Transitioning People Through Constant Change

This post in the series “Kill the Hierarchy” explores how a hierarchical organisational structure will decrease employee engagement and the adverse effects that brings.

My last posts  explored rapid and decentralised decision-making, and increased innovation in a flatter organisational structure. In this post I want to discuss how moving hierarchical barriers has benefits including employee engagement.

For an organisation to survive and thrive in a world of constant and uncertain change, the organisation has to be one in which leadership is important, but MORE important is a collaborative workplace in which transparency and creative freedom reign over hierarchical boundaries. This enables innovation, creativity, experimentation, rapid decision-making, agility and employee ownership, engagement and influence. There is widespread autonomy and everyone leads.

No one ever did anything awesome or great just because they were told to!

The ‘Kill the Hierarchy’ model shown the diagram below, illustrates the changes needed to move to a flatter structure, and it is these changes that we shall be exploring in this series of posts.

Employee engagement

Employee engagement means that employees have choices and work towards the success of the organisation. They are actively involved and enthusiastic about their work and the workplace.

A hierarchical structure can disempower employees. A flatter structure provides more opportunities for employees to be involved in decision-making processes and therefore they are increasingly motivated and engaged. Employees have more autonomy.

Employee engagement has many benefits.

Benefits

When employees are engaged job satisfaction increases. Engaged and satisfied employees are invested in the success of the organisation and demonstrate a high level of commitment and loyalty. I will explore the latter a little further in this post.

Engaged employees will go the extra mile to achieve business success.

When employees are engaged, there is less absenteeism. They are increasingly motivated and in turn productivity increases.

Having an engaged workforce not only retains talent but also attracts talent to the organisation.

The engaged employee is motivated which in turn leads to increased innovation and creativity. Engaged employees actively collaborate with each other. They look out for each other and the organisation as a whole. They have a sense of ownership of the outcomes of their work and the success of the organisation.

Engagement = loyalty

Employee engagement drives loyalty and there is inherent cost savings associated with reducing employee attrition. Retaining talent is core to organisational success.

In “First, Lets Fire All the Managers”, Gary Hamel describes employee engagement at Morning Star.

At Morning Star there is flat structure in every sense of the world. No one has a boss, employees negotiate responsibilities with their peers, everyone can spend the organisation’s money, there are no titles and everyone is responsible for acquiring the tools and resources needed to get the job done.

Hamel says:

“Few colleagues leave Morning Star for a competitor, but the reverse frequently happens. What’s more, even temporary employees are dedicated to the company. Each summer, as the tomatoes come off the vine, Morning Star’s processing plants take on more than 800 seasonal workers. Ninety percent of them return each year, and the company has trained them in the principles of self-management. When a team of independent researchers recently measured this group’s sense of empowerment and ownership, they found that the temporary workers had the sort of engagement scores that are typical of senior executives in other companies”.

And then there is the bottom line

What does employee attrition cost Australian organisations?

According to Workplace Info, if an organisation of 500 employees could reduce attrition from 10% to 5% they could save the business over $2.5 million a year.

Their website states:

“A business with 500 employees can expect to have 50 resignations per year. Latest Average Weekly Earnings (AWE) figures issued by the Australian Bureau of Statistics (for November 2015) record AWE for full-time employees of $1,499.30. Adding 30% to this for the cost of employee benefits and on-costs amounts to $449.79, giving a total cost of $1,949.09.
 
Assuming turnover cost to be a year’s total remuneration for each employee, total annual cost of turnover for this business is $1,949.09 x 52 weeks x 50 employees. That’s a total of $5,067,634 per year. So a retention strategy that was able to reduce employee resignations from 10% to 5% per year would save this business over $2.5 million per year, less the costs of implementing the strategy”.

Disengagement epidemic

Adecco describes Australia’s employee disengagement as an epidemic.

The Adecco Employment and Talent Report 2016 notes that there is one area of business that needs urgent attention:  employee engagement. Adecco says:

Disengaged workers remain costly for employers. A significant 76% of Australian workers are in two minds about their jobs, or worse still, are completely disengaged. With only 24% of the workforce engaged, the drain on the wider economy is apparent: disengagement costs the national economy a whopping $54.8 billion annually. This cost can be seen in numerous areas. Disengaged workers have been proven to be:

Less profitable . Highly engaged employees achieve twice the annual net income of organisations whose employees lag behind on engagement

Less loyal.  81% of engaged workers are willing to provide positive recommendations of their employer’s services, compared to 18% of the actively disengaged.

Less safe.  Engaged employees are five times less likely to have a safety incident than disengaged employees and seven times less likely to have an incident requiring time off work

Less innovative.  60% of engaged employees say their job sparks creative ideas compared to just 3% of the disengaged

In short

Organisations cannot afford to have disengaged employees. A hierarchical structure can make it difficult for employees lower down in the structure to feel engaged. Therefore we need to flatten the structure to drive increased engagement. We need to give employees – that is those who create the wealth for the organisation – the ability to lead and make independent decisions which will in turn spur action, innovation and creativity.

In essence, we are enabling employees to reach the summit of Maslow’s hierarchy of needs theory from 1943 – self-actualisation. That’s not a new idea now is it?

Coming up!

Upcoming posts in this series entitled ‘Kill the Hierarchy’ will continue to explore how we flatten the hierarchy in order to achieve rapid and decentralised decision-making, employee engagement, high levels of collaboration, widespread autonomy, trust and respect, and an environment in which everyone leads.

More posts on their way over the coming weeks and months, exploring how we need to take a fresh and radical look at organisational change management, and the changes we need to make if we are to thrive.

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Also remember that older posts from me are available via the Resources section.