| making 'People' work

To have meaningful work that enables our independence and to live with dignity should be a basic human right

Month: July, 2014

The weakness of hierarchies

The linear hierarchical structure has, almost without exception, become the only type of structure used in organisations. The entrenchment of line-based management in modern organisations reflects the conviction that productivity is an outcome of time-and-motion efficiency.  Enterprises invest heavily in increasing motion, compressing time and utilising tools such as fish-bone diagrams, decision trees, organisation charts, pedigree charts, tree charts and flow charts to manage most of their activities in pursuit of their desired productivity increases.


10th Airborne Command and Control Squadron Emblem

De-layering in organisations has been a focus ever since those running organisations recognised the downsides of command and control structures include the cost of the structure itself. Those who sit in the middle and top of the chain of command cost more than those who do the work to deliver on production or service requirements.  To activate each line of production or service, the work needs to be broken down for each work group pushed down the line to each set of tasks to be completed, and then re-aggregated up the line to, hopefully, create a cohesive piece of work that meets all its separate requirements including financial, service, safety, quality and efficiency. Other costs are the time that organisational hierarchies take for decisions to be implemented and the degree to which they slow down the organisation’s ability to respond to the market. Concentration of power has also been a much-documented source of poor decisions with too much authority invested in the thoughts of too few. Two popular practices have been widely used to offset these drawbacks: downsizing (to cut costs); and promoting leadership as the quality that subsidises the reduction of management control.

Extensive research shows that what has appeared to be cause-and-effect or linear is often in fact small-world network behaviour.  Social network analysis on the relationships between individuals, groups and organisations, shows that performance is more influenced by our relationships and location within our network, than it is from our position in the chain of command.

Organisations that continue with the paradigm that performance must be ‘managed’ (i.e. top-down) must be very determined to ignore the social networks that occur naturally, and as the office grapevine proves time and again, operate far more efficiently than any corporate dictate.

Outdated management thinking assumes that given half a chance people will prefer to seek out friends and little formal attention is paid to their ability to build effective functional relationships.  It also wrongly assumes that even if people do prioritise social relationships, this is anti-productive.  ‘Outdated’ because it is thinking that fails to recognise the role of culture in the organisation.  When there is a culture of supporting co-worker relationships, the hierarchy becomes even less effective.  Gallup, the global consulting firm that has been studying employee engagement for decades has found that co-worker friendships increase employees’ satisfaction by 50 per cent, and employees who have a best friend where they work are seven times more likely to be fully engaged in their jobs.  This level of engagement has been correlated with company bottom line performance including earnings per share.

When the objective is command and control, the top-down hierarchy should be the organisation structure of choice.  However those that believe that the sort of productivity that comes from engagement is available from this structure are wasting their time and their money.

Hierarchical structures give us an illusion of effective control.  Sociological and organisational studies tell us people react and respond to millions of cues exchanged between people through all five senses at an estimated rate of 11 million pieces of information per second – and only a fraction of which occurs consciously.  Based on this information we decide what is important, what and who we can trust and how we will respond to different messages.  Nothing in the hierarchy acknowledges that any information we receive through the hierarchy is tested, and may be overridden by our responses to those in our network.

The increasingly technical and sophisticated approaches for managing performance and behaviour in the workplace convince us that people can be effectively influenced by the hierarchy.  This helps explain why despite the concerted effort to improve employee engagement, it continues to be persistently low costing businesses billions of dollars.

By depending on lines of authority or chains of command the enterprise all but guarantees that its organisation will have pockets of non-performance.

Many organisations dabbled in self-managing and autonomous teams at some point but few were actually game to understand and allow the social network to operate.  It would not only mean a wholesale dismantling of systems, and more importantly mindsets, on which we currently rely but it would seem that we would be risking control for chaos.  Here too, they would be wrong.  Hard evidence has emerged that networks are actually not random at all.  The activity that connects individuals, invariably follows a mathematical formula that leads the the formation of hubs (key connections) and hubs can then be used to manage everything from innovation to communication.

Even better, social networks are able to naturally produce many of the outcomes organisations have always desired and spent enormous energy and resources trying to achieve. For example, networks have been proven to:

  • Facilitate the creation of social capital for individuals and organisations
  • Allow authority to form where it is required
  • Operate in organisations effectively in place of hierarchies
  • Promote innovation
  • Assist in the development of trust and tolerance
  • Synchronise thoughts and actions
  • Diffuse organisational practices effectively across groups
  • Shape the way individual tastes and preferences develop

Author Nassim Nicolas Taleb in his book, Antifragile: Things that Gain from Disorder, argues that by managing a rigid structure we are actually creating the weakness we intend to avoid.  Anything organic is better allowed to develop and grow. “We humans, the more intellectual we are…the more we build things that are fragile because they depend so much on our projection of the future…they depend on theories, whereas robustness does not need theories…. When you are designing a system, it has more downside than upside…there is empirical evidence showing that anything top-down is fragile; anything that is bottom-up that takes place organically is [robust].

For organisations this means develop the strategy then support the network to deliver.

Industrial models vs. post-employment

Post-employment workers move from contract to contract

The knowledge economy was supposed to bring unprecedented levels of opportunities to workers.  As more work depended on the use of information rather than manual labour, these workers as contractors and freelancers would have the freedom to choose independence over traditional employment.  They would be able to negotiate contracts that recognise their unique abilities outside the confines of controlled employer remuneration systems.  They would be able to work at times and locations of their choosing to suit their lifestyle.

For some, the ‘post-employment’ era has met this expectation.  These workers have been able to shift from passively offering their skills as employees to commercialising and marketing their capacities.

For others, the need to maintain enough work to survive drives them to accept work that may be of a lesser capacity level and/or to lower their rate to win the contract.  Rather than the work on various contracts that would broaden their skills and experience, they are progressively becoming less skilled in their profession.  While platforms such as Elance and open them up to a larger potential market, they also facilitate a race to the bottom in fees.

There are also those who are not independent agents by choice.  Writers, academics, project managers, and in particular, recent graduates might all find themselves without the option of on-going employment and playing to stay may be as high on their list of priorities as performance of the contract.  Many, such as the writer of an article entitled, Surviving the post-employment economy, believe that the post-employment economy has simply allowed employers to exploit workers as they have no obligation to offer continued employment, or even to pay people for their work.

When things are not working well it can be tempting to yearn for the past, however, the days of people working like automatons in production lines for minimum wage were not so good either.  In the old industrial workforce, workers could break into higher ranks of specialised or management roles but they were at far greater risk of burnout and stress.  Yesterday’s bad old days are not today’s good old days.

For corporations, independent agents provide them the ability to be more flexible and agile to keep up with the rapidly changing and volatile business environment.  They provide greater access to diverse skills, abilities and experiences that is available on demand.  The combination of the in-house staff who understand the direction and culture of the business, and the outside view provide by external workers, offers great ability to find creative solutions and innovations that would not have been able to be developed by the internal workforce alone.

Corporations will be unlikely to be able to take full advantage of the opportunities offered by the post-employment economy without rethinking the basic organisation.

Under the industrial model workers are organised to serve the hierarchy.  The outcomes they produce are set and measured based on internal expectations.  Decision-making and planning are centrally controlled while work performance is managed at the local level.  This is a great structure for the control needed for production-oriented businesses in slow-moving industries.  However because of the layers and divisions that make up the industrial structure they can be unwieldy and the management needed to divide then re-aggregate work is expensive.  They are also clumsy and the ability of individual units to create the complete whole that the organisation was designed to achieve is always overestimated.

With last century’s business models where the greatest returns were achieved from the investment in physical capital, the cost of the top-down hierarchy was by comparison, minimal.  When production is physical, it is easy to see and make good any gaps in the process.  When production is based on knowledge it is impossible to see where all the gaps between the desired and the actual exist – in particular the gaps caused by different ideas, perceptions, values, opinions, experiences, preferences and ideals.  A physical product can be quality-tested, skills needs analyses can be conducted, but the discrepancies between individuals’ knowledge contributions can be difficult to see even when they are being specifically studied.


A Comcast representative’s ‘service’ goes viral

A Board or CEO cannot simply mandate how people should feel about and interpret every aspect of their role in the ‘production’ process.  Even if they could, the performance of the entire organisation is too dependent on meeting the expectations of too few.  A recent customer service call between Comcast and a customer which has gone viral on the internet is an example of why production-style management is always going to experience failures.

If corporate managers see the post-employment economy merely as giving them the ability to pay fewer people less money for the same work they will miss many opportunities to enhance their companies’ performance.

Firstly, devaluing the labour market only serves to enforce the lowest common denominator of skills.  There is no incentive for workers to develop highly specialised, well-tested capabilities available to the corporate sector – even if they had the means for acquiring them.  Benefiting from access to independent agents depends on their quality and availability.

The real benefit however will come when organisations are able to engage with the opportunities that occur when independent agents working with internal teams can respond to the market.  The organisation must have the strength of culture and clarity of direction so that strategy can grow from the ground up not just be dictated from top down.

Managers will need to be retrained to facilitate collaboration and manage it, and to create and manage situations that come with risks as part of such a structure.  Their role should be facing outwards to ensure that their unit is shifting and responding to the environment, rather than facing inwards chasing people to perform.  The task and responsibility of performance management becomes that of the individual, especially the independent agents.  Managers focus on and create networks to draw from them and contribute back so that the overall is continually enhanced.

The post-employment organisation structure is hard to set up, but become easy to manage as they mature.  In contrast the industrial organisation structure is easy to set up, but managers spend many difficult and unproductive hours trying to achieve a non-existent ideal – that is, the assumption that ideal people, doing the best possible work, being prepared for when things change, having no personal issues to interfere with the workplace, and at a cost that is consistently low can be a reality.

A loosely managed, tightly efficient post-employment structure is not only possible, it can be devastatingly effective.  Studies into the operation of al-Qaeda show an organisation that consisted of both hierarchical management but also of a network of cells, all of which could act independently guided by the ideological inspiration of the senior members.

Start-ups and small business entrepreneurs are taking advantage of the shift to post-employment.  Large businesses have the most to gain but their biggest barrier is not the size of their operations but their commitment to continuing that which has worked in the past.

Understanding Gen Y Part 2: why employers need to learn to love them

Businesses globally are unprepared to face the challenges of the changing business environment, as they struggle to manage the demands of Millennial (also known as Gen Y) employees and adapt to disruptions in labour markets.

This was the finding from a Deloitte Global Human Capital Trends survey released earlier in 2014.

Gen Y are frequently made out to be lazy and entitled.   An article from the Melbourne newspaper, The Age, a few months ago, “What your boss really wants to say to you”, included a quote from one employer that typifies the sentiments shared by many, ““The younger generation seem to want the boss’s job and pay but they don’t want to work for it,”

The attitude that Gen Y are people whose ‘demands’ should be ‘managed’ seems to be contributing to the lack of preparation for changing business environments rather than being part of it.  Given the things business should be focusing on, it seems remarkable that incessant Gen Y bashing continues.

The things that Gen Y are accused of are not new; workplaces have always had to deal with these issues.  There have always been those who thought there was a fast ride to the top.  Nepotism, cronyism and old boys networks provide many with their sense of entitlement.  Everyone knows that the phrase ‘it’s not what you know, it’s who you know’ refers to advantages paid for reasons that are not ability and hard work.

Anyone who has spent any time in employment, particularly the corporate environment can pinpoint lazy pretenders who have mastered the art of slipping away when anything becomes too demanding.  They will be able to recall long-winded and tedious discussions about nothing more than golfing handicaps or who else has noticed the great legs on the new girl in marketing.  Those take credit for someone else’s work are no more or less lazy or entitled than the expectations the Gen Y are accused of having.

Of course Gen Y as a group are different to previous generations.  They have been brought up differently – every parent has their list of things their parents did that they would never do to their children.  Gen Y grew up in a world of technology, terrorism, 24-7 news; their grandparents aspired to the quarter acre block, their parents committed to lifetime mortgages, today both are out of reach for many.  Why would we expect they should join the workforce with the same understanding as previous generations?

The key to businesses being prepared for the challenges of the changing business environment is not in meeting the demands of Gen Y; it is in using Gen Y’s perspective of the world to fast track their capabilities for the business environment as it changes.

For instance, ‘work’ for older generations is likely to incorporate notions of service and subordination (to the company), hierarchy and divisions, succession and approval (reward and recognition).  ‘Work’ for Gen Y tends to include an expectation that they are part of a team that is there to contribute to the organisation’s objectives – which the older generation usually assumes is the role of the CEO.

For Gen Y, social currency is what matters.  This includes a team environment that collaborates, discusses and works together to solve problems.  Rather than viewing their supervisors as people moving towards the management ‘them’, Gen Y see their role is to support their supervisors – as long as they have built a good relationship with them. Social currency means being able to engage with the organisation’s story.  This is very clearly seen in Gen Y’s attitude to brands.  They are at the same time cynical about marketing but highly engaged with a brand’s values whose stories they relate to.

There are two examples to illustrate this.  Jeans brand, Levi’s, international ‘Make Our Mark’ campaign calls out to the artist inside us.  The company used #MakeOurMark and other hashtags to invite the public to contribute their artistic expressions to a living online ‘wall’.

McDonald’s, on the other hand, tried to hijack people’s values to promote their brand through a Twitter campaign #McDStories.  The aim was for the hashtag to inspire heart-warming stories about Happy Meals.  The campaign succeeded in engagement with horror stories about the company immediately filling the twitterverse.  Although the campaign was pulled within two hours, the momentum – and terrible stories – carried on for weeks.

So organisations should not see Gen Y as a problem to be solved, rather by understanding Gen Y’s perspective they may be helping their organisations to evolve in line with the changing needs of the business.  It does not mean Gen Y have all the answers.  Keeping in mind that the jobs young people used to fill while they were at school are not as available – because of automation, and often because their parents are still holding them – their first ‘real’ job is also often their first job.

The most common, and easily fixed, mistake employers make is sitting all employees down in an induction program that was written following a format as old as the company itself.  It would be sensible to develop an induction program for those – like Gen Y – that have little or no recent work experience and deliver it in a format – such as a podcast – that reflects how they are used to consuming information.

Gen Y have now been in the workforce for a decade or more.  It is time for us to get over the stereotyping and do what we should be doing: making sure the workplace is keeping up with change.

Four ways to get the best from Gen Y

  1. Develop an organisation where context is clearly defined.  Gen Y do not care about skills they way you do – they have all used Youtube to learn a skill.  They care less about your knowledge – information has always been at their fingertips.  Also they have grown up in a world knowledge and skills can be outdated in fewer years than it takes to complete a degree.  If recognition and authority is based on skills and knowledge alone in your organisation, they will expect to move quickly.Gen Y do care about wisdom and experience.  They want to be guided through real life.  Show them how skills and knowledge work in context so they learn it is not what you know or what you can do, it is how you use what you know or what you can do.
  2. It’s all about values.  Gen Y use the word ‘values’ in the same way we used the word ‘career’.  It drives their decisions about where they work, what they do, what they aim for, and what they are prepared to do to get there.  It is the importance of values to Gen Y that they will prefer lifestyle and flexibility over money and promotion, and choose an employer for what it cares about over the job it offers.  They work on the basic assumption that things can be fixed with enough people who care coming together to make it happen.
  3. Replace formal goal-setting with regular coaching.  You will get better performance from Gen Y by supporting them in the here and now.  Think about gamification which rewards incremental gain not goal achievement.  The thing that makes Gen Y easy to manage is they are practically hard-wired for change and continuous learning (such as the way they barely seem to notice when functionality changes on their iPhones while we complain with every upgrade).
  4. Gen Y are not impatient and insensitive so much as they are often poor at soft skills such as prioritising, managing relationships, workplace etiquette, teamwork, planning and managing distractions.  These are all trainable skills that somehow, in the way they are being schooled, they are underdeveloped.  They have a great capacity for feedback and work better with regular input and the opportunity to reflect on their achievements and improvements.

So with Gen Y in the workplace in increasing numbers and starting to reach management levels, looking down our noses at all their shortcomings is a cop out.  We have done a great job with them as parents, now our role is to coach them in their development at work.

Remember when we began our careers, as a whole we were more qualified than the generation before us.  They called us upstarts who needed to experience ‘real life’ before we earned the right to contribute.

It was true then as it is now that organisations will benefit from investing time in early career development as well as changing practices to encourage greater input.

Understanding Gen Y: Part 1

I recently came across an article written by a young man who identified himself as Gen Y (those born between the mid-1980s and 2000).  His article reflected on the life of his mother who had served her main profession and few employers continuously and steadfastly throughout her adult life towards the aim of enjoying a comfortable retirement.  As that time loomed near she had not achieved the financial security she needed for retirement.  Even a delayed retirement would provide her little more than a basic existence and the prospect of dependence on others as her health declined over time.

The writer vowed that he would never live his life in selfless service to employers to face the same late life insecurity as his mother.  His article provoked outraged criticism from many readers.  Comments saluted the mother as dedicated and selfless while he was branded ‘typical Gen Y’: entitled, ungrateful, insensitive and selfish.  Respondents compared their own parents who, like the writer’s mother, worked long and hard to provide for them but unlike the writer, they were proud of their parents who earned their pensions and they saluted their dedication.

The emotion of the responses seemed out of proportion to the sentiments expressed in the article.  For instance he was accused of having a sense of entitlement, yet nowhere did he write that he expected more than his mother.  He simply stated he wanted make different choices to his mother so he would have the opportunity to achieve a better outcome.  A look at the profile photos of the respondents suggests reactions could have had something to do with their ages and their own prospects for retirement in the years ahead.

Like this writer, I do not think we should call a system (economic, social or otherwise) that asks for compromises to be made during our working lives in exchange for freedom in future years, but then that freedom is unavailable, a success. Far from disrespectful, he was distressed that his mother’s financial situation did not do justice to the care she took of others during her working life.

What was typical of this writer as a member of Generation Y was his attitude that the system needs to be better. He reached out on social media so he and others can do something about it.  They think this way because we taught it to them.

As Gen X (those born between the mid-1960s and the mid-1980s) parents, we have sought to do what our parents before us have done: give our children a better life than the one we had.  With experiences of relationship breakdowns, mortgage stress, complying with society’s expectations at the expense of our own fulfilment, job insecurity and social inequality guiding our parenting approach, we taught our children to never settle for less than they deserve.  We have given them the expectations of respect, equality, choice and that they can be anything they choose to be.  We denied them little and protected them from harm that often existed only in our minds.  “Why don’t you look it up yourself?” we would say when they asked us a question and we saw an opportunity to develop their independence.  We drove them from activity to activity week after week, and that was worth it because these activities developed their confidence and their collaboration skills.  Their sense of responsibility to the planet and to the disadvantaged is a credit to us because we told them it was important to care about people more than title, money and power.

And now they are in the workforce, and Gen Y – with the values we instilled in them – and the workplace are out of sync.


Since the modern workplace developed in the 1950s, a clash between the establishment and the new generation has always been the case.  Boomers in the 1960s fought workplaces fraught with inequality and patriarchy.  Gen X in the 1980s fought being ‘treated like a number’ and demanded recognition and career opportunity.  The difference with the entry of Gen Y into the workforce is the previous generations are working longer; they are staying rather than making way for the new generation.

It is far too easy to dismiss Gen Y as a self-absorbed generation that understand technology better than people.  To them, we the older generation can seem not self-absorbed enough – complying with employers for their benefit at our own expense – without fighting to change it.

Gen Y are an educated, caring, confident, connected, inquisitive, socially-minded, innovative and entrepreneurial generation.  Organisations need to harness these attributes not beat young workers into our old thinking that time served equals achievement.  It will not be enough to accommodate them; we need to actively engage with them.  We should learn how we can keep up with an automated, technology-driven and hyper-connected world.  As the world ages, Gen Y will not just be the talent that powers the organisation, they will also be the customers.

As parents we told them not to settle for something they felt was not right, and there is much about work that is not right.  Like them we should also feel outraged when after a long working life we are faced with the fear that our savings will not be enough. Like them we should assume that this is something we should do differently.  As managers we should not even have the time to be complaining about Gen Y.  The time should be spent developing a workforce model that better serves the organisation in the new world, and provides better prospects for financial security in retirement.

%d bloggers like this: