HR trends

Gary Hamel on Workplace Bureaucracy

The opening keynote speaker at UNLEASH America was Gary Hamel, one of the world’s most influential business thinkers. He is a professor at the London Business School, director of the Management Innovation eXchange and the author of several best-selling books, including “The Future of Management” and “What Matters Now.” Hamel is also the most reprinted author in the history of the Harvard Business Review.

He spoke about the stifling effects of top-down management and how we need less — not more — management. Here are highlights from Hamel’s Q&A session with the media.

Understanding the Effects of Bureaucracy

“Bureaucracy shackles people with rules that prevent them from doing the best thing for the organization, the best thing for customers,” Hamel says.

He doubts that most organizations have tried to measure the costs of bureaucracy — which include insularity (too much time spent on internal issues, politicking, too much energy spent trying to gain power) and friction (too much busy work that slows down the decision-making process). Other costs include bloating (too many management layers), risk aversion (too many barriers against taking risks) and inertia (too hard to proactively change).

“Without having a benchmark there and any cost data around that, you have no idea what it’s actually costing your organization,” Hamel says.

Ten or 15 years ago, not many companies were concerned about the environmental cost of business. But now, that’s a major issue, and companies have environmental reports. Hamel recommends doing the same with bureaucracy. “If I’m an investor and I understand that this top-heavy, rule-driven culture is going to cause the organization to miss opportunities, miss how to allocate resources and misuse their talent, that is something I want solved.” While CEOs vaguely understand these costs, he says, they haven’t actually calculated the costs and decided this is a problem that needs to be solved.

Embracing Change

It’s possible to run a billion-dollar business with virtually no management layers, though Hamel believes the average person can’t conceive of this idea because they’ve never seen it before. “For example, at GE Aviation, they have 400 employees at the plant and one plant supervisor,” he says. He recommends getting out to see these companies and how they operate to understand how they are able to maintain control, discipline and alignment without a superstructure of supervisors.

“And then you have to be able to find a migration path between the present and the future,” Hamel says. Many post-bureaucratic organizations were formed that way, so they didn’t have to “uninstall” bureaucracy and tear down all of their rules and regulations.

This can be more complicated for more traditional companies because bureaucracy does serve a function. “Even though it has a lot of downsides, bureaucracy is the way we get control and coordination and consistency in large organizations.” If you try to destroy that and start all
over, Hamel warns, that will lead to chaos. “That’s why you need to approach it as migration path as you think about such principles as openness, meritocracy, experimentation and other next-generation management principles.”

He recommends challenging long-held organizational assumptions. “You just assume that power trickles down, you assume that you need managers to manage — but none of these things are eternal truths, they’re not principles of physics.”

Using Technology to Change Organizations

Hamel believes that technology can dramatically change how organizations are run: how to find and hire people, how to make capital and strategic decisions. But right now, technology is primarily being used for white collar productivity (sharing documents, sharing schedules, etc.) or to aggregate information and exert more control. “Managers today have an enormous amount of real-time, microscopic information about performance, and the temptation is to have time cards on steroids.” Managers are paid to control, he says, and he thinks they may use technology to disempower rather than empower workers.

Technology has offered much more choice in our lives as consumers, but where is the equivalent empowerment in the workplace? “Why don’t we design our own jobs? Why don’t we pick our own colleagues? Why don’t we choose our own bosses? Why don’t we approve our own expenses?” That might sound crazy, but Hamel says organizations are doing it.

Hiring strategies are moving toward a consensus model, he says. “Historically at Whole Foods … if you wanted to work there, you would work for a couple of weeks with one of their in-store teams, and it took a 70% vote of the in-store team to hire you.”

Even project development is becoming more democratic. Hamel says that at Chinese manufacturer Haier, every new product starts as an online project with customers. “For example, when they want to develop new air conditioners, they go to social media and ask, ‘What do you want in an air conditioner?’ The first time they did this, they received 700,000 comments and had hundreds of thousands of fans following the project.” The company even uses social media to find technical partners. In one instance, they posted a technical challenge and asked who could solve it. The outcome? Dow Chemical responded, “We can build a membrane for that.”

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