Suppose you want to design the best company on earth to work for. What would it be like? For three years we’ve been investigating this question by asking hundreds of executives in surveys and in seminars all over the world to describe their ideal organization. This mission arose from our research into the relationship between authenticity and effective leadership. Simply put, people will not follow a leader they feel is inauthentic. But the executives we questioned made it clear that to be authentic, they needed to work for an authentic organization.
What did they mean? Many of their answers were highly specific, of course. But underlying the differences of circumstance, industry, and individual ambition we found six common imperatives. Together they describe an organization that operates at its fullest potential by allowing people to do their best work.
We call this “the organization of your dreams.” In a nutshell, it’s a company where individual differences are nurtured; information is not suppressed or spun; the company adds value to employees, rather than merely extracting it from them; the organization stands for something meaningful; the work itself is intrinsically rewarding; and there are no stupid rules.
The “Dream Company” Diagnostic
These principles might all sound commonsensical. Who wouldn’t want to work in a place that follows them? Executives are certainly aware of the benefits, which many studies have confirmed. Take these two examples: Research from the Hay Group finds that highly engaged employees are, on average, 50% more likely to exceed expectations than the least-engaged workers. And companies with highly engaged people outperform firms with the most disengaged folks—by 54% in employee retention, by 89% in customer satisfaction, and by fourfold in revenue growth. Recent research by our London Business School colleague Dan Cable shows that employees who feel welcome to express their authentic selves at work exhibit higher levels of organizational commitment, individual performance, and propensity to help others.
Yet, few, if any, organizations possess all six virtues. Several of the attributes run counter to traditional practices and ingrained habits. Others are, frankly, complicated and can be costly to implement. Some conflict with one another. Almost all require leaders to carefully balance competing interests and to rethink how they allocate their time and attention.
So the company of your dreams remains largely aspirational. We offer our findings, therefore, as a challenge: an agenda for leaders and organizations that aim to create the most productive and rewarding working environment possible.
Let People Be Themselves
When companies try to accommodate differences, they too often confine themselves to traditional diversity categories—gender, race, age, ethnicity, and the like. These efforts are laudable, but the executives we interviewed were after something more subtle—differences in perspectives, habits of mind, and core assumptions.
The vice chancellor at one of the world’s leading universities, for instance, would walk around campus late at night to locate the research hot spots. A tough-minded physicist, he expected to find them in the science labs. But much to his surprise, he discovered them in all kinds of academic disciplines—ancient history, drama, the Spanish department.
The ideal organization is aware of dominant currents in its culture, work habits, dress code, traditions, and governing assumptions but, like the chancellor, makes explicit efforts to transcend them. We are talking not just about the buttoned-down financial services company that embraces the IT guys in shorts and sandals, but also the hipster organization that doesn’t look askance when someone wears a suit. Or the place where nearly everyone comes in at odd hours but that accommodates the one or two people who prefer a 9-to-5 schedule.
For example, at LVMH, the world’s largest luxury-goods company (and growing rapidly), you’d expect to find brilliant, creative innovators like Marc Jacobs and Phoebe Philo. And you do. But alongside them you also encounter a higher-than-expected proportion of executives and specialists who monitor and assess ideas with an analytical business focus. One of the ingredients in LVMH’s success is having a culture where opposite types can thrive and work cooperatively. Careful selection is part of the secret: LVMH looks for creative people who want their designs to be marketable and who, in turn, are more likely to appreciate monitors who are skilled at spotting commercial potential.
The benefits of tapping the full range of people’s knowledge and talents may be obvious, yet it’s not surprising that so few companies do it. For one thing, uncovering biases isn’t easy. (Consider the assumption the diligent chancellor made when he equated research intensity with late-night lab work.) More fundamentally, though, efforts to nurture individuality run up against countervailing efforts to increase organizational effectiveness by forging clear incentive systems and career paths. Competence models, appraisal systems, management by objectives, and tightly defined recruitment policies all narrow the range of acceptable behavior.
Companies that succeed in nurturing individuality, therefore, may have to forgo some degree of organizational orderliness. Take Arup, perhaps the world’s most creative engineering and design company. Many iconic buildings bear the mark of Arup’s distinctive imprint—from the Sydney Opera House to the Centre Pompidou to the Beijing Water Cube.
Arup approaches its work holistically. When the firm builds a suspension bridge, for example, it looks beyond the concerns of the immediate client to the region that relies on the bridge. To do so, Arup’s people collaborate with mathematicians, economists, artists, and politicians alike. Accordingly, Arup considers the capacity to absorb different skill sets and personalities as key to its strategy. “We want there to be interesting parts that don’t quite fit in...that take us places where we didn’t expect to get to,” says chairman Philip Dilley. “That’s part of my job now—to prevent it from becoming totally orderly.”
Conventional appraisal systems don’t work in such a world, so Arup doesn’t use quantitative performance-measurement systems or articulate a corporate policy on how employees should progress. Managers make their expectations clear, but individuals decide how to meet them. “Self-determination means setting your own path and being accountable for your success,” a senior HR official explains. “Development and progression is your own business, with our support.”
If this sounds too chaotic for a more conventional company, consider Waitrose, one of Britain’s most successful food retailers, according to measures as diverse as market share, profitability, and customer and staff loyalty. In an industry that necessarily focuses on executing processes efficiently, Waitrose sees its competitive edge in nurturing the small sparks of creativity that make a big difference to the customer experience.
Waitrose is a cooperative: Every employee is a co-owner who shares in the company’s annual profits. So the source of staff loyalty is not much of a mystery. But even so, the company goes to great lengths to draw out and support people’s personal interests. If you want to learn piano, Waitrose will pay half the cost of the lessons. There’s a thriving club culture—cooking, crafts, swimming, and so on. We have a friend whose father learned to sail because he worked for this organization. In that way, Waitrose strives to create an atmosphere where people feel comfortable being themselves. We were struck when a senior executive told us, “Friends and family would recognize me at work.”
“Great retail businesses depend on characters who do things a bit differently,” another executive explained. “Over the years we have had lots of them. We must be careful to cherish them and make sure our systems don’t squeeze them out.”
Pursuit of predictability leads to a culture of conformity, what Emile Durkheim called “mechanical solidarity.” But companies like LVMH, Arup, and Waitrose are forged out of “organic solidarity”—which, Durkheim argued, rests on the productive exploitation of differences. Why go to all the trouble? We think Ted Mathas, head of the mutual insurance company New York Life, explains it best: “When I was appointed CEO, my biggest concern was, would this [job] allow me to truly say what I think? I needed to be myself to do a good job. Everybody does.”
Unleash the Flow of Information
The organization of your dreams does not deceive, stonewall, distort, or spin. It recognizes that in the age of Facebook, WikiLeaks, and Twitter, you’re better off telling people the truth before someone else does. It respects its employees’ need to know what’s really going on so that they can do their jobs, particularly in volatile environments where it’s already difficult to keep everyone aligned and where workers at all levels are being asked to think more strategically. You’d imagine that would be self-evident to managers everywhere. In reality, the barriers to what we call “radical honesty”—that is, entirely candid, complete, clear, and timely communication—are legion.
Some managers see parceling out information on a need-to-know basis as important to maintaining efficiency. Others practice a seemingly benign type of paternalism, reluctant to worry staff with certain information or to identify a problem before having a solution. Some feel an obligation to put a positive spin on even the most negative situations out of a best-foot-forward sense of loyalty to the organization.
The reluctance to be the bearer of bad news is deeply human, and many top executives well know that this tendency can strangle the flow of critical information. Take Novo Nordisk’s Mads Øvlisen, who was CEO in the 1990s, when violations of FDA regulations at the company’s Danish insulin-production facilities became so serious that U.S. regulators nearly banned the insulin from the U.S. market. Incredible as it seems in hindsight, no one told Øvlisen about the situation. That’s because Novo Nordisk operated under a culture in which the executive management board was never supposed to receive bad news.
The company took formal steps to rectify the situation, redesigning the company’s entire quality-management system—its processes, procedures, and training of all involved personnel. Eventually, those practices were extended to new-product development, manufacturing, distribution, sales, and support systems. More generally, a vision, core values, and a set of management principles were explicitly articulated as the Novo Nordisk Way. To get at the root cause of the crisis, Øvlisen also set out to create a new culture of honesty through a process he called “organizational facilitation”—that is, facilitation of the flow of honest information.
A core team of facilitators (internal management auditors) with long organizational experience now regularly visit all of the company’s worldwide affiliates. They interview randomly selected employees and managers to assess whether the Novo Nordisk Way is being practiced. Employees know, for instance, that they must inform all stakeholders both within and outside the organization of what’s happening, even when something goes wrong, as quickly as possible. Does this really happen? Many employees have told us that they appreciate these site visits because they foster honest conversations about fundamental business values and processes.
Radical honesty is not easy to implement. It requires opening many different communication channels, which can be time-consuming to maintain. And for previously insulated top managers, it can be somewhat ego-bruising. Witness what ensued when Novo Nordisk recently banned soda from all its buildings. PeopleCom, the company’s internal news site, was flooded with hundreds of passionate responses. Some people saw it as an attack on personal freedom. (“I wonder what will be the next thing NN will ‘help’ me not to do,” wrote one exasperated employee. “Ban fresh fruit in an effort to reduce sugar consumption?”) Others defended the policy as a logical extension of the company’s focus on diabetes. (“We can still purchase our own sugary soft drinks...Novo Nordisk shouldn’t be a 7-Eleven.”) That all these comments were signed indicates how much honesty has infused Novo Nordisk’s culture...
Via Vilma Bonilla, Frank J. Papotto, Ph.D.