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February 2010

Who knows best?

The expression "Span of Control" surfaced from the murky mists of my mind the other day. I remembered having learned no manager can expect to directly manage more than 7-10 people effectively. This made me wonder if this term was still used and whether the theory still applied.  So I had a quick look at the internet. The results certainly made for interesting reading.

Rather surprisingly, the term stills seems to be widely used - another indication that the concept of command and control is not quite as passé as we would like to believe. Wikipedia confirmed my recollection of 7-10 being the ideal number. It also informed me that corporate leaders' efforts to flatten organisation structures since the 80's had caused the average span to increase to about 100. As you would expect, this was made possible by "the development of inexpensive information technology." Nonetheless, with a span of control this wide it is hardly any wonder that employee engagement is the problem it is.

As you would expect, however, the concept of span of control has become "less salient." This is apparently due to the shift away from hierarchical structures to self-directed cross-functional teams. Since responsiveness and adaptability are hardly compatible with hierarchical organisational structures, this shift makes perfect sense.

However, one aspect of business continues to be doggedly hierarchical: the development of strategy and operational tactics. This remains exclusively the domain of the executive team and perpetuates top down, command and control management. Conventional wisdom says this is unavoidable. But the problem with this is that the executive team is:

  • The furthest removed from the customer; and
  • The furthest removed from day-to-day operations and the challenges people face.

This means that the people who know the business needs best are not involved in the process. Furthermore, in most organisations the executive management team comprises only a small percentage of the business thinking capacity. Thus it is illogical that they should have such a disproportionate say in charting the direction. Clearly this is risky and lack of strategic alignment and lack of employee engagement - different sides of the same coin - are a clear indication of an executive management team that is out of touch.

Good communication goes some way towards addressing this, but only if it is a two-way communication. Management has to be prepared to listen and be guided by people "lower" in the organisational hierarchy. You may not be able to dispense totally with the hierarchy, but you must have some means of utilising the full "business intelligence" of your people. Clearly this is not possible with disengaged employees. You need to move away from "span of control" to "span of contribution."

Is Redundancy Losing Favour?

Is the workplace becoming more humane? Recent reports show that output in the UK has fallen by 6% while unemployment has only gone up by 2%. This interesting statistic has been used to suggest that unemployment is not going to be quite as big a problem as had been forecast.

Yet is this really de facto evidence of management doing more to hang on to their employees and looking for more alternatives to redundancy? Certainly there is ground for optimism. Indications are that many employers did try to find alternative solutions. But it could just as easily be argued that this is simply the inevitable consequence of a more technology based society.

The last recession was more than 16 years ago, and the lengthy interval makes comparisons so much more difficult. New technology revolutionised the way business is conducted and global competition has led to a fixation with the need to cut costs and improve efficiency. Initiatives like 6 Sigma and "Lean" have seen businesses re-engineer operations. Much of this has been at the price of jobs. Indeed, reduced headcount has been the primary justification for many technology initiatives. So much so that redundancy has been a common feature of the boom, and job losses occurred at a level never before seen in good times.

In light of this it is hardly surprising that job losses have been fewer than forecast. After all organisations that had already optimised staff levels simply would not have the capability to reduce their staff any further. Consequently a cynic might argue that the redundancies made during the recession showed that nothing had changed and that people remained the first target for managers looking to reduce costs in troubled times. Thus optimism about a more humane workplace may be misplaced. As ever, statistics are open to interpretation.

It is a cliché to say that redundancy is a last resort, but my argument against redundancy has always been based on two key principles:- 

  • The organisation as a whole is a team; and
  • The pain suffered to enable the organisation to survive any economic or business downturn should thus, as far as possible, be borne equitably by the whole team.

Until we have measures in place that incorporate these principles I remain unconvinced as to the progress that has been made in properly valuing people or the contribution they make as human assets. What do you think?

How to Improve Training Effectiveness

What is your reaction to a headline that reads "Quarter of all training fails to deliver significant performance improvement?"

I am pretty sure it would be one of amazement, but I am not so sure I know why. Are you amazed that as much as "a quarter" of all training is effectively wasted? Or are you amazed that it is only "a quarter" - i.e. as little as 25%?

I have to confess I fall into the latter camp. (I should make it clear that I am talking here about formal work-related training only and not all education.) I believe training is considerably more than 25% ineffective. I find it fascinating to observe how quickly lessons get forgotten and we fall back into our old ways. It’s rather like New Year Resolutions. No matter how good our intentions, we fall short.

Anyway, whatever the percentage there is a problem. The headline, from HR Magazine, was for real! And even more disturbing is that they report this 25% 'failure' costs £9.5 billion a year, which is a steep price to pay. And if you share my more sceptical view, then this cost is likely to be even greater. This makes proposals to make regular training an employee's legal right a real concern. You see, this reduces the likelihood of proper cost-benefit justification.

Cost-benefit justification for training is already weak. Yes, you devote effort to training needs analysis, which arguably equates to benefits, but the emphasis is on costs. You don't permit training unless there is a budget and/or the expense is approved. That is fine, but how much effort do you put into post training assessment to measure its effectiveness? The figures themselves say it is not a lot.

Yet a large proportion of this training waste can be avoided. All it requires is more emphasis on measuring the benefits - the return on investment.

Now you may argue that this is fine in theory but in practice measuring this is too difficult, time-consuming and costly, and so would make the problem worse. You might even claim that some of the benefits are intangible anyway in so far as they simply improve employee engagement. Perhaps, but that's hardly relevant here.

Certainly it is not easy, and it would be naïve to say it was. But, if training costs or a portion of them were capitalised and added to the individual's asset value, in the manner I propose, then you would have a basis for more effective negotiation between manager and employee to justify the training as well as a measure of gauging its effectiveness. The net change in bottom line over the gross increase in Human Asset Value, gives you a perfectly empirical formula. It may not be perfect, but it is at least as good if not better than anything we currently have. Furthermore, if the rules are properly defined and agreed, it is not subjective and cannot be easily manipulated. And, even better it provides a basis for HR and Finance to communicate more effectively, which has to be good for business.

That's what I am putting on the table - a powerful training effectiveness measure. Can you trump that?