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Empowering Employees by Removing Hierarchy

The open banking platform Bud has teams defined by networked projects rather than a management structure. Bud’s implementation specialist, James Perry explains why and how they did away with the unnecessary layers of hierarchies, and has some advice for other leaders thinking of doing the same.

James Perry, Implementation Specialist at Bud

James Perry, Implementation Specialist at Bud

Bud, the fast-growing open banking platform, is changing the way people interact with their money – and discovering how moving away from a traditional management hierarchy can help its employees and business thrive. James Perry of Bud explains why and how the fintech did away with the old system, and offers some advice for other leaders thinking of doing the same.

About 40 years ago, a pair of psychologists at the University of Rochester in New York struck up a conversation that ultimately developed into a new and hugely influential theory of human motivation. Previously, it was thought the best way to get people to do something was to reward them for it. But Richard Ryan and Edward Deci’s Self-Determination Theory overturned all that. Their theory states we have three innate psychological needs: autonomy, competence and relatedness. When those needs are satisfied, it enhances self-motivation and mental health. It follows that if autonomy and empowerment is a proven recipe to motivate people, then by scrapping the old-style management system, businesses might just flourish even more. And it’s this philosophy we’ve adopted very successfully at Bud.

In scrapping titles, team members felt far more comfortable with the situation because they could truly look at one another as equals

Most of us are used to hierarchies, from childhood onwards: at school, teachers report to the head of the year, who in turn reports to the deputy head, responsible to the headmaster. That same chain of command is a hallmark of many companies, with management ultimately determining what happens on the front line. Too often though, there’s a lack of communication or transparency as to why a particular decision was made, while many employees often have to perform actions they either don’t understand or fundamentally disagree with. And yet it’s those employees who know the product and customers better than the companies often give them credit for.

Bud is an emerging business benefiting from the expertise of Investec’s Emerging Companies Fund, for more information on the fund visit: 

Empowering teams
At Bud, we too drifted towards a traditional model very early on, with department heads and a managerial level in place. But with seven heads of department in a team of just 15 people, we realised that as we grew (now at 33) we needed a rethink. So, from January onward, as opposed to a pyramid structure, we decided to create motivated and empowered teams defined by networked projects. We felt that one of the best ways to empower people was to remove the subconscious blockage around hierarchy. There’s often a reluctance to take on big decisions, because you’re scared your boss – or your boss’s boss – might disagree with you or question your validity to make that decision.

Bud Team

The Bud Team

But we wanted people to be allowed to make decisions in their specialist field, rather than leaving it to someone at a senior level with access to the same amount of information. To have the confidence to say, ‘I’ve made the decision and I’m the best-placed person to do so.’ In hiring the best people, we trust them to make those decisions. And by tapping into their ability, it has reduced inefficiency and allowed them – and our business – to bloom.

You could actually see the physical expression of relief on some people’s faces after we had this conversation. In scrapping titles, team members felt far more comfortable with the situation because they could truly look at one another as equals.

A shift in mindset
Admittedly, the lack of traditional promotion methods is a hard transition for some. However, we’re finding that people just aren’t all that interested in moving up a traditional career trajectory, running a team, or having more power relative to other people within an organisation. What they’re interested in is having much more challenging or engaging work, or developing their skill sets so they become better at their jobs. It’s allowing people to almost select their own career paths.

This is a really big mindset shift, and a big behavioural change for organisations. It’s hard work, and it doesn’t happen overnight. For larger organisations considering this approach, I’d recommend trialling it in smaller teams rather than a big gung-ho move to change the whole company. I’ve found digital teams are more open to change, but more traditional hierarchical departments less so. Like any change, it takes constant learning, constant observation and constant requests for feedback from the team. So be patient. Allow it to take place over a period of time as opposed to trying to force it on a lot of people over a short period.

We still have lots to learn at Bud and accept it will sometimes be a challenge. But in this way, we’re fully accountable to the projects we work on – not the boss we work for.

James Perry is an implementation specialist and is also tasked with coordinating the internal Organisation Design “project” at open banking platform Bud.