As we begin to edge into autumn, its time to think about layers again
All of a sudden, one of the most accepted and largely unquestioned business consequences of the post recession landscape seems to be back under the microscope.
From a distance, de-layering or the removal of too many burdensome hierarchies within the workforce seems to make abundant sense. Money is saved, bizarre and arcane job titles are removed and there are fewer gaps and potential for mis-communication between entry levels and the C-suite. Seems to make perfect sense.
A number of fascinating indicators bobbing around this month would seem to cast doubt on this.
Firstly, an interesting piece of research from CEB suggests that the key driver for employees seeking pastures new is a lack of opportunity for progression. Slightly more than half of employees surveyed suggested that in the absence of moving up, moving on seemed the next best option. The CEB made the telling point “Apart from money, there are few motivators to offer employees within a flat hierarchy”. Knowing that your next career step is more akin to a quantum leap does not point to progression or opportunity.
For TMP, with ongoing and very regular access to employee bases through both weekly focus groups and more quantitative insights, what people are most searching for, as regards the relationship with their employer, are recognition and progression. If my great work, dedication and perspiration cannot be rewarded either through recognition or through progressing my career, perhaps I’m not with the right organisation, seems to be the view expressed.
The construct is backed up another instructive piece of source material from one Jeffrey Pfeffer, professor of organisational behaviour at Stanford. For Pfeffer, hierarchies offer the fundamental need for order and security as well as the validation that promotion creates in terms of drive, initiative and bias for action.
To promote, or not to promote?
There’s another hugely important ramification of largely excluding promotions from the workforce. People are simply not ready for them when they do come around. Promotions today are huge rather than incremental. People take a massive step through the corporate hierarchy rather than a series of baby steps. With perhaps predictable results. According again to CEB, 65% of professionals regret accepting management positions.
This could not come at a worse time for the workforce. The UK faces the widest productivity gap between our performance and that of other G7 countries since records began in 1991. Similarly, although patchy, the latest ONS employment figures for the UK this month pointed to the fact there are 170,000 more unfilled vacancies in the economy against the average for 2001-14. Such unfilled vacancies are costing UK plc no less than £10bn in lost GDP this year.
If business knowledge, corporate history and client relationships are, at best, disaffected or, at worst, walking out of the door at an increasing pace, perhaps there’s little doubt that productivity levels will be affected.
For UK finance chiefs, with the exception of low oil prices, there is no greater fear to economic buoyancy than their ability to access dwindling sources of talent. In 2014, 26% of UK CFOs felt this way. This year the figure is 37%, according to ICAS/DLA Piper.
By stripping layers from an organisation, we have in one fell swoop, stymied motivation to excel and stand out and increased the risk by ill-preparing those who do achieve a now near mythical promotion.
Consequences which are unlikely to have a positive effect on the employer brands of the organisations in question.
Strong employer brands come and go to an extent. And such evolution is both health and inevitable – according to analysts Gartner, by 2017, 20% of all market leaders will lose their no.1 position to a company founded after the year 2000. But surely some things in life are more reliable.
There can have been few employer brands, across the UK, certainly across Europe and increasingly across the world which stood for quality, integrity and success, as Volkswagen.
Stood rather than stand.
With the news that VW installed software in 11m cars that allowed them to pass/cheat the US’s stringent emission tests, the fallout has been catastrophic with little end or upside in sight. Four days after the scandal broke, its shares had lost €26bn in value, the CEO had lost his job and a massive fine is inevitable. The CEO will not be the only one exiting the building.
But how do its people think about working for the organisation, particularly if they have had nothing to do with the wide-scale deception? How do talented and aspirational young engineers or marketers leaving universities suddenly feel about the prospect of working there? It is also not fanciful to question the impact on Germany’s brand as an overall employer of talent. Will people continue to associate it with engineering quality, ethics and innovation?
Who can tell if the pressure to excel in order to achieve promotion was behind this or if people without the necessary judgement and experience were put in roles perhaps too burdensome for them? If BP are still recovering, and recovering slowly, from the hideous accident which was Deepwater Horizon, what are VW’s prospects? Both as an organisation and an employer?
Just as the whimsy that ‘if only everything in life was as reliable as a VW’ is despatched to history, so perhaps too is the unquestioned notion that stripping out layers and hierarchies must be a positive. People have both stayed put and put up with careers apparently permanently on hold during the economic downturn. This has passed and employees now expect to see a gear shift in the pace of their careers.
Two dangers emerge if such demands are not met – that great people in even greater numbers will seek career recognition elsewhere; and that a minority of people will find themselves in jobs so far removed from their previous roles and encountering challenges so far removed from their employment experiences to date.
Perhaps we should not be too surprised at some of the consequences.