Flat management more than words at Cogita

Is there a successful alternative to the traditional top-down working environment of most companies? If the answer to this question is a sigh and a weary 'Afraid not', Manukau-based software developers and IS consultancy Cogita may cause you to rethink.

Is there a successful alternative to the traditional top-down working environment of most companies?

If the answer to this question is a sigh and a weary "Afraid not", Manukau-based software developers and IS consultancy Cogita may cause you to rethink your bias toward hierarchical management systems.

The company can claim a fair degree of success. It has survived 19 years in a rapidly changing industry, employs 75 "team members" -- it declines to use the term "staff" -- across six offices on both sides of the Tasman, and revenue is set to top $11 million this year. The firm's website moreover, talks of a doubling of profit by 2004.

While naturally pleased with such growth, executive director Margaret Brown (she is the boss, though some employees have titles for the sake of customers) is reluctant to credit the firm's progressive working culture as the sole reason for its success.

Cogita was formed in New Zealand in 1983, evolving from the firm Accounting and Computer Services. Owner Ulu Aiono, Brown's Samoa-born husband, researched many business management philosophies as part of his Otago University MBA.

Influences include Ricardo's Semler's book Maverick, which promotes decentralisation in management based on his running of the family-owned Brazilian pump-maker Semco.

Brown says much of Cogita's work is project-based, so when a project comes in a project team is formed and the team then elects a leader. After the project is completed the team is disbanded and its leader may or may not lead further projects. The team leader usually won't receive any extra pay unless he or she gets awarded a bonus for a particularly successful project. Leaders do not have to put themselves forward for election.

Team workers also have a say in the "discipline" of underperformers. If someone is found "sitting on the bench" for too long, a team leader would be responsible for finding out why this is so. The company would look for solutions to the problem, but co-workers "criticise us for taking too long and being too optimistic" in dealing with underperformers, Brown acknowledges.

Cogita has since discovered a similar policy of leader election is used by management consultants McKinsey when selecting partners.

One department, a consulting arm known as ViAGO, is paid purely on performance, Brown says -- how much value they have added to the company. General sales staff earn base plus commission. A profit share scheme of up to 15% on top of base salaries encourages performance, but there are no "executive accoutrements" such as company cars, personal assistants, reserved parking spaces or executives flying business class.

Brown says the firm works like a closely-knit family with ambitious targets set across the whole organisation. It is an open family: there are no offices, only open-plan desks and PCs; one policy that may surprise outsiders is that staff are allowed to reach each other's email. They can even read Brown's messages, who points out that openness runs two ways and she can tell who has read her emails. Her view is that staff are all adults and the company's policy aids responsibility about what messages are sent.

Cogita says it hires people not for their specific skills or IT qualifications but rather their aptitude and attitude. These individuals are then encouraged to grow within the organisation.

Brown says interviewing is a slow process. She initially interviews several candidates, after which finalists face a further interview before their would-be co-workers. They are then given a document outlining the firm's culture. Final appointment follows after a last interview with Aiono, but if the intended co-workers have rejected the candidate they will not be hired.

Jobs are advertised on the site, but oftentimes people approach the firm to work for it, says Brown. Such people are usually sourced from suppliers, friends of existing team members, and others who already know something about Cogita and how it operates.

Brown says people are encouraged to research the organisation because it is where they spend much of their waking life. Typically people will "hang around" the firm for three to six months, often doing unpaid work, while both parties try each other out.

The company's website describes these people as interns: “We don't mind if you have absolutely ZERO background -- but you must be able to demonstrate, during your internship, that you have an aptitude for software development and problem solving. Or perhaps you will be able to demonstrate an aptitude for consulting, giving sound, and effective, advice to clients who use the ERP systems and solutions we support? If you are looking for a new start, please contact us. As an intern, you won't be paid -- except for expenses (in the event that we send you on training courses, or if we require you to travel to other cities or countries) during your internship. The internship program lasts three to six months, and it is up to you how fast you complete the program -- there is no minimum time limit.”

This policy of optimising the "fit" of people helps ensure that staff turnover is low, with many employees staying many years with Cogita, though Brown is unable to produce precise turnover figures. Young graduates still leave for their overseas experience, Brown says, but they often stay in touch with the firm and sometimes rejoin it when they come home.

Brown says the firm's structures are not seen as a competitive advantage, but she points out that because her team members tend to stick around they can serve customers better because they know what Cogita can do and are more likely to know the customers than a new person.

Cogita hasn't got everything right and is still looking to improve, says Brown, but she offers other companies some advice.

If a firm has a culture of blame, it will encourage behaviour based on a fear of attack, she says, with people looking behind their backs and being fearful to innovate. Bosses should also avoid being "one-minute managers" -- intervening and making all the decisions. If a manager does this staff will keep on waiting for that decision to be made rather than pressing ahead. The manager will meanwhile become too involved in the minutiae of things, rather than being focused more broadly and moving more quicky.

"Most of us are refugees from command and control organisations and we are seekers of a better and different way. People like the freedom aspect [of Cogita] being treated as an adult and having their opinion heard."

Greenwood is Computerworld's human resources reporter. Send letters for publication to Computerworld Letters.

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