A company as human as the people in it

Most companies operating in mature markets have similar value chains with limited sources of competitiveness – in these markets the employees become the key differentiating factor. Unfortunately many companies are experiencing that traditional models of motivation, such as financial reward and personal achievement is suffering in the post financial crisis era. The misalignment between the organisational goals of corporations and the individual aspirations is increasing. Business performance, risk management, efficiency, cost control, uniformity, lean is colliding with greater autonomy, variety, meaning, challenge and growth.

“Management is undoubtedly one of humankind’s biggest inventions“  Gary Hamel

A large group of employees are satisfied and stay with the corporation but they are not inspired to go the extra mile and create productivity gains. Gallup and other organisations have demonstrated a significant performance gap between engaged and disengaged employees. This is now making corporations increasingly interested in Employee Engagement.

As Employee Engagement is often seen as tactical task, is becomes the ownership of the HR department that has to fix the issue with Compensation & Benefits, Training and Recruitment peppered with some leadership training of middle managers. This is ignoring that most people, be it customers, employees and other stakeholders distrust and are demotivated by the current mainstream management philosophy.

Gary Hamel together with other prominent thinkers and business leaders has outlined 25 points that needs to be addressed in order for corporations to evolve to management 2.0:

Management 2.0

1: Ensure that the work of management serves a higher purpose. Management, both in theory and practice, must orient itself to the achievement of noble, socially significant goals.

2: Fully embed the ideas of community and citizenship in management systems. There’s a need for processes and practices that reflect the interdependence of all stakeholder groups.

3: Reconstruct management’s philosophical foundations. To build organizations that are more than merely efficient, we will need to draw lessons from such fields as biology, political science, and theology.

4: Eliminate the pathologies of formal hierarchy. There are advantages to natural hierarchies, where power flows up from the bottom and leaders emerge instead of being appointed.

5: Reduce fear and increase trust. Mistrust and fear are toxic to innovation and engagement and must be wrung out of tomorrow’s management systems.

6: Reinvent the means of control. To transcend the discipline-versus-freedom trade-off, control systems will have to encourage control from within rather than constraints from without.

7: Redefine the work of leadership.  The notion of the leader as a heroic decision maker is untenable. Leaders must be recast as social-systems architects who enable innovation and collaboration.

8: Expand and exploit diversity. We must create a management system that values diversity, disagreement, and divergence as much as conformance, consensus, and cohesion.

9: Reinvent strategy making as an emergent process. In a turbulent world, strategy making must reflect the biological principles of variety, selection, and retention.

10: De-structure and disaggregate the organization. To become more adaptable and innovative, large entities must be disaggregated into smaller, more malleable units.

11: Dramatically reduce the pull of the past. Existing management systems often mindlessly reinforce the status quo. In the future, they must facilitate innovation and change.

12: Share the work of setting direction. To engender commitment, the responsibility for goal setting must be distributed through a process in which share of voice is a function of insight, not power.

13: Develop holistic performance measures. Existing performance metrics must be recast, since they give inadequate attention to the critical human capabilities that drive success in the creative economy.

14: Stretch executive time frames and perspectives. We need to discover alternatives to compensation and reward systems that encourage managers to sacrifice long-term goals for short-term gains.

15: Create a democracy of information. Companies need information systems that equip every employee to act in the interests of the entire enterprise.

16: Empower the renegades and disarm the reactionaries. Management systems must give more power to employees whose emotional equity is invested in the future rather than the past.

17: Expand the scope of employee autonomy. Management systems must be redesigned to facilitate grassroots initiatives and local experimentation.

18: Create internal markets for ideas, talent, and resources. Markets are better than hierarchies at allocating resources, and companies’ resource allocation processes need to reflect this fact.

19: Depoliticize decision making. Decision processes must be free of positional biases and should exploit the collective wisdom of the entire organization and beyond.

20: Better optimize trade-offs. Management systems tend to force either-or-choices. What’s  needed are hybrid systems that subtly optimize key trade-offs.

21: Further unleash human imagination. Much is known about what engenders human creativity. This knowledge must be better applied in the design of management systems.

22: Enable communities of passion. To maximize employee engagement, management systems must facilitate the formation of self-defining communities of passion.

23: Retool management for an open world. Value-creating networks often transcend the firm’s boundaries and can render traditional power-based management tools ineffective.
New management tools are needed for building and shaping complex ecosystems.

24: Humanize the language and practice of business. Tomorrow’s management systems must give as much credence to such timeless human ideals as beauty, justice, and community as they do to the traditional goals of efficiency, advantage, and profit.

25: Retrain managerial minds. Managers’ deductive and analytical skills must be complemented by conceptual and systems-thinking skills.

This is undoubtedly a significant challenge for most corporations. However it is becoming obvious that the old models are not sustainable anymore. A new management model that creates engagement in all stakeholder groups can significantly disrupt existing large companies and markets.

Who dares to start?