Requisite Organization Structure

What Have You Done for Me Lately?
In the blog world, recency is everything!  I’ve been going where the energy is lately and that hasn’t been Mission Minded Management.

Truth is Timeless – Requisite Organization
My blog is rooted in the meta-model, Requisite Organization, which focuses upon structuring your organization to take advantage of natural laws.  It’s the science behind effective organizations.  It informs and enables you to structure your organization, assess and lead your talent with integrity — as an engineer would with a systems, science-based approach.  Yes, I’m a management consultant, but I’m really an organizational engineer.

Executive Leadership – Ensuring Strategy Execution, Accountability Systems Design
Lack of a clear framework, which Requisite Organization provides, leads many an executive puzzled by why s/he can’t get her strategy executed.  When you design your leadership systems without the common inherent conflicts of interest that exist in most leadership systems, buy-in happens naturally.  People want to contribute at work.  Requisite Organization’s Accountability and Authority framework integrates these two ideas into a leadership system of integrity.

Major Short Article Repository – Requisite Organization, Organizational Structure, Managerial Leadership, Talent Assessment
I encourage you to use the search function on my blog to take advantage of the 300 posts in this time before they become a book.

If you have questions or make comments, I’ll still respond.  I just won’t be posting with any regularity.  Thank you for your support over the years.  And, as always…

I’m OK.  You’re OK.  Let’s fix the system.

What Drucker was drawing a line between was the operational work levels in an organization and the strategic work levels in an organization.

Doing Things Right aka Current Operations
The work of requisite work levels 1 through 3 is to make the best use of current resources to most effectively deliver today’s products and services to today’s customers.? Theirs is to decide how to make the best of what has been allocated by the executive levels.? This is where the money is made within organizations.

Doing the Right Things aka Strategic Intent
The work of requisite work levels 4+ is decide how current operations needs to change in order to deliver goals that fall out more than two years.? Theirs is to decide whether the organization is doing the right things to be viable in the future.

No Need for Leadership Snobbery
I’ve said before in one of my most visited posts, that innovation must occur at all levels, although it will look different by level.? Leadership is the same way.? If we use Elliott Jaques’ requisite organization definition of leadership:?The ability to set purpose or direction for others and then get them to move in that direction with competence and full commitment; then all managers must be exercise leadership, for that is their role.?

It’s not just executives who are leaders.? I daresay that?minute-for-minute, first line managers spend more time exercising leadership than executives do.

What do you think?

I’m OK.? You’re OK.? Let’s fix the system.

Photo credit: gmeaders_ch

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• Level 5 – The brand, the business model, the strategy
• Level 4 – The infrastructure, the future focus strategic work, operational change decisions
• Level 3 – The operational processes for consistency, best practices for efficiency and waste minimization, contingency planning.

A Single Franchise Unit Can Be Managed at Level Two
Franchising allows someone currently capable of level 2 work to run an effective business by “outsourcing” the higher level work.?

What is Level Two Work?
Level 2 work consists of day to day operations, dealing with customers, scheduling and training staff, and this is the accountability of the franchise owner.

Win-Win
When you consider that Elliott Jaques, the father of the Requisite Organization model, estimated that only 10% of the world’s adult?population has capability at level three or higher, the franchise model allows a large percentage of people to complement their natural gifts in a way that allows them to earn a generous living for themselves and their families.

Da, da, da, da, daaaa.? I’m lovin’ it.

The Right Altitude
Ram Charan uses the phrase, asking questions at the right altitude.? Once again, intuitive proof that we all sense work levels, but don’t have a language to speak about them.

If we didn’t have measures for distance, and we wanted to talk about altitude, we’d be stuck using words like high, medium, and low – relative terms that you and I could debate all day and not agree.? However, with measures like feet or meters, we have a common understanding and efficiency in our conversation.

Similarly, you and I could stand in a room and argue all day about whether the room was warm or cold and never come to an agreement.? But we could walk together to the thermostat and instantly agree on the temperature.

Let’s Create a Collective Understanding – Work Levels
Understanding work levels allows us to design work enabling organizations.? Understanding work levels and human capability to problem solve in levels allows for matching people to roles.? Understanding work levels allows us to match people with leaders.? Understanding work levels is foundation knowledge for management science.? Did I mention that I think you should understand work levels?

I’m OK.? You’re OK.? Let’s fix the system.

My colleague, Craig Tamlin,?with PeopleFit Australasia has written an article proposing non-commission based sales compensation.? Read his article here.

I’m OK.? You’re OK.? What do you think?? Do sales people rate another system?

On Engagement
“The really good marketers will become much more clever about what they do, and engage with people more effectively.? Conventional media will lose a lot of those marketers, because the marketers don?t need the media as much anymore.? Coca-Cola used to need Time magazine or television to reach consumers.? Now Coca-Cola can sponsor contests and get people to put Coke badges and links on their own Web sites.”

Why the War for Talent
On the War for Talent issue, I’ve said that high potentials no longer need hierarchical organizations to find employment.? They can work for themselves.?

Organizations, by their ignorance surrounding requisite work levels and human capability,?often force their high potentials out the door by not providing them with leadership aligned with their capability?or?work appropriate to their capability.?

Tweaking?Ms. Dyson’s quote for My Purposes
Organizations will need to become much more clever about what they do, and engage employees more effectively.? And by clever, I mean, designing work-enabling, trust inducing people systems.

What Doesn’t Lead to Lasting Engagement
What’s NOT effective when it comes to engagement?? Compensatory techniques e.g. perks, teambuilding exercises, bonuses.

We Don’t Need to Motivate, We Need to Provide an Appropriate Work Environment
Remember, I’ve said people are wired to work.? They do not need to be coerced.? They only need (1) work suited to their level of capability and interests?and (2)?as leadership suited to their level of capability.

Here is what Ms. Dyson has to say:

“Many people work much harder on a World of Warcraft role-playing team than they ever work in a paid job. They are very skilled and they do painstaking work, usually for only brownie points and recognition, because that work gives them a feeling of control and camaraderie.”

“It?s a mystery, and as an investor and as someone who?d like a better-run world, I?d like to solve it. Whatever makes work unpleasant, it?s often not really the nature of the task itself; it?s the involuntariness, and the fact that you can be punished by the person running the game.”

Ms. Dyson – it’s the system!!!!? We put employees in impossible situations every day and then blame them when things don’t go well.

All of the Accountability with None of the Authority
One of the things we do to induce dysfunction is we mismatch accountabilities and authorities.? We ask employees to be accountable for things for which they have no control.? This is fundamentally unfair, and fairness is necessary for engagement.? Ms. Dyson, you referred to it as “involuntariness”.

Ms. Dyson, you provided an example here when you were discussing Internet security and the ISP’s role:

“Until the costs of abuse are assigned to entities capable of stopping the abuse, it?s not going to get much better.”

Organizational Systems and Structure are an (Unenforced) Executive Leadership Accountability
What have I been saying for years here at Mission Minded:? Until executive leadership is assigned accountability for designing and implementing work-enabling, trust inducing people systems, it’s not going to get much better.

I’m OK.? You’re OK.? Let’s fix the system!

A few weeks back I wrote a post called, Is the Story You are Telling Yourself Helpful?,? and I’ve since?found?a video clip that powerfully illustrates?one?point I was making in that post.?

Sometimes we see what we expect, not what really is.? There is power in what we expect or know to be ?true?, and we must be mindful of the ?stories? we tell ourselves.? Some are so powerful, we cannot override them.

Are the stories you are telling yourself about your work world helpful?

The following is part thee of a three-part post on Felt Fair Compensation. ?See Part 1 and Part 2 here.

This Felt Fair Pay series was authored by my colleague, Barry Deane of PeopleFit Australasia.? My hat is off to him for addressing the topic so thoroughly and for backing it with historical data and research citations.

Key Features
Remunerations systems based on the Requisite Organization body of work have the following key features:

• Organizational levels are assigned to specific and objectively-defined ?levels of work?
• Specific remuneration limits are assigned to each organizational level.
• The spread of remuneration within a level (from ?entry level? to ?fully effective?) is set at 1:2 (i.e. a multiple of 2 from bottom to top)
• There is no crossing of the level boundaries in assigning remuneration i.e. a the top remuneration for a Level 2 role marks the bottom of remuneration for a Level 3 role
• Variation of remuneration for people in roles within a work level is focused on ?progression through the work of the role? i.e. from ?entry level? to ?fully capable?. Progression itself is determined through the judgement of the immediate manager in relation to the employee?s ?performance effectiveness?.
• Internal system parities and external (i.e. market) parities are dealt with through separate but linked processes

Key Behavioural Principles
These features reflect two behavioural principles of ?felt fairness?:

1. People do/will acknowledge that it is fair that employees who do more complex work deserve to get paid significantly more than people doing less complex work. Note: I said, ?significantly? not excessively) ? and the significant difference is quantified in the RO body of work
2. People acknowledge that those who work more effectively (i.e. in relation to doing work of the same complexity) should be ?differentially? rewarded. Perhaps this principle is better appreciated by the implication of this principle that those who do not work effectively should not be rewarded as much as those who do.

Key Texts
A few key texts which deal with felt-fair pay in some detail are:

• A General Theory of Bureaucracy, (noted above)
• Executive Leadership, Elliott Jaques and Stephen D Clement (1991 – 2002), Cason Hall & Co, USA
• Social Power and the CEO, Elliott Jaques (2002), Quorum Books, USA
• Requisite Organization, Elliott Jaques (1987 – 1998), Cason Hall & Co, USA

And RO in Australia (part story):

• The Line in the Sand, J.T.Ludeke QC (1996), Wilkinson Books, Australia

One Part of a Meta Requisite Organization Model
Having provided a few notes on the principle of ?felt fair pay?, I need to caution that this cannot be considered or deployed as a stand-alone principle.? There are a number of other precursor principles and practices relating to organizational design and managerial practice which must be understood and established.? I have alluded to some of these above (e.g. organizational stratification by ?levels of work?, managerial assessment of ?performance effectiveness?). Unfortunately, space does not permit me to delve into these matters here so I refer readers to the body of work that I have drawn attention to above (i.e. Requisite Organization) for further study.

This is the third in a series of three guest posts on Felt Fair Compensation by Barry Deane.

The following is part two of a three-part post on Felt Fair Compensation.??See Part 1 here.

This Felt Fair Pay series was authored by my colleague, Barry Deane of PeopleFit Australasia. My hat is off to him for addressing the topic so thoroughly and for backing it with historical data and research citations.

Over 60 Years of Research
Lord Wilfred Brown and Dr. Elliott Jaques investigated this matter (among other organisational and leadership matters) as part of an extensive piece of workplace-based research known as the Glacier Project (UK 1948 to circa 1976). The following quotation is instructive, especially since it was written over 30 years ago:

?If the problem of differential payment is as critical an issue as experience would suggest, what then is to be done? A possible lead has been provided by the curious finding which first suggested that level of work might be measurable in terms of time-span of discretion; namely, that for each time-span level there is a corresponding level of pay felt by employed persons to be fair.

In work over a period of some twenty years in the Glacier Metal Company a correlation of about 0.90 has been found between time-span and felt-fair pay, for all types of work ? manual, technical, managerial, research, sales, finance, etc. In a study at the headquarters of Honeywell Corporation in Minneapolis, U.S.A., Richardson found a correlation of 0.86 for managerial and staff personnel in manufacturing, sales and research. He further found by means of regression analysis that time-span explained some 75% of the variation in felt-fair pay, as compared with actual pay (10%), and 28 other variables, none of which accounted for more than 1.5% of the variation. There is further support for the validity and reliability of these studies in work in Holland and in Canada, and in less systemic and unpublished testing in a number of other countries besides.?

-Elliott Jaques (1976, ?77, ?81, ?83) A General Theory of Bureaucracy, Heinemann UK

The ?time-span levels? referred to above concerns the recognition/discovery of levels of complexity of work, a necessary construct informing the layering of organisations i.e. what is the nature of the work to be done by the organisation and how many levels of management should there be to achieve the work.

The Glacier project is well documented.? Felt-fair pay is also well documented.

Requisite Organization – The Meta Model
The whole body of work of which felt-fair pay is a component is now known as Requisite Organization (RO). This body of work was introduced into Australia late in the 1970s by Sir Roderick Carnegie, then CEO of CRA Ltd (now Rio Tinto).

Requisite Organization Library
There is a large amount of academic and other professional documentation of the CRA experience (and others) and RO, much of which is listed in an extensive bibliography published by the Global Organization Design Society, a not-for-profit organisation based in Toronto Canada. You can download this bibliography free from GO?s website.

More tomorrow…

Stop by tomorrow for the third post in this guest series on Requisite Felt Fair Compensation by Barry Deane.

The following is part one of a three-part post on Felt Fair Compensation.?

This Felt Fair Pay series was authored by my colleague, Barry Deane of PeopleFit Australasia.? My hat is off to him for addressing the topic so thoroughly and for backing it with historical data and research citations.

Paying Executives More For Less?
Interest in what is seen as excessive executive pay, has been gathering over a number of years now ? at least ten years. The current financial melt-down provides emphasis as attempts are made to reconcile excesses of pay with business results.

Could We Ever Agree on Fair Pay?
Watching this game of executive justification for excess (e.g. ?My job is really, really big, and I deserve as much as I can get.?) being met by public anxiety (?It sure seems a lot, but then maybe I couldn?t do such a really big job, or maybe I?m just envious?), one could be forgiven for thinking that the question, ?What is fair pay?? cannot possibly be answered.

We Already Have
The ?fact? is that work to address this question has already been done – and the key determinants of ?felt fair pay? have been identified. At the very least one might say that there is compelling science-based evidence that this question has been answered substantially.

An Evidence-Based Way to Pay?
The more troubling question to me is why it is that in all of the current public debate on this subject, there appears to be no expectation that board directors, legislators and policy makers must find and use an objective, evidence-based link between the work being done and the assignment of pay for that work?

Can We PROVE Executive Pay is Excessive?
The presence of significant and persistent community outrage about executive pay is predicted by the substantial, science-based field work that has already been done. The work also suggests that such (predictable) outrage is founded in deep feelings about fairness and justice. Surely it is important (now more than ever) for us to know whether such feelings are justified and, if they are, what might underpin them? It is a fact that the work that has been done points decisively to such a community-based idea about fair pay and to the key determinants for achieving that.

More on this tomorrow…

Come back tomorrow and Thursday for Parts?2 and 3 of this guest series written by Barry Deane.