Managing without managers

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Could a company – a large company – survive without managers?

Your immediate answer is probably no, but in Harvard Business Review, Gary Hamel, a visiting professor at London Business School, insists that you're wrong, and points to the example of the Morning Star Company, the world's largest tomato processor, handling about one-quarter of the tomatoes processed in the U.S. each year.

The Woodland, Calif.-based company does have a president (founder Chris Rufer) but its structure is unique – and will make you think. Prof. Hamel explains how Morning Star works:

Employees set the pace

Every employee is responsible for drawing up a personal mission statement that explains how he or she will contribute to the overall company goal of "producing tomato products and services which consistently achieve the quality and service expectations of our customers." The employee is then expected to accomplish that mission – acquiring the training, resources and co-operation needed for success.

Employees are the bosses

Every year, each employee forges a "Colleague Letter of Understanding" with the associates most affected by his or her work. This is the operating plan for fulfilling the personal mission, spelling out performance metrics, and is developed after conversations that can last from 20 to 60 minutes with each colleague.

In effect, each employee is an independent contractor in a web of multilateral commitments. "Around here, nobody's your boss and everybody's your boss," one employee told Prof. Hamel.

Employees do the purchasing

There is no central purchasing department, with senior executives signing off on expenditures. Any employee can issue a purchase order for what is needed, but is expected to develop a business case that includes return on investment and present value calculations. They are also expected to consult with colleagues; an employee seeking a $3-million investment might talk with as many as 30 co-workers.

The employee confirms receipt of the item when it arrives and passes the invoice on to accounting for payment. Employees who buy similar items in large quantities or from the same vendor meet periodically to co-ordinate so they can maximize buying power.

Employees do the hiring

Employees are expected to initiate a hiring process when they find themselves overloaded or see a new role that should be filled. The company president says: "I don't want anyone at Morning Star to feel they can't succeed because they don't have the right equipment or capable colleagues."

Competency is rewarded

With no hierarchy to climb, employees seek status by being recognized by colleagues as more competent than others, which is then reflected in compensation. Any rivalries are about who can contribute the most, rather than who gets a plum job.

Performance sets compensation

At the end of the year, every employee receives feedback from colleagues with whom he or she has developed a letter of understanding. Compensation is determined by elected committees, which study how an employee performed against the goals in those letters of understanding and other metrics.

Every January, each business unit must defend its performance over the previous year. Business units are ranked by performance, and those near the bottom face interrogation. Strategy is developed in February, with each unit presenting its plan to a companywide audience.

Special to The Globe and Mail