Want Exponentially Better Production? Focus on People Instead

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Traditional business training focuses the leaders on production. But research shows that focusing on the people instead is more likely to help your production.

95% of companies are still organized around the outdated Industrial Age factory system model that taught a focus on production. People were an ancillary, necessary evil to be managed, but the message of MBA courses and the factory system model was clear: production equals profit, and people are just overhead.

People Are Profit, Not Overhead

It’s easy to make a correlation between the speed of the assembly line and the number of widgets produced. We like direct correlations; it’s easier for the human brain to comprehend.

But research is now consistently showing that when you focus on the people, all the production numbers that command and control businesses mistakenly focus on get better. Capitalism, it turns out, works a lot better when you build great relationships, have a great culture, and encourage community at work than when you focus on trying to get your assembly line to run faster. Focus on the people, and they will make your assembly line run faster.

Focus on People and Grow Well

James Heskett and John Kotter, Harvard Business School professors, did a decade long study of companies focused on performance-enhancing culture, and companies with more traditional focuses. Their findings, published in a book called Corporate Culture and Performance, are shown in the graph below:

Performance-Enhancing Cultures Graph

Look at the stunning differences: companies focused on culture grew six times faster, increased their value over ten times faster, and had 756% faster income growth. Data like this sadly highlights the fact that most executives don’t like facts. They want to keep doing what they’ve always done because it’s what they know, not what will help the company succeed. Any leader looking at the above graph should immediately focus every resource they have on getting their culture right. Instead, they will go right back to oiling the machinery and trying to make a better deal with a shipper. Nero fiddles while Rome burns.

Here’s another angle showing similar results. Raj Sisodia, in his book, Firms of Endearment, found twenty-eight Fortune 500 companies, what we call Participation Age companies, that valued purpose and making meaning, over production and simply making money. Here are the results:

Firms of E graph

Again, stunning. These companies focus on something bigger than making money that coalesces their people around a vision of how they can each individually make a difference inside their companies and in the world around them. This emphasis on getting people motivated to make meaning resulted in these twenty-eight companies growing four times faster than Jim Collins’ oft-referenced Good to Great companies, and ten times faster than the norm.

The Emerging Work World Executive

These are just two of a long line of studies showing that when you take care of people, they take care of the company’s numbers. It’s tempting to find this interesting and then just go make another widget. But what this means to the emerging work world is that the most valuable leaders going forward will be those who know more about how to take care of people than how to take care of production.

It also means that HR will likely no longer be a department; it is already extinct in many Participation Age companies. Instead it will be a core responsibility of executives throughout the company to care for people more than machines. Experts will focus on production, and leaders will be chosen not because of their production expertise, but because of their people expertise.

Companies like Davita, with 65,000 Stakeholders are shining examples of this focus on people. Their story of rags to riches is one small proof that if you take care of people, they will take care of production. Davita went from near bankruptcy in 1999 to 1,200% growth through 2015, by moving away from command and control hierarchy to an emphasis on great culture and distributed decision-making. Read their story and get motivated to leave the factory system behind.

The bottom line: Focus on your people even more than your production, and your production numbers will jump off the charts.

Article as seen on Inc.com

Why You Can Never Empower People, but You Absolutely Must Engage Them

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Leaders have wasted a lot of time and money on two of our favorite Business Buzzword Bingo terms for the last three years: empowerment and engagement. Here’s the real skinny.

Gallup says a whopping 70% of people are disengaged from their work. That’s critical because the very few companies with high engagement enjoy much higher net profit margins and five times the shareholder return.

Engage People By Empowering Them?

The standard answer is that if you empower them, they will become engaged. But that is an answer developed within a command and control mindset, which is not the place to find out how people are empowered. As Einstein said, “Problems cannot be solved with the same mindset that created them.”

In a recent discussion with an elderly billionaire who had made his money in the 80’s and 90’s, he was convinced that, “It is the job of the CEO to empower people.” He bristled dismissively when I suggested people might not need him to empower them. Einstein’s quote came to mind, and I realized he was trying to solve the problem from the mindset that had created it. He was well known as a top-down, command and control manager, and he was taking special delight in having the power to empower people, by sharing a little of his power with them.

Thank You, But I’m Already Fully Empowered

But empowering someone this way is a subtle way of communicating, “I’m still in power, and the only reason you have any power at all is because I granted a little of mine” – a patronizing and perhaps even belittling view of empowerment. The message is, “You don’t show up fully equipped to contribute – without me, your personal empowerment is insufficient.”

The reality is, we can’t empower people. They show up empowered and all we can do is suffocate their innate ability and desire to contribute, innovate, make decisions and generally be self-managed adults. Empowerment is the absence of the heavy hand, just like an apple seed only grows where you don’t put down plastic. The seed shows up empowered and ready to sprout. I can’t add anything. All I can do is smother it and keep it from sprouting.

But Give Me a Reason I Should Engage With You

Engagement, however, is all on us. While people show up empowered – it’s who they are, the seed is complete – they are likely to show up not engaged in any way. The apple seed can remain just a seed for a very long time if the conditions aren’t right to grow. In the same way, people will be in neutral until you give them a reason to use their empowerment to make the company better. Engagement is the addition of leadership, principles, resources, guidance, training, community, teams and incentives – like the addition of water, sun, fertilizer, and good soil are to growing the apple seed. The seed shows up fully complete and ready to grow, but won’t until it sees the right conditions to do so.

How To Engage People

Engagement requires that we do a very few things right. We must engage everyone in building a clear vision of where we are going, and require that they play a part in creating a plan to live it out.

Engagement also requires that we build an organizational model that encourages distributed decision-making and other forms of participation formerly reserved only for hierarchical managers. And if we expect people to be fully engaged, we need to invite them to have more control over their time, and to be treated like self-managed adults. We also need to be more deliberate about recognition, rewards, relationship-building experiences, and participation in incentives programs directly related to agreed upon results.

The Bottom Line

Empowerment is the absence of the heavy hand; the absence of black plastic over the seed. Engagement is the addition of reasons to get involved – leadership, vision, tools, values, resources, guidance, training, metrics, and relationships. Get out of the way and people will show you how empowered they already are.

Don’t waste time trying to empower people. They already are. Just give them a reason to be engaged, give them the resources they need to grow, and get out of the way. And watch your company take off.

Article as seen on Inc.com