This article was originally written by Hundun Daxue, a Chinese WeChat public account. Translated and adapted by Ellen Tay.
An organization is very much about its people. A successful leader needs to balance the interest of its people without sacrificing the organization’s growth. This tests the ability of a leader to think strategically and systematically about the organization’s future and human nature while creating a value system that turns human capital into profits for the organization.
Xu Yulin, professor at School of Labour and Human Resources, Renmin University of China and senior visiting scholar at University of California, Berkeley, illustrates what it takes to be a successful leader in a flexible organization.
#1 The possibility of a “borderless” organization
In recent years, we have witnessed the natural evolution of traditional organizational structure to a new form—the ecosystem-oriented organization.
An ecosystem-oriented organization has four key characteristics—
Sharing: Value sharing among stakeholders
Value Chain: Creating a multi-layer value chain
Borderless: Embracing the concept of a borderless organization and product
Innovation: Focusing on value creation for customers, suppliers, and employees.
The demands of an ecosystem-oriented organization also differ greatly from a traditional one. Instead of exerting power control, commanding obedience, and perfecting execution, the senior management team needs to run an interactive, influential, yet balanced platform of networks that emphasizes value creation and aligns the interests of the organization, employees, suppliers, and customers. With a network-like structure, an ecosystem-orientated organization can achieve flexibility and agility.
The transition from a traditional, bureaucratic organization to a virtual, network-like organization requires reimagining the existing one to branch out into a network of different virtual organizational subunits. These virtual subunits can take the form of a headquarter, committees, or project teams. The goal of these units is to work towards achieving targets set out by the organization through taking on increasingly complex and innovative tasks.
In a virtual, network-like organization, each employee has an equal opportunity to take on more responsibility and even hold a leadership position when participating in a new project regardless of their corporate ranks. Through this, each employee plays a much more diversified role in the organization and can contribute in more meaningful ways.
The evolution of organizational structure has naturally raised questions about how we should rethink the meaning of an organization and how we should approach organizational management in today’s context. One way to consider these questions can be through adopting a macro view of the organization. At a macro level, the relationship between employees and the organization can be defined as collaborative, integrated, and symbiosis. Therefore, managing an ecosystem-oriented organization requires an in-depth understanding of both human and organizational behavior. It is crucial to bear in mind that while it is important to work towards the goals of an organization, it is also equally important to fulfill the needs of its people.
To ensure that the needs of its people are fulfilled, the organization can establish a profit distribution mechanism and take steps to instill a strong sense of cultural value in its people. In this case, corporate governance aims to ensure the alignment of employee’s interests with the organization and empower leaders to drive growth while managing the delicate balance in the organization’s ecosystem consisting of customers, shareholders, suppliers, and employees.
#2 Do things right
Peter Drucker, an influential thinker on modern management, once said, “Management is doing things right; leadership is doing the right things.” Indeed, leadership is more of an art, relying on the leader’s charisma to do the right things, while management is more of a science involving daily operations and execution.
In today’s popular culture, management ability is seen as a test of one’s delegation ability. From team building to grooming talents and empowering employees, the more you can delegate, the better your management ability. Measured by that standard, leaders in most organizations excel in execution but not in management. How then, can these leaders improve their management skills? One way is to keep a supervisory record during the management process.
The purpose of the supervisory file is to have a detailed record of the entire management process, including timeline, coaching provided, comments from the supervisor, and performance review. Instilling the practice of keeping a supervisory file and conducting regular performance reviews for employees holds the employees accountable for their contribution to the organization and holds the leaders responsible for monitoring progress.
It is crucial to keep in mind the essence of management before discussing teamwork, empowerment, and leadership. Management is the science of establishing guardrails throughout the organization and controlling the process to enable employees achieve their goals and objectives. When there is no discipline in the management process, there will be no results.
That said, management style should also remain flexible and adaptable to fit the level of maturity and readiness of employees.
When the employee is not as mature, the management style should be prescriptive; as the employee’s performance progresses over time, it can be tweaked to be persuasive. Once the employee has displayed a certain level of maturity, a leader’s role should evolve to participating and eventually delegating.
The management framework described above was first developed in 1969 by Paul Hersey and Ken Blanchard in their life cycle theory of leadership. Under this management framework, choosing the most appropriate growth strategy for the organization depends on factors such as timing, maturity level and readiness of employees, organization culture, etc.
There is never one best management style, only one that is most suitable for the organization. Instead of the personal attributes of the leader, it is the confluence of the leader, employees, and circumstances that play a more significant role in determining the success of an organization.
#3 Building a high-performance team
In 2018, Mercer, the world largest human resource consulting firm, proposed that the future of organizational management will fully digitally driven in the following five key areas :
First, keep pace with rapid changes. The ability and agility to adapt to change will be a key differentiating factor that distinguishes an organization’s capabilities.
Second, having a strong sense of purpose. Employees need to be imbued with a strong sense of purpose and empowerment, thereby unleashing their potential to be agents of change.
Third, a flexible system. Flexibility does not stop at allowing employees to have a flexible working arrangement. It also means the flexibility and freedom to rethink job scope, format, and responsibilities.
Fourth, the talent management system. Organizations function as a smart platform that matches employees with suitable skill sets to the most appropriate job. The role of an organization has to continuously evolve to tap the creativity and ambitions of its talents.
Finally, the digital transformation of an organization. Technology must be enhanced to improve productivity before an organization can unlock the growth potential of its talent.
In response to the growing trend of digitalization in organizational management, organizational structure design in this new era should emphasize decentralization, flexibility, and mobility. Correspondingly, the employee experience should emphasize commitment to work-life balance and exposure to diversity.
In 2020, LinkedIn’s research data put forward four major trends in global talent.
First, organizations need to pay more attention to the overall employee experience. 94% of talent professionals believed that employee experience is key for talent recruitment in the future. In fact, 77% of the organizations have started to make the employee experience their focus. Employees today are no longer working for the company, the company has to actively collaborate with employees to design experiences that allow them to perform their job better.
Second, people analytics will inform talent decisions at every level. There has been a 242% increase in HR professionals with data analysis skills in the past five years. Using Amazon as an example, the company uses big data and artificial intelligence to monitor employee behavior and strengthen internal governance. The deeply automated tracking system is also capable of generating warnings and terminations based on employee’s productivity. While the ethics of Amazon’s tracking system is debatable, the use case shows that big data and new technologies have the potential to improve management efficiency.
Third, internal recruitment is increasingly relevant. An organization’s existing workforce is an often-overlooked talent pool. LinkedIn’s data shows that employees in organizations with formal internal recruiting programs tend to stay on 41% longer than employees in organizations without internal recruitment programs. The majority of the current senior management team members in the e-commerce giant, JD.com (NASDAQ:JD) (SEHK:9618), joined the company as management trainees and were groomed internally. They have a strong sense of loyalty towards JD.com and are aligned with the company’s corporate values.
Finally, the workforce today is multigenerational. Organizations are seeing a new chapter in workforce age diversity with the postponement of the retirement age and Generation Z hitting the workforce. To capitalize on this trend, 56% of the organizations have updated their policies to attract and retain talents from all ages.
As organizations recognize the need to undergo organizational change, the transformation process should emphasize refining collaboration and iterate across various levels.
In conclusion, there is no such thing as the best management—only one that fits. . And management should not be a theory. What you know is practice, what you don’t, that’s the theory.