One of the benefits of being a TJ subscriber is full access to our decades-long archive of content – here we look back to a piece about agility from TJ Magazine of August 2012.
It’s time to rethink what a high performing organisation looks like, says Jean Gomes.
Successful and powerful organisations have one thing in common – they serve their people’s ability to perform. As a result, their employees have an enhanced sense of purpose, growth, autonomy, accountability, satisfaction and sustainability.
Too often it’s the other way round: employees are ‘servicing’ the needs of the organisation while it stands in the way of their performance and ability to meet customers’ needs. At worst, this can provoke a ‘parent-child’ culture, reducing people’s accountability for their work. Is the fundamental structure of your organisation capable of maintaining high performance from your people?
In essence, performing well and having a sense of meaning at work represents the most sought-after element of the employee experience – feeling that a task is inherently rewarding, that you do it for the joy of doing it rather than for financial reward or fear of punishment. Taking a panoramic view of 225 academic studies, a meta-analysis by Lyubomirsky, King, and Diener1 found that happier employees are on average 31 per cent more productive, sell 37 per cent more and are three times more creative. Naturally, if people were happier in organisations, more productive, creative and profitable as a result, everyone – shareholders, leaders and customers – would benefit.
The most basic function of a company is to co-ordinate and motivate individuals’ economic activity. In a slower world, where a greater proportion of work had pre-determined outcomes – rooted in processes and systems – command-and-control leadership and systems could be highly effective. Carrot-and-stick incentives were also usually adequate to drive performance, even if they failed to get the most from people.
However, we are living in a world in which the implications of a progressively individualised culture of value creation, coupled with social media and an increasingly purpose-hungry workforce, means that the organisation must support and inspire performance. Merely requiring performance and assuming it will materialise as a by-product of a strategy and organisational design is no longer realistic. The diminishing power of many companies can be traced to the rising ineffectiveness of rigid hierarchies and command-and-control leadership as an organising principle in the digital age.
As more value is derived from knowledge workers dealing in intangibles – relational value, tacit knowledge, creative problem-solving and entrepreneurial thinking – the opportunities for innovative organisational design to generate wealth is vast.
From a senior manager’s perspective, I hear three recurring themes about what a high-performing organisation looks like:
- the right people in the right roles, focused on what matters most
- an organisational design that encourages and enables the right balance of focus and wider collaboration, ie structures that support short- and long-term value creation
- ways of working that help people to be productive and fulfilled.
The good news is that employees want the same things. The bad? Organisations are plagued with slow and badly managed re-organisations, misaligned workforces, structures and systems that encourage introvert turf wars and ways of working that demotivate and incapacitate individuals’ performance. Though accepted as important, senior executives rarely talk about the underlying nature of their organisation or make it their priority to develop in line with their strategy.
Effective organisations have more purpose-driven employees, specifically individuals that feel ‘I want to’. Ineffective organisations breed more stress drivers, and individuals driven more by ‘I have to’.
Leaders must focus on aligning people, people processes, business structure and culture, to support the strategy. Organisations can make persistent breakthroughs in performance through their people by combining the dimensions of capability (skills, process, knowledge, experience, systems) and capacity (ideas, leadership, energy, creativity, values) to become more aligned, efficient, flexible and employee-centric.
According to a Microsoft survey2, employees globally spend an average of 5.6 hours a week in meetings and 69 per cent of participants feel that these meetings are unproductive and unnecessary. In terms of efficiency, the average knowledge worker feels he loses 20-30 per cent of his week in redundant email, unproductive meetings and corporate red tape, according to research by Oklahoma State University3. For an employee paid £100,000 per year, this means £20-30,000 of waste. Multiply it by 10,000 employees and £300 million of employee productivity is lost a year.
Breaking inefficient working patterns and giving employees the skills and means to think creatively and innovatively about the way they work can truly create value for the organisation.
But efficiency is only the tip of the iceberg. The real significance of organisational inefficiency is that employees feel overwhelmed by their work and, therefore, have less time and energy to focus on value creation. Inefficient organisational design restricts opportunities to leverage knowledge, talents and new opportunities to grow the best people, to capitalise fully on a new acquisition or to innovate. The net effect is shown in the figure above right: inefficiency locks the organisation down into exploitation mode – ‘now’ – where its focus is short-term and narrow, rendering it less productive and strategically vulnerable in the medium to long term.
CEOs get this. Over the past ten years, I’ve been involved in more than 40 ‘one-company’ initiatives with clients attempting to join up disparate resources and create a more orchestrated proposition. These companies understand that their current structures result in underused knowledge, relationships and talents that limit vast sources of new wealth being created.
There has been a deep paradigm shift from the individual in service of organisational performance to the organisation in service of the individual’s performance. Performance is a product of people’s conformance to known givens. As work has changed, [pullquote]an unmanageable gap has developed between how people create value and the effectiveness of the organisation to support that process[/pullquote]. In the Google founders’ IPO letter4, Larry Page and Sergey Brin stress the importance of creating both an inspiring purpose and providing the best resources in attracting the finest talent. In other words, they set out to create an organisation that enabled people to do their best.
Creating a shared experience to build a cohesive culture is another characteristic of a high performing workforce. According to a global study conducted by Towers Watson in 20115, organisations that create a strong sense of ‘being in it together’ are around seven times as likely to create a sense of ownership among employees as part of a change initiative and to build the critical mass of support necessary to be successful.
A ten-year study into the impact of human capital systems on business performance6 shows that, in the minority of companies that have created high performance workplace systems – where talent is systematically aligned to building strategic value, they sustain their performance over the long term and deliver 10-15 per cent greater market value to book value. After 13 years, they had typically built a 35 per cent greater market to book value than their competitors.
A focus on how value is created in an organisation will inevitably highlight that not all functions and roles are equally important. Given the fundamental role that people and their talent play in enabling higher levels of performance, this prompts the questions do we have the right people in the right roles? Are people maximising their potential to create value? Are some people blocking or destroying value?
A differentiated workforce scorecard approach challenges the organisation to differentiate roles within it according to their importance in strategic value creation. Firstly, roles need to be differentiated based on their strategic importance: the impact they have on delivering strategic capabilities. A parallel exercise is required to differentiate people or talent based on their performance and potential. [pullquote]The alignment of people and value creation is achieved by developing strategies for ensuring that the best people are filling the most important value-creating roles[/pullquote].
Most organisations have a pyramid model and I believe that this type of hierarchy needs to be consigned to the last century. This is because it promotes an inward perspective and thwarts even the most committed, customer-focused companies. An organisation should be a means of supporting customers and for employees to exchange value. When this happens, the chances of sustaining high performance from employees and the organisation as a whole are considerably increased.
A great example can be seen in the transformation of the advertising agency Grey London. In 2008 it wasn’t considered to be a ‘hot’ agency, having a reputation as grey as its name. By 2012 it had become a magnet for the most innovative brand leaders and for the best talent. What had changed? The agency flipped the notion of value creation on its head. It tore open old, closed ways of working, enlisting everyone, including clients, in a transparent process called Open. An anathema in the industry, clients and staff revelled in the excitement of co-creation. This shift has added millions to its bottom line, brand and long-term strategic relevancy.
Many of the world’s most pioneering companies are changing their mind-sets and structures, and it’s not just cool web and tech companies like Apple and Facebook. Proctor and Gamble – a traditional firm in every sense – has set out its intention to become the world’s most collaborative company. It recognises that internal resources are simply unable to maintain sufficient pace to keep up with customer demands. Boundless change and an ever-more volatile environment are a reality.
Is your organisation ready for the coming decade or is it clinging to a reality that no longer exists?
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