By Jack Cumming
There are two ways to manage a large organization. One is by principles, talent, and leadership. To channel Alexander Stubb, the respected world leader, we might call that “values-based realism.” It’s inclusive. It’s pragmatic. It’s unifying.
The Deadweight of Hierarchy
The other management structure is more common. It’s the hierarchical command-and-control structure we associate with military formations. The one is circular and mutual. The other is pyramidical and disempowering. The concept of superiors and subordinates is contrary to that of peers and commonality.
Hierarchy brings to mind the picture of Hercules holding the entire world on his shoulders to give Atlas a break. The business parallel is that of the local revenue-producing operating entity, say a Life Plan Community (CCRC), holding up the entire non-revenue central office, regional office, and functional services (accounting, technology, legal, HR, etc.) on its shoulders. No wonder that local entities struggle to stay competitive and serve their mission.
Without access to pictures, it’s hard to convey to you what seems obvious, but let’s try with word pictures. In the one picture, imagine a CEO relaxing, supported at the top of the heap by corporate hierarchy. Now invert that picture to put her or him at the bottom of the stack with the weight of the organization bearing down. At the top of that inverted pyramid are, say, as an example, the 1150+ senior communities that Brookdale had at the peak of its scale. Your number of communities is likely less, and so now is Brookdale’s.
Local Business Success
Board and care facilities are often the best solution for caring for the aging. Still, large institutional facilities dominate public awareness. As an aside, I know that there are some in the industry who detest the use of words like “institutional” and “facilities,” but those wordsmiths are also not residents in those “communities” they tout. Those locally owned, locally run board and care entities do well by word of mouth despite the lack of corporate affiliation. They’re more personal and less institutional.
Now returning to Brookdale as an example of the kind of corporate entity that dominates both the not-for-profit and for-profit business models. Each community, if run right, might have been a profitable local business on its own without interference from Brentwood. Now add in all the costly apparatus that corporate-think put in place to ensure central control. The locals might understand the market and the needs, but the central theorists are in charge. That can be a heavy burden for executive directors and their local communities to bear.
Revenues at the Bottom
Flipping the chart by putting the local operating community, like Atlas, at the bottom of the stack, holding up all the “know-it-alls” above, without the freedom to do what’s obvious where the rubber hits the road, where the revenues are generated, and it’s no wonder that hierarchy is a costly business model.
It’s also obvious how it comes to be. A local community succeeds, and so do other communities elsewhere. Someone observes that mutual support can be positive. Capital is deployed to buy up those local communities and band them together. But the result isn’t mutual support and improved service delivery. The result is a hierarchy of control and concentrated authority at the top. Ownership can be intoxicating.
Natural Corporate Politics
Sycophants surround the person at the top. After all, you move up the stack by making those above you feel good. It’s a CEO’s success story. The person at the bottom, who once took pride in local achievement, is now just a minor figure subordinate to those above. No wonder so many executive directors feel forgotten and diminished.
Moreover, those up the stack gain nothing from constructive innovation at the community level. They stay safe by saying no to local creativity and by trumpeting all the good that those in the ivory tower do for everyone below. A corporate flatterer once asked executives who were presenting their virtues to residents, “What else would you like the residents to hear from you?” The flipped question, of course, is “What of substance have you heard from the residents?” A resident asked that question, and the presentation soon ended.
The Corporate Regional Vice President
No one wants to be the executive director who reports to a namby-pamby naysayer. From the 1725 source for that term, “Namby-pamby’s doubly mild, ‘Once a Man, and twice a Child’…”. Do you know anyone in your hierarchy like that? Who do you respect? It may not be your boss. Respect outshines authority. Who is actually worthy of respect? And, beware, it may be a resident.
The alternative is more simply delineated. Sure, standalone communities can learn from each other. That brings us to a second picture. Picture a roundtable of executive directors meeting much as the head honchos of sovereign nations meet in the round to address global issues. Those executive directors are far more likely to respect the suggestions of their peers than to accept the performance review of that tolerated boss.
Peer-Driven Excellence
Not only does performance optimization outshine performance reviews by Mr. Namby-Pamby, but it also saves money as Namby-Pamby is now free to pursue a more constructive career, saving the enterprise and those it houses much money. It takes an exceptional leader, a peer among peers, primus inter pares, to facilitate a sharing consortium in the round. Some franchises follow this model. At one time, auto dealerships operated successfully on this model. But it’s rare.
Rare or not, a sharing, cooperative culture is perfectly suited to the senior living industry. Yet, I know of no senior living leader who’s brought it into being. Instead, a superstructure of cultural flimflammery tends to get pasted onto the traditional hierarchy. The power hierarchy persists. The cost of centralized culture is fallow overhead. The payers are those who pay the bills, the residents.
It’s Not Your Fault
If you’re a leader by position who has fallen into this righteous trap, know that I admire you. At least your recognition of the importance of culture is a move in the right direction. This article is not intended to chide or criticize. It is intended to show clearly the obvious deadweight of hierarchy and overhead as a drag on performance. Textbook business school authority speaks of “span of control,” but business school tends toward counting-house rationality. Missing is the subtle understanding that permeates the human condition.
We humans are at our best when disaster strikes. That’s when peers come together without corporate structure to help each other. I remember vividly the disaster of the Blackout of 1965, which plunged New York City, where I lived, into darkness. I went to use a phone booth at 94th Street and Broadway to call home, but I was stopped by a local denizen. “Don’t put money in the phone,” he said, “I rigged the phone before the lights went out, but I don’t want the money now.” There’s no hierarchy when people pitch in together. That’s when integrity matters the most.
Learning From Disaster
Recently, Leigh Ann Hubbard shared on LinkedIn the story of devastation overtaking her community near Oxford, MS. The reason she gave for sharing deserves to be engraved in the hearts and minds of all humans. She wrote that she shared her community’s plight.
Hierarchy lends itself to narcissism. Subordinates are expected to be loyal, deferential, and adoring. The model is a parent-child relationship with an adored parent, except that the parent doesn’t act in a loving way but instead demands control and subordination. Teepa Snow addressed this recently. Remember how everyone came together, trying to help each other, during those taxing days and months of COVID-19.
Let’s Come Together for Each Other
The emerging, more democratic roundtable of peer effort is less ego-driven. It’s not new. De Tocqueville wrote of its unique American origins in his 1835 tome, Democracy in America. But it’s human nature for self-thinking people to disregard the deep thinking of others in favor of their own superficial thinking. That tendency remains rampant even today.
Humanity is at its best when everybody comes together. If we rid ourselves of the sclerotic impact of insipid hierarchy and simply heave to as a group, our business will be better, and our society will prosper.
Let the work of reform begin. May you find prosperity in the effort.
