.steamstatic.com/apps/valve/Valve_NewE...

There is nothing stopping staff from choosing their own managers and coming up with a management roles and structures of their own. In large companies, people get overly hung up on standardized titles and structure that looks reasonable on paper. But this isn't necessarily the structure that is needed to get the job done. This could cut down on unnecessary headcount.

I've worked in organizations that were 4-5 times as big as they needed to be - but not where we actually needed people. We had half a dozen departments, all with 2-3 managers of various kinds, but were always short on developers. The reason being that the people who built the organization had experience from mature companies, and had never built anything from scratch before. So their focus was on building the kind of organization they were used to - not the organization we needed to bootstrap the company and product.

I have forgotten the name of another big company that tried this and kinda failed. I hope something comes out of this for Bayer. I remember this because I liked the idea in general and the term stuck with me -- Holacracy (I think I read a book too).

https://en.wikipedia.org/wiki/Holacracy

Self-organizing still leads to bosses, but they just get paid like regular workers.

My company does this sort of thing but with dev chapter leads. The chapter leads have no management training and no authority. They don't even really know what you're doing since they're on a separate team and have their own coding work. They're senior devs that have added management responsibilities and are just paid as senior devs. Fuck that.

  > work together on projects of their choosing for 90 days, before regrouping for their next project. 

am i crazy or does intuitively this sounds like a recipe for disaster?

how do you provide long-term value (never mind complete a new drug?) if everything changes every 90 days?

This is going to crash and burn.

Humans are tribal. We need hierarchy, whether it's defined or not. We need to know where we fit among a collection of people.

At work, bureaucracy gets a bad rap because we like to cite the -bad- examples of it being executed. It's actually a very efficient way to explain someone's purpose, expectations, and tools to succeed.

Ripping it out is just taking a c-level mentality of "wanting to be the leader" and applying it to people who don't necessarily want/need/have the capacity for such a role.

As for de-layering, a person can really only properly handle 7 direct reports before things get dysfunctional. Delayering just means more people reporting to fewer managers. Expenses are saved, but dysfunction grows, along with opportunity cost.

> In the coming years, Bayer’s workforce will consist of constantly evolving “5,000 to 6,000 self-directed teams” that work together on projects of their choosing for 90 days, before regrouping for their next project.

That's how you produce nothing, but a lot of it.

State prison "inmates who are really managers" is certainly a danger. Or "All employees are equal, but some are more equal than others."

However, this is worth a try. HR can devote itself to slapping down anyone who tries to become the toughest convict in the yard. Or the meanest girl in the cheerleading squad.

Middle managers are invariably the source of all corporate problems. So postulating "we're not going to have any" is a good start, but then you have to control the problems that inevitably arise from that.

Managers are just the symptom. Growth is the disease. There is no good solution to managers except being small enough to not need them at all. The idea that companies need to grow to survive is a myth. Staying small avoids so many problems.

Holocracy has never worked. Someone has to do the management tasks, even if you pretend there aren’t any managers.

My understanding is that Bayer's biggest problem was that they bought a lawsuit

https://www.lawsuit-information-center.com/roundup-lawsuit.h...

The question is: "Will this reform prevent them from making another disastrous acquisition?"

They actually learned it from tech. The whole Agile, self-organizing teams and flat structure was sold by HR consultants to tech, and years later (because pharma doesn't move very fast and because "innovative" tech did it) they adopted it. Bayer is actually one of the last ones.

It's just the flavor of the month. Matrix organizations were a decade ago. Something new will come along later.

The structure makes some problems better (less bureaucracy because fewer decision makers - no need to get 6 levels of middle management to approve) but creates new problems (lack of visibility across organizations so dumb decisions get made because of a lack of information). The workers basically have to keep doing the same job with fewer resources.

I can't wait until we come full circle and go back to a pyramid org chart structure a la 1950's. It'll be fun to see how the HR consultants sell it.

There seems to be a bit of over-correct going on here:

When Anderson took the helm last June, he learned that the company’s rules and procedures handbook was longer than War and Peace. and “It’s just too hard to get ideas approved, or you have to consult with so many people to make anything happen.”

So sure, makes sense that there needs to be some correction. Yet basically it seems that they're just tossing everything into the bin. Perhaps an actual review of that entire rule book would have been more prudent? I expect they'll have some sort of disaster, then turn around an start writing that rule book from scratch.

I wonder if something crazy will happen. They'll end up with the equivalent of tenured professors, with unlimited grants, working on all sorts of pet projects, yet the result being an explosion of research.

Too late for anyone to see this, but GE/Durham, who build jet engines, do (did?) small teams (<20) with 170 employees and one manager.

Fast Company: Engines of Democracy (1999) https://www.fastcompany.com/37815/engines-democracy https://web.archive.org/web/20221116144415/https://www.fastc...

The most interesting part there is that Bayer is a pharmaceutical company. They should have chains of responsibility and self-organizing these chains can be... tricky if not impossible. Mostly due to probability to be a plaintiff in a lawsuit.

For Bayer's it's less about getting rid of bosses, but just getting rid of the huge amount of fat they have accumulated over the years, making any kind of decision a battle between layers and layers of mid-managers.

This works ONLY if there are somewhat clear goals that people can work towards. If there's a principle or a purpose that transcends a managers personal agenda, then yeah, go for it. If not, this will be just anarchy.

Open Source efforts have a been a wonderful laboratory to gather data on how different kinds of "low cost" management affect different types of efforts. I'm always surprised that given the explosion of those efforts for 20 years, businesses have never looked at them as a source of inspiration.

This sounds like a great time to be working at Bayer. What's going to happen though is that this will open up an internal power-grab and then whatever structure comes out of that will remain around for a while.

That said, my gut tells me there is a good chance that whatever structure it ends up might be more efficient than top-down selection. My experience of top-down selection is absolutely horrible. The outcomes are worse than random.

They probably already already did some internal studies to ascertain that teams of professionals could operate autonomously without management... And if they can, it makes sense that managers could only get in the way. You don't need managers if you have the right incentive structure.

Most of what managers do is threaten and allocate punishment. Studies have shown that positive reinforcement is more effective at guiding behaviors than negative reinforcement. What kind of positive reinforcement can one get from a manager aside from a worthless pat on the back? Any employees today actually value that? Better cut out the managers and dangle big bonuses in front of the employees directly. The CEO at the top can save all the pats on the back for themselves!

Sort of works if you start that way. Meta sort of does this by putting the onus of creating and working on the right project on individual contributors. This is sort of product and project management evasion of division of labor by making everyone shoulder the burden of a cross-cutting concern without any help. Similar to getting rid of secretaries and personal assistants when some leaders aren't good at time management, scheduling, remembering people or events, or being the least bit organized... certain people plus the right personal assistant can comprise an immensely productive and impactful team like a superorganism.

Drastically changing who holds priorities and assists with unblocking company-interfacing issues isn't leadership, it's anarchy without setting a tone or a direction. It just sounds like the leadership class doesn't have a clue what they're doing and will try a reorg and another layoff should the continued beatings not have the desired effect.

I agree that “managers” are these days mostly a legacy from Industrial Revolution. Supervisors at every few dozen people was a solution for armies and factories where the human does all the work. As those workers “do what they are told” and do not “leave the farm” you can call it feudalism if you want.

But now the CPU does all the work so the coders are the new managers

Yes we need fewer supervisor-managers, because we have / need fewer workers. Bauer thinks they just need a few brilliant chemists who can use AI to find that new protein. They might be right.

But there is a flaw - they still Want the cash to flow upwards. They still see owning the capital as the right to get the returns to capital. They still want feudalism, but with fewer grabbing barons.

Bauer seems to have missed the point that self-organising is democracy.

That equal say means equal share

That letting smart mission driven people organise will likely lead to better results around the mission, but also lead to them asking “why aren’t we getting better paid, and who is taking all the money?”

FDR was called a traitor to his class. Or a hero for democracy.

Other companies before them have tried the holarchy/holacracy thing. As far as I can tell, the general conclusion is that there's such a thing as too little middle management, as well as too much.

See for example: Medium (https://blog.medium.com/management-and-organization-at-mediu...), Zappos (https://www.huffingtonpost.co.uk/entry/why-you-need-a-boss_n...)

That reminds me of what Ricardo Semler did at Semco: distribution of authority, employee participation in decision making, flattening of organization, rotating leadership roles, ...

https://semcostyle.com/ricardo-semler-creating-organizationa...

https://mallenbaker.net/article/inspiring-people/ricardo-sem...

Soon a lot of workers will need to start buying Aspirins by Kilograms. Bayer wins again.

I've been saying this for the last 10 years. Middle managers are Bozos. They don't let you get shit done and don't let you flush your ideas and brainstorm to products. I hope this tendency becomes the new norm.

you might get rid of managers, but you will still need leaders.

I've seen a similar idea implemented with a lot of tech teams. In particular, I've seen companies try to be "flat," meaning that the software developers don't have managers, but instead, the software developers are expected to self-organize.

But all of the normal tasks of a manager still exist: someone has to coordinate the work of multiple teams when those teams have zones of concern that overlap, and someone needs to be able to assign a budget, spend a budget, and take full responsibility from both the good and the bad that arises from spending that budget. If money is spent poorly, someone has to take the blame. If money is invested wisely, someone has to get the credit.

What tends to happen (in "flat" organizations) is that a lot of the coordination work gets pushed down to the individual software engineers, so that they now need to spend more of their time on coordination activities, and they spend less time actually writing code. I've seen "flat" organizations where senior engineers spend as much as 25 hours a week in meetings, because they've taken over all of the coordination work that would have previously been handled by an engineering manager.

Decisions about budget are rarely extended down to individual software engineers, so instead those decisions go up the hierarchy: you've now got the CEO making small-scale spending decisions that should have been passed down to some middle manager. For instance, at Futurestay.com, the CEO was dragged into an argument about what managed hosting service to use for MongoDB, a decision where the difference was maybe $200 a month. Obviously the CEO should not get dragged into spending decisions of that scale (unless you're talking about a 5 person startup that is just getting started).

If it was possible to wave a magic wand and make all management work cease to be necessary, then every company in the world would do that. But instead, many companies will make the managers cease to exist, while the management work is still there. And the overall result tends to be a loss of productivity, either because essential coordination activities are left undone, or because talented specialists are forced to do management work for which they have no training.

Also, if I might comment on a controversial issue, so-called "flat" organizations tend to be especially weak at enforcing discipline. If a worker is lazy, or if a worker does poor work, then they would normally run the risk of being fired, but in a "flat" organization they can often get away with poor performance for a long time, because fewer people are tracking their performance.

But I do think Bayer has a grasp on a thread of at least one important idea: they claim they are doing this to save $2.5 billion. That implies they think the management work can be done by other employees who are paid less money than the managers. And that implies that the managers were overpaid, relative to the value they delivered. While I think Bayer is making a mistake by getting rid of its managers, I also think that managers are probably overpaid relative to the value they deliver.

When I was at ShermansTravel.com we had a very competent project manager who oversaw the tech team. She did a fantastic job of estimating tickets, prioritizing tickets, and keeping engineers focused on the right tickets. But she was paid less than any of the software engineers. And I think that is the right model for most companies, including Bayer. The default assumption, everywhere, is that managers need to be paid more than the people they manage, but why is that? I think there are many cases where the managers should be paid less than the people they manage.

Self organization works when every single person is ambitious enough to try to do something, brave enough to speak up and be heard, and humble enough to admit they could be wrong and be willing to compromise. No company is full of unicorns by definition. Self organization the scale of Bayer is doomed to fail and so obvious that I suspect it is part of some larger ulterior strategic plan.

The bad kind of middle managers want to hire more people to increase its power, regardless of the true interest of the company he is working for.

Apply this logic recursively, if there is enough cash, and you can easily imagine where it goes.

And it is also extremely difficult to unwind, they usually are pretty smart and cunning individuals who know how to make it look like all of this is necessary.