Until now, companies have largely used a top-down approach to manage change, but isn’t it time to change the way we change? The growth of digitization, automation, gig and project work and now, remote working, demands a more creative approach. In fact, the latest trends suggest we should flip the script.
Change management is needed to ensure a company’s relevance and survival. Top-down is the tried-and-true, traditional approach, where managers tell employees what to do: decisions are made by the few and implemented by the many, and information flows one way. In this way, decision-making is centralized and hierarchical, placing a strong leader at the forefront. Think pyramid.
But when ‘you build pyramids, you should expect mummies,’ 1 writes Ricardo Semler, CEO of Semco Partners, the Brazilian company known for its groundbreaking corporate re-engineering. In the 1980s, Semco ditched the fixed hierarchy and began experimenting with democratic management principles, and its employee turnover rate has remained at less than 2% ever since 2. According to LinkedIn, the average annual employee turnover rate globally is 10.9% 3.
When it comes to employee engagement, the mummy image: something dead and shuffling forward in bandages is apt. According to Gallup, the majority of employees sleepwalk through their workday: only one-third of Americans 4 feel engaged in their jobs in any given year. Their finding hasn’t changed since the organization first started measuring it in 2000.
The call for a work culture that supports wellbeing is increasingly clear. Important because engagement is a leading indicator of business success, linked to turnover, productivity and profitability, as well as employee wellbeing. Promisingly, Gallup research 5 shows that managers account for a 70% difference in employee engagement scores, meaning good managers make a hell of a difference.
It’s a Two-way Street
According to Jeffrey Pfeffer, author of Dying for a Paycheck 6, one the most important predictors of job satisfaction and work motivation is job control, ranking frequently above pay.
A bottom-up approach is gaining in popularity because it increases self-determination. It rests on nurturing each employee’s individual strengths, talents and skills, and encouraging communication to middle managers, who then deliver feedback to the executive team 7. Rather than having a hierarchical structure, information flows horizontally: employees set goals, tasks and deadlines, give and receive feedback. In short, it’s a co-creative, inclusive process that harnesses collective brainpower and supports colleagues in what they are doing.
Managers are inclined to give themselves a more mentor-like, facilitative role. According to Gina Sanchez 8, Media and Management Consultant at Spatial Awareness, managers don’t always find it easy shifting gears and letting go of control. ‘It takes trust on their part—having confidence in themselves and their team to run with the process. The great irony in change management is that people are averse to change. But when the decision-making process allows staff to take ownership, it makes it more engaging. They feel they are now being heard.’
When employees feel heard, acknowledged and have the freedom to act on their ideas, they cope better with stress and be engaged, happy and committed. According to Gallup, highly engaged teams are more present, productive and effective, achieving 21% greater profitability for their companies 9.
Research by McKinsey & Company also bears this out. The survey (on how employers addressed their employees’ basic needs during COVID) found that respondents who feel a greater sense of individual purpose at work are four times more engaged and report five times higher wellbeing. The survey also found a 55.1% increase in engagement for those who felt they were being recognized for their work, implying that feeling appreciated is even more valued than job security 10.
Back to the Future
In the 1990s, Ricardo Semler took over his father’s manufacturing company, Semco, in Brazil. It was like most companies at the time where ‘The powerful ruled, and the wise obeyed.’ He was 21, full of outrageous ideas, and immediately began experimenting. He let employees set their own hours, vote on corporate decisions, allowed managers to determine their own salaries and quickly discovered something fundamental: participating in decision-making was the key to motivation. Its impact is reflected in their impressive growth rate, averaging 46.5% for the past 20 years 11.
Semco’s consultancy offshoot, Semco Style Institute (SSI), based in the Netherlands since 2016, continues experimenting with new, creative ways of working. The company insists there is no single management model or solution 12. ‘We never recommend copying someone else’s approach,’ says Koen de Boer, Executive Consultant at SSI. However, the company sees self-management as an essential mindset.
Does management want to share control? That’s a crucial factor. Management has to decide first: we’re going to do this,
De Boer says, explaining that the bottom-up approach rests on a top-down decision, they are not mutually exclusive. To succeed using the bottom-up approach, he continues, management needs to remain open to its employees’ collective wisdom and input, actively facilitating the collaborative process while gradually stepping back.
The results are worth it. ‘When you give people autonomy over their work, they become happier. There’s greater job satisfaction and team spirit. Not only that, companies become more effective because they have a team working together on a goal. They’re no longer dependent on one person, the manager.’
As the Forbes Insights report The Experience Equation puts it, happy employees accelerate growth because the correlation between employee experience and customer experience is high – those with both double revenue growth 13.
Smells like Millennial Spirit
Increasingly, a healthy, productive workplace is seen as one that is supportive and collaborative. This might be in line with the onboarding of Millennials, now set to make up 75% of the global workforce by 2025 14. The social media savvy generation values teamwork and inclusion and they are interested in keeping the playing field flat.
Millennials have grown up with social networks, collaborative tools and apps, and continually share their ideas – teamwork remains a must. Research by IdeaPaint 14 (which literally produces paint) found that 74% of Millennials prefer to collaborate in small groups (office supply king Staples dubbed them the Collaboration Generation) 15. They seek ongoing feedback and collaborative goal setting, want a voice in setting performance expectations, and defining success in their roles 16. They want to be appreciated. They expect businesses to be people-centric.
Collaboration creates a sense of community, which is increasingly essential in employee engagement and retention, and it’s really nothing new. According to Gallup, when employees feel connected to their team, they are driven to take positive actions that benefit them, such as taking more risks and committing for the long term, because there’s a greater sense of belonging 17. As Pfeffer of Dying for a Paycheck puts it, job control together with social support helps employees thrive 6.
With change all around us and increasing pressure to find new solutions to new problems, companies are discovering that decisions and plans which have evolved from – and with – employees are often pragmatic and effective and likely to improve the employee’s sense of wellbeing.
Well-grounded decisions are best made by the people on the ground.
Dara Colwell is a freelance journalist, content editor, and writing instructor with 20 years’ experience writing about culture, the environment, politics, relationships, and the arts. She teaches professional writing and storytelling techniques at the University of Groningen, where she has developed the curriculum for several classes. She seeks to provide insightful content with an observant eye.
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