Julian Birkinshaw – The Surprising Lead Indicator of Employee Engagement

Henry:: Now, I'm going to hand over to Julian. Julian Berkenshaw is from London Business School. And his details are in the in the pack, but actually we had to cut them in half because there's so much that he'd done. He's written 12 business books. He's worked with some of the biggest companies in the world.

But above all, the Thinkers 50 list of the top business gurus in the world put him in the top three in the UK. So, no pressure then, over to you Julian.

Julian:

Thank you Henry. It is a pleasure to be here, great pleasure to be here and I've known Henry for years, six or seven years I guess. And we've been bouncing around on these ideas of, of making great places to work. We come from slightly different angles, but ultimately we kind of, if you like, start and finish in more or less the same place, which is the reason you're here, which is that a happy and invigorated and committed workplace is good for people as well as good for profits. If you see what I mean, we can actually do both of those things. We don't have to trade off between, shall we say, doing good and making money for our organizations.

I've talked, I've called my talk Reinventing Management. That's the name of my book. I've got some slightly academic thoughts. I'm going to keep it fairly light, hopefully very practical. I'm going to have at least one chunk in the middle where I'm gonna, in Henry style, ask you to ponder a question for two or three minutes with your neighbors.

But I will be also throwing quite a lot of ideas at you. I said we started in the same place. Here's where I start. This is data from, some of you will have seen this before, I appreciate. This is data from a chap called Richard Layard who's an economist at the LSE. And he asked people who they're happiest spending time with.

Anyone wanna guess what, you know, you can, you can guess how this works. I put them in order. So, the friends come top, the parents, the relatives, the spouse. We love our children, but, you know, when we spend too much time with them, we get into fights with them, so I don't want to, I want to dwell on the bottom here.

You can see where I'm heading. I'll spell it out if it's not obvious. People would prefer to be alone than with their boss, okay? The boss is that person with whom we have a Sometimes great, sometimes rather tempestuous. At all times, a little bit delicate relationship. And when asked, most people actually would prefer to be alone.

What does that mean? I think that's obviously a kind of a rather sad indictment on our organizations. There are some terrific bosses out there. There are also some terrible bosses. And my personal kind of quest, if you like, over the last five or ten years has been to say to myself, you know, what can we do differently to start, in Henry's word, a transformation and movement?

And my starting point, actually, is to go almost like back to the kind of the basic underlying principles, almost the kind of the concept of what management is all about. My definition of management is getting work done through others. That's not a controversial definition on that, of course, applies both to the kind of the architecture of the company as well as the individual things that each of us does .

So if you say to yourself, be a little bit sort of philosophical here, say, what problem was management invented to solve in the first place? You know, you can go, that might sound like a crazy question, but if you think about it, management is a, is a social technology. It is a mechanism, a means by which we get people to do stuff which they couldn't do on their own.

And so if you go back to the Industrial Revolution, I mean, you can go back further if you like, but let's start with the Industrial Revolution. You go back to the kind of the dark, satanic mills of Lancashire, if you like. And you say to yourself, what were the problems that the original architecture management were trying to solve?

And it was to routinize and standardize work, you know, make high mass produced products at high, high quality and low cost, and to maximize the diligence and discipline of people. You know, the word, the term manual labor means literally using the hands, right? We are, we created the concept of manual labor almost as a way of, you know, almost dissociating people from the fruits of their production.

And of course that's, that was the, the result of that was enormous increases in productivity and efficiency. You know, we live on the fruits of that today. But if you say to yourself, and I'm typically talking about bigger companies, but the story also applies to smaller companies. If you say to yourself, what are the problems that management grapples with today, they will be more likely to say things like, we want to get the most out of our employees.

We want to create an engaging workplace. We want to innovate. We want to try to continue to adapt in order to make sure that we stay relevant. And that list, Of challenges. Agile, innovative, engaging, of course, is qualitatively different to the original challenges. that were created. So I think you see where I'm going here, which is a very simple point, which is we created this social technology we call management.

It's a good 100 plus years old as a way of working. The challenges that companies face today have substantially changed, and yet an awful lot of the basic mechanisms by which we get work done have kind of got stuck in a time warp. And I'll, I'll, I'll kind of prove that point to you. In effect, here is a chart I took from a textbook about how the work of management gets done. What are we trying to do? We're trying to achieve the organization's goals through planning, organizing, leading, controlling. What date do you think that textbook was written? Shout out a number. It doesn't really matter if you're right or wrong. 1965, 1925. It was written in 1955, so you knew it was going to be old.

If you were an American and you were growing up in, you know, school in the fifties, you almost certainly would have read this book. This was the Kuhn, Turner, Donald principles of management. It was the kind of the standard textbook of the era. And my point of course, is that you could have, you could, you'd have better, better quality graphics today, but the words could be exactly copied from that put into a textbook from 19 from 2014, and people would say, yeah, that's about right. That's kind of the way management works. So the kind of the thought experiment is take someone from the 50s, put them in a time capsule, bring them forward to the present day, and ask them to comment on the way that work happens.

And they would be astounded, wouldn't they, by technological advances. They wouldn't get this concept of mobility and Internet and things. But if you actually start describing your budgeting process or your system for evaluating the performance of people, they would feel right at home. We haven't actually evolved the principles management.

So if you ask me what should we do to make our workplaces happier, more engaging, more fulfilling, I actually say we've got to kind of go all the way back to the basic principles, the basic logic of why we organize and manage and control and plan the way that we do and actually start by reinventing things at source.

And then, as a result of that, we will figure out better ways of making work happen happily on a day to day basis. So I want to broaden our concept of innovation from innovation in products and services to actually new and better ways of working. So I actually use this slide about Google all the time anyway, whether, whether we actually have an event at Google.

So I think Google is a fascinating company on many dimensions. It of course is innovative in terms of its products and services. But it's also a company which has pushed the boundaries of what's possible in terms of how management work happens, how much autonomy to give people the span of control, the working environment.

All of these are good examples, I think, of some of the innovations in management practice that we need. I'll just give you one very specific example. HCL Technologies is a company that some of you will know, some of you will not. The chap in the picture there, his name is Vineet Nair. He's just retired as the chief executive of HCL after 10 years running the show.

HCL has grown in the time that he was the chief exec from 30,000 people to 80,000 people and they do IT services. They do call centers, they do business process re engineering business process outsourcing, rather. And the details of what they do don't matter, but the key point here is the following, which is that he has taken personal responsibility over that ten year period to completely rethink their management technology, their, their wiring, if you like, of how they work the way they do.

And we don't have time to go into the details of it. It's the biggest, most successful management transformation I think I've ever seen. He starts with this fundamental premise, of employees first, customer second. And he tells his customers that. He tells his customers very happily that his job is to put his employees first on the basis that if he puts them first, they will, in turn, put the customer first.

And one, I'll just give you one example. You know, he uses 360 degree feedback. Many, many big companies use 360 degree feedback as a way of evaluating the performance of managers. Well, he said to himself, why on earth would we do that and then keep the results hidden? From now on, he said, I want to make sure that everybody understands that if somebody is evaluated well or poorly by their peers and by their bosses and by their subordinates, I want the entire organization to know that.

So we gradually, through persuasion, got everybody at a management level to open up their 360 degree feedback and put it online for everyone to see. So if you are not doing a good job as a manager in HCL, you're not doing a good job as a manager. There's nowhere to hide. You either have to say, look, I'm not a good manager, I don't care, or you have to say, I'm taking this stuff seriously, I'm going to improve, or you choose to, to leave the company.

It's a mechanism of transparency that enables, obviously, all of the good stuff that we're talking about here. Lots more I could say, but in the interest of time, I'm going to keep cracking on here. I'm going to give you one very specific example of how I go from the principles, the underlying principles, through to an alternative set of principles, through to a practical experiment in changing the way that we work.

Because Henry's asked us to speak practically. We want to try to make sure this is not just a theoretical exercise. So you say, what are the basic principles of management? One of them is the question of how we coordinate our activities. The classic mechanism, of course, is bureaucracy. You all know what I mean by bureaucracy.

Standardized work. Standardized procedures and rules for enabling people to work effectively together. Is there an alternative logic to that? Yes, there is. It's often called self organization or emergence. It's the notion that when left to their own devices, people, as long as they've got some sense of what they're trying to achieve, people will figure out how to coordinate their activities through mutual adjustment.

I'll just give you one example. If you can just roll the Roll the tape here. This, if you've ever traveled in India, if you've ever traveled in other parts of Southeast Asia, you'll have seen something along these lines. I'll just run it for 20 or 30 seconds.

We've seen enough. Thank you. If you can just put that on pause. If you like that video clip, it's just a YouTube thing. Just type in India to India. traffic or something like that and you'll, and you'll find it and use it with your colleagues. Look, as I say, if you've ever traveled in that part of the world, yeah, you've seen this, it's chaos, but it just about works.

Okay. That's, that's the kind of the point here. It doesn't have a whole lot of rules or procedures. There's some basic rules I drive on the left or whatever, and that's about it. And this and other insights have led to some interesting experiments that a chap called Hans Mondeman. He was a Dutch road traffic engineer.

He had this brilliant insight that in order to make our road systems safer, we should make them more dangerous. The genesis of that was the observation that in the, in the West, in a place like London, in a place like Amsterdam, We're obsessed with kind of safety, and we're obsessed with rules and, and construction.

We try to make our road systems completely free of any sort of deviation from the norm. We create lights, and we create markings, and we create, and so forth. So he said, strip all that stuff away. All of that stuff is clutter. What we need to create is a shared space in which the cars, the pedestrians, the cyclists can coexist.

So you go down Exhibition Road in Kensington, you see a version of this. I mean, this, this concept has been actually applied in many, many cities around the world. And you, if you imagine yourself as the driver, you approach a shared space like this. What is your response? You know exactly what you do. You slow down, you take stock, you look around, you make sure you understand what everyone else is doing, and then you find your way through the system.

And of course, when he did this, he actually persuaded a couple of Dutch authorities to try this out with a very explicit kind of experimental mechanism. So you test how things are doing before. You'd make the changes, you'd test how things look afterwards. He discovered, you know, to his delight, that the before and after picture was exactly what he predicted.

There were, there were fewer accidents, traffic speed increased, general kind of ambiance in the area was actually improved. And for me, this is just a beautiful analogy to what we do in big companies, right? The markings and lights and all the rules of the road are analogous to the to our performance management systems, and our budgeting systems, and our capital allocation systems.

Well intentioned, designed to create structure and order, but actually they all have the effect of disempowering people. And in many, many cases, fewer of those systems would actually achieve just the same result, but with a whole lot less bureaucracy. So just to just to take their story forward and to give you a practical kind of so what I've seen many companies, UBS, the big Swiss bank being being one such example.

This is the private banking part saying to themselves, look, we've got these really ungainly processes. In UBS's case, it was their budgeting process. And the details don't matter, but essentially, rather than fine tuning their budgeting process, they said, let's just get rid of it altogether. Let's get rid of our budgeting process, because that's the thing that's blocking our growth.

And let's put in its place a very light touch system, whereby essentially we're empowering people on the front line. to make their own choices about how much to invest, how many people to employ. And we will evaluate people at the end of the year on their return on investment rather than their performance against budget.

That's a big change. We've even, London Business School have even kind of helped organizations with much smaller changes. I was running a program with the Swiss pharmaceutical company Roche and they were, they were fascinated by this insight. And they said to themselves, look, we can't change the whole of Roche, but what we can do is we can take one particularly annoying bureaucratic strand, the expense claim process, we've all experienced bureaucratic expense claim processes, and we will get rid of the traditional model where every single expense has to be signed off by the boss, no matter how senior you are.

And replace it with a peer review system. I think you know what I mean by that. You put online the information about what you're spending. And if your peers think it's okay, then you just proceed. You go back to the MP's expenses scandal. You know, we didn't need the Daily Telegraph to do that. If we just used a peer review system, if we just have a system where our MPs had to simply, you know, provide information about how much money they were spending.

I realized that that would have created all sorts of challenges. But the principle, the peer review system, is a much more powerful way of achieving coordination and getting, getting sort of checks and balances in the system than actually having some sort of top down bureaucratic system. So hopefully you see what I've done there.

I've said big picture, you know, we need to figure out ways of coordinating activity. Bureaucracy has all sorts of flaws and emergent self organizing model has advantages. Let us think practically about one way of taking that forward in a useful and practical way. So that's the kind of part one of my talk.

My second part, I want to give you a chance to get involved. And this is to take my concepts, if you like, of management as a set of processes down to what does it mean for us as individuals. And the definition of management I like is this one, enabling your employees to do their best work. And I think you can kind of get that.

Henry's whole conversation that we've had before is completely consistent with this idea. As a manager, if you enable your employees to do a good job, then basically you can more or less stand back. I mean, occasions we have to intervene, but basically that's our job. And as Henry says, what employees need, what employees want, is kind of well understood.

We know that if you give people important work to do, if you give them autonomy in space, if you give them support when it's needed, if you give them recognition when they do a good job, all of those things together actually create the sort of environment that we've all been talking about here.

Unfortunately, as we know, It doesn't always happen that way, right? We often, as employees, when we look at the people in our organizations, it is the case that the quality of management is very mixed. We often get confusing or unclear objectives. We have micromanaging bosses. We have a little lack of information about what we need.

We don't get the feedback we want or expect. And there's a gap. I've just been writing my most recent book was called Becoming a Better Boss. I thought I was going to write a book on what good management looked like. I realized that actually, we know exactly what good management looks like. And that kind of gave me the insight to say that the book I had to write was a book on why we don't do what we know we should do, if you see what I mean.

Why, given that we kind of know intuitively that what good management looks like is this. Why is it that many of us, when we're being honest with ourselves, actually continue to be, shall we say, good quality managers one day, poor quality managers the next, at best, kind of mixed in terms of the quality of the management caliber that we provide to our people.

So, I'm gonna ask you a question in a second. And it links to this logic that in fact good quality management is about trying to, sorry, the challenge of good quality management is the challenge of changing habits and developing skills. I personally see an analogy between, you know, the kind of the Stephen Covey model, seven habits of effective people, to the self help books on becoming a better golfer or losing weight. And if you'll just, you know, sort of humor me for a second, you know, the books on becoming a better golfer those books tell me, as I address the golf club, here are the ten things I need to remember before I swing the club. I can't keep ten different pieces of information in mind at the same time.

I can't keep two or three pieces in mind. The fact is that golf is difficult because these things are all interlinked with one another. And to become a better golfer, the only way is actually lots and lots of practice and preferably with a professional, a pro, helping me and ensuring that I make corrections.

I can't become a better golfer by reading a book. I don't think I can become a better manager by reading a book. The story about weight loss we all know how to lose weight. Exercise more, eat less. Okay. That's kind of an understood point. The nonetheless, the vast numbers of books written tells that that basic advice is not being heeded.

And you know exactly why it is. It's because we all are involved in our lives in taking part in a bunch of habits and routines that are very hard to break. And it is the same in management. The way that we work is a set of habits, a set of learned routines that unless we work very hard on them, are very difficult to pull back from.

So I think we can learn a lot from the challenges of losing weight and becoming a better golfer as we start to try to become better managers. So, here is my question to you. This is my Grand Canyon sized gulf between the rhetoric and the reality of management. If we know what good management looks like, and we do, Why do we struggle to do it consistently?

That's the question. I mean, the supplementary is, what techniques can we put in place to help us? But frankly, in the three or four minutes we've got, I think the first question is the one we're going to focus on. So, turn to your neighbors. Why do we struggle to do it consistently? That's the question.

Okay! Look, I've got five minutes before I must wrap up. Let me just make a, a three or four, More summary thoughts, and then we will give the floor back to Henry. I started to think of being manager, a good manager, as an unnatural act. I googled around to try to find an image to go with this pitch, with this slide.

But I realized that they weren't fit for consumption in an event like this. So, you got text only on this one. An unnatural act, what do I mean by that? It links back to, Lady said here. You know we are all, trying to do things which don't come completely naturally to us. I mean, again, there's variation here.

But most of us would like to be, more or less, in control. You know, it's almost kind of human nature. You go back to kind of basic psychology and this need for control exists. It probably exists more in men than women, but I'm going to be very cautious about generalizing on a statement of that sort.

So my most recent book is an attempt, to try to turn that basic insight into something a little bit practical. The starting point is, is a kind of an old thought, which I'm just going to amplify, which is this notion that we should become much better at seeing the world through the eyes of our employees, walking a mile in their shoes.

They say that the, the Queen of England thinks that the world smells of fresh paint. You've probably heard that expression. You know exactly what I mean whenever she does a visit, whether it's a hospital or a school or whatever, you know, it's always planned at least a year in advance, and what does the hospital or the school do?

They give everything a fresh coat of paint. They make sure that everything is just perfect, so that when she visits, all she sees is the beautiful, the best side of the place. And of course, the bigger your organization, the more your senior executives find themselves stuck in kind of the Queen's sort of worldview, which is that you don't actually figure out what's really happening.

And even if you try to kind of cut through and get to the point, your risk is you're being given some sort of view of the world, which is not quite correct. Heisenberg's uncertainty principle, I believe, says, you know, as soon as you try to measure something, you actually disrupt the thing that you're measuring.

So I've, I've been kind of pondering how we can do things differently there. I mean, there's a lot of very practical things. I'm not going to go through this list in any detail. A lot of practical things that, particularly in big companies, a senior person can do to try to cut through a little bit. I mean, these are all fairly self explanatory.

For example, I'll just go through a couple of them. You know, frontline work. Many, any, if you're in retail or Tesco's or whatever, Every senior executive is expected to spend a few days a year working on the front line. And you can replicate that model in any other organization. Some companies have even dabbled with reverse mentoring.

The idea that a 50 something general manager doesn't really understand technology anymore. So he or she has a, a mentor who is 22 years old. And by creating that relationship, it starts out being a relationship about social networking, but it actually generalizes to a slightly non hierarchical, less threatening way of trying to figure out, get the pulse of what's happening in the organization.

So, more I could say here, but in the interest of time, I'm just gonna finish that and make one final point. Which is if we want to see the world through the eyes of our employees, we need tools to do that. We mustn't just say, oh, it's a good idea to change your perspective. It's easy to say that. I've actually been kind of tracing back the thinking about how marketing as a profession works.

Just bear with me on this. So what is marketing? If you're a marketer, you know, one of the definitions you use of the principal marketing is to see the world through the eyes of your customer and marketers have spent 50 or 60 years now building techniques for trying to figure out better how to see the world through the eyes of their customers.

And one way they do it is they get closer to their customers. They follow them around, they do ethnographies and all of this stuff on this list here, if you think about it, it's about getting closer to the pulse of what our employees are actually thinking. And I'll just give you one final example, which is this notion that our employees are our best promoters.

Most of you have heard of a marketing concept called the net promoter score. And the Net Promoter Score is a very famous, well used way of asking a single question to try to understand how successful we are being with our service mentality. You almost certainly, all of you filled in this question at some point in time when staying in a hotel or flying on British Airways.

How likely is it that you'd recommend this company to a friend or colleague? And the theory is that if you answer 9 or 10 out of 10 on this question, you are what the literature calls a promoter. You love this product so much that you're going to tell your friends. And this is far more effective as a marketing tool than any number of ad campaigns, because you get the personal recommendation.

It turns out if you answer one to six on the scale, you are what they call a detractor. Six, strangely enough, is actually seen as negative here. And what the marketers do is they very, religiously, even track the net promoter score in their organization by calculating the number of people who score 9 or 10 out of 10.

And they subtract the number of people who score 1 to 6 out of 10, and they throw away the information about the so called neutrals. And they come up with a net score, and they track it over time. And this then is, has been shown to be a good kind of predictor of sales growth and customer loyalty and things like that.

So you can guess where I'm going with this. I have been pushing this notion. Here's a slightly scary idea. But one that I think is well worth trying, that I suggest if you run some sort of employee engagement survey, that you add to next time's survey. And the question is this. How likely is it that you the individual employee, would recommend your line manager to a colleague of someone that they should work for in the future?

So this isn't about what's the quality of management in general in the company. That's a lame question, right, because there's always a cop out. This says, the immediate boss who you are working for, would you recommend them to a colleague? As, as with the Net Promoter Score, you know, you can calculate the nines and tens, subtract the ones to sixes, and you can track that.

I've actually got a few companies to try this out. Some friends of mine in Unilever are working on this. I've got some friends in Roche, the Swiss pharmaceutical company, playing with it. It is a very sharp and effective way of cutting to the meat of the question, which is if you've got a good line manager, a manager who takes management seriously, an awful lot of the good things we've been talking about kind of flow directly from that.

So if you're running a big organization, you want to get evidence about this as a measure. And in aggregate, this gives you a better pulse, arguably, of how the organization's doing than many other measures. So many of you, if you're in the sort of organizational behavior, human resource side of things, you will have some sort of employee engagement measure.

The horizontal axis on this little graph is employee engagement. The vertical axis here is my net management promoter score. It's a single question. And you can see there it's a very, very clear, if you're interested in correlation matrices, 0.75 is the correlation. What this says is, rather than measuring all of these other things about employee engagement, in terms of the quality of the working conditions, the quality of the colleagues, the state of the economy, we can ask this one short, sharp question, and we can get to almost the same result.

And my personal view is that this is a very useful, almost leading indicator, of how the organization's going to be doing in the future. I'm going to finish, no I'm going to finish there. I'm going to finish there because I realise I'm out of time. There's much more I could and would love to say.

I'm sticking around all day anyway. So please by all means to ask me questions during the break. Hopefully my thoughts have at least given you something to chew on for the rest of the day. Thank you very much.