As far back as 4,000 years ago Pharaohs sought to have larger pyramids. Many of todays leaders seek the same, but rather than stone, their pyramids are made of jobs and people. We frequently detect this when organizations are concerned about their compensation costs. Sometimes the compensation process is working well to align jobs to the external market data but the “position control” process is out of control. In these types of organizations it is often unclear how new jobs should be proposed, what the approval process is, or what the criteria is for approving new jobs. Decision makers are put in a bad position because leaders have already designed their new organization and jobs, selected the people and maybe even made promisses about titles and levels on the org chart before getting approval. When the position control process is unclear the size and shape of the pyramid often gets bigger at the middle and higher levels, which of course are higher paid jobs. The short term solution for ongoing lack of positon control is often a restructuring and layoff to get the pyramid size and cost aligned to the actual size of the business.
There are several ways to measure and depict the organizational pyramid and doing so is fundamental to helping decision makers understand if proposed jobs are going to contribute or hurt the organizations effectiveness. Here is an example of how pyramids get out of shape. If an organization has 400 individual contributors, 100 managers, 40 directors, and 10 VPs, it would not be unusual for one in four managers, directors and VPs suggest one new position each, and each of the new directors and managers suggest two new positions each, all in the same year. Every one of those suggestions might look reasonable on its own. But overall it is an increase of 61 positions, nearly a 12% increase. That might be fine if the organizations revenue is growing at an equal or greater rate. But if the top line is not growing fast enough, several years without guidelines on the desired size and shape of the pyramid can cause a painful problem to be dealt with.
Some organizations control new positions well and others let the Pharaohs build with few if any limits. How does your organization do it?