I am going to pick on the accounting department. For the past couple of days, we have talked about time span related to roles in the organization. Following are typical time spans for roles inside the accounting department.

Accounts Payable and Accounts Receivable roles typically have time spans around one month. As they work through their daily routine, A/P and A/R must look forward to check or billing runs with a monthly reconciliation. All during the month, these roles must look forward to things which will impact that monthly reconciliation.

Payroll may require a slightly longer time span. I usually look for a time span of three months, which coincides with quarterly payroll reporting and reconciliations. There are also annual responsibilities related to W-2 filings and reconciliations, but I often expect the payroll clerk has additional support from a full-charge bookkeeper, an outsourced payroll service or even just a great piece of computer software.

Full-charge bookkeepers are responsible for the production of in-house monthly financial statements but also must look forward to the end of year. The annual task of organizing the records for the firm’s CPA (tax returns and audits) stretches the time span of a full-charge bookkeeper to 13 months.

A controller’s responsibilities go beyond the compilation of financial statements to controlling all financial and management control systems. This would extend to the selection of computer accounting software to the design of all administrative systems that surround that software. Companies requiring departmental financial reporting or job costing also come under the purview of the controller stretching the time span from 12 months to 24 months.

CFO responsibilities extend out beyond 24 months. From my CFO, I expect trend analysis, capacity utilization, return on capital assets, indexing to economic indicators. I expect my CFO to look at the coming recession of 2009 and tell me when we need to renegotiate our lines of credit, when we need to be stockpiling cash (in case we want to buy a troubled competitor) looking at our leases and our owned properties. Time span associated with these responsibilities goes from 24 months to 48 months.

When you begin to measure the task in relation to time span, you become extremely precise about the level of person you need to fill that role. Next week, we will take a look at how to make that judgment about members of your team and prospective candidates in your hiring process. -TF

BTW. I have a white paper I would be happy to send you listing typical time horizons for a number of disciplines. Just drop me an email, be happy to send it to you.

From the Ask Tom mailbag:

Question: Related to our discussion of Time Horizon. Submitted by David.

But, doesn’t the individual’s ability or skill level play a role in measuring the complexity of a task? If I give the same task to two different people, inevitably they will complete it at different rates based on their skill level and/or familiarity of the task. Doesn’t that skew the measurement?

Response:
There are indeed the additional elements of skill level and experience, but the complexity of the task itself does not change. A person’s experience and skill level does have a bearing on their ability to be successful, but the complexity of the task does not change whether the person is successful or not.

A person’s skill level and experience will have a bearing on a person’s current time horizon, but the important observation is of a person’s maximum time horizon. As a person’s skill level and experience increases, their current time horizon will increase, but never beyond the person’s maximum time horizon.

Tomorrow, we will look at typical time horizons to get a clear understanding of how this works and why it is an important concept for managers. -TF

Special thanks to David for the question.

“My gut tells me that you are right, but I am not sure if I could explain it to someone else,” Marge said. “The longer the time span of a task, the more complex it is?”

“Yes,” I replied. “Remember we were talking about your freight supervisor working out two weeks into the future using the shipping calendar?” Marge nodded. “You said that the first week was pretty solid, but the second week was not as certain.”

“Yes, this week, we know exactly what orders are due, but there are always some unanticipated problems for next week. We just don’t know. It’s okay, we just don’t know.”

“Exactly, the further into the future, the more things are uncertain. That uncertainty into the future is what creates the complexity. The further into the future that you expect someone to work, the longer the time span that person needs to have.” You could see the wheels churning in Marge’s head.

“So, that’s why Martin has difficulty for anything beyond today. He doesn’t have the time span for it?” Marge finally surmised.

I nodded my head. “Time Span becomes an accurate measurement of complexity.” -TF

“I never thought of it that way,” said Marge. “But I am not sure exactly what you mean.” We had been talking about how measuring time span was a valuable indicator of the complexity of a job.

“Time span is the length of time that a person can work into the future, without direction, using their own independent discretionary judgment,” I explained. Marge turned her head with a quizzical look.

“Let’s take a task. Let’s say I want to delegate a task to you. So we have a delegation meeting and I explain all about it. You get some questions answered and we adjourn the meeting. From that moment, you begin to work without further direction from me, using your own discretionary judgment.

“When you complete the task, you come back to me and say, -that’s it, I am finished, what’s next?

“The time that you were working independently, measures the time span for that task. On the shipping dock, you have people doing things with different time spans. Packing a box may only have a time span of 15 minutes. Working a rolling freight schedule, checking inventories, supplies and personnel on the loading dock may have a time span of two weeks. Two totally different roles, each with its own time span.

“Time span becomes an accurate measurement for the complexity of any given task.” -TF

Marge had a frustrated look on her face. “I am just about fed up to here. I spend more time counseling and correcting than I do controlling the work.” She had just emerged from a round with the shipping dock. Four orders had been mis-packed and two orders had the wrong ship address. Luckily, the errors were found before the freight company picked up, but the orders would now be delayed another day.

“What do you think the problem is?” I asked.

“Well, Martin just doesn’t seem to be catching on. He has been here for five weeks, now and I swear it’s like he is still in his first week. He is supposed to be matching and proofing orders and picking tickets, catching mistakes before they cause disruption.”

“When you look at his job, how would you describe the longest task he has to perform, longest in terms of time frame?”

Marge thought for a minute. You could see some insight wave across her face. “He gets an advance report every Monday that looks two weeks out for orders and their target ship date. It’s like a rolling two week calendar. Of course, the orders during that week are much more definite, but we want him to be thinking out two weeks.”

“And how far in the future do you think he is working?”

“Oh, no more than one day. If you ask him about tomorrow, you get that deer in the headlights look.”

“Did you ever think about that when you hired him?” I asked.

“No, he had experience as a packer, but not as a supervisor. I never thought it would be that big of a deal to really control what was happening.”

“Marge, don’t feel bad. Most companies underestimate the time span required for success in the job. And if you key in on time span, you can get much more specific about the level of the person you need. Here is the key question. When you look at the job, how would you describe the longest task the person has to perform, longest task in terms of time frame?” -TF