Strategy & Leadership

Only your employees are ready for the future

March 31, 2016

Organizations deal with crises and disruptions in a dictatorial manner. Middle management is thrown out, the top is replaced and costs are cut. But repeated dieting results in an anorexia patient. If the business keeps on picking up, then you will have no more fat left on your bones to go along with changes. Prof. Dr. Toni Sfirtsis, associate professor at TIAS, sketches a better way: humanizing business.

The market is a racetrack. You never know who is joining the race (who the competitor is) and who is leaving it. It is an unpredictable situation. At the same time, we want to respray our racing car (we are looking for a new business model).

Who will survive? Those who are the most adaptable and innovative. It demands courage to release the grip, something that not many companies are able to do. Henri Fayol (1907) defines management as: "To manage is to forecast and to plan, to organise, to command, to co-ordinate and to control". This one hundred year-old definition dates from the industrial revolution! And yet it is still standard practice in companies.

Punishments and rewards

The organization of mainstream companies is nearly always based on command & control. A manager logs in and the first thing he sees is a dashboard with red and green flags. This defeats the object. A management dashboard is useful when it is used for what it was originally designed: to learn, not to call to account. Companies have still not got beyond the punishments and rewards stage. While all the research shows that bonuses and wage increases are counterproductive.

W. Edwards Deming argues: "94 percent of quality problems in companies are caused by the system, not by the employees". So what happens if we release the grip?

Self-management

The Morning Star Company in California, the world's biggest tomato grower, has opted for what they call "self-management": “We have no boss.” Instead, employees decide for themselves. Every year each employee indicates his or her contribution to the organization and signs a contract. So making a contribution is an option, based on your experience, age and ambitions. However, the contribution is expected to increase each year and so to become more challenging. Employees assess and reward each other. The lack of time-consuming bureaucratic processes in taking decisions makes The Morning Star Company exceptionally flexible.

Accountability culture

As a manager, you will now naturally have your doubts. How do you shape that freedom? Who is responsible for what? How do you create such a culture of accountability? That takes time. One of the hurdles is fear. Steps like this involve a fundamental change. Change happens as soon as behavior has changed, not earlier. You don't achieve that in a year. Not only the leaders need to get used to this, but also the "followers". They often find it convenient if someone else takes the decisions.

And that is the crux of the matter. With self-management, there is no owner to hide behind. To be able to say to the other: "But you took the decision". It is scary to devolve responsibility and – another step further – ownership. But this type of organization does perform better.

Happy employees

From an HRM viewpoint, that is easy to explain. In his book "Drive", Daniel Pink describes what motivates employees and makes them happy. These are the three most important factors:

  • Autonomy: give people the room to make their own choices as to how to organize their work, to get a grip on it themselves.
  • Mastery: an employee must be able to grow. In professional services, the bottom layer is often completely obsolete and hollowed out. That is a shame.
  • Purpose: do I matter? The organization plays a very fundamental role here.      

Professionals are proud of what they do. That is the source of their involvement with the organization. If a manager assigns them something, then they simply show him what he wants to see. And in the meantime they still do what they themselves think is best. Why not stimulate them in this? A successful company demands other competences from its employees than you might think:

  • Intellect: 15% Commitment: 5% Obedience: -
  • Passion: 35% Creativity: 25% Inventiveness: 20%

But to give professionals room to develop themselves, to work with enthusiasm and to act according to their own discretion, you need to shift the command and control. That demands confidence of the management to give people freedom and not only to give them responsibilities but also powers. To let them experiment and take decisions independently.

Start small

How do you take the first step here? It is crucial to no longer think in terms of positions but in terms of roles. Start small, just as with any normal change process. Choose a department, for instance marketing, with which you can take steps and demonstrate the project. Because you will have to be able to demonstrate the effects. Then at some given moment it will start to reverberate.

Here are a number of recommendations to retain success in the future too:

  • Be scalable. Everyone defines his own contribution. Google, a project organization with a small core, is a good example.
  • Added value: you need and must allow activism. Employees must be able to ask: why are we doing this?
  • Collaboration: actually conduct a dialog with colleagues. Most people are unable to do this.
  • Chance: accept that you cannot predict everything, increase your organization's problem-solving ability.
  • Trust: if it isn't there, the rest will be a sham.

Ultimately, the question is not what type of organization is ready for the future. The only factor which is really agile, fit for the future, are the people. You have to start there. We need to make business more human: humanizing business.

About the author:
Prof. Dr. Toni Sfirtsis is expert in the field of strategic, management and business innovation and future leadership. Toni is associate professor at TIAS School for Business and Society.

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