(highlight:: Org Debt is Like Financial or Tech Debt: It's the Accumulation of Negative States
Summary:
Organizational debt parallels financial and technical debt, representing the cumulative effect of outdated policies, processes, and organizational practices that once served a purpose but have since become burdensome.
Such debt builds up without a structured way to address or reduce it, leading to bureaucratic layers that impede progress. In many cases, efforts to manage daily operational tasks feel like paying interest on this debt, without addressing the core issues that hinder meaningful change or improvement within the organization.
This results in a focus on compliance and superficial tasks rather than tackling the fundamental work that drives organizational success.
Transcript:
Speaker 2
So when I talk about. Orgnet with folks. I generally try to compare it or contrast it with more familiar types of debt. Financial debt which you may be familiar with. I am familiar with. Thanks student loans. And technical debt. So technical debt. Maybe you'd be less familiar with if you're not in a technical role where you are writing software. But you can think of technical debt as kind of shortcut decisions that you make along the way that are kind of just good enough decisions. But they can kind of accrue on top of each other and eventually you get to a point where you have to refactor the code base to pay down some of that technical debt. So those are two types that we may be familiar with organizational debt then. There is the accumulation of policies and processes and ways of working and ways of being within an organization that very frequently served a very good purpose at one point. We had a reason for introducing this bit of Orgnet at a time. But because most organizations do not have any sort of Orgnet pay down practice. They just build on top of each other on top of each other on top of each other until you have some sedimentary rock that is made of Orgnet and we call that bureaucracy.
Speaker 1
Great. And I feel like just to add to the metaphor that you started with, I feel like when I worked in HR and a lot of HR teams that I see, if you think about what financial debt is like when it compounds, You end up just paying interest and not ever getting at the principal. And that's what working in HR can feel like. You're just like moving deck chairs around on the Titanic. Like every day is just like, how do I check this box or say this got done or make sure that we are in compliance with this thing that actually no one cares about. And that's all like interest on the Org, but actually like doing the important work of the org or really making changes in the org would be the principal that you never get to you never Even make a dent in it.)
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(highlight:: How Bureaucracy Forms: Creating Policies & Procedures To Account For Infinite Edge Cases
Summary:
Organizations often react to unique situations by adding them to ever-growing checklists, creating a bureaucracy that becomes increasingly cumbersome.
This approach stems from a desire to prevent possibly rare yet significant issues, leading to an inflated, inefficient set of procedures. The cost of these extensive policies is often invisible, with individuals not accountable for the long-term consequences faced by future employees.
As organizations scale, even small policies can become burdensome, multiplying across numerous transactions and stakeholders, resulting in millions of dollars lost in productivity.
Rather than managing emergent situations effectively, companies may mistakenly prioritize prevention of hypothetical issues over evaluating the practicality of their policies, ultimately sacrificing efficiency in pursuit of an illusion of safety.
The reluctance to remove unnecessary procedures perpetuates a cycle of inefficiency, where the justification for policies is rarely scrutinized against their real-world impact.
Transcript:
Speaker 1
I was in a conversation with a woman who we did not know until the meeting was in the middle of adopting a child as a single parent from another country. And she was like, yo, if I lose my job right now, this adoption is going to fall through, which is horribly sad and obviously very concerning to this person into us. And coming out of that conversation, when I went back to my team and was like, holy shit, what should we do about this? They were like, well, we need to add that possibility to the checklist. So it's like every time a thing took us by surprise. It got added to a checklist that then we had to check for the next hundred to forever people who were being laid off, even if that situation was never going to happen again. So you can imagine the checklist just goes from like the three things you should know to like 30 things you should know. And then you multiply that by laying off hundreds of people. And you can imagine the way that the preparation starts to look for doing layoffs. Right.
Speaker 2
I'm going to play devil's advocate for just a second because I think maybe some listeners will be thinking this. They're thinking, Hey, this is a pretty major situation that had like major ramifications for a person. We're just putting a little thing on a checklist. Is it really that bad that you have to ask a hundred people if this is their situation? If it prevents the harm that you just described. Great question.
Speaker 1
This is how it happens. This is how it happens. You're doing the thing. So what Sam just did is what always happens in companies. And the question is, is it worth it? No, probably not. Is it worth it if it happens again? Maybe. But if it's a single data point and the reality is, for example, in this example, we were able to work with this person who was leaving the company and her manager and our team to figure Out an arrangement. Like it was not an irreparable situation. And if it had happened again, we could have figured it out again. And to me, the cost of trying to prevent something that may never occur again versus the cost of triaging something emergent in the environment is most people make the wrong trade off. Because it feels like cold comfort that it's like, I did not like being in that room and getting that news. And so now I'm going to check this box and like, I feel a little bit safer than I felt yesterday, but like you're not safer and you're just spending more time.
Speaker 2
Yeah, that makes perfect sense. And I think, you know, why it is so to cite our opening slam poem, so pernicious is the cost is invisible. And it's not something that you personally likely have to pay. You're putting it on a checklist that other people forever into the future have to deal with. And maybe that's you a couple more times. But really, you're not seeing it scaled across a huge organization. And the larger your organization is, the smaller these little pebbles eventually turn into huge boulders because they scale across thousands of people.
Speaker 1
Yes. And one new small policy that is meant to prevent a mistake that happened. This happens a lot when somebody makes a mistake in a transaction and then you add a layer of approval, or you add a four eyes check or you add whatever. When you multiply that over dozens of transactions and hundreds of people and dozens of years, you're potentially costing millions of dollars in human hours and nobody wants to look At that and nobody wants to be the one who goes, let's actually take that off the checklist. And like, we don't really need that policy. And also, no one's really convinced that that policy has prevented a similar mistake again ever. So is it really worth the money that we're paying for it? Because to your point, they don't know what they're paying for it and it's no one's job. And it feels dicey to go like it probably won't happen again.)
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(highlight:: 1min Snip
Transcript:
Speaker 1
So before we get into why this is HR's problem, because y'all kind of a problem. Sorry. It's other people's problems too, but it's your problem more. I want to talk about some examples of Org debt so that everybody has a really clear idea in mind. So we've talked about adding policy after a mistake happens. We've talked about adding to checklists until they become sort of useless. What else have you seen that's particularly gnarly or just costly or just common.
Speaker 2
Zombie meetings, a meeting that once was a vibrant operating rhythm for a really important piece of work and that piece of work has been finished for a long time, whether or not we've Admitted it to ourselves or not. And the work and the rhythm just kind of continues. Add infinitum. That's a good one.
Speaker 1
I also would add reporting. One of the best org debt little experiments I did in an early client of mine at the ready. In a workshop, a woman who was working in finance, a sort of fest up that she spent about four days a month on a report and she was pretty sure nobody read it. And the experiment that she was going to run was to not send it and see if anyone emailed her and no one did. And she got four full days a month back. Yeah. From that little experiment. So meetings reporting.)
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(highlight:: Common Sources of Org Debt: Zombie Meetings, Inefficient Reporting, Copying/Pasting Data
Transcript:
Speaker 1
So we've talked about adding policy after a mistake happens. We've talked about adding to checklists until they become sort of useless. What else have you seen that's particularly gnarly or just costly or just common.
Speaker 2
Zombie meetings, a meeting that once was a vibrant operating rhythm for a really important piece of work and that piece of work has been finished for a long time, whether or not we've Admitted it to ourselves or not. And the work and the rhythm just kind of continues. Add infinitum. That's a good one.
Speaker 1
I also would add reporting. One of the best org debt little experiments I did in an early client of mine at the ready. In a workshop, a woman who was working in finance, a sort of fest up that she spent about four days a month on a report and she was pretty sure nobody read it. And the experiment that she was going to run was to not send it and see if anyone emailed her and no one did. And she got four full days a month back. Yeah. From that little experiment. So meetings reporting.
Speaker 2
What else? The other angle that I was going to take on reporting is, and this, if you're sitting here listening to this as a senior leader thinking very carefully about the ripples that your words Create within an organization. I have seen lots of leaders who are receiving a certain kind of stack of reporting on a whatever basis. And they don't actually understand how much work goes into creating this. And when they understand it, they're like, I don't ever want to see this again. I am not getting nearly enough value from this. Let's just stop doing it. But one time they said, Oh, it would be nice to see this number in this way. And now four people spend each of them half a day getting that number just the right way. And that's not serving anybody.
Speaker 1
Yeah. Since I have delved back into the HR sphere, the number of systems that don't talk to each other where there are people who are doing duplicate reporting or duplicate data entry, or there's No golden source or whatever is still quite high.
Speaker 2
If you're finding yourself spending a lot of time copying and pasting, you're probably servicing some organizational debt that could be automated or connected in some way.)
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Chaotic (Power v.s. Bureaucratic Org Debt
Transcript:
Speaker 1
So we're talking about stuff where it's like an explicit thing exists that we have to service or do or invest in to make it go. And then there's this whole other category of org debt where it's like, we are not taking the time to be clear. And so the debt comes from figuring it out every fucking time where it's like, I'm not going to decide who has the final say, but every time we make this decision, I'm going to have to have 15 conversations to line people up. That's its own debt. That is the chaotic side of org debt as opposed to the bureaucratic side of org debt, where it's like, we're not going to write the workflow down, or we're not going to clarify the authority, Or we're not going to like specify the way we do it. And it is going to cost us hugely every time we rinse and repeat.
Speaker 2
Yeah. And that version of org debt, I think might be even harder to root out because it's so intertwined with people's sense of power within an organization. If I am the keeper of the chaos and people have to come to me or I have to orchestrate the chaos, then I am an important person. And if we figure that stuff out, well, then what am I going to do?)
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(highlight:: Centralizing v.s. Decentralized Org Policies
Summary:
Creating effective organizational policies can become complicated when striving to satisfy diverse needs within HR, leading to a structure that is overly complex and ultimately ineffective.
A centralized approach can provide a well-informed and tested framework, but as individual groups request exceptions or alternatives, the policy evolves into a convoluted affair that rarely meets anyone’s needs. The burden of centralization often manifests in the form of organizational debt, particularly in hiring, compliance, and performance processes.
Decentralization allows for contextual adaptation, empowering teams to tailor policies to fit their specific circumstances, thereby alleviating the complications of a one-size-fits-all strategy.
Emphasizing experimentation and flexibility at the edge of the organization can mitigate the administrative burden and restore the policies' significance and usability.
Transcript:
Speaker 1
And the other big thing just as a callback to our episode with Meg where we talked about centralization and decentralization is part of the fuckinging of org debt is when you're in HR And you're trying to create a process. You say you're trying to create a process for return to office and you're trying to figure out what is the policy that we are going to comply with. What generally happens is you are instructed and incented and just habituated to creating something that is complicated enough to work for every eventuality. So it's like the policy starts with being like everyone's going to be in the office on Wednesdays. And then one of your internal clients is like, I don't work on Wednesday and it's like parenthetical except for the legal team who will be in the office on Thursdays. And then someone else is like, actually, we want to do one week in the office a month instead of one day. And like by the time you create something that is acceptable to everyone, it is so fucking complicated that it is useful to no one. And this is where the idea of centralization and decentralization exists is that the centralized policy is something that is well informed and well tested and that we've experimented With, et cetera. But at the edge, you all pick and decide and configure for your context. And that's a really big shift because a lot of the debt that is held in HR is held by centralizing hiring processes and compliance processes and performance processes, et cetera, and Having to try to make a complicated workflow that works for everyone. And then it just gets so fiddly and it gets too hard to administer and it also loses meaning.)
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(highlight:: Unmet Needs Foster Organizational Debt
Summary:
Unmet human needs in the workplace lead to cycles of organizational debt, often manifested in two distinct forms.
Basic needs such as autonomy, connection, and safety are crucial. When these needs go unmet, individuals may respond with bureaucratic behavior.
For instance, a leader who feels a lack of connection may resort to command and control tactics, believing this approach ensures compliance.
However, this behavior fosters a permission culture, stifling initiative and creativity among team members, resulting in a cycle of diminishing engagement and productivity.
Transcript:
Speaker 1
I do. So our friend Ali Randall and I did a bunch of work on this several years ago. There are links in the show notes so that you all can go and watch my stupid face on a video explaining this if you'd like to. But she and I really dug into this idea that org debt is a bit of a cycle that often gets kicked off by an unmet need in a human being. And like at work as in life, we have some very basic human needs. The ones that she and I have talked the most about are the needs for autonomy, individual agency, connection being in relationship with others and safety. I'm talking about like physical and psychological safety. And what we see is that those unmet needs tend to trigger certain kinds of responses in people that create one of two flavors of org debt. And the first flavor is the more bureaucratic flavor that you and I started this show talking about. So I'll give you an example. Let's say that I have an unmet need for connection. I'm like, I don't trust these people around me. I am not in relationship with them. I don't like them. They don't like me. And as a leader, what that might lead me to is more command and control behavior, which on its faces, generally not good, but is often very rational response to say, I can't trust that Sam is going to do what I ask him to. So I am going to insist and manage and force the behavior that I want to see. There are lots of problems with that. But the biggest problem is that that results in a permission culture, which over time and over reps, Sam stops doing anything. Interesting, useful, et cetera. Because Chuck, we get into a mother may I situation because he's accustomed to being micromanaged.)
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(highlight:: 2 Flavor of Org Debt & How Unmet Human Needs Results In an Org Debt Cycle
Summary:
Unmet human needs in the workplace lead to organizational debt, manifesting in two primary flavors: bureaucratic and chaotic.
The bureaucratic flavor arises from unmet needs for connection and safety, resulting in a command and control culture that fosters learned helplessness among team members. This culture creates apathy and disconnection, perpetuating a cycle of increasing bureaucracy and frustration.
Conversely, the chaotic flavor stems from unmet needs for autonomy, often seen in founders who resist establishing clear guidelines, leading to inefficiencies and dependence on influence rather than directives.
Teams oscillate between these two extremes of over-constraining and under-constraining, with the underlying issue being human psychological needs that, when unaddressed, impede effective functioning and can degrade organizational performance over time.
Transcript:
Speaker 1
So our friend Ali Randall and I did a bunch of work on this several years ago. There are links in the show notes so that you all can go and watch my stupid face on a video explaining this if you'd like to. But she and I really dug into this idea that org debt is a bit of a cycle that often gets kicked off by an unmet need in a human being. And like at work as in life, we have some very basic human needs. The ones that she and I have talked the most about are the needs for autonomy, individual agency, connection being in relationship with others and safety. I'm talking about like physical and psychological safety. And what we see is that those unmet needs tend to trigger certain kinds of responses in people that create one of two flavors of org debt. And the first flavor is the more bureaucratic flavor that you and I started this show talking about. So I'll give you an example. Let's say that I have an unmet need for connection. I'm like, I don't trust these people around me. I am not in relationship with them. I don't like them. They don't like me. And as a leader, what that might lead me to is more command and control behavior, which on its faces, generally not good, but is often very rational response to say, I can't trust that Sam is going to do what I ask him to. So I am going to insist and manage and force the behavior that I want to see. There are lots of problems with that. But the biggest problem is that that results in a permission culture, which over time and over reps, Sam stops doing anything. Interesting, useful, et cetera. Because Chuck, we get into a mother may I situation because he's accustomed to being micromanaged. And over time, we end up with teams that are like, apathetic and stuck. Like the learned helplessness becomes high in response to that command and control culture. The unfortunate reality of this is that when we have learned helplessness on our teams, that leader will feel ever more disconnected. Because they're like, these people don't even care. This is why I have to be this way.
Speaker 2
So that's like the bureaucratic flavor. It truly is a cycle so that it will continue. So I will not be more bureaucratic and come down harder and be more confused about why.
Speaker 1
And it just doesn't necessarily end at any good point. Yeah, I feel like we've all seen that movie. The other flavor of Orgnet is the more chaotic side. So we talked about this too, where we refuse to be clear. Again, think about an unmet need in a leader. Maybe this is for autonomy. I see this a lot in founders. So I started a company because I don't want to boss and I want to do whatever I want. And you're not going to tell me shit. And what that sometimes leads to is avoiding things like clarifying my rules, clarifying rules, clarifying expectations, guardrails of any flavor. Guardrails of any flavor. Because I'm like, you're not going to pin me down. I'm free. You know, over time and at scale, that often results in an influence culture where it's like Sam doesn't know what he can decide. The only way to get a yes is to go and influence Rodney behind the scenes to get what you want. Because, you know, depending on the day and whose last in the room, her mind might change. That influence culture again over time and at scale leaves teams dependent on a leader and like quite inefficient. Because that kind of way of working, not clarified, not consistent, not coherent. It's just super, super inefficient. And when they become dependent, that increases my felt lack of autonomy. Because I'm like, why are you all asking me all the time? This is why I don't write things down. Because you mean me and I need to be the decider at all times. You can see a visual of this in the video. The point is most teams and companies swing between the two sides of over-constraining and under-constraining. And usually when we really dig into the root and what's at the core, there is human psychology at work. And there is a person or a small group of people who are trying to repair a need that they feel is not being met. That is fundamental and foundational to them working.)
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(highlight:: Balance Clarity and Autonomy
Summary:
Leaders often struggle between providing clarity and maintaining autonomy.
Founders, driven by a desire for independence, may avoid setting clear rules and expectations, leading to a chaotic culture of influence where decisions hinge on informal agreements rather than established guidelines. This inefficiency creates a reliance on the leader, diminishing team autonomy and increasing frustration.
The interplay between over-constraining and under-constraining reflects deep-seated human psychology, necessitating a balance to foster effective and autonomous teams.
Transcript:
Speaker 1
And it just doesn't necessarily end at any good point. Yeah, I feel like we've all seen that movie. The other flavor of Orgnet is the more chaotic side. So we talked about this too, where we refuse to be clear. Again, think about an unmet need in a leader. Maybe this is for autonomy. I see this a lot in founders. So I started a company because I don't want to boss and I want to do whatever I want. And you're not going to tell me shit. And what that sometimes leads to is avoiding things like clarifying my rules, clarifying rules, clarifying expectations, guardrails of any flavor. Guardrails of any flavor. Because I'm like, you're not going to pin me down. I'm free. You know, over time and at scale, that often results in an influence culture where it's like Sam doesn't know what he can decide. The only way to get a yes is to go and influence Rodney behind the scenes to get what you want. Because, you know, depending on the day and whose last in the room, her mind might change. That influence culture again over time and at scale leaves teams dependent on a leader and like quite inefficient. Because that kind of way of working, not clarified, not consistent, not coherent. It's just super, super inefficient. And when they become dependent, that increases my felt lack of autonomy. Because I'm like, why are you all asking me all the time? This is why I don't write things down. Because you mean me and I need to be the decider at all times. You can see a visual of this in the video. The point is most teams and companies swing between the two sides of over-constraining and under-constraining. And usually when we really dig into the root and what's at the core, there is human psychology at work.)
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