In "Under New Management," David Burkus challenges traditional management practices and introduces innovative strategies that are transforming the modern workplace. This book explores how successful companies are adapting to the changing nature of work in the 21st century, particularly in the realm of knowledge work.
Introduction
The world of work has undergone a dramatic transformation in recent decades. As we've moved from an industrial economy to a knowledge-based one, many of the management practices that served us well in the past have become outdated and ineffective. Burkus argues that it's time for a radical rethink of how we manage our organizations and lead our teams.
Drawing on cutting-edge research and real-world examples from forward-thinking companies, "Under New Management" presents a compelling case for abandoning many long-held management beliefs and embracing new approaches that are better suited to today's work environment.
Key Ideas
1. Put Employees First, Not Customers
For years, we've been told that "the customer is always right" and that customer satisfaction should be the top priority for any business. However, Burkus challenges this conventional wisdom, arguing that companies should focus on their employees first.
The reasoning behind this shift is simple but powerful: happy employees lead to happy customers. When workers are satisfied, engaged, and motivated, they're more likely to provide excellent service and go the extra mile for clients. This, in turn, results in higher customer satisfaction and loyalty.
Research supports this idea. A 2008 study by Stephen Brown and Son Lam of the University of Houston found a strong correlation between employee job satisfaction and customer perceptions of service quality. Interestingly, this held true even for customers who had minimal direct contact with employees.
To put this principle into practice, companies need to prioritize trust and autonomy. For example, Netflix has implemented a radical policy of unlimited vacation time and no set working hours. Instead of micromanaging, they trust their employees to manage their own time and workload. This approach has led to more engaged employees and, surprisingly, reduced costs.
The key takeaway is that by focusing on creating a positive work environment and empowering employees, companies can indirectly but significantly improve customer satisfaction and loyalty.
2. Rethink the Hiring Process
Traditional hiring practices often focus on individual qualifications and past performance. However, Burkus argues that this approach is flawed, as it fails to account for the importance of team dynamics and cultural fit.
Research has shown that even top performers who transfer between companies don't always succeed in their new roles. This is because their success often depends on the specific team and organizational context they were working in.
To address this issue, Burkus suggests involving the entire team in the hiring process. For example, Whole Foods allows prospective employees to work with the team they're applying to join for a few weeks. After this trial period, the team votes on whether to hire the candidate.
This collaborative approach to hiring has several benefits:
- It ensures that new hires will fit well with the existing team.
- It gives current employees a sense of ownership and involvement in shaping their work environment.
- It reduces the risk of hiring someone who looks good on paper but doesn't mesh well with the company culture.
3. Pay People to Quit
One of the most counterintuitive ideas presented in the book is the practice of paying disengaged employees to leave the company. While it may seem strange to offer money to people to quit, this strategy can actually be highly effective in improving overall team performance and company culture.
The rationale behind this approach is that disengaged employees are often a drain on productivity and morale. They may be physically present but mentally checked out, negatively impacting their colleagues and the work environment. However, many of these employees stay in their jobs due to inertia or fear of change.
By offering a financial incentive to leave, companies can help these disengaged workers overcome their hesitation and move on to opportunities that might be a better fit. This strategy has been successfully implemented by companies like Amazon and Zappos.
The benefits of this approach include:
- Improved team morale and productivity by removing negative influences.
- Increased engagement among remaining employees who are committed to the company.
- A clear message that the company values engagement and isn't afraid to address issues head-on.
4. Embrace Flexible Organization
In today's knowledge-based economy, rigid hierarchies and job descriptions are becoming increasingly obsolete. Burkus argues that companies need to adopt more flexible organizational structures to thrive in this new environment.
Knowledge work, which involves tasks like writing, programming, or system analysis, is inherently more unpredictable and creative than traditional manual labor. As a result, strict schedules and fixed job roles can hinder productivity and innovation.
Instead, Burkus suggests organizing work around projects rather than permanent positions. This approach allows employees to take on different roles and responsibilities based on the needs of each project, fostering a more dynamic and adaptable workforce.
To make this work, companies need to:
- Ensure that employees are aware of their colleagues' skills and expertise across different departments.
- Encourage self-organization and autonomous decision-making among team members.
- Shift the role of managers from directing work to enabling and supporting employee self-organization.
This flexible approach to organization can lead to increased productivity, as research has shown that workers who feel in control of their work are more motivated and efficient.
5. Create Flexible Workspaces
The debate over open offices versus closed offices has been raging for years. Burkus suggests that the best solution is actually a combination of both.
While open offices can facilitate communication and collaboration, research has shown that they can also lead to increased noise, lack of privacy, and more sick days. On the other hand, closed offices can provide the quiet and focus needed for certain tasks but may hinder teamwork and idea-sharing.
The solution, according to Burkus, is to offer a variety of workspace options and allow employees to choose the environment that best suits their current task and personal preferences. This approach, known as activity-based working, has been adopted by companies like Facebook, which combines large open spaces with smaller, more private areas.
Benefits of flexible workspaces include:
- Increased employee satisfaction due to greater control over their work environment.
- Improved productivity as workers can choose the most appropriate space for each task.
- Better collaboration and communication while still providing options for focused, individual work.
6. Limit Email Use
While email has become an indispensable tool in modern workplaces, Burkus argues that its overuse can be detrimental to productivity and focus. The constant stream of messages can be a major source of distraction, with studies showing that the average employee checks their inbox about 36 times per hour.
To address this issue, some companies have taken radical steps to limit email use. For example, the French technology company Atos SE has implemented a policy to reduce internal email, replacing it with a custom-designed social network. This approach allows employees to actively seek out the information they need rather than being bombarded with unsolicited messages.
Benefits of limiting email use include:
- Improved focus and productivity as employees spend less time managing their inboxes.
- Reduced stress and information overload.
- Encouragement of more meaningful, face-to-face communication within the workplace.
7. Foster Inter-Company Collaboration
Burkus challenges the notion that companies should fiercely guard their ideas and talent from competitors. He argues that fostering connections and collaboration between companies can actually lead to greater innovation and success for all parties involved.
The author uses the example of Silicon Valley versus Boston's Route 128 to illustrate this point. While Route 128 relied heavily on non-compete clauses to protect their businesses, Silicon Valley embraced a more open approach. The result was that Silicon Valley thrived, becoming a hotbed of innovation, while Route 128 struggled to keep up.
The free flow of ideas and talent between companies can lead to:
- Increased innovation as companies build upon each other's ideas.
- A more robust talent pool as employees gain diverse experiences across multiple organizations.
- The development of strong industry networks that benefit all participants.
To implement this approach, Burkus suggests maintaining connections with former employees through alumni networks and encouraging open dialogue with other companies in the industry.
8. Rethink Performance Reviews
Traditional annual performance reviews are often dreaded by both employees and managers. Burkus argues that these rankings are not only ineffective but can actually be detrimental to creativity and innovation.
For example, Microsoft found that their performance ranking system was killing ideas and discouraging risk-taking. Employees were so focused on their rank that they avoided challenging tasks and were reluctant to admit mistakes.
Instead of annual rankings, Burkus recommends implementing a system of regular, personalized feedback. This approach, adopted by companies like Microsoft, involves frequent one-on-one meetings between managers and employees to discuss progress, set goals, and provide timely guidance.
Benefits of this approach include:
- More accurate and fair assessments of employee performance.
- Encouragement of skill-building and personal development.
- Reduced competition between peers and increased collaboration.
9. Be Transparent About Wages
While many companies keep salary information strictly confidential, Burkus argues that transparency in this area can actually be beneficial. He suggests that being open about wages can demonstrate fairness and prevent unfounded jealousy among employees.
When salaries are kept secret, employees may develop incorrect assumptions about their compensation relative to their colleagues. This can lead to resentment and hinder teamwork. By contrast, companies like Whole Foods have implemented complete salary transparency, allowing any employee to look up the performance data and salary of their peers.
Benefits of wage transparency include:
- Increased trust between employees and management.
- Reduced speculation and gossip about pay disparities.
- Greater motivation for employees to improve their performance and earn promotions.
Practical Applications
Trust your employees: Implement policies that give workers more autonomy, such as flexible working hours or self-managed vacation time.
Involve the team in hiring: Create opportunities for potential new hires to work with the team before making a final decision.
Offer a quitting bonus: Consider implementing a program that offers financial incentives for disengaged employees to leave the company.
Create flexible work arrangements: Allow employees to organize themselves around projects rather than rigid job descriptions.
Design versatile workspaces: Provide a mix of open and closed spaces, allowing employees to choose the environment that best suits their current task.
Implement email alternatives: Explore other communication tools that can reduce reliance on email and promote more meaningful interactions.
Build industry connections: Encourage networking and idea-sharing with other companies in your industry.
Provide regular feedback: Replace annual performance reviews with more frequent, personalized feedback sessions.
Consider wage transparency: Evaluate the potential benefits of being more open about salary information within your organization.
Conclusion
"Under New Management" challenges us to rethink many of the management practices we've long taken for granted. By putting employees first, embracing flexibility, and fostering open communication and collaboration, companies can create work environments that are better suited to the demands of the modern knowledge economy.
The ideas presented in this book may seem radical or counterintuitive at first glance. However, they are backed by research and real-world examples from successful companies that have dared to break away from traditional management paradigms.
As we move further into the 21st century, it's clear that the nature of work will continue to evolve. The companies that will thrive in this new landscape are those that are willing to adapt, experiment, and put their trust in their most valuable asset: their employees.
By implementing even a few of the strategies outlined in "Under New Management," organizations can create more engaged, productive, and innovative workforces. This, in turn, can lead to improved customer satisfaction, increased profitability, and long-term success in an increasingly competitive global marketplace.
The key takeaway from Burkus's work is that management, like any other aspect of business, must evolve to meet the changing needs of the workforce and the marketplace. By challenging conventional wisdom and embracing new approaches, leaders can create organizations that are not only more successful but also more fulfilling places to work.
As you consider how to apply these ideas in your own organization, remember that change doesn't have to happen all at once. Start with small experiments, measure the results, and gradually implement the strategies that work best for your unique situation. The future of management is not about control and hierarchy, but about empowerment, flexibility, and trust. By embracing these principles, you can help your organization thrive in the new world of work.