Copyright 2001 W. Jan Austin, Corporate Coach and President of Potential At Work, Inc. All rights reserved.
Web Site URL: http://www.potentialatwork.com
FOSTERING ORGANIZATIONAL COMMITMENT IN A FREE AGENT WORLD
Keynote by Jan Austin
The Association for International Management Search
Toronto, June 21, 2001
I’m fascinated by the complexity and magnitude of change in the global business environment. We are witnessing an era of unprecedented growth, against a backdrop of extreme volatility. There is good news and not so good news for the workplace. The good news is that productivity and employment can be expected to grow. The not so good news is that the fundamental agreements by which organizations conduct business, and workers participate in the enterprise, have been irrevocably altered. New road rules apply to those who seek success.
I’d like to share with you some of the trends I think are worth watching, their impact on organizations and people, as well as some strategies leaders can employ to gain the commitment to high impact performance by their workforces, in light of these trends.
I see four significant trends which will create turbulence and uncertainty in the global business environment for the foreseeable future.
There is little doubt that leaner organizations will perform better in the new economy. We must not mistake lean manufacturing, however, with real growth. Real growth comes from the germination of great ideas into innovative products and services.
There are also high hidden costs associated with strategies to create lean organizations. Employees of many organizations have been worn down by constant change, pressure to work harder with fewer resources, and repeated downsizing. As a result, organizational leaders are finding that their employees are reluctant to give their full commitment because employees don’t trust that it will be reciprocated.
One of the great ironies of our time is that leaders expect—and desperately need—the loyalty, commitment and trust of their workforces, but they are not able to make promises they can easily keep. Failure to re-examine these expectations in light of current organizational realities serves only to make leaders all the more suspect.
The notion of who is an employee and what is the nature of the employment contract must also be re-examined to make way for new workplace relationships. What is the new relationship?
Displaced, burned out, overworked, and under-challenged employees of the traditional workplace, as well as those who simply want more control over their work lives, have begun to re-define their relationship to work. They are re-engaging in the workforce as “free agents” in the form of independent contractors, licensees, or strategic partners. Organizations are getting right behind this, as their leaders recognize that contingent, project based employment can help them deploy the right talent for their current and emerging business needs as well as manage their bottom lines.
Free agents have discovered something very important—that if they can tolerate the risk of the marketplace, and if they are willing to continually develop themselves as brands, free agency may be their best hedge against downturns in the economy. Why? By diversifying and spreading their knowledge capital across a range of projects and clients, they are not as vulnerable if there is a downward trend in performance in one area. In fact, by assuming risk, free agents place themselves squarely in position to reap the full rewards of high impact performance.
The number of individuals who are claiming or defaulting to free agency is staggering. According to Fast Company Magazine, there are roughly 16 million soloists, 3 million temp workers, and 13 million micropreneurs in the United States. This is more than the total number of people employed in the entire public sector (comprised of federal, state, county and local governments, including police and teachers). According to the U.S. Census Bureau’s latest figures, 70% of the businesses in the United States have no paid employees. As a comparison, 66% of British businesses five years ago had no employees.
The trend toward free agency has resulted in what some business leaders are calling “brain drains” and “capital flight”—no doubt pointing to their concerns about a serious loss of knowledge capital from their organizations. What used to be considered private property or proprietary technology is now offered freely in the open market.
It’s little wonder that organizational leaders are worrying more these days about recruiting and retaining top talent in their organizations. They understand that high levels of employee commitment represent a business necessity, and that talent shortages will be an obstacle to sustained high performance. They also know that their earnings projections are vulnerable. According to Fast Company, 85% of companies are still projecting earnings at levels which historically only 10% of companies have actually delivered. This is a huge gap, and I can’t help but wonder what is causing so many companies to miss their targets. My strong hunch is that what is missing can be found in the human side of the enterprise.
There is more than ample evidence that there is a crisis of commitment in today’s workplace, the solution to which requires a paradigm shift in everyone’s thinking—
starting with leaders. Every leader must make it a top priority to earn the full commitment of every member of the workforce. Yes, I said “earn”, because just as employees can no longer feel entitled to their jobs, leaders cannot feel entitled to employees’ loyalty. And, every individual must make it a top priority to become career resilient—to become change agile and self-managing of one’s skill portfolio—to assume the mindset of free agency
So, what does it take to have the full discretionary effort of every individual available to make the business a success?
First, let’s consider what attracts people to organizations, and what gets them to stay. Let’s be clear that it isn’t money, and it never was. A study by Towers Perrin revealed that the top three reasons people choose to stay in their jobs are:
While compensation was on the list, it was ranked much lower as a factor which attracts and retains people in the organization.
Let’s now consider what causes people to leave:
A study by Christian and Timbers showed that the top three reasons people leave their jobs are:
We intuitively know that these findings are true; yet, organizational leaders don’t pay nearly enough attention to the things that are clearly within their sphere of influence.
So, I have some bold suggestions, based on my coaching of hundreds of organizational leaders and individual contributors. This is a short list of the things that an organizational leader can do to earn the commitment of members of the workforce to achieve the organization’s goals:
The retention studies I talked about indicated that stock options are the third highest reason people stay in their organizations, and lack of appreciation is the third highest reason they leave. This suggests another strategy for increasing commitment, and that is recognition in some form which gives people a stake in the enterprise and which is tied to the achievement of high impact results.
The world of business is changing at a rapid pace, but there is plenty to be optimistic about. There has never been as much opportunity to create value in the marketplace as there is in this time in our history. There is no absence of talent, no absence of great ideas, and no absence of a market which is hungry for the products of great talent and ideas.