January 30, 2012 12:19 am

The view from below

The coalition government is considering changing employment law to make it easier for companies to hire people – Orwell-speak, many think, for sacking them. In her piece on business school governance in the last issue of this magazine, editor Della Bradshaw noted that it was hard to imagine organisations “allowing the workers effectively to decide who will be their new boss. When the FT is next looking for an editor, will jobbing journalists be allowed to vote?”

Maybe they should. Behind both these ideas are the same assumptions: that, baldly, performance is all about sorting out the workers, and all will be well if managers are allowed to get on with it. It is the conventional wisdom – but does it stack up?

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In a recent research report on “employee-centred management”, London Business School’s Julian Birkinshaw, Vyla Rollins and Stefano Turconi point out that unlike, say, sales and marketing, which has learnt that customer insight comes from seeing the world through customers’ eyes, management is exclusively viewed from the perspective of the manager.

This one-eyed view is self-reinforcing, perpetuating the assumptions it started with.

If the aim is “creating a workplace where employees are able to deliver their best work” – the subtitle of the LBS report – the evidence is unarguable: a happy, secure workplace produces better results. Dozens of studies show that improving engagement pays off. One recent scholarly study calculated that a value-weighted portfolio of Fortune’s “100 best companies to work for” in the US, outperformed the average by 3.5 per cent a year over 25 years.

Or try it at national level. Statistics from the Organisation for Economic Co-operation and Development make nonsense of the idea that UK workers need less protection. The UK is already next to bottom in the employment protection league. UK employees work longer hours, are more likely to work part time, and get proportionally half the employment benefits of the average. Taxes on labour are lower, too. There is simply no correlation in the OECD figures between low employment protection and high economic performance. Rather, the reverse is true: greater protection seems to go with better economic performance.

If employees are feeling helpless and worried about their jobs, that is what they are focused on, not customers or quality. Fear makes people stupid. Beyond that, though, in LBS’s ideal workplace, trust looms large, and trust is incompatible with not knowing whether you will be there tomorrow.

It goes further. The main determinant of trust, and engagement generally, is a good first-line manager. In fact, all other aspects of the workplace – conditions, colleagues, pay – are comparatively insignificant.

The big question

In What Matters Now, Gary Hamel says creating organisations fit for the future and for humans is the answer. Is that not what management is about? The fact that they have not done it already, suggests managers are in for a big challenge.

To recap: engagement and commitment are the nearest things to a management silver bullet. What is more, we know how to do it: select managers who can, in Prof Birkinshaw’s words, “push decision-making down to employees, communicate the meaning of the work being done loudly and clearly, and provide support when needed”.

This is hardly rocket science – and it has been known for decades. In this light, the real question is not why you would give workers a say in appointing their manager: it is why you would not.

Sure enough, some of the high-performing, best-to-work-for companies do just that. At manufacturer WL Gore, of Gore-Tex fame, the only way to become a leader is to attract followers. Current chief executive Terri Kelly got the job because more people followed her than anyone else. Closer to home, Happy, the award-festooned training company, lets associates choose department heads; and if anyone is unhappy with their manager, a better solution than forcing them to leave is allowing them to choose someone else.

Even among the “best-workplace” companies, most see employees selecting managers as a step too far. But, as Prof Birkinshaw notes, even without allowing this, the central conundrum of people management remains. Why do more managers not walk the talk? Why are there so many bad ones? Why are so many workplaces “stultifyingly dull” (Prof Birkinshaw), or worse? There are a number of plausible answers – for example, the self-reinforcing, top-down assumptions we started with, human nature, convention and fear of standing out from the crowd. But none has anything to do with evidence – which does not do much for management pretensions in the first place, does it?

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