Hierarchy of Roles – very often questions are asked about job design and role accountabilities in the context of establishing clarity in organization structures. I go by a simple 4 step profile that is defined by what each role is trying to manage.
1. Management of Capital – the role of managing an organization’s capital ($$) is strictly limited to the Board and the Managing Director. The Board works with MD to articulate direction, endorse strategies and make Capital allocation decisions.
2 .Management of Policies – the role of defining and managing an organization’s policies – which are the rules that provide the framework within which the business will function is the responsibility of the Managing Director and his/her direct reports – often referred to as Heads of Divisions.
3. Management of Processes – the role of defining and implementing processes goes to the division heads working with their direct reports, commonly referred to as Heads of Departments. Processes define how work gets done. It is processes that create the capacity for lateral coordination in an organization. Lateral coordination in simple terms means working across functional boundaries.
4. Managing of People – the role of supervising the people who actually do the business comes down to the Heads of Departments and their direct reports commonly referred to as supervisors. It is here where the customer are touched and operational profits or losses are made.
No matter how small or big an organization is, you will find the 4 levels present. In a small owned enterprise, the owner may be operating at all four levels and in a global organization it may be layers and layers of people within each level.
What is important to recognize is that each level up requires a very significant shift in thinking an focus. Whereas in managing people, the issues and time frame for resolution is fairly immediate and must be done within the process and policy framework, if one is a level up at the process level, one gets consumed by “technostructure” type issues, addressing productivity and performance and working cross functionally.
Often times we make the mistake of promoting a person who is very good at the process level to do policy only to see the person struggle miserably. Titles also lead to massive confusion. CEO of a local bank for example is clearly sitting the capacity of “managing capital” but a the local CEO of a Global Bank who reports to a regional CEO who report to a global CEO, is hardly managing capital and at best is implementing processes. Hence it is very risky to bring in the same titles position from a multi-national’s local operation into a local company. The CEO of Shell or Esso Malaysia is no where close in terms of readiness to become the CEO of Petronas, if I can use this as an example.