The performance that really matters
by Simon Caulkin

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When 30 of the biggest names in management convened in California in June 2008 to spend two days ‘inventing the future of management’, one professor observed that we knew plenty already: what was really needed, he said, was an implementation as much as an innovation engine. (Here’s what I wrote about the event at the time.)

One of the things we have known a lot about for some time is the high-performance workplace. Performance that matters wasn’t and isn’t a mystery, documented as it is in copious research covering many settings and industries over decades. Much of it is what most people would call common sense: giving people a good job to do, the tools and the autonomy to do it, fair pay and conditions and a strong sense of purpose. The predictable by-product is a committed workforce in which trust replaces the need for burdensome rules and hierarchy, which is one reason why such workplaces are regularly 30 or 40 per cent more productive than the norm, with financials to match. Significantly, many such organizations also figure highly in ‘best firms to work for’ and Glassdoor-approved lists. Which leads to what really is a mystery: since we know what to do and it’s reliably effective, why are companies using such practices so rare? In almost every sector there is a ‘positive deviant’ that is consistently successful doing the exact opposite of the conventional industry wisdom. Two of them were represented at Half Moon Bay – W.L. Gore and Whole Foods Markets – and they are still quoted today (although the latter is now owned by Amazon). These days we would add Haier and its US acquisition GE Appliances, Nucor, Vinci, Buurtzorg, and a few more. But the sad truth is that the exemplars have strikingly few imitators. Economics predicts that if rational companies and managers spot dollar bills lying in the street, they’ll pick them up pronto – so why not here?

One reason is that high performance involves many elements working together, which mandates patience and thought. It isn’t a big initiative to catch the attention of the markets or appeal to a new chief executive in a hurry to make a mark and move on, like digital transformation or a large merger. (It is telling in this respect that most of the high-performing companies are private, not publicly-quoted firms.)

But another reason for the neglect may be that traditional managers don’t see the cash lying in the street. You can’t get to high performance incrementally from today’s conventional wisdom – as a system, it starts from assumptions that set it on a different management track. Instead managers double down on doing the same thing as before only better! faster! – which simply drives them further up the blind alley. An awful example of where that leads is the digital technologies that could serve to build a more open, sustainable and democratic economy, but which today’s counterproductive management incentives have hijacked to be used for trust-destroying manipulation and surveillance.

If this diagnosis is right, it puts management innovation in a different light. While improving performance can always benefit from new organizational insights and practices, if these are to yield their full promise the first essential is a sympathetic platform on which to graft them.

Exhortation won’t bring it about. Judging from the snail’s progress so far, nor will new-minted affirmations of corporate ‘purpose’. More promising is the advice of one of the architects of the management model we now urgently need to decommission. ‘Only a crisis,’ reflected Milton Friedman, ‘produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes the politically inevitable’.

By any measure that moment must be near. The necessary crisis is already convulsing the organization – what we might call the revolt of the knowledge workers, aka the Great Resignation. As Lynda Gratton has noted, an unexpected effect of Covid has been to ‘unfreeze’ ingrained work habits that had remained unchallenged for half a century. Although employers are trying hard to re-freeze them back into the old patterns, not least with the digital surveillance techniques deplored above, employees and particularly knowledge workers are balking at returning to the bullshit jobs, bureaucracy and toxic culture that surveys say are driving the exodus. RTO (returning to the office) has become a battleground.

As such, it is also the pressure point where the current management model is vulnerable. Toxic workplaces are unfortunately nothing new. As the author of the implementation quote at the start of this article, Jeff Pfeffer, underlined in his indignant Dying for a Paycheck (2018), for some time they have been a dark stain on on the corporate record – a massive generator of mental and physical ill health that causes an astonishing 120,000 excess deaths and costs business at least $300bn a year in the US alone.

But Covid and the Great Resignation have brought the issue squarely to the top of the agenda. Making people sick, or worse, at work is no longer acceptable practice. It is absurd that currently more attention is directed to environmental than to human sustainability. As with child labour, slavery and poisoning the environment, it should be proscribed, and executives held accountable for rooting it out. The more so as it comes with a huge positive bonus. As Pfeffer points out, not only is there no conflict between concern for employee health and quality, productivity or profitability, they go together: for obvious reasons healthy workplaces are normally higher performing as well as happier, and vice versa. That’s a win for society as a whole, as well as for employees, the company and its shareholders too. And here’s one more – enormous – benefit: no one can accuse it of wokery. Rather it’s welcome proof that doing the right thing, and doing it right managerially, are systemically as well as morally good. The high performance that results generates trust and a positive view of human nature as well as a vast amount of shared material value. Who could be against it? Building a movement that makes this happen at scale may not be management innovation in the strictest sense – but it would be a giant step towards the realistic, human-centered and effective management platform that we need to unblock the path to meaningful innovation. Performance could hardly matter more than that.

About the Author:

Simon Caulkin is senior editor for the Drucker Forum.

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