Balance Your E.I. Skills


Having emotional intelligence, often referred to as EI, is an important part of being a stronger, more effective leader.

But too many people assume that it’s all about being sweet and chipper. Sure, some EI competencies are related to sociability, sensitivity, and likeability, but others are connected to leadership skills like achievement, influence, and conflict management.

The key is to have a balance.

If you’re strong in some of the softer, emotional skills, then focus on honing skills like giving unpleasant feedback. For example, rather than using your EI to smooth over interactions with a co-worker who is overbearing and abrasive, work on bringing up the issue to your colleague directly, drawing on conflict management to give direct feedback and on emotional self-control to keep your reactivity at bay.

Adapted from “Emotional Intelligence Has 12 Elements. Which Do You Need to Work On?”
by Daniel Goleman and Richard E. Boyatzis

EI 3

Trevor Lee

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Test Your Offer BEFORE You Make It!


Never make a formal offer until every aspect of that offer has been tested and agreed on beforehand. Easy to remember, but hard to fix if you forget. Once you’ve formally extended an offer, you’ve seriously limited your options. The applicant becomes the buyer, the company the seller. Open communication stops dead. Candidates stop thinking about why they want the job and start worrying about why they DON’T want it.

An offer extended while there’s still doubt often gets an “I have to think about it” response. Thinking about an offer is fine – but once you’ve extended it your own flexibility is weakened. It’s much better to have an applicant think about all aspects of an offer BEFORE you formally put it together.

TEST OFFER 1

Here’s another important point: Before you extend a formal offer, you get unbiased information. After, that same attempt to determine a candidate’s interest can come across as harassment, pushiness or over-selling. Contentious salary negotiations become awkward and stressful, because neither party wants to lose face. Deals often fall apart at this point for relatively unimportant reasons.

Start by testing a candidate’s general interest in the position. Ask, “Assuming an attractive offer, do the job and the challenge appeal to you?” This question lets you draw a line between the job and the offer, and gives both parties the chance to address concerns about the job itself. You’ll eliminate a lot of bad fits this way!

Then you can ask, “What would you think if we could put together a package in the range of £_____ to £_____?” You’ll need to go back and forth with the candidate to test the range, but this gets both parties talking in an open manner.

Don’t let the candidate forget about the competition – real or imaginary. Say something like, “Although we’re still seeing other candidates, I believe you’d make a great addition to our team. What do you think about something like £_____?” The threat of competition allows you to be a bit stronger during the negotiating phase, and tends to make the candidate more realistic.

A candidate’s hesitation on any item at this stage means there are probably other issues to be considered. Continue probing. Many objections have to do with lack of information: don’t move forward until you have addressed these concerns to everyone’s satisfaction. Now is the time to make trade-offs and be creative. If you can’t meet a particular need, offer an alternative – a signing bonus instead of a too-high salary, for example. Find out now if this could turn out to be a deal-breaker.

Work on all these points until you come to an agreement – or at least an understanding. You’ll both discover that this give-and-take process is much easier WITHOUT a formal offer on the table. And when all the objections have been addressed in a mutually satisfactory fashion, THEN you’re ready to get to the final offer.

TEST OFFER 2

Trevor Lee

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http://www.ceo-worldwide.com

@trevorblee

Encourage Collaboration – Make It Easier


Collaboration takes time and resources. So if you want people to work together, you have to make it as easy as possible.

For example, you can use simple, off-the-shelf tools like Dropbox and Skype to help people share and communicate. (Be sure that any programs you use work seamlessly with your IT system.)

If some of your employees aren’t confident with the technology, pair them with someone who is. People are much more likely to adopt a new technology if they have someone they can turn to for help, rather than learning it on their own or relying on an IT hotline.

And for major collaboration projects, consider assigning co-leaders who can shoulder the administrative burdens.

Adapted from “How to Get People to Collaborate When You Don’t Control Their Salary,”
by Heidi K. Gardner

MIDDLE

Trevor Lee

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Successful Business Transformation


9 implementation principles that will guide you toward a successful transformation:

The problems facing every company are different. They largely depend on history, culture, capabilities, and information technology. However, the importance of vision and communication cannot be overestimated.


Therefore …

A clear vision of the tasks ahead and good communication skills will enable you to navigate around the most difficult obstacles and prevent the organization sliding back into its old habits. The following principles will guide you toward a successful transformation:

  1. Think like a revolutionary

  2. Build an urgent case for change and convince the board

  3. Establish a ‘guiding coalition’

  4. Create a compelling and coherent vision for change

  5. Communicate the vision

  6. Enable and encourage people to change

  7. Look for quick wins

  8. Work around the resistors

  9. Consolidate the gains and maintain the momentum

Ed: These are principals that form the core of my friends at the Beyond Budgeting Institute – bbrt.org – and form the business model of such diverse companies as AstraZeneca, Arla, Danfoss, Handelsbanken, HILTI, Lego, MAERSK, Michelin, Sodexo, SKF, Timpson, Volvo and many more.

But getting back to point number 2,

because it is crucial to discuss how we sell the case for change to the people that matter.

Who are the key ‘influencers’ that you need to convince?

In most companies, the two primary persons to convince will be the CEO and CFO. However, it is of great importance to engage the whole organization. I will get back to that later.

While the case for change might appear to be compelling to you, it can seem too vague and “in the future” for others.

Hard-pressed managers need more organizational change like a hold-in-the-head. Therefore, the reasons must be compelling and the case well prepared and presented.


So how do we convince key influencers?

Ask yourself the following questions:

  1. What will it involve?

  2. What are the costs and benefits?

  3. Which parts of the business are affected?

  4. Is this the only option?

  5. What evidence do we have that it will work?

  6. What are the risks?

  7. How long will it take?

  8. How will we know if we have succeeded or failed?

Addressing them objectively will strengthen your credibility and increase your chances of success even though these questions are difficult to answer. 


Remember …

One common pitfall of implementation is believing that the total transformation of the model can be driven by finance (or any other one function) alone, and failing to engage other parts of organization such as Human Resources or members of the management team.

Author: Anders Olesen – Director, Beyond Budgeting Institute.  E-Mail: info@bbrt.org

transformation

Curated by Trevor Lee

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Build a Passionate Company with Purpose!


To build a great business, companies need a purpose — one that transcends the traditional bottom line. People want to be passionate about their work, and they want to be surrounded by others who feel the same. But how can managers actually foster passion?

Here are five ways:

  1. Let people show their emotions. If you ask your people to check their emotions at the door, you can’t tap into their passion.
  2. Hire passionate people. One way to get passionate people into your organization is to incentivize current employees to refer people they want to work with.
  3. Fan the flames. Find plenty of ways to celebrate joint accomplishments.
  4. Don’t stifle your rock stars. Give your people the autonomy to do the work that interests them most.
  5. Share context. Connect job functions to the organization’s broader mission, and remind people why they do what they do.
Adapted from “How to Build a Passionate Company,” by Jim Whitehurst

Shared by Trevor Lee

tblee@ceo-worldwide.com

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Challenging Organisations and Society


Management Plasticity:

Neuronal Networking as the Organizing Principle for Enterprise Architecture to Unfold Human Potential and Creativity

A guest article by FRANZ RÖÖSLI, MICHAEL SONNTAG and DOUG KIRKPATRICK 

 creative-2

Abstract

The human brain exhibits a series of unique and highly desirable characteristics. It has the ability to grow rapidly during development, to learn, adapt and self-heal after injuries. lt is capable of making new discoveries and connecting seemingly disparate thoughts. At the core of these characteristics lies the brain’s ability to self-organize and form new connections, which is described by the term ‘neuroplasticity’. In an age where adaptability, creativity, and connectedness are key success factors for organizations, a new understanding of organizations as living systems maybe called for. In this article, we want to introduce the concept of management plasticity that challenges the underlying beliefs that shape traditional organizational structures. In our case study on the highly successful tomato processing company Morning Star, we illustrate how the principles and practice of management plasticity, like neuroplasticity, allow for development and connectivity, learning and memory, creativity and leadership as well as innovation.

  1. Hitting the Wall with Mechanistic Organizational Structures and Styles Tue business environment has changed dramatically over the past few decades as modern economies have transitioned from the industrial age to the digital age, in which innovation and creativity have become critical success factors. Tue new and highly dynamic environment has brought an array of challenges and it seems that the old organizational structures were not suited to meet the new demands.

In this environment, restructuring has come to be seen as a panacea, with the underlying belief that if only the right organizational chart could be drawn up, businesses would once again be operating efficiently. This goal has proved to be elusive. The effort has been focused on what the organization would look like, but the way people work has not really changed. Even worse, employee morale, trust and engagement have been suffering, as numerous studies have shown.1

In our view at the core of the problem lies a linear-mechanistic understanding of organizations as machines with its deeply and therefore predominantly unconsciously underlying assumption of predictability and control. Hierarchical organizational charts are indicative of a business philosophy from a bygone era, in which maximizing machine productivity was paramount. Einstein once said: “We can’t solve problems by using the same kind of thinking we used when we created them” and we assume that the numerous counterproductive attempts at reorganization will continue or even intensify if the underlying beliefs that shape organizational structures remain unchanged.

  1. A New Understanding: lntroducing Management Plasticity

To be successful in the new era, there is evidence that companies need a culture allowing employees to develop their human potential. This calls for a new understanding of organizations as living systems that operate in a mode of sense and respond, which is radically different from prediction and control for machines.2 What are the characteristics of a contemporary organizational structure and what principles could it follow?

1 See for example (LRN Corporation, 2012), (Towers Watson, 2014). 2 See (Laloux, 2014).

Looking at how Nature manages to cope with the dynamics and complexity of our environment we can try to build a new understanding. Modern neurobiology and affective neuroscience helps us to understand how the human brain’s ‘architecture’, through evolution, is conceived to cope actively with the complexity of the outside world in the most effective and impactful way. In fact in science the human brain is considered to be not only the most complex, but also the most adaptable living system that we know in the universe. lt is inherently built for learning.3 Our brain is organized as an immense, dynamic network based on self-organizing principles. lt is capable of changing either parts of its function or even its whole organizational state within milliseconds. In neuroscience this is called ‘neuroplasticity. lt is the ability to change functions coherently and quickly with a minimum of energy invested and without having to re-build or ‘re-structure’ the organic substrate.4

Besides high adaptability, self-organizing network structures have further portant advantages:

  • They are receptive to learning.

  • They work superbly even when the information is incomplete.

  • Being redundant, they are robust in case of partial failure of the system.

But how is neuroplasticity linked to the capacity to sustainably unfold human potential and creativity?

Research shows that unfolding human potential and creativity depends on our ability to mobilize intrinsic motivation.5 From neurobiology we know that these desired features will exclusively emerge when individuals and teams are able to act autonomously.6

  1. See (Fuchs, 2009).

  2. See (Haken & Schiepek. 2006). 5 See (Pink, 2010). 6 See (Panksepp & Biven, 2012).

On the other hand, not being able to act autonomously and to protect our integrity actively in the case of potential threat is a key cause of fear and chronic stress. In a state of chronic stress, as we all know, our overall health is impaired but also our cognitive capacity, e.g. our ability to think clearly and to create new understanding and connections is reduced dramatically – we are no longer able to find new solutions. But also our ability to connect socially, the precondition to ask for help, is dramatically impaired. Tue neuroplasticity of our brain declines severely. Even worse: under stress we ‘regress’. We often return to our old strategies of action, exactly those ‘proven’ strategies which have caused the existing rigidity and inability to act. Tue negative process is intensified. Stress and the energy invested to survive and ‘keep control’ increases while the energy reserves are ‘burned out: This is the case on an individual as well as on the organizational level.

Conversely, if a person has the organizational not only personal capability to act freely, in a self-organizing manner, the brain is stimulated and the energy level will increase. In this positively stimulated state, clear and flexible thinking is enabled and new thought patterns and innovative approaches arise. The eagerness to connect socially, which is the precondition for creativity, and the ability and willingness to act in a goal-oriented manner will rise. The brain’s neuroplasticity is boosted.

As we have seen, the traditional management approach with its rigid, command-and-control structures, division of labor into functional silos and underlying human nature assumptions attempts to ‘manage’ and control the individual and to minimize his or her ability to act autonomously. Thereby it creates exactly the opposite conditions to those that would be .necessary to unfold human potential and creativity. Having understood these basic principles, we have to conclude, that if an organization wants to meet the new economic conditions by enabling the unfolding of its human potential and creativity, it will have to build organizational structures enabling freedom to act within good relationships. Tue resulting organic, plastic structure is a dynamic network of self-organizing individuals and teams.7

Setting the organizational parameters correctly will facilitate neuroplasticity, problem solving and constructive actions, the preconditions to survive in the dynamic and changing circumstances of today’s economy.

Therefore we define management plasticity as the ability of organizational management to engage the energy and potential of each member to collaboratively, creatively and effectively learn from and adapt to dynamic internal or external changes, opportunities or threats.

  1. Morning Star as a Prototype

    1. lntroduction

California entrepreneur Chris Rufer formed Tue Morning Star Packing Company to process tomatoes near the small town of Los Banos, California. In the spring of 1990, a tiny farmhouse on the outskirts of town became a beehive of round-the-clock activity. The tiny farm kitchen became a conference room, where an endless parade of job applicants, bankers, regulators, vendors, and contractors met together in nonstop organizational meetings.

Chris and his team focused with intensity on getting the new factory up and running. A successful startup would declare an entirely new level of industry competition. Most of Morning Star’s new employees (including Doug Kirkpatrick, a co-author of this article) had left secure jobs to join the team. If the venture failed, there would be short-term personal disruption, but most of them would be able to find new employment. For Chris, however, everything was at risk.

7 See (Sonntag, 2012).

In a March 1990 organizational meeting with the founder (attended by co-author Kirkpatrick), Morning Star adopted two core principles: first, people should not use force or coercion against other people, and second, people should honor the commitments they make to others.

The first loads of tomatoes arrived at Morning Star’s first new state-of-the-art facility in mid-July of 1990 and kicked off a successful processing season, producing over ninety million pounds of bulk tomato paste for the world market. Morning Star is now the largest tomato processor in the world, with over $700 million in annual sales, its products consumed by virtually everyone in North America and millions more around the world.

While Morning Star owes much of its success to an innovative low-cost production strategy, much of its success is also traceable to its unique organizational philosophy of self-management, which is core for an organizational modus operandi of sense and respond. As a successful self-managed organization, it is a case study in management plasticity.

    1. Organizational Design and Philosophy

Morning Star exhibits zero hierarchy. There are no human bosses; the only boss is the mission. The operating philosophy is total self-management. Morning Star employees consider themselves professional colleagues.

Since command authority does not exist in the company, there is no unilateral authority to fire. Colleagues acquire or culminate the services of others by invoking written Colleague Principles. No one has a title, which reinforces Morning Star’s self-management philosophy. Everyone has an equal voice regarding decisions that affect them.

While lacking formal structure, there are resources available to help colleagues synchronize their activities with others. Each colleague executes a Colleague Letter of Understanding (also known as a CLOU). The CLOU is a dynamic, transparent, negotiated accountability agreement between colleagues declaring each individuars personal commercial mission, process stewardships, and performance measures.

Morning Star’s success takes place in a complex and demanding business environment. Morning Star colleagues continuously navigate complex disciplines that include cell biology, plant genetics, microbiology, food chemistry, thermodynamics, meteorology, global currency exchange and many others. The Colleague Letter of Understanding is a key navigational and communication tool that enables management plasticity by creating networks of individuals based on the resource requirements and urgency of diverse problems and opportunities.

  1. Interpretation of Morning Star’s Management Plasticity

There is as much need for leadership in a self-managed organization as in a hierarchical one; self-managed leadership is just dynamic rather than static- it completely depends on the issue and the individuals. Leadership in such an ecosystem can rotate and evolve naturally, depending on the circumstances. No particular leadership style is required, and many leadership styles can work well. Morning Star’s expression of self-managed leadership fits our definition of management plasticity. lt also proved to be a key enabler of Morning Star factory construction. A small band of self-managed colleagues in 1990 (about 24 during the construction phase) were able to oversee the construction of a new, state-of-the-art, $27 million dollar factory in a period of just a few months. This project and others could not have been completed on time with traditional, command-and-control hierarchies. Paradoxically, the very simplicity of the two simple foundational principles adopted in 1990 facilitated the management plasticity driving Morning Star’s growth. People had no choice but to manage with adaptability, agility and flexibility. There were simply no traditional management systems available to do it otherwise.

With the advent of successful new organizational models like that of Morning Star, it is worth asking the question: how do the properties of neuroplasticity inform the emerging theory and practice of management plasticity?

Morning Star’s organizational network resembles a spider web of connectivity. All associations between members are voluntary, and digitally recorded in the CLOU. When these connections are rendered in a diagram, they resemble a neural network. If one were to make a time-lapse movie of such a diagram, it would dynamically change shape and size as individuals enter and leave the ecosystem or voluntarily renegotiate their relationships and commitments. Morning Star’s actual organigraph is depicted above, built from a digital rendering of CLOU data.

One benefit of management plasticity is that organizations become more resilient and are able to adapt with flexibility to dynamic change. Threats and opportunities cause Morning Star’s human network connectivity to change rapidly in response, much like a human brain; it is all about a constant flow of sense and respond. Clusters of connections form and dissipate in response to organizational needs. Tue rapidity of this formation and dissipation is often startling – attempting to concoct or reorganize teams in a traditional hierarchical model would be glacially slow in contrast. Co-author Kirkpatrick has personally engaged with multiple temporary hot teams formed to address issues like spiking insurance costs and capital project management.

Self-managed organizations have also demonstrated, like human neural systems, the ability to regenerate themselves and self-heal.8 When an individual leaves the Morning Star ecosystem, roles and responsibilities are quickly relocated by self-managing peers, without direction or control. If the individual exiting the system possessed a unique talent or skill that cannot be quickly replicated by others, colleagues engage a recruitment and selection process to fill any gaps.

Morning Star’s member colleagues experience no structural barriers to communication with anyone in the organization. Learning is an ‘always-on’ activity, as members in similar and dissimilar functions and locations seek information from each other that will improve their own performances, and those of their peers. Members of individual business units that cross multiple factories (for example, Steam Generation) come together at least annually to formally share learnings and experiences. These formal meetings augment continuous informal communications that drive superior performance and innovation.

Creativity is another natural benefit of neuroplasticity. The virtuous cycle of absorbing new and outwardly unrelated ideas, and connecting them in unexpected ways, is the essence of human creativity. Does management plasticity provide similar benefits to organizations?

For decades, the tomato processing industry used energy-hungry elevators to carry loads of tomatoes uphill into flumes for processing in factories. Morning Star’s founder, Chris Rufer, observed that unloading trucks on top of a hill would allow gravity to carry tomatoes into the factory without the use of elevators. Today, the concept of an unloading hill is an industry standard. Similarly, he observed that evaporating water from tomatoes to produce concentrate required the use of large, inefficient cooling towers to cool water for reuse. He replaced the cooling towers with large ponds, and let the water cool down naturally through evaporation. In each case, creatively integrating natural methods of movement (gravity) and temperature change (evaporation) with industrial processes proved to be disruptive to an entire industry. In these examples, neuroplasticity and management plasticity worked together: neuroplasticity catalyzed new connections and creativity in the mind of the innovator, while management plasticity drove implementation.

When everyone is a manager, as in the case of Morning Star’s self-managed ecosystem, the benefits of management plasticity are widely distributed. In one recent example (2014), a mechanic identified an innovation in material management: the handling and usage of chemicals. The innovation, which generated a compelling return on investment, depended on the creativity of one individual with an ability to foresee improved process outcomes. The flexiblity of a self-managed environment, endowed with management plasticity, allowed that individual to creatively envision a desired future state, personally communicate the benefits to peers, re-design the process, create buy-in, and successfully implement the change.

8 See also (LRN Corporation, 2012).

  1. How to Start a Journey Toward Management Plasticity

How can enterprises that have been built on traditional command and control management structures and tools take steps toward greater management plasticity, i.e. enterprises that have not been built from scratch in a self-managed manner like Morning Star? In the natural sciences, experiments are fundamental to progress and success. In contrast, in the business world, experiments will often face bitter opposition, as they are perceived as carrying uncontrollable risks with possible undesired outcomes. Yet experiments can pay off precisely because of their very nature of accepting unpredictability and failure and therefore fostering learning and adaptation in contrast to traditional projects within the outdated predict-and-control fashion of traditional management.9 Examples of possible managerial experiments toward management plasticity are10:

  • Voluntary participation in meetings of all kinds·

  • Voluntary participation in projects or experiments

  • Access to all information for all employees

  • Time and space for the employees to develop their creativity

  • Abolition of formal talks on target agreements and incentives (also financial)

  • ·Abolition of job descriptions

  • Abolition of traditional budgeting and budget targets

Such kinds of experiments support management plasticity and the opportunities to live up to one’s full potential as lived by the Morning Star Company. This is in line with the call for management plasticity, which sees neuronal interconnectedness as a metaphor for a new organizational understanding.

  1. Conclusions

Building an organizational structure based on self-organizing, dynamic networks releases trapped human potential and leads to creativity, as well as to a whole field of other positive and critical features in today ‘s complex and fast changing world, as we have seen in the Morning Star case. These include adaptability, resilience, ability to innovate and self-healing capacity.

In the end, to really unfold human potential and creativity, we argue that courageous leaders will be needed everywhere in organizations to transform the traditional management mode of predict and control into a new mode of sense and respond that we have defined by the term management plasticity in this article.

  1. See (Hamel & Zanini, 2014).

  2. See detailed examples in (Kirkpatrick, 2011) and (Hope, Bunce, & Röösli, 2011).

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ABOUT THE AWESOME AUTHORS

Franz RÖÖSLI, PhD, is a professor at the University of Applied Sciences Zurich (ZHAW), management trainer and Director of the Beyond Budgeting Round Table (BBRT), an international, membership-based practitioner and research community. He had worked in different companies in leadership positions including member of the executive team before he started an academic career. His research and consulting interests are organizational behavior, leadership and management innovation. He co-authored the book “The Leader ‘s Dilemma”. Contact: franz.roeoesli@zhaw.ch
Doug KIRKPATRICK is the author of Beyond Empowerment: The Age of the Self-Managed Organization. He is a former financial controller for The Morning Star Company and a participant in the adoption of its unique self-management philosophy. He is an organizational change consultant, TEDx and keynote speaker, executive coach, writer, educator and SPHR. Contact: doug@redshift:3.org
Michael SONNTAG is a medical doctor, Bioenergetic Analyst (trained by Alexander Lowen) and management consultant. He is specialized in teaching and creating the conditions needed to enable, enhance and govern deep transformational and self-healing processes, both on an individual and an organizational level. Contact: m.sonntag@sonntag-consulting. ch

Curated by Trevor Lee

tblee@ceo-worldwide.com

http://www.ceo-worldwide.com

@trevorblee

 

References

Fuchs, T. (2009). Das Gehirn ein Beziehungsorgan. Eine phänomenologisch-ökologische Konzeption. Stuttgart: Kohlhammer.

Haken, H., & Schiepek, G. (2006). Synergetik in der Psychotherapie Selbstorganisation verstehen und gestalten. Göttingen; Hogrefe.

Hamel, G., & Zanini, M. (2014). Build a change platform, not a changeprogram. Retrieved November 12, 2014, from McKinsey Insights & Publications:http://www.mckinsey.com/ insights/organization/build_a_change_platform_not_a_change_program

Hope, J., Bunce, P., & Röösli, F. (2011). The leader’s dilemma how to build an empowered and adaptive organization without losing control. Chichester: John Wiley & Sons.

Kirkpatrick, D. (2011). Beyond empowerment the age of the self-managed organization.

Sacramento: Morning Star Seif-Management Institute.

Laloux, F. (2014). Reinventing organizations a guide to creating organizations inspired by the next stage of human consciousness. Brussels:Nelson Parker.

LRN Corporation. (2012). 1he HOW report new metrics for a new reality: rethinking the source of resiliency, innovation and growth. Retrieved März 9, 2014. Archiviert mit WebCite ais http://’\\’W\V.webcitation.org/6NwNkhUsk, from http://www.lrn.com/howmetrics/ data/LRNHowReport2012.pdf

Panksepp, J., & Biven, L. (2012). The archaeology of mind neuroevolutionary origins of human emotions. New York: W. W. Norton.

Pink, D. H. (2010). 1he surprising truth about what motivates us. Edinburgh: Canongate.

Sonntag, M. (2012). Jenseits von Managed Care -Wie aus unserem Gesundheitswesen ein modernes und wertgenerierendes System entstehen könnte. Schweizerische Ärztezeitung, 93, pp. 729-730.

Towers Watson. (2014). Towers Watson Global Workforce Study 2014. Retrieved November 12, 2014, from http://www.towerswatson.com/en/lnsights/IC-Types/Survey-Research­ Results/2014/08/the-2014-global-workforce-study

Buurtzorg: Humanity Above Bureaucracy


A guest post.

In only nine years, Buurtzorg has grown from a great idea to a very successful neighbourhood nursing organisation with almost 10,000 employees in the Netherlands. At the core of this remarkable success is a unique leadership philosophy.

Buurtzorg (‘neighbourhood care’ in Dutch) is a wonderful example of the Beyond Budgeting principles in action.

With this case report, the Beyond Budgeting Round Table (BBRT) shared with its members a great example of the extraordinary levels of competitive advantage and performance an organisation can achieve, solely due to its innovative management model.

Background and the case for change 

To describe Buurtzorg, we have to start with its founder Jos de Blok. Originally, Jos studied economics but shortly after, he decided to follow his vocation and educate himself to become a nurse. For 15 years, he worked as a nurse; first at a hospital and later as a district nurse in the community. For reasons that I come back to shortly, he quit this job and went on to work in the health administration in various leadership roles. This lasted for about 10 years, when in 2006 he decided to establish Buurtzorg.

To start with, Jos found his work as a district nurse in a local community to be very inspiring. The job obviously involved a lot of contact and interaction with patients, it included a large variety of activities, and work was coordinated in a team of local nurses. This, however, ended in 1993 when Dutch politicians decided to ‘professionalise’ community care. Jos refers to this as a disaster. The local teams became integrated parts of much larger organisations, managed by managers. Instead of focusing on delivering solutions for people, nurses were now delivering products. In order to become more efficient, the many different activities were detailed, coded and time measured. Nurses had to specify their time spent with patients in a wide range of product categories; this created confusion and took away time and focus from patients. Many nurses found these new working conditions degrading.

With the specification also came specialisation, which was an even bigger disaster for patients than it was for nurses. Some patients experienced having up to 40 different health care workers in their house every month; all of whom asked the patients the same questions about their situation… i.e. not a very human way to treat people who are already weak and insecure. This also meant that the personal relationships between patients and nurses were lost, to the extent that nobody felt responsibility for the care of the individual patients.

Buurtzorg at a glance

Nine years after its foundation, this is Buurtzorg:
• Highest client (patient) satisfactio
• 40% lower costs then peers
• ‘Best employer’ prize 5 years in a row
• 9,700 nurses taking care of 75,000 patients in Holland
• 850 self-managed teams, freed from admin and intervention
• Minimal bureaucracy

Like in many other countries, the Dutch system was inspired by the apparent efficiency gains in companies and industries of mass production. This is sometimes referred to as ‘new public management’. More and more managers took over the profession, and consequently (albeit with the best of intentions), hierarchy and bureaucracy increased significantly. Focus decreased on the employees who actually did the work, not to mention the patients. This is a classic example of the separation of decision making from work, which leads to poorer performance.

Much to the surprise of legislators, the ‘new public management’ had exactly the opposite effect of what they expected: In 10 years, costs doubled and quality decreased dramatically. However, instead of challenging the obviously flawed assumptions about the new way of managing, more of the same was practiced: Nurses were, for example, provided with even more specific plans that had to be adhered to, and deviations had to be explained to managers. Consequently, this created even more dissatisfaction with the system and further reduced the time available to patient care. Not surprisingly, costs continued to rise and quality to go down.

Buurtzorg: the foundation and rapid expansion

In 2006, Jos and a few friends decided to do something about the deteriorating situation. Based on their experience from the 1980’s, they knew that this could be done in a much better way. Therefore,they established a not-for-profit nursing organisation based on principles of trust and self-organisation.

In early 2007, it started as a bit of an experiment with only four nurses, but it soon picked up and more teams were established. After a few months of operation, the same thing happened again and again: Small teams of nurses developed networks with hospitals, doctors and pharmacies etc. in the local community. They worked and organised themselves according to the new principles and within months they had so many patients, that they had covered their initial costs and were profitable. Many nurses wanted to work for Buurtzorg, and by the end of the first year, they had nurses working in 10 different locations.

The teams were more profitable than intended and this provided a sound basis for the expansion, which went very fast. From 2008, they established 10-20 new teams of nurses every month. And by November 2015, when we conducted our interviews at Buurtzorg, the number of nurses working for them in the Netherlands stood at a staggering 9,700.

Jos explains: “We didn’t have problems to manage the growth since the teams were managing themselves. Another contributing factor was that we have always avoided any kind of bureaucracy.”

Results

Buurtzorg is a remarkable success story that has gathered a lot of attention from both inside and also outside the Netherlands. It needs to be told and widely copied in the opinion of this curator.

Below are highlights of their achievements:

• Buurtzorg has highest client (or rather: patient) satisfaction in the country.

• Despite the fact that Buurtzorg has higher educated nurses than peers, their costs are far lower: Compared with peer organisations, they spend some 40% fewer hours of care per patient because their patients need care only about half as long; they heal faster and become more autonomous.

• Buurtzorg patients use far less medicine, which is a great benefit to both patients and the Dutch government.

• Buurtzorg has ranked at the very top of the ‘Best Employer’ list for the last 5 years in a row.

• Buurtzorg has also shown to be very profitable. This was not the intention, but it has made it easier to fund growth, experiment and develop the organisation.

Buurtzorg’s management model

In the following, we review some of the key elements that make up Buurtzorg’s unique management model. Readers familiar with the Beyond Budgeting principles will find a great resemblance between these and the elements below. As you will see: Buurtzorg is a great example of the Beyond Budgeting principles in action.

Purpose

A key element of their successful model is a clear purpose that ties the whole organization together. In this case, the purpose is in line with nurses’ natural vocation: Helping patients lead better lives. The task of the teams of nurses is thus to take the best possible care of their patients, which translates into helping them recover their ability to take care of themselves as much as possible. It is up to each team to figure out how this is best done for each individual patient.

Every Buurtzorg employee knows what good performance looks like and what is expected of him/her. Experience shows that clear and noble purposes are far more powerful than strategy plans and financial targets to inspire people and drive performance. One of the reasons is that purpose comes without the negative side effects of plans and targets.

Transparency

Buurtzorg believes in the power of sharing information; also because this makes it a learning organisation. For this purpose, and to support the local teams of nurses in their daily job of taking care of patients, they have developed their own unique IT-system. This has many purposes and features:
• It provides teams with confidential patient information, and nurses are responsible for continuously updating this.
• It is a platform for sharing ideas, news and other information; as well as for seeking advice.
• Planning and scheduling work. This also provides a basis for statistics about capacity utilisation etc.
• The system provides teams with their actual performance metrics. Performance data are shared for the purpose of self-regulation and learning

In building the system, Buurtzorg deliberately split the administrative process from the professional processes, so that all the administrative and bureaucratic work is done without interfering with the day-to-day job of the nurses.

No bureaucracy

In order to give maximum attention to their patients, Buurtzorg avoids activities that do not support the purpose of taking care of patients. This means deliberately avoiding the introduction of a lot of the elements associated with traditional management: strategy, budgeting, targets, forecasting, business reviews, management meetings, variation analysis, rules and regulations, etc..

Small organisations that want to grow usually copy such management tools from the more established ones. Sometimes such tools are introduced with the help of consulting companies and / or inspired by business schools. The result is usually the same: as the small company grows, it loses the agility, spirit and benefits of being small – and very often it becomes rigid, bureaucratic and in some cases even a sad place to work.

Not least due to the founder’s own experience from before the government introduced its disastrous way of working, Buurtzorg has resisted all attempts and pressures to go in this direction.

Trust and autonomy

These are also central elements in Buurtzorg. The teams of nurses are completely self-managed. They are not just empowered by Jos or the hierarchy; they have power because there is no hierarchy with any decision-making power over them. When shown such trust, nurses take on the responsibility of taking the best possible care of their patients. The concept of self-management is a great way to avoid one of the main problems of traditional management; namely the separation of decision making and work. This also contributes to making it a very attractive work place:

Five years in a row, Buurtzorg has been at the top of the ‘Best Employer’ list in the Netherlands.

Customer / patient focus

The above-mentioned purpose has naturally created a very strong customer / patient focus. At Buurtzorg, nurses generally spend a lot of time together with new patients to get to know their situation, needs, background, etc. Based on this, the nurses have complete freedom to come up with individual solutions for patients.

A very interesting (but also obvious) finding is that this way of working leads to far less hours needed in patient care. Why? Because patients become better much faster. Over time, Buurtzorg spends approx. 40% less time together with patients than their peers; this is a massive efficiency increase and it even comes with much happier patients!

With small and dedicated teams of nurses working with and around a clearly defined group of patients, it is no wonder their patient satisfaction is very high; it is by far the highest in the country.

Organisation

“In Buurtzorg, we don’t use organisational charts,” says Jos de Blok. They have a simple structure that makes such charts redundant. The organisation has three parts: Teams of nurses, coaches and the head office.

The core consists of self-managed teams of educated nurses that work out of a small office in their local community. Each team has some 10-12 nurses, which means that there are now a little more than 850 teams across the country. Even though the teams are self-managed, there are times when they need support, so they have some 20 coaches (approx. 45 teams per coach) that help teams in several ways; primarily coaching about how to make teamwork work. The coaches are not managers; they have no say on the actual work of the teams and are not responsible for the teams’ results.

The modest head office with 40 people is located at the outskirts of Almelo, a small town in the eastern part of the Netherlands. The role of the head office is to act as a service centre for the teams and the coaches; i.e. help them do their work better. In addition, the head office takes care of those activities that they have found made sense to centralise and standardise. The latter includes support and admin within accounting, IT, sales contracting (customers are insurance companies and municipalities), salary administration and housing (agreements re. each team’s local office). These limited staff functions are also organised in teams with a minimal level of managerial hierarchy.

The head office can provide guidelines but they have no decision-making power; they are truly a service centre. As mentioned above, there is a small team that takes care of salary administration (contracts and salary payments); but there is no HR department. Those other tasks that usually belong in a HR function (like recruitment, training, development, feedback and communication) are either performed by teams locally, by Jos or not at all.

Except for Jos de Blok (founder and CEO), no one in the organisation has a management title. Further, there is no management team, and there are no fixed meetings. This frees up time to focus on how to become even better at helping patients and solving problems. Meetings are only held when there is a specific need; not because they have been scheduled.

Buurtzorg and the Beyond Budgeting principles
If you compare Buurtzorg’s management model with our 12 principles, you will find a striking resemblance. We cannot claim that Buurtzorg was inspired by us. But what is very encouraging and much more important, is that an increasing number of organisations, independently of each other, are finding new and better ways of managing their businesses; ref. also Frederic Laloux’s great book: Reinventing Organizations, 2014.

Why is this? Because command & control is failing; and because there are better ways to design and manage work.

Buurtzorg is a great example of a company that has managed to find such a way.

This organisational model ensures optimal coordination, and with no bureaucracy on top of it, it becomes both very effective and efficient.

Management processes

In general, management processes are kept to a bare minimum. Only the ones that support the core decentralised service delivery and those required by law (compliance) are done. Everything else is regarded as potential waste that should be avoided. This means that Buurtzorg’s process are carried out dynamically based on the underlying (continuous) rhythm of patient activities; adjusted for events as they happen. Buurtzorg does not have the calendar year as the default basis for its management processes, as is found in most organisations.

Guidelines instead of targets

At Buurtzorg, they know that short-term financial targets come with significant negative side effects. Accordingly, they do not use such measures.In order to assist teams when making certain decisions and when assessing their performance (which is what targets are often used for), they have developed a number of guidelines. One such measure is the percent of nurses’ available time that is spent with patients. Based on analysis, they know that good financial performance is achieved when this figure is at a level of 60%.

Accordingly, teams are measured on this parameter and their performance is visible to all. When a team is significantly above or below this level, such information is addressed by the local teams of nurses and is part of their ongoing (self-regulating) considerations and prioritisations.

Another example of a financial guideline is the amount available for new teams to establish their offices, for training, etc.. Teams can deviate from the guidelines; these are only there to help – not to be followed rigorously. By treating teams with such trust, teams respond by acting responsibly… so what we find is improved performance because of trust and the absence of detailed targets and management intervention.

Achieving more with less… brilliant!

Financial management

A team of eight people at the head office handles all financial administration for Buurtzorg. Two of these employees are responsible for preparing sales invoices and two others are responsible for checking purchase invoices. The rest of the team (four persons) handles bookkeeping, accounting, controlling and reporting. On a monthly basis, the team prepares a simple set of financial statements including profit & loss and a balance sheet. The P&L is broken down per team of nurses and they receive their results in the before-mentioned common it-system. Teams are measured on what they can influence. For example: As the teams are not responsible for sales or negotiating terms with customers (the commercial agreements are handled by a small team at the head office), Buurtzorg’s total income is averaged out and divided between the teams based on number of hours together with patients. This way, the teams’ focus remains on patient care and efficiency, which they can influence locally. To nurture teamwork and the sense of belonging, everything is done to help teams perform better as teams. So, even though data is available about the efficiency of individuals, this information is not used. The purpose of the internal financial reporting is learning for continuous improvement. Therefore, the information is provided and transparent to ensure teams know how they are doing; also compared with others. Deviations are regarded as learning points, and are not subject to (traditional) managerial scrutiny, control or variation analysis. Buurtzorg does not ask its teams of nurses and coaches to spend any time preparing financial forecasts, budgets or the like. They simply do not see the need. At head office level, they now and again make limited high-level financial forecasts in order to balance cash flows, which during the rapid expansion has sometimes been under pressure. This view on financial management is sometimes referred to as “sense and respond” as opposed to (traditional) “predict and control”

It will probably not come as a surprise, that Buurtzorg does not make use of any incentives in the form of bonuses or the like. Every employee has a fixed monthly salary. For the nurses, the salary level is slightly above that of nurses employed in the public sector.

Humanity above bureaucracy

Buurtzorg’s management model has been very successful on all of the above mentioned parameters.

In addition, it is also extremely beneficial for society, which is why the Dutch political parties now support the spread of this way of working throughout the country. Ernst & Young has estimated that the Netherlands could save € 2 billion annually if all care organisations were as effective as Buurtzorg… not to mention the benefits in terms of increased quality of life for both patients and nurses.

Talking about the achievements Jos de Blok says: “Just by doing nothing, we achieved all of the above. We don’t have an HR department, and we do far less of the traditional management stuff like controlling and commanding people what to do, and this is how we get far better results.”

Buurtzorg is a fantastic story about how a simple coherent management model that serves a very noble cause can also be extremely effective.

Ref, W.E. Deming: Out of the crisis, 1982 and John Seddon: Freedom from command & control, 2003
Patient focus – avoid bureaucracy
The focus is on the patient – and to take the best possible
care of the patient. Everything that does not help the patient (i.e. waste) is avoided.

A White Paper from Beyond Budgeting Institute : bbrt.org

Curated by:

Trevor Lee

tblee@ceo-worldwide.com

http://www.ceo-worldwide.com

@trevorblee

 

Executive Search & Interim Management since 2001
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