Category Archives: Levels of Work

Who Controls the Variables?

“What is structure?” Melanie asked. “I draw boxes and circles, with lines and arrows. The question that guides me is – who reports to whom?”

“And, that would be accurate,” I replied, “if you worked in a command-and-control, reporting environment. This misconception about most organized companies leads us astray.”

“But, that’s my central question, my guiding principle when I put the org chart together. Who reports to whom?”

“Indeed, as managers, we sit around the table discussing a new recruit coming into the company tomorrow. And, the question is, who should this person report to? Quite seriously, it’s the wrong question.”

“I’m listening,” Melanie replied.

“It’s not a matter of who this young recruit will report to, but which manager, around the table, will be accountable for the output of this new hire? It’s not a matter of reporting, it’s a matter of accountability, and it’s the manager who is accountable.”

“Seems upside-down,” Melanie observed.

“Does it?” I responded. “Think about it. This new person comes into the organization. Who designed the role for this person to play? Who determined what this person should do? Who determined the quality spec of the output? Who selected this person to play this role? Who trained the person? Who provided the necessary tools, created the work environment? Who controls all the variables around this person?”

Melanie paused, the answer so obvious. “The manager, of course.”

“Then, why should the manager not be held accountable for the output of this new hire?”

To the Next Level

From the Ask Tom mailbag –

Question:
As I talk with other CEO friends, they keep talking about taking their company to the next level or that they want to scale their companies larger. It sounds like they know what they are talking about. But do they? They are my friends, and I don’t want to disparage, but in many cases, I have my doubts.

Response:
No organization can ever grow larger than the CEO. If it does, the wheels will get wobbly and the organization will falter. The same is true as levels of work are built inside the organization. No level of work can exceed the capability of the manager. If it does, the wheels will get wobbly and the organization will falter. It doesn’t matter if the company is S-I, S-II, S-III, S-IV or S-V. Faltering can happen at any level.

Most who say they want to take their company, or department, or team to the next level has no clue what that means. Timespan and levels of work create the only framework that clearly identifies what that means.

Scalability doesn’t happen until S-IV, where multiple system integration occurs. Listen carefully to your friends, but judge not what they say, only judge what they do (or are capable of doing).

How Many Levels?

From the Ask Tom mailbag –

Question:
You recently described an organization as having five levels. You also said that some organizations don’t need five levels. I am trying to figure out how many levels our company needs?

Response:
Your question is similar to the manager’s span of control issue. The consultant’s answer, “it depends.” The number of levels in an organization depends on the complexity of the decisions and problems faced by the company’s mission. That’s why it is important to occasionally sit down and revisit the mission. We think of mission as “what the company does,” but it also includes which markets, geography of those markets, market segments, governing rules and regulations, availability of labor, incorporation of technology, availability of capital. All of these elements play in to the complexity of the organization.

The initial mission always exists in the individual eyes of the founder. In the beginning, that mission may be modest, simply to prove the concept is viable (minimum viability). With early success, the mission can grow, be redefined as the organization learns more about the environment it created. And we think, with more levels, the more success we see. That is not altogether true. You can have a successful organization at any level, with an appropriate number of managerial levels, even an organization with just one.

S-I (One level of work) – This is the sole practitioner, an individual technical contributor, whose mission is to solve a narrow market problem requiring only one mind, usually supported by technology. Successful sole practitioners could be an artist, writer, even a computer coder developing a single application to solve a market problem. A good living can be had by the savvy sole practitioner, though it is rare to reach any large scale by yourself. (Timespan 1 day – 3 months).

S-II (Two levels of work) – This is the sole practitioner who gathers surrounding assistance. There is too much work for one and that additional work is necessary to solve the problem. At this organizational level that additional work requires coordination for quantity output, at a given quality spec, according to a deadline time schedule (QQT). There is no system yet, because the quantity or complexity of work does not require it. This could be a entrepreneur with a small team. It could also be that the organization requires a system, but does not possess the internal capacity to develop that system. Many successful S-II organizations simply purchase their system from someone else, as a franchise or a license from a larger organization (who has a system for sale). (Timespan 3 months – 12 months).

S-III (Three levels of work) – But even a small franchisee, with one or two stores, who wants to increase to three or four stores, eventually requires an internal system. At three to four stores, an additional level of work appears. It is interesting that one of the larger franchisors, Chick-fil-a only allows one store per franchise. This may be an unconscious realization that the capability of their franchisees is limited to S-II. The hallmark of an S-III organization is a single serial system (single critical path). This is often an artisan craftsman, a subcontractor on a larger project. (Timespan 1 – 2 years).

S-IV (Four levels of work) – Consists of multiple parallel systems that have to be integrated together. S-III as a single serial system is limited in its growth. For an S-III company to scale, it requires the coordination of multiple systems. From its core production system, the S-IV organization also has to coordinate material purchasing, equipment procurement and maintenance, personnel recruiting and training, marketing campaigns, sales efforts, legal review, project management, quality control, sustaining engineering, R&D, human resources and accounting.

S-V (Five levels of work) – This is the enterprise in the marketplace. And, the marketplace is not just about customers. Marketplace includes regulation, labor, finance, technology, competition, logistics, supply chain. This is still within the Small to Medium Enterprise (SME) but also extends to larger organizations.

An organization can be successful at any level, it is governed by the level of their mission.

Why Organizational Structure?

What is organizational structure? On a single piece of paper, it’s called an org chart.

Organizational structure is simply the way we define the working relationships between people with the organization. All social settings have a social structure. Parent-child, teacher-student, politician-constituent, minister-congregation, coach-player, manager-team member. The social structure helps us understand what is expected and what are the norms of behavior.

Organizational structure in a Management Accountability Hierarchy (MAH), helps us understand the working relationships between people in the company. It is important to know who has the authority to make decisions, the authority to solve problems (the way we would have them solved), but most importantly, who is accountable for output.

Managerial roles are stacked in levels of work so we can more quickly understand the context in which that role is working.

Levels of Work

  • S-V – Business Unit President or SME CEO. The context is on the entire enterprise as it sits in its marketplace.
    Timespan 5-10 years.
  • S-IV – Executive manager. The context is the many parallel systems that have to work together. Timespan 2-5 years.
  • S-III – Manager. The context is on a single serial system, or a single critical path. Timespan 1-2 years.
  • S-II – Supervisor. The context is on the work in hand in the near term. Timespan 3-12 months.
  • S-I – Production. The context is on the work in hand today, tomorrow and next week. Timespan 1 day to 3 months.

How Many Manager Levels?

From the Ask Tom mailbag –

Question:
The template you sent out looks like it only handles five levels of work. Our organization has seven manager layers, total headcount 62 people. How do we fit in the extra two layers?

Response:
The reason you have more than five manager layers in your company is that you use some other criteria to define a managerial layer. You decided someone in your company needed some manager experience, so you promoted them with a new title, and gave them someone to manage. Your criteria for creating a new manager level was that someone needed experience. Your criteria has nothing to do with the complexity of problem solving or decision making. You created a managerial layer as an accommodation to a single person. Don’t organize the work around the people, organize the people around the work.

With a headcount of 62 people, I can safely assume that your company should have no more than five layers and possibly needs even fewer. Stop looking at the people you have, and look at the work. What is the necessary work required to accomplish your organization’s mission? When you base your organizational structure on the complexity of decision making and problem solving, the work naturally falls into the levels described below. Using that framework, you can identify where your organization is bloated and where it is thin (too thin).

Levels of Work

  • S-V – Business Unit President or SME CEO. The focus is on the entire enterprise as it sits in its marketplace.
  • S-IV – Executive manager. The focus is on the integration of departmental workflow. Looks closely at work handoffs from one department to another and the output capacity of each department as it sits next to its neighboring departments.
  • S-III – Manager. The focus is typically on a single department, which contains a single serial system, or a single critical path.
  • S-II – Supervisor. This is a coordinating, implementing role, making sure production work is complete, within spec and on-time.
  • S-I – Production. The focus is on pace and quality, how many units at a specific spec.

Assessing Capability

“Your turn,” I said. “Step me through these four levels of work and tell me where you think Jason is struggling.”

Elisa started slowly.

  • Direct action – Jason began as a project manager. We started him on simple projects, things (variables) came at him slowly enough where he had the time to immediately respond, and in that, he was very effective.”
  • Diagnostic Accumulation – Jason did so well on a single project, that we gave him two simultaneous projects. The just reward for hard work is more hard work. With two projects, he did the second project the way he did the first project. He was able to effectively put things together, recognize similarities, connect the dots.
  • Serial Thinking – is where Jason begins to struggle. We asked him to work over the shoulder of junior project managers, up to twenty simultaneous projects. We thought the project management software would handle all the detail, but the sheer volume of decisions and problem solving required Jason to think ahead, anticipate. He had to play “What if?” He had to look at twenty projects and see all the things that were the same, simultaneously understanding the nuanced differences between each project. He had to put a system together and that’s where he struggled.
  • Interactive Systems Thinking – is way beyond Jason. Project management sits inside our organization next to estimating, procurement, logistics, workforce and finance. Most of that is outside of Jason’s scope.

“And, so, where would you peg Jason’s level of capability?” I asked.

“Now, it’s very easy,” Elisa nodded her head. “Jason is on the upper end of Diagnostic Accumulation, but struggles with Serial Thinking.”

“Understanding this framework, can you now, as Jason’s manager, more accurately determine what project assignments, how many, how complex that Jason can effectively handle?”

Four Levels of Work, Four Levels of Capability

“Okay, okay,” Elisa replied. “You are right, easy to see the number of variables in a single project multiplied by twenty projects.”

“This will help us understand the complexity of what we are asking Jason to do and Jason’s capability to actually do it. When we look at levels of work, identifying the level of work in a project, we have to look at the variables. More variables, the more complex the variables, the more difficult the task, more difficult problems, more difficult decisions,” I began to lay the groundwork.

“We understand projects and we understand variables,” I continued. “Let’s look at Jason’s capability* to effectively respond.

  • Direct Action – are variables we can deal with one at a time, that come at us at a pace where we can see it arriving and deal with it.
  • Cumulative Action – are variables that arrive together, where the pace of incoming is faster. We are required to diagnose things together (diagnostic accumulation). We can solve problems that look alike the same way, but only if we are able to see those similarities quickly enough.
  • Alternative Serial Thinking – are variables that arrive in groups, the pace of incoming groups is so fast that to effectively deal with the problems and decisions, we have to anticipate. That is why this level of work requires as much thinking (ahead) as it does action.
    We have to think of each group as a system, with internal cause-and-effect elements.
  • Mutually Interactive Groups – are groups of variables that, as they arrive, begin to impact other groups of variables. If we can see each group as a system, we have incoming systems that impact other systems, systems thinking.

“Our ability to think and act effectively is an accurate way to understand an individual’s capability. You can also see the progression in variables as we move from five simultaneous projects to twenty simultaneous projects.”
——-
*Four levels of mental processing. Elliott Jaques. Requisite Organization

Complexity of Similar Projects

“Jason is our best project manager,” Elisa described. “But, I gave him just a little bit more responsibility and he is failing. Not only that, it’s impacting the rest of our project management team.”

“How so?” I asked.

“When Jason started here, he did so well on his first project that I gave him another project at the same time, two projects. And, he did that so well, I gave him a third project.”

“And?”

“After a year and a half, I asked him to look over the shoulder of another junior project manager, who was struggling with two projects.”

“So, that’s three projects plus two projects,” I confirmed.

“By then, he already had two more projects himself, so that would be five projects plus two projects,” Elisa replied.

“I see where this is going. He is failing. How many projects does he have on his plate, now?”

“Well, we have five project managers on the team. Everyone is handling two to three projects. I just asked Jason to look over everyone’s shoulder and make sure all the projects are running smoothly.”

“I have ten fingers and ten toes, how many total projects?”

Elisa stopped to compute the number. “Okay, let’s use all your fingers and toes, let’s say twenty projects.”

“Twenty projects is different from his original five projects,” I started. “Let’s talk about the complexity of twenty projects, Jason’s natural capability, and where the mismatch may be. Looking at your project management software, how many variables on a single project? Are the projects all the same, with the same variables? How are the variables grouped into phases, related to time? Can some variables be accomplished simultaneously, while other variables depend on each other and have to be done is a specific sequence? Now, multiply all that by twenty. Handling five projects is one level of work. Handling twenty projects is a different level of work.”

Current Potential Revealed

“I want the person to be up to speed,” Sam started. “After orientation and some process-specific training, I need this person to be able to solve certain problems and make certain decisions without a great deal of input from me, as manager.”

“Up to speed?” I asked. “I know what you mean, but I want you to be more specific with your language.”

“I want the person to have the capability, after two weeks of process-specific training, to solve specific problems and make specific decisions, related to the work in the role.”

“Can you train that capability, current capability?”

“No, I can train skills, but I cannot train current capability. It is what it is,” Sam replied.

“And, can you train current potential capability?” I wanted to know.

“No, the training will reveal the candidate’s potential capability. As the manager, after two weeks, I will have a very clear understanding of their current potential,” Sam nodded, slowly.

“You are about to go into an interview tomorrow,” I nodded in agreement. “What questions can you ask in the interview that will give you a clear understanding of their current potential? You don’t want to wait two weeks, until after training, to find out you made a hiring mistake.”

“The difference between current capability and current potential will be orientation and training,” Sam thought out loud. “Some of my questions in the interview should be about things they learned in the past, at a former job. What did they learn, how did they learn, how fast did they learn? In the beginning, the work in this role will be all about learning. I need to know how the candidate learns, the pace of that learning.”

“Learning in relation to what?” I prodded.

“Learning in relation to problem solving and decision making,” Sam smiled. “It’s not memorizing technical information. I don’t care what the candidate knows, I care what the candidate can do.”

Current and Future Potential

“I want to hire someone who has potential,” Sam described. “But, I need them to hit the ground running today.”

“What do you mean when you say, potential?” I asked.

“You know, they have the ability to grow, so as things get more complicated, they don’t get lost,” Sam replied.

“I need you to be more specific. You used the word, grow. Do you mean grow taller, measured in inches? You used the word, lost. Do you mean lost in the woods? If you really want to find someone with potential, your language will lead you to the qualities you look for in a candidate.”

“Yes, but you know what I mean,” Sam flatly stated.

“I can make assumptions, but they might be wrong.” I stopped, then started again. “Instead of looking at the person, let’s look at the work, specifically the context of the work. What does hit the ground running mean? Please use terms related to capability, decision making and problem solving.”

“Okay,” Sam was slow to piece things together. “The role, today, has certain problems to be solved and decisions to be made.”

“Stop,” I interrupted. “So, the candidate has to possess the actual capability to solve problems and make decisions without significant input or direction from you, today.”

“Yes, but, the candidate will still need some initial direction from me, just to find out how things work around here. We have certain processes unique to our company, so the person will need some orientation, initial training.”

“And, how long will you give them to learn this stuff in the beginning?”

“Easy,” Sam said. “Training last two weeks. If they haven’t demonstrated some initial capability by then, we might counsel them out during a probation period.”

“So, you cannot see the performance on day one, but you expect to see performance after two weeks, benefit of the doubt, four weeks or eight weeks? In that period of time, has their potential changed?” I pressed.

“No, potential doesn’t change that fast,” Sam responded.

“So, on day one, you see their actual capability, in a raw state, it is what it is. You need this person to learn and learn quickly, so that two weeks, four weeks, eight weeks from now, the candidate’s decision making and problem solving will be at a higher level, meaning they have current potential. The difference between actual capability today and current potential two weeks from now is initial orientation and training.”

“Yes, but I want more than that,” Sam said, almost complaining.

“Of course you do,” I furrowed my brow. “What you really want is future potential. Potential is not something that can be trained, it can only mature. And, you want to see that in a candidate?”

“It sounds like a tall order, but yes, that is what I want.”

“Then, what questions will you ask?”