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The Rigour of Requisite Organization

An Interview with Ken Shepard, President of the Global Organization Design Society

Interviewed by Queen's Industrial Relations Centre
Publication date: July, 2008

Requisite Organization (RO) is a science-based management theory that traces organizational dysfunction to poor structure and systems rather than underperforming employees. According to RO adherents, the way to fix dysfunction is to fix the system. That means having crystal clear management accountability, setting compensation and employee capability to job complexity, and ensuring the proper number of organizational layers. The result: souped up organizational effectiveness, says Ken Shepard, founding president of the Toronto-based Global Organization Design Society. In the following Q & A, Ken discusses RO's relevance to people management practitioners.

Let's start with the basics: what exactly is the Requisite Organization philosophy?

For the senior human resources practitioner, Requisite Organization (RO) is a strong beacon of light in the darkness of the management theory jungle. It's an integrated management system that helps organizations achieve their strategic business results. It brings fairness to a radically higher performing workplace, and builds trust between managers and subordinates – as opposed to the exploitive and paranoid relationships that exist in most organizations. It all adds up to strong employee engagement.

RO includes many evidence-based tools to design and align roles and practices throughout the organization. It can be used to better understand and bring together the many partial truths that makeup the craft of designing and managing organizations.

I understand it was developed by a Canadian management guru Elliott Jaques.

Yes, Elliott Jaques was born in Canada. He was a multi-disciplinary scientist and long-time organizational clinician. He graduated in psychology with honours from the University of Toronto, then completed a medical degree at John Hopkins Medical School, and a doctorate in social relations at Harvard. After service during World War II with the British Army, he settled in the UK, where he was one of the founding members of the Tavistock Institute. He worked in the UK as a scientist and researcher for many years, and that's where he developed his theories.

These theories are being applied with dramatic results to the world's largest organizations. He was a pioneer and a brilliant innovator. He died in 2003, and wrote 20 books on how organizations using his integrated organization design and management systems can be made to work effectively.

What characterizes his method?

His levels-based approach to organization design and management creates significant increases in employee satisfaction, customer satisfaction, and financial results. It involves three main steps: getting the right structure; getting the right people in the right roles; and holding all managers accountable for using the right managerial practices.

RO provides leverage and power for working strategically, and you can do it with less energy. It's a good theory that makes complicated work actually light and easy. Rather than carrying around100 tools, I would rather have one integrated tool. Jaques' system is like having the Swiss Army Knife as opposed to all the disorganized tools in different sizes, all with different handles.

RO is a nonsense screen. There's no field so full of fads and puffery than HR. So many things in the marketplace are being sold to HR managers. How do you make sense of them? Knowing this theory helps you sort it out really quickly.

How was RO developed?

It was in a unique partnership between a British industrialist, Wilfred Brown, and Elliott Jaques. These two worked in daily partnership over15 years solving problems at every level of a major manufacturing organization, and then carefully building an integrated management system that they carried around the world. The system was further developed during a subsequent 15 years in an interdisciplinary management consulting institute at Brunel University with major contracts in redesigning the UK Public Health Service.

Senior consultants brought RO ideas to General Electric's talent pool work in the 1970s; McKinsey consultants took it to CRA in Australia in the 1980s; and the U.S. Army has used it for over 20 years. Recent world conferences on RO practice have brought together practitioners from 14 countries to Toronto to share their experiences and to learn.

Why should HR leaders be interested in RO?

Senior HR practitioners need to understand the organization as a system and to support the CEO's work in leading that system, to contribute to strategic business results, and to enhance the quality of work life for managers and employees at every level. RO provides methods to support the CEO in preparing and developing the senior management team for re-design and strategy execution. In terms of structuring the organization, its methods enable measurement of the level of work complexity required to accomplish the organization's strategy; design of the optimum number of managerial levels for the organization; and role design and related vertical and lateral authorities and accountabilities. RO methods are valuable for recruitment, for establishing effective managerial leadership practices throughout the organization – including a transformed, trusting, and accountable relationship between manager and subordinate, and for designing aligned and effective systems. These might include setting fair compensation systems aligned to work level sand capabilities, effective talent pool systems including identification and development of high potentials, and effective cross-functional teaming systems.

Which Canadian organizations have applied RO principles successfully?

Since the 70s in Canada there's been a lot of RO activity in the private and public sectors. RO has been applied by Bank of Montreal, Canadian Tire Acceptance Ltd., Canadian Tire, Imperial Oil, Inco, Inglis, Ontario Hydro, Roche Canada, Suncor, Chapters Indigo, and Tembec, among others. Many VPs of HR ran RO projects, including at Roche Canada. Various elements stuck very well: restructuring corporations, getting rid of pay for performance systems, putting in the requisite compensation programs, and introducing product launch teams. (See below to read a case study from Organization Design, Levels of Work and Human Capability: Executive Guide.)More recently, Denis Turcotte – Canadian Business CEO of the year last year – used it to turn Algoma Steel around. After being bankrupt Algoma became one of the most profitable steel companies in the world, and that was using Requisite Organization. As well, the Government of Canada, including Health Canada and the Public Service Commission, has used RO extensively on its own structure and in evaluating and assessing levels of executive leadership in the public service. Not-for-profits such as the Victorian Order of Nurses have used it. In the HR field five years ago we used it to help the board of HRPAO to reposition the organization, and it led to an explosive growth period.

Is RO a radical approach for North American organizations?

It is. It challenges conventional assumptions. It's a more thoughtful approach to management. The people who like it are those who read – and not many managers read anymore. They're people who think, are reflective, who have a longer time horizon. They're systems thinkers. To get your head around RO requires more than a one-day workshop. It takes some time and study, because it has substance. It's foundational. You can build on it – you can use it. It gives you such a powerful lens, grounded in solid theory. No matter what part of management you do – and as an HR person you might be recruiting, you might be in compensation, you might be in labour relations – if you understand this theory, you can do whatever you do so much better.

Can HR practitioners benefit from RO's leadership practices?

Yes. In the HR field there is this current interest in competencies, which tend to explode in number, and it gets fairly bureaucratic and difficult. In the RO system, there are about 10 leadership practices, all based on the need to dialogue. These require some study and practice. But it's a much lighter system. You don't have to have 150 competencies to do the job well. If you can do these dozen or so practices, and grow in your ability to do them as you move up the organization, they will serve you well. They're very well thought out, and very well designed.

Resources:

For an introduction to Requisite Organization theory, download The Global Organization Design Society's new book, Organization Design, Levels of Work and Human Capability: Executive Guide. It is available free at: http://www.surveymonkey.com/s.aspx?sm=YqqII66AKGuK5y_2fCVAKoUw_3d_3d

If you have limited time, focus on these articles:

The Long View of Leadership

An Executive's Guide to RO-based Organization Design

How Did Dennis Turcotte become Canada's CEO of the Year?

The Inglis Story: How It Became The Number One Appliance Company in Canada

Teams Can't Be Better Structured Than Your Organization: How Roche Canada's Created High Performing Cross-Functional Product Launch Teams

The Global Organization Design Society – formed in 2004 to promote the RO approach – has a website with articles, books, and video interviews. Go to: http://www.GlobalRO.org

There's a useful, keyword-searchable, 1,000-page bibliography at: http://www.globalro.org/en/go-library/comprehensive-annotated-ro-bibliography.html