by Doug Wesley
NOTE:
This is an excerpt from the article "Optimizing Employee Retention in the Era of Knowledge Capital" written by Doug Wesley, principal practitioner at ChangeCraft Corporation. The entire article can be viewed on their web site www.changecraft.com. The article also supports a presentation made by the author at the Special Libraries Association 91st Annual Conference on June 13, 2000. This segment of the article represents a new paradigm for organizations managers and employess in the information economy.
Six Propositions For the NEXT Generation
ONE: People Circulate. Institutions Learn
TWO: It's All In the Connections
THREE: Managers Build Institutional Wealth
FOUR: Employees Are Engaged As Individuals
FIVE: Combine and Innovate
SIX: The Individual's Work is Essential
Why New Propositions? Is This Just Another Fad? During the Agricultural Age, the basis for wealth was land and natural resources. During the Industrial Age, the basis for wealth was capital and machinery. During the Information Age, the basis for wealth is knowledge. (Toffler, PowerShift: Knowledge, Wealth, and Violence at the Edge of the 21st Century, 1990) The most fundamental reality for economics was transformed when power shifted from wealth based on things made of atoms to bits of knowledge, which can move at the speed of light and have no physical reality. Unlike all previous bases of wealth--land, natural resources, money, machinery knowledge can be given away by a person who has it, but not lost to that person. The fact represents a revolution in the very nature of economics. (Negroponte, Being Digital, 1995)
We have moved from a zero-sum game (one in which a gain for one side always entails a loss for the other) to one in which we can share, but not lose. In the old economy, scarcity was assumed, and always increased a thing's value. In this new economy, abundance can be assumed. We have shifted from a worldview with a core proposition of "either/or" (either you have it or I have it) to one that accommodates a "both/and" possibility (both you and I can have the same thing… all of it, and more).
In the natural world, this may be akin to repealing the laws of gravity. If the natural law of gravity changed its basic properties, most of our machines would not work. As the economic laws of wealth transform, most of our organizations don't work. That's what's happening to us today.
Here are six propositions about work, organizations and people that were created based on these new realities.
ONE:People Circulate. Institutions Learn
This proposition stands in the place of the old maxim: "Personnel Turnover is BAD."
When losing an employee always meant losing knowledge capital (skills, experience, personal processes), we fought to keep the employee longer; we sought to increase retention and avoid turnover.
But what if, when an employee moves out of the company, we are able to keep that knowledge capital? And, what if, as we gained the person's knowledge capital, s/he lost nothing (maybe even gained something) in the process? Would personnel turnover be bad?
In the old economy, you either "have" the employee or you don't. What if you could have continual use of the person's contributions to the organization, even though you did not have the physical presence of the person in the job? When we begin to see great value in the person's knowledge, and when we apply the natural laws of the new economy, it is possible to lose the employee, but keep the value.
We can only expect to increase the wealth of the enterprise with personnel turnover if the organization is in the business of learning. Since the beginning of organizations, it has been assumed that the old-timers must teach the newcomers. That, only after this value is added to the newcomer, can that person make a useful contribution. The "master" has always had an obligation, not just to work, but to teach apprentices. How different life would be if the master had an obligation to learn from the apprentice as well. What if the apprentice came on board with an obligation to teach?
New information technologies enable our organizations to build systems that capture an individual's knowledge. If knowledge is wealth, we must become much more serious and much more capable about doing just that.
But, if knowledge is also power as people have been hearing since at least the times of Sir Francis Bacon then why would an individual employee agree to "give up" that power? Easy. What if the new proposition were this: "You teach us everything you know and, in return, you can have access to everything the entire organization knows."? Not a bad trade.
If the norm is for organizations to learn and for people to circulate among them, then we increase our personal value by the efficiency with which we learn from the organizations we serve. The new, more potent question for screening interviews is not "Where did you work (and for how long)?" but "What did you learn?".
We further increase our personal value if we develop a fine skill to integrate all we have learned - to make creative connections between all our disparate bits of knowledge - and to apply that knowledge in new and interesting ways.
If your organization were to become an increasingly efficient learning machine, it could profit greatly from a steady stream of newcomers who stay and work for a while, teaching and learning, then move on.
TWO: It's All In the Connections
This proposition is a slap in the face of "Everyone Should Be A Professional." (Professionals - who are dedicated to the depth of their expertise - hate the fact that some slackers get by on "connections.")
Some years ago, while working as a consultant to a large, staid insurance company, I sat in on a senior management meeting. The presenter put up a wall-sized organizational chart that showed every arm of the broad-reaching enterprise. She spared us what we thought would be several hours of defining the hundreds of boxes on the chart with a startling insight. She said that this company (which was known for investing millions in every new management fad and scheme) had spent literally decades arranging the myriad boxes on the chart and making sure that everything was working properly within each of them. Her team had discovered that, no matter how well things work inside a box, if the lines between the boxes don't work, the company doesn't work. That's what we mean by "the connections."
We can see the consequences of over-specialization and professionalism. Things continually "fall between the cracks." Businesses thwart fulfillment of customers' immediate needs because "It's not my job" or "You'll have to call another department." Deadly mistakes are made in hospitals because specialists are unaware of each other's treatments of a single patient. We have all learned to demand to speak with a manager when we encounter these problems because we know that most workers do not have the authority to solve unusual problems, or problems that cross organizational borders. And, how often do we then hear that the manager, too, is powerless?
People do not like to be powerless in their jobs. Most people would rather solve the problems they are offered than hand them off. Our organizations constantly embarrass us with their inabilities (and refusals) to solve the most straightforward problems. Our organizations constantly make us look stupid as we try to explain why problems can't be solved, or make us feel stupid with our lack of information about other parts of the business. These factors make us want to quit our jobs. It's not stupid people that repeatedly create these situations, it's those stupid systems and stupid jobs.
A small team of diverse people, given the authority to get results and access to needed information, can do what was thought impossible in traditional organizations. We've seen this time and time again, not with superstars or the company's brightest managers, but with people who are living at the top of the bell curve: regular, normal folks. And, they have fun in the process!
Business success now depends on close connections between paying customers and the company. The connection is best created and maintained by small teams of people who are responsible for the relationships, and who have full, quick access to the information and resources of the company to make things work. It's all in the connections.
THREE: Managers Build Institutional Wealth
This proposition stands in the place of the old maxim: "Managers Generate Efficiency and Profits."
With new organizational forms, information processing systems that automate much management work, an educated workforce, and a continuous process improvement capability, small self-managed teams no longer need supervisors and managers to achieve peak performance.
This offering does not advocate the abolition of managerial work, rather its reinvention, so that it can make a far more valuable contribution to the enterprise.
The new management work should be assuring the company's owners that the knowledge capital of the enterprise is:
1) Inventoried: known and accounted for,
2) Utilized and optimized in innovative ways across traditional lines
3) Secured within the company (outside of employees' heads), where it can be used by lots of people, and
4) Growing. If knowledge capital can, indeed, be leveraged into revenues and profit, then expanding that capital should be paramount. And managers are in the right place (with most of the skills) to do just that.
The above commission redeploys current skills that most capable managers now possess. But it takes the "boss" out of the role of managing. The skills required to grow a company's knowledge capital are more than just technical; they are social as well, and this work requires a real rapport with people. As is true with much traditional management work, the people responsible for doing the organization's real work each day may believe that the constant collection of knowledge capital does little more than interfere with their performance.
Some people in obsolete supervisory or managerial jobs are less interested in systemic work, and would find this proposed mission boring. For former managers who are more energized by working directly with people, there's another way to build the knowledge capital of the enterprise.
With all the magic and potential we've discovered in properly equipped, well-informed self-managed teams, our work at ChangeCraft has taught us that these teams tend to fall apart without a skilled and disciplined Team Coach. These coaches (who are not members of the team, but visit regularly) add focus, facilitate resolution of internal problems and work with team members to aggressively--and continually--develop each other's skills and capabilities. It is this last contribution that seems to mark the difference between high-performance work teams and committees (Katzenbach & Smith, The Wisdom of Teams: Creating the High-Performance Organizaton, 1993).
Here's a caveat, though. Experienced managers seem to have difficulty making the transition from being "boss" to being a servant and supporter of self-managed teams. The best coaches we have seen have been true peers who never worked as managers or supervisors.
FOUR: Employees Are Engaged As Individuals
This proposition is offered as a replacement for the old maxim: "Treat Employees Consistently."
Before we knew were moving into the Information Age, the consumerism movement in America forced a radical change on Industrial Age businesses. These enterprises had matured as the masters of supply, providing identical products to sheep-like mass markets. In the 1970's, emerging world markets gave consumers a true choice; we learned that quality did not necessarily cost more (maybe less) and that it was possible to get products as we wanted them, when we wanted them. American consumers began buying their cars and other products from other countries. The industrial enterprises that survived learned that they were servants to their customers and not masters. The ones that have thrived learned to customize --even custom make-- products their customers wanted, and to make the experience of doing business with them a real pleasure. When 800 numbers and the Internet came along, the new way of doing business was sealed: customers were now freed from local suppliers and could buy just as easily anyplace in the world.
The End of the Age of Policy. In the previous era, a company in conflict with a customer could end most any dispute with: "It's our policy." That meant, "You should give up now because we treat all customers the same way. You have no choice." Customers no longer stand for that… they find new suppliers.
Only the most clever and aggressive new employers have come to understand that their employees (who learned the lesson as consumers) will no longer stand for "consistent" treatment,- even if it's policy - when it fails to meet their needs. They will find new employers.
Business enterprises are learning to engage customers as individuals. We're now just beginning to learn to treat employees the same way. It is this motive that drives some Information Age businesses to delight the people who work there with all those incredibly outrageous benefits.
We can no longer treat consumers as a mass market, whose desires and needs can be averaged and only generally addressed. Nor can we apply the old Industrial Age standards of treatment to the labor market. There is no mass labor market. Increasingly, employees are making independent, individual decisions about what they require from their employers. And, the very best of your knowledge workers can find employers who respond to their requirements. How? On the Internet, of course!
But, It's Against the Law! American employment law is hopelessly archaic. It requires employers to act as fair "masters," caring for the child-like, unsophisticated people who labor in their shops. The law was written for the mass labor market, which no longer exists.
Just as laws follow - rather than lead - real social change, businesses that only follow these antiquated, paternalistic employment laws will also follow their innovative competitors into the new millennium.
FIVE: Combine and Innovate
The old proposition of Divide and Control no longer creates competitive advantage. "Unity, Focus and Collaboration" are becoming the mantra of tomorrow's business leaders.
When the leverage to gain and hold market share was found in standardized machines and production systems, it made sense to force employees to comply with procedures, even though they thought they had a better idea about how to do their work. Everyone who has held a job knows what management does with most employee suggestions: nothing. In traditional organizations, new employees learned quickly to check their brains at the door when they arrived at work.
Today's - and tomorrow's - knowledge workers will not check their brains at the door. They will not be a cog in a machine. They will be heard. They will contribute their ideas and see them work. They will do it here, or they will do it in their next job. Actually, that's the good news.
Dilbert as a Failure Indicator. Every morning, millions of American employees get a sour laugh reading the Dilbert comic strip as it lambastes management for its stupidity and incompetence. Are managers generally stupid and incompetent? Of course not! It is impossible for the nearly 15 million Americans who hold executive and management jobs mostly to be stupid and incompetent. Then, why do so many people relate to Dilbert? Because the rules and processes of almost all management work are still rooted in the Industrial Age. The old corporate machine is the walking dead. And each day, Dilbert fans mock those who still try to run it.
If we are to earn the loyalty and the innovative contributions of our employees, we must abandon the systems they mock. And we must earn the innovative contributions of our employees. Just as global markets allow buyers and sellers to freely cross the economic boundaries between countries, we must emancipate employees to freely cross the departmental and divisional boundaries within our companies to combine their talents and invent new ways to succeed.
Global free markets mean businesses must constantly innovate, and businesses can no longer afford to squander the spirit, intelligence and inventiveness of rank-and-file employees. Innovation can no longer be the domain of the Research & Development department. It must come from everyone. Management cannot be allowed to decline employee suggestions for improvement; it must become the facilitator of every one of those suggestions, supporting the employee innovator in getting ideas implemented. Even "bad" ideas, because innovation is, by nature, experimental. And experiments, by nature, do not always succeed.
At ChangeCraft, we've learned ways to mobilize the vast, untapped resource of employee brainpower. Our clients implement a system that brings together small teams of employees with diverse backgrounds, and blindly pre-approve any change they implement to make the business work better for everyone who cares: customers, owners, employees, the community.
SIX: The Individual's Work is Essential
This proposition stands in the place of: "People Need Jobs." Sure, people need paychecks. But people increasingly need to make an important contribution in their work lives. What's more, business enterprises can no longer afford to employ only parts of the people they hire.
Henry Ford, the last century's wizard of industrial production, reflected in his autobiography about the more than 7,000 specialized jobs required to manufacture a Model T:
"949 required strong, able-bodied and practically physically perfect men. 3338 needed men of merely ordinary physical strength, most of the rest could be performed by women or older children, and we found that 670 could be filled by legless men, 2637 by one-legged men, two by armless men, 715 by one-armed men and 10 by blind men" (Ford, My Life and Work, 1923)
Following Ford's lead, we have institutionalized organizational designs that employ only parts of people. To reverse this pattern -- to earn the right to the whole person -businesses must deal with the whole person. That means openly and effectively dealing with "messy" human issues like emotions, interpersonal issues, conflicting needs, family demands and obligations. For, if a person's work is essential, we must, in every way, deal with the person, herself, as essential.
If an organization is to move beyond the slogan, and truly honor each individual's work as essential, a new type of corporate culture is required. Command and control systems must be replaced with more open, flexible and responsive processes that provide natural checks and balances as individuals work with one another. The organization must not only be made up of self-managed people and teams, but the work of those teams must be self-correcting, so that when a person or a team gets off course, others quickly know it, and pressure it back into the flow.
Essential people must be allowed and encouraged to shape their own work, not just to do "jobs" that were structured sometime in history by unknown people. They must be afforded significant control over the tools and equipment they employ. They must be treated as the "owners" of their own work processes. They must have the authority to negotiate working agreements with anyone in the organization who affects their performance.
For employees to structure their work responsibly, each must develop and maintain an understanding of the nature and the strategy of the business. Each individual's responsibilities must be directly and tightly connected to a strategically essential end product and/or paying customer. Essential people shoulder essential responsibilities.
For employees to capably exercise the responsibilities that come with structuring their own work, they must have broad and general skills that were never required for specialized jobs. Much of the training that has been provided only to managers and supervisors over the past 50 years must be made available to self-managing employees and their teams.
Summary and Conclusion
This article was written to outline ways to master the challenge of retaining and building Knowledge Capital in this new era. In the old days, in simpler times, this may have meant, "How do you keep good employees from quitting their jobs and moving to another employer?" Today, and in the era we are just beginning, it means something entirely different.
To succeed in maintaining and growing the Knowledge Capital of an enterprise, old structures-- like jobs and management -and the principles that support them must be reinvented and replaced. Some "new age" enterprises, which had the advantage of starting with appropriate structures and philosophies, are already better able to recruit employees and retain Knowledge Capital. If older institutions fail to do that, they won't be able to keep the valuable people whose contributions they need to stay in business.
Knowledge Capital is generally found in the heads of employees, but it can be collected in an organization's information systems. Thus, an organization can stand (even thrive on) higher turnover rates in employees.
If we are to replicate and capture the growing Knowledge Capital found in employees, the employees must cooperate and actively participate in the process. To earn that cooperation, organizations must create entirely new relationship structures with--and between--employees. Organizations must completely reassess their policies and approaches to knowledge in light of the new "natural laws" of the knowledge economy.
Doug Wesley is principal practitioner at ChangeCraft Corporation. He may be reached via e-mail at: wesley@changecraft.com.
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