Position Contracts Continued
In this PVT, I continue last week's discussion
about Position Contracts. For a review, click here.
To summarize, I talked about the following:
The "Standard Approach" to developing
position contracts where you start at the top of your Org Chart and
develop Contracts for lower level(s), one level at a time. This makes
sense because you must derive a Contract for any position from its immediate
managing position's objectives.
How you might need to fill lower level
positions before you have managers to manage them.
The case where you have more boxes
on your Org Chart than people to fill them and the fact that in start-ups
and small businesses, the CEO probably does "lower level" work (such as
a Payroll Clerk) that will someday be delegated to someone else.
Finally, I mentioned that a Position
Contract is not "job description." Let
me explain further.
What is the difference between a Job Description
and a Position Contract?
A job description is a description, not
an agreement for anyone to do anything - in spite of its implications.
In contrast, a Position Contract is a
document signed by a manager and his or her subordinate.
A Position Contract contains interdependent
promises to deliver specific results.
The subordinate contracts to the results,
work, and behavior inherent in his or her position. The manager contracts
to manage the subordinate by using specific management technology and
certain corrective actions. Each agrees to do their job to the best of
OK. Last week, I said I would discuss
a more effective approach to developing Position Contracts. So, let's
An Effective Approach
First, you must have developed your company's
organizational strategy from your strategic objective. For a review of
organizational strategy, see PVT 2,
3, and 5
Second, once you have developed your
organizational strategy, identify all those positions that have no available
personnel. (If you're just starting out, you're probably the one who
fills ALL boxes on your Org Chart!)
Third, develop your own Position Contract
derived from your Strategic Objective, using the classic standard approach.
Thus, your Position Contract is virtually identical to your Strategic Objective,
except for certain additions.
Here's where we leave the standard
approach to creating Position Contracts and continue with last week's
example where you want to hire a Payroll Clerk.
Let's say you're at the top of your Org
Chart and you must hire a Payroll Clerk near the bottom of your Org Chart.
That's a big gap... You haven't
hired a VP of Finance, no Directors, no Managers, etc., yet you NEED that
Payroll Clerk to pay yourself plus new hires.
So, you need Position Contracts for all
the positions between yourself and your Payroll Clerk.
To solve the problem, you can create
a template for a standardized Position Contract. Then for each position,
you can later fill in necessary information based on each position's objectives
that are inherited from its managing position.
For your Position Contract Template,
you'll want to include such information as:
-- A "by and between statement"
that specifies the title of the position and its managing position.
-- A list of subordinate functions
for a given position. You would copy these subordinate functions directly
from your Org Chart. For example, you might have a position box called
VP of Finance with three subordinate boxes labeled: Accounting, Administration,
and Management Information Systems. These ARE the Finance VP's subordinate
-- A section that describes the position's
Strategic Objective in terms of Results, Work, and Behavior, as follows:
Results Inherent - a paragraph
that encapsulates the results produced by the subordinate functions.
Work Inherent - here you would
define the strategic work inherent for each of the subordinate functions
and define the position's tactical work
Behavior Inherent - here you
would first list the standards that apply to every position followed
by the standards that apply to a given position. For example, my company
has 10 standards that apply to every position, such as, "All work will
be orchestrated and quantified," and "The company will achieve the highest
possible degree of standardization in the implementation of technologies,"
-- A place for the manager and subordinate
to sign, agreeing to accept all accountabilities.
But, as they say, a picture is worth
a thousand words.
to see a Sample Position Contract (PDF file) from which you can design
your own standardized Position Contract template.
(Note that I added a section of a sample
Org Chart on page 3. While this may sound like a good idea, remember
that if you change your Org Chart, you would have to update every Position
Contract in the company. This would require links to the company's Org
Chart source file.)
Recall from last week's PVT that I mentioned
"two movements" - upward and downward - as part of the standard approach.
Again, we have two movements: "Standardized
Position Contracts" (downward) and "Customized Position Contracts" (upward).
They could "pass each other" if you hire
someone for a position "in the middle of" your company. You would "customize"
the Contract for that middle position, then continue with standardized versions
downward until you reach an occupied (or about to be occupied) position
by someone other than that middle person.
(Remember, that person hired in the
middle would now manage downward to lower level positions.)
Store your standardized Position Contracts
in their appropriate Operations Manuals until you're about to hire
people to fill those positions. Then, customize those Position Contracts
according to the standard approach.
For any position, be sure you have either
a standardized or a customized Position Contract before you hire someone
for that position. This will give you an advantage because it predates
an employee's tenure and will eliminate or minimize new employee resistance.
One more important point.
The Position Contract is intended as
an addendum to your Standard Employment Agreement, which would cover
such things as: duties and obligations, compensation, termination and
renewal, covenant, trade secrets, indemnity, inventions, etc.
Until next week...
Questions? Comments? Send me an email.
Mike Hayden, Principal/Consultant
Your partner in streamlining business.
PS. If you'd like to receive Profitable
Venture Tactics, click here to sign up (FREE).
Senior Management Services
9457 S. University Blvd. Suite 235
Highlands Ranch, CO 80126
Fax: (952) 674-1767
* * * * * * * * * * * * * * * * *
* * * * * * * * * * * * *
(c) 2004 Mike Hayden
* * * * * * * * * * * * * * * * *
* * * * * * * * * * * * *