Addressing Economic Woes through Management Innovation

October 22, 2008

One need not read this post to understand the breadth and depth of the economic crisis upon us all. Banks are failing, Wall Street is crumbling, and companies all over the world are evaluating new ways to deal with long term economic hardship.

Gallup polls over the last few years have indicated that approximately 30% of employees are disengaged, with 15% of those, “actively disengaged”.

In 2007, Gary Hamel published a great book titled, “The Future of Management“, which asserts that while technology, employee talent levels, and market diversity, have changed dramatically over the last 100+ years, management techniques have not, and that management, as a discipline, is a ripe area for innovation.

Typically, in hard times, managers will try to squeeze that extra 1% out of inventory, or layoff 10% of the workforce to reduce costs. Rarely do we hear about new management techniques being deployed to extract effort from the 15% who are “actively disengaged”.

If a manager were to experiment with rewards tied to earnings, self managing teams, and innovative ways to reach the Gen X or Gen Y worker, would it lead to a greater economic efficiency than squeezing any more “fat” from the production process, or reducing pay for long time employees?

Often, in times of stress, people revert to what’s worked in the past, but it’s hard to believe that last year companies were running their production lines with a bunch of extra fat, or that they truly employed too many workers or were paying people too much.

Perhaps, instead, it’s time to look at that big, juicy 30% of disengaged workers as a target for improving the economics of the firm.

And guess what, if managers turn things around and engage the disengaged, people will be having more fun too. Work will be a more pleasant place to be, and earnings and morale will rise. As Adrian Gostick, one of the authors of “The Levity Effect” says, “If you’re demanding, you can drive people for a short period, but if you’re fun, you have them for the long haul.”

The Great Place to Work Institute has consistently found that companies that are classified as “great” score unusually high marks from employees on the question “Are you working in a fun environment?” Great companies scored 81% on this, compared to 62% for companies ranked “good”.

If managers can innovate to improve the lives of the managed, then the “fallout” should be a reduction in the percentage of disengaged workers, leading directly to increased productivity, reduced costs, and improved earnings. If all of a sudden, 30% of the workforce starts doing more work, then that must have a positive impact.

It’s at least something to consider instead of the knee-jerk reaction to squeeze harder. Successful companies don’t cost-cut their way to greatness.

The Management Innovation Lab, an offshoot of Hamel’s efforts, defines management innovation as “anything that substantially alters the way in which the work of management is carried out, or significantly modifies customary organizational forms, and, by so doing, advances organisational goals.”

There is a lot of room for interpretation and experimentation. Could Alfred Sloan have predicted the pervasive use of IM (instant messaging) – or when Henry Ford introduced the assembly line, did he anticipate the use of wikis as a way of sharing information between workers? How about texting, YouTube, Facebook, LinkedIn, Sharepoint, Twitter, etc? All these new school techniques facilitate more rapid and deeper communication, much in the same way the “organizational memo” of the 1950’s did in that era.

Wouldn’t it be impossible for management styles NOT to be impacted by a change in communication styles and techniques?

Wouldn’t extending an olive branch to these disengaged workers through the application of new and improved management capabilities be a great way to initiate positive change in a challenging economic climate?