Motivating People in Lean Organizations

Linda Holbeche, Andrew Mayo

• Publisher: Routledge
• Year: 2009
• ISBN:
  9781136377631
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Shortlisted for the prestigious Management Consultancies Association (MCA) best management book of the year, 1997. Motivating People in Lean Organizations is the essential guide for managers who need to motivate employees and promote new forms of career development. In organizations that have been delayered, career progression is often stunted. The best talent may jump ship at a time when they're most needed, leaving less capable employees to fill the space.This book focuses on: implementation of motivational strategies, appropriate internal communications, new career development structures, reward and recognition of achievement.Motivating People in Lean Organizations is idea for HR/training managers and directors. Line managers, team leaders and internal communications managers will also find this of great benefit.Linda Holbeche is Director of Research at Roffey Park Management Institute. She has been studying career development in organizations with flatter structures for several years and is the author of Career Development: The impact of flatter structures on careers.

1 Introduction

What is a Lean Organization?

In recent years there has been much talk of ‘lean organizations’. Lean organizations are those that trim their internal costs to produce the highest possible margins on whatever goods or services they are providing. When the organization is operating like a well-oiled machine, with every part interconnecting effectively with other parts in order to provide superb goods and services for the customer, economic survival and growth seem assured. The logic is impeccable. No wonder that management gurus have recommended them!

Lean organizations are generally considered to be ‘a good thing’ since they appear to make sound business sense. In theory they enable an organization to reap the benefits of flexibility and innovation while facilitating such useful practices as teamworking. In business process terms, the aim is to reduce the cost of supplying the input whilst at the same time maximizing the value of the output to the customer. In some cases organizations have attempted to do this by improving or re-engineering their internal processes, introducing quality initiatives and making better use of technology.

The impetus for change may be the introduction of Total Quality, or may simply be the urgent need to shed costs. Some organizations have attempted to cut costs of production by slicing out those parts of the workforce that appear to be redundant. In many cases, a combination of both approaches has been used. In the macho 1980s, being ‘lean and mean’ was considered to be commercially desirable. By the late 1980s, for the first time in living memory, downsizing had started to affect white-collar workers on a big scale, producing shock-waves within society as a whole.

Becoming lean usually involves reshaping organization structures to enable business goals to be achieved more effectively. Consequently, employees have become familiar with apparently continuous rounds of re-engineering and restructurings which reflect the current needs or fads of the organization. Thus structures have been set up which operate along process lines, as a matrix, as project structures, as federations. As they internationalize, businesses have decentralized, recentralized, become ‘virtual’ with global centres of production and customer service. Change has become the norm.

Flat Structures

One of the most fundamental forms of restructuring has been the inexorable trend towards flatter organization structures, which remove selected layers of the management hierarchy. For organizations in the West, flatter structures represent a radical shift in thinking. They are more closely linked to the Japanese model of organization. Whereas for Japanese organizations, influenced by the works of W. Edwards Deming, flatter structures are a familiar way of operating, in the West they are relatively new, except in certain types of organization such as partnerships and consultancies. We are used to more hierarchical structures.

In many cases, delayering has involved removing several layers of the organization hierarchy, reducing the number of levels between the ‘front line’ staff and the head of the organization from twelve, for example, to four. In other cases, the amount of delayering has been negligible yet the organization still describes itself as ‘flat’. Why should this be? It perhaps relates to the mindset and working practices which relate to flat structures, rather than to the number of management levels. Organizations want the benefits of flatter structures perhaps more than they want the flat structures themselves.

Potential Benefits of Flat Structures

Flatter structures should enable organizations to get the best out of their employees. An empowered workforce should be able to achieve more than in more hierarchical structures where the power of individual contributions is more limited. As one CEO said: ‘We’re having to empower people because we’ve disempowered them’. Flat structures should enable organization-wide quality movements to be carried out by cross-functional teams. This should mean that fewer and more flexible roles are called for, which brings potential cost-savings, with peripheral services outsourced.

The creation of a multi-skilled core workforce operating across previously rigid functional barriers should enable the organization to adapt and flex to market conditions. Taken to its logical conclusion, this could eventually lead to the ‘virtual’ organization in which completely flexible teams are brought together for specific purposes and times. Given the competitive environment within which organizations operate, the need for flexibility, core strengths and speed of response has perhaps never been greater.

Lean Organizations and the Competitive Environment

Organizations are going through massive shifts as they face the new global business environment. Some of the features of that environment are so fundamental that they are likely to drive greater change in future than we have already seen. One of the biggest change drivers is the rapid advance of new technologies.

Technology

Technology is having a major impact on work, with many formerly labour-intensive processes now being automated. Consequently whole groups of mainly semi-skilled jobs have disappeared, while other forms of work have been created. The era of the ‘knowledge worker’ is upon us. Technology has also brought changes in information and communications. The development of cell phones, laptops and modems means that employees are expected to be accessible anywhere, at almost any time. Distinctions between work and home life are blurring. The possibilities of accessing information via the Internet appear almost boundless; we are yet to see the full implications of such technology on our work and personal lives.

Technology is helping established organizations to reinvent themselves. One major financial services organization recognized that increased competition in its financial products was making sustained profitability difficult to achieve. Senior management realized that the company’s huge databank of customer details was in itself a major resource, and they reinvented themselves as being in the information business ahead of their competitors.

Technology has also led to the development of new kinds of business, such as home banking, new forms of organization and occupations. It has made possible the development of global teams, virtual teams and other groups who can be based in different geographical areas but are able to provide a seamless and cost-effective service to the customer, wherever the customer is. Teleworking is not only a possibility but a reality for many. Technology has helped many organizations to expand their horizons from national or regional boundaries to become global players. Through the use of technology unexpected competitors are suddenly able to challenge long-established businesses on their home ground. Technological advance provides a short-term competitive edge, but any advance can be easily replicated. It is increasingly recognized that the best form of competitive edge comes not only from having the best product but also from the quality of customer service the organization provides.

The Customer Service Revolution

Relative affluence in the West over the past three decades has meant that most people have acquired a wide range of goods and products. By the nature of things, what were regarded as luxuries yesterday are today’s necessities. In terms of products, customers are becoming ever more discriminating and demanding. What the customer wants is innovative, higher quality, cheaper goods – by yesterday! Lean organizations seem to offer an ideal way of keeping costs low, since when employees are working to their full potential and teamwork ensures maximum leverage of human skill, there is less need to employ a huge workforce or to pass on such costs to the customer. Similarly, innovation is easier to ‘design in’ to processes which have fewer layers of bureaucracy to overcome before they are approved.

It seems that customers are looking nowadays not only for a quality product, but also for the element of pampering or individual attention known as customer service. Getting the material goods right, therefore, is only part of the answer. Good customer service involves the human touch. Customer service can be outstanding when employees are ‘empowered’ to use their initiative in dealing with customer needs. Flatter structures can facilitate this, allowing ideas to flow, since there are fewer communication barriers, and innovation to flourish. All in all, flatter structures seem an ideal way of organizing work.

Lean Organizations and Society

The term ‘lean organizations’ encompasses an increasingly bewildering range of organizational types that have emerged in the past few years as organizations try to ensure that they are competitive. Whether these are management ‘fads’ which will be replaced by other fashions in their turn or whether they represent part of a bigger shift in the way in which work is organised is not easy to see. What is evident is that there are a number of sea-changes under way which will fundamentally affect the world of work as it has been known in the West for the past forty years.

The Changing Nature of Employment

Lean organizations challenge some of the basic suppositions on which the so-called ‘psychological contract’ between employers and employees is based. One of these presuppositions is that having a career means being employed full-time in a secure job.

Organizations have taken the opportunity during the long recession of the late 1980s and 1990s to concentrate on their core business and outsource peripheral activities. Downsizing has cut workforces to the bone, reducing to a nonsense the idea that a job can be for life. Whether these workers will be reintegrated into the main business as growth returns remains to be seen.

Core workforces are shrinking. It is estimated that by the year 2001, 41 per cent of work patterns will be non-traditional (ISR: Labour Market and Skill Trends 1996/1997). The growth of flexible working in its many forms – contract work, part-time work, tele-working, ‘hot desking’ – is already obvious. In the retail trade in particular, the impact of customer choice has led to shops being open seven days a week, and in some cases round the clock. Shift working, so often in the past the preserve of semi-skilled workers, is increasingly applying to office workers and managers. There has therefore been an increasing trend towards generalism amongst members of the ‘core’ workforce as people are expected to be adaptable and multi-skilled.

New types of work and more fluid working patterns require new skills, behaviours and types of performance. Economic changes which have led large numbers of workers to shift to new forms of employment look set to continue. For many people whose skills are perceived to be obsolete this can mean redundancy, or at least the fear of losing their job. In the West as a whole unemployment has become a familiar spectre, and people are being thrown back much more on their own resources. Although flattening organization structures does not automatically involve downsizing or job losses, the combined effect of changes usually does involve some job loss. The implications of the changing nature of the employment market have as yet barely started to be understood. As Mark Hastings (1996) of the UK’s Institute of Management states:

Employers, government and individuals must now look to the future and grasp the opportunities this new (employment) market represents.

For many people in the ever-changing workplace, self-employment has become a viable alternative to full-time employment with one employer. Yet the full-time employment model continues to dominate our thinking. There is still some stigma attached to flexible working. Many self-employed people find it important to transfer over to their new form of employment symbols and status from their employed life. Consequently, ‘independent consultants’ and ‘freelancers’ become ‘company directors’ in no time. This is hardly surprising since, in the UK in particular, the economic infrastructure of society is to a large extent still geared to a conventional employment model.

Flatter structures in particular challenge the presupposition that having a career means being promoted. In a vertical hierarchy, with many levels through which people can progress, career development has usually involved acquiring experience and seniority gradually, with clear levels of accountability at each stage. Flatter structures reduce the number of opportunities for vertical promotion and as yet there is no clear alternative career model which seems to be gaining ground. The main alternative model involves the gradual acquisition of skills through increasingly developmental responsibilities, at the same organizational level, yet in practice this model is often difficult to implement. There are often seemingly insuperable difficulties to be overcome by the individual who wishes to develop a lateral career path. Moreover, alternative careers, including self-employment, are seen as the risky option.

Cultural Shifts

In the UK, the trend towards lean organizations is also driven by ideological and political beliefs. In recent years organizations in public ownership have been privatized to bring about, in theory, the benefits of increased customer care and efficiencies achieved by the private sector. These changes have been accompanied by increased regulatory pressures, and new forms of management have emerged. Such cultural shifts are not without their costs. Employees who were attracted to a career in the public sector because of its vocational nature may now find the organizational values in operation to be at odds with their own.

What are the Implications of Lean Organizations for Employees?

For employees lean organizations have a number of implications. First there is the nature of the work itself. In a hierarchical structure decision-making responsibility is carefully restricted to certain management layers. Work is normally functionally organized and career development usually takes place up functional ‘silos’ (Figure 1.1).

Figure 1.1 Traditional hierarchy

By contrast, in a flatter structure work normally takes place across functions, often in process teams. Decision-making is devolved to each level in the hierarchy. Career development in principle takes place at the same level and involves growing skills and experience (Figure 1.2).

Figure 1.2 Flatter structure

New working practices call for new skills, behaviours and management styles. In a hierarchical structure in which roles are clearly segmented and responsibilities often narrowly defined, a command and control management style may be appropriate. If things go wrong it is the manager who takes on the role of firefighter and problem-solver. In times of relative stability hierarchical structures are useful since they minimize the need for crisis management and make for easy standardization of procedures. In lean organizations, with fewer employees who are called upon to carry out more complex tasks, the manager is no longer the sole decision-maker. ‘Empowered’ employees who have the skills, resources and training for their tasks need support and guidance from their managers rather than control. This implies that participative and enabling styles of management are more appropriate.

Lean organizations therefore require different types of working relationship. Whereas in a hierarchical structure relationships between management levels might be described as parent-child, flatter structures call on people to be able to interact on a more adult-adult basis. This implies that if accountability and responsibility are to be shared, so also must authority. Similarly, if problem-solving is to be shared, so also must support and resources. Working in any sort of team is different from working in a work group. For many people these shifts represent a massive change, and we will be looking in more detail at different reactions to change in Chapter two.

The biggest changes of all have affected people’s careers in lean organizations. The effects of on-going restructuring include insecurity and increasing work loads (Holbeche, L., 1994). Delayering has exploded the myth of onwards and upwards, yet there are no clear career alternatives. People are being told to manage their own ca...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright
• Contents
• Foreword
• Acknowledgements
• 1. Introduction
• 2. The effect of lean organizations on employees
• 3. Communications
• 4. Developing the organization through teamworking and leadership
• 5. Introducing structure change – a strategic approach
• 6. The Operations Development Project at Thresher
• 7. Introducing lean organizations: cross-cultural experiences
• 8. Motivating and retaining people – the roles of the line manager and the Human Resource professional
• 9. Changing roles
• 10. The new employee
• 11. Should organizations care about career management?
• 12. (Changing) great expectations
• 13. Career management – what works in the new structures?
• 14. Mobilizing development
• 15. Supporting development
• 16. Reward and recognition
• 17. Conclusion
• References and further reading
• Index