The disappearance of engagement and passion

Next months, these posts deal with the challenges of Earthlings of bringing humane cities closer. These posts represent the most important findings of my e-book Humane cities. Always humane. Smart if helpful, updates and supplements included. The English version of this book can be downloaded for free here and the Dutch version here.  

For centuries, entrepreneurship has been motivated by craftsmen’s passion. In less than one century this kind of entrepreneurship disappeared. The fascination of making new things still can be found incidentally in small and medium-sized businesses operating. In large companies a new generation of managers has taken possession of the boardroom, who are motivated by financial incentives in the first place. This applies to most employees too. Let’s face the facts.

Engagement

Each year, Gallup collects data worldwide about the engagement of the workforce in companies and organizations with more than 50 employees. These are characterized as ‘engaged’, ‘actively not engaged’ and ‘passively not engaged’. The table below provides an overview, showing that in any country only a minority of this group is ‘actively engaged’. This means that they are enthusiastic about their work, their colleagues, praise their company, and do not worry if they have to work overtime. 

Percentages of actively engaged (green), passively not engaged (gray) and actively not engaged (black) of employees in different parts of the world.

Lack of engagement correlates strongly with the ‘low strain’ character of many jobs, but also with the management style of most bosses.

Companies want to increase the engagement of their employees as the level of engagement correlates with productivity. Therefore, worldwide they spend billions on this goal and to train managers to support it. Without much result.

Engagement is not enough

According to John Hagel, managers are heading in the wrong direction by focusing on engagement alone. After studying individuals who are exceptionally productive in a wide range of professions, he concluded that what they have in common is ‘the passion of an explorer’. 

Passion does not mean that these people are overly gifted, diligent, hardworking or smart. Instead, they are determined to achieve their goal in a certain domain, are excited when faced with challenges, and seek collaboration with others who can support them. Passion is the main driver of entrepreneurship.

Unfortunately, the number of employees with passion is even lower than the number of engaged ones. The latest US survey of passionate employees shows that up to 13% of the workforce (managers included) have each of the three aforementioned attributes. An additional 39% have one or two attributes. 64% of all employees and managers are neither engaged nor passionate, or in other words they lack the essence of entrepreneurial behaviour.

This lack of engagement and passion entrepreneurship or intrapreneurship is understandable. The 20th century companies have organized their production according to principles of scalable efficiency and a system of planning and control, top-down assessment based on performance indicators and quarterly reporting to the next boss in hierarchy. Consequently, room for initiative is limited, neither expected nor desired. At the same time making money became the ultimate objective of most companies and the top management made large efforts to satisfy the shareholders and their own monetary ambitions.

Self-organization and interpreneurship

There are strong arguments for self-organization and -management by employees, just think of the book Reinventing Organizations by Frederic Laloux. However, little research has been done into the relationship between self-management, entrepreneurial behaviour and performance. The recently published HOW-report has changed this. Research in 17 countries (among others the Netherlands, Germany, the USA, India, Russia, China and Japan) showed that organizations based on self-government performed better in all respects.

The superiority of self-governed organizations. The gray bar refers at organizations in which employee’s influence depend on their rank and authority. The black organisations are the dominant type, based on hierarchical assignment of tasks, planning and control and the red ones are based on self-government.

The superiority of the scores of self-governed organizations is clear. The HOW-report has delved into the distinguishing characteristics of employees of these companies. These are: more trust, willingness to take risk, celebration of success as collective achievement, collaboration and mutual assistance, sharing information, and respect for personal judgement. 

In order to survive, companies should digest these data, but managers will not be happy with them. They undermine their position and huge financial benefits.  Time will learn whether the many new start-ups are wiser, or whether they become ‘takers’ instead of ‘makers’ as well, to use Joseph Stiglitz words.


“The Big Shift” No single organization will be the same

Looking back in 2050 at the first decade of the 21th century our (grand)children will probably recognize the characteristics of another industrial revolution. The Edge, the research institute of Deloitte is speaking of The Big Shift’[1]. The ‘Big Shift’ is the joint effect of two processes:

Distributed growth of knowledge

The old Philips buildings offer workplaces to many small innovative companies

During the past 10 years, ICT – bandwidth, memory, speed, and especially software – has improved tremendously. Connecting ICT-power with other devices has enabled 3D printing, Internet of things, wearables and robotics. Its disruptive influence at industry is only in the first stage. However, even more important is that the underlying knowledge has become distributed and is no longer limited to small groups of scientists in universities and R&D centres. Worldwide, millions of young entrepreneurs prefers the live of an explorer and innovator in garages, empty industrial buildings, science parks or wherever over being employed in a large bureaucratic company.

Global competition

Until recently, a centre-periphery model sufficed to characterize the economic relations in the world. The centre (Europe and the USA) bought raw materials, and mass products in the periphery in exchange of high-end products, knowledge and (financial) services. Nowadays, a multitude of centre-periphery relations has come into being. The old centre has to compete with rapidly developing competing centres. The winner is going to be the owner of the most distinguishing innovation capabilities. Besides, the development of ever-changing new products requires a high degree of inter-firm cooperation. Here too, small and agile new market entrants seem equipped best.

“Traditional” companies have to reinvent themselves In order to cope with the ‘Big Shift’. The first step is dividing itself in smaller flexible entities. Further, the process of reinvention has to put knowledge workers in the centre of operations at the expense of the until now dominant position of managers-class. The feasibility of a redesign depends from the degree of engagement and intrapreneurship of the work force. In this respect, recent studies are not encouraging.

Engagement

Each year Gallup is collecting data of the engagement of the global workforce[2]. Employees are characterized as being ‘engaged’, ‘actively disengaged’ and ‘not engaged’. The table beneath gives an overview, showing that the USA, Australia and Canada have most reasons for optimism.

Engaged employees worldwide 2The lack of engagement is caused by the “low strain” characteristics of the majority of jobs, the authoritarian behaviour of many bosses, the uncertainty of keeping one’s job and work pressure.

Intrapreneurship

I prefer the term intrapreneurship over ‘passionate explorer’, as deployed by Deloite[3]. Intrapreneurship is based upon specialist business knowledge, the drive to explore new frontiers and a feeling of urgency to cooperate. The ‘Big Shift’ report reveals that only 12,5% of the workforce is ‘intrapreneurial’. Probably the lack of engagement is prohibiting quite a number of latent intrapreneurs to act.

The lack of Intrapreneurship is quite understandable. The 20th century companies have organized their production according to well-chosen strategic principles empowered by detailed planning, control and quality systems. Consequently, skillful and accurate performers dominated the workplace. Competence management systems guaranteed the right employee at the right spot. Room for intrapreneurship was limited.

It is this lack of intrapreneurial opportunities that has causes a true exodus of talent from companies in the USA and other countries. Each year, about 2 millions of employees have given up well-paid jobs. The estimated damage caused by the departure of high-potential employees is about $200 billion each year. The independent workforce in the US nowadays counts about 17 million people.

The conclusion is obvious. Above all, the strongly-needed reinvention of companies depends from the retrieval of engagement and entrepreneurship al main characteristics of the work force.

Engagement will increase as soon as the workforce feels more respected and recognized and if managers do better jobs as coaches. Structurally, workplaces have to become more demanding. Theresa Amabile has discovered that employees are motivated in the first place by ‘the progress principle’, the meaningfulness of their contribution [4]. In order to comply, workplaces have to combine a sufficient degree of challenge with a corresponding degree of autonomy.

Retrieval of intrapreneurship is more demanding. Needed are: decentralization of the governance of firms, servant leadership, reduction of management, smaller differences in compensation of managers, active promotion of (open) innovation, and deploying collaboration opportunities outside the firm.

Anyway, most companies worldwide have a long way to go. The most innovative firm will be the firm that is succeeds in the improvement of engagement and intrapreneurship.

[1] http://goo.gl/QaNXdy The report is a comprehensive study of global development, innovation and entrepreneurship in contemporary history

[2] See for more results: http://www.gallup.com/poll/165269/worldwide-employees-engaged-work.aspx

[3] http://goo.gl/oQEQzi. Research with respect to the passion of the workforce included 4000 employeed in different branches in the US.

[4] TED-talk Theresa Amabile: The Progress Principle: https://www.youtube.com/watch?v=XD6N8bsjOEE&feature=youtu.be