The Dangers of Siloed Leadership

Mar 31, 2022 The Dangers of Siloed Leadership from ProCFO Partners

Siloed leadership is the practice of organizing and managing an organization in a way where different departments are separated and often work independently. This article discusses how siloed leadership can be dangerous for business because it limits the collaboration between departments, leading to missed opportunities to innovate, grow, or solve problems.

For example, a company might have one department focusing on marketing while another department focuses on sales. The two departments might not collaborate and instead focus on their own goals. This separation can make it difficult for the company to innovate or grow because there is no collaboration across departments. 

Siloed leadership often develops by accident. Let’s explore how leaders can take practical steps to avoid friction when one part of the business is out of sync with another.

Understanding Organizational Silos

Siloed leadership is a function of an organization that is structured around silos.

Organizational silos are a type of organizational structure that can lead to lower productivity and less collaboration.

The term “silo” is derived from the agricultural practice of storing grain in tall, cylindrical structures. The word came to be used in a figurative sense more recently, meaning “a group of people or things that are treated as one entity and isolated from others.”

Organizational silos happen when departmental managers have control over the information that flows between their department and other departments. This often leads to low communication between departments, leading to lower productivity and less collaboration.

Communication Breakdowns

In siloed leadership, the best-case scenario is poor communication, diverging goals and objectives, and independence out of sync with other departments or the company. The worst-case scenario is departments in hostile competition, managers keeping insight and information away from others in the company, and ultimately damaging company culture.

Pretty bleak, huh?

Companies often fall into three camps if they’re struggling with siloed leadership.

  1. “That’s not us! We’re not like that at all!” Great! If you’re sure. Would your managers agree? More importantly, would the teams they lead and your employees agree?
  2. “We’re really struggling with this.” Awareness is how you start solving problems. This is an excellent start to solving some of your leadership and organizational issues.
  3. “Wait…there’s a structure my business should be organized around?” Small and mid-market companies especially struggle with an ad-hoc, inconsistent organizational structure and leadership mentality mainly because they haven’t planned for it. A startup team of six can’t be structured the same when it grows to sixty or 600.

Warning Signs Siloed Leadership Is An Issue In Your Company

Few of us intend for a siloed organization, and you may not even be aware that you’re struggling with siloed leadership. You may, however, recognize some apparent symptoms.

  • Leaders or managers seem to have a sense of ownership rather than collaboration. You’ll hear this in phrases like “my team,” “my people,” or “my department.”
  • Departments are working on projects important to them but not necessarily crucial to achieving company goals.
  • Departments and managers seem inappropriately competitive, not celebrating the wins of others or overly celebrating their successes.
  • Anything happening under a manager’s leadership that feels at odds with company objectives or goals. This includes what’s said around the water cooler to how reports are created and presentations are given—the small stuff matters.
  • Leaders don’t know or understand what other departments do or are currently doing, especially in achieving goals.

This list is by no means exhaustive, but you should get the point. Nearly every organization is trying to solve some dysfunction. But if you’re consistently butting heads with each other or leaders are constantly out of step, it’s time for a change.

How Does Siloed Leadership Happen?

This is a complex question because it involves the personal characteristics of leaders, company culture, executive-level leadership styles and more. But keep two things in mind:

  1. Siloed leadership will eventually become the default if no other organization or leadership structure is provided
  2. A consistent cause of siloed leadership or a siloed mentality is a disconnection in annual planning.

If the company plans goals around events like increased profitability, revenue growth or acquisition, there might be lots of cheers at the annual meeting. But back in departments, the assignments to achieve those goals become very transactional. Big picture thinking and behaving often gives way to what buttons are being pushed and what levers are being pulled. The simple question, “Is what we’re doing today, or this hour, getting the company where we want to be?” doesn’t get asked or asked often enough.

If company goals are instead planned around more comprehensive success, it can be easier for departments and managers to achieve more collaborative thinking. A goal of “increase profit by 12%” can lead managers to cost-cutting measures impacting department morale. Whereas an annual goal of “make our products available in three new markets” instills a different attitude that can invigorate innovation. Smart goal setting will ensure both possibilities can be true – If we grow more quickly, we can increase profits by 12%.” 

Solving Siloed Leadership

In learning what to look for and how to evaluate things at your company, you’re already in motion to solve leadership issues in your company. 

Where siloed leadership is often the accidental isolation of teams and leaders, cross-silo leadership is the active collaboration and connection among all departments and leaders. 

The cross-silo organization is structured where different departments work together to achieve the same goal. It is a more effective way of managing an organization because it provides more opportunities for learning and innovation. Outcomes include:

  • Increased productivity and effectiveness at all levels.
  • Improved employee engagement and satisfaction.
  • A better decision-making process.
  • Reduced conflict between employees.

Again, goal-setting and annual planning can inform cross-silo capabilities. Asking, “What do our customers value most and how can we do more of that,” will never answer, “Well, they want 12% more profitability!” 

Your answers to this question will give your business and its leaders a focal point.

  • Better customer service
  • More product availability
  • New solutions that address a pain point
  • More diverse leadership
  • More climate-sensitive practices

When questions like these drive your goal setting, you set up an environment for more focus and better teamwork. Your leadership, including your CFO, can help connect goals like these to business outcomes, metrics and reporting.

Knowing the dangers of siloed leadership starts with understanding if and why it’s happening in your business. If you’re struggling with conflict, friction and disconnection between leaders and departments, it’s time to get serious about doing things differently.


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