Silo Mentality: What Are Organizational Silos and Their Impact

Organizational silos seem like a negative structure for any company. But, are silos really a bad thing? Learn the causes and impact of a silo mentality

Written by: Josh Brown

Published: February 11 2022

Picture this.

You and Jeff from Marketing have been waging a silent war for years. The marketing department is always promising new features to your clients. Features that don’t even exist yet and making you wonder how your engineering department is going to achieve deadlines. There’s always tension between the departments because you have to “protect your own”.

If this is a familiar situation for you then you most likely have an organizational silo problem. And you have to take care of it before it scales up to compromise organizational goals.

In this immersive post, you’ll learn:

  • What are silos in business?
  • How a siloed organization looks like
  • The drawbacks of silo thinking
  • And how to dismantle the silo approach to benefit you

Of course, this post wouldn’t be complete without examples of organizational silos — you better learn from others’ mistakes, so you don’t repeat them, right?

What Are Organizational Silos?

Organizational silos in business is when a company has groups of experts separated by department, specialization, or location — a very common approach. The problem starts when employees aren’t just separated physically, but when they pursue department goals instead of company goals.

Remember the example at the beginning?

The term organizational silos also refers to stovepipe organizations, where sharing information and communicating is scarce. The company is organized in a way it’s difficult for information to flow because, let’s say, one department doesn’t want to leak information.

When communication is scarce in a big business, achieving the same goal and looking at the big picture becomes a daunting task. And the so-called turf wars (usually between departments) start. A competition within your organization that everyone is going to lose.  

What Causes Organizational Silos?

A silo mentality is the major cause of organizational silos forming. It all starts with the mentality your people have to work.

So, what is a silo mentality?

Nate from engineering submitted this requirement saying it was urgent. Like everything else he asks for. Let’s not tell him it’s already finished until tomorrow. Or he’ll come straight away to the laboratory and make another ‘urgent’ requirement. We have our own work here to complete and I have to take care of my guys’ time. Nate just wants to meet his department deadlines to look good in front of the bosses.” 

If the former example wasn’t enough of an explanation, here’s the one:

A silo mentality is when employees, and even management, only think “inside the silo”. Employees report only to their department and the others are just adversaries that want to bring you and your buddies down.     Managers don’t share information or communicate because they want to have the upper hand — contributing to the silo approach.

Silos are more common than you think. After all, people being categorized as being from one department and getting benefits whenever they achieve a department goal is a silo system. This sums to the silo development, but there are many ways in which a company can go the wrong way and contribute to the silo effect. 

Let’s see some of these:

  • Lack of management promoting collaboration 
  • Internal communication barriers 
  • Not focusing on the big picture or company goals
  • Competition within departments — usually for resources
  • Incentives that serve one department
  • Poor knowledge management practices and tools like an internal knowledge base
  • Lack of a unified organizational culture
  • Lack of meetings or activities that promote interactions between departments
  • No cross-department or cross-team projects 

You get the idea. 

Drawbacks of Organizational Silos

Watch out for these early signs of organizational silos cropping up in your organization. 

Duplication in effort and diminished innovation

It looks silly, but this actually happens in a bunch of companies today. There’s an assignment that must be done and there are two people doing it simultaneously. Of course, this means productivity decreases and your employees get frustrated. 

This is a sign that your people aren’t communicating and you’re not assigning tasks. So, when it’s time to deliver results you can hear “I thought you were going to do that” “No, I was doing X” or even “I didn’t know that was due today”. Also, sometimes, you sacrifice innovation because there are projects in which ideas aren’t shared, and results don’t reach their full potential. 

If you think duplication on effort and lack of innovation is the case of companies not that big, look at the example of a huge company like Sony:

(Image source)

The Expo of Technology in 1999 marks the moment in which Sony’s Walkman was defeated by Apple’s iPod. Steve Jobs presented the “1,000 songs in your pocket”, while Nobuyuki Idei — CEO of Sony — showed the audience two products. Two different Walkman that used different technologies and, in the future, would end up cannibalizing each other. The question here is why would Idei show two products that did essentially the same? 

(Have in mind that in these expos it was usual to only show one new product per niche)

The answer is Sony’s departments were all disconnected from the company’s goals. Departments were pursuing their own goals to protect themselves instead of working together. This miscommunication and reluctance to share ideas resulted in two departments producing two different digital Walkman-type devices that weren’t even compatible with each other. 

Lack of team alignment and overall organizational alignment

Standards are good. They help your employees decide based on your company values and, in the long run, save you a lot of headaches. If it wasn’t for these, employees who didn’t know what to do at the moment would implement a short-term solution. 

The thing with these short-term solutions is that your employees become used to it and some of them create their own — it becomes the old reliable way. And it’s passed down from employee to employee, resulting in an entire company that solves a query either the wrong way or in multiple ways. 

This means, again, communication is poor, and your employees are prone to make mistakes. Mistakes that are going to be difficult to correct from a large group of people and result in a waste of time, productivity, and resources. 

Do you remember MySpace and how it lost to Facebook? 

Well, MySpace’s failure resulted from not adapting to the needs of their audience, but that wasn’t all. In a discussion thread from Y Combinator, a former MySpace engineer explains some of the reasons MySpace failed:

It’s no surprise that one reason had to do with silos forming within the company. Each team in engineering had its own standards, meaning alignment was non-existent. Additionally, MySpace had poor user experience, resulting in users leaving the platform.

Employee disenfranchisement/poor culture

Remember the Volkswagen clean diesel scandal of 2015. This is a great example of how poor culture can affect a company. As you may already know, Volkswagen designed several car models that were, apparently, more eco-friendly than a normal car. 

The promise was fewer emissions to the environment. But when the EPA looked into this, they found Volkswagen claims to be false. And that in reality, these cars were throwing 40x more emissions than standard. Also, to avoid regulations, they implemented a defeat device that knew when the car was being tested and when it was being driven normally. So, the device just changed from one mode to another to pass the test and then back to normal in a normal environment.

After a lot of legal processes… Hiltrud Dorothea Werner, the former board member/executive at Volkswagen, got hands-on on building Volkswagen’s ethical culture. And she discovered that all this problem could’ve been avoided if it wasn’t for the silo culture at Volkswagen. Where its employees were stuck in a “chimney career”, meaning a career where people couldn’t apply to other departments and the only way was going up in their silos.

This chimney career meant that people were afraid to communicate new ideas or even to speak up to a manager. As it could lead to the end of their career and them being stuck in the same position. This silo process in the hierarchy of Volkswagen made employees avoid confrontation. 

Lack of cross-team collaboration and communication

We’ve already talked about how important is communication to avoid silo culture. But cross-team collaboration is vital too. You need employees that are team players, not only for their departments but for the whole company. And let’s be honest, if various departments can’t agree on something or take decisions without consulting each other, some decisions can seem absurd.

Look at the failure of, an e-commerce platform to buy your pet’s stuff: was innovative. It could’ve been the amazon for pets nowadays. The problem was it didn’t expand slow and steady, making $619,000 in revenue and spending $11.8 million in advertising wasn’t smart. And on top of that, people at that time (1999) wanted to buy stuff from their nearest store instead of buying online and waiting for their items to be delivered.

In this case, departments like marketing, finance, and supply chain management weren’t on the same page. And business model had huge flaws that could’ve been avoided with cross-team collaboration and patience.

Can Organizational Silos Ever Be a Good Thing?

Yes. silos in the workplace can be beneficial to your company. It’s always nice to have a group of experts to go to within the same area. If one of those experts doesn’t know, another person can, and they all know what you’re talking about. And later on, they can come up with a solution.

But haven’t we been talking about how bad corporate silos are?

Also yes, but the real problem isn’t the silos. The problem is the people within the silos and their silo mentality. If you think about it, silos are everywhere. If you work at a global company with locations everywhere, that’s a demographic silo. If you have old and new employees, that’s also a silo.

Business silos are just a result of humans being humans. But by breaking those barriers that the silo mentality creates, silos can be beneficial to your company.

Benefits of Improving Informational and Knowledge Flow

Information is key to any process. So when your company has these so-called knowledge silos or informational silos, it’s difficult to make the most out of your internal processes. Let’s look at some benefits of breaking the silo organizational culture.

Improves productivity

Remember what we talked about duplication of effort? Well, by improving the flow of information, this won’t be a problem anymore. Employees will know their daily tasks as well as where all the information regarding those is. 

Time is an important metric in productivity and the more you save your employees’ time, the more they can improve their performance during the day. You may already know how it feels to look for a piece of information for hours. And then somebody comes and shows you where it was in a matter of seconds.

Breaks barriers of communication and collaboration

Now, it’s not about department goals, but about company goals. When information is distributed in all departments, people don’t feel like they have to protect something anymore. There’s transparency in processes and employees know the impact of their actions. 

This gives your employees a feeling of belonging, which is why they want to share ideas. Or go to other departments to see how their processes fit with the next project. And this could lead to innovation and flexibility in processes.

Gives a sense of community and culture

Gusto states that half of the employees stay in a company longer just for the strong sense of community. And this community would usually result from good relationships between coworkers and celebrations for achieving milestones. 

One reason Apple could develop their iPod was because of the no silo rule. At Apple, it was encouraged to ask for help from other departments and work on cross-departmental projects. This, of course, created a team culture, where the important thing was to assist others and work together.

Enhance company alignment for goal achievements

This one is easy. It’s better to have a bunch of people working towards the same goal than subgroups wanting to show who’s better. And it works. Promote the entrepreneur mindset across your company in a way employees want the organization to be better.

When a lot of people from different expertise come together to achieve something, the result is always impressive.

How to Break Down Organizational Silos

You already know the bad and the good of organizational silos. But the question now is how do you make it go the good way for you. Yeah, it starts with changing the silo mentality, but here are some tips that will help you along the way:

  • Align the vision and mission of your company with common and step by step goals
  • Encourage your employees to share knowledge 
  • Promote cross-team collaboration. Assign projects that require two departments to work together
  • Make use of knowledge base software to create a centralized location for information/knowledge
  • Use collaboration tools
  • Create activities in which employees can learn different points of view

Breaking down silos isn’t easy, but you can start small and implement these tips little by little. Also, make sure management really buys this no silo mentality policy. It all starts with leadership. And if managers aren’t putting up an example, employees will hardly follow. 

Work Towards a Bigger Goal

Siloed thinking isn’t going away overnight. What’s more, it’s a lot of work and you have to make sure to always enforce collaboration and communication. But on the other hand, it gives your employees a nice working environment. It gives you confidence that your people can do the job. And it sets you up for success.

So, yeah, it’s a lot of work. But it’s totally worth it.

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