Hack:
Let the Employees Decide

By John Nyawo - Operational Risk Consultant at Bank of New Zealand

October 4, 2011 at 12:56am

Moonshots

Summary

Establish corporate practice and structures which balance decison-making power by involving employees including the selection and hiring of managers and making them accountable to their direct reports.

Problem

There are problems with present day management structures; particularly, in the corporate world. There are Team Leaders, Managers, Heads of, Business Unit Managers, Divisional Directors, Executive Directors, Managing Directors and the Chief Executive Officers. There are way too many layers for information to filter through. The reality is that there are too many fingers in the pie and personal interests at play.

There is no direct connection between the people or area affected by the problem and the decision maker and in most cases, the decision makers cannot relate to the issues for which they are making decisions on, but they have the requisite authority to do so. There are too many free riders in the corporate world who add to the noise which distorts the message reaching the top.

There are conflicting interests between the parties requesting a decision to be made and the decision makers; particularly if it involves spending money or committing additional resources which are not directly linked to income generation activities. This has worsened in the last 4 years following the Global Financial Crisis.

Traditional companies have not brought their practices into this century as they still view management as the representatives of the shareholders and the workers as tools of trade. The workforce has become more sophisticated, skilled and educated. In most cases, staff knows more about the work than management. The decision making power and indeed the remuneration structures are disproportionate to the value which all staff bring to the organisation.

In contrast, Web-based and volunteer-based organisations have the right idea where each member is respected for the skills and knowledge they bring to the table. Interestingly, this is not a new concept; it has been around for more than 2500 years. The Athenians in Greece had a citizen city where all citizens were treated equal and had responsibility in the decision making process as well as being expected to hold a position of authority at some stage of their life. The democracy lasted for more than 200 years, which is longer than most companies survive.

It is time to go back in time and have work environments which promote and reward excellence. All workers are adults and most have families who they look after and make decisions on behalf of. It is mind boggling that someone who makes decisions about other people’s lives, runs a household and its financial requirements can still be considered to be incapable of making decisions affecting his or her work for which he/she is adequately qualified to perform. This is the 21^st Century where literacy levels have never been higher, skill-sets are at historically high levels, yet decision-making power still rests with the top echelons of management, not because they are smarter that the rest, no sir, but because they have the authority to do so.

Solution

Do away with current executives and replace them with managers who have business specific skills and knowledge. Most employees don’t want to move jobs. Japan is a good example of lifetime employment. Indeed, it is the senior managers who keep moving before their short-sighted decisions come to the fore. It therefore makes sense for employees to have input into the qualities and skills they expect of their managers and to be involved in the selection process so they can ask questions which are relevant to their expectations of the manager.

The existing process is flawed as senior management do the interviewing and hiring, yet it is the employees who have to put up with their choice. This is the first major flaw with the traditional decision-making power within organisations. Involving staff in the hiring process ensures that the manager is accountable to them and that will automatically empower employees to be part of the decision-making process. Decisions will naturally be made on a bottom-up basis and on a collaborative basis. Mutual respect and trust based on capability and actions will prevail which will ensure that the right decisions are made at the right time, for the right reasons to ensure the right outcomes.

To keep the managers honest, their performance will be judged both by senior management (25%) and by employees (75%). The staff assessments carry more weight as the manager spends more time with the team and they are also best placed to properly judge his or her performance.

This model would ensure that there is total transparency as everyone’s performance is monitored. Decision-making will improve, employees will be empowered and valued and collaboration will become part of the natural business processes. The shareholders will benefit as decisions made would ensure long-term profitability and sustainability of the organisation as employees will have vested interests to protect.

First Steps

1. Highlight and give examples of situations where there have been delays in decison making, where incorrect decisions have been made and where unnecessary referrals have been made due to lack of decision making authority and the power resting with the few people at the top of the organistaion.

2. Explain the full impact that these actions have had on the operations, employees (morale and ability to effectively perform their roles), customer service/service delivery and effect on profitability.

3. Ask how many middle managers spend 1 day a week with their hiring manager; the answer would most probably be none. Ask how many of them spend more than 4 days a week with their direct reports and this would be most.

4. Ask who fully understands the work being carried out; the workers, the managers or senior maangers.

The plan is to get their participation, understanding and buy in. This is part of the change management which is crutial for the success of the program.

Highlight the benefits of having a fully engaged team, total accountability and transparency as peer pressure and responsibility will ensure that all staff peform at optimum levels. This will make the managers' job easy!!

Credits

Davies, H. (2010). The Finacial Crisis; Who is to Blame? Cambridge, UK: Polity Press.

Ober, B. M. (2003). A Company of Citizens - What the World's First Democracy Teaches Leaders about Creating Great Organisations. Boston: Harvard Business School Publishing Corporation.

Pollard, C. W. (1996). The Soul of the Firm. Illinois: Harper Collins.

Steven McShane, M. O. (2010). Organisational Behaviour on the Pacific Rim. Australia: McGraw-Hill Australia Pty Limited.

Sutton, J. P. (2006). Evidence-Based Management. Harvard Business Review OnPoint Article.

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October 6, 2011 at 1:00pm

David Sims

Thanks, John for this Hack. I think it's well thought-out, particularly in terms of sharing the hiring and review powers with the employees who will report to a manager. I'd love to know more about the buy-in. In companies that seem to have this ethos (Whole Foods, WL Gore), the direction has been set by a visionary leader. Most companies aren't that lucky. I wonder if you can say more about how companies get turned in this direction by the people who are affected most.

December 7, 2011 at 12:31am

John Nyawo

Thank you for your kind comments David and apologies for the delay in responding. You are quite right that companies that have followed this culture have had exceptional leaders with ideals often leaning more towards a social justice economic system. Another interesting organisation I came across during my research was Service Master which has done wonders in bringing respect and empowerment to basic cleaning jobs.

Back to your question; there has to be a need and this is usually manifested by delays in decision making which results in some adverse results like delays in service/delivery, missed orders, customer complaints, loss of customers and loss of revenue. The proposition is not to strip the managers of their power; but to empower employees to make decisions which are in all stakeholders' best interests, which is to make a profit and increase shareholder value. This has to be sold as a win-win partnership. Unfortunately, it still needs management buy-in, so it has to be seen as logical and in the best interest of all parties.

October 10, 2011 at 6:24am

Mitch McCrimmon

Some great ideas in this hack. I agree that managers have too much power. I have often used the metaphor of the organization-as-person to highlight this fact. It means that the "head" thinks and the "hands" do, which is why employees are sometimes called "hired hands." For me, managers do too much of the thinking and thereby fail to engage employees. I advocate being more engaging by asking: "What do you think?" However, I'm not sure that managers can be accountable to employees. This is like a customer being accountable to a service provider. Doesn't this get things backwards?

See my article on disengagement: http://www.lead2xl.com/cultures-of-disengagement.html

December 7, 2011 at 12:41am

John Nyawo

Thanks Mitch. You are quite right that managers fail to engage employees as they don't see the benefits of sharing the load and working as a team. Remuneration structures (in some organisations) may have a lot to answer for this behaviour!!! The concept is that we now have smart employees who are capable of adding value, not only to their jobs but to the processes, decisions and overall strategy. This will improve engagement and job satisfaction as the ownership will lead to better productivity. I don't agree that employees are the same as customers, but get your point. I believe that bad managers can ruin careers; so yes, I strongly believe that good management practices should make managers accountable to staff. Some companies are already doing this through 360 degree feedback processes; so its not a new concept.

October 11, 2011 at 10:53am

Vikas Narula

Good article - thought you might find this write-up equally interesting. Democracy in the workplace is on the rise:
http://www.keyhubs.com/blog/democracy-in-the-workplace-its-on-the-rise/