The Practice of Managerial Leadership - A condensation that is 15% of the book

1. Introduction: Why Managerial Leadership Fails—and How to Rebuild It

Too many organizations tolerate weak management. Leaders are often promoted on tenure or personality. Structures grow incoherently. Accountability is confused with control. What results is chaos masked by “best practices” and fads.

Nancy Lee’s The Practice of Managerial Leadership offers a rigorous, tested alternative rooted in Requisite Organization (RO)—an applied system created by Elliott Jaques that links human capability with the complexity of work, time horizons, and accountability.

“Organizations succeed when structure, staffing, and managerial leadership align with the complexity of their business—not when they follow charismatic whims or bureaucratic habit.”
— Nancy Lee

This book is an executive blueprint for how to design and lead an organization that is fit for purpose, talent-aligned, and capable of long-term, strategic performance.

2. Requisite Organization: The Operating System for Managerial Work

What Is “Requisite”?

“Requisite” means “as required by the nature of things.” Jaques used the term to describe organizations designed in accordance with:

The nature of work (its complexity and scope)
The nature of human capability (our growth in abstraction and time span)
The relationship between work and people

A Requisite Organization is not just an org chart—it is a system of:

Clear managerial hierarchy (not just reporting relationships, but time-span-based accountability)
Defined role complexity (measured by time-span of discretion)
Capability-matched placement (who can do what level of work)

“You do not solve people problems with training and coaching. You solve them by putting people in roles they can actually do.” — Elliott Jaques

3. Structure: Designing for Complexity, Not Convenience

Strata and Time-Span of Discretion

Each layer in an organization (called a Stratum) is defined by the complexity of work and the longest task time-span in that layer:

Stratum	Time Span	Work Complexity
I	1 day – 3 months	Direct output
II	3 months – 1 year	Supervisory, scheduling
III	1 – 2 years	Tactical integration, cross-unit work
IV	2 – 5 years	Strategic business unit leadership
V	5 – 10 years	Enterprise strategy, systems integration
VI	10 – 20 years	Global strategy, portfolio optimization
VII	20 – 50 years	Nation-scale or multi-sector systems

Most mid-size companies operate between Strata II–V. Many CEOs of such firms are struggling in Stratum IV roles, trying to do V-level work.

4. Roles: Output, Accountability, and Authority

Roles Are Defined by:

Prescribed output (QQT/R): The quantity, quality, time frame, and resources expected
Working relationships: Vertical (managerial) and horizontal (cross-functional)
Time-span: Maximum expected time for discretion

Types of Working Relationships:

Managerial: Manager-subordinate
Service: Provides work directly
Advisory: Offers advice, not control
Auditing: Verifies compliance
Monitoring: Oversees standards
Prescribing: Defines policy or method
Coordinative: Ensures flow and sequencing

In Requisite design, no person should report to more than one manager. Matrix structures often collapse because they violate this logic.

5. Managerial Accountability and Leadership Practices

Nancy Lee emphasizes minimum managerial accountability. If you manage people, you are accountable for:

Their output
Ensuring they understand expectations (QQT/R)
Creating the context and environment
Building capability through coaching and development
Judging personal effectiveness and removing non-performers

The 7 Essential Managerial Practices:

Selecting staff
Context setting and direction giving
Task assignment
Coaching
Performance appraisal
Reward and recognition
Deselection or reassignment when necessary

Managers-once-Removed (MoRs) add a layer of developmental oversight and are key to succession planning and Talent Pool development.

6. Capability: Matching People to Work

Jaques discovered that human capability develops over time in predictable patterns. The key measure is Complexity of Information Processing (CIP)—your ability to work with abstraction and uncertainty over time.

Capability ≠ Current Performance

Someone may be excellent in a Stratum II role yet lack the CIP to operate at Stratum III. Conversely, someone with emerging capability may underperform due to misfit or poor management.

Three Types of Role Fit:

Current Actual Capability (CAC): Can perform the role now
Potential Capability (PC): Will grow into it
Applied Capability (AC): What they’re currently demonstrating

Good performance is not proof of capability for the next level. Use structured assessments and MoR judgment to evaluate.

7. Case Illustration: Roche’s Talent Challenge

Roche faced declining engagement and inconsistent managerial practices. Working with Nancy Lee and Elliott Jaques, they implemented:

A full capability assessment for all staff using CIP and time-span tools
A Talent Pool chart visible to the executive team
A new MoR-driven mentoring system
Structured succession planning tied to future needs

The result:

49 of 50 employees in a pilot group agreed with their assessments
Employees valued the fairness, consistency, and future orientation of the system
Executives had a clear picture of the internal talent pipeline for the first time

8. Strategic Talent Management: Replacing Career Paths with Capability Pools

Traditional career path models assume a linear, vertical trajectory based on performance. In contrast, Requisite Organization introduces a Talent Pool System, which is:

Stratum-based, not job-title-based
Focused on future potential, not just past performance
Structured for managerial leadership development, not mere career progression

What Is a Talent Pool?

A Talent Pool is a group of individuals who:

Have been assessed as having the potential capability to handle a specific level of work complexity (e.g., Stratum III)
Are not yet in a role at that stratum but are being developed through structured experience, coaching, and oversight
Are not promised promotion, but are recognized as future leaders to be cultivated

This allows organizations to:

Plan succession with confidence
Develop internal capability pipelines
Reduce mis-hires into roles with mismatch
Reduce political jockeying for promotion

“You don’t move up because you’ve been in the role long enough. You move up when you’ve demonstrated the capacity to do work of greater complexity.”
— Nancy Lee

9. The Role of the Manager-once-Removed (MoR): Building Future Leadership

In Requisite systems, the MoR is the guardian of future capability. The MoR leads the Talent Pool system and is held accountable for the career development of SoRs (Subordinates-once-Removed).

What the MoR Must Do:

Conduct capability assessments of SoRs using structured interviews
Monitor actual task performance from a developmental lens
Make recommendations about readiness to move into acting roles
Engage in regular coaching conversations (separate from the immediate manager’s feedback)
Track progress in the capability matrix or Talent Pool chart

MoRs are less emotionally tied to the SoR’s day-to-day performance and better able to evaluate longer-term capacity. This dual-track leadership avoids favoritism and expands visibility into enterprise talent.

10. Assessing Capability: Tools and Methods

Nancy Lee presents structured tools adapted from Jaques’s CIP theory to help leaders assess current and potential capability.

Key Factors in Capability Assessment:

CIP mode: The complexity of problem-solving an individual consistently demonstrates
Time-span judgment: The longest time frame the person can manage tasks without intervention
Work sample analysis: Past decisions that reflect complexity handling
Interviewing for potential: Structured developmental questions, often scenario-based

Signs of Stratum III Capability:

Consistently integrates variables (e.g., time, cost, people) across departments
Can hold multiple contingencies and adjust as new information emerges
Capable of resolving conflicts between multiple stakeholders
Comfortable with goals 12–24 months out

“The real art is distinguishing high performers with only Stratum II capability from lower performers with emerging Stratum III capacity. This is where the MoR’s judgment and structure are essential.”
— Nancy Lee

11. Assignments and Acting Roles: Growing Capability through Stretch

People do not grow capability through training alone—they must take on assignments that:

Expose them to the next stratum’s complexity
Allow them to exercise judgment over longer time-spans
Require integration across more variables or systems

Nancy Lee emphasizes “acting roles” as the best test-and-develop method:

A Stratum III individual might lead a cross-functional team with 18-month deliverables
A Stratum IV pool member might run a regional operation for 6 months
Acting roles must come with clear QQT/R expectations and post-performance debriefs

12. Capability Mapping: The Talent Dashboard for Senior Leaders

A mature Talent Pool system includes a capability map—a visual matrix or dashboard that tracks:

Each individual's current stratum role
Their assessed potential capability
Their MoR, development plan, and current stretch assignment
Estimated timeline to readiness

This allows CEOs and CHROs to:

See where talent bottlenecks or gaps exist
Align business expansion with internal readiness
Make succession choices on logic, not politics

“The capability map is a more powerful HR tool than any 9-box grid or performance appraisal report. It focuses on who can do what level of work, not who is popular or likable.”
— Nancy Lee

13. Succession Planning the Requisite Way

Traditional succession plans often emphasize:

Performance reviews
Political advocacy by current managers
Tenure or visibility

Requisite succession planning is stratum-based and led by MoRs:

Individuals are proposed based on potential and acting role success
Talent Pools are reviewed quarterly
Promotion readiness is evaluated against time-span complexity and QQT/R judgment
The MoR, not the immediate manager, nominates individuals for promotion

This preserves objectivity, reduces personal bias, and ensures a sustainable flow of leadership capacity.

14. Common Errors in Capability-Based Talent Systems

Nancy Lee warns senior leaders about pitfalls when implementing RO-based talent systems:

Error	Consequence
Confusing performance with potential	Promotes ceilinged individuals who then underperform
Failing to invest in MoR training	System becomes inconsistent or ignored
Using too many subjective criteria	Undermines stratum-based consistency and fairness
Allowing HR to “own” the process	Disempowers line leaders and erodes accountability
Neglecting acting roles	Missed opportunity for real-world capability demonstration

“The Talent Pool system fails when leaders don’t take it seriously. If not managed with discipline and care, it devolves into just another HR formality.”
— Nancy Lee

15. Designing Cross-Functional Working Relationships (CFWRs)

Most senior leaders focus on vertical hierarchy—who reports to whom—but lateral coordination often causes the greatest confusion. Nancy Lee provides a structured approach to designing Cross-Functional Working Relationships (CFWRs), using Elliott Jaques’s typology.

Each relationship type must be explicitly named and governed by rules of accountability. This eliminates ambiguity, role conflict, and turf wars.

Seven Types of CFWRs in Requisite Organization

Type	Purpose	Accountable For
Service	Providing direct output to another unit	Meeting QQT/R; fulfilling service agreements
Advisory	Providing expert advice	Relevance, clarity, timeliness of advice
Auditing	Reviewing for compliance or standards	Objectivity, reporting accuracy
Prescribing	Setting policy, standards, or systems	Quality and usability of prescribed frameworks
Coordinative	Managing sequencing/integration	Minimizing delay, overlap, or misalignment across teams
Monitoring	Observing adherence to protocols	Timely reporting and alerts about deviation
Delegated Managerial	Temporary or dotted-line role	Specific defined authority, usually time-limited

“In a well-designed Requisite organization, every cross-functional link has a name, a purpose, and an accountable role-holder.”
— Nancy Lee

Designing for Clarity

Avoid generic dotted-line relationships.
Write out the QQT/R for each CFWR—what’s expected, when, and with what resources.
Assign a clear decision-rights framework (e.g., who decides, who advises, who executes).

Executive Insight:

Audit your organization’s current CFWRs. Where there’s conflict or duplication, chances are the relationship isn’t clearly defined—or the stratum of the roles involved is misaligned.

16. Compensation: Rewarding the Level of Work, Not the Person

Compensation is one of the most distorting systems in organizations if not properly aligned with the stratum-based structure. Nancy Lee emphasizes that pay should be tied to the complexity of the role, not to the negotiation skill or market pressures.

Problems with Market-Based Pay Models:

Stratum II roles in hot industries may be overpaid relative to Stratum III roles in other units.
Pay compression discourages movement into higher complexity roles.
Compensation loses signaling value—people no longer see advancement as a reward for greater accountability.

Requisite Compensation System Principles:

Stratum-based pay bands with no overlap between strata.
Clear and objective mapping of each role’s time-span and output complexity.
Reward tied to the role, not just the individual.
Performance bonuses based on role-specific contribution to longer-term outcomes.
Role evaluation system based on:
- Time-span
- Judgment required
- Range and depth of decisions
- Integration required across functions

Illustration:

A Director in a Stratum IV role (2–5 years time-span) should always earn more than a highly technical Stratum III contributor, regardless of technical rarity.
Variable pay should not bridge the gap if the base structure is broken.

“If people can earn more by staying where they are, your entire leadership pipeline will collapse.”
— Nancy Lee

17. Real-World Application: Novus Pharmaceuticals

Novus faced rapid international growth and needed to scale its leadership capacity. However:

Roles had grown organically with uneven complexity.
The structure had hidden Stratum IV work being done by Stratum III-capable leaders.
Internal promotions were failing due to poor role-capability match.

RO-Based Intervention:

External consultants and internal HR partners used capability assessments to review all leadership roles.
Defined clear time-span for each executive role, redrawing the org chart.
Created a Stratum IV Talent Pool from across regions and functional silos.
Introduced MoR mentoring and formal acting roles.

Results:

Over 18 months, 70% of senior roles were filled internally.
Role clarity led to more decisive strategic execution.
Turnover dropped by 22% among mid-level managers.

18. What Happens When You Ignore Requisite Principles?

Lee includes several examples where organizations partially implemented Requisite ideas—or ignored key principles—and saw limited or negative results.

Case A: TechCo – The Capability Mismatch Trap

Used time-span assessments to redesign roles but allowed leaders to override promotion decisions.
Result: High performers in Stratum II roles were pushed into Stratum III without support.
Within a year, several new appointees failed, morale dropped, and the Talent Pool system was abandoned.

Lesson: Requisite tools are not optional checklists. They must be backed by managerial courage and systemic discipline.

Case B: FinServe – Compensation Breakdown

Tried to adopt Requisite pay bands but left existing high-paid technical experts in place.
Result: Junior staff in Stratum II were earning more than their Stratum III managers.
Ambition among mid-level managers collapsed.

Lesson: If you implement structure but not aligned compensation, the system is perceived as fake and unjust.

19. Change Management in Requisite Implementation

Nancy Lee outlines key strategies for successfully introducing Requisite Organization principles:

1. Executive Readiness

Start with the CEO and top team
Provide capability assessments and a brief education in RO logic
Ensure personal commitment to stratum-based placement and accountability

2. Pilot Implementation

Select a business unit or function
Assess current structure, redesign roles, and assess capability
Introduce Talent Pool process and MoR mentoring
Track outcomes and refine tools

3. Cultural Integration

Create a shared vocabulary: QQT/R, MoR, time-span, stratum
Reward leaders for development, not just delivery
Reframe “promotion” as assuming greater complexity, not gaining status

“Requisite thinking isn’t a program—it’s a philosophy of how people and systems work together.”
— Nancy Lee

20. Becoming a Requisite Executive: Thinking at the Right Level

Nancy Lee emphasizes that the biggest failure point in organizational transformation is not at the team level, but at the executive level. Leaders must think, act, and manage at the stratum their role demands. Otherwise, they collapse back into operational firefighting or personal intervention.

Indicators That a Director Is Operating at the Wrong Stratum:

Constantly steps in to “save” managers below
Makes short-term decisions that override strategic plans
Cannot articulate outcomes beyond 6–12 months
Avoids systemic redesign and focuses on “quick fixes”
Has a team that mirrors their own ambiguity

To Lead at Stratum IV (2–5 years), a Director Must:

Hold a line of sight over time—strategic outcomes that unfold over 2+ years
Integrate multiple business systems (finance, people, operations)
Anticipate non-linear change and competing priorities
Set clear context and constraints for all Stratum III units reporting in
Coach subordinate managers to delegate effectively and stop overfunctioning

“Directors must stop doing work that belongs to Stratum III and start designing and integrating the systems of Stratum IV.”
— Nancy Lee

21. Leadership Transitions: Building New Cognitive Muscles

Moving from Stratum III to IV is one of the most difficult shifts in managerial leadership. Lee describes it as a “crucible transition”, where operational strength must give way to strategic design capacity.

Typical Struggles in the Transition:

Challenge	Requisite Remedy
Clinging to operational detail	Shift to setting systems, boundaries, and context
Over-involving in team conflict	Clarify working relationships; hold managers accountable
Avoiding ambiguity	Develop comfort with multi-year uncertainty
Deferring decisions to CEO	Own your level; seek CEO alignment, not approval

A key insight: you don’t “earn” your way into higher strata—you must demonstrate the ability to handle greater complexity of judgment over time.

22. Coaching Managers Across Strata: The Role of the Manager

Coaching is not generic advice-giving or emotional support. In a Requisite system, it is precisely defined as a managerial practice, governed by:

Role clarity (you coach for effectiveness within the role)
Stratum-appropriate development (you develop people to handle next-level complexity)
Time-span awareness (you evaluate how long someone can hold a line of accountability)

Example: Coaching a Stratum II Supervisor

Focus: Planning across 6–12 months, prioritizing tasks, managing a team
Common need: Moving from instruction to judgment-based delegation

Example: Coaching a Stratum III Manager

Focus: Integration across functions, resource allocation, navigating trade-offs
Common need: Managing tensions between functional heads; resolving ambiguity

Example: Coaching a Stratum IV Director

Focus: Creating and refining integrated systems, leading strategic change
Common need: Letting go of “being the hero” and trusting the system

“Good coaching elevates the thinking of your managers. It makes them see their role differently and operate at their appropriate stratum—no lower, no higher.”
— Nancy Lee

23. MoRs as Developmental Leaders: Growing the Pipeline

The Manager-once-Removed (MoR) is uniquely positioned to:

Spot capability earlier
Provide stretch assignments
Offer longer-term developmental feedback
Protect the development process from short-term performance pressures

Lee encourages executives to formalize MoR development meetings, at least quarterly, using templates or dashboards to track:

Talent Pool participation
Readiness for acting roles
Post-assignment review
Movement between strata

24. Aligning Enterprise Systems with Requisite Logic

No matter how well an executive understands RO, the organization will resist unless systems reinforce the principles. Nancy Lee details how to align four critical domains:

A. Human Resources Systems

Role evaluation tied to stratum (not title inflation)
Stratum-specific capability assessments for hiring and promotion
Talent Pool architecture visible to top leadership
Succession planning built from MoR capability judgments

B. Finance and Budgeting

Investment planning by stratum (e.g., Stratum IV leads multi-year capital plans)
Performance measures matched to expected time-span
Reward systems tied to role complexity, not status

C. Strategy Execution

Multi-year outcomes mapped to Stratum IV and V accountability
Systems integration (e.g., digital transformation) led by correct strata
Avoidance of “too much strategy” without structure to implement

D. Learning and Development

Programs matched to current stratum and target growth stratum
Executive education aligned to complexity thinking
Development through action: stretch assignments, rotations, acting roles

25. Culture: Sustaining Requisite Leadership Beyond Individuals

Even with strong structure, systems, and capability alignment, an organization will not sustain Requisite practices unless the culture supports it.

Cultural Markers of Requisite Maturity:

Managers speak in terms of QQT/R, time-span, and accountability
Development is seen as growth in capability, not status
People value being well-placed more than being promoted
Conflict is addressed through role clarity, not personality management

Nancy Lee suggests appointing Requisite Champions—internal leaders trained in RO logic who serve as consultants, educators, and advisors in key meetings and transitions.

“The biggest culture shift is from blaming people to improving placement, coaching, and structure. It’s a shift from shame to systems.”
— Nancy Lee

26. Leading Requisite Transformation: From Design to Stewardship

For senior executives, adopting Requisite Organization is not a one-time reorganization. It is a discipline of continuous alignment—between strategy, structure, capability, and leadership behavior.

Nancy Lee argues that once structural alignment is achieved, the executive role evolves into that of a steward of capability—responsible for the developmental infrastructure of the organization.

Your Role as a Requisite Executive Includes:

Ensuring every role has a clear QQT/R
Evaluating capability alignment across your division or enterprise
Coaching your direct reports at the right level of abstraction
Modeling MoR behavior by mentoring the layer below your subordinates
Holding your managers accountable for their team’s performance and development
Guarding the integrity of the Talent Pool and succession process

“The test of a senior executive is not whether the business runs today. It’s whether capability is growing to meet the complexity of tomorrow.”
— Nancy Lee

27. Checklists for Requisite Implementation

A. Structural Design Checklist

✅ Have all roles been defined using time-span of discretion?
✅ Does each layer of management reflect a true jump in complexity?
✅ Are working relationships (managerial and cross-functional) clearly articulated?

B. Role Assignment Checklist

✅ Does the role-holder’s capability match the work complexity of the role?
✅ Has the MoR assessed potential for next-stratum growth?
✅ Are QQT/R expectations clear and documented?

C. Managerial Practices Checklist

✅ Is the manager holding performance conversations using output metrics?
✅ Are they coaching based on the next-stratum’s required behavior?
✅ Are development opportunities linked to Talent Pool strategy?

D. MoR Development Checklist

✅ Have SoRs been assessed for capability at least annually?
✅ Are stretch assignments being tracked and reviewed?
✅ Does the MoR have regular development meetings with SoRs?

28. Pitfalls to Avoid

Nancy Lee highlights several organizational traps that can derail Requisite implementation:

Pitfall	Consequence
Ignoring time-span in role design	Role ambiguity and misalignment
Promoting based on tenure or politics	Mismatch between capability and complexity
Delegating Talent Pool to HR only	Loss of line leadership engagement and quality assessments
Not educating senior leaders in RO logic	Weak adoption, reversion to old habits
Partial implementation (structure only)	No culture shift, disappointment in results

“A Requisite system cannot survive in a non-requisite culture. Leadership behavior and decision-making must change alongside structure.”
— Nancy Lee

29. Sample Templates for RO Practice

A. QQT/R Assignment Example (Stratum III Role)

Quantity: Deliver three new product launches this fiscal year
Quality: Each product must meet internal safety and compliance criteria and be ready for market testing
Time: Launches due in Q2, Q3, and Q4
Resources: $2.1M budget, shared marketing and R&D support

B. MoR Meeting Agenda (Quarterly)

Review of all SoRs
Update on development activities and assignments
Capability growth assessment updates
Identification of acting opportunities
Talent Pool adjustments

30. Sustaining Requisite Organization Over Time

Nancy Lee recommends that organizations periodically recalibrate their RO systems:

Conduct every-3-year structure reviews
Refresh capability assessments
Audit QQT/R clarity across all teams
Realign reward systems to ensure pay is consistent with stratum
Keep vocabulary and principles alive through training, coaching, and storytelling

Cultural embedding is critical:

Managers speak in terms of stratum, QQT/R, time-span
Performance reviews include judgments of complexity handling
Promotions are expected to reflect actual capability growth, not just political sponsorship

31. Final Executive Summary

Domain	Requisite Principle
Structure	Hierarchies must reflect distinct levels of complexity (strata)
Role Definition	Every role must have clear output expectations (QQT/R) and time-span accountability
Staffing	Match people to roles by capability, not performance or tenure
Leadership Practice	Managers are accountable for output, behavior, coaching, development, and appraisals
MoR Practice	MoRs must assess potential, lead talent pools, and mentor for the future
Talent Development	Talent Pools group individuals by potential capability, not career ladder
Compensation	Pay must reflect the complexity of the role, not just market rates
System Integration	HR, finance, and strategy systems must align with stratum logic and time-span roles
Culture	Embed through language, rituals, coaching, and consistency

32. A Final Word from Nancy Lee

“Organizations do not need to rely on guesswork or charisma. We have the tools to design systems that make sense, match people to the work they can actually do, and build enterprises that thrive. That’s what managerial leadership is about—not personality, but practice.”