org planning and analysis in disruptive times
Watch Rupert Morrison, CEO, OrgVue, talk at The Conference Board Org Design Conference in November 2019 about Org Planning and Analysis (OP&A): a new model for OD that’s making waves.
Disruption today is constant, and organizations must adapt faster, better and stronger to survive. Change, however, can be cumbersome and the benefits often unrealized. Against this backdrop, OD has evolved. OD needs to enhance workforce productivity and effectiveness to deliver strategy. OD needs to leverage data to proactively identify opportunities, and guide design decisions.
In this session we introduce Org Planning and Analysis (OP&A): a new model for OD that’s making waves. As a natural partner to FP&A in Finance, this is capability in forecasting and planning that connects the organization to ever-changing business needs.
Speakers: Rupert Morrison, CEO, OrgVue
Recorded on Thursday, November 7th 2019 at The Conference Board Org Design Conference, New York.
EVENT HOST: Okay, we have an exciting next presentation. Rupert Morrison is the CEO of a company called OrgVue. Rupert’s training is as an economist. He’s an industry leader in visionary and data-driven organization management. He has 20 years of industry experience and he combines a deep understanding of board-level business issues with data-driven methodologies and advanced analytics. In 2008, Rupert founded Concentra Analytics; I believe the brand name here in the US is OrgVue. So, welcome Rupert and we’re looking forward to hearing about Concentra/OrgVue.
RUPERT MORRISON: Thank you. So, just a little bit about myself before I dive into the details. I live in London but [am] originally from New Zealand. I grew up on a sheep farm learning the practicalities of life. Then something changed. I decided to study mathematical economics and discovered I didn’t have an imagination and thought, “What am I going to do? Am I going to be a management consultant or an investment banker?” But because of my practical background I thought I might go into management consulting, which I did and loved.
But I got really frustrated with being a management consultant. Why? Because I love data and I love analytics and that was the red line. I love crunching numbers, very sad like that. When I was doing my wedding planning, I created an algorithm to optimize where everyone would sit in my spare time.
So, I built all these models and analysis, all visualized in PowerPoint. And my clients, CEOs would turn around and say, “This is really helpful, this is really insightful, but what are we going to do in six months time? Because there’s no way that we can maintain everything you’ve built.” And I thought to myself, “I don’t have a good answer and where I am currently as a management consultant,” because as a management consultant, you charge by the day. And so, I decided to disrupt the business model and two weeks after my second son was born, I set up a company. And what we did is we combined a group of management consultants with a group of software engineers and analytics people, and we smashed that together. And that was in 2008.
Who here knows of a chap by the name of Joseph Schumpeter? What’s Joseph Schumpeter famous for? Joseph Schumpeter coined the phrase ‘creative destruction’ and really came up with the economic foundation for why economies grown through disruption and entrepreneurship. So, Google, only been around 20 years and now worth close to a trillion dollars. How does that happen? It happens through constant revolution, and that revolution destroys the old and creates the new.
So, the concept of creative destruction is not new. The only thing that’s new is the pace of the change. And what we have is an opportunity. We’ve done a piece of research with the CEBR, the Center for Economic Business Research. So, they’re basically an economic think-tank, they work with the Bank of England and the Treasury, and what we uncovered is that people who do organizational planning and analysis have a two-fold increase in productivity per employee. And we measure that as profit per employee. For the US economy that’s, if I round upwards, USD$100 billion. This is for organizations above 5,000 employees. So, just by doing a little bit of work on getting an org design, you can have a material impact on the bottom line.
But the question is how do we do it? Now, you heard from AlignOrg [Solutions]and they came up with a very deliberate process. They said, “We have to deliberately design this” and in the fog of war, it all might be confusing, but go through the process, trust the process. Move away from people panic, and being there at the last minute, to deliberate design. So, that’s one of the fundamental things that we believe in. But it’s not just taking control of the workforce, it’s taking control of the work and everything related to that.
Now, I’m going to put to you that there needs to be a new function in HR, because organization design and organizational planning is so fundamental that, if it sits in a [Center of Excellence] somewhere, and even if it’s called ‘organizational excellence’, that is insufficient. And let me start with Finance.
The finance function is broadly broken into two pieces. There is a backward-looking, operational, day-to-day function,
financial operations. What does it do? Credit control, financial accounting etc. Without financial operations, you do not have a business, you cannot survive. 75% of the finance function is in financial operations. 25% is in financial planning and analysis. What does financial planning analysis do? They think about the future, they model and plan. They pull the levers and they do the analysis. Who does the executive team, CEO, and senior management rely on when they’re doing their future planning? It’s FP&A.
What proportion do you think organizational planning and analysis – that’s organization design, there’s organizational planning, that’s the people analytics that we’ve been talking about – what proportion of the HR function do you think that is? Who said five? Okay, that would be good. Who thinks it’s more than five? No. Who thinks it’s less than two? Everyone. Anecdotally, it’s between 0 and 2 percent, it is tiny.
And how can you do proper FP&A if you don’t understand your organizational needs into the future? Because we’re disrupting so quickly. And this is not a Center of Excellence (CoE). FP&A is not a Center of Excellence, it is a function. The CoEs to me is a nice to have. Calling yourselves internal consultants in my mind is just not good enough. Your FP&A leader is not an internal consultant. They have a seat at the table and every month they tell you how you’re doing versus your plan and that’s where you need to be.
So, how are we going to get there and what do we need to do? Who knows David UIrich? Pretty much everyone. He did a podcast a few months ago and I picked this quote from that podcast, which I thought was really interesting. “People can be champions but organizations win championships. It’s not talent or people that provide the competitive edge, but organization systems. The key question is how to build an organization as a system to win in the marketplace.” What do HR people talk about every day and all day? The war for talent. You can have the best people and fail. If you don’t get your organization right, you can’t succeed.
I’m assuming no one here knows anything about rugby, a couple of people. I coach rugby as well and ref it. There was a big tournament in Japan, which New Zealand lost. So, we’ll move on. But for those that don’t know, Japan is not a rugby titan. They have never qualified before and they’ve only won a couple of games in their history, and until recently they’d never won a game. None of the Japanese players would make any of the tier 1 nations at all. They’re smaller, they’re not as fast, they’re not as strong. It’s not in their cultural DNA.
Until recently, Ireland was the number one team in the world, as recently as August. Ireland beats everyone – huge men, phenomenal team, strong winning record. Japan beat the Irish. They did not beat the Irish because they had the best people, they don’t. They won because [of] the organizational systems, their communication, and how they played as a team. So, this is an org design conference, everyone says your organization is a system – I think we’ve seen the star model three times – so, we all know what the system looks like, but the question is how do we link and how do we link it in terms of data?
I’m going to start with people. And everything I’m going to show you is data, and then I’m going to show you examples. You have data about your people. You know when they’re born, you know when they joined, you may know their manager. And by the way, saying we have bad data is just a really pathetic excuse. You can get your data and fix it. There are lots of crowd sourcing ways. I can get you data in minutes and get it clean. And if you’ve done the reporting lines, we send a survey, who’s your manager and who do you manage? And in weeks it’s fixed. So, there’s no excuse about we don’t have good data, we’re envious of Google. Then you have pay data and everything else.
But what you also need to have is roles. Now, an interesting statistic that I look at, if you take the number of employees, divide it by the number of job titles, and look at that ratio, very frequently it’s two. So, for every employee there’s two job titles. You don’t have control of your job titles, your role structure, and your role grid. Your role grid is “What are your role levels?” – someone mentioned Elliott Jaques earlier and the Requisite Organization, that is an example of levels – and “What are your role families?” And you define your role families, which have technical capabilities and competencies, and levels have behavioral [attributes]. And then in that, you have all your different roles and you define your roles.
Then you have positions. And roles have a purpose. So, an example of a role is a sales rep. But there’s a one-to-many relationship between role and position. A position has a scope – so, I might be a sales rep in North America for financial services. The reward, you have a target salary in your role but obviously each position depending on the scope, you may adjust that. And employees have actual salaries and you want to understand the gap.
So, here I have an Anna Brown, she fits a position. Now, one of the big mistakes that people make – we were talking about the problems with doing org design – is you design the organization around your people. And as soon as you do, that’s when you get into the politics and the whole thing can, by definition, not work. There is a one-to-many relationship between roles and positions and you have multiple positions and, as you look at the number of positions over time, that becomes your operational workforce plan. So, org design and organizational planning morph into each other. But the underlying dataset is the same.
And then your people are in positions, but some people move around positions – that’s where succession planning comes in. But how do we define a role? It’s a set of targets. What is the work, and what are the tasks, what are the activities that people do? What are the role-specific competencies that they need to have? And what are the outcomes that you want to achieve?
And so, for each role you have a set of targets. When you’re linking to activities, that’s an accountability framework, saying who’s accountable for what. If it’s decision-making, who can approve what decision. But you also want to know the truth, what are the actuals. Who does what’s in their job description? Most people don’t.
So, we want to know what people really do. We want to know what competencies do they really have and how do you assess competencies? Well, you can do a self assessment, you can do a manager assessment, you can do 360, and you can do third party. So, you can crowdsource that and you can make that continuous. And then you can use that information for things like slating which roles could people do in the future and for predicting succession planning. And we want to understand the gap.
So, how is this relevant? Think about a manager having a conversation with the employee. When the manager has a conversation, they say, “What are you trying to achieve? What is the work you’re doing to achieve it, and do you have the skills, do you have the mastery, to achieve it? And if you don’t, okay, let’s automate a training needs analysis, let’s work out where the gaps are.”
Common sense? Simple? It’s pretty much the star model? But what we’re doing is we’re linking all of this stuff at the position/role level. So, I’ll give you some examples. Here is a process taxonomy. So, what we do is we create structure, we say, “What is the work that happens, what are the value chains, and how does that break down into the various activates.” In terms of setting accountabilities, we say, “Who is responsible for doing what?”
Now, who uses RACI? I’m going to say 60% of the room. I really dislike RACI. What is the difference between ‘responsible’ and ‘accountable’? Is anyone French in the room? You don’t even have the words in French. I spent years and years trying to defend RACI and the difference between ‘responsible’, you have to do, ‘accountable’, you get shot if the person responsible doesn’t do it. But it’s confusing.
C, consult. So, do you have to in an essential system say who needs to consult? I think the person responsible should know whether or not they should consult or inform. And I don’t know if you guys have done lots of RACI workshops, I’ve spent hours and hours and hours arguing about whether someone is a C or an I. It’s really depressing.
So, I just think when you create these acronyms, try and come up with things that are really meaningful and actionable. So, you want to know who’s responsible. If it’s decision making, you want to know who’s got veto power, who approves [what]. But what’s really important from a workforce planning perspective is who actually does the work. RACI doesn’t talk about that. The Bain model does perform. So, D is for do. And by the way my book’s out of date, I changed S to D.
But then we want to know the actuals. So, we want to know what is the work that people actually do. And we do a thing we call an individual activity analysis, an IAA. If I were to say to you, “What percentage of time do you spend coming to conferences,” how easy would that be to answer that question? Easy? I think it’s quite hard. Now, if I say how often do you go to conferences you might say, “Well, I go [to] three a year.” “What’s the duration?” “Two days.” That’s easier. So, what we do is we say, “What’s the frequency that you do something and [what’s] the duration?” But we also ask other information like, “Do you actually believe you should be doing this, and do you have any ideas about how to improve it?” So, let’s just crowdsource that and get the information.
So, what do we do with this information? Finance. Finance has a thing called activity-based costing, it’s the holy grail. You want to understand the cost of the work. So, if we know the cost of every single employee, which we do, and we know where they spend their time, on what work, we know the cost of every single activity. Not only that, we can start looking at “Are they the right level of people doing the right level of work?” And what’s quite interested is quite senior people spent about 30% of their time doing transactional activities. So, what we do is dimensionalize the data and we can say, “Oh my goodness, these really senior, experienced people are doing all this transactional work. Why are they doing that?” Well, because when they get promoted, they don’t let it go and they don’t trust.”
But we see other things. I’ll give you an example of how ludicrous the world can be. I had a client, big consumer goods organization based in Europe, and they had 300 people in central and regional HQ HR. We did an activity analysis and one of the activities [was] “write the HR strategy.” How many people do you think were involved in writing the HR strategy? Hands up if you think it was less than five. Okay, very wrong. Who thinks it was less than 20? 50? 150? Correct. 150 people were spending time writing the HR strategy. When I asked the HR chief officer and the HR leadership team, “Where’s your HR strategy? Because this is how much it’s costing you to write it.” They didn’t have one. So, that’s the kind of stuff you see.
You can see other things, like in a marketing function, huge costs in energy in terms of developing their pricing strategy. Communicating the pricing strategy, almost nothing. You can also see the disconnect when you look it [through] accountability mapping. Loads of people think their accountable for the pricing strategy, no one thinks their accountable for executing and implementing it, because that’s not sexy. And when you go and ask customers in the field, “Do you understand the pricing?” No one does. But we’ve spent all this money on pricing strategy.
So, what we can also do is look at, by setting the targets, what work is core for the role and how much time is spent doing non-core stuff. You can start to see roles where you’ve got dozens and dozens, up to 60 different activities, that people are trying to do. How can you be successful if you don’t have the right level of focus? You just can’t. So, then what we do is we combine all of this to do the ‘to-be’ design and get clarity on accountability. So, this is at the detail level.
But we talk a lot about cost savings and driving costs. So, let’s do a hypothetical. You need to save 20% cost savings. How do most people make 20% cost savings today? What’s the go-to metric? There’s one single metric that’s used to take cost out. It’s span of control. So, someone in a suit will come to your organization and say, “I will save you 20% costs, we’ll delayer, and we’ll reduce span of control. And what we’ve got benchmarked and we’ll make it eight.” Great. How well is that working out for you? Terrible, right? And which people are you losing? Probably a lot of the best talent, you hire them back as contractors.
So, if you want to take cost out, think about what work you want to stop doing. 20% is a big number. What activities are non-value adding? You say, “Let’s just not do them.” How many do you want to reduce the effort of and say, “We’re just overinvesting in this, let’s consolidate it down.” Where do you want to reassign and move it to a different location? Why are you doing it in New York? New York’s really expensive, move it to London, improve efficiency.
People talk a lot about automation, machine learning, particularly automation, “We need to automate, automates a big thing, future of work.” Automate what? What is the business case? You have all these people selling bots. If you don’t know what [the work] is currently costing you, who’s doing it, and what the impact is going to be, why are you automating [it]. Where’s the business case for doing that and what do you want to outsource. And by the way, what do you want to invest in? If you’re a growth organization, say, “What work are we not doing that we should be doing?” So, that’s how we use this kind of stuff.
Now, what this does is it takes the politics, because we’re focused on the work. Think about structuring the work and the roles, then move the number of positions, and that’s then rightsizing. There’s a data-driven discipline in doing that.
Let’s talk a little bit about position management. So, HR is obsessed with the employee lifecycle, employee lifecycle management. I’m not saying it’s not important, you need to do that. You need to hire talent, train talent, move talent around, exit talent, by definition. But you need to maintain your positions on an ongoing basis. There’s no point doing an ‘as-is’ and a ‘to-be’ org design and then saying we’re done. Who achieves their to-be org design anyway? Your to-be design keeps on evolving, you need to maintain it. That process becomes position management, which is also operational workforce planning, it’s all the same thing. And what you’re really doing is you’re managing the supply and demand. And by the way, that’s budget and that’s where the link to FP&A happens. And I’ll put to you, in this dynamic world, you can’t just do this on an annual basis.
In terms of data, so we talk about data, definitions. There are different types, there’s role data, position data, and people data. So, with your organizational hierarchy, you will have role IDs and a role purpose, and you put them into dimensions, functional dimensions. Then you have position data. How many of those roles do you need? And a position has a scope, a number, and a hierarchy, and it can be matrixed and everything else. You can be in a mission team and in a function. You can be with a geographical reporting line and a functioning reporting line. And then you have people data. The big mistake that people make is they put all of this together in one dataset and that’s why you get confused.
So, I’ll go back to my favorite topic and then I’ll take questions – span of control. I’ll do a thought experiment with you. I’ve got two managers, Adam and Bridge. Both have got a span of control of eight. So, their job is just as difficult, span of control of eight, that’s the only measure that counts? Everyone that works for Adam is in the same physical location; Bridget, different locations, actually different time zones. Adam, everyone does the exact same job, same job title; Bridget, different job titles, actually different sub functions. Adam, they’ve all been there for a long time and they’re all solid performers; Bridget is actually new, and a lot of the team is new and there’s some performance issues. Whose job is harder now? By what order of magnitude? What risk is that?
What we want to do is ask interesting questions of the data. Now, that data you all have. You know the depth, how many layers there are, how many geographies, what the grade differences [are], the Elliott Jaques thinking with this compression. All of this information you know, so you can calculate ‘burden of management’ from this. And that becomes a risk factor. And when you’re doing structural design, you have structural burden of management, which is all the physical things. So, team tenure and performance are clearly related to the employee, but the rest of the stuff is structural. That becomes a good diagnosis to say, “Have we shaped this right? Do we have issues? Maybe we need to reduce the span of control for Bridget, or we need some other intervention.”
So, there we go. I’m two minutes ahead of schedule. Questions?
Audience member 1: So, first of all, I just want to say thank you, because I’m so over the span of control, so over it, and now I know why. With that, I was curious just if you could share an example about how you’ve implemented that management complexity approach, roadblocks you’ve faced along the way, and how you bring people along on the journey around thinking about different levers other than just, “I’m a manager who has two direct reports, and so therefore I’m a problem.”
Rupert Morrison: So, it’s first and foremost having the conviction of the span of control thing. So, I just go in hard against it, because I think it’s so dangerous and almost morally abrupt to design on one metric. And I call it the magic number, the world loves a magic number. How big should our HR team be, take the total population and divide by 100, that’s another example. So, I go in and I talk about the dangers of these margin numbers, these overly simplistic designs, then talk about the value of work, and come with examples.
So, player coaches. I might be a senior developer with a junior developer, I’m acting as a mentor, but I spend most of my time writing code. Or I’m in the legal department, highly task-focused roles, cognitively high grade; with others, the span of control is one or two. But it’s just one measure of many. And the reason people obsess about span of control is because it’s the only thing you can measure easily. It’s certainly not the only thing you can measure, [but] it’s the only thing that is measured. And the consulting industry is to blame, because it is so easy to drive savings. It was an investment bank in New York that told me recently someone came in and said, “Don’t worry, we’ll take 4% of the savings.” I mean, really?
So, I think it’s the conviction and telling that story, and thinking [that], at the end of the day, it is an employee that is impacted here, these are people with lives, and you have a duty of professionalism to do a good job. I just think you have to have that conviction, to tell that story, and then keep telling it. My experience is it’s only the really senior people that don’t quite get it, because they just love that big number. So, you just have to explain these points and then they get it.
But then if you can go to Finance. The holy grail in Finance is understanding the work and the cost of the work. If you’ve done any finance courses, activity-based costing is the holy grail in Finance. So, that’s the angle there to say, “We can work together to understand the work.” And that’s where we bring finance together, with FP&A, and that changes it.
Audience member 2: So, my question is how do you bring the discipline of Finance and HR together in a better conversation around estimating how many resources you actually need and this conversation about the cost of the work, what type of workers that you need, and then bring that back to the business in a way that’s meaningful?
Rupert Morrison: So, everything that I’ve just shown you, everything on this model, has cost running through it, and cost centers as well. You’ll bring the cost center taxonomy into play as well. And as long as you can push everything back in those terms. And by the way, understand the fully loaded cost and work with Finance to say, “How do we measure it? Is it base? Is it base and bonus? Do you want to include office space allocations?” And sit and work that through and make assumptions.
The problem with Finance is they work in averages and aggregate data. They don’t have the detail at the employee level. So, if you can have the detail at the employee level and the position level, you have the source of truth. And in most organizations, people cost somewhere between 60% and 80%. And FP&A is struggling and just as frustrated about this, and they’re frustrated with HR. So, I think this is your way of like building bridges.
Audience member 3: Hi, I had two questions. The slide that talked about burden of management, do you use an evaluation system that you have, like a scoring for each of those categories?
Rupert Morrison: Yes, we have an index and we are actually doing a piece of analysis right now. So, we’ve done a best stab at the index of what the impact is and we roll it up. But we’re actually in the process of doing a piece of conjoint analysis to have over 1000 managers score each of the different attributes through a piece of analysis so we can quantify that more precisely than what we’ve got. What we have is we have an algorithm in OrgVue, we bring that data in, we create a data contract, and then we calculate the burden of management from it.
Audience member 3: Okay, then my second question had to do with the dataset. Like most HR systems, when you talk about roles, positions, and all of that data, many don’t have those fields.
Rupert Morrison Yes, most don’t. I’ve got one client with the 60,000 open positions, so for me OrgVue then becomes a system of records for roles and positions. It is trivial for us to build the role grid. OrgVue is a system for defining the activities. OrgVue’s a system of record except for the people data; the people data comes from your transactional HR system. Your transactional HR system is there to do one thing: manage the employee lifecycle. It’s a transactional processing system. It is not built to do analytics and it’s not built to do modeling, it’s built to transact. And anyone that tells you that one system can do everything, doesn’t know what they’re talking about. This is a different shape of data. It’s built for modeling.
Audience member 4: Thank you, my question is, and it’s very much building on the last two questions around spans and layers. I agree and I understand what you’re saying, but in reality when you’re in organizations, there are two things that are important to them: one is growth and they want to go into new growth markets or they’ve been disruptive, then they are going to look at organization design. When it comes to efficiency and savings, which most organizations have to do, then the quickest approach, and I don’t know how you can get around this, is going to look at organization efficiency through pulling a lever, spans and layers.
Rupert Morrison: So, you’re right. And if you want to come to me and I’ll do it in two minutes for you and see the impact. It is trivial to save cost. If you need to take cost out, I mean why not just roll a dice and if it lands on one, anyone born in January is fired. There you go, I’ve saved one 12th. I mean, it’s like in the middle ages. It’s so basic, it’s almost barbaric. And normally when you make decisions, you have to do a robust piece of analysis to work out the best way to take out cost. If you don’t change the work, you’re not taking anything out and you’re just leaving it to randomness. Now, if you say, “We have to, because of some crisis, take out cost and we’re going to use span of control,” know the risks you’re taking. And the only thing I’d say is explain the risks to those making the decision, that’s all you can do then.
Audience member 5: So, we’re a company that would have roles, people, activities, how many people are in each role, blah, blah, blah. But how do you come in and get to the real data of how much that activity costs? So, I may have a team of 10 people, they may have all the same role or title but, I can tell you, it’s not consistent [that] they’re all actually doing that job on a daily basis, or are capable of doing that job, so how do you get the data you need at that level, without the pushback of all the tracking of information taking away from their daily job?
Rupert Morrison: By making the survey only take 10-15 minutes, and by saying that we’re collecting qualitative information as well as quantitative. We’re asking the employees what they think. And guess what? A lot of employees are really frustrated with the job they’re doing, because they’re doing stuff they thought they weren’t hired to do. And it’s not uncommon, and you ask them and say, “What proportion of your job do you dislike?” and they’ll say something like 50%.
So, it’s all about how you position it. If you go in and say, “We’re doing a re-org and, instead of doing spans and layers, we’re going to do this activity analysis, so we can fire 20% of you. But if you are going to do it and you say, “You know what, we’re going to listen to you and we’re going understand what you think, and we’re going to go through a robust process; and we have to take 20%, but we’re going to take out the right 20% of the work and this is what we’re going through, most employees will say, “Okay. I’ve been consulted, I understand.” It’s a lot of better than suddenly being pulled out.
So, it’s all around the positioning. I’m not saying it’s trivial, you have to get them to understand the taxonomy. So, it’s very easy for me to put on a slide, activities with an orange box around it. To build that requires getting the language right, and verbs, and we have a huge amount of training on how to build a taxonomy. There’s a huge amount of goldilocks problems here. If it’s too high level, it’s superficial, it’s meaningless; if it’s too detailed, it’s also meaningless.
So, it’s getting the level of detail [right]. And I put to you, as professionals in this field, you need to learn how to do that. There are lots of libraries, but those libraries have to be modified to reflect your culture and the language that you use. That’s where the work is. And there’s that upfront consultation to get them to understand, to explain why, and then when you do the analysis, you better also then communicate, say, “This is what we’re doing, this is the impact.” And making this just a one off is also not good. You want to repeat and make it part of a process.
Audience member 6: One question, we’ve talked a lot about span of control and cost, which I have to say I’m always worried when I hear cost and span of control, because very often it doesn’t have a direct correlation. You can reduce layers and have marginal cost improvement. However, there is one thing [that] is indeed directly correlated to delayering, and I wonder if you’ve done analysis through your system, which is on speed.
Rupert Morrison: Speed of decision making, things like that.
Audience member 6: Exactly, and there’s a lot of discussion around that.
Rupert Morrison: So, I think layers has got a lot more merit. And I think the Elliott Jaques thinking as well, in terms of thinking, “Is the delta and the level between each layer right, and what is the value add that each layer is bringing?” And so, too many layers [are] clearly not good and, by definition, if you have more than six, you’re kind of breaking the rules, and then you start creating compression. And compression is where both of the roles are basically at the same requisite level, and that leads to micromanagement and zero value-add. So, I think thinking about layers and that structure is really important as part of the design process. I do appreciate there’s a correlation between layers and span, but my beef is more just the focus on spans without any thought.
Audience member 7: Thank you. Now, we’re talking a lot about agility. So, how do you connect that concept with this?
Rupert Morrison: So, I run an R&D team. I loved the New York Times presentation this morning where he talked about mission teams. My R&D teams are based on mission teams as well, cross functional with design, QA, and dev ops, and everything else. That is agile. We also have a functional structure. Your positions can sit in multiple different reporting hierarchies. And you can have [any number of] different versions, it doesn’t really matter.
I think the thing about agile is [it’s] a really robust discipline, where you have backlogs and performance increments over fixed periods of time, with key outcomes that multifunction teams deliver in sprints. But you also have people in career paths and other aspects like that, and I don’t think [the speaker from the New York Times] could have said it better.
So, these things aren’t in opposition to each other. What you really want to know is that if you’ve got a UX designer, an engineer, or a procurement clerk, that they’re really clear about their role and they’re good at that, even if they’re sitting in a matrixed organization.
Another beef I have is the nine-box grid and [performance] potential. So, how do you define potential? And potential for what? I ask clients, “How do you define potential?” They say, “Oh, based on cognitive something,” and they lose themselves. So, I’ve done analysis and said, “What proportion of high-potentials remain high-potentials three years in a row?” and it’s about a third. So, to me, it’s a meaningless measure then. If you’re a high-potential, you’re not high potential and suddenly low potential, so that’s where the competencies come in.
You say, “You’ve got behavioral competencies that are also quite role specific. It’s not generic. Everyone talks about our values and our behaviors of the organization. Teams have them and roles have them. It’s too simplistic. I mean, all these platitudes and you walk into these beautiful lobbies and it says “integrity”. What does that mean?
I think you’ve got to be really specific about the role. High potential means for certain roles. I might be high potential in a technical regard; doesn’t mean I’m a high potential for a marketing role or a CEO role. And so, I think we just need to have a little bit more discipline about what we mean by these terms and how we measure them. Sorry, went off on a little bit of a tangent. I think we’re out of time. Thank you.