Tag Archives: levels of work

Context of Decision Making

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“What is the difference between you and your team members, related to the role you play as their manager?” I asked.

“Well, I’m their boss. I provide direction, guidance, coaching. I delegate task activities,” Joan replied.

“Why you? Why doesn’t the team provide its own direction?”

“Well, they weren’t invited to the monthly meeting where the company sets that direction,” Joan smartly observed.

“But, this is the age of Zoom, why weren’t they invited to attend that meeting?” I pressed.

“But, it’s a highly interactive meeting. We can’t have ten more people asking questions. We would never get anything done in the meeting. Believe me, I know my team.”

“And, doesn’t the content of the meeting concern them? Are decisions made that will impact what they do day to day?”

“Yes, it impacts what they do, day to day, but in that company meeting we make adjustments to the overall goals and objectives for the year. It’s important to be flexible, agile. My team may have specific ideas (and questions) about technical issues day to day, but in that meeting, it’s not about technical issues, it’s about a new competitor that’s eating our market share, a new office across the state we are thinking about, a new product that our customers have been asking about.”

“So, the context discussion in that meeting is different than the context your team works in?”

“Yes, that’s it,” Joan agreed.

“So the difference between you and your team members, related to the role you play as their manager, is the context in which you work, meaning the context in which you make decisions and solve problems?” I prodded. “Your decisions impact their decisions, but the difference is the timespan of your decisions vs the timespan of their decisions.”

Joan continued to nod her head. “And, the difference between me and my manager is the same,” she replied. “My manager makes decisions that impact me, but the timespan of my manager’s context is even further in the future than mine.”

“And, so, we begin to see the structure of layers in an organization,” I said, “based on distinct levels of decision making, measured in timespan.”

How Many Organizational Layers?

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From the Ask Tom mailbag –

Question:
When you talk about context, organizational context, I assume you mean organizational structure. We have team members and supervisors, managers and executive managers. How many layers should we have? Is it best to have fewer layers, a flat organization or more layers?

Response:
As any good consultant knows, it depends. First, an organization should have no more organizational layers than is necessary, so, it depends on what is necessary. And what is necessary depends on the complexity of the problems to be solved and the decisions to be made to effectively deliver the product or service to the customer.

I watch organizations blow up into morbid obesity because they have no framework on which to base that decision – how many layers? And, who should be who’s manager? How many team members can a manager manage? What do we expect from this manager vs that manager?

Timespan.
What is the timespan of the decisions to be made and the problems to be solved? Think about this pattern –

  • 1 day to 3 months – Level I
  • 3 months to 12 months – Level II
  • 12 months to 24 months – Level III
  • 2 years to 5 years – Level IV
  • 5 years to 10 years – Level V

That’s how many layers you need, and only as many as you need. But, now you have a framework in which to make that decision.

Most entrepreneurs stay within the first two levels, with goals and objectives that rarely extend beyond 12 months. Those with aspirations for larger organizations, with higher revenues, more market clout, have to consider the impact of decisions and problems that extend two years and beyond.

There is a subtle seduction that occurs, however. Any entrepreneur with the intent to take their company to the next level, must first achieve mastery at their current level while sowing the seeds of problems for the next level.

Management Work

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Ruben was stumped. “You are right. Just because we give Edmund a new title, doesn’t mean he is going to change his ways.”

“Edmund will always be Edmund, and we have to redefine his role. It’s not a matter of giving him new rules not to do this or not to do that. You have already tried that in his role as supervisor. As Lead Technician, what will be his new goals? How will you re-direct him?”

“It sounds obvious,” Ruben replied. “It starts with his job description.”

I nodded affirmative. “This is critical fundamental stuff. It’s the stuff you ignore because it sounds so simple. It’s the stuff you ignore that gets you in trouble. Stuff like goals and objectives, performance standards and holding people to account for performance.”

“I think I have a job description around here that might work,” Ruben hoped.

“Why don’t you start from scratch. As the manager, you have time span goals of approximately one year. Your annual plan has stuff in it that you are held accountable to deliver this year, and next year. If you had a supervisor, which Edmund isn’t, you would drive some of those goals down to that level, in time span appropriate chunks. For the time being, you are going to have to step into that role, review those supervisor outputs and determine the time span appropriate chunks (goals) for your new Lead Technician.”

Ruben was quiet.

“Look, do you want to lose Edmund?” I asked.

“No way,” Ruben replied. “He’s a great technician.”

“Then you have some management work to do.”

Cannot Continue This Way

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“Our system creates predictability,” Ruben explained. “It creates predictability without stress. It allows us to do our maintenance at the best times, allows us to properly inspect our raw materials, test our setups accurately. Everything runs.”

“What are you going to do with Edmund?” I asked.

“He should never have been promoted to supervisor. He is a great technician, a great operator, our go-to guy. We don’t want to lose Edmund, but he cannot continue as supervisor.”

“What are you going to do with Edmund?” I repeated.

“I am going to assign him to a new role called Lead Technician. He won’t like it, and, right now, I run the risk of losing him. The job market is too fertile, lots of other companies would like to have Edmund.”

“How are you going to keep him from screwing things up, just because he has a new title? And how are you going to keep him.”

Matching the Work

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“I’m a structure guy,” Pablo said. “When you think about effective managerial leadership, I think the focus is on the structure.”

“It’s not on charisma, likeability, luck?” I asked, knowing the answer.

Pablo gave me a knowing smile. “The first key area for any manager, is to design and build the team. Individual achievement is a myth. If you want to create something great, it takes a team, a collection of teams, organized to get work done.”

“Before I do anything else, I have to build the team?” I wanted to know.

“Before you build the team, you have to design it,” Pablo continued. “That’s where most companies make their first missteps. As time goes by, there is too much to do, always work left over. Someone has a brilliant idea, let’s hire some more people. And, they do this without any thought of the overall design of the team to get work done.”

“So, first I have to think about the work?”

“And, not just task assignments, we have to figure out what problems must be solved and what decisions have to be made. With that, then we have to determine the level of problem solving and the level of decision required on the team, to make sure when we start to match up the people, we can select the right ones.”

Accurate Measure of Capability

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“To do otherwise, to create an org structure, working relationships based on something besides timespan, creates dysfunction within an organization?” I asked.

“One doesn’t have to work in a company for very long to have the following experience,” Pablo explained. “As a team member, have you ever had a manager who micro-managed your every step, who was always breathing down your neck?”

I nodded, “Yes.”

“And what did you think of that working relationship?” Pablo wanted to know.

“At first, mildly annoying, frustrating, then intolerable. A personality quirk,” I surmised.

“Rarely,” Pablo chuckled. “At your level-of-work, you were vested with an undefined timespan of discretion, decision making? Am I right?”

Another affirmative, “Yes.”

“And, because your authority to make a decision was not defined, your manager presumed to make your decisions for you. A micro-manager. In fact, and this goes all the way to the CEO, your manager did not trust you to make the decisions appropriate for your role, appropriate for your level-of-work.”

“And, accordingly, my manager was accountable for my output, so was accountable for my decisions, hence the distrust of my decisions,” I flatly stated.

“Without timespan,” Pablo said, “your manager had no defined criteria related to decision making appropriate to your role, appropriate to your level of work. But, with timespan, your manager has a very clear understanding of decision making appropriate to your level of work. With this understanding, those decisions delegated to you and those decisions reserved for your manager become clear. Your experience was not a personality quirk, it was ambiguity related to decision making and problem solving.”

“But, what if my manager still didn’t trust me to make the right decision,” I countered. “After all, my manager is accountable for my output.”

“That’s where timespan changes the game. Instead of an ambiguous level of distrust, your manager now has a clear idea of the authority required to be effective in your role.”

“Okay, my manager has a clear idea of the authority required, but still distrusts me.”

“Then, how did you end up in the role in the first place?” Pablo asked. “If your manager is accountable for your output, and knows precisely the timespan of discretion, it is incumbent on your manager to hire a person who has the capability, necessary experience and skill to make those decisions. Timespan becomes an accurate measure of decision making.”

Accurate Measure of a Decision

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“So you are suggesting that managerial layers in an organization rests on the two ideas of accountability and authority?” I restated as a question.

“I am not suggesting,” Pablo replied. “To do otherwise creates the organizational dysfunction we so often see.”

“And you are connecting timespan to those two ideas, accountability and authority?”

“Timespan is like the discovery of the thermometer. Our ability to accurately measure temperature led to the precision of melting points, the beginning of chemistry, as a science. Timespan is the beginning of management, as a science. Our ability to accurately measure accountability and authority provides us a precise method of organizing structure.”

“Structure being, the way we define the working relationships between people?” I added.

Pablo looked at me carefully, then clarified. “Structure being the way we define accountability and authority, the working relationships between roles. Timespan works to define those two things.

  • A supervisor (S-II) is accountable for the output of the team for timespans ranging from one day to three months, with the longest authority for decision making at 12 months.
  • A manager (S-III) is accountable for the output of the supervisory team for timespans up to 12 months, with the longest authority for decision making at 24 months or two years.
  • An executive manager (S-IV) is accountable for the output of the managerial team for timespans up to 2 years, with the longest authority for decision making at 5 years.
  • The CEO (S-V) of a single business unit is accountable for the output of the executive management team up to 5 years, with the longest authority for decision making at 10 years.

“Ten years?” I wondered.

“Unless it is a larger organization,” Pablo continued.

  • The CEO (S-VI) of a multiple business unit (holding) company is accountable for the output of the single business unit CEO up to ten years, with the longest authority for decision making at 20 years.

“And?” I nodded.

Pablo smiled. “You’re playing in the major league, my friend?”

  • The CEO (S-VII) of a multiple business unit conglomerate is accountable for the output of the holding company CEO up to 20 years, with the longest authority for decision making at 50 years.

“And, what kind of company might that be?” I wanted to know.

“Those would be the largest of global companies, Apple, Halliburton, Microsoft and government entities, US, China, Russia.” Pablo sighed. “Those are the organizations whose decisions will impact lives for the next 50 years, maybe more.”

Like a Horse and Carriage

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“We have to put leadership back in the hands of CEOs and their managers,” Pablo said. “Relying on control systems to manage our companies misleads us into the false sense that we actually have control.”

“You mean we don’t,” I stopped. “You mean we don’t have control?”

“Not over the things that really matter,” Pablo replied. “We don’t have control over our markets. We don’t have control over social trends, stock prices, pilot error. We only have the illusion of control. When we run our companies solely by its Key Performance Indicators, we remove discretionary judgement in the face of uncontrollable things. We have to put leadership back in the hands of CEOs and their managers.”

“By doing what?” I asked.

“By taking advantage of decision making and judgement at all managerial levels. The future is uncertain, ambiguous. Decisions made in the face of uncertainty and ambiguity are not calculated algorithms. If they were, we could let computers rule the world.

“We are back to two words,” Pablo continued, “accountability and authority.”

“Those are the two defined elements in structure,” I connected.

“Only when we vest decision making authority in the role of the CEO and the roles of managers, do we take advantage of their capability to do so. And only when we do that, can we truly hold them accountable for the results (output) of their teams.”

“I’m going to push back,” I countered. “I think most CEOs assume decision making authority at the highest level.”

“Some do,” Pablo agreed. “But, many run the company by the numbers, or offload accountability to their executive team, attempting to engage in democratic decision making. Then, wonder why the direction of the company goes off balance. We typically place accountability one level-of-work too low in the organization. Accountability and authority go together, you can’t have one without the other.

“Except in government,” Pablo smiled. “I always find it amusing, a government oversight committee, thinks it has all the authority without any accountability. If you have the authority, you have to have the accountability that goes with it.”

Complexity of the Problem

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“I understand there is a difference in thinking-near-term vs thinking-long-term. Conceptually, I understand. How does that help us, as managers inside a company?” I asked.

“You are familiar with delegation?” Pablo asked, knowing the answer.

“Of course,” I replied.

“You say that so fast, I assume you do NOT understand delegation, except at its surface level,” Pablo stopped. “You understand delegation as a task assignment. What you delegate is not just the task, but the decision making and problem solving that goes with it. Inside any task assignment, as a manager, you must also understand the level of problem solving that goes with it.”

“Near-term vs long-term?” I confirmed.

“Yes, the timespan of the decision will accurately determine the level of problem solving required. If I delegate a step in a process that is due tomorrow, there are decisions that go with it, AND most of the variables are known. To meet a special order for a customer tomorrow, the team can work a little overtime with the materials at hand and we can meet the order. If we have another special order, how do we do that second order?” Pablo asked.

“The same way we did the first special order. Work a little more overtime,” I replied.

“But, what if we get 50 special orders?” Pablo challenged.

“Well, there isn’t enough overtime for 50 special orders, and if we focus on those, what happens to the regular orders that were already in process, it would play hell with our schedule,” I replied.

“You see, that is not such a simple problem. And, you immediately began to think about the impact in the future. Processing 50 special orders, with special setups, depleting our materials on hand, some of which have lead times, delaying our current scheduled commitments to customers with whom we have contracts, the timespan impact of the problem grows. I would submit to you, the complexity of the problem is not just more moving parts.”

“But this is not an unusual problem, companies face this all the time,” I said.

“And, companies figure out the solution all the time. We can accurately measure the complexity of the problem by identifying the timespan impacts of each of the elements of the problem. The timespan impact of each element leads us to the complexity of the solution. Lead times of depleted materials is a clue. If the lead time is six weeks, we don’t have an immediate impact of one delayed order, we have a six week impact on all orders. We cannot solve this problem by working overtime.”

The Measure of Complexity

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“Would you agree,” Pablo asked, “there are some simple problems that most people can easily solve?”

I nodded, “yes.”

“And, would agree that as problems become more complex, some people struggle?”

Again, I nodded, “yes.”

“So, how do we measure the complexity of any decision, the complexity of any problem?”

“I suppose,” I started, “it would have to do with the number of variables in the decision, difficult enough for those variables we know about, even more so for those variables we do not know about.”

“And, how would you define a variable, start with one we know about,” Pablo prompted.

“A variable would be something we anticipate, and we don’t know for sure which way it’s going to go,” I replied.

“Like the weather,” Pablo stated. “We anticipate it is going to be cloudy, but we don’t know for sure if it is going to rain.”

“Yes,” I said, not sure where Pablo was taking me.

“And, how do you know it’s cloudy?” he asked.

“I looked outside, no sunshine. Observable, visual evidence, I can see it.”

“But, you don’t know if it is going to rain? Do you take an umbrella?”

“I suppose I might. A minor annoyance if it doesn’t rain, and a handy thing to have if it does,” I assumed it was a smart response.

“So, in the face of uncertainty, you make a decision based on something that is observable right now. Would you make the same decision a half-hour from now?” Pablo baited.

“It looks pretty cloudy, I believe a half-hour from now, I would still take an umbrella,” I hedged my bet.

“So, in a short timespan, you believe you have enough evidence, in spite of the uncertainty, to make a decision to take an umbrella?”

I nodded, “yes.”

“How about a week from now?” Pablo’s eyes shifted and he grinned.

“Well, who knows, a week from now if it will even be cloudy, much less rain?” I asked.

“So, one week from now is less certain than a half hour from now?”

Again, I nodded, “yes.”

“Is it possible to measure the uncertainty of any decision using timespan?” Pablo stopped and rested.