Building Institutional Muscle

Tuesday, December 21st, 2010

Building Institutional Muscle

Explores Open Book Management, a great way to get people to think like owners of the business.

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by Rick Maurer

Too many organizations go on binge diets. If costs are too high, they cut staff until they get down to the desired weight. Unfortunately, they do lose some fat, but they lose valuable muscle as well. They end up weaker after dieting.

There is a better way. Build institutional muscle so that all parts of the organization are working with peak efficiency. By using this muscle, the organization actually gets stronger in the process.

But how do you build institutional muscle?

Treat People Like Owners

When people feel like they have a stake in the business, they act differently. They begin to search for solutions because they care about what happens. Just getting lots of people thinking about the business begins to build institutional muscle. You now have more people looking at problems and considering possible solutions.

Three things get people thinking like owners.

  • They know what’s going on
  • They have a stake in the outcome
  • They are given authority to make decisions

They Know What’s Going On

Organizations often keep people in the dark. When executives get worried about challenges facing the telecom, they are perplexed and angry when employees don’t feel the urgency to change. But its no wonder employees don’t feel the challenge; nobody ever told them about it.

Open Book Management is one very effective way of letting people know what’s going on. Consider these questions:

  • What are the most critical numbers that drive our business?
  • How do those numbers translate into the work of each department? In other words, each department may have different numbers that lead to the overall number for your company.
  • What’s a good way to keep them informed of the numbers that should be driving their work? Face to face meetings work well. And weekly is great. These meetings don’t necessarily need to take much more time. For instance, you can provide this information as part of weekly staff meetings. In The Great Game of Business, Jack Stack describes the “weekly huddle” in which people gather to identify their projected versus actual numbers for the week with a brief explanation of the reasons behind the actual numbers.

They Have a Stake in the Outcome

People really feel like owners when they see that their good work leads to more money for them. While this isn’t an essential element (since some organizations can’t provide bonus pay), it can be a very strong incentive.

The stake in the outcome needs to be fair. Everyone needs to be rewarded based on a single overall number. If our telecom meets this big number, then we all benefit. This open book approach rewards everyone. It does not look for a few heroes to reward. In fact, individual incentive schemes often destroy institutional muscle because they can lead to resentment.

They are Given Authority to Act

If you give people information about the business and tie their hands, you can create despair and hopelessness. However, if you encourage people to find creative ways to meet challenges, you increase the feeling of empowerment. In traditional companies, it’s only the executives who stay awake at night worrying about problems. In open book companies, everyone cares. It is common to see employees coming up with ad hoc solutions to fix quality or service problems, or finding employees going to management with ideas for addressing a critical issue.

Opening the books can’t be a one-time event. This approach demands that you trust people with critical information, because once you start it is difficult to go back. If this approach interests you, I strongly encourage you to read more about it. (Books by John Case or Jack Stack are great places to begin.)

Trusting people with information and having confidence in their ability to help solve problems flies in the face of conventional wisdom. But the results in terms of money, productivity, quality and service, and morale indicates that this more “unconventional” approach builds strong institutional muscle.

© 2002-2009 Rick Maurer. Rick uses his Change without Migraines™ to advise organizations on how to lead change effectively. He is author of many books including Beyond the Wall of Resistance. Recently, he created the Change Management Open Source Project, a free resource for people interested in change in organizations. www.beyondresistance.com

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