by Katrien Decroos | Jun 8, 2020 | All, HR & People Solutions, Risk & Crisis, Strategy, Transformation
Unleash your company’s hidden performance
Stimulate recovery today.
After months of difficult containment and despite alarming and often alarmist forecasts, most Belgian companies are not ‘at the end of their rope’. But let’s be clear: the critical phase is coming now. In most cases it will be necessary to reorganize structures in order to control costs. But that will not be enough.
Tomorrow’s ‘winning’ companies must also look to the medium and long term. Transforming a company is of little use if it continues to be managed with pre-crisis concepts. One example: the freedom gained by employees through ‘forced’ teleworking will not disappear when the situation returns to normal. The classic hierarchy concept will be overturned.
It is therefore time to thoroughly rethink not only your structures and ways of working, but also your ways of functioning and internal cooperation, in parallel with everything you are currently doing to return to normal.
And to help you achieve this transformation, did you know that your company has a hidden source of economic and human resources? A real reservoir of performance that can be perfectly mobilized right now to activate the economic recovery and get out of the crisis?
Mobilizing hidden performance: within the reach of any company
Let’s start with an obvious fact…often forgotten in recent years. The level of performance of your organization is strongly linked to its ability to maintain sustainable cooperation between employees, teams, hierarchical levels, operational and functional units.
By interacting correctly, the ‘human’ organization develops and sells the products and services that keep it alive. But as nothing is perfect in this changing world, some of the interactions cause problems that need to be ‘regulated’. This regulation generates waste of time, energy, financial and human resources that it would be smarter to use to help your organization to (re)develop.
These losses of energy, human and financial resources are manifold. We will give a few examples, but check at the end of the article how your company fits into a more exhaustive list:
– Destruction of added value resulting from poor synchronization of activities
– Financial overloads caused by problematic operational implementation
– Overtime pay caused by shifts in functions due to a lack of delegation
– Time and resources consumed in the regulation of repetitive or predictable problems
– Over-consumption of resources due to a lack of steering of activities
– Losses in production and quality caused by a low level of responsibility of operators
– Implementation of change projects that are top slow, over budget or not meeting objectives because the strategy has not been cascaded throughout the company
More than 4,000 ‘dysfunctions’ of this type have been identified over 45 years of management research in companies and public organizations. They are also called hidden costs because they do not appear in balance sheets or management tools. However, they do have an impact on the final result.
These dysfunctions create losses of energy and means, but also create frustration and human disengagement. They undermine a company’s energy and strike force. Their economic impact has been calculated in several thousand companies. This real ‘source of additional performance’ fluctuates between €25,000 and €60,000 per worker per year, on a recurring basis.
Let’s take an example: a company with 100 employees has an additional source of economic performance at its fingertips, which is between €2.5 and €6 million per year. Amounts that could be used to finance digitalization, strengthen structures, improve competitiveness, invest in innovation, training, increase the investments necessary for successful transformation, support profitability.
So what are we waiting for to exploit it?
An approach exists. It places people at the centre of economic performance.
While models such as Lean Manufacturing, Six Sigma and Kaizen have been able to contribute to the optimisation of certain processes, they no longer meet the new needs generated by the impact of the pandemic on mentalities, behaviours, working methods and the new challenges taken up in a very large number of markets.
The future belongs to companies that have truly integrated human and economic factors into their DNA. Such an approach exists: it is called ‘socio-economic’.
This managerial approach applies itself to supporting growth by also continuously developing all the hidden sources of performance. The additional resources released by this approach are used to strengthen competitiveness, turnover, the quality of products and services, innovation, growth, the attractiveness of work… according to the strategic priorities of each company.
Why deprive ourselves of additional sources of performance that are just waiting to be exploited to get out of the crisis?
Experience shows that up to 55% of the hidden sources of performance that all companies, whatever their size or activity, can recover annually. Provided that the elements that give rise to them are clearly identified, precisely calculated, analysed for their root cause and ‘recycled’ into performance by means of a structured management method that mobilises all the company’s stakeholders.
A socio-economic approach gives management, supervisors and employees the means and tools to effectively manage the company’s resources in their own area of responsibility. Man is no longer considered as a cog in a big machine that needs to be ‘oiled’ periodically, but as a co-producer of added value and a self-controller of his own management by dealing with malfunctions in a way that is shared by all and in close consultation with his colleagues and superiors.
This approach is neither a democracy nor a concept of self-management. On the contrary, it brings management back to its essential mission: to look after the employees so that they can look after the machines, the internal and external customers. In other words, it puts into practice the fact that in a company we are all ‘salesmen’ or ‘producers’.
A self-financed approach,
It is therefore in your company’s best interest to mobilise its hidden performance potential to reconnect with customers and markets, improve its competitiveness, its attractiveness to employees, its commercial strike force, its ability to innovate and to face the competition in full possession of its resources.
The socio-economic approach is entirely self-financed. The economic gains obtained in the very short term largely finance the relatively light investments in the training of management and the piloting of the method. Experience shows that self-financing is achieved on average over a period of 6 to 8 months, and very often over a much shorter period.
With this self-financed approach, a successful exit from the crisis on a budgetary level is within the reach of every company. Take the step! Join the thousands of companies that have already integrated this approach into their growth and development strategy. Hidden human and economic resources are at your fingertips.
Implementation of socio-economic management.
The approach can be started as a pilot project in one or more departments or as a strategic project for a site, a factory, a company as a whole. It offers great flexibility in its implementation.
The first step in its implementation is therefore to define the scope of its application. This step allows management to concretise precise expectations, expected progress and to define the scope of intervention, which can be sequenced over time.
Second stage: start of training/concertation of management and supervisory staff on the socio-economic management method and tools.
At the same time, conducting a horizontal diagnosis and vertical diagnostics to highlight the sources generating hidden costs, monitoring groups of projects and the implementation of actions to transform them into economic and social performance.
Six areas are covered: working conditions, work organization, time management, communication-coordination-concertation, integrated training and strategic implementation.
A specific and unique software program allows to classify the sources of hidden costs by domain and reveals the convergences or divergences of opinion between management and management.
An expert’s opinion is issued together with a proposal for dealing with malfunctions by ‘baskets’.
The dysfunctions are then dealt with through project groups and priority action plans over 6 months, mobilising workers at all levels of the company.
The method allows each employee to continuously assess the progress achieved and ensures that socio-economic know-how is passed on throughout the organization, in order to achieve sustainable results.
The first concrete results can be expected within the first 2 to 3 months, sometimes even earlier.
Most of the companies that have adopted socio-economic management have gradually integrated it into all their structures, creating a real continuous dynamic of human and economic progress.
Does your company also encounter this type of problem? They form a hidden source of performance ready to be mobilised!
A non-exhaustive list, to date, over 45 years of research, approximately 4000 dysfunctions have been identified.
- Poor consultation and coordination between people, teams and departments: maintenance of ‘silos’, loss of flexibility, cumbersome decision-making processes, additional costs of strategic implementation.
- Unsuitable working conditions: impact on concentration, motivation, productivity and the quality of the work performed, additional cost of operational implementation.
- Deficient communication: partial information and lack of feedback to steer change, insufficient valorisation of the skills potential present in the company, fixed corporate culture, strong resistance to change.
- Weak management of working time: recurrent loss of time leading to overtime, multiple and unmanaged meetings, loss of quality in decisions, loss of time and efficiency in strategic implementation.
- Fragmentation of working time: frequent interruptions due to inefficient work organization, chronic emergency work with impact on the quality of work, services, products, loss of productivity, cost of overtime.
- Deficient or uncoordinated programming of activities: additional cost due to loss of time and energy, over-consumption of financial and human resources.
- High staff turnover: loss of efficiency, additional recruitment costs, negative impact on the implementation of change and strategy.
- High absenteeism: additional cost of temporary staff.
- Lack of versatility in teams: failure to adapt teams to new and future needs, cumbersome and over-costing strategic implementation.
- Insufficient, poorly adapted or poorly used programming and monitoring tools: lack of ‘steering’ of teams due to the lack of suitable indicators.
- Non-integrated training: difficulties in developing skills, additional cost of training that is not adapted to the needs of the company.
- Poor implementation of the strategy: failure to disseminate the strategy at all levels, failure to achieve the required transformations and the company’s objectives, chronic underperformance of management and staff in implementing the strategy and making changes.
These dysfunctions have two types of impact:
Economic impact: lower productivity, quality problems, loss of competitiveness, higher financing costs, reduced capacity for innovation, poor strategic implementation, increased costs, failure to achieve economic and financial objectives.
Social impact: Insufficient mobilisation of human potential to achieve change and goals, corporate culture frozen by strong resistance to change, lack of staff flexibility, under-utilisation of talents and skills, increased absenteeism and staff turnover, increased costs of strategic implementation.
by Ludo Goethals | Sep 6, 2019 | All, HR & People Solutions, Transformation
The good news is: it can be treated!
An insidious virus is crippling many businesses and keeping them from achieving their potential performance and growth. Its name? TFW (Taylorism-Fayolism-Weberism).
The good news is: it can be treated!
The TFW virus chronically saps companies of their human, material and financial energy. Forty years of management research has enabled the economic cost of this destructive virus to be quantified. It is somewhere between € 30,000 and € 60,000 per full-time equivalent per year.
This represents a wealth of human energy and economic added value that companies could be mobilizing to boost competitiveness, improve flexibility, innovate more effectively, accelerate sales, and drive growth and profitability…
It all started with a revolution
In the course of the 19th century, the predominantly agricultural and artisanal society was catapulted into a new world. This was the Industrial Revolution.
This era marked the beginning of the quest for efficiency and effectiveness. How to best organize production? At the time, the discourse on business organization was dominated by three great thinkers.
The first figure: F.W. Taylor
The first thinker, the American Frederick Winslow Taylor, the father of Taylorism, advocated a scientific approach to the organization of work. He proposed breaking the work down into highly specialized tasks so that everyone could be as efficient as possible. He introduced hyperspecialization to companies.
He also split every organization into two categories of people: those who ‘think’ and those who ‘execute’. In his view, organizing work in this way would bring a high degree of efficiency. Many companies were inspired by this early version of the assembly line, including Henry Ford in the United States.
The second figure: H. Fayol
The second major personality of the era, the Frenchman Henri Fayol, was one of the first to attempt to rationalize and formalize management concepts within companies.
He sorted administrative tasks into ‘operation groups’ such as technical, commercial, financial, administrative, etc. He described the content of each function but did not consider the human aspects that are relevant to a function.
For Fayol, a function exists once it is described on paper. The ideal business thus becomes a neat organization chart with well-defined boxes and every box in the right place.
His approach entails the depersonalization of the function. Fayol assigns little importance to the human factor, to the person who occupies the position. This leads to organizations that are not very rewarding on the human level and that do not perform well in the long term because everyone can simply hide behind their own walls according to the job descriptions.
Third figure: Max Weber
The third personality that dominated the discourse at the time was a German. His name was Max Weber. He was both an economist and a sociologist. His version of the ideal business boils down to what would later be known as a ‘bureaucracy’.
For Weber, the work must be organized according to strict rules that everyone must stick to. Command and control. The key principle of this approach is subordination. Everyone knows his place and awaits his ‘orders’ from above. Yet individuals end up merely protecting their territory and there is a loss of engagement.
Birth of a virus
Many years pass, men and women evolve, markets become globalized, new technologies flourish and a whole series of company organization models are developed, in the eternal pursuit of an optimal solution. The latest of these is the concept of the ‘lean’ approach.
In our world that is characterized by technological progress, the explosion of information and advances in education, we would expect concepts dating back to the 19th century such as hyperspecialization, the depersonalization of functions and subordination to have been left behind or at least to have evolved…
Well, think again. The principles that applied at the end of the 19th century are still very much alive in our so-called ‘modern’ management methods. But they have now morphed into viruses. The TFW virus.
Infected organizations
How to spot the TFW virus?
The TFW virus is everywhere. It is insidious because we have become used to it. And worse, we sometimes make it the fashionable model. How to spot it? Here are some of the symptoms an infected company may present.
We still see a lot of companies with departments that function basically as separate silos. The lack of consultation and transversal cooperation leads to paralysis. Essentially, this means difficulties in implementing the strategy, action plans and improvements. It’s a vestige of Taylorism that undermines the company little by little, from within.
The depersonalization of the function leads to the creation of workstations that offer little value in professional and human terms. This encourages absenteeism, and leads to increasingly worrying numbers of cases of burn-out and higher than average staff turnover.
Fayol’s principle finds its ultimate prototype in the matrix organization. An ideal organization on paper that in practice forces managers to become professional schizophrenics whose performance – they are the first to admit it – is arbitrary.
Weber’s subordination is still very much present in sometimes insidious forms. It is detrimental to the employees’ commitment to implementing improvements, changes, adaptation. When we expect orders, we feel little or no responsibility for the problems. Middle management and employees do not understand the strategy and therefore do not apply it – they do not feel that it concerns them.
What are the symptoms of the TFW virus?
The list of symptoms that indicate that a company is affected by the TFW virus is long. A few examples:
- Employees systematically complain about a lack of general communication in the company, but nothing changes.
- Recurrent defects in production quality, which the workers barely seem to take into account.
- Productivity is suboptimal but no one knows exactly why.
- The ‘lean’ approach generates tensions and creates widespread demotivation.
- Social relations deteriorate for no apparent reason.
- Implementing changes is slow, difficult and requires too much energy.
- The concept of the customer is not very present in the minds of employees, who simply do their jobs because they are getting paid.
These symptoms are all related to some form of hyperspecialization, subordination and depersonalization that causes the workers to give up or no longer feel engaged.
What are the consequences?
The TFW virus generates dysfunctions that cause recurrent losses in human, material and financial energy. These are known as hidden costs. They take a toll on the results and on the employees, but since they are not measured, they are not taken into account.
Aside from the impact on economic results, the TFW virus also has a social cost. Loss of commitment, demotivation, stress, burnout, absenteeism, resistance to change and difficulty filling jobs are just a few examples.
The virus results in lethargic organizational structures that are hypercontrolled or infinitely complex and impracticable. It thrives on a mode of management that is made up of various closely guarded ‘powers’ and not always subtle forms of influence. It creates and maintains conflicts, whether they are open or – more insidiously – underlying. It is found at every level of the company, in all its operations. And the body count keeps mounting.
But treatment is available. It is within the reach of any company, whatever its size
The first requirement is knowing who has the power in an organization.
The formal power is certainly in the hands of management. They can issue rules and fire employees.
But the real power is in the hands of the employees, those who ‘know’ and who ‘do’. They are the ones who will ultimately decide the fate of the company by investing more or less of their energy in attaining the company goals. And this power often goes undetected by the management. It is therefore necessary to repersonalize relationships, organize frequent one-on-one contact, give each employee room for responsibility that they can fill in their own way, with their own talents and knowledge.
The second requirement is to reinvent the ‘modern’ definition of the manager.
It’s quite simple, actually: take care of your employees and they will take care of the products, services and customers.
What is often overlooked in the so-called modern management models is middle management. Yet it is the most effective strategic link for progress. But the middle management is disregarded, and often has no voice in questions of strategy. A member of the middle management finds himself between a rock and a hard place. He must execute orders handed down from above and is often not valued by the company leadership. Everyone knows this. It’s what everyone says. But what can we do to change?
The third requirement is to systematically track the dysfunctions caused by the TFW virus by involving the employees. There is a diagnostic technique* that can bring these dysfunctions to light and calculate their impact on the company. It makes solutions for improvement more concrete, effective and sustainable. The goal here is to reconcile the human aspect with economic performance.
By targeting the TFW virus, the organization can build stronger tissues, improve blood circulation and increase muscle tone, turning it into an athlete that will be able to face the challenges of a fast-changing world like no other.
*The SEAM approach (Socio-Economic Approach to Management)
The TFW virus, the slow killer of companies?
