Old watch mechanism. © Günay Mutlu — iStock

Rapid Talent Pool Evaluation for Merger and Acquisitions Using Requisite Organization

Forrest Christian Computers/IT, Managing Leave a Comment

A new periodic feature. I wrote the following for another website. It describes the success that Glenn Mehltretter of PeopleFit has had in using Requiste Organization informed practices to create a better merger of two companies.

Bob Smith had a big problem for the brand new millennium. His company, a major medical products company, recently merged with another giant in the industry. The new company, Very Big Medical Supply (VBMS)* had corporate IT staff located in two cities in the eastern United States and in the UK. As Vice President for Corporate Information Technology, Bob had to merge the two disparate corporate IT structures into one finely-tuned machine. He already had placed all of his Directors who reported to him. But he now had to get all of the Directors to make some very difficult decisions and determine who should be where in the new IT organization.

Linda had been working with Bob as the internal OD consultant. She knew that if they used Requisite Organization principles to create the new organization, they would have a smoothly functioning organization going forward. It was also a great opportunity to put the ideas of Elliott Jaques to work.

“Let me use Glenn Mehltretter to do some talent gearing,” she told Bob, “and I promise that you’ll get 10-20% better selections.”

Bob listened to her points and agreed to use Mehltretter and his requisite-based talent gearing processes. Glenn and Linda would help the Directors complete the placement process. It would include all personnel at Str2 and 3 reporting to the Stratum 4 Directors in Corporate IT. To make it even harder, none of VBMS’s employees other than Stanley had any background in Requisite Organization theory.

“We know that we can improve a manager’s accuracy in judging individual potential to do work by leading them through a certain thinking process,” Glenn said. “It’s based on the fact that the human person is much better at comparing two things than judging a single thing.”

Following the data collection interviews, Linda facilitated the meeting in which Bob, the VP for Corporate IT, and IT Directors filled the roles. The Directors noticed that they had a shortage of people capable of working at levels 2 and 3. To fill the gaps, they decided use the existing people in their talent pool.

“It’s just a small misfit,” they said. “It won’t be optimal but it will be okay.” They asked Glenn what he thought.

“Well,” he said, “You could do that. Just remember that if you take someone who is only capable of doing Level 2 work and give them a Level 3 role, they will still only be able to do Level 2 work. If you are their boss, you will have to do all their Level 3 work, in addition to whatever Level 4 work you have.”

This drove the way that he and Linda created their work process. They led each director through three core steps.

  1. Build a hierarchy of the roles from most to least complex, using the existing roles because they were familiar to the directors.
  2. Compare the people to the roles, judging the level of role that matched the current potential of each individual.
  3. Judge whether the individuals’ places at each level really demonstrated similar capability.

Linda and Glenn interviewed the directors, mostly in person but for a couple only telephone interviews were possible. They led the directors through the three core steps about their own organizations. They also asked them if there were others in the IT organization whose capability they felt comfortable judging. These additional judgments were added to the data pool.

During the interviews Glenn or Linda anchored the hierarchy of roles to the level of work, using time-span measurement and descriptions of work at the various levels. This let them compare the judgments of directors from across the organization.

Thirteen directors were interviewed to evaluate a pool of 132 staffers. Glenn worked with each Director, started interviewing all the Directors who had already been selected, and some of those who had not been. Few people knew everybody. Unfortunately, a number of director-level managers had already left the merged company, leaving a portion of the pool with no one qualified to judge their potential.

Data on capability was collected for 86 of the 132, of which 39 (a little less than half) actually had more than one judgment collected about them. In 85% of the multiple-judgment cases, the judgments agreed, meaning that the process resulted in consistent ratings across raters. Also, it shows that the results can be represented in measures that can be converted to job complexity across the organization.

The results also showed that the organization would benefit from a more requisite structure. “We’ve found that almost across the board 35% of people are above or below their role, and another 35% are either too far below their boss, or equal or above their boss,” Mehltretter said. “This client was no different.”

The Directors decided they did not want to do that work. However, some people who were not big enough for the role were given it anyway, for a variety of reasons. By the next year, all of those people had either quit or been let go.

When they presented their final selections to Bob, the VP for Corp IT, he knew he had gotten his money worth. “Yes,” he said, “That’s at least 10-20% better than we would have had otherwise.”

This success reinforces the power of this tool, particularly when integrating two merged companies demands rapid action. By letting the Directors make more accurate initial judgments in talent gearing, it reduced the risk of large, second-round organizational changes that so often follow the initial integration.

* Names have been changed.

Image Credit: Old watch mechanism. © Günay Mutlu — iStock.

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