Should salaries be public?
Is it possible to eliminate the performance review process?
Should customers come second?
Do open offices work?
Most businesses have rules and practices that have developed over many years. Whether inherited from long ago practices or invented by the company, these rules often continue unquestioned.
My friend Dr. David Burkus is a business school professor and author who questions many common business practices. His research reveals that many of the rules are outdated, misguided, and possibly counterproductive. His research looks at the contrarian practices of companies such as Zappos and Netflix where the rules are being rewritten.
From designing office space to eliminating annual performance reviews and unlimited vacation policies, David’s book ignites a debate and conversation.
Some of the “rules” may stand the test of time because they work while others may be held in place based solely on tradition. Regardless, his newest book, Under New Management: How Leading Organizations Are Upending Business As Usual, is a good reminder that it’s time to review all the rules and determine whether they still serve a valid purpose.
The Case for Change
After I wrote my first book, The Myths of Creativity, in which I talked a bit about practices like hackathons and 20% time that spurred innovation, I started to get even more curious about the things innovative companies were doing that seemed unusual or opposite of best practices. As I travelled down that rabbit hole I found lots of people writing about why the ideas were unique and appealing, but no one was making the case for why these practices work so well. Since organizational psychology is my background, I started to look at these ideas through the lens of human behavior and found compelling reasons for why they might be better than best practices.
Do you believe many of our management practices and principles are outdated? Is this a global view?
Well that depends. As Daniel Pink rightly pointed out in Drive, the shift from industrial work to knowledge work left a lot that needed to change about how we motivate people. I think that shift has broader management implications, which I explore in Under New Management. So yes, if you’re organization does mostly knowledge work, it’s likely that your management practices are rooted in some outdated assumptions.
Ban Email and Increase Productivity
Let’s look at email. Does banning email really work? Do these techniques work in larger organizations? Doesn’t moving to other technology tools just move the problem and not address the fact that it is people, not the tool, that cause it?
Email is an amazing tool because it’s cheap and it’s asynchronous. But it’s a difficult tool for exactly that reason. It’s easy to send…so we send it far too much. And because it’s asynchronous, it moved us to a world where we’re always on. There are a lot of other tools that are also cheap and asynchronous, but it’s a matter of how the tool is used.
And yes, to some extent, it’s a people issue. The companies that banned email took a deep look at their communication needs and settled on another tool for internal communication. If you’ve looked at what your team’s communication needs are and email meets those needs….great. But odds are, there’s a better tool out there.
13 Counterintuitive Ideas to Upend Business As Usual
- Outlaw email.
- Put customers second.
- Lose the standard vacation policy.
- Pay people to quit.
- Make salaries transparent.
- Ban non-competes.
- Ditch performance appraisals.
- Hire as a team.
- Write the Org chart in pencil.
- Close open offices.
- Take sabbaticals.
- Fire the managers.
- Celebrate departures.
Eliminate the Performance Appraisal
Performance appraisals are another common practice that most of us dislike. What’s wrong with the way most organizations do these? What’s the prescription? Is the problem with the process or does it fall with the skills of the manager?
I think most managers have the best of intentions when engaging in performance appraisals, but the system limits them in two key ways. The first is that performance reviews are generally not conducted often enough. Feedback needs to be far more immediate. The second is often a “label” is used (Exceeds Expectations, Meets Expectation, Underperforming, etc.) and often the annual review discussion turns into a negotiation around this label instead of a productive feedback session. Ultimately, whether a manager has to conduct performance appraisals or not, all managers can improve their ability to have regular “check-in” conversations around expectations, feedback, and growth. When these conversations happen informally and frequently, performance improves far better than when just an annual review is used.
Hire as a Team
Hiring the wrong person is costly for all involved. What is wrong with the typical hiring practice? What recommendations do you have to change that?
You’re totally right. Hiring the wrong person is a huge cost, and it’s hard to judge who the right person is. In a knowledge work organization, so much of individual performance is actually explained by the team and the company a performer is placed in. Interviewing an apparent star once or twice and then making the offer will do little to judge team and company fit. That’s why many companies are moving toward including the team more, whether it be by having peers conduct interviews or by giving new hires a probationary period before their membership on the team is final. In all cases, the assumption is the same: the people working with new hires should have the biggest influence on who is hired.
Another hotly debated area is the recent trend toward open offices. What have we learned about design and productivity?
The trend toward open offices is well-meaning, there’s some research promoting the benefits of openness for collaboration, serendipity, innovation, etc. It also helps that open offices are far cheaper to furnish and maintain. But it turns out that the benefits of open offices may not be worth the costs. Open offices increase employee stress and even the number of sick days taken (We can’t say if they’re actually sick, but we can say people are either legitimately sick or they’re sick of working at that office). As such, a lot of companies are moving toward a “palette of places” that give employees space to roam around and work in open or closed environments depending on their personality and the task at hand. These designs are aligned with some intriguing research that suggests that the most impactful factor of an office on performance is the extent of perceived control an employee has over the office space. So it’s not about open or closed, it’s about giving individuals freedom to choose the space that works best.
Leaders Innovate the Factory
This book and your work on innovation are obviously interrelated. How do corporate leaders promote an atmosphere where new ideas are encouraged and tried?
Great leaders don’t innovate the product; they innovate the factory. We tend to tell the story of an innovative company as if the product ideas came solely from the CEO. But as I discuss in my previous book, creativity is a team sport. The best leaders focus their attention on crafting the organization—the factory—so that employees have freedom to experiment and explore. This involves pushing the task of judgment down to the employees themselves, teaching them how to test and refine ideas, and then having the courage to step back off the controls and trust them. If you focus on innovating the factory—adjusting the organizational design and culture to one of trust and experimentation—then your people will focus on innovating products and services…and do a better job than you could do anyway.
Under New Management: How Leading Organizations Are Upending Business As Usual