OPINION:Rarefied bubble zones of CEOs and directors bounce only towards disaster. Harnessing energy from the bottom up is the way to power us out of recession
GOVERNANCE IS a fancy word for decision-making. Who gets to make the decisions and whose lives are affected? Our primary experience of governance is in the workplace where we have been conditioned to see business leadership as a top-down process. Decisions by an elite minority determine the working life outcomes of the majority.
Amid the complexity of the current business environment, the elite decision-makers have been too removed from the customer interface to make consistently intelligent decisions.
This centralised approach is founded on arrogance. It ignores the deep pool of talented people in our workplaces, who live rich complex lives, raise families and contribute to their communities. These decision-making processes only utilise a fraction of the knowledge available in our organisations.
Knowledge is the key component of the changing leadership challenge in our workplaces. Increasingly, a large part of the value of a business is invisible, locked away inside the heads and hearts of the frontline staff. Their daily working lives are rich in feedback from the marketplace and this granular intelligence steadily aggregates into important patterns and insights for the business.
Control is an illusion with this ephemeral commodity of knowledge. The value added by knowledge workers cannot be distilled into a set of precise steps. Most work scenarios are differing shades of grey and there is a multitude of context-specific details that separate mediocrity from excellence. Pushing out the performance frontier is a voluntary act.
The leadership mindset change from “human resources” to “volunteers” is a 180-degree shift. It places a premium on new skills such as listening, delegating, coaching and praising. A comprehensive dashboard of performance measures facilitates self-governed autonomy but also sets clear boundaries on individual discretion. The art and science of fair rewards is a crucial ingredient, as is a positive workplace atmosphere built on fun and our innate sense of humour.
The rationale for this power shift is pure bottom line. Harnessing all of the intelligence in a knowledge-intensive business delivers the best commercial outcome over any medium-term horizon. I watched this unfold before my own eyes over almost a decade in Irish Life Corporate Business. It works.
The exceptional business results there were not driven by financial engineering. The most important performance indicator had nothing to do with money. Consistently low staff turnover throughout the boom confirmed the transition to a volunteer culture and it copper-fastened a relentless increase in organisational knowledge. It is remarkable how customers reward consistency and continuity.
The shareholder value derives from the reality that obedient compliance and passionate engagement exist in different dimensions, not on the same spectrum.
The simplest way to represent the required leadership shift is from top down to bottom up. Leaders must articulate a mobilising vision of the future but the operational plans and strategies are best delegated to those closest to the action. The Wisdom of Crowds by James Surowiecki should be prescribed reading in our boardrooms. Surowiecki builds a compelling argument that, given the right conditions of diversity and independence, collective bottom-up decisions are extraordinarily sophisticated.
“Our people are our greatest asset” is a familiar tune in the workplace. The words and deed are rarely aligned and such campaigns are at best tactical. Forget about gimmicks and trinkets. The hard currency of these sentiments is real power to make real decisions.
Democracy in the workplace runs counter to all our conditioning about work. Used wisely, it delivers speedy decisions attuned to current market conditions. Better still, these decisions carry the moral authority required to ensure successful implementation.
Switzerland is possibly the most democratic country in the world. Their bottom-up decision-making has fostered a unique culture of self-reliance and engagement with their society. As an example of how seriously they exercise their mandates, they voted in 1995 against a shorter working week, in the interests of their long-term competitiveness.
Google is the most contemporary example of a volunteer culture. Its revenue may derive from internet advertising but it is essentially a talent machine. It hires exceptional people and gives them the liberty to design amazing products. It is hardly surprising that it has been selected by Fortune magazine as the best US workplace in 2007 and 2008. There is no reason why Ireland couldn’t spawn a Google-type success story.
The report of the National Workplace Strategy (NWS) highlighted the urgent need for workplace reform in 2005. It is a well-intentioned document full of the right language but it fails to highlight the critical leadership shift needed. Those working at the top of our large organisations are unlikely to relinquish the power they have accumulated.
There is a paradox at the heart of this issue. The complex political skills required to become a chief executive are very different from the service-oriented leadership skills required in the same role. All too often, the first decision at the summit is to appoint compliant followers.
The NWS is premised on the assumption that workplace change will start at the top. I believe that real momentum will only be built on a bottom-up basis. Workplace reform must become a burning political priority, driven by the Taoiseach, just as it was in Finland, over a decade ago.
We need to promote and celebrate exemplar organisations so that the bright light of transparency can shine on workplace mediocrity. Management incompetence, in all its forms, must be rejected and the NWS finding that 50 per cent of employees “hardly ever” receive information on key areas of their enterprise is a disgrace.
Language is very important in this transition. The boardrooms and executive suites of Ireland need a new lexicon, containing words such as purpose, values, fairness and many other terms outside the command-and-control model.
Words matter. Somewhere on the Celtic Tiger journey, bank lending was absorbed into the vocabulary of sales. Clearly, doubling “sales” is always good for a business and so the lending spree accelerated towards disaster. We all realise now that lending only becomes a “sale” when you get the money back.
Ireland is uniquely suited to the knowledge-driven world. We have deeps roots in learning and curiosity and are blessed with an abundance of young talented people. Consider the simple example of humour, at which we excel. Humour is a piercing indicator of intelligence, built as it is on speed of thought and the ability to make surprising and unexpected connections. Creativity is in our nature.
The term “knowledge business” must include a return to manufacturing in areas where speed and agility can outrun the multinational monoliths. Achieving economic prosperity for our children will be built on trading internationally and we have the innate entrepreneurial skills to excel here.
A 21st-century version of the land of saints and scholars is a realisable vision. Workplace innovation is a national imperative, founded on the intelligence, passion and energy of the Irish people.
One simple idea can serve as our guide on that journey.
Excellence is a voluntary act.
Donal Casey is an actuary and former chief executive of corporate business within the Irish Life and Permanent group. Previous articles by him on the business and attitudinal challenges thrown up by the recession may be found on the Irish Times website,