On the work and decision-making of managers

What do managers really do? What is the difference between managerial work at different levels and how do we get the right person in the right job?

It boils down to understanding what managerial work really is about. We get little help from psychometric instruments. Yes, we do know that there is a correlation between intelligence and conscientiousness and achieving results in a managerial role. So would higher scores on intelligence and conscientiousness imply greater ability for higher managerial positions? I have not seen any research correlating managerial levels with specific measures of intelligence etc. Psychometrics are used to differentiate between applicants, not between levels of work. What is it then that makes the difference?

Many of us had a good laugh in the seventies when we read Laurence J. Peters’ “The Peter Principle”, claiming that managers are promoted until they reach their level of incompetence. A good laugh most probably due to recognition of the fact that a significant number of managers are not good at their job and we recognized the described symptoms. The really interesting phrase is “level of incompetence”, implying that there are levels and that some people can attain higher levels.

There are plenty of descriptive expressions of when somebody is not doing the managerial work expected of them. In the UK one might say that somebody is not up to their job, has too much on their plate, is out of their depth or not up to the mark. In Sweden we can say that somebody is to short for their coat or that they do not have sufficient height. In Denmark they say that a person unable to fill his shirt.  Most languages probably have similar expressions. Again, the most interesting is, up to which mark, the size of the coat or the height that is sufficient, that indicates some sort of requirement, but of what? If we can pinpoint this, then we could probably avoid the effects of Peters’ Principle.

So how does the incompetence show itself? Primarily in the inability to make decisions. Decisions are what we do when we do not know what to do. If we are unable to cope with the uncertainty, ambiguity or complexity in making a decision, then we will not take a decision. The person will primarily avoid taking a decision, either hoping that it will eventually go away or that further information will let the decision make itself. When under pressure a person will make a decision anyway and it will be seen as being the wrong decision. Not knowing what to do and decide is a terrible burden. I have seen many managers flounder and agonize, not knowing what to do.

Interestingly there is another category of managers who do not take the right decisions, i.e. those that have done the job, grown out of it and should really have been promoted. Many who have outgrown their jobs lose focus. There is a lot of detail that needs to be considered and they may feel that they have seen it all. “This particular case is just like all the others.” People may see this person as unfocussed and not doing their job properly and will see little difference between the incapable person described earlier.

Colleagues in Bioss have done management audits in a number of organisations. Just over a third are well placed and doing a job at their level of ability. One third have been over-promoted and in Peters’ words reached their level of incompetence (no wonder the book sold so well) and less than a third could be doing the work one organisational level higher. There is no great shortage of potential managers, almost half of those at the first managerial level could be working higher up. The serious problem lies at the strategic level, where about half had reached their level of incompetence.

Bioss is now an international consultancy with about 200 partners, consultants and associates. We were originally a research institute at Brunel University, where a “scale” was developed to measure managerial work. The major difference between levels is that of uncertainty and complexity. Most people can within a very short time-frame see if their decision was right or wrong. At the highest levels the results of a decision may not even be seen during the tenure of the decision maker. How do you then know in which direction to go? What is the difference between those that succeeded in those decisions and those that fail?

In the very early research it also became clear that many organisations have to many levels. Bioss describes seven levels of work that add value to the organisation and its clients/customers. Too many levels detract value. If the organisation has too few levels then there is work that needs to be done that will not be done.

These are the seven levels that we describe, most jobs lie within the two first. Here short descriptions:

Quality – This is where we find most of the people in organisations. They are the persons that we usually identify the company with, such as bank tellers, car workers, postmen etc. These are the people that do the work that provides the income and profits of the company. Their job is to do a good job with quality.

Service – Here we find both first line managers and specialists. The job of the manager is to give service to their employees so that they can do the quality work. Many first line managers talk about how they juggle their work, they need to ensure quality, have an organisation in place, schedule staff, ensure customer satisfaction, productivity, a good work environment etc. The specialist birings their deep accumulated knowledge into their jobs.

Practise – Here is operational management – a small to mid-sized organisation, people, plant, resources, budgets etc. The job is to create a work system. Which is the most efficient structure, system etc, both now and for the immediate future?

Strategic development – At this level in the organisation we usually find a functional or geographical structure. Here are people whose job is to develop strategy within their areas and spend more time and energy considering where and how value will be created in the future and less time on running large operations.

Strategic intent – This person will be leading a large company within a well-defined business. In a large corporation this will be a strategic business unit. The job is asking the existential questions “Where is this business going?”, “Why are we in it?” in order to ensure the financial and social direction and viability of enterprise.

Corporate citizenship – These are probably the people that we find at the World Economic Forum or Aspen Institute. They are making sense of the world and are sensitive to changes that can be seen and be responsive in building strong local, national, regional and worldwide presence.

Corporate prescience – Here are the very few people who somehow seems able to go beyond visible trends. It is as if they are gazing into a crystal ball and see possible futures and take steps now, the full effects of which may 20-50 years to be seen and understood.

Of course we have considerably longer descriptions of both the jobs and what people actually do in their roles at different levels.

I very often find that managers strongly relate to and understand these descriptions. Higher managers directly sense which of their subordinate managers are doing their job or not and

People have different strengths and develop differently over time. I ascribe status to a person that does a job well. I can be amazed looking at a gardener. When I go to our favourite sourdough bakery I look at the skill and energy-efficient movement of the baker. I am disappointed when I meet a manager who has reached their level of incompetence. Some people become immensely skilled bakers, footballers or violinists over time. In Bioss we are interested in managerial career paths. We see that some people follow paths that may lead them to very high managerial positions. Some of the early research at Bioss was sponsored by the US Army wishing to identify potential four-star generals and put them on more rapid career path development.

Bioss developed a method, which we call Career Path Appreciation, in order to “predict” such development. Better to promote on potential than past history, as the latter may lead to filling jobs with people who already have done it and have matured out of it. Longitudinal studies show that we are able to “forecast” with more than 80% precision in a 7-10 year time frame. Long enough to ensure than a person is not promoted to their level of incompetence.

Quite a number of people are given a job based on their track record and proven ability to deliver at that level. The risk is that they have outgrown their past and should really get a job one level up. I have often seen how people like this after 6 months realize that they have done a lateral move and there is no challenge in what they are doing.

Some companies and organisations have worked with Bioss and Bioss methods for decades. You can see a list of some of the international clients at http://bioss.com/about/our-clients/

Strategy or culture first?

In answer to a question on LinkedIn: Strategy or culture first?

It is like the hen or egg question. Drucker wrote that culture eats strategy for breakfast and Schein wrote that you will not understand the culture until you try to change it.

Culture can lead to the failure of strategy. Cultural change without strategic direction is a waste of time and energy.

So in a sense the first step is considering ideal long term strategy, where do we want to be in 7-10 years. What are the cultural impediments? Which steps can we take within the existing culture? Which cultural strategies do we need to pursue over time so as to create the preconditions necessary for reaching the long term strategies.

Many years ago I worked with a CEO working with culture and direction. Over three years three distinctive steps were made in organisational structure as the organisational culture matured. The banner goal of the company was developed early on and was not changed. But strategy evolved over time.

Culture is like fish in an aquarium. Most fish tanks have fresh eater, are oxygenated, regularly cleaned etc and the fish thrive. Some aquariums are in a dire state and the fish are sluggish if not dying. But they do not come knocking at the glass drawing your attention to the problems.

I have been in many organisations where people are aware that culture is in the walls, but they cannot diagnose the culture and definitely not identify any changes needed. Many changes in strategic intent fails as top management does not understand the importance of the social processes and actually do not know how to build a strategy for the strategy and implement it.

Why do we have Matrix organisations?

This is a response to a LinkedIn question.  Forrest Christian suggested in a comment to another post that I post my responses here as well. Those of you are LinkedIn members can read the whole question and all other answers here .

My answer was:

No matter how a company is organized formally, for stuff to get done people need to communicate and work across boundaries. Researchers have done social network analysis in organizations and have seen that some bosses cannot handle this; they force everything to go through them, so of course they end up being bottlenecks. 

My belief is that matrix organizations were “invented” to address the non-cooperation between unit managers. But we still have a lot of turf wars and alpha-male behavior. We also see organizations apparently in endless committee meetings. 

My opinion is that matrix organizations were a “quick fix” to a larger and more deep-running problem. If we “solve” those problems we will not need matrix organizations. Managers needs to be selected ,trained and rewarded for abilities to: 

  • work with talented staff who do not need constant direction 
  • being able to work in collaboration and yet be held accountable 
  • that company results are more important than personal position

The Matrix revisited

The matrix is an organizational mystery to me. So popular, so reviled, so dysfunctional, so often suggested by the major consultancies.

My first encounter with the matrix was in the eighties when one of the major consultancies had suggested a matrix to the big international chemicals company where I was working. Fantastic product company, but they needed to know about marketing and markets, to which the matrix was the answer. The new region to which I belonged got a forceful manager who quickly made his mark, pushed the right sort of issues and quickly got the product division to hate and undermine him. A ”war” in which we in our market had to do our best to survive, while keeping customers happy and churning out plans and reports in all directions to keep the matrix happy. Good job that chemicals were so profitable then that they could afford using 20-25% of our resources for planning and reporting.

Not so long ago I did a specific organizational audit in an exceptionally profitable company. They had been wrestling with the issue of emulating their one-product/one-market success to more products and more markets. The big consultancy had solved this by implementing a matrix. Now everything seemed to be decided in committee, where all participants appeared to have the right to veto decisions for their particular market/product. Accountabilities were vague and unclear and role descriptions inflated. Good job they have all those profits so they can afford all those people sitting in meetings.

In one organization where I worked the combination of the matrix and Parkinsons law led to the proliferation of jobs. On the product side of the matrix they started adding people to deal with market areas and on the market side people to deal with product areas. The least one could say is that we did double our efforts.

My most absurd encounter with the matrix was in a major government agency, interviewing a manager with a vertical responsibility. Being a seasoned bureaucrat used to sitting in headquarters issuing edicts he was concerned with his mandate. ”Look here”, he said pointing to the intersection between his vertical and a specific horisontal responsibility. ”Look at that box”, he said, ”could one not draw a diagonal in that particular box, so that I am in charge of that resulting triangle, and the horizontal manager in  charge of the remaining triangle”.

I believe that the matrix was an honest attempt to address the fact that people need to cooperate to get stuff done and that drawing the matrix was the quickest way of fixing that. However, the nature of people does not seem to have changed. We still had the same issues with power, office politics and accountabilities. The managers on the top team more concerned with making their mark and jockeying for pole position.

More about what I think matrixes are attempting to solve and alternative solutions will follow in coming ports.

Organizations, bandwidth and social networking

I have read that the human bandwidth for communicating with and perceiving the outer world that is 10- 11 Megabits per second, most of it visual. We are not conscious of most of this information flow. Consciously, we can handle 30 to 40 bits per second. This of course has implications on how we manage and structure organisations. Let’s assume that we are looking at a first-line manager with 10 subordinates. They totally absorb 10 by 10 Mbit = 100 Mbits per second. With the manager only being able to consciously manage 30-40 of those bits, there is a huge overflow.

This completely overthrows the concept of the manager being able to see and hear everything and take informed decisions. It means that the manager cannot micromanage as that reduces the capability of the organisation to the communication bandwidth of the manager, i.e. nothing gets done, which is what we often hear about micromanaged organizations.

So what can we do about it?

  • Allowing employee discretion.
  • Context setting and information chunking.

Employees need to be allowed to use their discretion in taking decisions. Their bandwidth is closest to the point of need of the decision-making. But they need to see not only the local context but also the overall company context. That means that the manager needs to spend most of his/her bandwidth to set context and understand the situation around the employees, guiding them in their decision-making.

If employees absorb 10 Mb per second the possibilities are immense for them to overflow the bandwidth of the manager by telling him/her absolutely everything. Many managers fall for this and become micromanaged by their employees. Employees overfeeding info and demanding desicions become like Denial of Service attacks, where web servers get blocked by overwhelming traffic. However managers and subordinates need to communicate and discuss what is important. The manager cannot only be fed aggregates and what is thought to be significant deviations. There can be weak patterns that not one single employee can see – it is found in the context of several employees.

In some organizations I have seen higher managers that are like albatrosses gliding over the ocean, believing that from up there they can see the big picture. But like albatrosses they can spot a significant bit down in the water. Suddenly they swoop down and catch the fish that broke the waves. Great eyesight, but not the big picture. Sometimes higher managers dive into something that they just spotted, that everybody else thought they had talked about in strategy or budget sessions, a project is terminated suddenly, and people learn to avoid being conspicuous.

Elliott Jaques talked about information chunking. How are relevant bits of information ”fed” to the manager. The employee knows a lot more than what managers may see a self-evident. Managers at different levels and employees need to talk about what is important and patterning, so that information can be fed upwards in significant chunks.

I recently read ”Freedom from Command and Control”. Seddon gives an example from call centres were managers focus on number of calls, call time and call forwarding calls per hour but completely miss the fact that 47% of all calls were avoidable as they were prompted by sloppy routines elsewhere. All those who took he calls knew, but not the managers as they were busy ”manageing”. Clearly an example of a severe lack of communication between managers and employees.

We consultants often play games. The one I am thinking of usually has a poker-related name. There are three managers and 8 employees in a formal hierarchy. Only written communication along organizational lines is permitted. Everybody has got four playing cards and may swap them along lines. Only the top manager knows the objective, but does not know that nobody else does not know. People start swapping cards making assumptions based on the poker name. Notes fly all over the place. Eventually the top manager realizes the problem and starts organizing.

The middle managers are overwhelmed by communicating. At the debriefing the middle managers table are cluttered by mostly irrelevant notes from understimulated subordinates. In fact the ”chatter” is so overwhelming that the real clues as to what is going on gets hidden. Usually the task is solved by command and control. I have done experiments where I do not distribute the cars randomly but in such a way that a few cards need to pass through the top manager so that most of the solution could be delegated. It would be interesting to consider what would happen in social networking was allowed i.e. employees were allowed to talk with each other.

Social networking is how stuff really gets done in an organisation. A manager can still be held accountable for the results of the unit, while not micromanaging but creating the circumstances for the employees to a sort out and resolve the situations at hand.

I sometimes wonder if matrix organisations are a way of imposing structure on something which is better left informal. I often find that matrix structures create dual and competing command and control structures that in the end are incapable of taking requisite decisions and action. The tiny available bandwidth gets completely filled up by coordinational demands.

The only way to be ”in control” is to be ”out of control”.