PUBLIC SECTOR FUNDING CUTS: ARE YOU ABOUT TO LOSE THE WRONG PEOPLE?

You can increase net performance by at least 10% by retaining the best people to deliver efficient, effective services after a redundancy programme.

 

Hard to believe, but using an innovative influencer-based approach, we have been able to retain key people, while increasing staff engagement and improving morale both during and after major change programmes involving redundancies. We achieve this by tapping into the power of ‘hidden’ leaders and influencers, many of whom are outside the formal hierarchy. And we have the track record to prove it.

 

Background

There is a great temptation to manage funding cuts as a purely financial exercise. Sell assets, reduce accommodation costs, let natural wastage take its course and make cuts to specific low-priority services, preferably where redundancies involve younger staff with relatively few years of service, thereby minimising overall transition costs. In the short term, this approach seems attractive but ignores the really big post-cuts objective: to retain key people for the future.

 

Predictable side effects of a redundancy programme

In a perfect world, only the least effective staff would leave as a result of the cuts. Indeed, there is considerable evidence to show that overall performance rises as fewer effective staff depart. In our experience this holds true for staff reductions of up to about 10% of total staff. Although resources have been reduced by 10%, the overall impact can actually be positive: these individuals typically represent less than 5% of the effective work done, and they act as a drag on others (error creation, continuous queries, passing on difficult problems, duplication, etc.) that is so great that their combined overall impact can be negative.

 

However, a simplistic financial approach to cuts does nothing to reduce the percentage of ‘impact-negative’ staff within an organisation. Typically, a disproportionate number of very capable people leave and find external jobs because of uncertainty and insecurity. The low performers do not have this option and tend to hang on, often waiting for a redundancy pay-off.

 

Similarly, some of the most capable people will currently be working on services that are to be discontinued. A simplistic approach to cuts may well lead them straight out of the door. Also, those that remain may well be demotivated and disillusioned.

 

Unexpected side effects of a redundancy programme

In times of change, humans look to their natural leaders rather than their formal managers.

 

Who are the key influencers and where do they influence? Who do people go to when they need different types of technical or service advice or information? Who are the natural collaborators who can be relied on to link relevant groups across organisational boundaries? Who keeps the energy levels of teams high through difficult periods? Which formal managers are influential with their staff and have developed effective teams? Which individuals have created effective informal networks that link different work groups?

 

These are the key people that need to be retained to deliver efficient, effective services during and after the cuts. Typically, these individuals make up only about 3% to 4% of total employees. Their potential is usually latent and sadly under-utilised. Losing even some of them will have a disproportionate effect on future services. Morale will decline as natural leaders leave; valuable sources of expertise will be lost; collaboration will wither on the vine; and silo mentalities plus levels of disruption will intensify.

 

Retaining key staff while cutting costs

In the real world, the best approach for public sector organisations will be a balance between financial pragmatism and keeping key people for the future. A combination of natural wastage and voluntary redundancy (with clear guidelines on retaining staff with profiles needed for the future) will provide the main mechanisms to achieve the desired balance. A key component of the voluntary redundancy approach will be the creation of a redundancy ‘pool’, where those impacted by service reductions will be available for redeployment in other areas of the organisation. This not only allows key individuals to be retained, but also enables entire teams to be moved internally, particularly where a natural leader has built a highly effective team that can easily be retrained as a unit.

 

Early identification of, and communication with, key individuals and teams, will minimise the loss of very effective people, who might otherwise be tempted to seek external jobs due to insecurity.

 

Costs and benefits

As a rule of thumb, using our innovative influencer-based approach to identify the natural leaders and those in key positions within informal networks will cost from about £20,000 for 1,000 full time staff to £50,000 for 5,000 staff – typically about 0.03 % of total budgets.

 

The public sector will need to be more innovative in future to deliver more (and better) for less. Innovation should start before the cuts.

 

Examples of our track record: major change at National Savings & Investments and Liverpool City Council.

You can increase net performance by at least 10% by retaining the best people to deliver efficient, effective services after a redundancy programme.

Hard to believe, but using an innovative influencer-based approach, we have been able to retain key people, while increasing staff engagement and improving morale both during and after major change programmes involving redundancies. We achieve this by tapping into the power of ‘hidden’ leaders and influencers, many of whom are outside the formal hierarchy. And we have the track record to prove it.

Background

There is a great temptation to manage funding cuts as a purely financial exercise. Sell assets, reduce accommodation costs, let natural wastage take its course and make cuts to specific low-priority services, preferably where redundancies involve younger staff with relatively few years of service, thereby minimising overall transition costs. In the short term, this approach seems attractive but ignores the really big post-cuts objective: to retain key people for the future.

 

Predictable side-effects of a redundancy programme

In a perfect world, only the least effective staff would leave as a result of the cuts. Indeed, there is considerable evidence to show that overall performance rises as fewer effective staff depart. In our experience this holds true for staff reductions of up to about 10% of total staff. Although resources have been reduced by 10%, the overall impact can actually be positive: these individuals typically represent less than 5% of the effective work done, and they act as a drag on others (error creation, continuous queries, passing on difficult problems, duplication, etc.) that is so great that their combined overall impact can be negative.

 

However, a simplistic financial approach to cuts does nothing to reduce the percentage of ‘impact-negative’ staff within an organisation. Typically, a disproportionate number of very capable people leave and find external jobs because of uncertainty and insecurity. The low performers do not have this option and tend to hang on, often waiting for a redundancy pay-off.

 

Similarly, some of the most capable people will currently be working on services that are to be discontinued. A simplistic approach to cuts may well lead them straight out of the door. Also, those that remain may well be demotivated and disillusioned.

 

Unexpected side effects of a redundancy programme

In times of change, humans look to their natural leaders rather than their formal managers.

 

Who are the key influencers and where do they influence? Who do people go to when they need different types of technical or service advice or information? Who are the natural collaborators who can be relied on to link relevant groups across organisational boundaries? Who keeps the energy levels of teams high through difficult periods? Which formal managers are influential with their staff and have developed effective teams? Which individuals have created effective informal networks that link different work groups? 

 

These are the key people that need to be retained to deliver efficient, effective services during and after the cuts. Typically, these individuals make up only about 3% to 4% of total employees. Their potential is usually latent and sadly under-utilised. Losing even some of them will have a disproportionate effect on future services. Morale will decline as natural leaders leave; valuable sources of expertise will be lost; collaboration will wither on the vine; and silo mentalities plus levels of disruption will intensify.

 

Retaining key staff while cutting costs

In the real world, the best approach for public sector organisations will be a balance between financial pragmatism and keeping key people for the future. A combination of natural wastage and voluntary redundancy (with clear guidelines on retaining staff with profiles needed for the future) will provide the main mechanisms to achieve the desired balance. A key component of the voluntary redundancy approach will be the creation of a redundancy ‘pool’, where those impacted by service reductions will be available for redeployment in other areas of the organisation. This not only allows key individuals to be retained, but also enables entire teams to be moved internally, particularly where a natural leader has built a highly effective team that can easily be retrained as a unit.

 

Early identification of, and communication with, key individuals and teams, will minimise the loss of very effective people, who might otherwise be tempted to seek external jobs due to insecurity.

 

Costs and benefits

As a rule of thumb, using our innovative influencer-based approach to identify the natural leaders and those in key positions within informal networks will cost from about £20,000 for 1,000 full time staff to £50,000 for 5,000 staff – typically about 0.03 % of total budgets. 

 

The public sector will need to be more innovative in future to deliver more (and better) for less. Innovation should start before the cuts.

 

Examples of our track record: major change at National Savings & Investments and Liverpool City Council.

 

National Savings & Investments

When National Savings and Investments (NS&I) outsourced much of its business to Siemens in 1999 it was then the biggest and most ambitious deal of its kind. A decade on, the Treasury-backed group has been transformed into a sleek, modern-day financial institution which has seen a dramatic growth in business over recent years.

 

National Audit Office Report 2003 ‘PPP in practice: National Savings and Investments’ deal with Siemens Business Service (SBS) four years on’

 

“SBS has significantly increased productivity (more than 100%) without compulsory redundancies, through reducing the number of staff transferred to it from 4,100 to some 2,000, although the volume of work has remained the same. It has reduced the level of absenteeism to close to the national average of 3.1 per cent, compared to eight per cent when it took over the business. SBS has re-deployed 650 of the 2,100 staff, no longer required for NS&I work, on third party work. Of the remainder no longer employed on NS&I work, 1,200 took Voluntary Early Release and 250 were released through natural wastage.”

 

Liverpool City Council

Liverpool Direct Limited is a joint venture company set up in 2001 between Liverpool City Council (19.9%) and BT (80.17%) to reduce costs and improve service quality.

 

BT Report – ‘Partnership transforms Liverpool’s Performance’ 2005:

 

“Still in the first half of a 10-year, £300 million project – in which BT has so far invested more than £50 million – Liverpool Direct has already enabled the council to reduce its cost base by over £100 million over five years and help to reduce its headcount from 19,000 to 13,000.

 

A new contact centre is now handling 200,000 calls a month, resolving over 90 per cent of them first time. A Human Resources (HR) intranet is automating routine business (30,000 hits a week) and allowing the council to re-deploy over 1,000 staff, while absenteeism has fallen below the national average. The revenues and benefits functions have also been transformed, leading to performance improvement and financial benefits. The Audit Commission now places 70 per cent of Liverpool’s key services in the upper quartile of the industry standard in its performance indicators.”

National Savings & Investments

When National Savings and Investments (NS&I) outsourced much of its business to Siemens in 1999 it was then the biggest and most ambitious deal of its kind. A decade on, the Treasury-backed group has been transformed into a sleek, modern-day financial institution which has seen a dramatic growth in business over recent years.

 

National Audit Office Report 2003 ‘PPP in practice: National Savings and Investments’ deal with Siemens Business Service (SBS) four years on.

 

“SBS has significantly increased productivity (more than 100%) without compulsory redundancies, through reducing the number of staff transferred to it from 4,100 to some 2,000, although the volume of work has remained the same. It has reduced the level of absenteeism to close to the national average of 3.1 per cent, compared to eight per cent when it took over the business. SBS has re-deployed 650 of the 2,100 staff, no longer required for NS&I work, on third party work. Of the remainder no longer employed on NS&I work, 1,200 took Voluntary Early Release and 250 were released through natural wastage.”

 

Liverpool City Council

Liverpool Direct Limited is a joint venture company set up in 2001 between Liverpool City Council (19.9%) and BT (80.17%) to reduce costs and improve service quality.

 

BT Report – ‘Partnership transforms Liverpool’s Performance’ 2005:

 

“Still in the first half of a 10-year, £300 million project – in which BT has so far invested more than £50 million – Liverpool Direct has already enabled the council to reduce its cost base by over £100 million over five years and help to reduce its headcount from 19,000 to 13,000.

 

A new contact centre is now handling 200,000 calls a month, resolving over 90 per cent of them first time. A Human Resources (HR) intranet is automating routine business (30,000 hits a week) and allowing the council to re-deploy over 1,000 staff, while absenteeism has fallen below the national average. The revenues and benefits functions have also been transformed, leading to performance improvement and financial benefits. The Audit Commission now places 70 per cent of Liverpool’s key services in the upper quartile of the industry standard in its performance indicators.”

ISO 44001/BS 11000: COLLABORATIVE BUSINESS PARTNERSHIPS

This paper is in 3 parts, namely:

 

1. An introduction for Key Performance: where we might help support organisations, typical applications, initial marketing proposition
2. Brief introduction to the standard: mostly the core diagram showing the 8 phases
3. Benefits of ISO 44001/BS 11000

 

Introduction

Key Performance helps companies become more effective or efficient. This may be achieved via a leadership training programme or a much larger change programme. Companies need to be assured that our intervention will in some way give them increased competitive advantage. A key strategy for many companies is to form partnerships with other organisations in order to gain some form of competitive advantage. Historically there is evidence to suggest that partnerships have not achieved the goals they were originally set. Indeed many have been costly and embarrassing failures. Few have achieved the original goals and fewer still have created extra added value. Key Performance can provide the practical advice, support to make partnerships actually deliver enhanced value and massive competitive advantage. We would use BS 1100 as a framework, but within that framework we could help organisations to:

 

• Develop their partnering strategies
• Develop collaborative leadership models
• Develop supply chain relationships
• Develop joint products and services
• Facilitate the cultural fit
• Help them develop agreed processes, protocols etc.
• Provide independent expertise as and when needed
• Help joint communications
• Facilitate joint workshops
• Build joint teams

 

The exact nature of our support will vary depending on the particular companies, their size, their industry etc. BS 11000 provides a basic framework. Peter Westbrook is an accredited facilitator of the framework can envisage the sort of extra help companies will need (such as those listed above).

 

The MOD are now actively encouraging partnership frameworks between supplying companies (ignoring the fact that they need it more than anyone else). Companies will need to show that they are doing it to a good plan: hence the importance of BS 11000. Other possible applications could be:

 

• The Big Society: i.e. local partnerships
• Large construction/infrastructure projects
• Innovation across groups
• New complex products and services
• Alliances
• Mergers and acquisitions
• The NHS i.e. GP commissioning groups
• Local enterprise partnerships (LEPs)
• Joint ventures
• Business critical supplier integration
• Enhancing Systems Thinking

There are more applications and in the course of time there will be ways of enhancing the basic BS 11000 framework. It will also open the door to various other needs. However, please note that 99.9% of organisations do not know about the standard AT ALL!

 

Brief introduction to the standard

There is plenty of evidence that collaboration in whatever form (alliance, partnership, Joint venture, eco-system) can if appropriately integrated and executed provide a value business model and enhanced performance. The risk is that if adopted as bolt on to existing business processes or left to propagate the principles of collaboration by osmosis, it will likely be deemed a failure or worse be counterproductive in the longer term. BS 11000 is a world first and offers the opportunity to organisations to adopt a recognised model for building their collaborative approaches and benchmark themselves against industry good practice.

 

The adoption of a standard provides the foundation and catalyst against which organisations can develop the right strategy and encourage sustainable relationships that can deliver value based performance.

 

 

Benefits of working with ISO 44001/BS 11000

Collaborative business relationships have been shown to deliver a wide range of benefits, which enhance competitiveness and performance whilst adding value to organisations of all sizes. The publication of the ISO 44001/BS 11000 is a landmark for business. It is the first National Standard in the world to address collaborative business relationships. It does not represent a one-size solution, but rather provides a consistent framework, which can be scaled and adapted to meet particular business needs. Collaboration between organisations may take many forms from loose tactical approaches through to longer term alliances or joint ventures. The structure of the framework is drawn from the CRAFT framework and methodologies supported by a wide range of tools and guides, which have been established over some 20 years of involvement in relationship management.

 

 

ISO 44001/BS 11000 does not enforce a single rigid approach but has been focused on providing a framework that can complement existing approaches where these are already in place. It also recognises that every relationship has its own unique considerations. For those organisations with well established processes the framework provides a common language that can aid implementation and engagement. For those starting out on the journey the framework creates a road map for development.

 

The adoption of any standard has to be balanced against the value that it can deliver to the organisations that chose to utilise it, whether this is for improving internal performance or to enhance confidence in the market. In this respect ISO 44001/BS 11000 is no different to other internationally recognised standards such as ISO 9000. The BSI certification programme, launched in April 2009, establishes a measurable independent assessment for internal benchmarking of continuous improvement and people development together with independent validated pan industry recognition of an organisation’s collaborative capability in the market place. At a more detailed level some of the benefits already recognised by multinational organisations include:

 

• The standard creates a robust framework for both the public and private sector to provide a neutral platform for establishing effective collaborative programmes for mutual benefit.
• Its core value is commonality of language and application between delivery partners leading to improved / better integration.
• Acting as a bridge between cultures to form a more robust partnership or alliance, it reduces confusion, provides confidence to participants and lays a foundation for innovation.
• As it was developed through Pan-industry input and thus is not sector specific providing a basis for broader adoption and engagement, providing a common foundation and language for relationships between the private and public sector, international cultures to provide uniformity of understanding.
• It provides a platform for developing repeatable models to enhance communication and engagement and thus build confidence.
• The standard provides a basis for benchmarking the collaborative capability of organisations both internally and externally through BSI independent assessment   which will enhance partner evaluation and selection together with establishing market differentiation.
• It establishes a consistent yet flexible approach that provides a foundation for efficiency and repeatability across programmes and increased opportunity to focus on developing value.
• It will aid the development of capability at the working level.
• It creates a measure to promote customer confidence and a focus for more effective joint risk management both related to the challenges of specific programmes and those linked to relationship aspects of collaborative working. It reduces the likelihood of misunderstandings, a mismatch of objectives, constrains hidden agendas and reduces the probability of conflict.
• It establishes a consistent and structured approach to facilitate a focus on integration of collaborative working within operational procedures, processes and systems. Thus creating a platform for more effective governance, speed the development.
• Establishes a baseline to support resource development and training to increase collaborative capability to enhance skills and interchange ability of personnel.

 

In short a standard framework that will promote better engagement and effectiveness through strengthened business processes, whilst improving risk management, enhancing dispute resolution and providing a basis for skills development. Most importantly of all improve the potential for sustainable relationships that deliver value.

AT LAST…THE DAWN OF ‘NATURAL LEADERSHIP’

Perhaps the most enduring casualty of the current financial upheavals will not be the banks, the hedge funds or even the hapless financial regulators but the most prevalent business model of all – management by ‘command and control’. Certainly, this is a very good time to challenge the macho management cultures that have led to such chaos. As Darwin cautioned: “It is not the strongest of the species that survive, nor the most intelligent, but the ones most responsive to change.”

 

Yet there seem to be few compelling alternatives to current management designs. Even with mature programme and project management methods, failure rates for major internal business change stubbornly average about 70%. The so-called ‘democratic’ management models pioneered by Gore, Semco and Google have elements that are attractive, particularly in highly innovative, short product life cycle industries such as information technology and electronics. Nevertheless, even today’s open-minded CEOs often question the more radical ingredients of these models: teams deciding on their own – and even their boss’s – remuneration, spending 20% of their time on pet projects or backing large numbers of innovative ideas with internal ‘venture capital’ type funds. 

 

But “cometh the hour, cometh the man” – or in this case two unlikely men, both mature, maverick management consultants, Neil Farmer and Denis Bourne. Together, they developed the ‘Natural Leadership Model’ that they believe is destined to replace ‘command and control’ as the management model of choice – and need – over the next decade. 

 

Neil’s major claim to fame is that he cracked the 70% failure rate for major change in organisations by accurately identifying and engaging the real local change agents – saying goodbye forever to immature change junkies and management ‘favourites’ in change teams. Over a period of 7 years, in a series of interim change manager roles, he led the people side of change for five very successful major change programmes – back-to-back – at Nationwide, National Savings, Liverpool Direct, Lloyds of London, and Friends Provident. By stringing together five consecutive successful major change programmes, he defied the 70% failure rule and beat odds against success of more than 400 to one. By the way, these changes were not trivial: for example, in one organisation total productivity increased by 100%, while in another culture change led on to a prestigious ‘best place to work award’ for the first time in the organisation’s history. In essence, Neil recognised that, overwhelmingly, people factors are the cause of major change failure and that the solution lies in engaging natural leaders who are highly influential with colleagues but also change positive (or at least open-minded) by nature. These same real change agent individuals are also essential in changing the day-to-day behaviours that deliver – surprisingly quickly – fundamental culture change in the workplace.

 

Denis’s major claim to fame is that he identified the crucial importance of informal organisational networks in businesses and moved on to develop advanced software tools to identify the underlying causes of many of the most common, intractable organisational problems – at a time, starting more than 25 years ago, when academics were just beginning to make their early, primitive efforts at understanding social networks. Today, his web-based Magus Toolbox software and associated methodologies address issues ranging from individual influence, communication and collaboration networks, through a wide range of problem analyses, to mapping networks of knowledge sources and comparing ‘as is’ to ‘should be’ situations. The generic target never varies – identifying the causes of organisational performance problems and fixing them to improve results. It is all about developing practical ‘deep leadership’ where natural leaders are identified throughout organisations: they change from topic to topic, from circumstance to circumstance, and from time to time. In effect, he provides tools that regularly identify and indirectly engage this whole new range of ‘natural leaders’ – well beyond just the people who strongly influence the views and behaviours of colleagues. The bottom-line results range from improved productivity, greater innovation and faster new product delivery, through to faster process cycle times, higher sales and much improved employee morale. The approach has been successfully applied in many industries and public sector organisations.

 

‘The Natural Leadership Model’ emerged over time by blending these two complementary insights. While natural leaders who are the real change agents are certainly essential in implementing major business change, other natural leaders have key roles in creating comprehensive, high-performance workplaces. For example, individuals who are sources of business or specialist knowledge are natural knowledge leaders; people who stimulate and underpin informal work-related interactions between internal (and sometimes external) groups are natural communication leaders; project specialists who generate energy in colleagues as well as organising what needs to be done are natural project leaders; those who collaborate across merged organisations to speed up integration into a new cohesive whole are natural collaboration leaders; sales people with extensive, relevant personal networks become natural sales leaders as they share contacts with colleagues and increase overall sales; and people in R and D teams with extensive, relevant personal networks become R and D process leaders as they encourage their contacts to participate in innovation activities, so transforming new product delivery. 

 

Interestingly, the use of natural leaders as guides through a variety of informal personal networks greatly helps to overcome one of the traditional constraints on using informal networks: people’s reluctance to disclose potentially sensitive information. Managers who build trust with natural leaders are rewarded with a much greater degree of honesty in return when problems are analysed and relevant solutions highlighted and implemented.

 

This raises the question – what happens to managers in the Natural Leadership Model? Well, certainly the use of this model will lead to more influential natural leaders being moved into formal management roles – particularly into first line management positions where the bulk of face-to-face managing takes place. More and more managers will be chosen for their ability to work collaboratively with natural leaders throughout the organisation. Key senior executives who can chart the main direction forward for the business will still be essential, and some of these will need to invoke occasional ‘command and control’ behaviours to guide the organisation through any crises. But the whole point of the Natural Leadership Model is to make the business more adaptive to change: to get ahead of the curve when spotting future problems, challenges and opportunities via continuous honest feedback from the front lines. Middle managers will increasingly become change enablers and coordinators, prioritising and scheduling change through a variety of potential innovations highlighted and energised through real change agents across the organisation.

 

All organisations need to be effective. All need to be efficient. All need to deliver high quality outputs – products and services that meet or exceed the needs and wants of their customers. In short, all organisations need to be high-performing organisations. While this has always been true, in difficult economic times, the need is even greater.

 

There is only one route possible to achieving a high-performing organisation, and that is through optimising the focused contributions of all employees – throughout the entire organisation. Command and control management approaches don’t hack it – never have and never will. Trying to apply them in current conditions, where fear is a big factor might just achieve malicious obedience, for a while at least. A far better bet is the natural leadership approach. It is available now; it is cost-effective; it delivers its results quickly – and uses technology that enables large numbers of natural leaders to be engaged in the performance development process.

 

Implementing the Natural Leadership Model

The first thing to realise when setting out to implement the Natural Leadership Model in your organisation is that it can be initiated, facilitated and encouraged but – in the final analysis – can neither be imposed nor fully controlled. A good analogy is an irrigation system to water crops in a field. A farmer can lay the irrigation pipes to ensure that surface water from seasonal rain in local rivers reaches certain points in certain fields, but he cannot prescribe the exact level of rainfall or the exact way that water seeps into the soil at each outfall. 

 

Similarly, a CEO aiming to implement natural leadership throughout an organisation can take a number of ‘structural’ actions. The percentage of natural leaders across the management team can be greatly increased as: 

 

• Selected change-positive influencers are progressively moved into key first line management positions (typically increasing the level from less than 40% to 80%+) where they will be ideally placed to energise other real change agents at lower levels.
• Middle managers (and even some senior managers) are moved, depending on their collaboration and change credentials – and the level and range of relevant influence with peers and key senior executives, so that those with the ‘best mix’ of influence networks are increasingly in the most relevant line positions. As a by-product, common command and control anomalies, such as where high-level functional managers are much less influential with their superiors and peers than one or two of their subordinates, will largely be eliminated.

 

The way that people behave at work – not just what they do, but the way that they do it – can often be improved significantly:

• At a cultural level, initiatives are put in place to reach management/change agent consensus on desired workplace behaviours and these can be reinforced continuously through day-to-day informal peer encouragement of ‘good’ behaviours and criticism of ‘bad’ behaviours as these occur.

 

These types of ‘structural’ changes will minimise the degree to which innovation pipelines across the organisation are ‘clogged up’ with the wrong people in key positions and will significantly reduce the incidence of groups or individuals ‘behaving badly’. Malicious obedience – a common and very damaging human reaction to unreasonable or inconsistent management behaviours – will become extremely rare. 

 

Structural changes can also be made at the team or group level. For example, relevant informal personal networks will often become key determinants for group and team effectiveness:

 

• R and D teams will be chosen as much for their overall network of personal contacts as for their mix of technical skills. Some team members will also be chosen because of their access to knowledge sources. Very different groups of people delivering much enhanced, practical innovation in shorter timescales
• Project specialists who can energise those they work with will be identified and optimised across a variety of change projects, often irrespective of their specialist skill sets. Recognising key human aspects of change teams delivers much better results, usually on time and on budget.
• Successful salespeople are generally those with extensive, relevant personal networks – with key people in customer organisations, with other sales staff, and with relevant individuals within the parent organisation. Structures can be put in place for these ‘super salespeople’ to share or even pass contacts on to others in different sales teams, so increasing overall sales levels.

 

These are just a few examples. Relevant organisational networks will have a significant impact on both the efficiency and effectiveness of most teams working in a business environment. Indeed, the whole process of induction as new employees move up their respective learning curves can be transformed by rapidly building relevant informal personal and team networks through ‘seeding’ new contacts in a variety of training, job rotation, project and social events.

 

Structural changes alone, however, are not a total solution: despite the potential power of these structural change channels, problem solving, and innovation would still essentially be left to the natural instincts and willingness of different types of natural leaders throughout the organisation. Very fertile ground certainly – but built on people who are, by and large, not yet familiar with change analysis and implementation. Moreover, there are other conditions necessary for natural leaders to emerge and make their full contribution to developing a high-performance organisation. For example, people generally produce better results when they:

 

• Have better information
• Can engage in multiple, collaborative interactions with colleagues
• Are better networked with colleagues inside and outside the organisation
• Feel safe to develop and try innovative new ideas
• Can learn and develop through doing rather than just taking in information

 

Each of these, at first sight, is subject to management action, but that first sight is illusory. For example, it is possible to develop a well-designed, technology-supported knowledge management system. But that does not mean that people will consistently make use of the information that is available and share it to deliver informed analysis and therefore better decisions.

 

It is possible to develop and issue policies on collaboration, but does anyone believe that these will directly lead to significantly higher levels of collaboration in practice? Policies on inter-personal or inter-group networking (by themselves) are likely to be equally ineffective. Policies on formal networks may have benefits but will do nothing for the vast majority of tacit interactions, since these occur through discretionary informal networks. Telling people that they are safe to develop and try new innovative ideas is more likely to be greeted with blank stares or, worse, cynicism. ‘Safety’ in this context is an emotion that is not produced by diktat. The aspects of organisational behaviour that produce a sense of safety are subtle and complex, are heavily dependent on consistent supportive management behaviours over time and cannot just be prescribed. With a few noble exceptions, learning by providing information is what management routinely does, and it is generally poles apart from learning by doing. The vast majority of learning by doing occurs through cross-functional problem resolution, which is also outside the scope of management diktat.

 

Yet, despite all these constraints, the CEO can do some very effective and rapid ‘pump priming’ by buying into informal networks analysis and development tools that help (not instruct) natural leaders at all levels to identify current problems, constraints and new opportunities. 

 

These ‘informal network’ tools are typically web based and come in two types – targeted and open analysis. Targeted tools are aimed at identifying common problems and constraints that may exist in your organisation, such as poor information flows across functional silos, an excess of ‘micromanaging’ or poor strategy communication through different areas of the business. Open tools can be tailored to address specific problem areas, such as slow new product development, a quality problem or a decline in productivity in a back office. The open tools typically enable relevant employees to identify what ‘should be happening’ – who should be collaborating with whom, is the problem focused in one area or more widespread, how much discretionary effort is being expended to rectify a specific poor process or system, etc. Natural leaders are used to identify the most relevant sample population for using these analysis tools and participants are always included in follow-up workshops to review the information generated, interpret it, highlight problems, analyse the cause, and identify opportunities and solutions. In these ways, the high error rates associated with traditional 100% or representative questionnaires (particularly when dealing with sensitive issues) are largely eliminated. 

 

In the Natural Leadership Model, formal managers are largely natural leaders acting in harmony with a whole range of other non-managerial natural leaders across the organisation. A variety of natural leaders drive change processes, they build trust and honesty, and they energise implementation of the solutions. Natural leadership gradually fills the practical ‘gaps’ to create a high-performance organisation – an ongoing process that requires continuing management encouragement, consistent management behaviours, the right structural changes (including appropriate reward mechanisms) and the right informal network tools. Management can set the environment for achieving a high-performance, change resilient organisation but only natural leaders at all levels can implement it fully. 

 

Implementing only part of the Natural Leadership Model will deliver only partial success. For example, in recent years, there has been a lot of talk – and a large number of mainly ineffective initiatives – aimed at increasing employee engagement. Training, briefing sessions, facilitated workshops and lots of management communication have simply failed to deliver a breakthrough to highly motivated employees, working hard, readily giving discretionary effort, and using their brains to innovate for the future good of the business. Put bluntly, collaborative managers working in a predominantly command and control environment do not deliver engaged employees for any sustainable period of time, despite all the management efforts designed to produce effective employee engagement. Most such management interventions are just another manifestation of ‘command and control’ management, in this case ‘management by exhortation’ delivered through friendly, collaborative managers.

 

The Natural Leadership Model has to be based on high levels of trust and transparency: not just words but consistent, practical actions and relevant mechanisms – including widespread, day-to-day behaviour reinforcement for managers as well as everyone else; with ‘natural leader’ driven analysis tools; and an open information environment, where results, innovations and proposals are readily available and communicated to all – through many informal communication channels as well as occasional formal announcements. 

 

It is impossible in advance to precisely estimate the bottom-line benefits from adopting the Natural Leadership Model in your organisation. Nevertheless, we know that the benefits are potentially huge. Productivity increases between 20% and 100%, much higher employee engagement and morale, lower employee turnover and the ability consistently to attract high quality people. But the biggest payoffs may well be in spotting the dangerous threats and really big opportunities much earlier. The future of your business may well depend on the early warning mechanisms that you will set in place – mechanisms that only work consistently in a highly-engaged, natural leadership business environment: energised by the right people and supported by the right tools. 

 

As you consider the relative merits of the Natural Leadership Model, it may be worth asking yourself the fundamental question: How many of our natural leaders can we identify today? Well, unless your organisation is very unusual, it’s highly likely that more than 75% of your natural leaders are not in the management hierarchy at all – and even if you get on the phone and asked all your local managers right now, the combined answers you would get would be only about 33% right! How many natural leaders will you lose through proposed redundancies (voluntary or compulsory) in this recession year? How many effective collaborative informal networks will be fractured or destroyed as key ‘linking’ individuals leave? (Did I hear you whisper that you don’t know!)

 

In 2008, Neil wrote a book describing many of the elements in the Natural Leadership Model. (The Invisible Organization, published by Gower Publishing in December 2008). Denis built the worldwide network of consultants supporting the Natural leadership Model to more than 30 in the UK, Europe, America and even China. 

 

As Darwin said: “It is not the strongest of the species that survive, nor the most intelligent, but the ones most responsive to change.” Over the next decade and beyond, businesses ‘most responsive to change’ will increasingly be using a tailored form of The Natural Leadership Model.

 

So, you could regard the recession as something to be endured, survived and, hopefully, soon forgotten. Alternatively, you could follow the wisdom of the chap who said, “There’s no such thing as problems – just different kinds of opportunities”. Why not take the opportunity to clean out the Augean Stables of old, failed management models? As with Hercules, it would mean getting to grips with the nether regions of the organisation, but heroes do these things when the need and payoff are both great. In the current situation, having an organisational stable brimming full of previously hidden thoroughbreds just raring to go sounds like a good antidote for depressed economic times! If you would like to explore the what, why and how, please give us a call. Our team would be delighted to help you buck current market trends.

ENABLING INNOVATION TO STIMULATE A FLEXIBLE ORGANISATION

“One does not discover new lands without consenting to lose sight of the shore for a very long time.” André Gide

 

And therein lies the rub. Most managers will agree that innovation, which used to be required for developing and maintaining competitive advantage, is now essential just for survival. But the same managers are also concerned with the need for control. And it is impossible to have both at the same time. So a key question is how to unlock the contradiction, and ensure that innovative developments are aligned with strategic direction. First, consider some of the challenges to much conventional thinking.

 

The designed organisation

Organisation design mainly concerns strategy, structure and process. The idea is that strategy provides direction; structure distributes power; and process distributes tasks. The overall aim is to achieve stability, predictability and repeatability. All of that ensures that the strategy will be delivered. The problem is that when it’s realised that the business environment is very turbulent, there is a demand that people innovate. The implication is that people are being asked to produce instability, unpredictability and un-repeatability in an organisation designed to produce the exact opposite. And when they fail to deliver the required innovation, complaints are uttered about their lack of creativity and inability to innovate!

 

Command and control management styles

Telling people what to do and then checking up on them, accompanied by lots of KPIs, is a well worn but still popular approach to managing and control. The evidence suggests that it has never been successful in delivering high performance (1), but its application to innovation is a logical non-runner. There are two dimensions to innovation. The first is an act of creativity – thinking of a new way of doing something. The second is the transformation of the new idea into action: someone has to do something that has never been done before.

 

The first cannot be commanded. The creative idea generally comes from reflection, often about a problem or opportunity, and most often arises when two or more people come together to share their ideas in pursuit of performance improvement. The second is a matter of organisational climate – is it safe to try new ways of working, knowing that all such ventures are, by definition, risky? What will happen if an idea is tried and fails? What follows next might be shared learning, but it might be retribution! If it’s the latter, say goodbye to innovation.

 

Organisational permissions to create organisational flexibility

Exhortation does little to change behaviour. By contrast, permissions are the unwritten, unspoken messages contained in the design of organisation structures and processes, (as suggested above), and in the acts of individual managers, especially the senior variety. For example, an excessive focus on short term numbers and ‘micro’ management control are both sure-fire killers of innovation. The approach that works is for managers to seek negative, constraining permissions and replace them with positive, enabling permissions – specifically those that make it OK to test new ways of working, in the knowledge that what would follow failure would be shared learning, not retribution.

 

All of which leads to the conclusion that innovation can be enabled, but not managed. So, the challenge is how to develop a flexible innovation-enabling organisation. Fortunately, the challenge also contains the solution. Key Performance has a unique approach achieving innovation, enabling leadership and creating flexible/agile organisations.

 

1 – Managing by the evidence ~ McKinsey 2006

HOW FLEXIBLE THINKING AND AGILE WORKING CAN IMPROVE YOUR BUSINESS

When people discuss agile and flexible working, instinctively the focus is on flexible hours, hot desking or home working. This leads us to ask if we have a real understanding of the terminology. So what is ‘agile working’? And how does it differ from ‘flexible working’ and other terms often encompassed by the phrase ‘new ways of working’.

 

The RICS published a very interesting paper on agile working, which certainly gives plenty of thought to what agile working isn’t and what agility is, with some great examples. But it’s difficult to extract a succinct definition of agile working. Another interesting read is the FM World article Test of Agility, which summarises BT’s thinking and experience on the subject. For BT, flexible working is first generation thinking, while agile working is the new paradigm, ‘a transformational tool’ that’s the cornerstone of their property and people strategy, providing gains on cost, personnel productivity and sustainability.

 

One of the more straightforward and memorable descriptors is ‘Martini’ working (for those old enough to remember the ad slogan): ‘any time, any place, anywhere’. Most definitions of flexible working follow this tagline. But this is 2 dimensional, and ‘new ways of working’ these days must be multi-dimensional – not just limited to doing the same work in the same way at a different time and place. Agile working, on the other hand, incorporates time and place flexibility, but also involves doing work differently – it is transformational. Indeed, one organisation (Tameside MBC) has named their programme ‘Working Differently’.

 

Agile working is not new, but it is a new way of working. It can certainly be included under the umbrella term ‘smart working’, which is about using the benefits gained from changing work practices, deploying new technologies and creating new working environments. Behind the dissemination of new ways of working is progressive improvement in mobile, wireless and fixed line technology and related investments in fibre, bandwidth, server capacity, cloud computing and convergence. In fact, the network is increasingly seen as the place of work with the consequent rise of people working in the ‘clouds’ or virtual world.

 

You may ask where terms like ‘home working’ and ‘mobile working’ feature. These are essentially classed as workstyles, which relate to the place or location description in the concepts of agile and flexible working. ‘Hot desking’ and ‘Touchdown’ are other well used terms which are specific work settings in office workplaces.

 

One of the reasons agile working is difficult to pin down, is that it’s not prescriptive – there is no one size fits all. It has common themes but is essentially individual and involves choice in the how, what, where and when of working. My definition of agile working was aired at the CoreNet Global Conference in Brussels September 2009:

 

Agile working is about bringing people, processes, connectivity and technology, time and place together, to find the most appropriate and effective way of working to carry out a particular task. It is working within guidelines (of the task) but without boundaries (of how you achieve it).

 

Whatever the arguments over definition and terminology, the goal of agile working is to create more flexible, responsive, efficient and effective organisations that are based on more balanced, motivated, innovative and productive teams and individuals. These are essential ingredients in surviving and thriving in the current economically challenged world.

 

This article was written by Paul Allsopp of The Agile Organisation.