Organizational charts — not be to confused with organizational strategies — typically are deterrents for independent advisory businesses.

Because many owners don’t understand organizational strategy, they create an organizational chart with boxes and names on it. But this chart sends the wrong message to employees and creates a working atmosphere that prevents businesses from reaching full potential.

Virtually all the organization charts I’ve seen used in the independent advisory industry are what’s called “vertical organizational charts.”

These charts typically show a pyramid shaped diagram with each row of employees positioned below the person or job title they report to, with the rows getting shorter as you move up the pyramid.

The problem with a vertical org charts is they give the impression that the positions grow in importance as you move up the pyramid. This may be an accurate picture of a manufacturing business; in service businesses such as advisory firms, though, it couldn’t be more wrong.

The Issues Worth Noting

When you’re in the business of providing services, your success depends on the actions of every employee — from the owner to the receptionist.

When clients and/or prospects get poor service from any one of your employees or advisors, you run the risk of losing not only that client but also all the referrals they may have sent your way. If you run a future value calculation on this loss, it’s a big number.

Thus, owners should think about their employees in a different way. The perspective of each employee depends upon each of their employees.

From that vantage point, a number of things come into a different focus.

First, once you realize that your success depends on all your employees, your relationship with them changes.

Second, that vertical organization chart starts to look flatter. Think about it: While owners and employees in your firm may have different jobs, no job — or employee — is more, or less, important than any other.

Consequently, instead of “telling” your employees how to do a job that you’ve probably never done (not, at least, for many years), your relationship becomes more of a collaboration.

The beginning of the relationship is basically the same. When you hire someone, you see that they are trained in what you think they need to know and do, and you supply them with the tools you believe they need to have to do it.

But when your success depends also on their success, your follow-up attitude is quite different.

Of course, you check in from time to time to see how they are doing, but you also take more interest in their perspective and insights.

You ask them what else they need to do their jobs better, and you also inquire about how they would change their job, and/or other jobs in the firm to be more efficient or provide better service.

What’s more, when you get new ideas that involve specific jobs in your firm, or the firm as a whole, you ask your employees for their feedback and input before you implement it.

And, when you see your employees as “partners” in your efforts to provide your clients the best service possible, you also ask for their feedback about any areas of your business that could be better.

Employees who are taken seriously, asked for input, and are treated like equals, make much better employees — and together, make more successful firms.