The first six months were the hardest, and the blogs below were written during that time. These are absolutely not intended to show how WEIRD should be implemented; but are a record of how we decided to implement change considering the individuals involved. The present tense used in this section refers to the time that I wrote the blog.
B)
MONEY IS A NON-MOTIVATOR – (WEEK 2)
Money is a non-motivator. It took me only 47 years to realise this.
When employing staff, I thought that if we offered unlimited bonuses as a percentage of gross profit, everybody would be happy.
Wrong.
So, what could be wrong about motivating with unlimited bonuses? At the moment, everybody receives a percentage of the gross profit above a threshold that reflects when they joined the company. Bonuses are paid after a couple of months of joining regardless of position, but percentages differ according to experience.
This week, we discovered why money is a non-motivator and I should have known better. Dan Pink has a very good TED talk on this[ciii], the summary of which is that money is a great incentive when tasks are narrow (eg building widgets). However, for jobs that rely on creativity (or at least handling multiple variables – which accounts for most office jobs), financial incentives have been proven in multiple studies over the last 40 years to create worse performance than where no financial incentive is provided. The reason for this is that people get too focused and don’t look at factors unrelated to the incentive.
So, the philosophising (he is Greek after all) HR Director and I sat down with everybody.
We explained that, as we said and confirmed in writing when they were hired, we would need to change people’s bonus thresholds and percentages to reflect a smaller part of a bigger pie. It wouldn’t mean that they would receive less bonus, but that their bonus would grow at a slower rate.
Through this process I discovered that money is a non-motivator. As:
So long as they were paid reasonably, most people want to do a good job regardless of the money.
A few people didn’t (and I think still don’t) understand that the bonus was meant to be part of their overall salary. Net result – they were upset that their salary hadn’t increased and thought their progress in the company wasn’t being reflected properly. I was at a loss how to answer this, as the bonus had added a significant amount of money to each person’s monthly take home pay.
Despite salaries and bonuses being considerably higher than the market rate, it seemed that earning less salary than a colleague was more of an issue than the amount taken home.
In another case, reducing the percentage above a new threshold was viewed as a negative reflection of the employee’s performance. The bonus wouldn’t reduce, but clearly the perceived value had.
It was at this point that I remembered why I vowed never again to run a company with more than a few employees (the last one was 150 people across 8 countries) until I found a better way of doing it. Dealing with people was too hard.
Then I thought about our holiday policy (or lack thereof). It was almost management hassle free – people did what they wanted. The reason why it is almost, rather than totally, management hassle free is that I have to push people to take holidays.
C)
CREATING THE PERFECT ORGANISATION (OPTIMISTICALLY) – (WEEK 4)
“Did you come up with these ideas before or after you got drunk?” Slanderous accusations emerged from our colleagues when my HR Director and I returned to the office to explain our two-day disappearance.
“Did you go abroad? Was it a nice spa hotel?”
How little they knew ....
We had traversed our way into the depths of the Andalucian countryside with no heating and the nearest house at least a mile away to make sure we couldn’t be disturbed.
A recurring theme of this change process is that people don’t like change. Our colleagues were worried about what plans we were going to concoct in our cold isolation. Once we explained where we had been, that obviously our drinking habits were only to stay warm, what the goal of our retreat had been and they were given a broad overview of what we were thinking, everybody seemed less nervous and more curious.
Two days (and much wine) resulted in a presentation of some of the practices that we could adopt. Some of the slides have been added below. First our vision.
…which will result in one overall aim:
Everybody takes responsibility for their own growth and success, which will lead to the growth and success of the company.
However, there are some issues that, if not handled properly, could be disastrous. This is especially true when allowing any employee to spend company resources as they wish.
One of the hardest parts of this journey so far is the realisation that if we go down the route of transparent salaries and financial information – then, like everyone else, I need to be willing to reveal my earnings. Furthermore, with 360-degree evaluations, if they are to have any weight, I can be fired as MD and there will be a need for me to find another role:
It is difficult to suggest a new way to go forward whilst avoiding any suggestions as to how it will actually work – especially when people are used to the final say coming from the CEO. So, we have to keep our suggestions more speculative for the moment, so as not to lead the conversation.
We have, however, tried to set out a number of questions to resolve, including how profit should be divided.
D)
PRESENTING TO THE TEAM: GIVE NO ANSWERS – (WEEK 5)
“We are trying to get a bunch of control freaks to take control of their own actions – and they’re afraid!” As a company, Pod Group is full of control freaks (we employ them on purpose), so being afraid of taking control wasn’t a reaction we were expecting.
This week we made our presentation to the team. To do this we created groups (fairly randomly) of three or four people and set aside two hours for our presentation to each group over a two-day period.
We were careful to stress that we weren’t making suggestions, but rather that we wanted people to think about how the company should be structured going forward (especially around responsibility, salaries and goals).
That said, one of the key points that we were trying to make was the concept of employees choosing their goals and the company fitting in with this rather than the other way around.
This brings up the question, “What is the purpose of a company?” For a public company, there is a fiduciary duty to shareholders, but as I am intending to put some of the shares in trust for the employees anyway – this question gets more complicated.
So, what was the reaction after the presentation?
Silence.
Followed by “How do you cope with being you?”
Followed by “It’s your baby; why do you want to give it up?”
Again, not reactions we were expecting or hoping for! So, I tried to explain that as with any baby they grow and as they get bigger you can’t control everything. However, more importantly, I tried to explain that if we made use of everybody’s brains and initiative, we would go further than being limited by a hierarchical model where the organisation’s capacity to grow is always going to be limited by the capabilities and bandwidth of the CEO. Explained in this way, it seemed obvious to my colleagues that change was required (I decided not to read anything into the ease with which everybody understood it).
But still they were afraid.
E)
BEST IF THE BOSS LEAVES – (WEEK 6)
The ironic thing about trying to move people to self-management is that it requires autocracy to make it happen.
I was on a trip this week which provided a good opportunity for people to talk freely amongst themselves without me interfering. However, five days on, radio silence seems to be the preferred reaction.
After an email kick, we started getting responses on the forum on our intranet. As an indicator, here are some of the questions that have been posted on the forum:
>
What are related podcasts, articles and books?
How/when/who decides if we hire a new person/make an investment?
What is common sense for making decisions?
From the monthly gross profit, how much should the business distribute to its employees as wages (salaries+bonuses)? (Please say a %)
Should we choose our own salaries?
Should everybody be able to see all the expenses of the company (including salaries)?
What about a training pot?
Whilst some people have been active on the forum, there are some who don’t want to put their opinion down in writing. To try to bring these people into the conversation, I have had to encourage (from afar) people to take company time to go and talk amongst themselves and especially to take time to read around the subject.
At this point, we cannot put any timescale on when we can move forward as we need to get people used to the idea of changing to a radically different way of working.
Before I left, I was shocked when two of our technical team wanted to know how the gross profit was calculated. Both had been in the company for over a year, bonuses based on gross profit was a fundamental part of our remuneration structure and they didn’t know on what basis they were being paid. I am sure there are many others who don’t know how their salaries are calculated and we must find a way to ensure that people care how the company is progressing financially.
F)
PEOPLE HATE CHANGE – (WEEK 7)
“What time are you leaving for lunch? Ah good, I’ll make sure I use the kitchen then.”
If nothing else, after trying to move to self-management, I will have greater self-awareness. The above question came from one of our account management team after I had said that I would work in the kitchen so that anybody could come and ask questions about the process we are going through. I am happy to report that our coffee expenditure has reduced this week and I have had much time to concentrate.
However, the occasional person forgot that I was in the kitchen so, in return for letting them get their coffee, I wanted their feedback. This has resulted in three observations to date:
1) Giving people enough time to read around the subject is vital. We are a long way from full acceptance, but the general reaction was that “I could see that maybe it could work, but I know others won’t be happy”. This is progress from “You’re mad”. What was interesting about the ‘others won’t be happy’ is that I haven’t found the ‘others’ yet, so I am still trying to work out whether they genuinely thought there were others for whom self-management wouldn’t work – or was a reflection of their own doubts.
2) Undertaking this exercise across 5 different countries and around 10 languages definitely adds to the communication challenges.
3) People hate change.
Some of the arguments against moving to self-management have made no sense. “Self-management can work for a company like Semco, which is a production company, but we work in an office – so it wouldn’t work here.” I talked to our US CEO, who pointed out something interesting – most of the people who opposed our proposals were women.
Again, this makes no sense. One reason for the gender pay gap is said to be that women don’t negotiate as hard over their level of pay as men. Transparent salaries overcome this issue as companies cannot use secrecy to get away with paying women less. So why in our company, where we have a fairly even gender mix, were women objecting?
I asked. Perhaps we have made our work environment too comfortable, but it appears that the main reason for concern was not because of what we were suggesting, but rather that people don’t like change. There is no magic bullet to overcome this, apart from convincing people that the change is worth the risk.
I am thinking that a PhD in behavioural economics could be helpful in this process.
G)
MOVING TO STAGE TWO OF THE CHANGE PROCESS – (WEEK 8)
“Is this a game?”
Once again, not a reaction I had expected (I’m beginning to cease to be amazed by the reactions that I am getting from Pod Group’s move to self-management).
I refrained from the sarcastic response, “Yes, I thought it would be fun to put the whole company in disarray, offer no solutions and see if it survives”.
“No” seemed a better answer. Followed by “Why?”
“I can’t see what we are doing”.
If you have been following these blogs, you may be spotting a recurring theme – lack of communication from the CEO (me). The trouble with trying to get people to move to self-management is exactly that – you can’t dictate the whole process, otherwise it will feel like a solution dropped from above rather than agreed between colleagues. So ironically a lack of communication and lack of action is required to allow people to find their own solutions.
I realised this week, however, that a compromise is needed between those people who are keen on the concepts around self-management and those for whom these concepts were new and uncomfortable. Without moving forward, momentum will be lost and uncertainty towards this process of change will derail what we are trying to achieve. So, it was time to get everybody moving past the reading stage.
So, I set out the steps of the process:
Stage 1. Introduce the concepts of self-management, read around the subject and start with some initial viewpoints.
Stage 2. Collect suggestions for concrete plans, comment and merge plans until processes have been agreed on each aspect of self-management including: salaries, responsibility, reviews, investment and dispute resolution.
Stage 3. Collect all of the relevant internal and external information to allow the plan in stage 2 to be implemented
Stage 4. Implementation
Stage 5. Review and evolve
After talking to each person about their reaction to the concepts that we were trying to introduce, I needed to know whether there was anybody in the company who was uncomfortable with the whole concept and didn’t want to change. So, we sent an anonymous survey focused around four subjects:
1) Transparency of all company figures and other relevant information
2) Taking on the responsibility of managing oneself. This may or may not include everybody being able to make an investment decision related to their own work.
3) Choosing your own salary and/or bonus
4) Transparency of salaries
and allowed for one of four responses to each subject;
1) I am happy to go to stage 2 but we need to jointly agree the details
2) I am happy to go to stage 2 but I want somebody else to suggest the details
3) I am willing to go to stage 2 but I need to see the details and I am sceptical
4) I don’t think we should continue this discussion, I’m not willing to go to stage 2
What were the responses?
Q1 - Transparency of Company Figures
Everybody happy, except three colleagues who wanted somebody else to work out the details.
Q2 - Responsibility
Everybody happy, except two colleagues who were sceptical
Q3 - Choosing of Salary
A third of the company are sceptical about choosing their salaries and one person wanted somebody else to work out the details
Q4 - Transparency of Salaries
Twenty per cent of employees were sceptical and one person wanted someone else to work out the details.
I was relieved that nobody was against the whole concept, but a couple of things surprised me. Firstly, more people were sceptical about choosing their own salary than being able to see all salaries. Secondly, some people were happy to let others decide how to structure the way we work. I will need to point out that they will not be in a position to complain if they don’t like the way things end up.
This brings up an interesting question as to how much control people want in their own life. Clearly some people would prefer not to have to take major decisions in their work life or their home life. This must be respec
ted as part of a self-management philosophy, and it is vital that people be allowed to bypass a decision if it is going to cause an unnecessary level of stress.
H)
THE INITIAL PROPOSALS – (WEEK 9)
Wait, wait. Again, rather optimistically I thought that I would be flooded with a deluge of proposals as to how people want to see things in the future.
Nothing.
At the same time, my elderly mother caught an infection and moved to a care home (I hope temporarily) for recuperation. With no proposals to read, I spent many hours with her in the home with other elderly people. Which gave me time to observe. And be impressed.
I haven’t spent much time around caring professionals, and the dedication shown by the nurses and assistants was truly impressive – especially as some of the residents in the care home were not always polite or aware of their circumstances. So, I started asking questions as to how they work and why the staff seemed so motivated.
As a privately-owned company, the care home may have some similarities to Buurtzorg,[civ] the Dutch company cited as a case study in Frederic Laloux’s book Reinventing Organisations.[cv] Their success was largely down to allowing the nurses to decide the individual care required rather than care by targets.
Lunchtime in the care home is manic. Thirty residents, fifteen staff – with no apparent order. Some people eating in chairs, some in the dining area, some in the bedrooms; many residents can eat on their own but some need help. There appears to be no specific roles or direction to staff as to who should do what. So, I asked how it worked.
No roles, just tasks given in a ten-minute morning meeting. Then the staff worked together without management interference (it was only by asking that I found out who was the senior nurse giving out the tasks), all the residents were cared for and nobody was left unfed. No paperwork, no checklists to be filled out at the time, no time spent on unnecessary tasks.
The Weird CEO Page 14