…and how to make that happen.
The traditional organizational structure
Every large organization has its legacy. Decades and sometimes even centuries ago, the organization was formed by an entrepreneur with a dream. The organization grew larger and larger. Times and cultures changed, as did the social context, the technology and people interacting and belonging to that organization. With so many different variables, at times, it seems the only constant is growth.
Legacies can be good and bad. Some companies manage to continue to live up to their dream and, as we learned from Jim Collins best-selling book ‘Good to Great’, they stick to their core principle, the ‘hedge hock principle’. Very seldom do we see companies creating a culture of business agility. This is understandable, after all, core principles take time and investment to engrain in the organization, and they are often very dear to company founders and executives. Unfortunately, though, the structures of most modern organizations and the way employees within those structures are managed are today being exposed as painfully out of date. Most enterprise organizations I know still use the old-fashioned carrot-and-stick method: financial KPIs and yearly appraisals. The organizational structure has followed the product and process focus. The enterprise structure often is a very traditional one, in a simplified version most organizations look like this: manufacturing, marketing, sales, service, as well as staff functions like financials and human resources. In many of these organizations, these departments operate as silos, with cross-departmental collaboration only taking place when demanded by the top levels of the business. This, understandably, makes the task of aligning several departments in the name of achieving company goals extremely difficult. It also makes it difficult for the vast majority of individuals to see what value their work brings to the company as a whole.
Today’s need: focus on the customer
Most organizations today understand that they need to be focused on understanding the customer and satisfying his or her needs. Globalization, the rising importance of on-line and social media and the general trend towards fiercer competition have all contributed to this.
Within most organizations today, the traditional approach to manufacturing, marketing, and sales operations date back to the industrial age. Among others, C.K. Prahalad has taught us in his famous book, the ‘The Future of Competition’ that these models are no longer fit for purpose. Instead, we need to co-create with our customers and create unique personalized experiences.
Most organizations I work with are aware of the need to be on the same page throughout the entire organization when it comes to customer contact. They are developing ‘customer centricity awareness programs’ – internal programs with inspiring names like ‘Our Client First’. These initiatives often include printing placemats for the company canteen and creating campaign-specific posters and screensavers. While this helps to build awareness and buzz, such initiatives are rarely accompanied by a re-think in how company KPIs are structured. So while the campaign proclaims a revolutionary new way of thinking and a call to change the ‘status quo’, the means by which these behaviors are measured remain stuck in the past, with little consideration for anything but the financial triggers. Such KPIs do not motivate the vast majority of employees, nor do they promote a change in behavior or increase the likelihood of cross-departmental collaboration. And yet many organizations persist with such measures because they represent an easy and convenient way of distributing share holders’ value KPI’s down through the business.
What motivates professionals?
All employees are professionals. Scientific research has shown that professionals have an intrinsic motivation, an internal drive to perform well. Daniel Pink put forward his research on the topic in the book ‘Drive’. Pink’s research found that carrot-and-stick style financial KPIs are counterproductive and tend to frustrate professionals far more than they motivate them. What he found was that Autonomy, Mastery and Purpose are the key principles that motivate professionals.
For those interested in learning more about this, I would definitely recommend this RSA animated representation of Daniel Pink’s thinking.
Creating a social culture, using social (media) technology
I’ve seen excellent examples of how technology can make these things happen. The term is Social HR, modern social media based HR tools. A great example of this is Rypple. Facebook uses it, as does LinkedIn, and a great (3 minute) video has been created showing how Spotify uses the tool to motivate employees and align them with company targets. Rypple was acquired by Salesforce.com and is now known as Work.com. It enables companies to define effective targets (the purpose of Daniel Pink’s book, ‘Drive’) and monitor their progress far more frequently and openly than traditional appraisal processes allow. The Facebook-like environment enables employees – both managers and colleagues – to provide their feedback on individuals in way that is intuitive and consistent with their best experiences of using social media tools.
The open, ‘social’ nature of this exercise means that the feedback they provide transcends internal organizational structures and enables feedback and appraisals to be captured against company targets. Importantly, this can all happen without being hindered by internal boundaries, departmental KPI’s or sub-optimal departmental targets. This enables high-performing employees to shine and, importantly, it provides them with the motivation – in the form of peer recognition – to perform to the best of their abilities. In the same way, this ‘openness’ ensures that underperformers are not able to hide behind the formalities of old-fashioned KPIs. Importantly, this puts employees on the same page – not just in terms of appraisals and feedback, but also when collaborating towards a company-wide goal, such as putting the ‘customer first’.
- There is a need for customer focus and collaboration across organizational boundaries;
- Social media and cloud technology (the internet) have been responsible for empowering the customer. The same technology can be used by enterprise organizations to transform their organizations and facilitate a ‘social cultural change’;
- Current KPI’s are outdated and counterproductive. Those companies that recognize this and act accordingly will reap the benefits in terms of employee satisfaction and productivity;
- Read Daniel Pink’s book ‘Drive’ and start a pilot with this new paradigm, supported by a modern enabling Social HR solution.