Articles: Blog

Upside down organisational charts: insights and value from a different perspective

 

Inverted or upside down organisational charts are drawn with a purpose: to invite executives to think differently about their organisation and their role.  This article explains how to draw them upside down (it is not simply turned upside down) and how the changed perspective alters how Executives and managers think about their role in the organisation.

[Note I see examples of upside down organisational charts over the internet, however  many simply draw the org chart upside down, and add customers at the top.  The approach set out below is more subtle.  Executives I have done this with, tell me this approach creates a different perspective and provides different insights for Executives that use it.]

I started drawing organisational charts upside down, when working with the Executive teams of various clients, about five years ago.  I quickly realised that, as soon as I started to draw them,  light-bulbs came on for these Executives. Why did the light bulbs come on?  And how do you draw them in a way that illuminates issues for an Executive team?

Without fail, when i do this with a management team, they start to think about their roles, organisation and people in a different, fresher, way.  It helps them think through not only their organisational structure but also:

  1. Their strategy: where  and how it is socialised and implemented.
  2. How they interact with customers as an entire social system.
  3. The role of support functions in enabling capability in the organisation.
  4. How to create an environment where their people can make , act on and learn from, decisions better.

Why do traditional organisational charts exist and how do they work?

I have come to the conclusion, (rather cynically I know) that traditional, top down, organisation charts exist primarily for HR and Finance.

  • It allows the HR team to know who reports to whom for pay and rations, who does appraisals, and who manages who.
  • Finance love them because it means the costs of individuals and teams can be aggregated up through a clear and simple hierarchy into easy to describe cost centres.
  • Of course, the chart also gives some comfort to those individuals on the organisational chart, so they can see where they sit, who they report to, who reports to them. They have comfort in knowing they have a place in the organisation.

As a result traditional organisational charts have the Chief Executive at the top, followed by his or her executive team and then a structure that works ‘down’ through the organisation until you meet the front line workers, or other individuals that have no direct reports.  Everyone has their place in the organisational hierarchy.  The organisation charts are divided by departments or teams.  Everyone has a place.  (Yes I know some org charts are matrices, but they are essentially the same, top down style, just with two or more reporting lines.)

How do you draw the organisational chart upside down?

Drawing the organisational chart upside down sounds simple: you simply turn the page upside down, don’t you?  Well, no actually.

By applying some subtle, but important changes, you get a completely different, and more useful, picture of the organisation and how the people work together.

Let me explain.  First you create an overall framework to hold the structure.  I find that creating a structure of five layers is usually a great place to start (and you can modify and refine it afterwards, but this works best). The structure is as follows:

  • You start at the bottom and place the executive team there, in the first perspective.
  • Above them you place a layer where you will put the support functions
  • The third layer consists of the front line managers
  • The fourth layer above them, are the front line staff
  • Finally, you place the customers at the top.  (Yes you include the customers!!)

Already this upside down organisational framework creates a more radical and insightful view of the organisational structure.  Before we look at each layer in detail, there are two things to bear in mind:

  1. This is not simply about the perspectives and their order, but the interactions between the players and people in each perspective: for instance between the support functions and those above them, or between the front line staff and customers.  It is the joins that matter as much as the boxes.
  2. As you read through the description you will notice references to enabling decision making at each level.  A key implication of this approach, is helping people think through where policy decisions are made, and at what level of decision making should occur.
  3. This approach helps you think through the implementation of your strategy, in a way that traditional organisational charts fail (but we’ll come to that in a while).

First let us run through the structure and implications of this framework, perspective by perspective.

The ‘Top level’ management perspective changes

The first thing that this style of organisational chart does is to change the perspective of the senior management and executive team.  Sometimes, they are referred to as “top level” management because they are at the top of the hierarchy: they are now at the bottom!  For the moment let us call this the executive layer.

Placing the Executive layer at the bottom dramatically changes their perspective on their role.  Previously the top down hierarchy implied control, if not made control explicit: You control me and I control those below me, etc..  However, placing the executive team at the bottom changes this persective. The organisation is now balanced on the executive team.  I find that using this approach means that the executive perspective changes to thinking about how to delegate upwards and how to empower those above them.  In their heads the emphasis shifts from control to empowerment of decision.

Having the customers at the top, furthest away from the executive, also emphasises the important role of the front line staff, and the recogniton that the exeutive cannot directly control the front line inteactions: the executive merely work through the organisation to influence the customers.

I want to emphasise an important point that this upside down organisational strucure creates from the executive perspective.  This new perspective invites the question, “How do I, as an executive, enable and support the decision making of the people above me in this hierarchy?”    Note that this is not, how do I control their decision making, but how do I support their decision making?”  An important shift in thinking, that many Executives will recognise as a part of their role.

Support functions actually have a supporting role

The level above the Executive is where you place the support functions and their teams. These are typically HR, finance, IT, legal etc.

In traditional, top down, organisational structures support functions are called support functions, yet they do not support anything in the organisational structure hierarchy.  They sit beside the rest of the organisation.   Perhaps we should call them ‘beside functions’ rather than ‘support functions’?

In contrast, when drawing the ‘upside down’ organisational chart and structure, support functions actually support the front line managers and front line staff.  They physically and literally support the other people in the organisaton.

This positioning in the upside down organisational chart changes their perspective and also more clearly positions the role of support functions.  They are now seen, and see themselves, as having a role that should directly enable and support the front line managers and front line staff.  They should support the front line roles, who in turn, serve the customers.  In the organisational chart, the support functions no longer sit beside but support.

One important piece here is the direct implication that policies and processes designed by the support functions, and the decisions that support functions make, must clearly enable the front line managers and staff to do their roles better.  This is obvious, in this organisational structure, but not obvious is a traditional top-down beside structure.  It is obvious, that the support functions role is to directly support and enable the front line.  (Of course the function of some support functions can be to support the executive, but this is a minor detail we can happily step over for the moment.)

You will have realised that in a ‘simply turned upside down hierarchy’, there would be a line from some of the executives directly to the front line managers and some lines to the support functions.  However, bear with this, and fear not.  This upside down approach of drawing perspectives to hold the roles and people, emphasises how the Executives of the front line managers also have to work through the support functions to get things done.  It is not simply a pay and rations, reporting line, change.  It is however a much clearer statement of how the lines of influence should work.

Front line managers and Front line staff

The perspectives of front line managers and staff is more obvious.  The front line managers create the space for the decisions and tasks of the front line staff.  The front line staff execute those decisions.

The front line staff should also be enabled by all those beneath them in this new hierarchy.   Those beneath them exist to facilitate and enable effective customer interactions.  The role of those lower in the upside down organisational chart is to create the space and environment for people to perform.  This is no clearer than in the case of front line staff.

It is useful to separate the front line managers from the front line staff.  The Front Line Manager’s role is to support and facilitate the roles, activities and decisions that the front line staff make.   In turn, these managers should be enabled and supported by the support functions and executive team.

Placing the front line staff at the top of the diagram, and let us face it, in most organisations this represents the vast majority of the people in any organisation, also says something about how those front line staff are viewed.  They are seen as top of the hierarchy (subject to the customer of course).  More importantly they see themselves as being at the top of the hierarchy.  They are where the money is earned and the service provided.  They are the touch-points with the customer.  They are the face of the organisation.  Without them the organisation would not exist.  They are most important.

Furthermore, this approach emphasises that the front line staff should clearly have their orientation and relationship facing outwards towards the customer.  The traditional organisational structure encourages a “Where do I hang” approach and “Who do I look up to for advice?”.

In contrast, this approach says, “You face the customer: so what do you need to make that work well?”.

This change of emphasis to the front line staff and their interaction with your customers is perhaps the most important piece of this whole approach to drawing the organisational chart this way.

The customer interaction and customer perspective

Now, why would you include customers in the organisational hierarchy?  Conventional organisational chart wisdom ignores customers because they are outside the organisational boundary and structure.  They are of no interest to HR for pay and rations, or Finance for cost centre control.  So customers get ignored.

However, when you look at this new supposedly upside down organisational structure, it is clear that the role of everybody in the organisation is to facilitate the customers and particularly the interactions between the front line staff and the customers.  In many ways this is the right way up.  The customer is at the top and all are there to serve the customers.

How you present the customers in this perspective can dramatically change how you think about the organisational structure and the social interactions across the organisation.

For instance, you might organise the customer perspective into groups of customers, for example business and retail customers.  In this case it would suggest that the organisational structure would mirror those natural customer groups with differering needs.   This would reflect how teh customers are thinking: it would mean the organisation organises around how teh customers think and work.

Alternatively, organising the customers by, say geography, or the sales and servicing process, is doing something quite different.  It is organising the customer perspective around how the organisation thinks and operates.  Many organisations do this, but is this the best way?  If you think about the social system between the customers and the front line staff, the question invites thinking about how the social system is best organised, not from the perspective of the organisation, but from the perspective of the individual customers.

Having customers, or even customer groups at the top, also invites questions about which front line staff will be interacting with wich customers.  Again this is useful for breaking down traditional silos, because it asks about the collection of people in the ‘organisation’ who should be serving those customers.

What we are doing here is starting to look at these interactions, not as a transaction with the organisation, but as a social system which engages with customers.  The traditional organisational structure starts by asking, “What executive roles should I have running which departments?”.  If  you genuinely look at this upside down organisational chart as a social system, of which the customers are a part, then you start that conversation from the complete opposite end.  You ask, what social interactions do we want, and what is the best way to organise our social system to serve those needs?  Only then do we ask, what roles do we need to lead and who should create the space for these social systems to perform?

The traditional organisational boundary is artificial: bridged by social systems

Now this is being a bit radical by some measures, but it is clear to me that the boundary of an organisation is quite artificial.  More and more I come across organisations who invite their customers inside themselves to support, play various roles, advise, joint design, and collaborate.  Yes the boundary exists for pay and rations, but not for operations.  The organisational boundary is an artificial construct: one that is melting away as we recognise that it is simply bridged by the social system and social interaction that exists amongst people, be they employees or actual and potential customers.

As you develop these upside down organisational views, you will undoubtedly find parts of the front line staff that serve different customer groups and have different types of conversations.  If it helps, you can sub-divide this perspective by customer types.

Filling in the detail within the perspectives

A great advantage of this approach is that it helps an executive team think through its organisational structure with out the temptation to drift into silo thinking that traditional organisation structures and charts encourage.  Depending upon how you define or classify the customers, will dictate how you describe the organisational support (the social system) that supports those interactions and customers.

Overall perspective: a set of conversations and decision making

Looking up and down this new organisational structure, it is apparent that you can ask how each layer supports decisions making in the layer above.

I have said many times, that strategy does not exist on paper, but it is implemented in the decisions that people make on a day to day basis: and as they make those decisions they are not checking the strategy documents each time.  They are using the strategy as is in their heads.  So the key is to socialise the strategy and enable the decisions of those above you in this organisational structure.

This emphasis on enabling decisions completely changes the traditional “performance management as control” thinking.  Many organisations implement performance management to provide senior managers with a view of what is going on.  In contrast, this approach invites a completely different question:  What do we need to do to help the front line people make decisions more effectively.   The management question then becomes, “Are our people learning to use this information effectively and making good decisions with it?”  This means the senior management role becomes one of enabling decisions and ensuring people learn.  This is in complete contrast to traditional thinking where senior management gather information, wrestle control away from people beneath them and instruct them what to do, “because we know best”.  Clearly not a recipe for creating an environment of development and learning.

With many clients, this one aspects is the large light-bulb moment.  It invites the senior managers to think, what guidance and policies do we need to help our staff understand, so they can make decisions more effectively.   What resources and tools do they need?  What education and training can we provide?   How do we enable decision making, at the right level in this organisation: closest to the customer and where value is created.

‘Upside down organisational chart’ is the wrong expression

By now, I should really stop referring to this view of the organisation as the ‘Upside down organisational chart’.  It is traditional organisational hierarchical charts that are upside down.  It is this approach that is the right way up.

So if you have a good name for such a chart drawn this better way, do drop me a line with your suggestion using the form at the bottom of the page.

Implications for decision making

Perhaps the most valuable use for the up-side down organisational chart is that it helps an executive team think through how the support decision making in their organisation.  It invites the question, “How do we create an environment where people can make decisions, act on them and learn from them quickly”?

By looking from the bottom, the Executive team are asking, what information do these people need to know what to do, what freedom do they have to make decisions, do they have the ability to act?  Do they have the opportunity to learn?  These questions are at the core of how effective organisations support and empower decision-making in their organisations.  They are how we help clients think through what they need to do to empower their teams, the teams above them, to take good decisions, execute them well, and learn quickly.

Relationship to the Fourth Generation strategy map structure

I have been saving this until last.  I am about to make a clear link between the strategy and the new organisational chart.

The eagle-eyed amongst you will have noticed a bit of a similarity between the structure of the ‘upside down’ organisational chart, and the basic structure of the fourth generation strategy map.   There are differences, but there are more similarities.   There are certainly more similarities between these that between the strategy of an organisation and its traditional organisational hierarchy diagram.  In its simplest, form, the strategy map structure (before you overlay teh business model) has learning and growth supporting the processes, which enable the customer’s objectives, so they give you money.

The thinking behind this core structure is replicated in the upside down organisational chart.  The process and customer perspectives of the strategy map are replicated in the customer layer, and the first line staff and managers’ levels of the organisational chart.

There is no financial perspective in the upside down organisational chart, though you could easily allocate revenues and costs to various front line activities to create similar view.

The support functions and the executive team can be  seen as enablers and building capability in the organisation so it can learn and grow.  In reality the strategy map model is richer, because it asks what capabilities the front line staff need to learn and grow, as well as, in separate strategy maps, inviting the same questions for the support functions and even the Executive Team.

So the the strategy map and the organisational chart are similar, and it is useful to note the similarity.  However it is not a pure straight mapping, which is why a set of strategy maps are useful alongside the upside down organisational chart.

If you are serious about enabling decison making in your organisation, get it touch and we can talk through how we have helped others to improve decision making and their strategy execution.  Just give us a call.

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