by Andrzej Gorecki
[As published in Singapore Business, November 1992]
Turning the conventional management pyramid on its head is dangerous
practice, argues Andrzej Tomasz Gorecki.
Among those who create and disseminate new management concepts, there
are confused individuals who ought to be listened to with caution. They
often use the buzzword of Total Quality Management (TQM) to get a hearing.
Once given the opportunity to present their case, they invariably put
forward the concept of an inverted management pyramid.
It is argued that a traditional (implied: obsolete) business is styled
in the form of a pyramid with the chief executive officer at the top,
senior executives underneath, and so on. There are many layers in the
management structure, which reflect who reports to whom. Once the pyramid
is sketched on a white board, the crucial question is asked: Who are below
the rank-and-file employees? The answer sought is: The customers.
Once the customers are drawn at the bottom of the pyramid, just below
the lowest-level employees, the process of rending one's garments begins.
How can the senior management of a company tolerate such an absurd arrangement,
with the most important people (the customers) being kept at the bottom!
It is obvious that the enterprise has no hope of getting anywhere with
this obsolete management structure — especially in today's beleaguered
markets.
Fortunately, management is offered a fix — simply, turn the management
structure upside down, and put the most important people in the business,
namely the customers, at the top. Reversal of the pyramid not only gives
the customers the most important role in driving the business, it also
gives the front-line employees a similar ability. As they are closest
to the customers, this appears to be a reasonable and long-overdue proposition.
Thus, the inversion of the management pyramid is not only deemed to improve
relations with the customers, but also to improve the business itself.
The flow of communication from the customers and within the enterprise
should vastly improve.
Once the inverted pyramid idea is presented, it is postulated that the
role of management needs to change from a commanding role to a supporting
one. The whole concept sounds logical and, not surprisingly, many of those
who advocate the inverted management pyramid get more than just a hearing.
They actually get appointed to introduce the concept into some businesses.
The reform process begins. Sadly, what invariably follows is a major
disturbance to the business. Management authority is undermined and the
business loses direction.
In the absence of proper authority, people become confused and the business
veers out of control. A single instance of the management attempting to
issue a directive, rather than listening to what their subordinates want
them to do, is claimed to ruin the whole process. The management can no
longer command their staff.
The concept of the inverted management pyramid is a dangerous misconception,
born out of confusion. The hierarchical structure of a business must never
be abandoned because there is no other way to structure authority than
in the form of a pyramid. It is the chief executive officer (CEO) who
is responsible to the board of directors and ultimately to the shareholders
(or whoever owns the business). It is the CEO who is vested with the authority
to set the direction for the business, and who then delegates part of
this authority to his senior executives, who become responsible for functions
within the business.
From senior management, the authority is further devolved until it reaches
the front-line employees. A pyramid reflecting the devolution of authority
is created, which applies to any enterprise, without exception, Any organisation,
which operates well, has a proper hierarchy of authority and accountability.
(I am not advocating here a rapid swelling of middle management ranks.
The number of hierarchical layers and the number of managers must be as
small as possible, but enough to properly handle the delegation of authority.)
It is of critical importance to realise that customers do not enter into
this authority structure. No doubt, they are very important to the business,
but there is simply no room for customers in the management pyramid. Nowhere.
Neither at its bottom, nor at its top. There is no authority/accountability
ever delegated to the customers.
Having said that the pyramid must stay in place without the customers,
is there any hope for a typical Western-style enterprise, which usually
has major difficulties communicating internally and in listening to its
customers? Fortunately, there is. The fundamental reason for communication
failure, and the resulting inability to properly serve the customer, is
confusion between hierarchy of authority and flow of communication within
the business. Nearly everyone who looks at the business hierarchy makes
the mistake of assuming that it is also a map for communication flow within
the enterprise.
The flow of communication in business should have little to do with the
hierarchy of authority. If communication is allowed to flow only along
the lines of authority, your business is doomed because the information
will flow through a number of hierarchical levels. In such a system an
employee in the front line has no chance of ever communicating with the
CEO. If he is four levels below, he will never be heard because every
person who relays a message is likely to mis-communicate about 25 per
cent of its content. But the employee may have an important message or
suggestion. Such communication must be allowed to flow.
Where it comes to delegation of authority, the pyramid arrangement is
the way to do it. The communication structure, however, must be totally
flat. Not flat in the sense that everyone reports to the CEO; but anyone
within the organisation should be able to communicate with anyone else.
For the purpose of communication, every person acts only as a source and
recipient of messages. In this sense, everyone within the organisation
is equal.
Western enterprises have a massive cultural hang-up. For many it is inconceivable
that an employee could write a memo to his boss's boss — at the very
least, the immediate boss should get a copy. The question is: Why?
If the memo is a marketing suggestion from a computer programmer, why
should the information technology manager be notified? It needs to go
to the CEO or, even better, directly to the marketing department. It has
nothing to do with the IT manager. Let's keep communication lines free
of clutter. Communication bypass does not violate authority. It is only
the delegation of authority which cannot be bypassed.
Customers, who do not enter into the authority structure, certainly enter
into the communication structure. The marketing function simply could
not operate without lines of communication extending to the customers.
In a properly organised enterprise, there are communication lines available
between the customers and everyone within the organisation. A customer
should be able to communicate with the CEO as easily as with the person
across the counter.
Once communication is allowed to flow freely throughout the enterprise,
it becomes possible for employees to truly participate in the running
of business. Similarly, customers can shape the organisation through their
feedback.
Passing information from top management to front-line employees is no
less important. Many organisations with a great vision for the future
still fail, because the vision does not filter through to staff. When
necessary, the CEO has to communicate directly with all employees, bypassing
the hierarchical pyramid. Any program or strategic plan, including TQM,
will fail unless the lines of communication are opened up.
Andrzej Gorecki is a Director and principal
consultant with Melbourne-based Retail Directions Group, which develops
and supplies state-of-the-art software solutions for retailers worldwide.
Copyright
(c) 1992 Andrzej Gorecki
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