Curtail systems and procedures where necessary

The more you impose rules and procedures on a system, the slower everything moves through it. People usually figure out the best way to act if a decision is genuinely left up to them and a great deal of management activity is redundant.

You have probably heard the statement that most employees feel “over managed and under led”. But while there are hundreds of books a year telling us how we can become more leader-like there is virtually no advice on how we can manage less. Sure, there are plenty of ideas out there on how to manage a meeting, conduct a performance review, or make a well-informed decision but this is all inside-the-box thinking: it assumes that the meetings, reviews and decisions were needed in the first place. What if we started out by questioning the need for management in the first place?

Consider the case of town planning. Many carefully-designed town centers have ended up in grid lock as planners have sought to impose order on the various demands of cars, lorries, bicycles and pedestrians. By trying to balance the needs for freedom of movement efficient throughput and safety, they have ended up creating complex systems that please no one. Some cities, such as Drachten in the Netherlands, have blown up these careful plans. Inspired by the ideas of Dutch traffic engineer, Hans Monderman, they have taken away traffic lights, pedestrian barriers, road markings and cycle lanes, and created instead a ‘shared space’ for all users of the road network. The result is everyone has got used to being a bit more careful. Car drivers started looking out for other road users, rather than focusing on the road signs. Self-organizing took over from anonymous authority. Not only has the safety record improved, but paradoxically the speed of movement has improved as well.

These experiments suggest a couple of important points. First, the more you impose rules and procedures in a system, the slower everything moves through it. Second, individuals will usually figure out the best way to act if a decision is genuinely left up to them. The implications for management are obvious, and also quite frightening a great deal of management activity is not only redundant. It is potentially damaging to the morale and capabilities of employees.

The value-destroying potential of management has been a problem for as long as large organizations have existed, and it periodically gets tackled. For example, it became fashionable during the early 1990s for the corporate centers of diversified companies like ABB, GEC ad ICI to slim themselves down and push more management responsibility down to the operating businesses. De-layering and flattening of hierarchies have also been popular approaches.

More recently, some firms have started to take a more radical look at the problems of over management. In 2001, the Wealth Management and Global Business Banking division of UBS, the Swiss bank, was pushing for organic growth and it identified the budgeting process as the biggest single obstacle. Budgeting had become defensive and political, and it encouraged individual client advisors to push for lower growth targets that they were capable of. But rather than tweak the system, by coming with an even more complex formula for encouraging growth, the Wealth Management executive group threw out the budgeting process altogether. Client advisors were told they could invest whatever they liked and shoot or as much growth as they thought their market could handle. At the end of each year they would be evaluated their actual Return on Investment in comparison to a peer group. Client advisor, in other words were asked to start behaving like independent-minded businesspeople and were encouraged to make their own choices about how best to approach their market. The results for UBS were spectacular Its Wealth Management division’s profitability division’s profitability from 2.6 billion to 5.1 billion Swiss Francs from 2002 and 2005. They were also able to redeploy hundreds of internal staff, who and previously been working full time on the budgeting process, towards ore value-added coaching roles.

The questions behind this management innovation at UBS were very simple; can we identify existing practices or processes that are getting in the way of our value-adding activities? And if so, how can we eliminate them or rethink them. These are not easy questions to answer, but when they are the rewards can be substantial.

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