In early November 2011 I spoke on ways to attract and retain talent to a group of executives in Shanghai organized by the Ivey Alumni Association, Shanghai Chapter and the Canadian Chamber of Commerce in Shanghai. This is part 3 of that presentation.
A properly designed management accountability hierarchy (continued)
How many managerial levels are optimal? Based on his research:
- Jaques asserts that in a corporation there are exactly six levels of management;
- The Management Levels are not the same as pay grades; you need more pay grades than management levels;
- Each level requires managers with greater Complexity of Mental Processing (time horizon).
This chart summarizes the seven stratums of an organization, the time horizon of each level, and the typical titles associated with the level.
Below, we see the six managerial levels. Note, that at many levels there are also non-managerial roles.
The concept of time horizon
Jaques’ concept of the time horizon of a role is summarized by these points:
The level of work in a role is measured by its time-span;
Time-span is the maximum target completion time of the longest tasks in a role;
As the time-span of a role increases the “feeling of weight of responsibility increases, and the greater the complexity of mental processing (CMP) you need in order to cope”;
The “greater your potential capability (PC), the greater your working outreach in time – the further into the future you can not only plan, but can carry those plans through to the point of realization;”
That there exists a significant fact-base supporting the use of time-span as the most useful and objective measure of the level and complexity of work;
That any two roles with the same time-span regardless of occupation have the same level of work;
That Jaques’ concept of complexity of mental processing is not the same as “intelligence testing” or IQ.
When Jaques’ writes of “tasks,” he is not talking about activities, but objectives or missions. For example, a task (or mission if this helps you to think about it) to set up a supplier network for a new aircraft in 3 years is equivalent to Stratum 4. Another example is a Strategic Business Group EVP whose task is to design and construct a massive manufacturing, educational, port, rail and road infrastructure in a third-world country in three phases over 12 years. In this case, the Group EVP has a time-span corresponding to Stratum 6.
Problems occur when the person at a given management level does not have the required mental ability to operate at that level. In the example below on the right we see a stratum III manager who should operate with a time horizon of 1 to 2 years but is comfortable and capable in operating at a maximum time horizon of 3 months. People at both stratum 2 and 1 experience confusion and frustration.
In summary, Jaques approach to the design of management structures helps reduce frustration and clarify roles and expectations. Average performers perform better in this setting and the best people will see that performance and potential is recognized and rewarded based on capability not favoritism.