What are organization Silos? How silos endanger the company?

How can we stop working in silos?

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Organization Silos are when individual people, departments, or companies, conduct business in a vacuum without taking into consideration the impact their actions have on the entire organization.

For instance an accounts payable department always pays on time within the conditions of the purchase order but accounts receivable don't collect cash to support the amount of money going out.

Both departments work along merrily without any communication and both feel they are meeting their responsibilities however cash is drained and the corporation continues to borrow money at a high interest rate to support paying vendors and general expenses.

There is always an opportunity to share information and look at the corporate wide impact and ask if it makes sense to do business in the way we always have.

A process flow of all activities should show you the interdependency of one department or function to another. Sharing of information problems and actions implemented to correct these issue are vital to the ongoing efficient operations.

Silos are basically large vertical buildings that separate and store material on a farm. When organizations run in silos they are not looking at other aspects and the cause and effect of various activities, so it is referred to as working in a silo.

April, 2005 Industry Week

A study by Industry Week found that business functions operating as silos are the biggest hindrance to corporate growth. A more recent American Management Association survey shows that 83 percent of executives said that silos existed in their companies and that 97 percent think they have a negative effect.