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Have you noticed that struggling retail businesses tend to change their senior executives frequently?

Undoubtedly, every new appointment is made with the hope of finding a leader capable of turning the ship around. If such a person is found and takes the helm, the business is gradually transformed, and its results begin to improve.

However, in many cases, the appointment misses the mark, and another hire attempt must be made – at a severe cost to the business, to the executives concerned, and to the consumers who remain loyal to the limping business.

Why is it so difficult to find great leaders – in retail and in general? Is the way retailers approach recruitment flawed, or are such leaders scarce? I argue that we are witnessing both.

Obviously, I am not the first person to comment on this predicament. Given that effective leadership is fundamental to business success, thousands of books have been written on the subject, many backed by extensive research.

However, there must be something missing from mainstream knowledge in this area, as aspiring managers still do not know what they need to do to become better leaders. And, companies trying to raise their leadership quotient continue to struggle in their efforts to identify candidates with real leadership abilities.

Finding and nurturing leaders, it seems, is akin to a black art. Luckily, unlike other foggy areas of human endeavour, leadership does not have to be a mystery. There is an authoritative body of knowledge on the matter, with rock-solid concepts behind it. However, the holy grail of leadership has one characteristic that has made it unpalatable to the media and management experts – it is politically incorrect.

Requisite organisation

First published in 1997 by Elliot Jaques, the provocative book, which dissects the underlying principles of leadership and management following 25 years of research, is titled Requisite Organisation. Jaques coined terms such as “organisational culture” and “midlife crisis”.

In his analysis of organisations, Jaques noted the seemingly obvious: groups spontaneously arrange themselves into hierarchical pyramids. But, why do some people naturally gravitate toward the top of such hierarchies, while others stay in the lower layers or settle somewhere in the middle?

Jaques noticed a pattern that people at different levels within an organisational structure use specific methods of thinking and view the world using different time horizons.

He then classified these typical thinking patterns into ‘strata’. The lowest stratum (one) represents judgmental yes/no thinking and a time horizon of a week or so, while high strata, such as stratum eight, are characterised by multi-valued, multi-dimensional thinking and a time horizon of 25+ years.

This is why the CEO of Shell and a four-star general in the US Army need to be stratum eight people to succeed in their roles. The only problem is that such people are extremely rare. As the stratum increases, the number of people within the stratum reduces exponentially. The requisite organisation model has an unmatched capacity to explain how individuals and organisations work, and provides a framework that can help optimise performance on every level of business. Most importantly, it can drive the growth of an organisation.

If you put a person in a position where their stratum is lower than the demands of the role, they will be under-continuing stress, until they reduce their business area to match their stratum, or leave the organisation. Alternately, if you put a high stratum person in a role that requires a lower stratum thinker, they will be continually frustrated, until they expand their business area to match their stratum, or leave the business. For example, if you want your large business with a stratum five CEO to expand internationally, you need to give the job to a stratum six person.

Traditional training is futile

Could we not just train the incumbent to boost his or her stratum? This is where the political incorrectness of the Jaques findings comes in – the answer is ‘no’. So much for the notion of equal opportunity. According to Jaques, we are born and shaped as children into our stratum (authors like Malcolm Gladwell agree, see his book, Outliers).

While we smarten up with age and experience, we will likely remain within our stratum permanently. The only way to boost one’s stratum in adulthood is by transformational learning, via what the Harvard Business Review once referred to as ‘leadership crucibles’. However, this is not the type of education an organisation can administer to its managers.

So, what should you do once you take a critical look at your organisation and notice that you have wrong people in certain roles? To begin with, start utilising requisite organisation principles in your recruitment process. If you have a vacant managerial position, assess its stratum (there are methods to do so) and then test the candidates to see whether they align. If you adopt this practice, your organisation will progressively be restructured into a more productive enterprise.

But, what about the current team? Should you test their stratum? I would advise against it. Restrict your initial actions to just assessing the roles, to know what stratum each position requires.

Then observe your team. Those under continuing stress are most likely of an insufficient stratum for the job, while those continually frustrated are bigger than their position. Once you begin to see such patterns, start to move people gradually around, to achieve a better overall stratum architecture in your business.

Turning your business into a requisite organisation takes years. So, unfortunately, there is no silver bullet. Becoming aware of requisite organisation concepts and putting them to use within your business is a long-term plan.

Retailers often think that they do not have time for such enduring projects. But if you focus on improving your business for the long-term, sooner or later that improvement will arrive. And, you will leave your competitors in your rear view mirror.

This article was first published by Inside Retail, Australia’s leading retail trade publication.

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ABOUT THE AUTHOR
Andrew Gorecki, MD of Retail Directions, has worked with the retail industry since 1985. Industry insiders appreciate his strategic advice and insights, as he lives and breathes for the industry. Andrew received a nomination for the Australian Entrepreneur of the Year Award in 2010.
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