Loading the player...

What is 'Silo Mentality'

Silo mentality is an attitude that is found in some organizations; it occurs when several departments or groups within an organization do not want to share information or knowledge with other individuals in the same organization. A silo mentality reduces the organization's efficiency and can contribute to a failing corporate culture.

BREAKING DOWN 'Silo Mentality'

Managers of successful firms ensure that information flows freely between departments so all aspects of the company function effectively. Contemporary management views suggest that the silo mentality mindset must be broken for employees to remain motivated and be happy to come to work. Efficient companies promote the sharing of information to let the combination of groups function as a team.

Traditionally, a silo mentality is seen as a top-down issue, beginning with management and trickling down to individual contributor employees. It may also be seen between individual contributors when the employment situation feels competitive, such as within a commission-based profession where individual performance numbers directly affect compensation. It can also be witnessed between competing departments, such as marketing and sales, where some assigned duties exist, at least in part, in both departments.

It is often seen as intentional, as a silo mentality includes the desire to withhold information from other departments. The lack of cross-departmental communication can negatively impact workflow, as information is not passing freely across the organization. This can result in departments working with inaccurate or out-of-date information.

Silo Mentality and Employee Morale

A silo mentality can negatively affect employee morale, especially when employees are aware of the issue and are unable to do anything to change it. The informational bottleneck results in inefficiency as different departments may be working with different understandings for project completion.

Combating Silo Mentality Within an Organization

Creating a sense of unity within an organization can help combat a silo mentality. Gearing the organization to work towards a single goal can create a sense of community between departments, encouraging more open communication. Taking the time to recognize successes can help encourage and support open interaction.

Silo Mentality and Third Parties

A silo mentality can also affect how a business interacts with third parties, such as supply vendors or service providers, as well as other similar businesses. When applied to supply and service providers, this can result miscommunication regarding deliverables as well as other expectations of the relationship. While a silo mentality is more understandable between competitors, a lack of industry-specific informational exchange can have negative consequences.

RELATED TERMS
  1. Information Silo

    An information management system that is unable to freely communicate ...
  2. Mental Accounting

    An economic concept established by economist Richard Thaler, ...
  3. Market Psychology

    The overall sentiment or feeling that the market is experiencing ...
  4. Performance Management

    The management of employees, departments, and organizations to ...
  5. Central Purchasing

    A department within a business or organization that is responsible ...
  6. Trading Psychology

    The emotions and mental state that dictate success or failure ...
Related Articles
  1. Small Business

    Explaining Silo Mentality

    A silo mentality occurs when certain departments in an organization do not share information or knowledge with other departments.
  2. Trading

    The Casino Mentality In Trading

    Many new traders treat the market like a casino, placing unwise bets and hoping for the big win.
  3. Financial Advisor

    Market Mentalities: Bulls Vs. Bears

    Learn the importance of these opposing views on investing in the markets.
  4. Trading

    Increase Your Profits With Soft Or Mental Stops

    A soft stop provides a trader with added flexibility, allowing him to react to ongoing changes in the market.
  5. Trading

    How to Develop a Trading Brain

    For traders to achieve true discipline, they need to more than just accept the idea.
  6. Small Business

    Uncovering The Securities Firm

    Learn about the various departments of a securities firm and the professionals who make it work.
  7. Investing

    Characteristics Of Successful Traders

    Successful traders share psychological characteristics that augment their personal and financial power.
  8. Insights

    The Right Mindset for CEO Success

    Owning the role of CEO is no simple task so it is imperative that CEOs have the correct mindset to ensure the success of their organization.
  9. Taxes

    What IRS Form 990 Tells About a Nonprofit

    Want a picture of an organization's activities? This annual form, open to the public, sums up everything from salaries paid to missions accomplished.
RELATED FAQS
  1. How is something "brought over the wall" in an investment bank?

    An analyst who lends his or her expertise to an underwriting department is said to have been "brought over the wall". In ... Read Answer >>
  2. What does a merger or acquisition mean for the target company's employees?

    Learn about the likely impacts of a mergers & acquisition deal on the target company's employees, their benefits and adjusting ... Read Answer >>
  3. Do nonprofit organizations have working capital?

    Discover why financial reserves in the nonprofit world are equivalent to working capital used by for-profit businesses, and ... Read Answer >>
  4. Why is it less than ideal for a CEO of a company to also hold the position of COO?

    Learn the difference between a company's CEO and COO, and understand the division of labor that should be present between ... Read Answer >>
  5. I have a small business, and I'm considering setting up an SEP IRA. What are leased ...

    Generally, a leased employee is the employee of an outside organization from which you lease the employee's services. For ... Read Answer >>
Hot Definitions
  1. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  2. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  3. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
  4. Job Market

    A market in which employers search for employees and employees search for jobs. The job market is not a physical place as ...
  5. Yuppie

    Yuppie is a slang term denoting the market segment of young urban professionals. A yuppie is often characterized by youth, ...
  6. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
Trading Center