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CAPABILITY WHAT IS YOUR

POTENTIAL?

SELECTION

PERFORMANCE MANAGEMENT

DEVELOPMENT

SUCCESSION PLANNING

http://www.requisite-development.com/


TABLE OF CONTENTS

Moving from frustration to clarity – one manager’s journey

3-4

The context of Requisite Organization – its unique proposition

5 An overview of the RO approach to Organization Design and Human Capability assessment and development

6-12 The Model of Human Capability – what is it and how do we assess it?

10-11 CIP – the big breakthrough in matching people to roles

12-13

How to assess CIP 14 Summary – what is the point of knowing your Current and Future Potential Capability?

15



Moving from frustration to clarity – one manager’s journey

(Or, kicking the guesswork habit)

“You know, we spend a small fortune on assessment tools and tests and crunching the “scores on the doors” - but when it comes down to the crunch of deciding which candidate’s results are the best match for the job, or who is going to be the high-flyer of tomorrow, we still end up using gut feeling. So, what’s the point of it all? We could save ourselves loads of money and just go back to using our intuition like we used to do.” (HR Manager from the automotive industry) Assessment of people’s current and future potential capability is big business. Even a cursory Internet search reveals thousands of tools, techniques and consultancy services. It’s a bewildering and time-consuming choice. When I started out in this field in the late 1980s we were still dragging line managers kicking and screaming out of their comfort zone of the standard interview and dealing with the familiar mantra of “I can spot the winner in 10 minutes”. We would eyeball them sternly and lecture them about the need for objectivity and scientific evidence and watch their eyes glaze over with our explanations of correlation co-efficients, predictive validity and norm groups. These days no self-respecting HR function would consider a selection process without some form of “objective” standardised assessment component. What they use may well depend on what they can afford, the time available, their perceptions of the trends in the field and their own level of expertise. When challenged with the obvious question “does it work?” responses will vary – ‘we’ve always used these tests/everyone else uses them, don’t they?/the process works most of the time, so it must be OK.’ Until the early mid-1990s I must say that I, as an HR Manager, was in the same boat. I worked for one of the UK’s largest financial services organizations and, at the time, our toolkit of assessment techniques was pretty sophisticated. We believed that what we did worked and our internal clients were also believers – most of the time. On those occasions when it didn’t work, we could shrug our shoulders complacently and say that nothing is 100% foolproof. How wrong we were. I can’t speak for my colleagues of that period, but for myself the quotation in the first paragraph above was beginning to ring true. I just knew there was something missing from the assessment process, but couldn’t put my finger on it. In 1993, I was introduced by an external colleague to the work of Dr Elliott Jaques. It wasn’t exactly a ‘Road to Damascus’ moment as it took me a while to understand his theories but it was certainly a turning point and I found myself turning my back on everything I had learned up to that time about organizational and people development. Dr Elliott Jaques (1919-2003) was a pioneer in the field of organizational and people development. Starting in the 1950s, he built and tested theories about organizational structure, human capability and managerial leadership processes which turned a corner in management thinking forever. Over the decades he and his colleagues implemented these theories in organizations of all sizes and sectors around the world, allowing them to free themselves from outdated bureaucratic structures and practices in order to produce stunning results. (You can read some examples from our colleagues at the Global Organization Design Society at www.globalro.org).


http://www.globalro.org/


We need to give you some context to help you understand how Jaques’ ideas about human capability fit into the bigger picture of work in organizations.

The context of the Requisite Organization Model

Its unique proposition

All organizations, regardless of their state of development, need to ensure that their infrastructure and talent pool are designed and organized optimally to meet their strategic goals. During times of change – whether through growth, contraction or re-organization – the requirement for this solid foundation becomes particularly acute. People in the organization need to be not only capable of performing their current roles to an acceptable standard but also capable of creating sustainable transformation in their performance – and in the case of managers, transforming the performance of their team. The Requisite Organization Model Map summarizes how an organization can create optimum performance by ensuring that:

it has the right structure to achieves its strategic goals it deploys and develops its human talent by benchmarking it against organizational

needs It has the necessary managerial processes and systems in place.

On the next page you will see how the components of the Model are interlinked to address all aspects of organizational management.



AN OVERVIEW OF THE RO MODEL

By using the Requisite Organization Management Model as a framework we can ensure that individual interventions (such as organizational restructuring, talent assessment and performance management) can interlink with other organizational processes, thereby creating sustainable solutions. For example, quite often we find organizations run very interesting Learning and Development events but, beyond their intrinsic value, they may serve only a limited purpose unless there is a direct link to Performance Management systems, individuals’ capability assessments and ensuing development action plans and, ultimately, organizational goals. For this reason, we would encourage clients, in the first instance to assess whether they have in place such diagnostic systems against which to measure the success of their Learning and Development processes. The Requisite Organization Model therefore helps organizations and their employees to develop and sustain optimum performance by:

Ensuring that the organization has the right structure (i.e. correct number of Levels of Work and appropriate alignments of work roles, teams and business units in relation to each other) to support the achievement of its strategic goals.

Helping them to assess their human talent pool. Do they have the right people in the right roles? What roles could people perform in the future, based on their Future Potential Capability?



Designing fair and equitable managerial systems. Does the organization have the right managerial processes in place to monitor and develop performance? Are employees being paid fairly in relation to the size and complexity of their role? Are managerial processes seen to be objective, measurable and transparent? Do they help to secure employee motivation?

Developing managerial leadership at all levels to ensure that the organization’s culture is geared towards achieving not only business performance but also that it encourages ethical and socially-responsible behaviour.

In this article we want to talk about Human Capability specifically. In order to understand Capability and how to assess it, we need to take a step back and look at the fundamental principles of organizational structure as this will provide the benchmark against which to assess individuals’ Current and Future Potential Capability. In the next section we will examine how to assess the scope and complexity of work roles in order to match people against them.

THE RO APPROACH TO ORGANIZATION DESIGN AND HUMAN CAPABILITY ASSESSMENT AND DEVELOPMENT

This section examines how the Requisite Organization Model resolves the fundamental issues of:

1) Determining the right organizational structure 2) How to match people against current and future roles – measuring their Current and

Future Potential Capability

ORGANIZATIONAL STRUCTURING AND ROLE-PROFILING “Why does it matter how many layers an organization should have?” “ In times of rapid change and uncertainty, we don’t want a structure that holds us back.” “Our job evaluation system is a bureaucratic nightmare.” “ It’s not fair that I should have to take a managerial role to get promoted.” "Requisite organizational structure is the bed-rock of effective organizational management."

(Jaques, "Requisite Organization", 1986) Managers tend not to value organizational design or appreciate the impact it has on organizational performance. When problems occur, the temptation is to move people around (or recruit more of them) without a sound supporting framework or rationale.



The truth is that a badly designed organization impacts on people's performance. It also affects culture, communication, team-working, pay systems and talent pool development. Whether you are starting up an organization, looking to grow organically or by merger, or seeking to make changes to become more effective, you need to create a solid foundation. Organizational structure has received a bad press for many years. "Hierarchy" is seen as being commensurate with "bureaucracy", and organizations are continually urged to be as flat as possible. But how flat should they be? How many times have we experienced re-structuring, with the resultant fall-out in terms of redundancies and employee de-motivation, only to find later that it still didn't work and we ended up the next year recruiting for the same jobs again? Job evaluation systems claim to measure objectively the size of roles and, consequently, the numbers of levels of work that should exist in an organization. However, their fundamental criteria for measuring role size are subjective. Use of their criteria also creates a bias towards managerial roles, thus pushing the value of specialist roles further down the organizational ladder. This clearly has consequences for people's status, pay and career development. How many times have individuals tried to manipulate the content of their job descriptions or their departmental structure in order to give themselves or their staff a false promotion? These political games waste time and money and cause de-motivation.

How “Requisite Organization” solves these problems When Dr. Elliott Jaques began his research in the 1950s, one of his fundamental discoveries was that there is an inevitable style of organization - the Requisite Organization - which is segmented into layers differentiated by the complexity of work at each level. He found that the most accurate and objective way to measure the level of complexity in a work role is to establish the target completion date of the largest task in that role ("time-span of discretion"). This makes perfect sense - for example, a role whose major tasks includes the implementation of a new computer system within 5 years is bound to be more complex than one which has the task of designing and delivering a computer programme within 12 months. The longer the target completion time, the more variables have to be considered in terms of managing budgets, human and technical resources, and so on. Large-scale projects will contain sub-projects which have to be managed concurrently. Another example is the development of an organization's next phase of its corporate strategy over, say, 4 years. This role could well belong to a specialist like a Strategic Planner who has no direct subordinates - but this factor does not, in itself, influence directly the complexity of that person's role and its level within the organization. He/she could therefore be at the same level of “seniority” as a business function manager whose department has a total of 50 employees. It is the “time-span of discretion” in a role which Jaques’ research found to be the key determinant. Jaques created the term "time-span of discretion" to describe the work complexity factor. The longer the time-span of the role, the higher up the organization it would be placed. He also called organizational levels of work "Strata". How many Strata are correct for your organization? This will vary. One begins by measuring the time-span of the highest role (CEO/MD/President) and then cascades down the



organization. The maximum number of Strata that Jaques discovered was 8 - and this would be a supra-organization (on the scale of Microsoft or General Electric, for example) where the highest role would have a time-span of over 50 years. In contrast, an SME may need no more than 3 Strata. Jaques established the following time-span values for each Stratum:

What Are The Benefits?

Some of the many benefits of this system include:

Objectivity, transparency, fairness, and simplicity - the assignment of a target completion date for a task is a given objective fact. If this date should change in the future significantly, it is easy to identify whether the role moves up or down a Stratum.

Resource efficiency - one does not waste time in job evaluation committees arguing about the number of subordinates in the role under evaluation, the size of the role's budget, the vagueness of the "impact" this role has on organizational success, and so on.

Career planning - it produces clearly-identifiable steps for promotion. Pay levels - it provides a universal framework for bands of pay. Clarity of reporting lines and optimum number of Strata - within any vertical

reporting structure, only one role should exist at each Stratum. This automatically removes the threat of heavy bureaucracy which comes from too many layers in the decision-making process.

Matching people accurately to roles - "is this person big enough to cope with this role?" In Jaques' research, he discovered the exact correspondence between Organizational Strata and the Level of Complexity of Information Processing (CIP) which is required to perform a role effectively at a particular Stratum.



See the next section “Model of Human Capability” to find out about Jaques’ discovery of CIP and what it means in practice.

Always Start With Role Analysis Before we can build a structure for an entire organization, department or unit, we have to address the heart of the matter - the nature of work and how it is divided into roles and how these roles relate to others, in vertical and horizontal relationships. Some of the worst symptoms of organizational mismanagement - duplication, confused reporting lines, ambiguity about responsibilities, disagreement over performance appraisals, or political infighting about ownership of roles - stem from a lack of clarity about accountabilities and role relationships. What am I expected to achieve? Who is my real boss? How does my role impact on others in the organization?

Role Profiling Above, we have talked about how to measure the complexity of the role. Role complexity, and the judgment about at which Organizational Stratum the role sits, is just one component. Every role should be fully analyzed using a Role Description Profile, covering:

Accountabilities Authority levels Target completion date for the largest task (Time-span of discretion - judging the

complexity of the role = Organizational Stratum) Role relationships - what does the role-holder need from his or her manager,

subordinates, peers, and other members of the organization in order to perform their tasks effectively? And what do they need from the role-holder? Information exchange? Authorisations? Status reports?

Knowledge/skill requirements Such a document serves a multitude of purposes including: creating reporting structures, decision-making processes, communication channels, benchmarking for performance appraisals, salary decisions, recruitment and development. Sounds obvious? It is, but we all know how little attention is often paid to this fundamental component of building our organizations.

Reporting Structures Roles need to be aligned vertically in the correct number of Strata for each particular organization. Business functions also need to be aligned horizontally, to prevent duplications or gaps. The manager-subordinate relationship is the keystone to optimal vertical structuring. Every role should report to another role located in the next higher Stratum. Within a reporting chain only one role should fall into each Stratum. A manager's role needs to be one Stratum higher than that of his/her subordinate (and the manager's Current Level of CIP needs to match exactly with that Stratum) to ensure that he/she can create appropriate context for



his/her subordinate. In this way, the manager can be said to be creating value-added leadership. In the next section we will focus on the Model of Human Capability and how to assess someone’s Current and Future Potential Capability and match them against their work role.

CAPABILITY -

WHAT IS IT AND HOW DO WE ASSESS IT? Capability is made up of these 5 factors which need to be in harmony in order to create optimum work performance and employee satisfaction. Some factors are trainable but others have been found to be innate – this is one of the more controversial aspects of Jaques’ research.

KNOWLEDGE AND SKILLS VALUES

TEMPERAMENT SOCIO-EMOTIONAL MATURITY

COGNITIVE CAPABILITY



Definition of Capability Factors

Knowledge and skills (trainable)

This incorporates technical knowledge, generic skills and competencies - factors which are generally considered to be trainable.

Work Values (innate)

If an individual enjoys the core aspects of their work role (e.g. coaching subordinates, analyzing data, customer service, etc), then they are more likely to commit 100% of their efforts to performing well – in spite of external factors such as pay or working conditions.

Complexity of Information Processing (innate but subject to maturation at a

predictable rate)

Discovered by Dr. Elliott Jaques in the 1950s, CIP could be described as the "missing link" in the assessment of an individual's Current and Future Potential Capability. We talk about people being "big enough" (or not) to handle the complexity of a role. The essence of what we do at work is processing information and problem-solving - working out paths towards the achievement of goals in our tasks and juggling with all the variables which will affect that achievement. Work roles will differ in their level of complexity. Once we have analyzed the complexity of a work role we can compare an individual’s Current Level of CIP against it to identify a match or mismatch. CIP matures with age at a predictable rate throughout life. This maturation process cannot be speeded up or slowed down. It is innate and free from bias of factors such as gender, race, social background or educational opportunity. The rate of maturation differs between individuals.

Temperament and Socio-Emotional Maturity (innate but may be influenced by coaching)

In order to perform roles effectively and to maintain healthy working relationships, an individual needs to be free of extreme temperamental factors. Some examples may include: aggressiveness, extreme shyness, obsessive behaviour, dishonesty, manipulative behaviour, disorganization, procrastination, and so on. Coaching can help to eradicate some of these factors but some behaviors are deep-rooted within an individual's psychological make-up. Levels of Socio-emotional maturity (as defined by Kegan) tend to mature within people as they accumulate life experience but its development can be assisted through specific coaching.

The discovery of CIP has revolutionised how we look at cognitive capability in relation to work. In the following pages we will explain it in more detail.



Level of CIP = Organizational Stratum – “The Big Breakthrough in Matching People to Roles”

Jaques' research culminated in the identification of organizational levels (Strata) differentiated by the degree of work complexity in a role, and the fact that there are no more than 8 levels in any organization - indeed, usually, far fewer. When Jaques turned his attention to the analysis of CIP, he found that there were a maximum of 4 levels of information processing that our minds use – 1. Declarative (or, or) e.g. “I think that so-and-so could be true because of this, or this, or some other reason.” 2. Linear (and, and) e.g. “I think that so-and-so is true because of this, and this and this reason taken together.” 3. Cause-and-effect (if, then) e.g. “I think that so-and-so is true because if we do it, it will lead to X, and that will lead to Y, and then that will cause Z.” 4. Systemic (if, and only if) e.g. “I know that if we do X then it will lead to Y and then to Z. But we have to consider that if we do not do X but rather do A, then that will lead to B, and then to C. So, we have to consider both possibilities and relate them.” These levels are recursive, which is to say that they appear at the concrete and then again at the abstract level of information, making 8 levels in all. Jaques then found that there was an exact correlation between the 8 Strata of work complexity in organizational structures and the level of CIP required:



LEVEL OF WORK (STRATA) LEVEL OF CIP 8 (CEO supra-national organization) Global meta-systemic (Abstract) 7 (CEO multi-national organization) Cause-and-effect (Abstract) 6 (CEO national organization) Linear (Abstract) 5 (Strategic Business Unit President) Meta-systemic (Abstract) 4 (VP/Functional/General Manager) Systemic(Concrete) 3 (Department Manager) Cause-and-effect (Concrete) 2 (Team Leader) Linear (Concrete) 1 (Frontline staff) Declarative (Concrete)

Therefore, a true matching process of an individual’s Level of CIP (current and future potential) against strata of work in an organization is possible. For example, a Marketing Director whose role was judged to be at Stratum V (time-span of 5 to 10 years) needed to have Level 5 (Declarative Processing - Abstract) as his/her Current Level of CIP in order to cope with the complexities of this role. In another example, a Sales Manager whose role was at Stratum III (time-span of 1-2 years) needed to have Level 3 (Serial Processing - Concrete) as his/her Current Level of CIP. NB. Validity correlations between CIP and job performance have been established at 0.94, with inter-rater reliability of 0.89. This compares very favourably with competency-based assessment centres at 0.7 and aptitude/personality tests at 0.4 – 0.6.

What Does CIP Mean In Practice? It means that we can identify and measure objectively an individual's Current Level of CIP at any age and match it with 94% accuracy against the level of complexity in a role at a particular Organizational Level. Once we have established an individual's Current Level of CIP, we can then map their maturation curve ("mode") on the "Maturation of Future Potential CIP" graph (developed by Jaques by tracking maturation of CIP for thousands of people over the course of decades) to identify their Future Potential Level of CIP - namely, which is the highest level in the organization to which they could rise and at what age, plus all the steps in-between. Thus we have the optimum information for succession and career development planning. CIP, being innate and subject to maturation, is therefore the first factor one should consider when assessing and developing employees, both for current and future roles. A mismatch between an individual's Level of CIP and the level of complexity in a role always spells disaster. However, on its own CIP is not sufficient. In order to perform effectively, an individual has to possess the other factors in this Model as they relate to the role for which they are being considered.



What Is the Process for Assessment of an Individual’s Current and Future Potential Level of CIP?

The assessment of CIP is by observation. Anyone can learn to use the technique. CIP reveals itself in our speech patterns when we are heavily engaged in debate in a subject that interests us, or in response to intensive interviewing. It is not the content of what is said, or the opinion that is expressed which matters. (Content does, of course, matter in assessing full applied capability as it reflects skilled knowledge and experience). CIP is about raw mental processing power. It tells us about an individual’s ability to handle complexity in organizing information in order to formulate solutions to a problem, with all its variables - how they think through the issues in order to reach their conclusions. We reveal our internal information processing power when we speak about how we would solve a problem. A typical assessment process would involve interviewing a candidate on a subject which engages their interest strongly. For example, it could be about politics, legalization of drugs or a problem about their work. The interview is conducted by a trained observer who guides the conversation to ensure that a real debate is taking place and that the interviewee’s responses reflect their spontaneous thinking. The interview is tape-recorded, then transcribed. The interviewer then tracks the patterns of information processing used by the interviewee to judge which level (as described above) is the most prevalent. This will reveal the current level of CIP which the individual possesses. Once the Level of Processing has been identified the other judgment to be made is whether the content of the interviewee’s comments is focused on either concrete or abstract ideas. The final judgment can therefore be made which states that this interviewee, at their current age, is operating at Level (1, 2, 3, 4, 5, 6, 7, or 8) – their Current Potential Level of CIP. By plotting this result on Jaques’ “Maturation of Future Potential CIP” graph we can track the interviewee’s maturation curve (Mode) and reveal the age at which they are predicted to reach their maximum Level of Future Potential CIP, and all the steps in between. Again, as these levels correspond with Strata of work in the organization this gives us a tangible picture in terms of the individual’s career progression, and enables us to plan their development (in terms of knowledge, competencies and experience required at different strata and in different types of role) in the most cost-effective way possible. In summary - developing the right people for the right roles at the right time.



Summary So, what is the point of discovering your Current and Future Potential Capability? Once you have this crucial information you can:

1. Discover how well you fit with your current work role. 2. Identify any areas where there is a mismatch between you and the role. It is

incredibly liberating to get to this point. So many people blame themselves or their manager for low motivation or performance when, in fact, they may simply be out of sync with their role. Perhaps you have applied for the wrong role (or have been promoted into it just because of your technical knowledge and skills), or you have now outgrown it.

3. Resolve any tensions with your manager or colleagues which may have arisen because of reasons listed above. So-called ‘personality clashes’ are just as likely to be the result of mismatched people to roles.

4. Plan your future career path, knowing at what age you will be ready to take on a more complex role and what kind of work is more likely to match your talents and interests.

5. Discuss with your manager the possibility of taking on more complex assignments if you have outgrown your role but there is nothing else suitable for you to move into for a while. This action can help to maintain your motivation by ensuring that your excess capability is ‘mopped up’.

6. Take control of your life. If you are unhappy at work through mismatches it will affect other aspects of your life too.

If you want to learn how to assess CIP (or to undergo an assessment yourself), simply email us at [email protected]


mailto:[email protected]

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