Get happy

A new book shows that keeping workers contented isn't a joke: it's deadly earnest

Imagine working in a company where you help choose the department head, and if you don’t like your manager you can choose a new one. Salaries and company finances are open-book. You are trusted to the point that the projects you work on are pre-approved so the solutions you come up with actually matter. You know you can alter the usual procedures if it’s better for customers – and you won’t get punished for an honest mistake.

Yeah, right – what planet do you think we live on?, might sneer anyone who’s done an MBA. Dream on, those on the receiving end would sigh wistfully.

Yet the funny thing is that companies set up in this New Age fashion conform much more closely to the hard evidence of ‘what works’ than conventional top-down, short-back-and-sides rivals. Companies that figure in ‘best places to work’ lists, using practices like the above, are consistently more profitable than ‘normal’ counterparts; getting employees more engaged is the single sure-fire thing any company can do to boost performance (see my piece on the extraordinary failure of people management here).

For a concrete example of how and why such practices work, look no further than training company Happy, which does all the things in the first paragraph, plus many more. Happy trains 20,000 people a year, and picks up awards for customer service, work life balance and being a great place to work with a regularity that must depress rivals. Generously, founder Henry Stewart (previously a journalist, and it shows) has written a provocative and welcome book about how it’s done, self-explanatorily entitled ‘The Happy Manifesto’.

Stewart’s book has a foreword by LBS’ Professor Julian Birkinshaw. The combo is particularly felicitous because Birkinshaw has himself published a fascinating research report on ‘employee-centred management’ – and the two complement each other perfectly, Birkinshaw’s paper setting out the research findings, Stewart illustrating them with practical examples.

They’re a great double act, and I’m sure they won’t mind my saying that reading them together is even better than reading them apart. Time after time, lightbulbs go off as the issues raised by Birkinshaw are faced, and faced down, by Happy. Here are three of the brightest, at least for me.

First, since the elements of helping people perform well are well established, muses Birkinshaw, why are most companies so bad at it? One reason is that the trusting, open management required is a minority sport – an ‘unnatural’ activity that goes against the grain of control and risk-aversion that managers at business school and their previous employer. Happy’s solution – ‘our most radical concept’ – is… to select managers who like and are good at managing. Wow. Let that sink in a minute. Many people are comfortable with left-brain management activities like strategy and decision-making, far fewer with supporting and coaching behaviour. So split the roles and hand people management to those who do it best. In addition, give people a say in who manages them. Poor management, points out Stewart, ‘undermines morale, creates stress, reduces productivity and causes companies to lose some of their best people. It is a massive problem, but there is a simple solution: let people choose their managers. If they don’t like the one they’ve got now, let them decide who they want instead.’ Done, problem solved.

Second, it’s a truism that front-line staff know more about what customers want (and are getting) than managers. But all too often companies block good customer service, and innovation generally, with rule books that force people to do things that they know are not in customers’ interests. (As Peter Drucker once lamented, ‘So much of management consists of making it difficult for people to work’.) Instead, Happy as far as possible eliminates rules. How? By making an incredibly important distinction: between rules and systems. ‘There is a crucial difference between the two. A rule has to be obeyed. In response to a rule you are expected to suspend your judgement. A system is the best way we have found so far to do something. But, if any member of staff can think of a better way in the situation they are in, they are encouraged and expected to adapt the system.’

In many organisations, the response to a mistake is to create a rule. Rules never get taken away, only added, so we end up with ever more and more dispiriting restrictions on the use of common sense, both at work and outside it. This dynamic explains why an author has to have a CRB check before he or she can give a reading at a school, or a neighbour can’t look after a child for a morning without registering as a child minder. Of course, you can’t just get rid of rules and throw people back entirely on their own resources. But the minute you start thinking in terms of systems you have terms of reference within which to exercise judgement, as well as guidelines for deciding whether rules are necessary (is the incident natural variation, or noise, in which case it’s pointless to make a rule; or is it a signal of a change or malfunction in the system that does require a reaction?).

Third, another reason why good people management is so rare is that in times of crisis like the present the default reaction is to is to pull control back to the centre, so that the manager is on top of everything. But this is often exactly the wrong thing to do, since it is people at the front end who are best positioned to respond to fast-changing circumstances. Happy’s answer, and more generally to pre-empt the automatic assumption that the manager knows best, is to institutionalise trust in the shape of pre-approval – making clear to a group or individual that they will have authority to implement their project or proposal, without prior management sign-off. As Stewart admits, this scares many mangers witless. ‘But think for a moment. What effect would this have on how seriously people took the task? We find it instantly removes any play-acting and politics. Suddenly it’s for real.’ Moreover, at implementation time they have an investment in making it work – and they can’t blame management interference if it doesn’t work.

Any of these practical insights is worth the price of the book on its own. But there are more on almost every page. Some of them have policy implications. For instance, whoever came up with the notion that making it easier to sack people would make them or the company more productive has only to turn to Stewart’s hierarchy of management needs on page 52 to understand why it is the stupidest idea in the world. Or page 106 to twig the real point of flexible working: ‘Flexible working is not what you approve of, but about the member of staff and what they need. It is not about you. It is about them’. The section on recruitment is particularly illuminating, or more accurately inspiring. Why do so many businesspeople complain that qualifications fail to prepare people for the world of work – yet continue to insist on the same irrelevant qualifications, Stewart asks. If more companies followed Happy’s practice of ‘recruiting for attitude, training for skills’, the UK unemployment figures would look much rosier – particularly among the angry and disaffected young.

In his foreword to the book, Birkinshaw notes that companies such as Happy are ‘more important for the economy than the immediate value they create for their customers and employees’. Their significance as alternative role models to the dreary (and ineffective) norm is immense. It can’t be emphasized enough that the management philosophy represented by Happy is not some fluffy attempt at do-gooding, but the reverse. It’s the rest of the world that’s out of line. Notes Stewart: ‘It would be nice to say that we do this out of a belief in democracy in the workplace, but this isn’t the real reason. We do it because it is more effective.’ Why not both? He rightly calls his book a manifesto, a call to arms. I hope he’s sent it to Dave and Ed.

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