The Damage Caused by Silo Mentality and Compartmentalized Business Roles

The Damage Caused by Silo Mentality and Compartmentalized Business Roles

For those who don’t know, silo mentality is basically when a group, department, division, etc. of employees work as autonomous units within an organization. Based upon that statement alone, some might think that’s a good thing; less need for oversight, lessor chance of communication issues, lesser chance for issues between employees, better productivity, more focused attention, etc. However, as with other things that look good on the surface, when you really get into it, you see a totally different situation. These silos usually refuse or at least are reluctant to share information and/or work with other employees. This lack of communication can highly impact workflow and ultimately have a very negative effect on quality and delivery to customers. This in turn can mean that organizational objectives and goals are not achieved or at least not achieved effectively and efficiently, which ultimately will have a negative impact on the bottom line.

You can see how this can cause major issues in both product and service companies. If in a product company the customer service department doesn’t communicate with packaging to inform them of a flood of customer complaints over delivery of broken products from a new packaging design, customers will feel unheard or that the company doesn’t care and the company will continue to lose a lot of money and customers by having to continually replace broken products with a new shipment that itself might again break. This can cripple if not destroy the company. In a service related company, silo mentality can compromise on the ability to offer and deliver an integrated solution. For example, in a marketing company the lack of coordination and integration in marketing techniques will not support each other and will fail to continue to move the prospective client through the marketing system.

An organization with silo mentality is fragmented and silo mentality manifests itself in the form of using cheaper suppliers, paying little attention to the needs of customers, and assigning fewer resources to new products and service design. Eventually, this will create quality, cost, delivery timing, and other customer service problems that are detrimental to the organization. An example of this I’ve seen exaggerated in the business world is in the food industry. I went to Culinary School to be a chef. The 1st few months of classes were KP duty (cleaning, busing, and doing the dishes) and front of the house operations (wait staff). My particular school chose to do this to try and combat silo mentality that exists between the back of the house (cooks and kitchen staff) and the front of the house. By having chefs in training first experience working in the front of the house, the professors were hoping that these chefs would have a greater understanding of the job of the front of the house and a better understanding of their own issues and struggles in the food industry. All too often I see fights and arguments break out between the front and back of the house because things aren’t going the way they should and neither truly understands the job of the other so they tend to lay blame and not have patience or understanding. This can obviously have a negative impact on the experience of the customers. On the flip-side, I’ve seen operations where the front of the house and the back of the house truly understand the other’s situation and ultimately are able to work through issues that arise in an efficient and effective manner, creating a better work environment, better and more efficient service, and better overall experience for the customers.

Maybe I’ve been lucky in my education in the business world. For the most part, I’ve been surrounded by professionals who didn’t buy into silo mentality and compartmentalized business roles. So it wasn’t until I started my own bookkeeping business that I really saw the extent of how much the business world is permeated with this kind of thinking. I’ve always known about this issue, seen it in the food industry, and seen first-hand how higher education not only promotes this, but teaches it.

I know some of you are probably balking at that last statement, but permit me to elaborate. Starting in K-12 education, the existing silos or disciplines are really irrelevant to finding a job. Math, science, art, and music become important only when they are folded into a larger context, and used to solve real world problems. Only then can students understand how and why such disciplines are relevant and necessary. The education system is flawed, let alone the fact that it’s design and function was originally to create factory workers, not thinkers, entrepreneurs, and free thinking human beings, and it hasn’t really been changed since.

If one chooses to attend college for some aspect of business, let’s say accounting, you are understandably expected to take a majority of classes geared towards finance. However, you might not be expected to take management, marketing, psychology, business law, etc. which are important to the overall operation of an organization and this (intra)disciplinary approach can feed into the silo mentality. I find this most evident in my interaction with some CPAs and even some CFOs.

Obviously my observations are limited to my personal interactions in the world and are not meant to be an overarching commentary on all of the accounting industry. It has; however, highlighted, at least for me, the issues with silo mentality in the business world.

In my interactions, some in-house CPAs and CFOs are rigid and geared to be “book specific”. What I mean by this is that they garner and take most of their information from the “books” they learned from and now operate from. They seem to have a disconnect from the actual goings on of a living breathing business world that can’t be put into a box or defined by rigid specifics of books.

My education and experience has been more interdisciplinary so I understand very well the business side as well as the accounting side of the industry. I’ve been in meetings where the two sides meet and are trying to address issues or plans of action for the organization. More often than not, I see the disconnect between the two worlds because of the silo mentality. Some in the accounting world don’t understand about risk, and the flexibility and fluidity of interactions, transactions, and deals and therefore end up coming at the issue or plan from a rigid inflexible “inside the box” thinking, while the business side comes at it from a more fluid flexible problem solving approach that sometimes doesn’t take into consideration the necessary constraints of finances. In these meetings, more often than not, I end up being a mediator between the two worlds working to get each side to understand the other and then utilize everyone’s strengths to make the best decisions and come up with the best ideas.

The situation that led me to writing a blog post about this was during my research about being a paid tax preparer. This is the first tax season I’ve experienced running a full-time bookkeeping service. I’ve had a lot of inquiries as to whether I offer tax preparation services. My go to answer has always been no, I’m not a CPA and I’m not interested in tax preparation. Recently I’ve assisted some clients in their tax preparation and with Intuit’s new Online Tax system. I realized that this could be a natural progression of growing my business. I started to research what it takes for a bookkeeper to be a paid tax preparer. I unfortunately came across a lot of information defining these silos and how you need a bookkeeper and a CPA and neither the two shall mix.
Now, I understand the need for checks and balances and that no one person should do everything nor can one person really do everything. I constantly herald how small business owners need a bookkeeper to manage the books freeing them up to do what they do best and grow the business. However, I also believe the owner, or someone they trust, should know enough about finances to understand the reports the bookkeeper gives them and the ability to have some checks and balances. I firmly believe that you should never hire someone you don’t trust, don’t connect energetically with, can’t see yourself working with, and most importantly haven’t done you due diligence on.

However, none of this excludes interdisciplinary roles. Not only am I a bookkeeper, I’m also a manager, consultant, researcher, strategists, etc. By being interdisciplinary, I offer a wider arrange of skills and tools to my clients becoming more efficient, effective, and valuable. By being interdisciplinary I can also communicate and work more effectively with people who aren’t interdisciplinary creating a better work environment and a more streamlined, efficient organization.

I believe the business world would benefit immensely if we started to educate, train, and create jobs and roles that were more interdisciplinary. By doing this, we will also combat and eventually eliminate silo mentality in the business environment.