Social Power and the CEO Social Power and the CEO Leadership and Trust in a Sustainable Free Enterprise System Elliott Jaques Q Quorum Books Westport, Connecticut • London In order to keep this title in print and available to the academic community, this edition was produced using digital reprint technology in a relatively short print run. This would not have been attainable using traditional methods. Although the cover has been changed from its original appearance, the text remains the same and all materials and methods used still conform to the highest book-making standards. Library of Congress Cataloging-in-Publication Data Jaques, Elliott. Social power and the CEO : leadership and trust in a sustainable free enterprise system / Elliott Jaques. p. cm. Includes bibliographical references and index. ISBN 1-56720-551-8 (alk. paper) 1. Chief executive officers. 2. Executive ability. 3. Leadership. 4. Management. I. Title. HD38.2.J37 2002 658.4'092—dc21 2001051096 British Library Cataloguing in Publication Data is available. Copyright © 2002 by Elliott Jaques All rights reserved. No portion of this book may be reproduced, by any process or technique, without the express written consent of the publisher. Library of Congress Catalog Card Number: 2001051096 ISBN: 1-56720-551-8 First published in 2002 Quorum Books, 88 Post Road West, Westport, CT 06881 An imprint of Greenwood Publishing Group, Inc. www.quorumbooks.com Printed in the United States of America 011,14 The paper used in this book complies with the Permanent Paper Standard issued by the National Information Standards Organization (Z39.48-1984). Contents Illustrations v i i Acknowledgments i x Chapter 1 Introduction: Creating the High Mutual-Trust Organization 1 Chapter 2 T h e New and Powerful CEO Class 9 Chapter 3 W h y People Work 2 1 Chapter 4 Manager-Subordinate Accountability 2 9 Chapter 5 T h e Four Managerial Authoritites 4 5 Chapter 6 T h e Nature of Time and the Measurement of Size of People and Size of Roles 5 1 Chapter 7 I n Praise of Hierarchy 6 1 Chapter 8 T h e Cross-Functional Morass 6 9 Chapter 9 Getting the Right Person for the Right Role 7 9 vi C o n t e n t s Chapter 10 T h e Appraisal of Personal Effectiveness and Merit Recognition 9 7 Chapter 11 Strategic Planning and Alignment 1 0 5 Chapter 12 T h e Demystification of Compensation 1 1 3 Chapter 13 Managerial Leadership 1 2 5 Chapter 14 C E O s of Public Service Organizations 1 3 3 Chapter 15 T h e Light at the End of the Tunnel 1 3 9 Chapter 16 S o m e Practical Examples of Organizational Development 1 4 7 Chapter 17 S o m e Results in One Company 1 6 5 Chapter 18 Managerial Leadership and the Great Free Enterprise Democracy 1 7 3 Glossary of Key Concepts 1 8 3 References 1 8 9 Index 1 9 1 Illustrations FIGURES 6.1 The Two Dimensions of Time 5 9 7.1 Requisite Basic Managerial Layers 6 5 9.1 Maturation of Individual Potential Capability 8 9 9.2 Talent Pool Set Out on Maturation Bands 9 2 10.1 Equilibration of Personal Effectiveness Appraisals 1 0 1 11.1 The Key Planning Periods within Strata 1 0 7 11.2 Cascading Vertical and Horizontal Alignment of Plans 1 0 8 11.3 Example of Lateral Alignment of Key Goals and Plans Across the One Year Level and Below 1 0 9 11.4 Example of Vertical and Lateral Alignment of Goals at Different Organizational Levels 1 1 0 13.1 Impact of Capability of CEO 1 3 0 16.1 Manifest Organization: Components Company 1 5 1 16.2 Extant Organization: Components Company 1 5 2 16.3 Requisite Organization: Components Company 1 5 3 16.4 Repair Service Station: Manifest Organization 1 5 5 16.5 Repair Service Station: Extant Organization 1 5 6 16.6 Repair Service Station: Requisite Proposal 1 5 7 viii I l l u s t r a t i o n s TABLES 6.1 Time-Span and Felt-Fair Pay Differentials 5 6 7.1 Basic Structure of the Managerial Hierarchy 6 6 9.1 Basic Managerial Layering and Information Processes 8 8 9.2 Example of Talent Pool: Str-V and -IV Roles 9 1 12.1 Example of a Total Work-Related Differential Compensation Structure 1 1 9 12.2 Example of Pay Range for a Role 1 2 0 15.1 Universal Felt-Fair Pay Differentials 1 4 3 17.1 Improved Results in Purchased Factory 1 7 1 Acknowledgments The material in this book has grown up over 55 years of continuous con- sultancy research in every kind of organization all over the world. I have acknowledged in detail in my last book Requisite Organization everyone who has been of significant help to me in that endeavor. I will not repeat those acknowledgments here. But I would like to refer to a few old col- leagues, and to some who have been added in the past few years to my long list of valued associates and friends, without whom any useful work that I may have accomplished would have been impossible. First I must mention Kathryn Cason, the President of ROII (the Requisite Organization International Institute), Dr. Jerry Harvey, Professor of Organization Behavior at George Washington University, and Mark Kaminski, President of Commonwealth Industries, Inc., who have so care- fully read and critiqued my every word. The material in chapter 11 is derived from project work that I was able to carry out in collaboration with Charlotte Bygrave, VPHR of ICOM Information and Communications, Inc. and Nancy Lee, President of Requisite Organization Associates, Inc. Next, there is Elizabeth (Betsy) Watson, former Chief of the Houston and Austin, Texas, Police Departments, with whom I have had the great privilege to collaborate on her work as Research Fellow for the Department of Justice on the organization and leadership of police depart- ments. We have learned great lessons about discipline and accountability for results. At the same time I had the opportunity to work with Ron Mazzeo and to test results in work that he was doing with Visteon, and then with Exxcel Construction. During this period, I also had the opportunity to continue the richness x A c k n o w l e d g m e n t s of my collaboration with Tom Helton in his new role of EVP Human Resources at United Stationers. At the same time, there were opportuni- ties to extend my purview with projects with Dr. Aldo Schlemenson, Dr. Carlos Silvani, and Dr. Beatriz Fontau, at the Federal Taxation Department in Buenos Aires, with Arturo Acevedo, Carlos Leone, Norberto Diaz, and Pablo Kanterwicz at Acindar Steel, also in Buenos Aires, and with Ulf Lindberg, Robin Rutuli, and their colleagues in Enhancer, Inc., and their interesting consultancy developments in Sweden. Regular discussions continue with Sir Roderick Carnegie and remain as fruitful as ever. Linda Martin, my personal assistant, has been of inestimable help in preparing this manuscript, an acknowledgment that takes on a new and more extensive meaning in this day and age of computer technology. I am grateful to Rebecca Cason Merrill for preparing the figures and tables.