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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 their ability.

OK. Last week, I said I would discuss a more effective approach to developing Position Contracts. So, let's get started.

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 at:

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 functions.

-- 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," etc.

-- 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.

Click here 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.)


Some final points...

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.

Best Regards,

Mike Hayden, Principal/Consultant
Your partner in streamlining business.

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