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Humanocracy

Humanocracy: upgrade your organization and culture

  • 30 March 2021
  • Posted by Marcella Bremer

In this age of upheaval, top-down power structures and rule-choked management systems are a liability. They crush creativity and stifle initiative. As leaders, employees, investors and citizens, we deserve better. We need organizations that are bold, entrepreneurial and as nimble as change itself - say Gary Hamel and Michele Zanini in their book Humanocracy. Let’s create organizations that are as inspired and ingenious as the human beings inside them. This book reminds me of Frederic Laloux’ Reinventing Organizations - and it’s recommended reading if you want to upgrade your organization and develop a positive culture.

Creative and Daring

People are resilient, inventive, and agile - we have seen many examples during the pandemic. But our organizations are too slow in this world of accelerating change. They are lacking in courage, creativity, and passion. “People are against change” is often said - but that’s not true. We’re fast to adopt smart phones and technology. We’re naturally curious - but our openness to change is stifled in hierarchies and in organizational cultures that want to play it safe.

Inspired by Maslow’s pyramid, Hamel and Zanini, present a hierarchy of work-related capabilities:

  1. Obedience
  2. Diligence
  3. Expertise
  4. Initiative
  5. Creativity
  6. Daring

Obedience, diligence and expertise are the norm in organizations, but initiative, creativity and courage can’t be commanded or controlled: they are gifts. But if people don’t feel engaged or safe, they won’t bring these gifts to the workplace. 

Bureaucracy

The professional bureaucracy relies on hierarchy, positions, silos, standardization, specialization, and top-down control. That used to be efficient and effective: the value created by one hour of labor increased thirteenfold in the USA between 1890 en 2016.
The pyramid empowers the few over the many, appreciates conformity more than deviance or originality, wedges people in job descriptions, treats them as resources and robs them of agency.
In a humanocracy, by contrast, the organization is the instrument to help human beings improve their lives and the lives of those they serve (with their products and services). It empowers as many people as possible by giving them freedom and responsibility.

Pyramids have unwanted side-effects as we all know. When there’s a lot happening, the escalating structure of hierarchy piles up problems on the doorstep of senior leaders who often lack the expertise to make quick and smart decisions.

Creating the organization’s strategy is also reserved for senior leaders. But they have vested interests in the past - their views of customers, markets and technology may be outdated since it’s been decades since they were frontline workers. Many top executives stop learning - as Hamel and Zanini see. “We have to challenge the C-suite, but middle managers aren’t inclined to bite the hand that feeds them.” 

What’s your organization’s BMI?

Bureaucracy comes at a large, but often invisible cost. To build the business case for changing your organization into a Humanocracy, Hamel and Zanini offert the Bureaucratic Mass Index survey.
The BMI looks at the layers and time spent on low-value bureaucratic tasks, impediments to speedy decision making, percentage of time spent on internal versus external issues, limits to frontline autonomy, skeptical responses to bold ideas, constraints on risk-taking and experimenting, and political behaviors and the role they play in personal advancement.
One of the outcomes to date: non-managerial employees spend 6,5 hours per week on complying with internal regulations and issues!

This outcome is recognizable in our organizational culture research. Many organizations score high on the process-oriented Control Culture type and the results-oriented Compete Culture type. Procedures, positions and production matter most - while employees want more of the people-oriented Collaboration Culture and the entrepreneurial, learning Create Culture. Hamel and Zanini estimate that half the compliance load in a typical organization could be eliminated without unleashing chaos. More freedom and responsibility boost creativity, innovation and resilience - and production.

Humanocracy

We need organizations that mobilize and monetize the everyday genius of “ordinary” people. Let’s tap the collective intelligence and energy and organize around a common, shared purpose or goal. The Humanocracy aligns with a higher score on the people-oriented Collaboration Culture and the entrepreneurial, learning Create Culture (in the Competing Values Framework). It has the four elements of a positive culture: a positive mindset, a shared purpose, learning and autonomy, and community.

Well-known examples of “human” organizations that foster creativity, initiative and freedom are Morning Star and Southwest Airlines. But also Nucor, an American steel manufacturer.

Morning Star, America’s largest tomato processor, employs five hundred self-managing employees. Each person is accountable to peers and your reputation is a great incentive to do your best and help co-workers. 
Their motto is: Do what you’re good at. You have the right to get involved anywhere you think your skills can add value. This means they have broader and more challenging roles than in an ordinary organization. Instead of de-skilling (and boring people) they are up-skilling people.

Southwest Airlines employees have the freedom to charm customers and improve the business, even if that means bypassing a policy. They trust the judgment of people: they buy cars and houses, why not trust them with the organization’s money?
They equip employees to make smart decisions with enough information and the permission to act. Everyone’s responsible for their fast turnaround times at the airports between flights - hence their competitive advantage. They fly off before you know it. 

Nucor’s slogan is: “We don’t build steel, we build people”. Their 26,000 teammates work in a confederation of 75 divisions. Everyone in a local plant is responsible for the financial results - and has access to the information. HQ acts like a corporate bank and sets a few basic rules for the divisions. R&D, sales, marketing, strategy, safety, engineering, compliance, purchasing are not centralized but a local responsibility.
They have few managers and administrative expenses are just 3%. The steel market is tough, with low margins, but their plants do really well. They reward performance with a team bonus plan, there are no detailed KPIs that may induce sub-optimization, and hire people who are open to learn. Everyone works hard and innovates where they can - taking pride in their achievements and enjoying their team bonus.

  • How’s your organization’s BMI?
  • What do people bring to work, on the scale of obedience to daring?
  • How can you stimulate freedom and responsibility?
  • What stands out from the three example companies?

© Marcella Bremer, 2021. All rights reserved.

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