What happens to organisational reporting lines in Agile transformations?

In 2019, we saw one of the UK’s most distinguished airline and travel agencies, Thomas Cook, file for bankruptcy after nearly 178 years of existence. This is only one example of how a well-established company was unable to swiftly respond to changing market conditions with new market entrants providing improved services at a lower price.

Read next: Business Transformation in a crisis

With an unprecedented pace of technology advancements and innovation, we are seeing markets disrupted by forward-thinking organisations who are reimagining business models and technology limitations. Having worked with many companies across multiple sectors on similar Agile transformations, we thought now more than ever it was prudent to share some lessons learned.

Agile – what is it?

Agile enables organisations to master continuous change. Agile promotes frequent inspection and adaptation, a leadership philosophy that encourages teamwork, self-organisation and accountability and a business approach that aligns development with customer needs and company goals.

Drawing inspiration from the success of Agile software principles and methodologies, an increasing number of organisations are now considering or undergoing what we may consider an “Agile transformation.”

Only now, the scope extends beyond the single development team to encompass divisions or, in some cases, whole organisations. This increased popularity and adoption benefits from shorter time to delivery, improved delivery quality and employee satisfaction that come from flatter organisational structures, smaller teams and greater autonomy.

What to expect when adopting Agile 

The reality is that every company is different. The success of implementing Agile ways of working will, to a large extent, depend on how willing your employees are able to embrace it, which in turn, leads to the question – do they understand the rationale for why a company needs to change? Let’s face it: change is cumbersome, slow and painful and may well be met with resistance if not communicated effectively.

When embarking on an Agile transformation, you are undertaking both a cultural and structural change. Existing roles and reporting lines need to change due to the new operating model, but how? At the core, Agile is a set of principles and values which does not prescribe a specific structure for how you realise increased value.

So, what are the different types of Agile transformation to consider?

Over the past years, Credera has seen various models gain popularity such as: Scaled Agile Framework (SAFe) and Spotify Tribe. Again, these models do not provide any specific insight in terms of providing us with a clear understanding for how organisational reporting lines should be transformed and what we do with middle management in the new structure. Indeed, Spotify themselves have already changed their own delivery structures from some of their early ways of working, which were defined to best suit their mission at the time. All these questions, with seemingly no straight answer may cause frustration and are common amongst our clients.

So, how can companies adapt their structure as an Agile organisation?

Unfortunately, there is no silver bullet or one-size fits all model; every company has subtle differences and thus how you structure yourself should reflect this.

Based on Credera’s experience from clients and research, we have derived five key aspects that organisations looking to move from traditional team-based structure to Squad/Scrum should consider, adopting a customer-centric focus.

Five key aspects for Agile transformations:

• Ensure that Scrum work management is distinct from People management

The Line Management role shifts to that of an appraiser in a matrix environment, focused on an individual’s growth and performance and not on directing their day-to-day work. Our recommendation is that the Line Manager should sit outside of the squad. They should have regular 1-2-1’s with their staff to make sure they are happy and productive and catch any situations or issues quickly.

•  Scrum Masters and Agile Coaches are valuable assets that should not be downplayed

The role of a Scrum Master is crucial in supporting squads. They are responsible for ensuring that Agile principles, such as self-organisation and continuous improvement, are being adhered to. Titles and reporting structures do matter but more for the purpose of keeping staff motivated, rather than supporting the processes the squads are following.

The Leadership team should therefore attempt to provide an environment that enables the Scrum Teams/ Squads to deliver business value as well as support individual performance and development.

• Agile is more effective when a line manager does not assume the Product Owner or Scrum Master role

The Product Owner and Scrum Master roles are not intended to be Development roles, nor do these roles assign work or task the team members directly. In fact, much of the directive authority that a traditional line manager would possess is deliberately excluded from the Product Owner role. If your team is fully embracing Agile principles, then they should be ‘self-organising.’

All employees will still need someone to assist them with career development. This manager must set and supervise expectations and provide  coaching to advance individual skills and career objectives. This set of responsibilities will sit outside of the Scrum. 

• Management in Agile requires more than moving boxes around on an organisational chart

New rules equate to new roles. The importance is allowing staff to iterate quickly and make quick fire decisions. Agile organisations eliminate hierarchy, they allow the organisation to re-think roles they need so that individuals are empowered to maximise business value. This is a huge cultural shift for companies, but one they need to accept if they are to succeed in adopting Agile. Managers must have the makings of an Agile mindset, prior to transforming. Agile coaching is a good way of getting people to work together in a room.

• It is critical to reflect on the current organisational structure 

Successfully adopting Agile will require an organisation to reflect on its existing mindset. Perhaps it is very hierarchical or maybe it has a flat reporting structure. There may even be some key business processes that heavily rely on certain reporting lines, if so, these will have to be adapted when moving to Agile. It is important for an organisation to adopt matrix management to help it become more nimble, as this approach emphasises interdisciplinary functionality and enables workers to move from team to team, as and when is appropriate.

To support this, there are different performance management mechanisms available, such as 360 feedback, which gathers feedback from a number of sources.

In a nutshell

The role of line management in the context of Agile is a hot topic. Our advice is that an organisation must reflect on its structure today and then change its mindset and culture, if it is to successfully adopt agile ways of working.

We recognise that this will be a huge challenge, so having a management team who are able to reinforce the need for this shift is critical, as they will be required to work with staff to encourage them to embrace a move to Agile. This Agile mindset must reside with the management team before embarking on an Agile journey and in our experience, a lot of companies fall foul of this.

Unfortunately, there is no ‘one-size’ model for helping an organisation agree its reporting line structures. Understanding the end-goal and vision is key in addition to assessing the organisation’s maturity against achieving this end state, which will enable the company to outline what it needs to do to reach the desired vision.