Stop gerrymandering the asset hierarchy

Malcolm Gladwell in Season 3, Episode 7 of Revisionist History, talked about his 12 Rules For Life. I was so moved by this podcast, that I elected to write my own rules. As I was compiling a personal prioritization of gifted wisdom by my mentors and experiences, I got to rule #5. It states, “If you start your own manufacturing company today, the first thing you shall build is your asset hierarchy standardization.”

The asset hierarchy is the layout and the format of your assets as you zoom in and out of the layers of comprising components. This alignment helps with things such as asset depreciation schedules, an understanding of where your bottlenecks are, and accurately tracking asset history for continuous improvement. Once organized, one can build the foundations for success. I have always been passionate about this, but it stayed ranked at #5 until I read ISO 55002 7.5.3.g. My rule #5 got bumped up to rule #1.

The alignment of information requirements for different levels and functions within the organization: this includes the ability to have vertical alignment of the information from top management down into the operational areas, as well as horizontal alignment between asset management, financial management and risk management functions, by using a common terminology for financial and non-financial information; - Asset management — Management systems — Guidelines for the application of ISO 55001, 7.5.3.g

Within every computerized maintenance management system (CMMS) there is a requirement for an asset hierarchy. As you get down to the bottom layer of the assets, this is typically where work orders are written, the costs are captured, history is recorded, and spares are electronically attached to reference as a bill of material. Everyone typically buys into the importance of the asset hierarchy as they can relate its optical organization to a folder and sub-folder structure.

But here lies the problem. If you look at every individual’s folder structure with paper copies in their drawers, electronically in a personal computer, or within an organization’s cloud folders, they are all different. There is no standardization of what is in, what is out, and what the expectations are indicating which type of assets are in each layer. And with no standardizations, continuity over time is extremely challenging.

These personal preferences in defining what is organized or what is functionable within an asset hierarchy begin to decapitate its functionality with irrevocable damage. Individuals and organizations tend to want to modify how they sort and find things based on their own siloed biases. As organizations change and morph over time, individuals tend to drift towards aligning their assets in their CMMS the same way accountability is laid out within the organization's chain of command. As a momentary preference, individuals justify modifying their asset hierarchy in a way that their areas of responsibility are derived.

Gerrymandering your asset hierarchy

In the same way that Gov. Elbridge Gerry of Massachusetts in 1812 defined new state senatorial districts that looked like a salamander, individuals begin gerrymandering their asset hierarchy to their own "political" bias. The gerrymandering of the asset hierarchy is done from a present point of view to selfishly steer its ability to function in the immediate future and not over the life-cycle of the assets. With no wilfull intent to disrupt continuity, these individuals are modifying their asset hierarchies to make their responsibilities easier. The manipulation of the asset hierarchy process, the gerrymandering of the asset hierarchy, hurts the organization and makes it harder to improve because of the constant change. They are making their folders organized from their unique perspective.

The term is derived from the name of Gov. Elbridge Gerry of Massachusetts, whose administration enacted a law in 1812 defining new state senatorial districts. The law consolidated the Federalist Party vote in a few districts and thus gave disproportionate representation to Democratic-Republicans. The outline of one of these districts was thought to resemble a salamander. A satirical cartoon by Elkanah Tisdale that appeared in the Boston Gazette graphically transformed the districts into a fabulous animal, “The Gerry-mander,” fixing the term in the popular imagination.

Two hierarchies

My rule #5 was pushed to rule #1 after interpreting 7.5.3.g to state that for an organization to be successful, you need to have two hierarchies. The vertical hierarchy is the organizational structure that is connected to an active employee directory. This hierarchy is malleable and it breaths over time to adapt to the priorities and memberships of the organization, from the very top to the very bottom. It must be accepted that this organizational hierarchy is constantly morphing its form. For example, one day the utility department is under the leadership of a utility manager, and the next day the utility department is under the leadership of the area the utility supplies. Another example is that one day your MRO (maintenance, repair, and operating supplies) organization reports up through operations, and the next day it shifts to reporting up through the procurement team. We have all seen this and this is completely normal in all industries. This organic altering, flexing, leaning, flattening, and retracting of the vertical hierarchy should be expected. But it should never affect the horizontal hierarchy.

The horizontal hierarchy is the layout of the assets. It is my rule #1 that should remain constant over time, only to add things when new capital assets are installed and have assets removed only when assets are decommissioned. It is rigid, it is not flexible. It does not get gerrymandered. It doesn’t breathe over time in alignment with the way the organization is managed.

The challenge

Some will argue then, well how do you should create performance indicators of the leadership and organizational departments if the asset hierarchy is different than the organization hierarchy? The best way that I have seen is to go through the asset hierarchy on regimented bases and indicate who from the organizational hierarchy is accountable for the assets. This earmarking of responsibilities is routinely updated so that attributes can be accurately filtered, trended, and improved both vertically and horizontally. Now with two hierarchies, you should be able to run things like PM Compliance or Open Incident Corrective Actions horizontally for the assets and vertically for the layers of leadership.

In my opinion, there are not many things more important to enable continuous improvement than an accurate horizontal asset hierarchy. Combing this with an accurate vertical organization hierarchy, you now have a complete picture of your people and assets. Building this with standardization and remaining rigid on its importance will enable the organization to successfully obtain the benefits from a CMMS.


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