In my experience with global mergers (Guinness and GrandMet, and Cadbury Schweppes and Adams Inc), creating stable working environments and certainty about the immediate future is critical to re-establishing commitment. Looking at the increasing M&A activity in the private and public sectors, and thinking about the possibilities for the future, leads me to conclude that at no time in the history of management has the role of the line manager been so critical to successful performance.
It is a truth universally acknowledged that an organisation in possession of engaged employees must be able to outperform its competition. Universally acknowledged it may be, but it is not often achieved. Regardless of whether it is pride, or prejudice, many managers seem incapable of engaging their people sufficiently so that they are prepared to ‘go the extra mile’ in pursuit of the goals of the organisation.
Put this in the context of a merger or an acquisition and you get to the heart of why more mergers and acquisitions fail to meet their business case than beat it. For us in Europe, this is an increasingly topical issue. as cross-border M&A activity continues apace. Ferovial and BAA, Mittal and Arcelor and L’Oreal and The Body Shop are all going to rely heavily on ensuring that engagement delivers the goods.
Without engagement no organisation can hope to align the efforts of its people with the goals it has set. Without alignment there is far less hope of successful execution of strategy.
At Henley, we believe that management at any level, from Chief Executive downwards, is facing a series of dilemmas and when faced by a dilemma, you have to make a choice. Our job is to develop managers to make the right choices: right for them, right for their organisations and right for the wider communities in which they live. A right choice requires good data, critical analysis, an understanding of goals and strategy, and an appreciation of the wider implications for the reputation of the organisation. Disengaged people are far less likely to make right choices and ultimately are far more likely to make wrong choices which could, at the very worst, so badly damage reputation that it may never recover. This is a risk that no modern organisation, voluntary, public or private sector, can ignore.
The link between engagement and success
There is plenty of research out there which makes the point about engagement and success. Gallup, Sirota and others have all done work which demonstrates the correlation between engagement and superior performance. (David Sirota is the noted behavioural researcher and organizational performance specialist). They have also pinpointed an important distinction between commitment and engagement. Commitment is the emotional attachment one has to the organisation within which one works and the pride one has in its achievements. Engagement, on the other hand, is more – the demonstration of discretionary effort to ensure the organisation achieves its goals.
During my time at Cadbury Schweppes, we worked on developing a global climate survey which would not just act as a catalyst for change at a local, regional or global level, but would also provide the business with a measure of the degree of commitment and of engagement at each of these levels. The purpose was to focus strategic management attention on what could drive improved business performance and where management might want to focus resources to achieve their goals. The point here was to engage the leadership at every level with what they could do at an organisational level to drive commitment, and line managers at all levels with what they could do with their own people to drive engagement.
Pulling this process together generated two insights which have influenced what we are working on at Henley, as we think through the role and development of effective leaders and managers. First, there is likely to be a gap between the level of commitment in any organisation and the level of engagement (commitment always being higher than engagement); superior performing organisations being those with smaller gaps. Secondly, whilst commitment can be influenced significantly, though not exclusively, by the leadership of an organisation, engagement is primarily, though not exclusively, the outcome of the interaction between an individual employee and their line manager. At Cadbury Schweppes, we expressed this second insight in the following way: “My line manager is the lens through which I look at the company, and through which the company looks at me.”
In my mind, this single insight explains why so many organisations find it difficult to convert commitment into engagement. To do so requires that every line manager be able to impact positively everyone who works for them. However, what is also true is that you can’t have engagement without commitment.
So, what do line managers have to do effectively? In “The Enthusiastic Employee”, David Sirota posits that engagement is driven through three key factors: Equity, Achievement and Camaraderie.
Equity, Achievement and Camaraderie
David Sirota defines equity as being treated justly in relation to the basic conditions of employment. The basic conditions are: physiological, such as having a safe working environment, a balanced workload and reasonably comfortable working conditions; economic, such as a reasonable degree of job security, satisfactory compensation and benefits, and psychological, such as being treated with respect, credible and consistent management and being able to get a fair hearing for complaints.
These are interesting in that they are pretty basic requirements, yet despite that, they can be radically affected by an individual line manager. Whether or not there is a respect for safety, whether one is treated as an adult rather than a child or an untrustworthy adolescent, and whether issues are dealt with fairly are all down to the individual. Even reward is ultimately an individual issue for many despite the fact that organisations have pay and benefits structures.
Other research would add one further driver here with which I would concur: the proper handling of poor performance. For an individual, there is nothing more discouraging than working hard and watching others get away with far less.
Camaraderie is defined as having warm, interesting and co-operative relations with others in the workplace. Gallup asks one single question in its survey to get at this: “I have a friend at work.” This may be for some a rather simplistic measure, but in my view, one of the largest differentiators in the UK’s ‘Sunday Times’ 100 Top Companies survey is the pride and comfort employees have in the community that is the workplace. It is, after all, a basic human requirement to want to belong and to be accepted as belonging. Again, like in the other areas, so much of this can be determined by the behaviours and attitudes of the individual line manager.
If you dissect these empirical studies which cover many tens of thousands of employees, the same conclusions can be drawn: commitment is essential to drive engagement. It is based on working for a company for which one can be proud in terms of its core purpose, its ethical stance and its successes. Engagement, however, drives superior performance and it is down to how individuals are managed.
What makes this even more challenging for the European manager is the very recent research coming out of the Future Work Forum at Henley (Managing Tomorrow’s Worker, 2005), the Tomorrow project (Working in the 21st Century, 2005) and studies by the UK’s Chartered Institute of Personnel and Development (CIPD, The New Rules of Engagement, 2004). All of these point to some major changes in the nature and management of work.
First, according to the CIPD, there are the basic demographics to consider: In the next 20 years there will be 3% fewer people in the UK workforce, yet the economy is set to grow roughly at the same pace over the next 20 years as it did in the previous 20, when 48% more people entered the UK workforce. Yet, there are still key skill shortages.
Secondly, according to the Tomorrow project, the nature of the work itself will change with a growth in demand for what is being called ‘social capital’ skills – the ability to work collaboratively. Skills such as ‘listening carefully to colleagues’ will become central to work.
Thirdly, according to the Future Work Forum, the dramatic changes in how people work today will accelerate even faster. Today, over 5 million people, almost one fifth of employees, spend some time working from home or on the move. Mobile workers are likely to become one of the fastest growing groups of employees and the way they are managed will have to change dramatically.
Fourthly, according to the Tomorrow project, the nature of organisations could well change, with innovation being led from the most customer-facing of employees and managers no longer being the prime leaders of change. Rather, they will develop into the role of designing and co-ordinating networks which allow others to lead where they have expertise. Being a leader will be more about designing, managing and repairing such networks.
These trends hold true for much of the European Union and I suspect will ring true for North America as well. Put this against what we already know about engagement and it can only increase the importance that organisations should give to this issue over many others.
With engagement a big driver of employee loyalty and retention, the demographic squeeze will play badly for those who can’t gain commitment or engagement. Organisations where line managers behave in ways that create an engaged community are those that will find it easier to build ‘social capital’ and to work within a less rigid and hierarchical structure. Where your workforce is increasingly mobile, ensuring engagement is essential if they are to make the choices you want them to make when they are at a distance from the management structures within which they operate.
Ultimately, if the futurists are even half right, we will all have to think far more carefully about the importance of building engagement for successful performance. Why? Because it lies at the heart of what we at Henley see as some of the key dilemmas for management in the 21st century.
Challenges for the 21st Century manager
Management today is far more integrated than it was even 20 years ago. The advent of end-to-end process thinking, integrated technology, near-global connectivity, flatter structures and other such changes in organisations have driven the challenges of management out of the functional silo. Whilst more of us may still structure around functions rather than processes, we are increasingly required to work across these traditional boundaries to get things done. The rise of the programme and project methodology to make things happen is a direct result of the need to think through stakeholders across and outside of the organisation.
The 21st century manager, regardless of where they are in the organisation and regardless in which sector their organisation lies, is grappling with some pretty big dilemmas. Some of the most significant are associated with the impact of choices they make on those who see themselves as having a stake in what is done and how it is done.
The interactions with stakeholders such as consumers, suppliers, customers and communities are significant drivers of performance. So is the reputation that is established with regulators, policy makers and those who influence them in pressure groups. In a world where these stakeholders are just as likely to be thousands of miles away as they are to be next door, ensuring strategic alignment and a clear understanding of the rules of doing business are major challenges.
Engaged employees will understand the linkages, will think through the implications, will ask questions of themselves and of others and will ‘go the extra mile’ to ensure that the success of the organisation is not compromised. They will do this because their line managers will have done their jobs effectively. Nothing else you can do will get them there.
Engagement and M&A mania
The merger and acquisition mania is taking off again, and here lies one of the greatest challenges for all those involved in thinking through the delivery of all those shareholder commitments. As organisations plan their delivery strategies they need to understand that they need to build engagement to ensure goal delivery at a time when uncertainty and insecurity are at their highest. This uncertainty militates against the achievement of an engaged workforce.
Engagement cannot happen without securing the emotional commitment of people to the organisation. The problem with a merger or an acquisition is that, for all or some employees, commitment has gone. Very few of them will form an immediate bond with an organisation they didn’t volunteer to join. In my experience with global mergers (Guinness and GrandMet and Cadbury Schweppes and Adams Inc), creating stable working environments and certainty about the immediate future is critical to re-establishing commitment. If you can get this, then line managers can begin to develop the effective relationships that drive engagement.
Key to this is the rapid communication of the process and timescales for putting people into jobs in the new organisation. Even if I’m not going to be placed in a role immediately, if I know the process, understand that it is fair and transparent and understand the timings, then I will give you my commitment and therefore am an employee who is ready to become engaged in the process of value generation for the shareowner.
Leaders in these circumstances can do a great deal to build or destroy commitment. They can put their efforts into getting the people processes right, they can allocate resources such that people are fully supported and they can begin early to map out the sort of organisation culture they want and begin to act as role models. If they don’t then they won’t get much. However, they can’t generate engagement – even in a merger, this is still the job of the line manager.
What is fascinating from this side of the Atlantic is that we are now seeing these experiences replicated in our public sector as organisations and institutions merge, de-merge, or acquire or are acquired. Take out the shareowner and put in their place the stakeholders associated with public service provision, including the taxpayer who has no doubt been promised better services at less cost (or at least at less of an increase in costs!), and you have the same pressures to deliver.
Looking at the evidence of increasing M&A activity in both the private and public sectors, and thinking about the possibilities for the future leads me to conclude that at no time in the history of management has the role of the line manager been so critical to successful performance. In the age of digital technology, ironically, it has overtaken technological advance as the driver with the most significant potential to deliver superior performance.
Ensuring that the basics of line management are done well is how you ensure that the line manager delivers. Investing in them will probably give you greater long-term returns than any other investment you could make today, whether or not you are a potential corporate predator or victim.
