Organizational Agility: Vertical Hierarchy & Titles

In an earlier post I talked about defining every position in the context five roles:  Producer; Talent & Resource Manager; Innovator & Entrepreneur; Personal & Team Developer; and Friend & Citizen.  In this post I argue for limitations on vertical hierarchy.

I think most organizations currently have too many levels of vertical distinction.  In non-management positions there are Associates, Seniors, Leads, Senior Leads, Principals, Senior Principals, and so on ad nauseum. And in management positions it gets even worse; there are multiple grades of Supervisors, multiple grades of Managers, multiple grades of Directors, multiple grades of Vice Presidents, multiple grades of Presidents, and CxO’s of everything and anything.

In case I am not being clear, I regard most of today’s titles as participation awards for adults.


Non-Management Hierarchy & Titles

If I were Talent Management King-For-A-Day (as I’ve stated before, I refuse to use the word “resource” in relation to humans; if you don’t like “Talent Management,” then try “People Operations,” or the humble, unpretentious, “Personnel”), I would define just three levels for non-management positions:

  • Apprentice—People who are still learning their job.
  • Journeyman—People who are self-sufficient in their job.
  • Master Craftsman—People who are so expert at their job that they can and are expected to teach others, perhaps even “certifying” their competency with a particular skill.

The expectations for each role will vary depending on the position and its level. For example, the Producer role will be a higher percentage of a Journeyman’s job than it would be for a Master Craftsman or an Apprentice, because the Master Craftsman is spending a larger percent in their Personal and Team Developer role teaching Apprentices, as are the Apprentices who are being trained.

Of course, I wouldn’t use the labels, “Apprentice”, “Journeyman”, or “Master Craftsman” in titles, but would use some form of modern-day equivalents.  Using the position, Product Owner, for example:

  • “Associate Product Owner” would be the title for an apprentice level Product Owner.
  • “Product Owner” (yup, just plain old “Product Owner”) would be the title for a journeyman level Product Owner.
  • “Senior Product Owner” would be the title for a master craftsman level Product Owner.

And let us not forget, in the Scrum framework, there are only three different positions: Product Owner, Scrum Master, and Developer.  Three positions, each consisting of the same five roles, each with three possible levels of escalating expectations—much more conducive to organizational agility.

Management Hierarchy

Not to be neglected, I will also argue for fewer management layers, too. To begin, the minimal viable organization structure consists of four functions:

  • Invent and design the stuff.
  • Make the stuff.
  • Sell and deliver the stuff.
  • Administer the non-product stuff (i.e., all of the people who don’t lay hands on product, such as those who collect and count the money, keep the books, report taxes, compensate and reimburse employees; pay vendors; deal with legal stuff; take care of company assets and infrastructure including buildings, equipment, networks, information technology; etc.).

Whenever you are tempted to add a function beyond these four, make sure that your additional function is truly value adding.  And just to be clear, let me give you a pragmatic definition of value adding: “Something is value adding if the customer would agree to pay for it if they knew they were paying for it.”

With that, let’s look at several different company configurations:

  • For a single-site company, I would strive for no more than three levels of management: the CEO, the functional leaders, and the functions’ product leaders.
  • For a multi-site company, I would strive for no more than four levels: the CEO, the functional leaders, the functions’ product leaders. And the geography/site leaders.
  • For a multi-business, multi-site company, I would strive for no more than five levels: the CEO, the business unit leaders, the business units’ functional leaders, the functions’ product leaders. And the geography/site leaders.

One reason to keep management layers at their viable minimum is cost reduction: with some exceptions, people in management positions do not lay hand on product; with some exceptions, they are not value adding, as I earlier defined “value adding”; and they are often the most expensive people in the company.

Another reason for keeping management layers at their viable minimum is what I call it the “reduction gear theory of management.” Take any organization and imagine each layer is like a gear, the higher the level, the bigger the gear, and these gears are stacked one on top of the other. This is depicted in the figure below, which represents an organization with nine layers of management.

Reduction Gear Theory of ManagementPicture1

Now, imagine that the CEO––the gear at the top, the biggest gear––has a modest idea, perhaps he or she is merely thinking out loud, thus turning their gear just one click. What happens to the gears at the lower levels? Because they are of decreasing size, they make a greater revolution with each layer. The turn of just a single click by the top gear may result in multiple, head-spinning revolutions by the bottom gear. Conversely, imagine that the bottom gear has an idea they want to advance. How many revolutions will be required by the bottom gear in order to produce any action at the top? Finally, if one gear turns clockwise, in which direction will the gears above and below it turn?

The point is that in addition to increasing economic costs, organizational layers also require larger stockpiles of political capital to grease the gears, and their inefficiency wastes precious cultural energy. The fewer the layers in an organization, the more efficient and effective the organization can be.

Put simply, reducing layers of management to their viable minimum enables greater organizational agility—the company will be faster and more adaptive to change.