Six “SmART” Rules to Get People to Solve Problems Without You
By HR Club on 14 August 2019
How do companies create value and achieve competitive advantage in an age of great complexity?
The growth of complexity is reflected in businesses’ goals. Today companies, on average, set themselves six times as many performance requirements as they did in 1955, the year the Fortune 500 list was created. Back then, CEOs committed to four to seven performance imperatives; today they commit to 25 to 40. And many of those requirements appear to be in conflict: Companies want to satisfy their customers, who demand low prices and high quality. They seek to customize their offerings for specific markets and standardize them for the greatest operating return. They want to innovate and be efficient.
In and of itself, this complexity is not a bad thing—it brings opportunities as well as challenges. The problem is the way companies attempt to respond to it. To reconcile their many conflicting goals, managers redesign the organization’s structure, performance measures, and incentives, trying to align employees’ behavior with shifting external challenges. More layers get added, more procedures imposed. Then, to smooth the implementation of those “hard” changes, companies introduce a variety of “soft” initiatives designed to infuse work with positive emotions and create a workplace where interpersonal relationships and collaboration will flourish.Whether you’ve heard of them or not, two gurus from the early twentieth century still dominate management thinking and practice — to our detriment. It has been more than 100 years since Frederick Taylor, an American engineer working in the steel business, published his seminal work on the principles of scientific management. And it has been more than 80 years since Elton Mayo, an Australian-born Harvard academic, produced his pioneering studies on human relations in the workplace. Yet managers continue to follow Taylor’s “hard” approach — creating new structures, processes, and systems — when they need to address a management challenge. Hence, the introduction of, say, a risk management team or a compliance unit or an innovation czar. And when managers need to boost morale and get people to work better together, they still follow Mayo’s “soft” approach — launching people initiatives such as off-site retreats, affiliation events, or even lunchtime yoga classes. If these approaches made sense in the first half of the twentieth century (and that’s open to question), they make no sense today. Indeed, if anything, their continued use is making things worse.
Stop Trying to Control People or Make Them Happy
Boston Consulting Group has created an “index of complicatedness,” based on surveys of more than 100 U.S. and European listed companies, which measures just how big the problem is. The survey results show that over the past 15 years, the amount of procedures, vertical layers, interface structures, coordination bodies, and decision approvals needed in each of those firms has increased by anywhere from 50% to 350%. According to our analysis over a longer time horizon, complicatedness increased by 6.7% a year, on average, over the past five decades.
This complicatedness exacts a heavy price. In the 20% of organizations that are the most complicated, managers spend 40% of their time writing reports and 30% to 60% of it in coordination meetings. That doesn’t leave much time for them to work with their teams. As a result, employees are often misdirected and expend a lot of effort in vain. It’s hardly surprising that employees of these organizations are three times as likely to be disengaged as employees of the rest of the group—or that dissatisfaction at work is so high and productivity so often disappointing.
There is, however, an alternative, a third way — one BCG calls “Smart Simplicity.” They have developed this approach over the past 30 years of working with 500 companies in more than 40 countries around the world. With “Smart Simplicity,” BCG puts the cooperating individual at the heart of the modern organization. Where the Taylor school implicitly distrusts the individual worker and designs structural fixes for controlling their actions in a top-down, rigid, micro-managing way — albeit ameliorated by the softening effects of the people initiatives propounded by the Mayo school — BCG promotes a radically different approach.
Simply put, companies are most productive when they harness — not hobble — the intelligence of their employees. Six simple rules help managers get beyond the shackles of the “hard” and “soft” management approaches we’ve inherited from our forefathers.We’ve found a different and far more effective approach. It does not involve attempting to impose formal guidelines and processes on frontline employees; rather, it entails creating an environment in which employees can work with one another to develop creative solutions to complex challenges. This approach leads to organizations that ably address numerous fluid and contradictory requirements without structural and procedural complicatedness.
There are six smart rules. The first three involve enabling—providing the information needed to understand where the problems are and empowering the right people to make good choices. The second three involve impelling—motivating people to apply all their abilities and to cooperate, thanks to feedback loops that expose them as directly as possible to the consequences of their actions. The idea is to make finding solutions to complex performance requirements far more attractive than disengagement, ducking cooperation, or finger-pointing. When the right feedback loops are in place, cumbersome alignment mechanisms—ranging from compliance metrics to the proliferation of committees—can be eliminated, along with their costs, and employees find solutions that create more value.Rule 1: Improve Understanding of What Coworkers Do
To respond to complexity intelligently, people have to really understand each other’s work: the goals and challenges others have to meet, the resources they can draw on, and the constraints under which they operate. People can’t find this kind of information in formal job descriptions; they can learn it only by observing and interacting.
The manager’s job is to make sure that such learning takes place. Without this shared understanding, people will blame problems on other people’s lack of intelligence or skills, not on the resources and constraints of the organization.
Rule 2: Reinforce the People Who Are Integrators
Conflicts between front and back offices are often inherent. Back offices typically need to standardize processes and work, and front offices have to accommodate the needs of individual customers.
A common organizational response is to create some sort of coordinating unit—a middle office. But that just turns one problem into two: between the back and middle offices, and between the middle and front offices. The same thing happens vertically in organizations: Coordination problems between the corporate center and country operations trigger the creation of regional layers in between. Another common solution is to impose a coordinating procedure like computerized job requests.
A better response is to empower line individuals—or groups—to play that integrative role. In almost any unit you will find one or two managers—often from a particular function—who already interact with multiple stakeholders (customers as well as other functions). If you’ve followed the first rule and observed people at work, it will probably be fairly obvious to you who these individuals or groups are. These people can act as integrators, helping teams obtain from others the cooperation needed to deliver more value.
Rule 3: Expand the Amount of Power Available
Usually, the people with the least power in an organization shoulder most of the burden of cooperation and get the least credit. When they realize this, they often withdraw from cooperation and hide in their silos. Companies that want to prevent this and increase cooperation need to give these people more power so that they can take the risk of moving out of isolation, trusting others, showing initiative, and being transparent about performance.
However, firms have to do this without taking power away from others in the system. The answer is to create new power bases, by giving individuals new responsibilities for issues that matter to others and to the firm’s performance.
New sources of power can also be created around expertise building and knowledge transmission. This works especially well if both project managers and line managers need more power. Project managers can assess and reward project-related performance, and line managers can decide who gets to be trained in the higher-order management skills that will improve chances for promotion.
Rule 4: Increase the Need for Reciprocity
A good way to spur productive cooperation is to expand the responsibilities of integrators beyond activities over which they have direct control. Making their goals richer and more complex will drive them to resolve trade-offs rather than avoid them. But if you measure people only on what they can control, they will shy away from helping with many other problems you need their input on.
As you spread responsibility for achieving outcomes, don’t feel you have to give people more resources to go with it. It’s actually often better to take resources away. A family with five television sets doesn’t have to negotiate which program to watch because everyone can watch the show he or she wants. The result is the kind of self-sufficiency that kills family life. Removing resources is a good way to make people more dependent on, and more cooperative with, one another, because without such buffers, their actions have a greater impact on one another’s effectiveness. Eliminating internal monopolies—by creating overlaps, bundling activities, or even setting up external alliances—also increases the possibility for reciprocal action and impels cooperation.
It might seem that you will multiply the number of goals and targets by applying this rule. Actually, this is not the case. What you will do is drive goals back to the employees who actually have to achieve them, so that the people who are best positioned to resolve trade-offs are the ones handling them. Indeed, the multiplication of corporate requirements that we described earlier is arguably a transfer up the hierarchy of certain goals and accountabilities that should remain nearer the bottom of the organization.
Rule 5: Make Employees Feel the Shadow of the Future
The longer it takes for the consequences of a decision to take effect, the more difficult it is to hold a decision maker accountable. Many who are involved at the launch of a three-year project will no longer be around when it’s completed—they will have been moved to another job or location, or promoted. They won’t be affected by the consequences of the actions they take, the trade-offs they make, or how well they cooperate. To paraphrase game-theorist Robert Axelrod, the “shadow” of the future does not reach them.
People are more likely to feel the shadow of the future if you bring the future closer. For example, the lead times on many projects or work processes can often be significantly reduced at companies.
Rule 6: Reward people who Cooperate
Some activities involve such a long time lag between cause and effect (for example, in some research and development efforts) that it’s impossible to set up direct feedback loops that expose people to the consequences of their actions. There are also situations where jobs are so remote that it’s difficult to have a direct feedback loop that makes the people who perform them feel interdependent with others. In those cases, managers have to close the feedback loop themselves by explicitly introducing a penalty for any people or units that fail to cooperate on solving a problem, even if the problem does not occur in their area, and increase the payoff for all when units cooperate in a beneficial way.
Why Managers Need the Six Simple Rules
Using the smart rules—all of them, or sometimes just one or two—enables a complicated company to transform itself, in part or sometimes completely, into a smarter, more streamlined organization. Smart rules allow companies to manage complexity not by prescribing specific behaviors but by creating a context within which optimal behaviors occur—even though what is optimal cannot be defined in advance. This approach leads to greater organizational diversity, because voluntary frontline cooperation breeds creative, customized solutions to problems.
Yet despite this diversity, companies following smart rules are highly efficient in terms of the resources they use, because problems are solved entirely by leveraging, through cooperation, the skills and ingenuity of employees. Any costs generated by the diversity are more than offset by being able to ditch all the coordination and collaboration programs favored by many organizational experts. Employee satisfaction rises along with performance, as companies remove the complicatedness that causes both frustration and ineffectiveness. So rather than overload your org chart with a lot of arrows and layers, why not aim for the kind of smart simplicity you’ll get from applying the six rules described in this article?
Yves Morieux is the director of the Institute for Organization at The Boston Consulting Group (BCG), where he brings economics and social sciences to bear on the strategic and organizational challenges of companies and their executive teams—especially as they relate to complexity. Yves formulated the smart simplicity approach to managing complexity, based on his background in research and theoretical inquiry, as well as his extensive work with clients in the United States, Europe, and Asia-Pacific. On the 30th of October, you can meet Yves Morieux in person, at the HR SmART Conference, where he will deliver the keynote speech “Smart Simplicity - 6 Simple Rules” within the plenary session, as well as the Masterclass “The Social Science in Smart Ways of Working”. Visit the official page of the event for more details.
Biblography:
https://hbr.org/2011/09/smart-rules-six-ways-to-get-people-to-solve-problems-without-you
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