Sunday, December 22, 2013

Why I’m no longer hitting my head against a brick wall!

I have spent the last 20 years trying to get managers to change old habits. I ran the Future Work Forum at Henley Business School in an attempt to collect the best research information on the changing world of work and use it to show managers how work is changing. I kept asking the question – If it’s so obvious that work is evolving then why are managers not grasping this as an opportunity to change the way they manage? Surely they can see that their employees will be happier, more effective and more loyal if they are treated differently. They must be able to see that the way we manage today is a hangover from an earlier era when people were content to do mindless routine jobs and were grateful for the money. Now we are surrounded by technology that has freed up all sorts of work to be done at varying times and places, isn’t it obvious that management has to change?

I guess that after 20 plus years of banging my head against a brick wall, I’ve finally sat back and looked rationally at the situation. I can continue to produce logical arguments as to why our management practices are outdated. I can use the best research in the world to show that autonomous employees are more productive that those under close supervision. I can point to numerous management gurus over the last 50 years, all of whom have said the same thing - give people responsibility and freedom, trust and empower them, and you will get a high performance workforce. I can cite successful examples of agile working, self managed teams, diverse leadership, mobile technology, flexible workplaces and results based management systems. But managers still continue to do the same things they have always done, oblivious to the changing world around them.

I’ve come to realise that it’s not in the interest of managers to make any change. They are happy with the status quo. For them any change is potentially threatening. Particularly change that may strip them of power and even question the need for their job at all. They are comfortable in their current positions of authority, giving orders to their staff and checking that they have carried them out. They have probably risen to their current position by being good at doing the work they now manage. The Finance Director is likely to have been a successful Accountant, the Research Director will have come up through the labs and the Sales Director was once out on the road himself. They are experts at the work done by their employees. So managing them involves telling people how to get the job done – in most cases the way they used to do it. After all, they got to be the manager by being the best Accountant, Salesman or Engineer.

And who promoted these managers on the first place? Obviously their superiors, who themselves were chosen by their bosses – and so on. So we have a formula for appointing managers that reinforces the current values and behaviours of top management. Unless you are prepared to admit that you are a poor manager (in which case you shouldn’t be in the job) it is perfectly normal to select people who act like you. So no wonder it’s difficult to change organizational cultures. They weed out the ‘misfits’ who do not agree with the prevailing regime and reinforce existing practices that have been around for decades.

So when I talk to a group of middle managers and tell them about the changing world of work, I get polite nods. They agree that the younger generation have different values about the place of work in their lives. They understand that technology is freeing up people to work very differently.  They listen politely to the examples of companies that are reaping the benefits of agile working. And they already know that trusting and empowering employees makes them more engaged and probably more productive. But when they get back to the ‘real world’ of their office they have no incentive to rock the boat and try out new ideas.

If you are a manager why should you empower your employees? That means losing power by giving it away. It means admitting that individual members of your team know their own work better than you do. It could mean allowing people to choose when, where and even how they get their work done. Then what is left for you to do? This looks like you’ve lost control and are no longer managing the operation. That’s not the way your boss did it when he was in the job and it’s certainly not what he now expects from you. Unless there is a major disruption to the business forced on it from the outside (competition, regulation, takeover etc) your career is dependent on supporting the existing values, systems and behaviours and not introducing radical change.

This has led me to the conclusion that the work revolution has to be driven bottom up. Employees need to be pressurizing their bosses to manage differently. They need to point out the outdated work practices and the barriers to improved productivity. They need to express their frustration at the long hours culture and the lack of personal time associated with success. They need to show that they can take on responsibility and become more effective, given the chance. And when they get rebuffed by entrenched management they need to vote with their feet.

I may have been a bit slow in getting there, but I now realise that I have to change tactics. Yes, I will still keep on giving presentations to senior management about the importance of addressing the work culture as a business priority. I will probably still be talking to middle managers about moving from ‘command and control’ to ‘trust and empower’. But I am now going to address all those people stuck in a job under a traditional management system. I’m gong to point out how outdated our management practices are and show them there is another way. Then the combined pressures of Directors who ‘get it’ as a business strategy and employees who ‘want it’ as a way to live their lives will overcome the inertia of the managers between them.

In my survey for the book, ‘Future Work’, I asked an audience of 350 junior/middle managers (mostly MBAs) if they agreed with this statement “There will be a revolution in working practices in the next decade”. To my surprise, two thirds of them agreed, or strongly agreed, with the statement. So they recognise there is a revolution on the way which will effect the way they manage. But they can’t make it happen whilst they are in the middle of a system that resists the change. So, I’m now setting my sights on the working population as a whole, who stand to benefit from the revolution, instead of the current generation of managers who do not.

Tuesday, November 26, 2013

Why should we take employee engagement seriously?

There are lots of surveys showing that employees are not engaged at work. It varies a bit by country, but as a rough guide only a third of employees are fully engaged.  So what?

The consultancy Blessing White regularly surveys 30,000 people across the world and measures levels of engagement from fully engaged to fully disengaged. The figures for Europe show that 31% are engaged and a further 24% are almost engaged.  But that means that just under half the workforce are not even ‘almost engaged’.

Should we care? Does some theoretical measure of engagement actually matter to employers? Are we aiming to keep people happy or do we have a business to run? Why should leaders worry about this when there are more pressing issues to manage?

To answer these questions it’s worth taking a moment to look at the relationship between engagement and business results.

One example is is employee turnover. 81% of engaged employees definitely intend to stay with their employer for the next 12 months compared with 23% of the disengaged. Plus a mere 2% of the engaged are definitely planning to leave compared with 32% of the disengaged.  So an employer with a demotivated workforce is likely to have an employee turnover 16 times that of a fully satisfied one.

Measurement of the cost of employee turnover is an inexact science. Because it’s not as visible as a direct expense it tends to be underrated. And it varies a lot between jobs, depending on the ease of replacement. But if you make a very conservative assumption that people take three months to get up the full productivity, during which time they are at an average of 80% of output we can work out some figures.

In this case the engaged organisation loses 20% of productivity for a quarter of the year on 2% of the workforce; a hit of 0.1% on output. However, the same calculation for the disengaged workforce at 32% turnover gives a 1.6% hit. That doesn’t look like much until you consider that a labour-intensive business with a 5% profit margin is potentially putting a third of the profit at risk just through high turnover.

But the real problem with disengaged employees is not the ones that leave, it’s the ones that stay. They are not just going to be below average performers for a few moths they are likely to be permanently low performers. And they are also quite likely to bring others down as well. It’s interesting to see from the Blessing White data that 34% of engaged employees stay in the job because they like the work they do, compared with 16% of the disengaged.  But in contrast, 11% of the disengaged stay because they are ‘comfortable’ compared with just 7% of the engaged.
So however you measure it, engagement is likely to result in higher performance for the business. It’s not just some arbitrary concept invented by HR; it’s a real business measure. It should be right at the top of the priority list for senior management. But because it’s not as tangible as the financial results it rarely is.

If leaders actually cost the impact of low engagement they will take it much more seriously. They will reduce the need to replace talent and get more out of the people who stay. It will directly improve output, value for money and profits. So they should all remember– A COMPANY IS ONLY AS GOOD AS THE PEOPLE IT KEEPS.

Monday, November 04, 2013

Productivity and Pay

A new report has just hit the media in the UK defining the level of pay that constitutes a 'living wage'. Below this people are deemed to be living in poverty, so the idea is that employers should adopt this instead of the minimum wage already in force.
It would be great to have everyone paid more but I can't quite see how this will add up. If we increase the hourly rate of pay and people continue doing the same job then whatever they produce has to increase in price. I'm no economist, but it seems to me that if goods cost more then fewer get sold, or customers simply go to a cheaper source. Or if there is a fixed amount of money to pay wages (as in the public sector) then there are less jobs to go around and services have to be cut.
Worse still, many of our jobs are competing with low wage economies around the world. If we increase pay in the UK then work will be transferred overseas and we have lost the job forever. This is clearly what has happened in manufacturing and as more and more of our services are delivered remotely they are also vulnerable.
In order for the UK to maintain the standard of living we have come to expect, we have to increase productivity. We have to remain competitive in international markets for goods and services so our cost of production and delivery must be kept to a minimum. If we want to increase the rate per hour we pay people to a minimum wage that reflects an acceptable standard of living, we have to find the money somewhere. There is no point in pricing ourselves out of work as a nation.
So, how do we make a step change in productivity? We have to look at the way we get work done and find smarter ways of doing it. The whole idea of breaking down work into jobs and then employing people on a fixed salary in exchange for their time has to change. We have to pay for output not input. If you are paid by the hour the slower you work the longer it takes to get a result. The longer it takes, the more you are paid. So the least productive person is rewarded the most. If my lawyer is being paid by the hour to represent me (probably actually billing me by the minute) then he/she will get paid more for taking longer to sort out my case. The bad plumber who takes 2 hours to fix my leaking tap gets paid twice as much as the good one who fixes it in an hour.
If we encourage people to find smarter ways of doing their jobs we should let them share in the reward. Here's a simple way. Instead of encouraging people to work long hours we should have competitions to see who can go home earliest. If people can get their week's work done by Thursday they should be able to take Friday off. They should then be given the freedom to come up with smarter ways to get the work done. I bet a high percentage would find very inventive ways of increasing their productivity because they would have a reason for doing it. Then we could get better at rewarding results and people would be getting paid more per hour for the time they are working. That way we can afford the living wage; otherwise it remains a pipe dream.

Wednesday, June 26, 2013

At Last - Business Leaders Champion Agile Working

After 20+ years of promoting the business benefits of flexible working I'm pleased to see the launch of the Agile Future Forum (AFF), with the aim of maximising the competitiveness of UK businesses in the global marketplace. Twenty-two businesses – including several well-known brands – who currently realise financial benefits through using workforce agility have joined together to help other UK businesses to do the same. 

The purpose of the AFF is to define the business value of workforce agility as a key input of the competitiveness of UK plc and to provide the leadership and practical support required to increase agile working practices across the UK. Workforce agility enables an organisation to establish the optimal workforce to support its business objectives by thinking about when and where people work, what they do and who is employed to the mutual benefit of businesses and employees.

This marks a step change in the development of working practices in the UK (with implications that will resonate world-wide). I have been researching new ways of working for the last two decades and have seen the way it can improve productivity, reduce employee turnover, cut absenteeism and help employers attract talented people. But too often it has been seen as an HR-driven employee benefit and dismissed by managers as a burden on the business. Now, at long last, here is a report pointing out the benefits for employers, backed by some serious chief executives. 

The announcement about the launch of the report says..." The AFF believes that agile practices can be established that benefit business and employees, but a new approach is needed where business leaders, rather than simply HR, should lead the development of agile practices starting with a clear understanding of the needs of the business and their workforce. In addition to the report launched today, the AFF has developed a range of practical support that enables organisations to consider workforce agility in this way. The AFF CEOs are also committed to sharing their experiences with the CEOs of other organisations to support the growth of the UK economy."

This gives the HR function an opportunity to be seen as business partners by promoting Agile Working as an initiative that will contribute to the bottom line, instead of pushing it as an employee benefit or employment law compliance issue. I look forward to seeing if HR rises to this challenge!!!