LEGITIMATE LEADERSHIP’S NEWSLETTER AUGUST 2017
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CASE STUDY: BEATING A DOWNWARD TREND BY SHIFTING INTENT
By Ian Munro, director, Legitimate Leadership.
To beat an extended downturn in the economy, and to go against the downward trend in its most significant market – that was what biotechnology company Deltamune had to do in order to stay operating. It knew it had to do something different in order to survive and thrive.
The company had numerous new business and project opportunities, but it was unable to bring them to fruition. With the help of the Legitimate Leadership framework, the “people” reasons “why” the goals were not being achieved, and what needed to change in order to achieve them were clarified. What was asked of leaders in Deltamune was not only a change in behaviour, but more importantly a change in intent. Diagnostic data collected for all senior leaders showed that while there was impressive respect for management, employees didn’t feel that management was really committed to their personal wellbeing – the latter being the single strongest determinant of support for management by employees.
There were also problems with the amount of time and support employees were receiving, as well as significant challenges with information sharing. Employees felt they were “out of the loop” and leaders had not engaged, or fully understood, their collective contribution. There was limited true accountability for what people were putting in, and arguably too much accountability for things outside of people’s direct control.
These were the challenges above which the Deltamune senior leadership team had to rise. And in partnership with Legitimate Leadership they did so. After the 18-month intervention, the improvement was confirmed by a repeat survey of leaders which reflected higher scores individually and on average. Deltamune is once again on a strong footing with significant growth aspirations over the next five years.
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ARTICLE: ENABLING HUMAN EXCELLENCE BY RAISING THE BAR
By Wendy Lambourne and Ian Munro, directors of Legitimate Leadership.
Leaders, unlike managers, focus not on the achievement of results but on enabling excellence in their people. They do so because they know that sustainable organisational excellence is not possible with mediocre people.
One way to enable excellence in people is to deliberately and consistently raise the bar. No one ever made it to the Olympics by jumping repeatedly, no matter how often, over a height of 1.50m or even 1.80m. Olympic high jumpers need a coach who continually raises the bar; in the case of the high jump, literally.
Similarly, leaders enable their people to be the best that they can be by continually reimagining and then implementing higher standards of behaviour and performance. An Operations Director for example, achieved significant improvements in Total Reportable Injury Rate (from 1.9 down to 0.35), a 40% productivity increase and an 80% decrease in customer complaints over a three-year period through the imposition of increasingly exacting safety, quality and efficiency standards.
When it comes to standards there is no truer adage than “the standard you expect, you demonstrate and the standard you walk past is the standard you get.”
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ARTICLE: ORGANIZATIONAL DECLINE THROUGH OVER-CONTROL
By Lulu de Beer, associate, Legitimate Leadership.
Organizations continue to experience excessive red tape despite business thought leaders suggesting that bureaucracy damages business growth and profits. The symptoms of bureaucracy include too many management layers, greater growth in head office employees than frontline employees, more and more processes removing the autonomy of employees, increasing reporting demands and excessive time spent in meetings. When speaking to business leaders the issue of too much red tape is a regular refrain, and yet little has changed for most large organizations.
Legitimate Leadership works with leaders to develop a working environment where leaders implement the behaviors that would allow their employees to contribute willingly. Rather than employees reluctantly accepting the instructions and commands of managers, employees will want to work for a leader that acts in their best interest, offers them opportunities to grow and enables them to deliver their best performances.
What does this mean practically? How can business leaders reduce red tape and allow their employees to contribute fully?
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ARTICLE: WHAT WE LEARNED ABOUT BUREAUCRACY FROM 7,000 HBR READERS
By Gary Hamel,visiting professor at London Business School and cofounder of The Management Innovation Exchange, and Michele Zanini, MD of the Management Lab and co-founder of the Management Innovation Exchange , which seeks to reinvent management by harnessing the power of open innovation.
COMMENT BY WENDY LAMBOURNE, DIRECTOR, LEGITIMATE LEADERSHIP:
Gary Hamel and Michele Zanini have provided a wonderful synopsis of the core problem facing big organisations today, namely “A management model that perpetuates a caste system of thinkers (managers ) and doers (everyone else ) , that regards human beings as mere ‘resources’, that values conformance above all else, that squeezes people into slot–shaped roles irrespective of their innate capabilities, that swallows up human initiative in the quicksand of bureaucratic busy–work, and that regards freedom as a dangerous threat to alignment and discipline.”
We at Legitimate Leadership fully endorse the authors’ takeaway is outlined in their article. The summation of which is that “bureaucracy is a tax on human accomplishment”. We also support them in believing that the first step is to establish an empowerment (the opposite to bureaucracy) scoreboard and to hold managers (especially senior managers) accountable against it. This was advocated in the book Legitimate Leadership (2012), page 145. We support the final statement in their article – namely, “If, as they claim, leaders are willing to share power, and if, as our respondents believe, employees are capable of exercising it wisely, then there’s no excuse for not getting on with the hard but eminently worthwhile work of dismantling bureaucracy.”
BELOW IS OUR SUMMARY OF THE ARTICLE BY HAMEL AND ZANINI WHICH APPEARED IN THE HARVARD BUSINESS REVIEW
The authors recently asked members of the HBR community to gauge the extent of “bureaucratic sclerosis” within their organizations using their Bureaucracy Mass Index(BMI) tool. They received over 7,000 responses from diverse participants.
Here are their initial takeaways:
The blight of bureaucracy seems inescapable. For each completed survey, they calculated an overall BMI score by aggregating responses across seven categories of bureaucratic drag: bloat, friction, insularity, disempowerment, risk aversion, inertia, and politicking. On their BMI scale, a score of 60 represents a moderate degree of bureaucratic drag, while anything less than 40 indicates a relative absence of bureaucracy. 64% reported a BMI of more than 70; less than 1% had a BMI of under 40. Not surprisingly, BMI scores were correlated with organizational size. The average BMI for companies with more than 5,000 employees was 75. Of the respondents who reported a BMI of less than 40, three-quarters worked in organizations with fewer than 100 employees. This confirms that large companies suffer from managerial diseconomies of scale.
Bureaucracy is growing, not shrinking. Nearly two-thirds of respondents felt their organization had become more bureaucratic—more centralized, more rule-bound and more conservative—over the past few years. Only 13% of respondents said their organizations had become less bureaucratic. Individuals working in customer service, sales, production, logistics and R&D were more likely to feel that bureaucracy was growing than those working in functions like HR, finance, planning, purchasing, and administration. In other words, the individuals who felt most hamstrung by bureaucracy were the ones most directly involved in creating customer value.
Organizations aren’t becoming flatter. The average respondent works in an organization that has more than 6 management layers. In large organizations (more than 5,000 employees) front line employees are buried under 8 or more layers of management.
Bureaucracy is a time trap. BMI survey-takers reported spending an average of 28% of their time—more than one day a week—on bureaucratic chores such as preparing reports, attending meetings, complying with internal requests, securing sign-offs and interacting with staff functions. A significant portion of that work seems to be creating little or no value. Less than 40% of respondents found typical bureaucratic processes (eg budgeting, goal-setting, performance reviews) to be “very helpful.” Another indicator of bureaucratic waste: nearly 40% of respondents said their ability to deliver value would be either unaffected or enhanced by a 30% reduction in the number of head office staffers.
Bureaucracy is the enemy of speed. Two-thirds of respondents believe that bureaucracy is a significant drag on the pace of decision-making in their organization—a number that rises to nearly 80% in large companies. Negotiating budget exceptions—often necessary when a company has to move quickly—was also impeded by bureaucracy. The average time for getting approval for an unbudgeted expenditure was 20 days or more in large organizations, versus 13 days in companies with fewer than 100 employees.
Bureaucracy produces parochialism. Survey respondents spend 42% of their time on internal issues — resolving disputes, wrangling resources, sorting out personnel issues, negotiating targets, and other tedious domestic tasks. Most swamped are executives in large companies who devote nearly half of their time to in-house matters. So senior leaders, who are typically charged with creating strategy, are significantly less externally focused than their subordinates. Little wonder then that they are often slow to respond to emerging threats and opportunities.
Bureaucracy undermines empowerment. When asked whether they had “substantial” or “complete” autonomy to (a) set priorities, (b) decide on work methods, and (c) choose their own boss, only 11% answered in the affirmative. In a similar vein, respondents estimated that fewer than 10% of the employees in their organizations could spend $1,000 without getting a sign-off from their boss. A further sign of disempowerment was that over three quarters of respondents indicated that front-line employees were either “never” or only “occasionally” involved in the design and development of major change initiatives. Since change that is imposed is often resisted, this is undoubtedly a contributor to the high failure rates of major change programs.
Bureaucracy frustrates innovation. Only 20% of respondents said that unconventional ideas were greeted with interest or enthusiasm in their organization. Eighty percent said new ideas were likely to encounter indifference, skepticism, or outright resistance. There was also a lack of support for bottom-up experimentation and innovation. Ninety-six percent of respondents working in companies with more than 1,000 employees said it was “not easy” or “very difficult” for a front-line employee to launch a new initiative.
Bureaucracy breeds inertia. In a bureaucracy, change programs are implemented top-down. The problem is, by the time an issue is big or urgent enough to capture top management’s scarce attention, the organization is already behind. Not surprisingly, nearly 60% of those surveyed said that change programs in their organization were “mostly,” or “almost always” focused on catching up. Fewer than 10% of the respondents from large companies said change programs were “mostly” or “almost always” focused on breaking new ground.
Bureaucracies are petty and political. In a formal hierarchy, competition for influence and advancement is a zero-sum game—hence the prevalence of backbiting and politicking revealed in the survey. Nearly 70% of big-company respondents indicate that political behaviors (like blame-shifting, resource hoarding, and turf battles) are “often” observed in their organizations. Overall, 64% of respondents claimed that political skills “often” or “almost always” influence who gets ahead; in large organizations, it was 76%. In a bureaucracy, power often goes to the most politically astute rather than the most competent. While we may live in the era of big data and information transparency, it seems that office politics hasn’t advanced much.
Taken as a whole, the BMI survey provides yet more evidence of the toll bureaucracy takes on productivity and resilience. It is a tax on human accomplishment.
However, bureaucracy won’t easily be beaten. We don’t lack role models – companies like Nucor, Morning Star, Spotify, Haier, and others. The real impediments are deeper and more personal.
Survey participants identified the most significant barriers to down-sizing bureaucracy was the reluctance of senior executives to share power (57% of them), and the widely-held belief that bureaucracy is essential for control (50%). However, while nearly two-thirds of front-line people viewed power lust as a barrier to cutting bureaucracy, only a third of CEOs shared that view. There was a similar split around the belief that bureaucracy is critical to achieving control. While 57% of first-level employees cited this as an impediment, only 27% of CEOs expressed a similar belief.
Another gap emerged when the authors asked respondents to reflect on the fact that bureaucracy is both familiar and entrenched. Fifty-four percent of lower-level employees saw this as a barrier, compared to only 23% of CEOs. So who’s right here? Frontline employees who believe that bureaucracy is vigorously defended and deeply embedded, or senior executives who see bureaucracy as a less fearsome foe?
However, there was one area of consensus: senior leaders and lower-level employees agreed that a lack of information and competence on the front lines is not a barrier to the devolution of authority and responsibility. Only 26% of CEOs and 36% of front-line employees mentioned this as an impediment. This leads to an intriguing question: if there’s a broad consensus that employees are, in fact, capable of self-management, why do they remain mired in a bureaucratic morass?
Either senior leaders are more reluctant to share power and more skeptical about their employees’ capabilities than they’re willing to admit, or there are other, deeper, barriers to banishing bureaucracy.
One of these barriers may be the lack of a step-by-step guide for disassembling bureaucracy. Few know how to make it happen. Where do you start? How do you overcome pockets of resistance? How do you build the right sort of culture and values? How do you prepare individuals to take on more responsibility? What supporting changes in information systems, incentives and organizational structure are necessary? There’s no uninstall button.
Still, humans have often ventured forth without a map – for instance, those who dreamed of landing human beings on the moon, or today those who are working to build machines that can think and emote.
What propelled the pioneers forward wasn’t certainty of success but the opportunity to expand the boundaries of human capability and further the cause of human dignity. These are the motivations that must be harnessed if we are to rid our organizations of the stultifying effects of bureaucracy.
In most organizations the costs of bureaucracy are largely hidden. Our accounting systems don’t measure the costs of inertia, insularity, disempowerment, and all the other forms of bureaucratic drag. Nowhere do we capture the costs of a management model that perpetuates a caste system of thinkers (managers) and doers (everyone else), that regards human beings as mere “resources,” that values conformance above all else, that squeezes people into slot-shaped roles irrespective of their innate capabilities, that swallows up human initiative in the quicksand of bureaucratic busy-work, and that regards freedom as a dangerous threat to alignment and discipline.
Measuring bureaucratic drag is a first step towards changing all this. As the size of the bureaucratic tax on human accomplishment becomes more visible, inaction will become more difficult to defend. If, as they claim, leaders are willing to share power, and if, as our respondents believe, employees are capable of exercising it wisely, then there’s no excuse for not getting on with the hard but eminently worthwhile work of dismantling bureaucracy.
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