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Employee engagement is key to survival in digital world

 “Only 13% of employees are engaged in global survey. This is a devastating figure in the digital era. It is the engagement, creativity and drive of the mass (all employees) that is the competitive advantage in the digital era.”

In the emerging digital era, the engagement of IT employees is key to drive innovation, drive change and agility, and in the end enable business success. Companies that succeed to motivate and engage will be the winners in the digital market that requires more dynamic and agile governance with increased revenue growth, customer value and return of equity. The competence and engagement of employees, with a willingness to perform, be creative and change, is therefore by far the most valuable asset of any organization. With only 13% of global work force “engaged” according to recent study (Gallup) – we have to ask ourselves is if our current way to governing organizations is the right way forward? Do we have the right tools to build competitiveness in the digital landscape?

Gallup published a research in 2013 stating that only 13% of the global work force (14% in Western Europe) is engaged at work. Additionally, 63% of workforce is “not engaged” meaning that they lack motivation and are less likely to invest discretionary effort in organizational goals or outcomes. And 24% are “actively disengaged,” indicating they are unhappy and unproductive at work and liable to spread negativity to coworkers. There is minor regional difference but the message is clear. The current management system does not create engaged and motivated employees. How to compete in a fast moving digital market with 87% of your work force not motivated to change or drive business success?

The basic problem is how we view our employees. Traditionally, management models are based on a “command and control” system (Taylorism) in combination with Penroses growth theory from 1959, where competitive advantage is gained through a number of key resources (core competence) and a system of employees (less important) that need to be controlled in order to perform. The management model (based on McGregor Theory X) views our employees (not core competences) as inherently lazy and will avoid work if they can and that they inherently dislike work. As a result of this, management believes that workers need to be closely supervised and comprehensive systems of controls are developed. But the Penroses theory only functioned in stable environment (with very little change) and started to fail when rate of change increased exponentially with new foundation of competition.

Today’s employees are mainly ambitious, self-motivated and exercise self-control (McGregor’s Theory Y). It is believed that employees enjoy their mental and physical work duties. According to them work is as natural as play. They possess the ability for creative problem solving, but their talents are underused in most organizations. When today’s ambitious employees meet traditional “command and control” culture and leadership, then employees loose their self-esteem and become unengaged and demotivated (low performance). It is the competence and drive of the mass (all employees) that is the competitive advantage in the digital era (post-Penroses).

Google is often highlighted as a very successful company and it is interesting to understand their management system. What make them so special and successful? A couple of weeks, I had the opportunity to listen to Annika Steiber who done a five year research of the management model at Google (and other companies in Silicon Valley). Google has identified six management principles that promote continuous innovation in the organization.

  1. Dynamic capabilities: continuously update capabilities (resources, competence, and leadership) in fast changing environment based on knowledge.
  2. Continuous renewal: continuously change the organization, by allowing for improvisation (limiting control to what is truly important) and viewing objectives and work from different time horizons.
  3. Individual in center: unleash the force of innovation in employees but believing an trusting employees to be creative and motivated.
  4. Both-and-organization: balancing long-term visions/innovation with daily operations/production. Both capabilities are valuable and work in co-existence.
  5. Openness and networking with world: Innovation is achieved in openness and collaboration inside company and with the outside world.
  6. System hypothesis: A corporate system and culture (leadership, values, communication, etc) that that fosters an innovative atmosphere.

(Annika Steiber: The Google Model, 2014)

What I found interesting is that the Google model is based on the assumption that “innovation is key for survival in the digital and unpredictable world”. This means that the management system is build around this assumption and the principles that supports that. Studying the principles more in detail, we notice that Google’s view of their employees is very much aligned to McGregor’s Theory Y. In many traditional companies (especially IT companies), the assumption is still that of stability and predictability, resulting in a different management system and view on employees (aligned to McGregor’s Theory X). That is not a surprise or coincidence.

Recommendations:

  1. Ask yourself – What are the success factors (assumptions) for your industry? How quickly does it change? What capabilities do you need to be successful? What is a suitable management model?
  2. How do you and your organization view the employees (Theory X or Theory Y)? How much control is needed for the employees to perform? How to unleash performance and innovation?
  3. Contact me for a further discussion and support Agile Management Models.

Only 14% of work force in Western Europe are engaged and motivated to drive performance and change. The figure is not surprising considering how quickly the business landscape changed and caught many seniors off guard. The rumors about digitalization have been around for a couple of years but it is now that we clearly see its effects. What is surprising is many senior managers address the increased unpredictability with further control and long-term performance contracts – instead questioning the organization’s non-working management style. That is probably a natural instinct but very costly in the digital world. But who wants to admit that they are a management dinosaur?

– Hans Gillior

Hans Legend 1