Maintaining employee engagement in growing and large organisations

By Elisabeth Goodman, 25th November, 2018

Small SMEs, large organisations, and a “microenterprise” model

One of the aspects I enjoy so much about working with smaller Life Science or Biotech organisations* is the level of energy, enthusiasm and connection that every employee seems to have with their company’s purpose.  The people we encounter seem to demonstrate a level of autonomy and independent thinking that is sadly so often lacking in larger organisations.

[*Typically referred to as SMEs – Small or Medium Enterprises.]

When I’ve worked in and with larger organisations it’s been more common to encounter “us and them” mentalities, cynicism, a lack of connection with the company’s purpose and objectives, and a lot more bureaucracy.

So I always enjoy Gary Hamel’s articles in the Harvard Business Review when he describes organisations that have found other approaches to management that mitigate the disadvantages inherent to larger organisations.

In this latest article, co-authored with Michele Zanini, Hamel writes about a Chinese white goods company, Haier, that has achieved significant employee engagement for its 75,000 global workforce, by developing a “microenterprise” (ME) management model.

“Haier’s empowering, energizing management model is the product of a relentless quest to free human beings at work from the shackles of bureaucracy”.  Gary Hamel and Michele Zanini. The End of Bureaucracy, Harvard Business Review, November-December 2018, pp. 50-59.

The microenterprise model: autonomy instead of bureaucracy

Haier’s model is an extreme version of an approach that GSK trialled, whilst I was working there, with its Centres of Excellence (CoEs).  In that model, there were about half-a-dozen CoEs, each with about 350 people.  They set their own goals, and managed their own budgets.

In Haier’s model, there are about 4,000 MEs, most of them with 10-15 people.  There is a strong emphasis on autonomy, with the ME teams setting their own, very ambitious, goals, and managing their own budgets. The MEs also set their own pay rates and distribute bonuses, dividends and profits based on their performance against goals (or “lead targets”). Ultimately, employees behave and are treated more as owners and members of start-up organisations than as employees of a corporate organisation.

The MEs demonstrate a more autonomous approach in other ways:

• Groups such as HR, Finance, IT, legal affairs etc. are set up as “node” MEs instead of the centralised or shared service model common to larger organisations.  These node MEs have to bid as suppliers to market-facing MEs who can choose between competing support services within or even outside the organisation. Contracts or agreements are then put in place to ensure that expected standards of service are maintained.
• MEs can change their leaders if they are under-performing, can recruit new leaders in an internal selection process, and can accept take-over bids from leaders elsewhere in the organisation.

Collaboration, open innovation and intrapreneurship in the microenterprise model

There are risks as well as benefits from Haier’s microenterprise model.  The MEs form a sort of network which the authors compare to the internet, or the web.  They have evolved this model to ensure that it works to their advantage as follows:

1. Collaboration.  Haier’s MEs were initially very competitive, and risked losing the benefits that could be gained from pooling their efforts and expertise.  Haier formed “platform” MEs to address this.  These platform MEs are somewhat akin to the “Communities of Practice” known to Knowledge Management practitioners.  The platform MEs are of two types, one type addresses categories of product or technologies, the other addresses capability development or competencies that might cross several products.
2. Open Innovation. Haier adopts all the practices available to tap into sources of innovation beyond the boundaries of its organisation. It invites potential users to provide input on needs, preferences and problems.  It accesses a world-wide network of experts for creative problem solving and to support R&D and eventual sales and support.
3. Intrapreneurship.  As the HBR authors point out, one of the consequences of  bureaucracy in large organisations is that the organisations can become very conservative.  Haier encourages a start-up culture whereby employees effectively act as intrapreneurs to pitch for and launch new MEs. These new MEs are often initially externally funded, to prove their viability,  before Haier pitches in with internal funds.

The results…

As Haier’s CEO, Zhang Ruimin told one of the authors on an earlier occasion: “We want to encourage employees to become entrepreneurs because people are not a means to an end but an end in themselves.  Our goal is to let everyone become their own CEO – to help everyone realize their potential.”

Apparently, Haier’s resultant growth in gross profits, revenue, and increase in market value are unmatched by any of its domestic or global competitors.

Zhang believes they have achieved this through their practice of rendanheyi – a tight association of “the value created for customers with the value received by employees”.

As the HBR authors point out, most companies have focused on optimising their operations, and, more recently, on digitising their business models.  Haier’s microenterprise approach would appear to be a unique route for achieving employee engagement in a large organisation.

There could be some interesting ideas here for managers and leaders to explore in growing Life Science SMEs:

Could finding ways to continue to work and think like a start-up mitigate against the otherwise inevitable increase in bureaucracy, and decrease in employee engagement inherent to large organisations?

Notes

About the author. Elisabeth Goodman is the Owner and Principal Consultant at RiverRhee Consulting., a consultancy that specialises in “creating exceptional managers and teams”, with a focus on the Life Sciences. (We support our clients through courses, workshops and personal one-to-one coaching.)  Elisabeth founded RiverRhee Consulting in 2009, and prior to that had 25+ years’ experience in the Pharmaceutical Industry in line management and internal training and consultancy roles supporting Information Management and other business teams on a global basis.  RiverRhee is a member-to-member training provider for One Nucleus and a CPD provider for CILIP (Chartered Institute for Library and Information Professionals). 

Click here for information on RiverRhee’s training, workshops and coaching for managers and teams

Elisabeth is accredited in Change Management, in Lean Sigma, in Belbin Team Roles, MBTI (Myers Briggs Type Indicator) and is an NLP (NeuroLinguistic Programming) Practitioner. She is a member of CILIP and of APM (Association for Project Management) in which she was a founding member of the Enabling Change SIG.

Why is employee engagement such an important topic?

By Elisabeth Goodman

My blog on employee engagement (Employee engagement – some interesting data and perspectives for Lean and Six Sigma practitioners) is, of all the blogs that I have written since 2009), the one that has attracted the most attention.  I wrote it in response to an article I read in the business section of the Sunday Observer¹ – a very informative study that the Observer had commissioned, rich in case studies and data from FTSE 100 companies.  So why has this blog attracted so much attention?

Employee engagement is the key to organisational and team effectiveness

The Observer article caught my attention because employee engagement, or involvement is intrinsic to business process improvement through such techniques as Lean and Six Sigma.  If people are not engaged, they won’t be committed to the organisation’s goals, won’t be able to communicate those goals as part of building strong customer relations, and won’t be looking for ways to achieve those goals through efficient internal processes.

People also need to be engaged in order to achieve effective business change.  Participants in my Change Management courses sometimes find it a revelation to hear that resistance from those experiencing change is a good thing, something to be welcomed.  Resistance is an indication that people are actually beginning to engage with a change:  that they are considering what the impact will be on them, rather than oblivious to or ignoring it.

And without engagement, people will find it impossible to identify and share the learning and insights, which are essential to healthy and thriving teams and organisations if they are to learn from their mistakes and build on their successes.

As I wrote in the December 2011 version of my RiverRhee Newsletter, “The answer comes from within… with the help of others”, it’s only possible to have an effective team or organisation if people are engaged.  Employees have the key!

‘Empowerment’ and ‘Intrapreneurs’

One of the big themes in my life as a corporate employee was ‘empowerment’: encouraging employees to appreciate and act upon the idea that they had ‘the power’ to make decisions and carry them out without necessarily referring to their managers.

As someone who is now self-employed and runs my own business, the idea of acting otherwise makes no sense at all!  I work in teams in an associate relationship, and we collaborate in our decision-making and actions.  I meet a lot of entrepreneurs, and have often wondered what it would be like if people took an ‘intrapreneurial’ approach to working within organisations.  In a 2010 newsletter (‘Finding our voice’ – a route to greater employee engagement and empowerment?), I suggested that what might help people to do this is to take a more active perspective of their careers – so that they view their current job as one that they have chosen, and are in control of, rather than something that they are being subjected to (to put it a bit bluntly!).

What if there weren’t any managers?!

I really enjoyed reading the case study of Morning Star in the December 2011 edition of Harvard Business Review.²   Gary Hamel describes a leading food processor, with revenues of over $700 million and 400 full-time employees, which functions entirely around the principles of self-management.

At Morning Star, no-one has a manager, each employee negotiates responsibilities with their peers and is responsible for finding the tools that they need for their work, everyone can spend the company money, there are no job titles or promotions, and compensation is decided between peers. The only ‘boss’ is the overall mission of the company.

This model works at Morning Star because it combines an individuals’ responsibility (and freedom) for managing their work within the context of the overall mission, and collaboration between peers to define and review individual roles and expected performance.

The article goes into a lot more detail, but one of the many interesting aspects of this model is that engagement and empowerment are not issues at all in this kind of scenario.  As a result of this approach, every individual inevitably has to:

1. Use their initiative
2. Continuously develop their skills to enhance the quality of their work
3. Display flexibility to respond to the changing environment of the organisation
4. Work in a collegiate way to fulfill their role in relation to their peers
5. Make decisions that directly affect their work

These are wonderful illustrations of process improvement / Lean and Six Sigma (1,2,4,5), Change Management (3), and Knowledge Management (2, 4) in practice.

Some final thoughts about thriving

I love my work, and welcome Monday mornings as the start of another week of new discoveries, opportunities to work with others and practice and develop my skills.  I meet many others running their own business that feel the same.  It sounds like the employees at Morning Star may also feel like this.

Another Harvard Business Review article³ suggests that giving employees a chance to learn and grow will help them and the organisation to thrive.  This time the managers are in charge again, but some of the themes re-occur:

1. Providing employees with the discretion to make decisions directly affecting their work
2. Ensuring that people have the information they need to understand how their work relates to the organisation’s mission and strategy
3. Encouraging good (civil) behaviour – positive relationships
4. Offering performance feedback

The authors suggest that these 4 mechanisms will foster vitality (or energy in individuals and in those with whom they interact), and learning (or growth from new knowledge and skills).

Conclusion

It seems that, unless people are running their own business or are self-managing themselves in an organisation such as Morning Star, employers need to study and support the mechanisms that will enable employee engagement and so help individuals and the organisation to thrive.  We’re obviously not there yet.

Why are you interested in employee engagement? It would be great to read your comments.

Notes

1. Are more firms listening to their staff or are they just paying lip service? Observer, 22 August 2010, pp38-39
2. Gary Hamel.  First, let’s fire all the managers. Harvard Business Review, December 2011, pp49-60
3. Gretchen Spreitzer and Christine Porath.  Creating sustainable performance.  Harvard Business Review, January-February 2012, pp93-99

Elisabeth Goodmanis the Owner and Principal Consultant at RiverRhee Consulting, a consultancy that helps business teams to enhance their effectiveness for greater productivity and improved team morale. Elisabeth has 25+ years’ experience in the Pharmaceutical Industry where she has held line management and internal training and consultancy roles supporting Information Management and other business teams on a global basis.  Elisabeth is accredited in Change Management, in MBTI (Myers Briggs Type Indicator) and in Lean Sigma and is a member of CILIP (Chartered Institute for Library and Information Professionals), and APM (Association for Project Management).