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The Golden Rule of Organisation Design

• What makes for a good organisation design?
• How should the different jobs in an organisation be defined and inter-related?
• What constitutes a healthy organisation structure?
• How can job and organisation design contribute to organisational performance?

These are questions which have been occupying OD practitioners and consultants for decades.  Now there is a rigorous and systematic way of looking at these questions, which applies to all sectors, sizes and forms of organisation.   It is based on the concept of ‘Levels of Work’.

The Levels of Work Approach

The ‘Levels of Work’ approach to job and organisation design is founded on a body of theory, research and practice developed over the past forty years by a variety of academics, consultants and business practitioners.   The approach is based on the observable premise that all organisational work falls into a hierarchy of discrete levels.  These levels are related to the complexity of the work involved.  Complexity grows at successively higher levels, as the job-holder’s accountabilities involve greater variability, higher uncertainty and longer time horizons.

Accountability is a key element of the ‘Levels of Work’ approach.  Accountability occurs when a job-holder is held to account by a higher authority for particular outcomes.  The focus of accountability is on ends rather than means – deliverables not activities.  Accountability implies ownership of results and accountabilities cannot be shared, although others may contribute to their delivery.  

Considerable research across a wide range of organisations has revealed that there are only six possible value-adding levels above the front line of any organisation.  A value-adding layer is one which makes a real and effective contribution to achieving the desired outcomes of the organisation.  The theme of each level and some typical roles are shown in the table overpage:

The ‘Levels of Work’ model affirms that it is possible to assign each job in an organisation to a particular level of work by analysing it against a set of key criteria, including: The job’s core accountabilities; range and complexity of resources employed; types of problems to be solved; discretionary space afforded to the job-holder for change or innovation; level of internal collaboration with peers and colleagues across the organisation; level of external interaction with customers, suppliers and significant external organisations; and the timeframe over which the impact of the majority of the decisions of the job-holder will be felt. 

The Golden Rule

The real power of the model, however, comes in applying the GOLDEN RULE of the ‘Levels of Work’ methodology.

The GOLDEN RULE affirms that in any organisation, a layer of management is only justified where the level of work is genuinely and significantly different from the levels above and below.

When rigorously applied to job and organisation design, the GOLDEN RULE ensures that:

• Each layer of management adds real value by focusing on accountabilities, which are significantly different in complexity to the layers above and below.
• Each job is assigned clear accountabilities, which do not overlap or conflict with the jobs which surround it, both vertically and horizontally and each job-holder is clear how their job adds value to the organisation and contributes to the achievement of organisational goals. 
• Each layer of management interacts and collaborates with an appropriate level of management across functions, departments or teams.
• The organisation has the right number of management layers from top to bottom of the hierarchy to ensure that it is operating efficiently and effectively to achieve organisational goals.

OD Profiler

OD Profiler, developed by 360 Partnership Ltd., and utilised by HDA in its consultancy services, is a new online tool based on the ‘Levels of Work’ approach and enables our clients to:

• chart a current organisation, division, function or team
• locate a particular job in its organisational or hierarchical context
• capture the overall purpose and key accountabilities of each job in the organisation
• provisionally assess the level of work of all jobs against simple criteria
• assess in detail and graphically represent the level of work of a job against the key dimensions 
• develop detailed job profiles and profile reports
• compare and contrast the profiles of different jobs in the hierarchy to assess accountability gaps/overlaps
• map job purpose and accountabilities across the organisation.

The benefits of applying this methodology are considerable:

• The organisation will have the right management levels and lateral relationships to develop, co-ordinate and deliver strategy.
• Everyone will be clear how their jobs impact customers, decision-making processes will be short and timely and the organisation will be able to anticipate change and grasp opportunities ahead of competitors.
• Fewer levels will shorten communication channels and key information can be rendered accessible to all employees at the appropriate time.
• Interfaces within and between processes will become highly visible and capable of continuous improvement and innovation
• Clear job accountabilities and performance standards will mean that the capabilities of people at all levels of the organisation can be assessed and developed.
• Individual contribution can be seen, measured and rewarded, and careers can be shaped and fostered to realise each individual’s full potential.
• A lean organisation, with the appropriate levels of management across all functions, departments and teams, will be far more cost efficient and effective in delivering organisational goals.

Beyond these significant benefits in regard to the design of jobs and organisation structure, the introduction of ‘Levels of Work’ to an organisation can provide a unique and powerful integrating mechanism for many other aspects of people management and development, particularly if associated with a competency model based on ‘Levels of Work’.

HDA now uses the new online tool, OD Profiler to apply the work levels approach to job and organisation design for the SME sector.  The tool offers a highly innovative and practical approach to the systematic diagnosis and improvement of organisational health.

More on Tim Harding:

As a consultant in organisational change and management development for over 20 years, Tim has advised many major UK-based and multinational companies. He was formerly Associate Professor of Management Development at Cranfield University and combines strong strategic thinking with a deep insight into the human processes that contribute to a healthy organisation. Tim was Change Director at Tibbett & Britten and has international consulting experience in over 40 countries. He is a director of 360 Partnership Ltd, and is an HDA Senior Associate consultant.

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