How can I get my team’s performance to be more consistent?
Even the best-run organizations have hidden systems - unspoken rules, workarounds, and “just this once” exceptions - that quietly disrupt progress. These covert actions can seem harmless - or even in the best interest of the customer - but over time, they can create confusion, erode accountability, and undermine the very processes you carefully designed to drive success.
In every organization, there’s a balance between overt and covert systems, and addressing these hidden systems can be a powerful way to unlock your team’s full potential.
Here’s what covert systems are, why they develop, and how to identify and address them to strengthen your organization.
Overt vs. Covert Systems: A Quick Overview
Overt Systems: These are the formal, documented processes. Think of policies, SOPs, workflows, and checklists that officially guide your team’s work. Leaders generally assume that these systems are what’s happening in reality in line with what’s been written, agreed upon, and frequently reviewed.
Covert Systems: In reality, however, organizations often rely on informal workarounds, unspoken hierarchies, power dynamics, and personal preferences. Covert systems emerge when people find shortcuts or create their own “hacks” to navigate around the formal system.
Covert systems aren’t inherently bad; in fact, they often develop as well-intentioned responses to an overt system that doesn’t fully serve team needs. But when covert systems override or replace overt systems, they can quietly sabotage progress.
The Origins of Overt vs. Covert Systems in Organizational Theory
The concepts of overt and covert systems are well-studied in fields like organizational psychology and systems theory. Several key thinkers have shaped our understanding of how these hidden systems impact organizations:
Chris Argyris
Argyris, an influential organizational psychologist, introduced the idea of espoused theory vs. theory-in-use. His work distinguished between what organizations say they do (overt systems) and what they actually do (covert systems). Argyris argued that these discrepancies often create communication breakdowns, erode trust, and impact organizational effectiveness. His work reminds us that organizations often rely on unspoken practices, even when formal systems are in place.
Edgar Schein
Schein, a pioneer in the study of organizational culture, explored the formal vs. informal aspects of organizational behavior. He highlighted that alongside the formal structures (overt systems) of an organization are informal, hidden systems (covert) that employees develop to work within or around these structures. Schein’s insights reveal that covert systems aren’t random—they’re responses to gaps or inefficiencies in formal structures.
Steven Spear and the Concept of Hidden Factories
MIT professor Steven Spear introduced the idea of “hidden factories” in organizations, a concept that refers to covert systems of informal workflows and practices that employees create to get work done. These “hidden factories” can lead to unmeasured, duplicative work that undermines the formal system’s efficiency. Spear’s concept shows how hidden systems often consume resources, create redundancy, and dilute the intended outcomes of formal processes.
By understanding these foundational ideas, leaders can start to see covert systems not as occasional once-offs by team members but as more widespread signs of how formal processes aren’t actually helping as much as you think they are.
The Impact of Covert Systems on Your Organization
While covert systems aren’t always problematic, they often reveal where the formal structure isn’t fully serving the team’s needs. Here are a few ways covert systems can harm your organization:
Reduced Accountability: When work is tracked or managed outside the formal system, it’s hard to hold people accountable. Without documentation, a culture of “invisible favors” or “off-the-books work” can become the norm, making performance assessment difficult.
Confusion and Role Ambiguity: Informal systems create blurry role boundaries, creating confusion over responsibilities. New team members especially struggle to understand the “real” way things work versus the documented way. Organizational “heroes” take on extra, unpaid work while the responsible party may be getting away with underperformance.
Inconsistent Standards: If policies are selectively applied, employees may feel that favoritism or inconsistency is at play, which erodes trust and transparency.
Wasted Resources: Covert systems often lead to duplicative work, where different teams create their own approaches to processes or create unnecessary workarounds.
Knowledge Management Vulnerability During Transitions: When key people leave, the covert systems they’ve maintained often go with them, making it harder for others to step into their roles and carry on the work seamlessly.
Examples of Covert Systems in Action
Here are some common ways covert systems show up in everyday work. Each one might seem small, but together they can create an environment that feels confusing, inconsistent, and inefficient.
“I’ll take care of it for you; no need to put in a ticket.”
Impact: This approach bypasses formal tracking channels, making it difficult to prioritize or measure workload accurately.
“Person Y usually does this, but you’re better off bringing issues straight to Person X.”
Impact: Bypassing formal feedback limits the organization’s ability to track and address individual or team performance challenges.
“Let’s just get it done now; we’ll update the documentation later.”
Impact: Documentation suffers, making it harder for others to understand, follow up or improve on the work over time. Potential knowledge loss becomes a huge risk and requires frequent re-work.
“Don’t worry about the procurement process; just call Vendor X.”
Impact: Purchases outside official channels make it difficult to track spending or vendor relationships centrally.
“I know that’s our formal workflow, but it’s faster if we just do it this way.”
Impact: Ignoring workflows leads to inconsistencies in quality and results.
“I’ll approve it this time, but normally it wouldn’t pass.”
Impact: People stop listening to standards and policies, creating unclear standards for what’s acceptable.
“Our time-off policy is flexible if you talk to Person Z.”
Impact: Of course you want flexibility, but training people that it’s flexible because of specific relationships is different than having flexibility as a policy. Uneven application of policies creates resentment and reduces trust in leadership.
“You’re not officially on the team, but please do this part of the work so that it moves faster.”
Impact: Blurred boundaries lead to role confusion and potential burnout as people take on unofficial responsibilities.
“Here’s the formal process, but I’ll give you a shortcut.”
Impact: Relying on informal channels diminishes the value of formal processes, ultimately leading to inefficiency.
Why Covert Systems Arise
Covert systems often develop as responses to perceived gaps in the formal structure. When the overt system is too rigid, too slow, or simply doesn’t address certain needs, employees adapt to get things done more quickly or efficiently.
While these workarounds may create short-term efficiencies, they can erode transparency and accountability over time. As Steven Spear’s “hidden factory” concept suggests, these hidden practices consume resources without contributing to the formal structure, resulting in redundant work and bottlenecks.
How to Address and Minimize Covert Systems
If you’re noticing that certain goals aren’t being met or progress is inconsistent, try to identify where covert practices are overriding your overt systems. Here’s a practical approach to doing this:
Map Out Overt Expectations: Start by identifying the official processes and policies that guide your team. These may include SOPs, communication protocols, or workflows.
Observe Real Practices: Take time to observe and speak with your team about how work actually gets done. Ask questions like, “Is this the typical process you follow?” and listen for mentions of “unofficial” methods.
Identify Patterns in Workarounds: Recurring workarounds often signal gaps in the formal process. For example, if multiple team members are using shortcuts to bypass procurement, the procurement process may need refinement.
Ask Why Workarounds Exist: Once you’ve identified covert systems, seek to understand why they exist. Are they faster? Easier? This insight helps you decide whether the formal process can be adjusted.
Refine and Reinforce Overt Systems: Based on your findings, consider revising your formal systems to better meet the needs that covert practices are attempting to address. Reiterate the value of using the formal system and communicate any changes clearly.
Create a Feedback Loop: Encourage your team to provide feedback on how systems could be improved, so they feel empowered to participate in shaping the processes they follow.
Final Thoughts
Covert systems can create subtle, yet powerful barriers to progress. By identifying and understanding these hidden practices, leaders can realign their teams with formal processes that enhance transparency, consistency, and accountability.
Ultimately, covert systems are often signals that overt systems need fine-tuning. By addressing these hidden practices, you can foster a culture of alignment, trust, and visible progress across your organization.