A Back-to-Basics Approach to Recovery

At the recent World Economic Forum meeting in Davos, there was a clear consensus that 2010 will be a year of gradual recovery, with Western Europe and North America growing slowly and Asia more rapidly.

While jobs are still being lost in certain sectors, there is a collective sense that the worst of the recession is behind us. Most companies have consolidated their positions, and are now moving, cautiously, towards a renewal of the growth agenda that they put on hold in 2008.

So how will you get your recovery strategy right? And what are the key success factors for enabling your organisation to grow again? The reality is that most companies operate in highly-competitive industries where there are no easy pathways to high returns.

So rather than focusing all your efforts on the next big thing I favour a back-to-basics approach. I believe that the most successful companies in the years ahead will be those that turn management – how they get work done through their people — into a source of competitive advantage.

Why do we need to reinvent management? Here are three important reasons:

Managers have lost credibility. In a 2008 Gallup poll on honesty and ethics among workers in 21 different professions, a mere 12 per cent of respondents felt business executives had high/very high integrity—an all-time low. With a 37 per cent low/very low rating, the executives came in behind lawyers, union leaders, real estate agents, building contractors, and bankers.

Employees are unhappy with their managers. Economist Richard Layard has studied happiness for many years. He showed that people would prefer to be alone than spend time interacting with their boss. This is a damning indictment of the management profession.

Poor management was the root cause of many recent high profile failures. Lehman Brothers failed as much through poor risk-management and ill-thought-out incentive schemes as poor regulation or public policy.

General Motors’ decline and fall was in large part the result of an inwardly-focused set of management processes that put conformity to the GM way ahead of customer responsiveness. Enron’s spectacular bankruptcy in 2004 was caused by the fateful combination of fraudulent behaviour and a lax and entrepreneurial management model.

In short, management has lost its way. For many people, it has a very narrow, almost pejorative meaning built around controlling, budgeting and planning. And the whole leadership movement, which now dominates the agenda in most business schools and management books, has served to further damage the credentials of management.

Leaders, we are told, focus on vision and change, while managers are responsible for maintaining the status quo. Perhaps not surprisingly, there are few if any role model managers out there. Have you ever met a teenager who said she wanted to be a manager when she grew up?

Here is a way forward. Leadership is a process of social influence: it is concerned with the traits, styles, and behaviours of individuals that cause others to follow them. Management is the act of getting people together to accomplish desired goals.

In other words, we all need to be leaders and managers. We need to be able to influence others through our ideas, words, and actions. We also need to be able to get work done through others on a day-to-day basis.

The job of the senior leaders in an organisation is to put in place an overall “management model” that encourages individuals to work more effectively in their management activities.

As a simple example, the IT services company, HCL Technologies has a system for posting managers’ 360-degree feedback results online. This initiative was established to push HCL’s employee focused management model, but of course it also serves to remind managers across the company that being a good manager of others is important.

Many companies are experimenting with innovative management models along these lines, and when such innovations work, they can be a real source of competitive advantage.

A well-managed company is one that gets the most out of its people. An engaged workforce, in turn, is one that seeks out opportunities to add value in creative and unforeseen ways, which then breeds responsiveness, innovation and resilience.

Let’s be clear, reinventing the practice of management is not going to provide your firm with any short-term benefits. But that is the whole point.

The road to recovery starts now, and it is therefore a perfect time to put in place the basic changes that will compound and accelerate over time.