HR’s Call to Action: Gary Hamel Interview (Part 2)

September 28, 2020 Sarah Mulcahy

8-minute read

Gary Hamel

There are few people more passionate and committed to radically reimaging the workplace than management consultant Gary Hamel. In the first part of our interview with Gary, we cover what it means to be a “humanocracy” and why just letting people work remotely won’t drive real employee engagement or commitment.

In part two below, we discuss the critical role HR needs to play in transforming the workplace – by experimenting, challenging the status quo, and crowdsourcing problems and processes. Working within a more bureaucratic organization can be challenging, but Gary shares practical tips for being the change and lifting others in the process.

Read our full conversation below.

Workhuman: How can business leaders promote a culture where employees have the right to do meaningful work?

Gary: By giving people the freedom to make meaningful business decisions. For example, in the micro-enterprises at Haier, everyone is guaranteed three freedoms. You have:

  • Freedom to set your own strategies: products, what you sell, how you sell it, how you price it. 
  • Freedom to define roles and responsibilities: who you hire, how you pay them, what their roles are. 
  • Freedom over the distribution of the rewards. However profitable, your team gets to decide how you share in that.

The last piece is having a financial upside. Only 6% of frontline employees in the United States have any bonus that depends on profitability. If you do those things, you will unleash an extraordinary amount of energy in your organization. 

Workhuman: How do you see HR evolving over the next 5 years? What can business leaders do to catalyze this transformation? 

Gary: I’ve spent my entire life as a management professor and trainer. Most of the people we’re training in business schools do not want to go work for a large corporation. Now, the biggest program is entrepreneurship.

I was talking to the recently retired CEO of Nucor, John Ferriola. He said at Nucor, the least noble work is to be a manager. All the value gets created at the front lines. When Haier made the jump to their micro-enterprise model, they eliminated 12,000 managerial roles that will never come back, nor should they.

Most of those people stayed and went to work in micro-enterprises. They’re far happier now than they were when they were micromanaging others and getting micromanaged from above. You do have to start to think about an organization in which you have a small, small number of people who are in primarily administrative or managerial roles. That work is going to get distributed to people close to the front lines. 

It’s not that I’m even saying anything very radical. In 1988 Peter Drucker said in 20 years we would have half the number of managers and one-third the number of layers. It didn’t work out that way. We are finally at a point where we’re understanding the old model doesn’t work. And we have to be able to think more radically.

HR can play the most catalytic role possible in making this transformation. What HR should be doing is training every single employee to think like a management hacker. HR should be a laboratory for management innovation.

What can we do to change how we do performance analysis? What can we change in our onboarding process? In how we develop leaders? What about our compensation model or the flexibility of roles? 

Rather than a few people figuring that out, HR needs to become the people who run the management lab. In HR I need to be the team that is responsible for accelerating the evolution of the old model. That means I have to crowdsource problem solving, where everyone across the organization feels they have the right to challenge the status quo, to run an experiment within risk boundaries.

The organizations that win in the future are going to be the ones that evolve their management models faster than their competitors – in ways that make those organizations more resilient, more inventive, and more engaging. HR has a choice. We can continue to be in that old compliance mode, or we can become the laboratory for radical management innovation. 

Think about how differently you consume media today from the way your parents consumed media. On a scale of 1 to 10, how big a shift is that? It’s almost 10 out of 10. Can you imagine an equally dramatic change in the HR model, in the management model, and the organizational model?

If you can’t, you have to try. Because organizations, in every measure, every metric, are letting us down, letting shareholders down, letting society down, letting employees down. They’re simply not good enough. We cannot run organizations in the 21st century using an ideology that made sense 150 years ago.

Workhuman: How do you think the language needs to shift to help solidify this shift in thinking?

Gary: The head of one of the largest consulting companies in the world was in Harvard Business Review and said something like, ‘The CEO, the CFO, and the CHRO will look into the future and see the big picture, while everyone else has their head buried in operations.’

When what really needs to be said to those leaders is, ‘You are no longer the chief decision maker. You are no longer the chief strategist. But here’s what you can do. You can be a social architect. You can start to think about how you build the systems, the incentives, the kind of culture that will unleash all of this energy. You can be catalytic in helping this change take place.’ 

The idea that a small number of people at the top of the pyramid can see the future and direct the organization – that ship has sailed. And yet, you still see that language and that prejudice.

I hear economists and others talk about low-skill jobs. That’s complete nonsense. No job is inevitably low skill. There are a lot of jobs that are low opportunity, where people don’t have the chance to learn, contribute, grow, innovate. There are a lot of jobs that are low paid, and they shouldn’t be, but that’s mostly because we’re not getting the best out of the people.

If you look at the companies we profile in our book, every one pays way over industry averages. Because their people are just contributing that much more. It’s an unbelievable time to be alive in organizations. COVID-19 is going to shake loose some old thinking. If you’re an HR leader, it’s like Ralph Waldo Emerson said: ‘There are always two parties: the party of the past and the party of the future.’ You get to decide which side you’re on.

Workhuman: How do you think creating a humanocracy can impact society at large? 

One is the social and one is economic. I’m not a psychologist, but I have a sense that every human being is looking for three things in their life at the core. 

  • They’re looking for dignity, and a sense that they matter as a human being and the work matters. 
  • They’re looking for opportunity to grow and to improve themselves and improve the condition of their family and their loved ones. 
  • They’re looking for equity – a sense that rewards are distributed in a fair way.

When you look at the evidence today, you have to conclude that a majority of people do not believe they are finding those things at work. In a Harris Poll conducted in May, only 29% of Americans said they believe capitalism works for the average American.

I don’t think they’re really indicting capitalism. But what they are saying is, how is it that the investor class and the CEO class has done so well, when so many ‘ordinary’ workers have not? That’s an absolutely legitimate concern.

What you find in some of these organizations I profile – where you have people who feel like owners, they have the freedom, they have a big financial upside – they do not feel that way. They feel there is equity there, that not all the stock options go to the people at the top, that you don’t have 300-to-1 pay differentials.

If you look at every generation since World War II, the proportion of young people making it into the middle class has gone down. How can we be happy with this? Beyond producing more competitive, more profitable organizations, I think making every job a great job, that is a critical way of creating dignity and opportunity and equity.

Economically, what you see over the last 20 years is bureaucracy increasing and productivity growth going down. When you have declining productivity growth, it is impossible to raise the average standard of living, to close income inequality gaps. 

So I think there’s a competitive reason, an economic reason, and a social reason to care about humanocracy. It’s time to deliver on what Drucker saw all those years ago. It’s time to deliver on what all you at Workhuman are so passionate about.

And it starts with ourselves. There are two simple things you can do. One is to ask, ‘How do I give away whatever authority I have? What do I do every day to equip the people around me not only to do more, but to be more?’ We have 21 suggestions in the book. What we’ve learned from a lot of research is your job will get better too. You’re going to become more valuable to your organization and you can work on bigger problems.

The second is to start to be honest with yourself about when you’re operating out of that old bureaucratic mindset. When do I pad a budget? When am I being so cautious because there aren’t rewards here for risk taking? 

Marshall Ganz at Harvard is a great thinker about activism and movements. He says, ‘The game only changes when people start to walk off the playing field.’ Maybe in some way we all have to take a knee at work.

About the Author

Sarah Mulcahy

Sarah is senior content marketing manager at Workhuman. When not writing and reading about all things culture, leadership, recognition, and appreciation, she enjoys iced coffee, running, and spending time with her daughters, Mabel and Eva.

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