Fifty years ago, Elliott Jaques had a profound and controversial insight. Workers have very different time horizons. Line workers focus on tasks that can be completed in hours. Managers devote attention to tasks that need months to complete, while CEOs pursue goals requiring many years to realize. Employee compensation recognizes this. Line workers are paid hourly; managers an annual salary and CEOs have long-term incentives like bonuses and stock options.
Humans differ vastly not only by intelligence and risk literacy but also by the ability to handle time-dependent complexity. There is a natural time horizon with which we feel comfortable. Employees assigned jobs beyond their natural time span will fail. Employees put in jobs with less will be insufficiently challenged and unhappy. Jaques called this phenomenon Time Span of Discretion. It was controversial because critics thought it was unfair stereotyping that could pigeon hole people like the totalitarian Government sorted human ability in Aldous Huxley’s Brave New World.
Organizations need all levels to function but higher, longer term focus ability is obviously more valuable because it’s a rarer trait among people. It also has a much larger impact on the ultimate success or failure of an organization. A successful, financially secure family also needs attention to long-range issues, even if that comes from a professional advisor like a good financial planner, accountant or attorney.
My estate planning practice serves clients who recognize how critical it is to think and plan over many decades and generations. People who execute their will or trust are typically risk literate, intelligent, high time level thinkers who want to safeguard their family’s future. People who can’t think long-term don’t believe they need a will or power of attorney. I don’t have a lot of short-term thinking estate planning clients but there is plenty of probate work because of short-term thinkers. So many deceased people fail to see their own mortality, leaving their families with a legal mess.
Your Estate Planning War Chest is situated on a high-level, long-term time horizon. Be sure you have a CEO capable of grasping the time-dependent complexity of your family’s success, happiness and security.