Shadow Work and Shadow Staffs in Organizations

I recently came across Craig Lambert’s book Shadow Work, in which he describes all those unpaid tasks we perform on behalf of businesses and organizations – from self-service ATMs, supermarkets, and gas stations, to shopping web sites. He places the blame with our sleep deprivation and our stress levels partially on these businesses, stating that part of our fatigue “… comes from performing extra jobs that were once done by someone else …” (p. 182)

Shadow work can sometimes save customers time or money (unless you live in New Jersey or Oregon, think about your experience with self-serve pumps at the gas station) and give customers a sense of control and autonomy, but it can also cost jobs and decrease human interaction (there are no more gas station attendants to exchange small talk with – not that this was the highlight of your day anyway).

While his definition of shadow work refers to tasks by businesses that are in a sense passed on to customers, there is another use of this term in organizational behavior. Shadow work in organizations refers to work that is conducted over and above (and at times in place of) the formal or official organizational structure. This is work that is done by shadow organizations or shadow staffs; while they are prevalent in IT (note the flap about Hillary Clinton’s private e-mail server, a good example of a shadow IT presence), they also exist in other functions, such as HR, marketing, and finance.

I first heard the term several years ago when a multinational I was familiar with embarked on a strategy to implement global support functions (like HR, Finance, and IT) that would provide “shared services” for its business units and subsidiaries around the world. As a first step, the company gathered headcount figures to identify the number of employees performing “duplicate functions” within different business units and subsidiaries. Such shadow staff added another 15-20% to total support staff head count. This is consistent with work that consultants at Booz & Co. found in their own analyses (Booz & Co., 2003). It turns out that certain business units and subsidiaries had created their own mini-support functions, in many cases duplicating and doing work that was sometimes not aligned with the global support functions’ direction.

Why have such shadow staffs? There seem to be five major reasons. First, business unit heads and subsidiaries want their functions to be able to perform certain tasks which they do not believe they can get from the corporate functions. Perhaps the subsidiary has a unique need such as a talent recruitment and development program for engineering graduates at certain local schools. Given their needs, this subsidiary knows that corporate would not really understand their situation, and so it would be more efficient simply to have its local HR function develop and implement this program without having to involve corporate. Second, business unit managers and local support staff may not feel that they are getting sufficient support from their corporate or global functions. In some cases, the corporate model may either be too sophisticated or not sophisticated enough in meeting their local needs. In other cases, the local business or subsidiary may not be high on corporate’s priority, where the focus (and resources) might be on other more strategic or more important business units or subsidiaries. Third, and this is related to the second reason, the business units may not feel that corporate truly understands their needs, or that they are responsive enough to their needs. One business manager executive I interviewed spoke about the bureaucracy in the global function, and his challenges in even getting the proper attention for and understanding of his marketing needs. Fourth, the business units might be operating under a legacy system that does not align with the global or corporate system, and the costs of conversion might be prohibitive for the subsidiary. This is true especially with IT; for example, the Gartner group predicted several years ago (Gartner press release, 2011) that:

“By 2015, 35 percent of enterprise IT expenditures for most organizations will be managed outside the IT department's budget … These people are demanding control over the IT expenditure required to evolve the organization within the confines of their roles and responsibilities. CIOs will see some of their current budget simply reallocated to other areas of the business. In other cases, IT projects will be redefined as business projects with line-of-business managers in control.”

Fifth, the structure, governance mechanisms, and culture of the company encourage business units and subsidiaries to do what they have to do to succeed. In many cases, the rules of engagement have never been spelled out, or are not clear. There are no explicit guidelines or policies on various roles and responsibilities among corporate and regional or local staffs; in some organizations that are decentralized, in fact, subsidiaries have considerable latitude in determining their staffs and their activities. Besides, if they can get away with it and there are no adverse consequences but good upside potential, why not? The costs can be hidden or buried and if senior management does not really care, especially if the duplicate staff is not really that expensive (as is the case in many emerging markets), then local management will simply create a shadow staff. According to Korolov (2015), for example, only about 8 percent of companies know and can actually track their shadow IT. However, the local subsidiary might at times come up with interesting and innovative solutions that help drive its local business forward.

Despite these solid business reasons, however, there are unintended consequences to such shadow staffs. One, they may waste company resources and create inefficiencies – not only in terms of headcount duplication but also misalignment. For example, in one organization, a local subsidiary had developed its own competency model and performance management system that were quite at odds with the systems that the parent company had developed for the entire organization. Two, they perpetuate the schism between corporate or global and the business units and subsidiaries. The corporate or global functions can gradually become further removed from the subsidiaries and, without feedback mechanisms to learn from the subsidiaries, a vicious cycle is perpetuated.

Many years ago, Bartlett and Ghoshal (1992) wrote about the need for global leaders heading these global functions to be strategists, architects and coordinators; and for local leaders like country managers to act as sensors, builders and contributors. Their recommendations suggest close collaboration and cooperation between global and local leaders. Three, shadow work contributes to silo thinking and further erosion of collaboration and best-practice sharing between business units and across subsidiaries. Tett (2015), in her book The Silo Effect gives detailed examples of the negative impact of silos on innovation and profitability (her section on Sony’s failures due to its traditional silos is especially relevant).

The presence of shadow work and shadow staffs is more prevalent with large companies, especially those with subsidiaries in different countries, separated from headquarters by distance. However, eliminating shadow staffs may not always be the solution, especially if shadow work done in some subsidiaries is truly innovative and may be transferrable across the organization. Here are a few suggestions for addressing shadow staffs. One, create mechanisms to have global support functions better understand needs of different business units and subsidiaries. For example, corporate functions might have “account managers” who will be responsible for interfacing with internal customers to make sure that they have a good understanding of their customers’ needs. In some cases, these account managers are located closer to the customer geographically, but maintain a solid line or a dual reporting relationship to corporate.

Two, create centers of excellence or expertise in selected subsidiaries or business units. while giving them regional or global responsibility. It is very possible that there are pockets of deep expertise that a subsidiary or business unit has developed. If so, rather than dismantling this expertise, make them available to the entire organization. For example, in one organization, the finance function in its French subsidiary had managed to attract very talented financial professionals who had introduced some innovative finance practices. This French finance function eventually become a center of expertise for the organization’s European region, providing support and expertise to the other finance functions in the company’s European markets.

Three, make structural changes and create governance mechanisms (especially in reporting relationships) to break down the we-they mindset. Many multinationals have support functions in subsidiaries with dual reporting relationships – both to their local management as well as to regional or global management for that function. For example, the head of HR for a subsidiary would report to both his or her country general manager as well as to a regional head of HR.

If the strategic decision is made to reduce or eliminate shadow staff, then make sure to have the following in place: a transition period to allow the business unit or subsidiary to adjust; provisions to help ensure that the local business unit or subsidiary can continue any value-added work, for example, by assigning global or local staff to support this work; and retention plans in place for any talented local or global staff that may be affected by headcount reductions.

Bartlett, C. and Ghoshal, S. (1992). What Is a Global Manager? Harvard Business Review, 70 (5): 124-132.

Booz & Company (2003). Shining the Light on Shadow Staff. http://www.strategyand.pwc.com/media/uploads/ShiningtheLightonShadowStaff.pdf

Gartner Press Release (2011). http://www.gartner.com/newsroom/id/1862714

Korolov, M. (2015). Only 8 Percent http://www.cio.com/article/2868113/it-organization/only-8-percent-of-companies-can-track-shadow-it.html

Lambert, C. (2015). Shadow Work: The Unpaid, Unseen Jobs That Fill Your Day. Berkeley, CA: Counterpoint.

Tett, G. (2015). The Silo Effect: The Perils of Expertise and the Promise of Breaking Down Barriers. New York: Simon & Schuster.

How Am I Doing? 360-Degree Feedback in Asia

I recently returned from Singapore, where I taught an executive MBA class in Global Leadership to a group of mostly Asian managers and executives. As part of the course, they were required to participate in a 360-degree feedback process using a a popular instrument, the Leadership Practices Inventory (Kousez and Posner, 2012). For many of them, although they were working for global, multinational companies, it was the first time they had experienced this kind of feedback from others – their managers, their co-workers, and others.

Now I know that it is simplistic to make generalizations about Asian cultural values, and even more so with this class (with students representing at least six different nationalities, including a few American expatriates). My class was certainly not representative of Asians in general, nor even of Asian managers in general. As scholars such as House et al. (2004) have shown, there are at least two distinct cultural clusters in Asia: Confucian Asia (e.g. China, Singapore, South Korea) and Southern Asia (e.g., India, Malaysia, Thailand). Hofstede (2001) and others have pointed out that Asian cultures tend to have higher Power Distance and Collectivism scores than Western cultures. More specifically, Power Distance tends to be higher in Southern Asia than in Confucian Asia, while Collectivism is higher in Confucian Asia than in Southern Asia. Southern Asia managers more so than Western managers tend to value leaders who are somewhat more authoritarian and more decisive in their decision-making; Confucian Asia employees value work places where harmony, relationships, and group recognition rather than individual achievements and confrontation are emphasized. In addition, as Ready et al. (2008) point out in their HBR article on attracting talent in emerging markets, employees from these markets (which include Asian countries such as China and India) value work place cultures that emphasize meritocracy, opportunities to learn and develop, and a strong connection to their teams and to their company. I kept these contextual factors in mind as I coached my students around their feedback and their reactions. Having spent time with these students, both as a group and individually through one-on-one coaching sessions with their 360-degree feedback results, the following are three impressions I have about their reactions to feedback, and how these tie to the use of 360-degree feedback in Asian cultures.

First, these managers and executives were eager not only to understand and learn about their feedback, but to also figure out what they could to do to develop themselves. When I met with each of them, they had already pored over their results and were especially interested in the written comments, some of which they claimed never to have heard before from others in such overt fashion. This is perhaps consistent with the generally non-confrontational and high-context language in many of these Asian cultures, especially among peers. About half had asked people outside their work place to give them feedback, including childhood friends, elderly relatives, parents’ friends, and their spouses. Many had actually already shared their results with their spouses.

Second, perhaps because educated Asians were focused on grades as they were going through school, many of my students were particularly interested in the numerical scores and the percentile ratings. They wanted to know how “good” they were, and tended to view the results as a sort of report card. While coaching them, I suggested reframing their view of these results not as a grade, but as developmental feedback. As I explained to them, the ratings are based not on how well or how poorly they were demonstrating certain leadership behaviors, but on how frequently their raters observed them performing these behaviors. It is certainly possible that in the context in which they interacted with some of their raters, these raters did not have an opportunity to view some of their leadership behaviors. For example, a family friend who provided ratings may not necessarily have observed the manager “challenging the process” (one of the leadership categories in the Leadership Practices Inventory).

Third, consistent with the higher Power Distance among these cultures, many students focused on the discrepancies between their ratings and their managers’ ratings. What was interesting was that of the 30 specific leadership practices, not one showed a statistically significant difference between self-ratings and managers’ ratings as well as for all observers’ ratings for the class as a group. Eckert et al. (2009) had reported in their comparisons of rating discrepancies from 31 countries that cultural values affected these discrepancies. For example, they found that self-ratings and observer ratings were more discrepant (with the former significantly higher than the latter) in high Power Distance cultures versus low Power Distance cultures.

In this small sample, I did not find this to be the case. Among my class, I also did not find differences in self-manager discrepancies among those from Confucian Asia and those from Southern Asia. There are several possible explanations for this. First, many of these students work in large companies with established performance management practices. While 360-degree feedback may not be universally practiced in these companies, regular performance reviews with one’s manager certainly are. Second, as some students explained to me, they tended to be “hard” on themselves and were downplaying their own self-ratings (similar to some research around gender issues that suggests that females tend to provide lower self-ratings then males). This was interesting, since another study (Gentry et al., 2010) found a “leniency bias” among its sample of Asian managers, and others have found such a bias in general when comparing self-ratings and observers’ ratings (e.g., Church, 1997); that is, self-ratings were more favorable than ratings by other sources. Third, as Gentry et al. (2010) have suggested, it might be that those with greater agreement on their ratings with their managers are in fact better performers. My class (most of whom were taking their executive MBA class with the approval of, and in some cases, the financial support of their companies) was most certainly reflective of this population of high performers. Fourth, especially for those in countries where Collectivism is a strong cultural value, supervisors, co-workers and others might have a tendency to inflate their ratings a bit in the spirit of preserving harmony. This might be the case especially for those who may believe that their ratings might not be anonymous.

Overall, I found receptivity to 360-degree feedback to be very positive. The students did not seem to go through the “SARA” feedback stages - from Shock to Anger to Resistance/Rejection and finally to Acceptance (Zenger and Folkman, 2010) – and were eager to move on and identify steps they could take to improve their leadership. Based on this small sample, there do not seem to be serious concerns about implementing 360-degree feedback in these cultures. In fact, use of 360-degree feedback is fairly common in many multinationals today, both Western and non-Western. In a study of over 650 organizations in the Asia Pacific region, for example (Mercer, 2013), 45% of organizations report that they do use 360-degree feedback; and 42% of them report that they provide individuals new in a global role with 360-degree feedback within the first year of their new assignment.

Unlike even say, twenty years ago, many Asian managers today are being constantly exposed to Western management practices, whether through their organizations, their formal education in school, or through the internet. This does not mean that cultural and contextual factors should be ignored, and that cultural preferences no longer exist. Some of these cultures are over two thousand years old, and their beliefs and assumptions are very deep-seated. It would be naïve to suggest that these values can change in a generation or two. Yet changes at least in work place practices are indeed coming, and perhaps accelerating. In the U.S. culture, for example, individualism has continued to be a very strong cultural value, yet we see collaboration and team work practices being emphasized and in many cases embraced in the work place. Companies such as Goldman Sachs and Accenture have implemented programs in their Japanese offices to help local employees interact more effectively with their Western colleagues and clients. With continued globalization, we will most likely see a greater evolution and transformation of work place practices around the world.

Church, A. (1997). Managerial Self-Awareness in High-Performing Individuals in Organizations. Journal of Applied Psychology, 82: 281-292.

Eckert, R. et al. (2010). “I Don’t See Me Like You See Me, But Is That a Problem?” Cultural Influences on Rating Discrepancy in 360-degree Feedback Instruments. European Journal of Work and Organizational Psychology, 19 (3): 259-278.

Gentry, W. et al. (2010). Self-Observer Rating Discrepancies of Managers in Asia: A Study of Derailment Characteristics and Behaviors in Southern and Confucian Asia. International Journal of Selection and Assessment, 18(1): 237-250.

Hofstede, G. (2001). Culture’s Consequences (2^nd Edition). Beverly Hills, CA: Sage.

House, R. et al. (2004). Culture, Leadership and Organizations: the GLOBE Study of 62 Societies. Thousand Oaks, CA: Sage Publications.

Kousez, J. and Posner, B. (2012). The Leadership Challenge (5^th Edition). San Francisco, CA: Jossey-Bass.

Mercer Consulting Group. (2013). http://www.mercer.com/content/dam/mercer/attachments/global/Talent/Develop-APLdrshpDevPractStudyRpt.pdf

Ready, D. et al. (2008). Winning the Race for Talent in Emerging Markets. Harvard Business Review, 86, November.

Zenger and Folkman (2010). http://zengerfolkman.com/meet-sara-our-emotional-response-to-bad-news/