Organizational Silos: Causes, Cons, and How to Break Down Departmental Walls

Say a marketing team at a startup SaaS company has been working around the clock to prepare for an upcoming product launch. But just days before their launch date, they learn the product will lack several important functionalities and features they had planned on. Now, they have to rework their entire strategy with just a few days at their disposal. 

This is an example of how organizational silos can create a breakdown of communication. 

If left unchecked, silos erode employee and customer satisfaction, stifle growth, and create chaos in your data systems. 

Table of contents

• What are organizational silos?

• 4 causes of organizational silos

• Why organizational silos are problematic

• How to recognize organizational silos

• How to fix organizational silos

• FAQs on organizational silos

What are organizational silos?

Organizational silos occur when employees work in isolation according to their department, physical location, rank, or schedule. In extreme cases, organizational silos lead to a silo mentality, where different departments purposefully don’t want to share information with each other.

In silos, there is very little cross-team collaboration, which leads to inefficient communication, confusion, and delays.

4 causes of organizational silos

The causes of organizational silos are multifold, ranging from poor management to turf wars between departments. 

1. Poor leadership

When leadership fails to communicate their vision for the business with the entire organization, they lay the groundwork for departmental silos. Individual teams become hyper focused on their own goals, rather than how those goals fit within the overarching business strategy. 

2. Isolated departments

Without effective collaboration across teams, departments work in isolation, unaware of how their efforts impact other teams. For instance, customer support may be sitting on a wealth of valuable feedback from users, but they haven’t shared it with the product team (meaning insights on product usability aren’t being factored into the roadmap). 

3. Hybrid work cultures

Hybrid workplaces can also be prone to silos based on location. It can be difficult to forge connections within a widespread, remote workspace, and it can be easy to forget to include people (e.g., teammates in the office don’t invite remote colleagues to dial in to an impromptu brainstorm session).

4. Competition and favoritism

Favoritism manifests itself as limiting information-sharing to a select group of employees, or awarding one department a bigger budget for ambiguous reasons. A company culture that tolerates unhealthy competition results in silos as employees and managers seek to outperform others rather than work together. 

Why organizational silos are problematic

A siloed organizational structure creates challenges on multiple levels, both for the customer and for internal teams. 

1. Unable to access important data

Organizational silos lead to data silos. Teams store information in separate applications, causing departments to work off different data sets. In an extremely siloed culture, departments might not be willing to share data with other teams, which also means data is incomplete.

Poor data quality is an expensive issue to have. According to IBM estimates, the annual cost of poor-quality data is $3.1 trillion. 

2. Cross-department rivalry

When departmental silos form, teams focus on achieving their own goals rather than those of the company. Instead of seeing other departments as different players on the same team, they view them as rivals.

A lack of accountability is one of the ways in which rivalry manifests. Let’s use the example of a startup struggling to grow their pipeline. The Sales team may blame marketing by saying they haven’t generated enough high-quality leads. The Marketing team can then turn around and blame Sales, saying they don’t know how to engage leads.

3. Privacy and compliance concerns

Organizational silos make it difficult for a company to track who is collecting, accessing, and storing sensitive customer data. Without a clear data governance strategy, you are more vulnerable to cybersecurity threats, and you risk violating data protection laws.

For instance, GDPR allows individuals to request that companies delete all of their data. But this is much harder to do if you don’t know all the applications where you have their data stored.

Nowadays, customers are more aware of data privacy issues, making it all the more important to have a good customer data management process in place. When you store data across disparate Excel sheets and apps, the risk of mishandling data increases, opening your organization to backlash and reputational damage. 

4. A decline in customer satisfaction

A siloed organization will inevitably spill over in the customer experience. As we mentioned above, there can be gaps in knowledge regarding the customer journey between departments, leading to a disjointed end-user experience. This can lead to reputational damage, and higher churn rates for the business. 

How to recognize organizational silos

The following are examples of the ill-effects of a siloed organization:

• Lack of bottom-up communication. The leadership team is unaware of the challenges faced by employees at the lower levels.

• Lack of communication between management. One department head is unaware of important projects other departments are working on.

• Lack of collaboration and information-sharing between departments. Teams might even avoid sharing information or have no easy way to do so.

• Using separate applications to collect data. For example, customer success may log support tickets in an application developers don’t have access to, leading to siloed information.

• Task duplication. Different teams working on the same projects, creating inefficient operations. 

How to fix organizational silos

Removing organizational silos requires a multi-pronged approach that tackles team dynamics and data governance.

1. Implement a data governance strategy

A data governance strategy is a set of guidelines that manage the collection, usage, access, storage, and removal of data. It breaks down organizational silos by implementing a single approach to data governance instead of allowing each silo to develop their own approach to data.

Segment Protocols supports better data governance by standardizing data collection and ensuring all information used by different teams is consistent and trustworthy.

With a company-wide framework for data governance, you’ll be able to more easily comply with privacy regulations and protect yourself from cybersecurity threats. It will also eliminate the use of bad data, as every team will follow the same data guidelines.

2. Integrate and centralize data

Considering the cost of poor-quality data, every company that identifies this issue should prioritize breaking down data silos, a process that’s also known as data orchestration.

The process consists of three steps:

• Capturing and organizing data from every storage tool or system

• Converting the data into a single format

• Activating the data by making it accessible to data analysis tools

With data silos out of the way, you’re able to implement a customer data platform (CDP) to set up a centralized database of your first-party customer data. A CDP will help all teams access and use the same information, allow the democratization of data, and personalize your customer interactions.

A CDP is more advanced compared to a customer relationship management tool (CRM), with some solutions having the ability to sync 30x more data than a CRM. It also provides a single customer view that contains all the data your business has collected on one account from different channels.

3. Encourage cross-departmental collaboration

Greater cross-departmental collaboration will break down silos, remove any animosity between teams, and help avoid last-minute surprises when launching new products. 

While updating an existing product, for instance, developers can refer to the support team to understand the most common issues that customers face. The marketing team can also better understand their audience’s pain points by listening to sales calls.

4. Use team-building exercises

If organizational silos are deeply entrenched, team-building exercises are necessary to improve the relationships between teams. 

A team-building exercise can help employees understand each other’s communication styles and behavior in group projects – knowledge that they can apply when working together.