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(originally published by Booz & Company)


Business Success from the Bottom Up

Management consultant Ralph Sink believes that people, when given ownership and held accountable, will shine.

In the Autumn 2007 issue of strategy+business, Ralph Sink, a consultant on high-performance systems, wrote about his decades of experience implementing the approach on the factory floor and as a human resources executive (“My Unfashionable Legacy”). High-performance systems, also known as self-organizing teams and participative management, require employees to take ownership of their jobs, to collaborate with one another to establish control over their work, to be innovative, and to deliver results — to maintain accountability for the business and be treated with corresponding respect, regardless of their level within the organizational hierarchy. In his essay, Sink lamented the decline of this approach, but expressed a belief that, in the end, it will make a comeback. But is there an appetite and an aptitude for this type of management today? What could it mean for companies coping with globalized business models and waves of corporate scandals? Sink spoke with strategy+business recently about the challenges of employing participative management in today’s business environment.

S+B: Why is the high-performance systems approach needed today?
Many of the young people I’ve spoken to who are being hired straight out of school actually come into corporations expecting participative management. The innate desire is there. Yet we’ve programmed managers to say, “Implement these rules. Follow these procedures.” People in organizations no longer think freely for themselves. They’re in survival mode, and some of them are doing pretty well that way; they are earning big bonuses. Everybody is pushing to get short-term financial results.

Moreover, there’s no loyalty in business today, on either side. When young people enter the workforce, they don’t want to wait 30 years to make good money. They want to come out of school and make it right off the bat, and a lot of them are able to. And they recognize that they can get to be 50 years old and then suddenly be let go by the company they devoted themselves to. People don’t stay at the same company for their whole career anymore; everyone is looking for the best deal.

But what if companies told their employees, “You can be involved, you can lead your own segment, you can have some space and leeway as long as you meet these parameters and grow”? People want their thinking to count. If there’s a better way to accomplish a task, they want to be able to identify it and use it. If they have ownership and they’re involved, they’ll do unbelievable things.

S+B: How do you convince executives to stop focusing on short-term gains?
I like to use an analogy about making wine. Managers who operate by metrics, paperwork, and numbers say, “OK, we’ve analyzed wine. It has sugar in it. It has pulp. It has yeast. It has grapes.” So, they dump those ingredients in a pot, stir it, drink it, and say, “but this doesn’t taste like wine,” and wonder why. It’s because the wine had to go through a process. They may have had the components right, but they overlooked the principles for transforming grapes and water into wine.

These managers will look at our approach and say, “Oh, I see what this is. You operate with 20 percent fewer people. You eliminate the supervisors, and everybody is self-managed.” So without any development process, principles, or leadership, they go in and cut head counts. And when they end up with a catastrophe, they say, “This approach didn’t work.” From their perspective, they analyzed the pot and put the elements in and stirred it up, so when it failed, they weren’t to blame. If you look across the United States, it’s happening left and right in corporations.

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  1. William J. Holstein, “Reining In the Overpaid (and Underperforming) Chief Executive,” s+b Leading Ideas Online, 2/19/08: Corporate governance expert Nell Minow explains the relationship between outlandish severance packages and the risky financial instruments linked to subprime mortgages.
  2. Art Kleiner, The Age of Heretics: Heroes, Outlaws, and the Forerunners of Corporate Change (1998; forthcoming, Wiley, 2008): Provides a history of participative management.
  3. Ralph Sink, “My Unfashionable Legacy,” s+b, Autumn 2007: Sink’s column, detailing his career as a proponent of high-performance systems.
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