Why Workplace Leadership Is About To Get Its First Major Makeover In 100 Years

“The difficulty lies not so much in developing new ideas as in escaping from old ones.” ~ John Maynard Keynes

Our common and traditional approach to leadership hasn’t significantly evolved since the dawn of the industrial age.  When it comes to managing people in a work environment, we’ve always treated workers like any other input: squeeze as much as much out of them as possible and pay them as little as possible.

This idea was introduced nearly a century ago when the expansion of the US economy largely was based on industrial machinery.  Workers were required to perform relatively unchallenging tasks and were easily replaceable.  Companies motivated workers primarily with money, paying by the piece to reward those who produced the most widgets.

But as we fast forward to today’s business world shaped by rapidly evolving technology and the far greater importance of institutional knowledge, creative thinking and sophisticated collaboration, the value of each employee has grown exponentially more important.  Companies are focusing on innovation and unique differentiation – and almost exclusively are looking at people, not machines, to provide it.

As workers have become increasingly more critical to the overall success of their organizations, what they need and expect in exchange for their work also has profoundly changed.  Money no longer inspires performance as it once did.  Being paid equitably will always be important as a driver of job engagement and productivity, of course, but people across the globe now have aspirations in their jobs that were virtually unimaginable in an earlier age.

Extensive research confirms that people want to grow and develop in the roles.  They want to feel valued and appreciated by their leaders, and to know their work has significance.  And, just as Abraham Maslow predicted 70 years ago, they seek to feel fulfilled and even maximized by the work they do.

That leadership practices have remained essentially unchanged through this evolution – and have failed to fully respond to the 21st Century workplace – has much to do with a deeply entrenched status quo.   Many organizations, along with their long-in-the-tooth leaders, have failed to embrace workers as being their most important stakeholder.  Instead, they cling to the threadbare paradigm that employees are a costly input, rather than human beings who associate their life’s happiness with their contentment at work.  Thus far, they’ve failed to see that more fully supported workers are more loyal, productive and drive an expanded bottom-line.

But, I believe the stars are now perfectly aligned to force a massive change in how we collectively seek to motivate human performance in the workplace.   Here are three important reasons why leadership is about to be greatly transformed, why the change will be long sustained – and what key practices will define the highly successful manager for the foreseeable future.  The one hint I’ll give you now is that future leaders in all workplaces will be required not just to have strong minds, but also generous and caring hearts.  I’m dead serious. 

Traditional Leadership Practices Are Failing And Businesses Are Paying The Price:

I recently interviewed Dr. Jim Harter, Gallup’s Director of Research, and learned that only 30% of US workers today admit to being engaged in their jobs.  In their “State of the American Workplace” report released early this month, Gallup reveals that the main reason an astounding 7-in-10 workers are disengaged at work is because they’re not getting proper support from their leaders.

For an article I wrote for Fast Company Magazine, Harter explained the gap: “Workplaces in general have paid a lot of attention to process and far less to people.  Too often employees are given managerial roles tied to success in a previous role, or as a reward for their tenure.  It’s unrelated to whether they can effectively support and positively manage human beings.”

What Harter’s 27 years of research experience has taught him is that people will continue to be unhappy in their jobs (and therefore greatly underperforming) just as long as their leaders fail to be their advocates.  For things to change, therefore, organizations must start promoting people into management roles who have a stronger inclination to mentor and care about their employees rather than compete against them.

According to a worldwide study by Towers Watson, the single highest driver of engagement today is whether or not workers feel their managers are genuinely interested in their well-being.  Less than 40% of workers now feel that support.

As further evidence that our leadership practices have the effect of undermining rather than driving productivity, the Conference Board reports that 53% of all US workers today effectively hate their jobs.

The Next Generation Of Workers Demands A Far More Nurturing Form Of Leadership:

If we’ve reached a tipping point in workplace leadership (which I believe we have), it’s because a new generation of workers has arrived on the scene that simply won’t tolerate a work environment that fails to support them and their needs.  Said another way, organizations will be unable to attract and retain this young talent if they don’t adopt far more authentically supportive management practices.  (Inevitably, this will be good news for all workers, regardless of their age).

If you don’t know already, the Millennials (born 1980-2003) are the largest generation in US history.  Totaling 17 million more people than the Baby Boomers (the last pig in society’s python), this group is just coming of age.  Their impact on influencing major changes to workplace leadership is just being felt – and it only will get stronger in ensuing decades as they grow older and inevitably assume senior manager and, ultimately, CEO roles.

While derided by some (Boomers mostly) as an unambitious, video-game playing generation still living in their parent’s homes, Millennials are the best educated age group ever.  And, collectively, they have very different values than their predecessors.  They’re highly self-confident, very concerned about the well-being of others and group oriented.  It might surprise you that they’re also extremely generous group; a spirit of service permeates the entire generation.

But here’s what’s most important.  To these young workers, money is far less important.  Instead, they have a strong desire to find meaning through their work.  In a recent study, 88% of Millennials rated “opportunity to have an impact on the world” important when choosing an employer.  These incredibly high aspirations will ensure workplace leadership practices are fully reinvented.

Organizations That Don’t Change Will Be At A Great Competitive Disadvantage

In just the past few months, I’ve visited companies like Google (where the median age of employees is just 29) and SAS – organizations routinely ranked by the Great Place To Work Institute (and Fortune Magazine) as America’s “Best Companies To Work For.’’

There are two important things you need to know about firms like these which place  extremely high value on people:

  1. They’re helping to reinvent leadership. What these companies have in common is that they give employees a meaningful voice in how the business gets run.  They place great value on trust – so much so that people have discretion on when they begin and end their workdays, and when they take their breaks.  They’re also uncommonly generous, and provide perks and benefits many traditional CFOs would reject as being blatant profit killers.  Workers are encouraged to contribute to projects outside of the scope of their normal roles (partly to ensure they have some variety in their day) – and are routinely made to know how their work and efforts contribute to the success of the firm.
  2. They have high engagement, very low turnover, and consistently outperform competitors in financial performance and shareholder return. Several recent studies have shown that companies where employees are happiest and better supported consistently achieve significantly higher profits.  SAS, for example, has had 37 consecutive years of record profitability, and Google’s stock price has appreciated nearly 700% over the past 8 ½ years (since its IPO) compared to just 51% for the Dow Jones average.  What all firms on the “Best Companies To Work For List” are proving is that highly supported human beings are more loyal, more creative, and sustainably drive far greater financial results.  This exceptional and broad success will force competitors to adopt similar leadership practices; shareholders will demand it.

The Future Of Workplace Leadership:

Workplace leadership is failing today largely because it has yet to acknowledge the importance of “emotional currency™” – a form of reward that makes people feel important, supported, valued, developed and appreciated.  In fact, science now has proved that it’s our feelings and emotions that determine our level of engagement in life, what motivates us, and what we care most about.

Where once the idea of appealing to the hearts in workers was seen as heresy, we’ve come to understand that it’s always been essential.   The greatest advice I can give you is this: “When you lead from the heart, people will follow.”

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