For companies to flourish and become a Workplace of Tomorrow, they must jettison not just their legacy systems and infrastructure, but also their legacy thinking.
Corporate America is slowly being reinvented. Winning companies understand they must unlock the full talent potential of their workforce in order to efficiently turn ideas — this era’s most important raw material—into products. They innovate to win; they are nimble, because people are encouraged to think and given the freedom to do so; these companies know professionals are assets, not expenses, and therefore seek out the best and embrace and nurture them; lastly, they are not burdened by an accumulation of legacy systems and legacy thinking, the last being the largest hindrance. Getting the human factors right will be what differentiates the workplace of tomorrow, a pattern that is increasingly visible in today’s best companies.
In contrast, traditional corporations struggle to innovate as they are weighed down by legacy infrastructures, outmoded people practices, and dependent on financial innovation to boost their balance sheets and earnings per share. Although their quarterly results may please Wall Street, they mask a worrisome reality: The world of work has changed. With 70 percent of American workers disengaged, per Gallup, pressure is building for a giant shift toward improving and nurturing the human side of business. As this shift occurs, traditional hierarchical management structures will slowly loosen their grip, relinquishing more power and control to the knowledge workers, the “machines” that power the innovation economy forward. The companies that fail to embrace this change will die untransformed, eaten alive by high fixed costs, a continual brain drain and unproductive management practices.
In the best workplaces, high-performing cultures and human understanding are the engines of workforce productivity. Unfortunately, the leadership skills to leverage these talent management practices are too often in short supply. Corporate leaders know a great deal about their processes, technology, marketing, sales, finance and product development, yet they know almost nothing about their organization’s primary source of competitive advantage: their employees.
Traditional corporations remain steeped in the mindset of the industrial era where employees are expenses—and are treated by management as little more than interchangeable parts. Such organizations are blind to the re-humanization of work that is transforming the competitive landscape, so they seek outside advice on how to improve workforce productivity and unleash innovation. The correct answer: “Look inward. Your people are your factory. Learn to free the large, untapped pools of talent potential you are already paying for, and innovation will begin to flow.”
Today’s winning companies understand this simple truth. They have relied on informed people practices from their founding, and view the workforce as mostly assets, not expenses. These companies are repeatedly cited amongst the best places to work; they have track records of success built on innovation and employ a workforce that possesses the ability to flex and change with the market. Also, they invest time to find and hire individuals who are a cultural fit, then nurture ,grow and retain them.
Understanding the human factors that unlock workforce productivity and innovation has become an undeniable source of competitive advantage. As Irish author and philosopherCharles Handy has said, “Karl Marx would be amused. He longed for the day when the workers would own the means of production. Now they do.”
What Successful Companies Do Right
In the still evolving world of post-industrial work, you find successful corporations like Google (search, advertising), Valve (gaming), Auttomatic (open source software), Zappos (online retail), W.L. Gore (advanced technologies), NetFlix (streaming media), SAS (enterprise software), and many more. They employ a variety of leadership strategies such as self-forming teams, a latticed organizational structure, workplace flexibility, nurturing employee cultures, workplace democracy, happiness as a barometer of organizational health, sponsors instead of managers, and true empowerment. These enterprises are not successful accidents, but the products of purposeful design. Some are still young (Netflix), others are enduring examples of the value of understanding the human side of business (SAS and W.L. Gore).
Just because the employees are happy, don’t assume these winning companies are just big “love ins.” People work hard, often very hard, but they don’t labor. These workplaces are different. Workers believe in the company mission, find meaning in their work, are excited to come to the office and, therefore, arrive in a productive state of mind.
Even though cultures and leadership practices differ among winning companies, they all share one thing in common: They fully understand that unlocking the talent potential and creativity of their workforce is mission number one. They embrace the workforce and care for it; they strive to hire people that are a cultural fit; and, they expend energy creating work environments where the talent can flourish (and have fun).
The world will never be one-size-fits-all, and each company’s culture will always be a reflection of the mind of its founder(or, in Google’s case, founders). But successful leaders understand that caring about others, and having their employees’ back isn’t just the right thing to do, but it’s also smart business. Indeed, this is the shared thread of company greatness, the DNA of their success. As founding SAS CEO Jim Goodnight says, “My chief assets drive out the gate every day. My job is to make sure they come back.”
These examples of high-performing workplace cultures are a preview of the future. They are different, but they all have the “get it” factor when it comes to talent. In these companies, employees really do count. And the employees know it, too.
It All Comes Down to Talent
Companies have inordinately focused on process and technology, much to the detriment of the workforce. They have treated their professionals as an operating expense, not as a company asset. And they have torn apart the social fabric of their organizations by indiscriminately outsourcing large swaths of their talent base.
They have traded experienced teams with valuable institutional knowledge, and broadly productive relationships, for commodity labor. They have done this without knowing which teams, individuals and roles were assets, let alone which were expenses. Too many leaders have focused almost solely on technology solutions, process and cost, and gutted their human infrastructure when they should have been growing and nurturing it. As a result, their only true source of enduring competitive advantage has been squandered and lost.
When the servers, storage, networks and infrastructure have been significantly outsourced, and non-core applications have migrated to the cloud, what then? The talent with intimate knowledge of key business applications, cloud solutions, complex processes, and deep relationships should be remaining—if management was wise enough to retain them.
If they have failed to retain these valued employees, leaders will awaken to the fact that workforce planning should have been a core element of their strategy from the start. And that they should have been building the asset side of the human capital balance sheet, not continually liquidating it. With many key resources gone, or soon retiring, they will have in-house business systems, and some infrastructure, along with the stagnation created by uninformed talent management practices; they will have motion, but no momentum. And they will find it difficult to survive.
In their daily struggles, they might finally see and understand the new reality of work: High aptitude teams with deep institutional knowledge, collaborative cultures, nurturing leadership practices, and informed expense optimization techniques are the enduring tools of competitive advantage. As this awareness dawns, one pressing question will remain: Did management’s understanding arrive too late?