In professional services company Deloitte and Touche's The 2011 Shift Index: Measuring the Forces of Long-Term Change, the company states that the return on assets (ROA) for US firms has steadily fallen to almost one quarter of 1965 levels. This study also concludes that less than 20 percent of workers are passionate about their jobs, executive turnover is increasing, consumers are becoming less loyal to brands, and the rate at which big companies lose their leadership positions is increasing.
Gallup reports that only 11 percent of today’s employees feel engaged at work. The rest operate in sort of a “corporate numbness.” Similar research indicates that only a microscopically small 0.3 percent of employees feel truly satisfied in their workplace. Companies cannot attain their best results if most of their workforce feels miserable about their work. A wide range of research agrees that employee engagement strongly affects the bottom line. The income of companies with engaged employees is 19 percent higher, while firms with disengaged employees suffer a 32 percent income drop. Turnover decreases by 87 percent when employees are engaged, and performance increases by at least 20 percent.
In Flat Army: Creating a Connected and Engaged Organization, Dan Pontefract points to command and control management as the culprit for our current state of affairs. He eloquently reminds us how management started with the formation of the East India Trading Company (EIC) in 1600. The EIC was the exclusive commercial entity for all British trade east of Africa’s Cape of Good Hope, and patterned itself after the English monarchy. This organization exercised tight, monopolistic control of all British commerce in India and throughout Asia. It was comprised of 250,000 workers, a vast fleet and a rigid command-and-control management structure. At its most powerful, the EIC controlled more than 20 percent of the global population.
Industrial efficiency expert Frederick Taylor and business management theorist Henri Fayol provided the 20th century intellectual foundations for command and control management. In 1911, Taylor wrote The Scientific Principles of Management, which casts employees as pieces in the scientific equations of industrial production time-efficiency studies. Fayol recommended that all corporations adopt rigid hierarchical structures. He wrote: “To manage is to forecast, to plan, to organize, to command, to coordinate and control.”
Pontefract posits that we need a “flat army” to handle the under performance of our enterprises and the correlated drudgery experienced by most employees. In his definition, “flat” corresponds to equality and “army” to moving together in unison. The flat army approach empowers employees and engages them in a system of horizontal connectedness. This connectedness fuels enthusiasm and provides a sense of ownership.
In the flat army, reciprocity matters. A culture of giving is essential. Although financial goals are paramount, staff well-being is intentional and fundamental. The flat army strategy of trust, involvement and empathy relies on five basic principles as defined by Pontefract. These are: 1) connection with engaged leaders 2) collaboration among staff and managers 3) participation in all kinds of networks 4) learning on a continuous basis and 5) technology that enables connectivity and cooperation.
Stephen Denning also introduced a set of principles for changing how we manage organizations which he calls “radical management.” These principles are documented in his book The Leader’s Guide to Radical Management. The author clarifies that none of the principles are new and that they have been part of our organizational best practices repertoire for a while. However, he argues that these principles tend to be practiced separately and not as a holistic set. His research points to companies like Zappos and SalesForce.com as case studies of organizations that practice the principles of radical management as a set. Denning highlights the market success of the “radical” companies and the significant satisfaction levels of their employees.
The seven principles of radical management are:
- The purpose of work is to delight clients through value innovation –vision changes from merely producing goods and services to offering constant value innovation and nurturing enduring relationships with customers.
- Work should be carried out in self-organizing teams – elicit the full talents, energies, and passion of employees through committed management support. As they learn to operate autonomously, they tend to evolve into high performing teams.
- Work should be done in client-driven iterations – work is organized in relatively short time slices aimed at delivering value in each one. This is consistent with Agile in software development and Lean in manufacturing.
- Each iteration should deliver value to clients – give everyone doing the work a clear line of sight to the contribution of the new goal. Each work cycle focuses on what customer value is being added during the cycle.
- Total openness: everyone levels with everyone – radical transparency is essential so that the team continues improving the product, service or delivery.
- The workplace is a context in which teams themselves want to improve –the team accepts genuine responsibility for their work and enjoys the freedom to innovate. In this setting, teams naturally want to do better and self-improve.
- Management communicates through interactive conversations –learning to have interactive conversations, employ authentic narratives, pose open-ended questions that energize and inspire, and engage in attentive listening. These practices encourage horizontal communications and enhance learning.
As you look into your organizations, assess how many of the principles outlined by Pontefract and Denning they profess compared to the practice of command and control management. You should be able to see a correlation of the principles listed above with the success of the organizations, and the amount of employee engagement and satisfaction. In my experience, none of the command and control organizations that I have been part of have succeeded in the last 10-15 years. I believe that we have truly shifted and the management of Taylor and Fayol is being challenged, and is no longer the management paradigm for success and human development.