From the Ask Tom mailbag –

Question:
For the past few years, I considered my company as a level V company. Your posts the past couple of weeks have made me question that position? I think I have organized the company, at least on paper as level V, but in reality, I may be wrong?

Response:
Most CEOs suffer from optimism. Optimism is required to forge a company against the odds, most startups fail in the first five years. And, those rose colored glasses cover the sins of organizational structure. We like to think our organizations are perfect renditions, we find the best in our people, sometimes ignoring deficiencies, both in structure and people.

An effective organization requires competence in leadership and management. Competence is a combination of Elliott’s four absolutes –

• Capability
• Skill
• Interest, passion
• Required behaviors

Any element on the list can be a dealbreaker. We understand skills, interest and passion, we even understand required behaviors. It’s capability that often eludes us. I can train skills, I cannot train capability. Capability is born and revealed, naturally matures and is relatively predictable.

Your Organization on Paper
Elliott defined three versions of the org chart for his description of a Management Accountability Hierarchy (MAH), an accountability chart.

• Manifest – the way we draw the org chart
• Extant – the way the org chart really works
• Requisite – the way the org chart should look using timespan and requisite principles

The org/accountability chart is an easy way to step through your optimistic thinking, to ground it in reality. An effective organization takes both a requisite structure, appropriately defined roles and competence in each role. Simple, right?

It is only the requisite accountability chart that considers the level of work required in each organizational function. With the level of work accurately identified, the managerial layers fall into place. And, that’s the structure part.

But, even a requisite structure will fail if not fielded with competent players in the right roles. A level V structure will fail lead by a CEO with capability at level III.