Flipping the organization

2014

It is the people of the enterprise that ultimately determine its long-term success or failure. Specifically, it is the front-line personnel, the troops in the trench that ultimately define the "customer experience" of an organization's stakeholders.

They produce the products that are consumed. They deliver the services that are expected by discerning customers. They execute the key processes and use the automated tools that get work done. They are the organization's most important asset.

Interestingly, this runs counter to how most senior leadership teams see it. They operate from a very different perspective – one where they sit at the top of the pyramid. Within this paradigm, their needs come first, followed by the middle management layer. The front-line staff is at the bottom of the proverbial totem pole.

Sure, much has been written about the importance of the customer-facing functions. Most management teams even talk about how their front-line personnel are crucial to the growth and profitability of the business. But little has been done to recast the current top-of-the-pyramid mindset and flip the pyramid on its ear so to provide emphasis on the front-line staff that does the work of the organization. Why is that?

The Paradox in Rethinking the Pyramid
An interesting paradox exists that complicates matters when it comes to flipping the pyramid. You see, we're asking those who are at the top to place themselves at the bottom of the ladder.

Executive teams have a vested interest in the prolongation of the current mindset.

Executive teams have a vested interest in the prolongation of the current mindset. They don't want to miss out on the perks, lower their salaries, live without the luxuries that have become part and parcel to executive life. This paradox is perhaps the greatest challenge to overcome in changing the way business is organized and operates.

Typically, paradigm shifts like the one suggested here come from the outside of the status quo. Recall struggles related to women's rights and racial equality for examples of societal paradigm shifts that were successfully driven from outsiders and redefined the way things work in the United States.

So, why even bother proposing such radical thinking? As a management consultant, I am the epitome of an "outsider". I have nothing to gain politically or financially by making the suggestion. But, I do have the challenge of developing a compelling business case for such change.

Simply put, today's business environment is anything but typical. The U.S. has still not recovered from its financial shambles, huge swathes of industry have vanished taking hundreds of thousands of jobs with them and it is still quite possible that if a shift in thinking doesn't take place then the very survival of many other enterprises will be at stake.

So it is in today's leadership team's respective best interests to figure out how to stop the death spiral – or there will be outsiders called upon to make the transition for them.

It seems the time is right to become a bit radical.

Making It Happen
There are implications to turning the corner on executive thinking. Firstly, an upside-down view of the organization must be adopted, where customers are at the top, those who work with customers are next and those who work to support those who work with customers are at subsequent rungs. This type of change will drive business decisions from a new perspective and everyone in the organization will be affected by it. True empowerment is enabled and those closest to the customer are allowed to "call the shots" on how the customer is treated.

In order to make this happen, we must sharpen our perspectives on the players that inhabit the basic layers of the organization. We must recognize that each layer have unique perspectives and are responsible for specific essential actions.

The executive layer, for example, is looking out five years. They are to determine where the organization is heading. The senior leadership team is responsible for establishing and articulating a compelling vision and then working hard to engage their staff members in the pursuit of it.

While the senior executives are envisioning what the enterprise can become over the next several years, the mid-level managers are concerned about operational excellence. They use the current year as a timeframe. The middle managers are overseeing and auditing work being done this year.

Certainly they need to understand the vision so to translate it for their respective staff members. But, in the end, they must empower their associates to do what is necessary to achieve the vision, while managing this year's budget.

Staff members, on the other hand, are ultimately responsible for execution. Part of their responsibility is to be constantly looking for ways to improve what they do. They must develop new skills and fine-tune existing ones so to be ever prepared to do what it takes to get the job done. Optimizing performance today is the driver for this layer of the organization. After all, it is their work that ultimately delivers value to the customer.

Once we gain the necessary understanding and perspective, senior leaders can shift their attention to the work needed to promote the cultural change that flipping the pyramid represents. It is essential that executives become the ambassadors of change that is essential to this shift. By doing so, they will begin to engage in the service of the staff that is ultimately responsible for delivering desired results.

Think of the powerhouses that could be established if the millions of dollars allocated to executive bonuses were instead redirected to staff training, development and workplace / technology enhancements. Talk about a stimulus package!

Of course, awareness programs must be put into place to help educate staff regarding this shift in prerogative and to inform them of what is expected in the new work environment. It certainly takes more than talk. Actions must follow the message and new development programs must be introduced immediately to demonstrate appropriate commitment to flipping the pyramid.

Finally, new ways of measuring and rewarding employee performance is required, too. By tying compensation to behavior modification we motivate personnel to commit to self-improvement. Indeed, this is how organizations will transition and, ultimately, achieve peak performance.

To Sum
Change will not be easy. Indeed, executive compensation continues to be greater, their perks are plentiful, their private offices are well appointed and their support staffs are very attentive. What did the management team at several Wall Street firms do months after the U.S. government provided millions in bail-out money? They awarded themselves hundreds of million of dollars in bonuses!

One can argue that bonuses are part of the executive compensation package prevalent on Wall Street. But, aren't bonuses awarded on merit? Did any of Wall Street's executive's performance warrant a bonus after how their greed so strongly contributed to the near-collapse of the world economy?

Such behavior is the epitome of the prevailing executive mindset. "I exist therefore I deserve." Nothing is more ridiculous, and, as recent headlines suggest, nothing is more dangerous to the long-term success of an organization.

Perhaps, now more than ever before, the prevailing mindset must be changed. Indeed, businesses must begin to flip the pyramid upside down and focus attention on, and, pour precious resources into the nurturing and development of the staff that ultimately deliver products and services to the customer – not on the executives whom primarily manage the spin among the institutional investment community.

If the game doesn't change, many more U.S. business institutions are likely to flail and falter. It is time to flip the pyramid.

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About The Author

James M. Kerr
James M. Kerr

James M. Kerr is the Global Chair of the Culture Transformation Practice at N2Growth and the author of The Executive Checklist. A specialist in organizational design and cultural transformation, he has been helping clients re-imagine the way work is organized and performed for more than 25 years. Kerr’s next book is due out later in 2016 and focuses on leadership and strategy-setting.

Older Comments

Two words stand in your way: Quarterly Results.

Jaz

If you want sustainable world-class performance, businesses must invest in themsleves...Building staff from the bottom-up is a fundamental.

If you don't do this, indeed, quarterly results will suffer.

JK

Yes, I agree. I talk about this and other innovative ways to propel growth on my blog at bizmd.blogspot.com. I think of the org chart as the Atlas model: the bottom person (CEO) holds up (supports) his dept heads who in turn each support their subordinate managers who then each support their line employees. Very good show!

Cheers!

Chris