Change has been endemic in business for decades. Yet identifying, initiating and implementing it successfully has never been straightforward and results almost invariably fall short of expectations. All too often this failure is attributed to employees’ reluctance to change and thus labelled “change resistance.” This is a phenomenon that is perhaps more easily understood when you consider the non-business changes we are encountering now.
In 1991 Charles Handy concluded that the basic purpose of an organisation is to perpetuate itself within the context of the environment in which it operates. You might not have thought about it in quite that way, but that conviction encapsulates and drives everything you do as a business leader. It shapes the way you think, the way you act and the way you expect others to think and act. That’s perhaps inevitable, but nonetheless spelling it out provides food for thought. Not least because it demands a long-term outlook.
Most business leaders will plead that they are thinking about the long-term and will cite all their strategic planning efforts as evidence of this. Yet, notwithstanding this, there seems to be increasing consensus that focus is too much on the short-term. All too often corporate failure seems to come as a major surprise: whether after a long-lingering painful demise that drained energy and resources, without achieving anything and failing to avoid the inevitable, or suddenly, as with the failures that precipitated the 2008 financial crisis. This is subjective territory and open to discussion beyond the scope of this article. Suffice to say that we need a more effective way of addressing the longer-term measures of organisational performance.
Here too Handy once again gives us some pointers as to how. He said, “The companies that survive longest are the ones that work out what they uniquely can give to the world not just growth or money but their excellence, their respect for others, or their ability to make people happy. Some call those things a soul.” I call it ‘Love at Work.’ But whatever you call it, it stems from people – your employees, your customers, and your suppliers – and the way you treat them – and Science supports this!
Rather ironically, hours after posting my blog last week (Cats, Caterpillars and Business), I received reinforcing information that substantiated all my points. And from no less an authority than Professor Gary Hamel. He enumerates the staggering scale of efficiencies that I alluded to but couldn't quantify for myself.
Believe me, when I talk about staggering numbers, I am not exaggerating! Talking about the US alone, he quantifies “the prize” for “busting bureaucracy” as $3 trillion p.a.! Perhaps, writing it as $3,000,000,000,000 gives you a clearer idea of just how much that is. Especially when you factor in this is an annual figure! Even if that number is 50% over-optimistic it is still significant. And what if it is conservative? No matter how successful you are, the possibilities this presents have to make you curious.
When will we learn, or, as Bob Dylan put it, “When will we ever learn?” That is the question I found myself pondering after reading two very different articles this week.
You couldn’t have made it up! In a world where the excesses of business have fuelled strong – sometimes violent – protests against capitalism and corporate malfeasance, Donald Trump won the US election because he was perceived as a businessman! Despite the onslaught of attacks on his personal character and his suitability for the role, he became the first man in history to become US President without any military or political experience whatsoever, because of his business credentials and the hope that this would enable him to bring about change.
This is like giving your most vociferous, disgruntled customer, who knows nothing about the ins and outs of your operations, control over your entire organisation, albeit on a far grander scale. You can imagine how concerned your other stakeholders would be if you were to do that. So it is hardly surprising that Trump’s election is causing consternation and creating a backlash. Inevitably people are taking stock of the implications and wondering how it is going to affect them.
Yet, in all the post-election reflection, there is one aspect that does not appear to have been considered in any great depth. And it is one that, perhaps, warrants the greatest thought: “What are the implications for business?” Without any doubt they are significant.
It is encouraging to know that employee ownership is becoming increasingly popular and more widespread. According to Chief Executive Magazine the number of worker-owned businesses in the US is growing around 6% per year and such businesses now account for 12% of the private sector workforce. Apparently, this is due to initiatives “to empower their workforce employees by selling their stock to an ESOP or similar worker-owned arrangement” and/or “from founders wishing to reward employees while cashing out of their business.”
Yet, notwithstanding such developments, difficulties remain. The article identifies 2 major dilemmas:
- Private companies lack the public trading capability that listed companies use to motivate employees;
- Governance “challenges” if subsequent owners are unwilling to continue running the business.
Then, presumably as solutions to these dilemmas, the article offers two case studies. The first describes the transformation effected by a shared compensation system at Johnsonville Sausages; and the second reveals how, over 30 years, Burns and McDonnell, grew from 600 to 5,500 employees (816%) and increased revenues from $40 million to $2.6 billion (6400%) as the result of an ESOP (Employee Share Ownership Plan.) Then, despite this example of extraordinary growth that most organisations can only dream about, the article simply concludes by identifying the upside and downside of ESOPs. So let me add to the subject.
“The science of leadership is well established.” So says Tomas Chamorro-Premuzic, a Professor of Business Psychology at University College London. This premise enables him to conclude, “There is no real need to advance it in order to improve real-world practices. We should focus instead on applying what we already know, and ignoring what we think we know that isn’t true.” (“What Science Tells Us About Leadership Potential”, taken from HBR.)
That makes it sound so simple. Would that it were so! Given the professor’s own statements that, “Its key studies are unfamiliar to most people, including an alarmingly large proportion of those in charge of evaluating and selecting leaders” and “This science-practitioner gap explains our disappointing state of affairs”, we appear to have a major problem.
Several questions spring instantly to mind.
Have you ever heard of The People Paradox? I hadn’t either, although I was well aware of Lord Acton’s famous quote that, “Power corrupts and absolute power corrupts absolutely.” Well, apparently that’s not just a bon mot: power does corrupt. Certainly according to research cited in the HBR.
Last week I wrote about The Golden and Platinum Rules in the context of Customer Experience. Today I want to discuss them in the broader context of human relations before, once again, narrowing the perspective and looking specifically at their role in the workplace. But, first let’s ensure a common starting point.
I have recently noticed a spate of material on the subject of worker cooperatives. The most interesting was the Forbes article “For Some, Worker Cooperatives Emerge As An Alternative To ESOPs” which made me wonder if worker cooperatives were a new trend. If so, it certainly provides food for thought.
The article suggests that worker cooperatives are a result of changing demographics and a means of addressing the disruptive effects of generational change. Perhaps, but their providing a solution for only “some” implies that ESOPs (Employee Share Ownership Programmes) are the only other option. While history certainly entitles both to be options, being the only two suggests rather limited thinking. After all, both have their shortcomings, which – at the very least – warrants exploring other possibilities.