The world has changed dramatically over the last few decades, but the way we work hasn’t kept up. Frederick Taylor died more than a 100 years ago, yet most organizations look and operate pretty much like they did when his assembly-line model was the cool new idea of the day.
Taylor was a Mechanical Engineer with a linear, parts and pieces view of the world. He believed that all work could and should be reduced to a series of small steps. He believed the focus of management should be the optimization of work processes and development of standards and procedures. He believed there was one right way to do each task (the most efficient way) and there should be no straying from the norm.
Taylor focused on individual work, productivity and incentives. He believed people were inherently lazy and motivated only by money. He believed they needed specific, detailed instruction and needed to be “managed” closely to ensure they followed the rules and did things the right way.
I know you’re thinking that none of this makes sense anymore and you’re right. The problem is not with the thinking, it’s with the lack of change in infrastructure and practices. We don’t believe people are inherently lazy or motivated only by money, yet money continues to be where we focus. We talk about teams and collaboration, but our job, pay, performance and promotion structures are all based on individual effort. We have flatter organizations and movement laterally, yet org charts are still predominantly hierarchical. The corporate ladder has collapsed, or at the very least lost many of its rungs, yet we continue to use job structures, career ladders and a language based on its existence.
We live in a hyper-connected world that allows us to work from anywhere, any time of the day or night, yet the majority of people still fight traffic every morning and every evening driving to a company facility where they work a typical 8-hour day. Companies spend enormous amounts of money to find and hire the right person for a job, completely ignoring people in other cities or contractors, job-sharers or part-time employees who may be a better fit.
The way we’re working isn’t working
Why are companies so slow to change their people practices? I think its because its easier not to. We’ve created these monstrosity infrastructures and fiefdoms where we have so much invested in doing things the old way that it’s just easier to keep doing it that way.
I think part of the problem is also how we incent and reward people involved in people practices. We tell managers that coaching and developing their people is a part of their job, but they’re incented and rewarded for increasing profits or keeping costs down with no mention of progress made in the people department. HR folks are focused on providing training, not on creating a learning organization or ensuring people know what they need to know to do their job effectively. Recruiting and staffing are about filling a slot, rather than finding the best match to the job, the team and the culture.
$450 billion dollar catalyst
In order to turn the giant ship, we need a catalyst. We need an iceberg. I think engagement is the iceberg.
Not much has changed since Gallup did its first employee engagement study in 2000. At that time, and today, studies show that only about 30% of US employees are engaged in their work. That means that 70% of the workforce has tuned out, is uncommitted and unmotivated. Gallup puts the estimated annual cost in lost productivity at over $450 billion. Let me say that again – $450 billion. Even if the numbers are a little inflated, it’s clear we have a problem.
And its not just Gallup talking about the costs of disengagement. Alex Edmans of The Wharton School of Business in The Link Between Job Satisfaction and Firm Value with Implications for Corporate Social Responsibility, notes that organizations with engaged, productive workforces significantly outperform organizations with unmotivated workforces more than 300 percent.
In a Towers Watson study of 90,000 employees across eighteen countries, companies with the most engaged employees reported a 19 percent increase in operating income, and a 28 percent growth in earnings per share. Companies whose employees had the lowest level of engagement had a 32 percent decline in operating income, and an 11 percent drop in earnings.
Lack of engagement not only effects productivity. It also affects retention. Losing employees is disruptive and costly, with hiring mistakes costing roughly 2 ½ times a person’s salary.
If you take the costs of lost productivity, add in attrition costs, then add in the costs of maintaining these enormous infrastructures that no longer serve our needs, it seems like we have a pretty compelling value proposition.
Where Do We Start?
In my next post I’ll talk about the stages of transition and provide some ideas for how to help your organization navigate the change.