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Phil Abernathy on Employee Happiness and the Bureaucracy Mass Index

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In this Shane Hastie, Lead Editor for Culture & Methods, spoke to Phil Abernathy about his work helping organizations focus on employee happiness to drive customer happiness and shareholder return and the Bureaucracy Mass Index as a tool to identify where companies are bloated and ineffective. He also spoke about what’s needed for real transformation.

Key Takeaways

  • Great companies are realizing that in order to attract great talent you have to have a great place to work
  • If you have complex systems and complex processes, the root cause will be complex structures
  • The organizational BMI – the Bureaucracy Mass Index, the proportion of enablers to doers.  A healthy BMI is around 10%, whereas in many organizations it gets to be as high as 40%
  • Having clear objectives that are visible to the while organization enables good decision making; Objectives and Key Results are one tool to achieve this
  • Organization transformation must include mindset and culture as well as structure and roles

Show Notes

  • 00:31 Introductions
  • 00:52 The goal is happier customers, happier employees and happier shareholders
  • 01:03 Quoting Richard Branson on happy employees:  “Clients do not come first. Employees come first. If you take care of your employees, they will take care of the clients.”
  • 01:12 The focus on customer journeys has meant that employees are sometimes disregarded, to the detriment of the customer in the long run
  • 01:35 Saying that we focus on employees first is almost sacrilege
  • 01:42 Great companies are realizing that in order to attract the great talent you have to have a great place to work
  • 01:57 The characteristics of a great place to work – people have Purpose, Autonomy and Mastery
  • 02:23 The importance of fairness in the workplace – teams are destroyed by favoritism and nepotism of any sort
  • 02:47 Examples of the small ways unfairness comes out and how they impact team morale
  • 03:10 Fair is not equal – treat me fairly, and that does not mean the same as everyone else
  • 03:52 Structuring the organization for agility
  • 04:10 If you have complex systems and complex processes, the root cause will be complex structures – you can only have as simple a process as your structure allows
  • 04:25 The impact of the proliferation of KPI style management since the early 2000s
  • 04:50 There is no difference between IT and “digital”, yet we see new structures with a digital transformation responsibility
  • 04:59 The convoluted obfuscation of accountability and responsibility is at the heart of complex structure
  • 05:15 One key to agility is having small, simple teams delivering a service to a direct customer group
  • 05:32 Empowered and self-directed does not mean no management and no hierarchy
  • 05:42 Build the teams based on the service and the customer
  • 05:50 Teams must be loosely coupled and tightly aligned to a set of purposes
  • 06:10 Layer a shallow management structure above the small, autonomous teams rather than building a deep hierarchy
  • 06:28 The value and importance of a shallow leadership layer with a wide span of control
  • 06:40 Introducing the organizational BMI – the Bureaucracy Mass Index, the proportion of enablers to doers.  A healthy BMI is around 10%
  • 07:03 The reality in many large organizations is a BMI ratio of 20-45%
  • 07:08 Explaining how the BMI is calculated with examples  
  • 08:01 Don’t get rid of the excess people – find productive work for them
  • 08:21 You don’t run a company to employ additional people, you run it to create value for your employees, customers and shareholders
  • 08:40 BMI is a signal that provides a starting point for a discussion about the level of fat in the organizational system
  • 09:02 Flat structures, small cross-functional teams, preferably collocated pulling work from a single prioritized backlog
  • 09:28 Most companies are overloaded with too much going on at one time – you need to structure the work to enable success
  • 09:42 The reason for the lack of prioritization is not a lack of decision making, it is a lack of strategic clarity
  • 09:52 The number of different strategies which cause conflict and confusion in the organization
  • 10:05 Introducing the idea of Objectives and Key Results – OKRs
  • 10:40 Useful OKRs have 1-3 objectives and each objective has 1-3 key results
  • 10:52 OKRs cascade down - the key results of the level above become the objectives of the level below
  • 11:02 OKRs are collaboratively developed, they are not set from the top down
  • 11:25 Explaining how an OKR discussion can be started with senior leaders in an organisation
  • 12:12 Structure alone is not enough you need a leadership style that supports the way of working
  • 12:50 A good leadership style is based on an agreed set of human values
  • 13:15 All too often what is on the poster is not what is lived
  • 13:27 We need to be able to hold people accountable to behave in ways that exhibit the values they espouse
  • 13:42 Trust is the foundation – if you don’t have trust you will have fake harmony, you won’t have conflict
  • 13:48 Conflict is a signal of good trust
  • 14:05 What this means for leadership
  • 14:24 The courage of senior leadership to call people out for breaking the values is the decider
  • 15:02 Uber as an example of a company where the values were ignored
  • 15:25 Culture is always top-down
  • 16:02 The importance of having a growth mindset, experimentation and learning
  • 16:42 Transformation must include mindset and culture as well as structure and roles
  • 16:58 Microsoft as an example of how transformation has been successful trough culture and structure
  • 17:28 Embarking on such a change must be a strategic decision taken at the highest levels in the organisation,
  • 18:12 If you decide to go on such a journey coming on board with the new way of working and behaving can’t be optional – everyone must sign on to the new approach
  • 18:38 At Amazon they deliberately make the bar high so that people must push themselves to achieve the new outcomes
  • 19:02 Trying to make transformation easy results in lukewarm adoption and a lack of real changes
  • 19:25 It’s important to learn from others and borrow brilliance

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