Up the Organization | Robert C. Townsend

Summary of: Up the Organization: How to Stop the Corporation from Stifling People and Strangling Profits
By: Robert C. Townsend


In ‘Up the Organization’, Robert C. Townsend offers critical insights into the world of corporations, urging a counterbalance against stifling bureaucracy and red tape that holds back growth and profits. This summary encapsulates the key messages of the book, touching upon themes like prioritizing excellence over all else, ensuring employee ownership and motivation, rethinking traditional corporate hierarchies, and fostering a culture of trust and innovation. Prepare to explore indispensable advice on simplifying inefficient processes, facilitating meaningful communication, enhancing frontline customer-employee interaction, and cultivating true leadership to bolster a company’s success.

The Art of Corporate Guerrilla

“No accounting system can provide you with the purest independent reality.” This statement summarizes the nuggets of wisdom presented in this survival manual for successful corporate guerrillas. The book argues that the key to financial success is not to mask a downtime with changes in the way you account for things, but instead to stick with an accounting system that meets your team’s purposes. Your budgets and reports should be written in plain language so that anyone can understand them.

Additionally, the book emphasizes the importance of hiring the right team of professionals, including accountants, bankers, and lawyers. While they are necessary, they should be controlled as they tend to spawn bureaucracy, which could hinder profits. The ultimate decision should be yours, and you needn’t follow their recommendations slavishly. Also, pushing your controller or CFO to prepare reports ahead of schedule can generate errors that will mislead you and others and undermine your credibility.

In essence, the book stresses that institutions should conduct themselves with the utmost care because the stakeholders expect success, not mediocrity. Therefore, the groups of people working together for a common purpose should focus on doing things excellently, ensuring profitability and having fun in the process.

Simplify for Future Growth

Successful companies must avoid being bogged down by bureaucratic operations that hinder growth. They should focus on simplicity, accountability, and justice for their employees, and eliminate inefficient and wasteful processes. True leadership should benefit followers, not enrich leaders. Personal assistants should be eliminated to promote direct communication between managers and their subordinates.

The Dangers of Corporate Overgrowth

Growing a big company is not necessarily bad, but becoming a bloated institution that prioritizes paperwork and management over customer satisfaction is a recipe for disaster. The author warns against losing sight of the customer and offers advice on how to avoid this fate.

Employee Ownership as Cure

Employee ownership through stock programs can help cure corporate lethargy, extravagance, and self-indulgence. When employees feel like owners, they prioritize customers over management. Traditional shareholder models focus on treating management well, but it should be the other way around. The use of well-planned incentive compensation and profit sharing programs can motivate employees and reduce costs compared to paying employees based on seniority. Incentive pay rewards performers, not time-servers. The book warns against bosses who never make mistakes and emphasizes the importance of seeking employment elsewhere if necessary.

Redefining Job Descriptions

Job descriptions may work for low-level jobs, but they can hinder creativity and productivity in higher-level roles. The author suggests publishing the Ten Commandments instead of having a policy manual. Ingratitude can decrease employee morale, so employers should express sincere gratitude for their contributions. The author recommends delegating decision-making to front-line employees to increase efficiency.

Beware of Oversized Executives

A cautionary tale against hiring an executive with a sense of entitlement, huge pay, and demoralizing organization charts. The author advises the readers to stay in column A of making good on their promises and to use a simple alphabetical list of employees. The executive pay should be a small multiple of the average company pay, and the company should get a new CEO every five or six years to keep the company fresh.

Real Leadership

True leaders prioritize the needs of their followers and focus on their success. They avoid self-centered behavior aimed at preserving their own rewards. The most effective leaders act as player-coaches, taking an interest in helping others succeed while setting an example with their own contributions. Embracing the potential for mistakes, being ready to apologize, and allowing others to make errors are all essential characteristics of a great leader. In contrast, prioritizing individual success over the needs of followers is a sure recipe for failure.

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