People principle will reap rewards

Max Mckeown and Philip Whiteley argue that ‘people’ and ‘Strategy’ are not
mutually exclusive

Another month, another clutch of surveys showing how empowered and motivated
employees create more successful companies. The Work USA 2002 Survey by Watson
Wyatt found that returns to shareholders were three times higher at companies
with high levels of trust between managers and staff.

Why does no-one believe the results? We are told that we always have to
choose between the evil but efficient ‘maximising shareholder value’ option
versus the caring, socially aware ‘stakeholder’ approach.

This notion of choice between head and heart is an illusion. There is a
powerful cultural myth of some intrinsic connection between exploitation and
profit-making; that the more people are demeaned and have their horizons
shrunken, the more lean and successful the business.

There is solid evidence that the whole human being, freed from the shrinking
effects of gratuitous rules, bullying and excessive cost-cutting, produces
better business.

Most managers will have been lectured over their failure to be more
strategic. But what does it mean to be strategic when most business strategies
fail and the ‘people element’ is regarded as peripheral?

Specifically, the approach to strategy based on the notion of a company as
an inanimate superstructure to which staff are subordinate as ‘resources’ is
just plain wrong. Research shows that mergers and restructurings on this model
nearly always fail.

The myth is so strong it persuades some people to try to convert good
businesses into bad ones. Southwest Airlines, alone among US carriers, has
never reported a loss. It makes development and selection of its people its
core strategic objective – yet it still comes under pressure from investors to
cut ‘costs’ on recruitment and training.

The ‘Unshrink’ theory replaces rules and obsessive cost measurement with
principles. The principles are that we are not what we do, but what we can
become. We are all human – boss and employee alike. Only good change is good,
and our organisations and world are communities and not machines.

It means creating a workplace for grown-up, complete people with families,
brains, unfulfilled ambitions and pride. People will follow willingly when they
understand the principles, believe in them and are permitted the freedom to
follow their own initiative in so doing.

Is it not the challenge of advanced economies to finds ways to create
ever-more creative, intelligence-packed products, and multi-level experiences?

The door is open for the personnel profession to develop its own strategic
thinking, and have the confidence to say "I refuse to draw up redundancy
plans until I see some evidence that you have gauged the effects of lost skills,
reduced morale and weaker customer retention". Or "Here’s a plan to
transform the pay and career structure in our call centres to equip staff to
improve the lives of the customers".

The evidence is on your side.

Max Mckeown is a business author and Philip Whiteley is a freelance
journalist. Their book, Unshrink is published by Prentice Hall Business, at

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