It’s an old and troubling story: Individuals or groups within an organization—feeling the need to safeguard their jobs or secure their successful position in the company—set out to make themselves indispensable. They move to protect their turf and seize control over what work gets done and how it gets done. Moreover, they lay claim to increasing quantities of resources—personnel, technologies, budget—in a relentless drive to amass power. In short, they create fiefdoms.

Based on deep-seated human needs—to control the information that reflects on our work, determine our own destiny, and be seen as vital to our organizations—fiefdoms arise in organizations of all types. They also crop up at every level of a company—individual, team, department, division, subsidiary. And they inflict severe damage. For one thing, fiefdoms stifle creativity, as the people ruling them resist new ideas in order to maintain their position. In addition, fiefdoms spawn confusion, by creating processes (such as separate financial reporting procedures) that conflict with those established by the company. The confusion worsens when fiefdom rulers present only carefully selected information about what’s going on in their area so as to make themselves look good. Finally, fiefdoms drain vital resources away from parts of the organization that really need them. Left intact, a fiefdom can even take down an entire company, as happened at Enron.

For these reasons, leaders must take prompt, decisive steps to break up fiefdoms. Though most fiefdom rulers will fight hard to survive attempts to fragment their turf, executives and managers can succeed in this effort—if they approach the process with determination and discipline.

How can you best shatter the fiefdoms proliferating in your company? According to Bob Herbold, former COO of Microsoft, author of The Fiefdom Syndrome (Currency/Doubleday, 2004), you need to strike a delicate balance. Specifically, you must restore discipline across the organization while also reviving fiefdom inhabitants’ ability and willingness to generate creative ideas for solving problems and satisfying customers.

Restoring Discipline
On the discipline side of the fiefdom-busting equation, Herbold recommends specific “process,” “behavior,” and “people” practices. These practices are designed to make what’s going on in your company visible throughout the organization, center procedural controls in one place, and stir up workplace relationships. The overarching goal? To restore discipline in processes and structures that stretch across the whole company.

Here’s what Herbold considers among the most potent disciplines:

Process: The Discipline of Creating Lean Global Processes and Accessible Data Companywide. Streamline your company’s reporting systems so that everyone in the organization can easily gain access to and understand data about the company’s financial performance, employees’ on-the-job performance, and so forth.

For example, use standardized scales on performance-evaluation forms. And reduce the number of reports to the minimum needed to convey needed information. "At Microsoft," Herbold says, " we had just twelve charts that answered 98 percent of all questions about the company’s financial performance. Those charts always had the same format and were available on servers in the company’s headquarters."

Behavior: The Discipline of Avoiding Fragmentation. Ensure that information technology, human resource, procurement, public relations, and other shared-service departments do not get duplicated in units across your organization. As Herbold points out, business units often strive to develop their own such departments in order to operate as independently as possible. Not surprisingly, such fragmentation increases costs and creates massive duplication.

To illustrate, consider what happens when procurement is dispersed throughout an organization. In one successful and financially secure company, Herbold explains, a major vendor sent a letter to headquarters asserting that the firm must be “going under,” since it hadn’t paid the vendor’s bills for six months. The reason for the confusion? Any group could procure resources when it needed by simply contacting vendors of their choice when they wanted. And the company had no central system for handling procurement and payment on an ongoing basis.

People: The Discipline of Personnel Rotation. Move people in and out of a team, department, or division to prevent a fiefdom from forming in the first place as well as break one up that has begun taking shape. As Herbold explains, when individuals are left in one place in an organization for many years, the company becomes reluctant to move them—even if they would make a better contribution elsewhere. Fiefdoms arise based on longstanding members’ expertise or seniority. Results? Missed opportunities and antiquated approaches as the skills and ambitions of the fiefdom’s inhabitants atrophy.

To avoid this scenario, Herbold recommends rotating valued employees among different assignments to give them a broad variety of experiences. “If a hot shot knows he’s going to be part of the marketing group for just two years,” Herbold says, “he’s not going to let himself get pulled into and absorbed by a fiefdom. He’d much rather make a positive impact during his short time there.”

Reviving Creativity
In addition to restoring discipline across their organization, leaders must revive creative thinking among employees in order to break up fiefdoms. “You want your people to be spending their time thinking up bright ideas for pleasing customers,” Herbold says, “not finding ways to please their boss or advocating for their own position in the company.”

Periodically making a particular group responsible for an unfamiliar (to them) product or service area is one way to stimulate creative thinking. “Deep experience in a particular business area is massively overvalued,” Herbold maintains. “Most smart people need just three or four months to grasp their responsibilities and start generating great new ideas. It’s important to send the message that ‘You’re not going to be doing the same things you did when you first came here.’”

Another way to foster creative thinking is to remove the “layers of wisdom” a good idea must navigate through in order to get implemented. In Herbold’s words, “When a person’s boss, the boss’s boss, and so on insist on approving every idea, they tinker with the idea and change it. That saps the creativity of the person who thought up the idea. The individual feels that he or she is not the owner of the idea and thinks, ‘Why should I bother?’”

Instead of requiring good ideas to wind their way through layers of wisdom, Herbold advises, “let people know that you’re there as a resource. Say, ‘I’m here; if you think I can add something to your idea, come see me. I’m not the decision maker for your idea—you are. Bring me the results of your idea, and we’ll see how well you did.’” Herbold continues: “When people know there’s no one hovering around them, they do a better, more thorough job.” Of course, employees aren’t always going to generate good results from implementing their ideas. But when they bring their results to their boss, the two can discuss what happened. The boss can say, “What did you learn from this experience?” In Herbold’s view, employee climb the learning curve a lot faster when managers use this approach.

In organizational life, people will always yearn to carve out and rule fiefdoms. But by systematically breaking up nascent or advanced fiefdoms through a balance of organization wide discipline and individual creativity, leaders can stave off the havoc that fiefdoms cause