(Re-published from October 2002 … browsing through old stuff, it’s interesting what comes up 😉
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The DNA of Hierarchy
Org charts began appearing in the 50’s, as organizations began growing in size and complexity to the point where making the work of large numbers of people (in the form of division of labor) began to be strategically important. In order to have the way the work was ordered make sense, the discipline of job evaluation was invented.
Job evaluation – the rank ordering of jobs according to certain factors – grew like wildfire from the mid-50’s through to the early ’90’s. Since then it has begun to become less effective, and less important, as reengineering has taken over the design of work (although forces like the legislation for Equal Pay For Work Of Equal Value and the absence of any replacement universal methodology for networked work) has kept it going through the ’90’s.
If “language creates reality” …
job evaluation methodologies rely exclusively on the semantic definitions of job size “factors”. These are definitions applied to various levels of increasing knowledge, responsibilities, duties and skills as they are expressed in the social construct we know as a “job”. There are several well-known methods in common use, all are similar but use slightly different titles for the factors. I have used the Hay Method’s factors here … as they are still widely and commonly used in organizations around the world.
The factors and sub-factors are as follows :
1. Know-How, consisting of 3 sub-factors :
– Technical Know-How
– Breadth of Management
– Human Relations Skills
2. Problem-Solving, consisting of 2 sub-factors:
– Thinking Complexity
– Thinking Challenge
3. Accountability, consisting of 3 sub-factors:
– Freedom to Act
– Magnitude (of budget, usually – some aspect of the financial measures associated with the job’s responsibilities)
– Impact (whether the job controls, or contributes, or simply is an information relay)
On the face of it, these look reasonable enough. However, the fundamental assumptions, and the rules with which they are used, bear closer examination.
The factors imply (or rely on) the stability and predictability of an organization’s activities and structure – in other words, it is assumed that the markets and customers don’t change too much and that therefore the work doesn’t change too much.
Many of us know that’s not the way it goes these days.
Secondly, these factors (and their derivatives) simply did not account for cross-functionality (in the language of organizational consultants) the across-the-silos communications and coordination needed for flexibility in a rapidly-moving business and organizational environment. And more importantly, these factors did not even faintly foresee the interconnectedness of the Internet, nor the wholesale and large -scale penetration of integrated ERP systems like SAP into the modern workplace.
Remember, the factors and their application to work and organizational design were invented in the mid 1950’s, and were designed to mirror and reinforce structures that were growing at that time, while mass production and control of quality and cost where the fundamental drivers of economic growth.
Let’s go a bit deeper.
The Technical Know-How factor carries quite a bit of weight (usually 40% to 45% of a job’s size), and the rules for its use are that the superior position (on an org chart) always carries several orders of magnitude more Know-How.
Hmmm … I wonder if that’s really the case today? How many young and highly-educated knowledge workers actually “know more” than many bosses?
Breadth of Management – what does that mean, in an age of outsourcing, partnerships, teams made up internal workers and external contractors, and so on. Again, we encounter possible dissonance, given the way things really work today.
Human Relations Skills – this factor has always been treated as a “gimme”. If a job supervises one or two people, or 300 people, you still get the same score – a “3”, for the requirement to motivate and lead. Again, hmmm…. in an Age of Relationships, I wonder if this shouldn’t somehow be differently defined and applied?
Thinking Complexity – this factor assumes stability and predictability, again. And even more reinforcing of hierarchy, it assumes that the superior jobs (on the org chart) carry a greater capability to define, understand and resolve problems. Very hierarchical …
Thinking Challenge – similar to the above factor, but assumes guidance for an incumbent through the use of practices, policies and procedures. The lower down you are, the more the jobs are rote, dictated by standard procedures that don’t vary.
Freedom to Act – this factor is the one that always bothered me the most. The definition of the factor was polite language for “you do as I say”, in the interaction between a boss and a subordinate. This is the dominant (most highly-weighted) sub-factor of the Accountability cluster. Not the most facilitative environment for dialogue, or constructive discourse in the workplace.
Magnitude and Impact – the bigger the budget, the more clout and size – forget about influence, forget about creativity, just manage and control that budget.
So….it’s my fervent belief that 50 years of applying these rules to the defining of jobs has helped to create organizational structures that are rigid, difficult to make adaptable and responsive, and slow to change. The factors are encoded into peoples’ mindsets about their jobs, their bosses’ jobs and their peers’ jobs. They do not encourage or facilitate creativity or innovation.
The factors were designed for the ways organizations were built 50 years ago. They are not particularly relevant to much of the work that is required or emerging in the modern workplace. But nothing substantial has replaced it – other “designs” like teamwork and project management, were layered on top of this fundamental structure.
As customers interact with organizations via connected software, and while peers collaborate using e-mail and on integrated systems, and can find knowledge quicly in databases or on the Web, is it any wonder that these fundamental assumptions aren’t up to the job of designing work?
In a world of work that is evolving towards wirearchy, we need work design factors that create the reality of responsiveness, flexibility, creativity, innovation – that allow for authentic human voices to connect and communicate, not command and control.
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Funny I was thinking about this today too and drafted a post that I subsequently deleted.
The Hay, that you describe above, is relatively complicated and obscures, IMHO, what we were doing.
In a hierarchy, each new level is integrating work that has been differentiated or divided. In principle, each new level is harder and more complex and is therefore paid more – 33% to 50%. That range is important to motivate upskilling but to keep the steps attractive and doable.
In structures that are organized laterally rather than vertically, two sets of people might be paid a lot: gatekeepers and people who can quickly pull together a huge web that can achieve what we cannot achieve alone. The subscription of our attention should somehow relate to pay – at least from that part of the subsystem. I couldn’t figure out more than that – I think because social media work relies for the moment so much on entrepreneurial work. The key word though is probably coordination (not includied in the words planning, leading, organizing and controlling which was the classic breakddown of integration.)
Later on in the evening, I was sketching out a budget for a project and I reverted to type. I worked out pay levels for project workers setting level one at the minimum wage and increasing by 40% each time. The levels were defined by Eliott Jaques and correspond to unskilled, semi-skilled (equiv to learning to drive a light vehicle or rough and ready computer use), semi-skilled with responsibility (bus driver or work requiring a some judgement), skilled (work requiring 3-5 years training and conscious decision making), skilled with responsibility ( the previous level and a few years experience – no oversight needs to be given), middle management (planning and achieving 1-2 year outcomes or managing complex systems like surgery), middle management experienced (setting conditions for previous level and coaching previous level), senior management (achieving 3-5 year outcomes and either managing change or managing two or more functtions – see the complexity), senior management experienced (setting conditions for the previous level/coaching), top management (designing and leading a full organization). A small organization is equivalent to the first level of middle management. For what it is worth, I used these to imagine step-ups in competence that allow a smart person to rapidly assimilate the specific skills used in a project and to set wages fairly. In most professional projects we would only use the first 5-7 levels anyway.
Whether we will need a formal system like this in the networked world, I am not sure. The world of work has become a lot looser. I suspect we won’t need it somehow. Once we’ve paid the rent and our basic living requirements, we might be a lot more interested in a kind of discounted cash flow – where is the project that I am doing going to take me. I think a sensible person will want to see ahead to several possibilities each of which they are working on at the same time as their current project.
Investing in dead industries, which is what old employment does in an of itself and through pensions, is just not very attractive anymore.
So the pay would include money for brick and mortar now and networked opportunities to work on other options. Reversing Google’s rule to 20% -80% perhaps?
So it is really important to find projects where people can work at a high level to earn their rent?