Tag Archives: organizational structure

Doesn’t This Look Like a Hierarchy?

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From Outbound Air –

“You know, this is beginning to look like a hierarchy,” Johnny said. “Do you remember Preston Pratney? If there is one thing he railed about, it’s that hierarchy is bad. It goes against all the tenants of Tribal Leadership. Having layers inside the company makes it too bureaucratic, too much red tape. If there is a decision to be made, why should someone have to check with their manager?”

Mary stepped in. “You’re talking about Preston Pratney? The problem with Preston is that he read too many books on leadership. He never understood the purpose of hierarchy. He got it confused with command and control. Hierarchy is necessary, to create this value stream for decision making and problem solving.”

Outbound Air Now Available on Amazon

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Outbound Air is a fictional account of a regional airline acquired by an investment group. The story illustrates the adolescent pains of organizational growth as the new CEO takes one mis-step after another. Outbound Air’s return from the brink of destruction is a vivid tale of how organizations work.

Why read this book –

Every management team wants to take their company to the next level. Most have no clue what that means. I press for answers and get general responses, like –

  • Higher revenues
  • Larger geography
  • More stores

I am a structure guy, and, levels actually exist. Each level in the life of a company has defined characteristics and carries predictable challenges that must be solved before the organization can go to the next level. This book answers the question that no one asks, “Just exactly what is the next level?”

These levels teach us about organizational structure. This structure helps a company understand why it has its problems and how to solve them. This book is about the structure of work, specifically –

  • Predictable levels of organizational growth, a prelude to levels of work.
  • Levels of work and accountability, in both managerial relationships and cross-functional relationships.
  • How to implement functional structure based on levels of work.

The safety briefing is over, buckle up and prepare for an immediate departure.

Outbound Air – Levels of Work in Organizational Structure

Outbound Air

Who Should This Person Report To?

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“I think we have these roles sorted out,” Peter proclaimed. “I like the picture. It makes sense. But how do these roles relate to each other? I mean, who decides who is whose manager?”

Johnny jumped in. “It’s true. Whenever someone new joins the company, that’s always the first question. Who will this new person report to?”

Jim Dunbar knocked gently on the door. “Hope I’m not disturbing. How are things going?”

“We have a problem,” Johnny declared. “Who decides who reports to whom? Whenever we have a new employee, we all sit around the table and that’s the question. Who will this new person report to?”

Mary looked out the window, but suddenly turned and came back into the conversation. “Usually, we unload the new guy on the manager or supervisor who is the least busy.”

Excerpt from Outbound Air, Levels of Work in Organizational Structure, by Tom Foster, now available on Kindle, soon to be released in softcover.

Outbound Air

What About in Individual Technical Contributor?

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From the Ask Tom mailbag –

Question:
In the levels of work definition, from Elliott Jaques, you have highlighted that

  • Strata III – creates the system for production (typically a managerial role).
  • Strata II – makes sure production gets done (typically a supervisor role).
  • Strata I – production (typically a technician role).

Assuming one is working in a highly technical field, one might have a Systems Architect role at Stratum III, with no reports. Does this then mean that they fulfill ‘
“production” and that a Strata IV role would be the supervisor and a Strata V role creates the system? Or, would you say that the Systems Architect fulfills all three roles? Or something different altogether?

Response:
Thanks for the question. You have tipped off a number issues. The example I use most often in my Time Span workshop is a manufacturing or direct service model. These models are easy to understand, both in level of work and managerial relationships.

But there are hundreds (thousands) of business models that are not so straightforward in level of work. The calibration to determine level of work hinges on the length of the longest time span task in the role. As you suggest, in a technical industry, you may have “production” work at S-III, meaning the longest time span task would take longer than 12 months and shorter than 24 months to accomplish. This is quite typical in professional service firms (accounting, legal, financial advisory, engineering, architecture).

Your illustration also reveals the role of an individual technical contributor. An individual technical contributor is not necessarily a managerial role, but likely requires level of work at S-II, S-III or S-IV. Again, this is typical in technical business models.

If you have interest, I describe more details related to level of work, in the book Hiring Talent, for the following business models.

  • Managerial roles
  • Accounting roles
  • Engineering roles
  • Computer programming roles
  • Sales roles
  • Restaurant roles
  • Fleet service roles
  • Creative agency roles
  • Financial planning roles
  • Insurance agency roles
  • Construction trades roles
  • Legal firm roles
  • Public accounting roles
  • Medical roles
  • Educational institution roles (K-12)

Your question also asks about the nature of the managerial relationship for an individual technical contributor where the level of work is S-II, S-III or S-IV. I will save that for tomorrow.

Difference Between Non-Profit and Profit Organizations

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From the Ask Tom mailbag –

Question:
We run a non-profit organization. Curious, related to Requisite Organization, what differences between not-for-profit and a profit organization.

Response:
Biggest differences between for-profit and not-for-profit –
1. Profit is called surplus.
2. The entity doesn’t pay taxes, or pass through taxes.
3. No person “owns” the entity.
4. Governance is achieved through a board of directors, which, in turn, hires the CEO.

While it is a fair question, the contrast in RO between for-profit and non-profit is minimal. The technical name for most of Elliott’s research is a Management Accountability Hierarchy (MAH). It’s purpose is to get work done.

There are larger contrasts between entities organized for purposes other than getting work done. There are differences between an MAH and a religious organization, a political organization, a family unit, a collegial organization, a fraternity, a sports team. Organizations are not necessarily designed for the purpose of completing work. And, there, is where you might see larger differences in accountability and authority related to problem solving and decision making.

Massive Update to Time Span 101

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Just wanted to tell you about a massive content update to Time Span 101.

New Video Content (2-1/2 hours worth)
Time Span 101 now contains video from our most popular workshop Management Myths and Time Span. We recently produced this recording, and embedded more than 2-1/2 hours in 23 video segments into the learning platform at Time Span 101. If you attended one of my live workshops over the past ten years, this is your chance to re-capture the things you discovered about your organization.


New Updated Workbook
Subscribers will receive our pdf workbook, based on the workshop handout, to help organize your notes as you go through the program.

Old Subscribers
If you already have a subscription to Time Span 101, your login still works. You will receive a separate email with more details, including the pdf workbook.

New Subscribers
Get your login, now, for only $100. Register here – Time Span 101.

Learn the Way You Want to Learn
It’s up to you –

  • Follow the program – Timespan101.com is built in a logical sequence, so that one principle builds on another. It’s a no-brainer.
  • Random Access – You might have a particular interest. You can access any of the topics out-of-order based on your own interests.
  • Just Watch the Videos – If you just want to watch the videos, there is a link in [How to Use This Program] to just watch the videos. There are (23) video segments in the playlist. More than 2-1/2 hours of embedded videos.

Share This Critical Research
If you know someone else, who might also be interested in the Time Span research of Elliott Jaques, let me know. If you have any questions, just Ask Tom.

“Zappos just abolished bosses” – Baloney

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“The latest management trend to sweep Silicon Valley requires CEOs to formally relinquish their authority and grants special protection for every employee to experiment with ideas. It’s called holacracy and big name tech leaders have jumped on the bandwagon,” proclaims Gregory Ferenstein in his post on Vox, July 11, 2014.

“Zappos CEO Tony Hsieh announced that he will transition his entire Las Vegas company — with a billion dollars of revenue and 1500 workers — to holacracy by the end of 2014.”

Holacracy is described as the latest management craze and it is just that – craziness. The problem with craziness is that a manager or CEO will read his article and naively follow a prescription that will cost hard dollars and create untold havoc. Following Ferenstein’s prescription could be fatal.

Holacracy is a weasel word. It attempts to use new (made up) terminology to mask a vague notion of contrived credibility.

“Holacracy is management by committee with an emphasis on experimentation. The CEO formally relinquishes authority to a constitution and re-organizes everyone into decentralized teams that choose their own roles roles and goals,” explains Ferenstein. Think about this. What is delegation? Delegation is the assignment of accountability and authority to complete a task. Delegation shifts the accountability and authority to a “decentralized” team that chooses to complete the task (or not).

And believe me. If the “decentralized” team chooses not to complete the task and adopts a six hour lunch break, some manager will step in and say “Guys and gals, that is not what we had in mind.”

If you read this column regularly, you know I am a structure guy focused on the research of Elliott Jaques. This notion of giving a team direction (an objective) and providing them latitude (time span of discretion), within limits, to solve a problem is not a new notion. Holacracy is baloney (weasel word).

Ferenstein would argue with the words “within limits.” He would argue that Hsieh would set those limits free. That will not be the case. Hsieh will define those limits (discretionary authority). Holacracy obscures what is really happening using words without meaning.

“Advocates for holacracy argue that centralization of power suffocates innovation.” Here is the biggest problem with Ferenstein’s description – most managers, CEOs and writers about management DO NOT UNDERSTAND the purpose for hierarchy. They believe that management is all about centralization of power. Hierarchy has little to do with power. Hierarchy has everything to do with accountability and authority.

So, is Tony Hseih misguided in his actions and decisions related to his management structure? No. What IS MISGUIDED is the understanding of what he is doing and its description as holacracy. Over my next few posts, we will look closer at what Tony is doing and see that it is nothing new. And if Tony understood his decisions more clearly, in the context that I will describe, those decisions would be more effective in creating his image of an organization.

The purpose of an organization is not to broker power, but to get work done. I know that is what Tony wants to do. The question is, what does that structure look like? It ain’t holacracy.

Why Structure?

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If you read this blog for more than a few days, you figure out pretty quick that I am a structure guy. Most people can recite the bus analogy, “Get the right people in the right seats on the bus,” but what most miss is the quote that immediately follows. “If you get the right people in the right seats (organizational structure) your issues related to motivation and management largely go away.” Jim Collins said that.

Just finished Creativity, Inc, by Ed Catmull (Pixar). “We made the mistake of confusing the communication structure with the organizational structure.”

In my world, Catmull is confused about organizational structure. Your organizational structure is your communication structure. The purpose of structure is to create those necessary communication channels for feedback loops, data gathering, discussion and decision making.
_____________________________
Hiring Talent Summer Camp kicks off July 7. More information here.

What is the Level of Work in Disney?

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From the Ask Tom mailbag – Related to yesterday’s post on Levels of Work. Thanks to Barry for posting.

Question:
I agree that the place to start is with the work, but I’m confused by your presentation of the structure of the work. This description seems to only apply to organizations that have five hierarchical levels. When Walt Disney was 20, he was president of a corporation called Laugh-O-Gram Films, Inc., that was established to make a series of silent cartoons. This was long before the creation of Mickey Mouse. All ten or so employees reported directly to Walt.

So, I agree with your last statement that the first step is to understand the work and the different levels of work, but I’m not sure the work necessarily matches up with the five levels you provided.

Response:
Barry, thank you for a great question. You are correct. Not every organization has five levels of work. The example you provide, Laugh-O-Gram films was likely a Stratum III organization. Each film was likely a Stratum II project, but to be successful, they had to develop Stratum III systems in their animation methods. Ten or so employees would be consistent at that level of organization.

As time went by, Disney’s successor corporations, either by organic growth or acquisition, grew in complexity. We can calibrate that complexity using Time Span, examining each successive level of work. Disney is now Disney-ABC Television Group after its acquisition of ABC-Cap Cities in 1996. Now, an international media company, its highest level of work is high Stratum VI or low Stratum VII.

Time Span – Where Do I Start, How to Implement?

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From the Ask Tom mailbag –

Question – 
I attended one of your workshops on Time Span.  Since that day, the subject is like a song that I just can’t get out of my head.  At the same time, where do I start?  You described Time Span, or Requisite Organization as a comprehensive management system, but where do I start?

Response – 
A first introduction to Requisite Organization and its central kernel, Time Span, can be overwhelming.  But the first steps are not that complicated.  Over the past ten years, I have shared this concept with more than 5,000 CEOs and managers, and this is always the first question – Where do I start?

It’s all about the work.

There are many kinds of organizations in the world, groups of people organized around a purpose.  There are religious organizations, community service organizations, political organizations, and organizations to get work done.  Work is my focus.  It’s all about the work.

So, what is the work that has to be done.  Where do I start?  It starts by understanding the answers to these questions.  These questions are helpful, to understand the different levels of work required in any complex endeavor.  Where you start, is by understanding the work.  The first step is understanding, the first step is a design step.

  • (S-V) What is the superior purpose for the work?  At the end of our foreseeable future, what do we want to accomplish?  This is often called vision, mission, purpose.  Without defining this purpose, the rest of the list doesn’t make sense.
  • (S-IV) To achieve the superior purpose (vision, mission), what are the big milestones that have to be achieved?  What are the big rocks that have to be moved?
  • (S-III) To move those big rocks, what are the consistent, repeatable behaviors (habits, systems) that have to be created?
  • (S-II) Inside each system, what are the deadlines and completed actions (projects) that have to be completed?  What are the materials, equipment and people required to complete those projects?
  • (S-I) What are the fundamental tasks that have to be organized?  What is the production work that has to be completed day in and day out?

The first step is to understand the work, to understand the different levels of work.