TED talks by managers who try radically weird leadership practices and get amazing results… those are the exceptions that prove the rule, right? If the way most companies are run is a problem, more would change, right?
Sorry, but no. The reason companies succeed while using standard practices is because they are competing against companies using the standard practices. And there is a host of psychological reasons why established companies don’t change (see “Sources of Resistance and Failure” for a summary).
A 2016 book I just read lists a bunch of atypical practices; provides good objective evidence for doing them; and adds several use cases for each, including many from large, well-known companies. Please read Under New Management: How Leading Organizations are Upending Business as Usual. The author, David Burkus is an associate professor of management at Oral Roberts Univ., and has written for Forbes and Harvard Business Review, among others.
Burkus seems to borrow a line from my marketing with this quote: “As you’ll see in each chapter, these ‘radical’ concepts are already in place in a number of well-established and forward-thinking corporations, and the truth is that not only are they working, but the organizations using them are thriving.” I’m not going to give away too much, because I really, really want you to read this book! But here are some of the chapter titles (in italics) with explanatory quotes, the companies he cites, and data that especially caught my eye:
Outlaw Email—“Corporate leaders across the globe are discovering that banning or limiting their employees’ access to email is making them more, not less, productive.” Companies: Atlassian, Atos SE, Daimler, Evernote, Learning as Leadership, Mejor Trato (eMT), Volkswagen.
The 70,000-person IT company Atos SE went through a formal organizational change effort to replace e-mail with transparent online communities. Two years later their “operating margin (had) increased from 6.5 percent to 7.5 percent… earnings per share rose by more than 50 percent and administrative costs declined from 13 percent to 10 percent.”
Put Customers Second—“To better serve their customers, some corporate leaders have found that they must put their customers’ needs second and their employees’ needs first.” Companies: HCL Technologies Starbucks, Union Square Hospitality Group, Wegman’s.
HCL shifted its focus to “supporting the frontline employees—not commanding and controlling them.” Research by Harvard into the “service-profit chain” showed a direct link between employee satisfaction, customer loyalty, and resulting profits. A review of 28 studies found this was even true in industries with short-term customer contacts, like fast food or retail.
Lose the Standard Vacation Policy—“Companies that have switched to unlimited vacation have found that their old policies often limited employees’ engagement and performance.” Companies: Consumer Affairs, Netflix, Virgin Group, Windsor Regional Hospital.
The policy regarding expenses and travel at one famous company has exactly five words: “‘Act in Netflix’s best interest.’”
Make Salaries Transparent—“Research suggests that pay secrecy actually lowers overall employee performance and produces more strife and distress in the workplace.” Companies: Buffer, SumAll, Whole Foods (and I will add, all U.S. governments; I’ve seen it work well at a federal facility).
Buffer not only published salaries internally, it shared the formula it used to determine them, quoted below:
Salary = [job type] x [seniority] x [experience] + [location] + [equity or $10,000]
Each variable had a set of levels, making it easy for anyone to see how to get more pay.
Ban Noncompetes—“…more and more leaders are creating non-noncompete environments in which information is shared freely, even with outsiders.” Companies: Almaden Lab (IBM), American Bar Association (ABA), Proctor & Gamble, Wieden+Kennedy.
The ABA recommends against noncompetes and bans them internally. “Their argument is that any restriction of a lawyer’s ability to practice after leaving a firm is unethical and harmful, as it would limit lawyers’ professional autonomy as well as clients’ freedom to choose legal representation.” It seems hypocritical, then, that corporate lawyers would recommend noncompetes, another example where good leaders need to thank them for the warning of risk and then take that risk for better outcomes.
Ditch Performance Appraisals—“…many companies have found that rigid performance management structures actually prevent people from improving their performance, so smart leaders have begun eliminating these structures in favor of newer measures that actually enhance performance.” Companies: Adobe, Expedia, Lear Corporation, Microsoft.
Microsoft ended forced rankings in 2013 after a magazine article quoted leaders and employees all saying the practice was killing innovation. It was causing team members to compete with each other instead of cooperating.
Hire as a Team—“To help them make smarter hiring decisions, the best leaders now bring their whole team into the interview process.” Companies: Automatic (WordPress), Google, Steelscape, Whole Foods.
After the typical hiring process, new hires at Automatic served three to eight weeks doing real work with the team. Only after that did the CEO do an interview (yes, of all new hires), but by text chat to cut down on inherent biases. He said he passed 95 percent of team-approved hires; their 2013 turnover rate was 2 percent; and of everyone they had hired by 2014, 83% were still there. WordPress is the #1 website platform on the planet.
Take Sabbaticals—“…the best leaders give themselves and their employees a good long break once in a while—a sabbatical.” Companies: Adobe, Atlassian, Autodesk, FullContact, Intel, McDonald’s, Menlo Innovations, Morningstar, QuikTrip, The Motley Fool.
One advantage to sabbaticals, according to the CEO of FullContact, is reduction of “‘misguided hero syndrome.’” People are forced to learn the company will not fall apart when they are gone, hopefully helping them maintain a work/life balance that is better for them, and therefore the company, afterward.
Fire the Managers—“Research suggests that employees are most productive and engaged when they, and not their manager(s), control their destiny.” Companies: General Electric (Durham, N.C., aircraft engine plant), Morning Star Company (different from Morningstar), New Belgium, Valve (Steam), Zappos.
One key to eliminating management at GE Durham was having everyone who worked in the plant, regardless of role, become licensed as an aircraft mechanic. This reduced the need for subject-matter experts. Teams were cross-functional and self-directed, with transparent salaries, each responsible for building an engine at a time. Cross-plant policies were made by elected representatives from each team.
The other chapters are:
- Pay People to Quit—“Helping employees quit, and literally paying them a quitting bonus, may seem insane, but many leaders are finding it worthwhile.” Companies: Amazon, Riot Games, Zappos.
- Write the Org Chart in Pencil—“The best leaders… (allow) the best teams to form around problems and products, instead of drawing lines and boxes in ink.” Companies: Eden McCallum, SumAll, W.L Gore (Gore-Tex).
- Close Open Offices—“…research and experience have shown that the benefits of open office design for collaboration are typically offset by myriad distractions.” Companies: Gerson Lehrman Group, Inc., TBWA/Chiat/Day (for more info see “The Recycled Myth of the Open Office“).
- Celebrate Departures, meaning create alumni networks—“How leaders deal with ex-employees affects not just those leaving but those who stay, as well as the performance of both the old and new firms.” Companies: Chevron, McKinsey & Company, Microsoft, Proctor & Gamble.
I added some fun by reading the book without looking at the table of contents or peeking ahead, to see if any of Burkus’s recommendations surprised me as I turned to a new chapter. None did. That’s not me bragging; that’s me making the point (yet again) that all of these alternatives have been around, and backed by hard data, for a long time. These high-performance work practices are not radical, nor do they only work in small companies. They’re just different from the normal way of doing things, from what “everybody” does.
But, by definition, doesn’t competitive advantage require being different from your competitors?
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Source: Burkus, David. Under New Management: How Leading Organizations Are Upending Business as Usual (New York: Houghton Mifflin Harcourt, 2016).