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Archive for March, 2012

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Why Purpose is important for Organisations – Organisation Development

Like the human heart organisation purpose is more than just the centre of organisation, it provides the lifeblood to the whole of the organisational system.  It connects, refreshes, renews and brings life to every single corner of the organisation.  If any part of the organisation becomes disconnected from the purpose of the organisation it will wither and fail to function properly, like a limb cut from the body’s blood supply. 

Growth requires Purpose

When discussing organisation development very often it is suggested that the start point is strategy.  But where is strategy created from?  Where, in all the managing, planning or giving it a go of strategy that an organisation must follow do the ideas come from to decide what strategy an organisation should be following, and who decides?

An organisation must answer the question “What is our purpose?”  You may think that I am playing with semantics to talk about purpose.  There is so much management speak already, so what is so different about using the word purpose as opposed to strategy.

The Oxford English Dictionary defines Purpose as “the reason for which something is done or created or for which something exists” whereas strategy is about a plan of action.  At an individual level purpose is being rather than doing.

“Purpose expresses the company’s fundamental value – the raison d’etre or over-riding reason for existing. It is the end to which the strategy is directed”  Richard Ellsworth

So when I speak of an organisation answering the question “What is our purpose?” the answer is not a profit number, or a growth percentage.  Rather purpose is what is at the very heart of why the organisation exists.  When all is said and done it is what really matters.

Is it possible for an organisation to be successful without having clarity around its purpose?  Yes. Organisation’s have been and will continue to be successful without having a purpose. But the world is changing, and the pace of change is increasing.  What used to define competitive advantage has shifted from efficiency to effectiveness.  Efficiency can be repeated, copied and adapted and is based on structures, processes and hard systems.  Effectiveness comes from utilising knowledge, innovation, creativity which comes from people.  People are unique and provide a critical element of competitive advantage for an organisation.

In Shaping the Future research the CIPD found that “feelings towards profit-related purpose are generally negative, with employees saying it makes them feel de-motivated and less committed to their organisation. Nonetheless, just under a third feel that focusing on investors is the right thing to do in the long run. It seems in order to produce a motivated and committed workforce, the main purpose needs to have a social basis to it – profit does not seem to ‘kick start’ the workforce.” (CIPD, Shared Purpose: The Golden Thread, 2010)

Efficiency can be created without meaning being understood, it can be achieved by doing things better.  But effectiveness requires people to have a sense of purpose and for people to commit to the direction an organisation is taking; they require an organisation to have a meaningful purpose.

I can’t remember if I read or heard the story about a NASA employee who was sweeping the floor and was asked what his job was, he answered it was to put a man on the moon; a purpose which was articulated by John F. Kennedy in a statement in 1969.  But even if this story is nothing more than an urban myth, it illustrates the power of purpose more than any other.  The individual had purpose in what he was doing, he wasn’t doing some low grade job he was putting a man on the moon.  When I think about that story I imagine the pride that the employee must have put into his job, and how motivated he must have felt when his alarm clock rang in the morning.  Organisational Purpose inspires purposefulness in employees and surely that is something all organisations would want to aspire too?

Therefore in the new global economy, the difference between an organisation which can sustain performance and one that can’t will be the clarity of purpose which is shared among all employees.

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Making the Leap From Capability to Faith – Organisation Development

It’s all too easy to talk about the need to increase people capability in order to achieve sustainable organisational performance.  Read any company memoranda or share holder report and it will contain within it some reference to the human capital in the business whether in leadership or the wider employee population.  The message that organisations convey is that people matter.

But look beyond the hyperbole and delve into the practices of the same organisation and it soon becomes apparent that there is a difference between words, actions and beliefs.  A change programme will focus on systems and processes, but the investment in people is mere percentage points versus the investment in the business process engineering; the amount invested in developing people is far exceeded by the amount invested in capital projects and along with marketing budgets for learning and development are dispensable when costs have be cut.

People Matter, is not just about the words we use, the message we sell or employee engagement.  People Matter is a choice that leaders, managers and employees make every day.  Do they choose to put people first, or do they choose to do what is best for themselves or for their balance sheet.

A few years ago I heard a story about a senior leadership team that had spent the morning during a development course espousing how important people were to their business.  But when challenged by the facilitator if the ‘really’ were a people first organisation the leadership team confessed that no, what was more important was the numbers.  It sounds shocking, and when I was told the story, the person telling me was incredulous that this belief existed in the organisation.  Actually we don’t care about people we only care about the numbers.  If only all organisations were as honest.

The issue is that all the evidence and research shows that successful organisations are successful because they believe, and more importantly act in a manner, that says People Matter.  Many organisational leaders intellectually have grasped the fact that People Matter, but not many truly believe it.  They have not taken People Matter to heart and do not consider how the choices they make reflect that belief.

The result is a disconnect between what is said and what is practiced, people capability is unable to be released and organisation effectiveness is something that remains out of reach.  But for many Leaders, changing from building capability (how much are we going to spend training people) to belief (people matter) takes a leap of faith.

A leap that requires a leader to understand that in adopting choices that put people first will go against traditional organisational thinking, it may even cost more money in the short term and it requires a different way of leading.  It requires that the organisation puts people at the heart of what they do and that they concentrate on releasing the potential of the people who work in and with the organisation.  Systems and processes might need to change to accomodate the needs of People, and the investment is turned on its head to concentrate building people first, systems and processes second.

The truth is that faith in People is different to faith in capability.  It is easy to place financial values on the return an organisation will get from having a skill set or knowledge base in their business; its much harder to place a financial value on Liz from accounts or Mary from Sales reaching their potential.  Extrapolate that over a population of thousands of employees and it takes faith to believe that people can make the difference between okay performance and sustainable organisation effectiveness.

There is plenty of research which supports the claims that people make the difference.  Leadership parrot the ‘people matter‘ because they have seen the evidence.  But belief and making choices that reflect the belief that People Matter requires a leap of faith.

 

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No more Upstairs Downstairs?

Well not literally, but it provides a useful metaphor.  The TV programme Upstairs Downstairs portrays life in the 1930’s and the separate lives of those who served and those who were served.  These same divisions may seem like something committed to history and TV dramas; but the furore about the gap between CEO remuneration and that of their employees, the political debate about taxing the rich or taxing the poor and the widening gap between rich and poor suggests that the division between those ‘Upstairs’ and those ‘Downstairs’ is alive and well.

When I started my first corporate job the offices were arranged as the proverbial ivory tower.  The CEOs office and senior leadership team were at the top of the building, then the next level of management and all the way down to the basement where the new starts (muggins included) worked in the dimly lit basement.  Then of course their were the parking spaces, the further down the food chain you were the further you walked to the office; and most amusing was the seating in the canteen and even the food that was served being determined by your pay grade.  No quite food glorious food from the movie Oliver Twist but the food served to the CEO was definitely a finer cut.

The days of the walnut panelled office may have been replaced with open plan office but the separation between employers and employees is being felt in organisations across the UK.

The problem with remuneration is that it isn’t about how much someone gets paid, but whether they perceive whether what they are being paid is fair pay for the work they have done.  Hertzberg identified pay as a demotivating factor.  The problem with the perceived over payment at the top of the ladder, and the increasing pressure on family budgets caused by the economic circumstances, austerity measures and rising prices; is that employees feel they are being treated unfairly.

To know that those at the top of the organisation have seen pay rises of around 49% in the last twelve months when the average employee has had their pay frozen or below inflationary pay rises whilst the work environment has become more difficult and pressurised.  A breeding ground for demotivation and disengagement among employees.  This in turn will have an impact on organisation performance, which will impact profitability.

If organisations are going to grow their way out of the economic downturn, they need to ensure that their employees are behind them; and to do that they need to be behind their employees.  It may be tempting to cut costs and hold wages, but if that is happening, then the senior leadership teams must demonstrate that they are ‘in it together’ with the employees.  Increasing perks, and remuneration packages at the top whilst being meagre at the bottom is not only morally questionable but bad for business.  One person at the top of the organisation can do nothing without the employees working for them.

Doing the right thing by your employees at this time, is doing the right thing by the organisation and will result to improved organisational performance.

 

 

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What is Organisational Effectiveness?

Leadership teams like buzz words, and every year new phrases are added to management lexicon.  The current buzz is around organisational effectiveness.  I remember doing my post graduate diploma and learning that efficiency was doing things right, and effectiveness was doing the right things.  So organisational effectiveness is about doing the right things, but what exactly does that mean?  Anyone?  It appears that Organisational Effectiveness is a difficult concept to pin down.

Francis, Holbeche and Reddington (2012) in their new book People and Organisational Development: A new Agenda for Organisational Effectiveness offer the following definition;

“Organisation Effectiveness takes as its desired end point sustainable, self-renewing outcomes.  This… requires a shift in mindset and practice with respect to organisational change, towards one based on… authentic mutuality.”

That clears that up then.

Well not really.  It just adds more buzz words to management lexicon which we will need to unpick to understand.

The first element to highlight is that organisational effectiveness is an end point, which suggests that in order to get there, the organisation needs to have a start point, and has to develop towards the point of achieving the outcome or goal of organisational effectiveness.  Its not a process or a system that the organisation adopts, but rather it is something the organisation works towards achieve.

This end point is not something that is static or one thing.  Its not like a gold medal that once achieved can’t be unachieved.  It is akin to organisational learning in that it is a way of doing things around here, but unlike organisational learning, which you never achieve if you really are learning organisation, but rather is something that can be achieved.  If you do the right things, you will continue to do the right things and maintain organisation effectiveness.

The self-renewing and organisational change elements are not new in management literature, but what is different is the element of ‘authentic mutuality’ and that is what makes this definition so exciting.  A seemingly banal statement made up of buzz words is actually challenging the way organisations work in regards to the employer/employee relationship.  It is ask for organisation to work together with employees in a way that not just benefits the organisation but also the employee.  Doing the right thing for the organisation AND doing the right thing for the employees who work in the organisation.

Of course this throws up all sorts of challenges for the organisation in regards to Human Resource practices, and the balancing the tensions created in attempting to do the right things for both organisation and employee.  But the output of an organisation focused on doing only the right things for the organisation is being felt in the economic challenges faced by the world today and the broken nature of the western capitalist model which focuses purely on competitive short-term entrepreneurship without consideration of the people in the organisation.

The time is ripe for change, and quite possible with some societal and cultural changes organisational effectiveness is achievable.

 

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Lies, damn lies and Statistics – Organisation Development

So what is it then?  Is unemployment going up or down?  Is the country debt getting worse or better?  What exactly is happening regards the economy, does anyone actually know?  Are we feeling more positive because it is sunny outside or are things really getting better?

Depending who you speak to, will depend on what answer you get to these questions.  What is sure is that no one really knows.  There seems to be an intake of breath as people begin to possibly, maybe, start to believe that it might actually be getting better.  That we might actually be looking at a growing economy and an improvement in economic circumstances.  Maybe.

So what should an organisation do?  Splash the cash, loosen the reins, crack open the bubbly?  Well maybe not yet but… it might be time to consider how you prepare for growth.

Contingency planning is often associated with disaster recovery, what to do when the worst happens.  However, todays economy, after the tough lessons of the last few years, requires a different type of plan, one based on positive expectations of the economy turning around and preparing for an operation which needs to respond to growth pressures.

“Change is inevitable, growth is intentional.”

The business season we are in is well matched to the weather at the moment.  There are glimpses of warmer weather to come.  We begin to think about changing from our winter wardrobe of thermal underwear, heavy knitted jumpers, Padded coats and wooly hats to clothing more suited to warmer weather.

But that change requires some preparation (especially if you are a lady).  Revealing parts of your body that haven’t seen the light of day for a period of times requires some work.  For me that involves a pedicure and intense moisturizing of my pasty legs in preparation for the big reveal when I start wearing shorts and sandals in hotter weather.

Organisations need to be prepared for a change in the economic landscape.  Taking advantage of an improving economic climate requires different leadership and different operating mindsets and practices.  Leave it too late, and you might miss the boat and your upward trajectory will at best be delayed.

Growth doesn’t just happen on the P&L of a business, it presents major challenges for an organisations operation, production, workforce and processes and will change the way the organisation works.  If you grow to fast, or get hit by unexpected or unprepared for growth it can be as much a disaster as a sudden downturn.  Is your business prepared in regards to being able to supply to a surge in demand?  Have you got the cash flow, employees, supply chain, capacity and capability to cope if the market returns to buoyancy?

From a development perspective, it is your people who will deliver the success your organisation wants to achieve.  As Jim Collins describes in his book From Good to Great have you not only got the right people on the bus but have you got the right people on the right seats of the bus, and more fundamentally do you have the right bus?  Will individual employees in your organisation be able to flex and adapt to the pains of growing after such a long period of difficulty?  Have you equipped them to be responsive to those changes and to be prepared to grow with the business rather than get in the way of growth?

“Don’t wait until everything is just right. It will never be perfect. There will always be challenges, obstacles and less than perfect conditions. So what. Get started now. With each step you take, you will grow stronger and stronger, more and more skilled, more and more self-confident and more and more successful.”  Mark Hanson

And what about your customers, do you know what they need now?  Do you know what they will need from you should their business start growing?  How do you communicate with them and how close are you to understanding where their business is in regards to growth?

It is very easy to focus on what is going badly and ‘fixing problems’ that exist, but after such a long period of bad news, fixing your eyes on opportunities and the possibility of good times and growth might feel strange.

“Growth means change and change involves risk, stepping from the known to the unknown.”