Ten years ago, while I was working at Juno, a start-up Internet service provider in New York City, my boss promoted me to the position of technical manager. The new role didn't come with a pay raise, and I had only two people reporting to me, but I still felt good about it. Juno was a hot company, backed by the investment firm D.E. Shaw, where Jeff Bezos had worked before he left to start Amazon.com (NASDAQ:AMZN). I was proud to start getting those mass e-mails that were circulated among the managers.
Until I noticed about half the company was on that distribution list.
For a company of Juno's size -- it had about 150 employees at the time -- there seemed to be a disproportional number of managers. I think most of them, like me, had only one or two people reporting to them. But it was hard to know for sure, because the org chart wasn't circulated; apparently, Juno's top brass were afraid it would fall into the hands of headhunters. So you knew your boss and your team, but unless you were a smoker, you didn't know any of the people in the other parts of the company.
For an Internet start-up, Juno had an operational structure that felt strangely like something out of the 1950s. There were strict hierarchies, the lines of communication were limited, and there was a deeply held conviction that when a decision was needed, you should appeal up the chain of authority until you got one.
That didn't work so well. I noticed too many situations in which members of top management happily issued an executive fiat even though they were the least qualified to make a decision. I'm not saying that they were stupid, mind you. Most of the managers at Juno were quite smart. But they had hired even smarter people to work for them: people with advanced degrees, raw intellectual firepower, and years of experience. And these people would work on a problem for a long time, come up with a pretty good solution, and then watch in surprise as their bosses overruled them. Executives who did not have specific technical knowledge and who had not studied a problem in depth would swoop down and issue some random, uninformed decree, and it would be implemented -- often with farcical results. I called it hit-and-run micromanagement, and I suspected that the managers at Juno acted this way only because many of them were young, and that's how bosses seemed to behave on TV.
Before joining Juno, I worked at Microsoft (NASDAQ:MSFT), where my experience had been very different. A bit of Redmond lore: Two software designers got into a debate over how something should be implemented. The question was highly technical. They couldn't reach agreement, so they went to their boss, a guy named Mike Maples, who was the vice president in charge of the applications division.
"What do I know about this?" he yelled at them. "Of the three people in this room, I'm the one who knows the least. You guys have been hashing this out for hours. I'm the last person who should be deciding. Work it out."
And so they did.
When my partner, Michael Pryor, and I left Juno to start Fog Creek Software, we knew we wanted to hire great people and then get out of their way. My instinct to do away with middle management was further encouraged when I read an article in one of those glossy business magazines, very much like the one you're holding in your hands.
It was about a General Electric (NYSE:GE) plant in Durham, North Carolina, that made jet engines, and it offered a portrait of the perfect work environment: a factory that had more than 170 employees but just one boss. All the engine technicians reported directly to the plant manager, who did not have the time or the inclination to micromanage. There was no time clock, and people set their own schedules. Pay was egalitarian (there were only three pay grades), and workers who assembled the engines could switch tasks each day so their jobs were not monotonous. The result? In terms of quality, the plant was nearly perfect. Three-quarters of the engines it produced were flawless, and the remaining 25 percent typically had only a slight cosmetic defect.
After my time at Juno, that GE plant sounded lovely -- an earthly nirvana of independence, workplace democracy, and joy. I decided that Fog Creek would copy the model. We would go as far as we could without having managers. Everybody on staff got the title Member of Technical Staff, and everybody reported to me.
Well, sort of. Michael is our president, and he and I are 50-50 partners, so whenever there was something really important to talk about, you had to get both of us together in a room. But everyone else was a Member of Technical Staff.
And for a while, the Everybody Reports to Me (and Michael) system worked just fine. Fog Creek grew slowly but steadily. We didn't hire our fifth employee until 2005, five years in.
Then, last year, we began to realize that things had changed. Fog Creek had 17 full-timers working on two product lines but still no managers. And unbeknown to us, people were getting grumpy. The staff members would routinely gather in one of the senior programmers' offices for gripe sessions. Eventually they realized that bitching among themselves was not productive, so they sent a delegation of two senior employees to talk to me and Michael. The spokesmen were exceedingly polite, even timid. "We're just wondering about the career path," one of them said, which was a euphemism for what was really bothering the staff, which I couldn't quite figure out.
So another programmer came to us. "I thought you should know that people are really unhappy," he said bluntly, "and it's starting to make it so that people just complain all day, instead of doing their work, and that's not good."
I spent a week having long talks with everyone and figuring out what was really going on. Our employees had some questions about compensation -- how we paid profit-sharing bonuses and granted stock options -- which we answered.
But they also said that Michael and I did not seem to them to be approachable. If you wanted to talk to management, you had to coordinate a time when both founders were available, and frankly, a lot of people were too scared to do that. This surprised me, because my door is always open, and people seem to come in constantly to ask me questions. I didn't realize that some of the newer people were intimidated.
We addressed the approachability problem in two ways. First, we eliminated the need to get both me and Michael in the room. You have a question? I'm the CEO. Talk to me. If I want to consult with Michael, that's my problem, not yours. Second, we appointed leaders for two of the programming teams -- in effect, creating that layer of hierarchy that I had tried to avoid.
And frankly, people here seem to be happier with a little bit of middle management. Not middle management that's going to overrule the decisions they make on their own. Not symbolic middle management that only makes people feel important. But middle management that creates useful channels of communication. If my job is getting obstacles out of the way so my employees can get their work done, these managers exist so that, when an employee has a local problem, there's someone there, in the office next door, whom they can talk to.
A final thought: You have to be careful when it comes to embracing the latest business idea. A single anecdote filtered through the eyes of a journalist about a new cool philosophy for running a company has to be considered in the light of other evidence, such as the way thousands of other companies are set up and operate.
Maybe GE's Durham plant is an aberration. Maybe there's more to the story than meets the eye. Maybe the article was scrupulously accurate, but the model works only in jet-engine manufacturing and does not translate to a field like software development. Or maybe GE has put in place all kinds of other mechanisms at that plant to substitute for middle management.
The lesson is, Don't believe everything you read in a business magazine. Not even this one.
Joel Spolsky is the co-founder and CEO of Fog Creek Software in New York City and the host of the popular blog Joel on Software.