Perfecting the Stratified Human System
Ronald G. Capelle, Optimizing Organization Design:
A proven approach to enhance Financial Performance, Customer Satisfaction and Employee Engagement,
San Francisco, Jossey Bass, 2013. 462 p.
A Review by Donald V. Fowke FCMC
Chairman of the Board
Global Organization Design Society
People often ask why, if it is so effective, Requisite Organization is not more widely implemented? Ron Capelle’s fine new book, Optimizing Organization Design, offers a couple of answers to this question. The first is that RO is widely implemented, but just doesn’t carry that label.
Requisite Organization is a term coined by the late Elliott Jaques to describe an integrated system of principles to govern the design of hierarchies in corporations, government departments or not-for-profit organizations. Capelle’s Optimizing Organization Design system incorporates many RO principles, and is faithful to the science especially around things like defining hierarchical levels according to complexity, as evidenced by the time span needed for management at each level. Ron Capelle articulates clearly his system’s components, the research supporting his work, and cases describing its implementation in several of the 100 or so organizations where he has applied it.
Perhaps RO might be more broadly recognized if issues of copyright had not come up regarding its use. Maybe so, but Capelle’s excellent book develops the ideas of organization design well beyond RO especially in how to get implementation to happen, and the principles to be sustained for the long term.
The second reason RO is not implemented everywhere is that it is difficult to do, and exacting in its requirements. Ron Capelle tells us both how to do it and why it important to do it right. This careful, pragmatic approach to improving how organizations work will make this book of interest to management consultants and to CEOs.
Capelle’s approach to organization design rests on a solid body of research, presented as an appendix to this volume, of 23 previously unpublished research papers. This research demonstrates clearly that good design leads to improvements in employee engagement, customer satisfaction and financial performance. Clearly if she can get these three things right, a CEO has got the fundamentals right for the long term. In the short term, there is potential for annual savings of the order of $2,500 per employee and these can be had for a project cost of about 25% of the first year savings.
Capelle takes a comprehensive approach to “alignment”:
- Of positions: vertical and functional alignment, provides the spine of the organization and includes the manager-direct report
- Of accountabilities and authorities: employee, supervisor, manager, manager-once-removed and cross functional
- Of people: current matching and future requirements
- Of deliverables: vision, mission, values, strategic positioning, operational plan and resource plan
- Of tasks: getting the right tasks done at the right levels.
He emphasizes that the manager-direct report alignment is the single most critical factor in getting good results, and why getting all the other items in the list aligned supports this. This is why it is difficult to do and exacting.
Which leads to what may be this books major contribution to the field of organization design: Capelle’s approach to implementation.
He describes, and illustrates in the four case studies appended, how to engage the client organization through diagnosis and implementation. His approach relies heavily on a client team to carry perhaps 90% of the work, and applies consulting resources to bring the skills, knowledge and support materials to support the effort of the organization redefining itself. This approach transfers know-how to the client organization, ensures that the methods are aligned with the particulars of the company, and that the technology is embedded for the long-term, what Capelle terms sustainability.
Capelle prefers to work with the complete system, starting at the top, analyzing comprehensively, getting approval of a grand design and cascading the implementation down through the organization. Sometimes the client wants to take a small bite and learn, and Capelle accommodates through pilot projects or divisional projects, and illustrates these in his case studies. He has a good feel for the supporting field of Organizational Development, and incorporates generally accepted practices into his method.
Overall, Optimizing Organization Design is a masterwork, capping a 35-year career in the field. There is much to be learned here for all of us interested in improving human systems, including executives, academics and consultants. It is not the last word, of course. Capelle and his company remain an active and vital force in Canada and internationally. He alludes to some of the promising areas of the future, especially the nexus of strategic positioning and organization design. Some companies explicitly redesign their organizations to achieve competitive advantage by raising the level of capability of selected functions, such as sales, or product design, or project management, to outflank and overpower competitors. In a fast changing market place, organization, strategy and talent management may need to be more tightly integrated, and this may lead to a modified methodology in the future.
But for now, Optimizing Organization Design is a seminal work in 2013.