Requisite Organization - An Evolutionary Theory

Speaker A: My name is Nancy Lee. I'm the principal of a consulting company called Requisite Organization Associates, and there is a history to how I founded that company and gave it its name.

I have an extensive background in being a manager in a number of different kinds of companies, including AT&T, General Electric, Macy's, New York, and ultimately Wedgwood China, which was a family-owned company. I worked for Josiah Wedgwood VI. All of the companies, except Wedgwood, I found fairly dysfunctional.

As part of my search for what makes a good working relationship and a good management system, I went back to get my Master's of Business Administration at Boston University. I went to a conference in 1982 where Elliott Jaques was the keynote speaker. That was the first time that I heard someone provide a total management system that made absolute sense and was implementable. So, I went and got his book, "A General Theory of Bureaucracy," read it and thought the ideas are all here, but they're not terribly accessible. Being an educator by nature, I did some work taking that material and putting it in an educational form for managers and made it a point to get to meet Elliott, and he liked the material I was doing.

Subsequently, I attended a number of conferences that he gave, and I spent a lot of time learning his system. I was then running a consulting company in the technology business, and after my two sons graduated from college, I thought, I want to do requisite consulting. I think that's my life's work. I told Elliott that, and I also encouraged Elliott to write a more accessible book, and along with his wife, Catherine Kacen, who also encouraged him to write the book, that was the genesis of the book called Requisite Organization.

As part of all of that, a large consulting project came up that Elliott didn't want to do. He was aware that I knew enough about his work that he felt comfortable recommending me. That was my first assignment in Requisite Consulting, and it was a perfect assignment. I worked with a high-level CEO, spent two to three years with that company, half-time introducing and implementing Requisite Organization, and I wrote a lot of segments about Requisite in short form as part of that. Those segments ultimately became the book that I wrote on managerial practices, and that book is available in both English and Spanish.

Now, after that, I've never had a problem having other consulting assignments because one CEO would suggest it to another, and I've never really had to go seeking any assignments, which was very fortunate. Elliott was one of the most generous, funniest people you would ever want to be around. And he certainly shared all his extensive knowledge with me to the extent that I was capable of absorbing it because his knowledge was substantially broader than what I can absorb. But he was very generous with his time. You could always pick up a phone and call him and ask him a question. To this day, I channel him with my questions because it's an evolutionary theory. It is always evolving. It has a very firm basis in science. But as the world moves on, as more things are integrated, it evolves.

Among other things, I'm an avid skier, and Elliott was an avid skier. Elliott would go skiing with his wife Catherine, and they invited me along on a number of ski trips and introduced me to the finest ski place in the United States, which is Arapahoe Basin in Colorado. So I go back every year and have the Elliott Jaques ski slope trip for him every year, thinking of him, because we did five or six winters at Arapahoe Basin together, all of us, and had a very good time. We worked the whole time that we were there. We typically would work 4 hours in the morning and then ski for three or four hours in the afternoon. He was working on various books, Catherine was working on various projects, and I was working on my client projects and writing because I feel that there is a great need in the field to take Elliott's high-level written material and translate it down so that it's more accessible to managers of other levels.

What I attempted to do in my book, "The Practice of Managerial Leadership," was to take Elliott's Requisite Organization material and bring it down to a level five, four, and three, a comfort level, and put it in a more linear form so that you could be introduced to it and read it in a flow instead of piece by piece, the way it is in Requisite Organization. But then I tell everybody to go back and read Requisite Organization by topic by topic because there is such depth in every page pair that that is the absolute research piece from which to learn and practice Requisite Organization.

When I go into a client company, I will educate the Chief Executive Officer and the senior leadership team in all aspects of Requisite Organization as an overview and introduction and to get their understanding and their acceptance of these ideas. We try to pull out where these ideas run against what they have always done or have always learned, and we try to get that initial acceptance.

Simultaneously, I interview the CEO about the roles that he or she has now immediately subordinate to them. I ask what are the key things that are happening in each role and what are the key accountabilities that that person is holding that role accountable for. I also interview the C-suite team or the executive team in the same way. I ask what they believe they're being held accountable for and what roles they have subordinate to them and what work they are handing off. I also ask two other questions: what work do they feel is being done that's legacy work that really doesn't need to be done and they would like to get rid of? Even more importantly, what work do they feel is critical to being done that they simply don't have the resources to do?

Then I ask for permission to report back to the president, the CEO, my findings. They not only always give me permission, but they say, "Please hurry up as quickly as possible, get back with this information" because they don't take the time to exchange this information on a regular basis in most companies, and they don't have the approach that Requisite provides, the structural approach and the clarity approach.

By the time I have that information, I've got a pretty good sense of the current situation and what's going on. I give the CEO and each of those managers that I have interviewed the material that they have given to me back on one concise piece of paper. I show them what are the key accountabilities of the top-level roles. Then I ask the CEO to begin to envision how he or she thinks the organization might be better structured to support the growth that they're planning. We design an organization tentatively for two or three years in the future, and that becomes a vision for that CEO shared with the executive team of where they want to go because it helps them make the decisions as they come across the day-to-day, very difficult decisions they have to make about both structure and people. They tend to make it toward a cohesive whole instead of ad hoc one-by-one decisions.

I also ask and as part of all that interviewing, I am always getting a sense of time span. I do time span interviews as part of all those interviews. It's just in the interview so I can come back to the manager and show him or her the time

 span of the extant organization. Simultaneously, I'm doing all the educating with them of what time span is, why it's useful, and so forth. When I'm working with a larger organization, I will very often have an associate help me by coming in and starting similar work at level three or level four, depending on what size the organization is, and start working down in the organization as well.

Because one of the things that we have learned recently very clearly is that as we all know, the level three is the linchpin of the organization. But we find that Requisite concepts embed best if you can have a year to work with those level three people, helping them to be more explicit about key accountabilities because they've gotten clarity through our process of what their stratum four managers want them to do. But they need a lot of help in getting key accountabilities clear for level two. They really need to see the whole process work through for a year, all the way through to the personal effectiveness appraisal outcome of the clear key accountabilities. By year two, we have no problems. But if you don't have that year to work with them, I find it very difficult to embed the process in the organization for the long haul.

Another key learning that I have, because my work is always implementing the total system, I help the organization understand the structure they have now requisitely. I help them design their future requisite structure. I have them learn how to judge the current capability of people and I have them put in managerial practices, all of the requisite managerial practices. Eventually, they are able to put in requisite compensation, which saves them hundreds of thousands of dollars of consulting fees in compensation consulting.

But you cannot do requisite consulting, requisite compensation until you have the structure established requisitely with low, mid, and high at each role, at each stratum level, until you have the roles properly geared within the strata, until you have more or less the right people of the right capability in the roles. It'll never be perfect, but you need to know at least what you've got in there. Once you've done that, then you can look at requisite compensation and put the compensation at the boundaries of low, mid, and high and at the boundaries of each stratum.

But one of the things you have to beware of is if you have a level two person in a level three role because you can't find a level three person, you don't want to be paying them at level three. It's no service to them.

The other thing that I'd like to say is that the reason I do this work and work so hard at it is because not only does it make the organization much more effective and profitable, but it makes it a healthy and humane place for people to work. And that's why I do the work.

Well, I'm on the board of the Global Organization Design Society because my interest is twofold. I want to continue to work for the intellectual integrity of Elliott's work because I was fortunate to have Elliott edit my book not once but twice. He was a hard taskmaster and was very exacting in the use of language and the use of his concepts. I want to help carry that forward.

The other part of that is I want to find as many capable people who are interested in doing this work and educate them in what requisite organization is, educate them in how to become requisite consultants. And that's my life's work.