We say we want adaptive behavior but we reward other things…
Introduction
As part of my research for my new book, I’ve been revisiting many management classics, including Arie de Geus’ book “The Living Company.” It’s a gem, and reveals what can happen when we don’t treat companies as living human communities.
BUILDING ADAPTIVE COMPANIES
My colleague Marianne Koch and I decided to partner on a topic which at the time was considered contrarian. She was studying human resource management systems, and I was studying strategic growth, two subjects that back in the day were hermetically sealed off from one another. We thought, “Well, what if we used her HR database and compared it to the strategies of various companies to see if a variable we called “human resource sophistication” would have a performance effect?”
BACK TO THE DRAWING BOARD
It turned out that the biggest performance effect of a sophisticated HR system showed up in firms that were not service-based at all. In fact, they were asset-intensive. We were crushed. Back to the drawing board.
We eventually came to a different hypothesis. What made the human resource capability in asset-intensive firms so important was leverage. Consider the Exxon Valdez disaster.
A series of errors along the way resulted in what Amy Edmondson has famously called a “complex system” failure.
MANAGERIAL CAPACITY
Arie de Geus, in his book The Living Company places the blame for the Valdez disaster on diminished managerial capacity and subtraction of adaptive on-the-ground organizing for exactly this reason. As he puts it (page 126-127):
“YOU CAN DEMOLISH A RIVER [GREAT] COMPANY IN LESS THAN 12 MONTHS. SIMPLY FOLLOW THESE EASY STEPS:
Declare that the company isn’t profitable enough. Henceforth, your goal will be a specific amount of return on capital employed. 1.
Develop an action plan in which all assets will be trimmed down across the board to meet these goals. 2.
Follow the plan. 3.
THE RESISTANCE TO RTO MANDATES
In light of this history, I’m intrigued by the news that giant accountancy PwC is going to demand that workers come back to the office and will enforce the rules by tracking each person, applicable to the 26,000 people working in the company ’ s U.K. operations.
As Fortune quotes, “Face-to-face working is hugely important to a people business like ours, and the new policy tips the balance of our working week into being located alongside clients and colleagues,” Laura Hinton, Managing Partner at PwC UK, said in statement. “This feels right for our business and right for our people, given our focus on client service, coaching, and learning and development,” Hinton concluded while emphasizing that this doesn’t mark the end of flexible working at the firm.
CONSEQUENCES OF MANDATES
Companies, like PwC, that believe mandating time in the office will be good for employee development, learning and engagement are basing these decisions more on beliefs and opinions, researchers find. A major study by Microsoft found that workers think they are working harder than ever at home while – wait for it – managers believed they were less productive! Jared Spataro, the company ’ s Corporate Vice President for AI at Work, had this to say about surveilling employees:
“At Microsoft, we believe that using technology to spy on people at work is not the answer and our technology is not designed for that purpose. Measuring productivity with mouse movements is like using a sundial as a stopwatch. And surveillance doesn’t just lead to bad data–it undermines trust, a critical factor in organizational success that, once lost, is incredibly difficult to regain.”
LOSS OF TRUST AND COMPLEX ADAPTIVE BEHAVIORS
One thing we know about the human condition is that mandating anything is going to lead many people to resist and resent it. It also implies that people – who outside of work are perfectly competent to manage their own affairs – somehow lose that capability when they come to the office. It suggests that the vast majority of people are not to be trusted to pitch in and do a good job, when most studies put the number at around 3%. As Doug Kirkpatrick, a thought leader in the realm of employee self-management puts it, systems that rely on “coercion” lead to disengagement. This is backed up by a good many studies that show a drop in engagement, even cynicism, when employees feel controlled and coerced.
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