Traditional management methods are rooted in the days of steam trains and textile mills and need to be updated to cope with a workforce that has to make decisions on the spot, says Jim Whitehurst. His name might not be familiar to you, but since becoming CEO of the open source tech company Red Hat eight years ago he’s transformed it into a powerhouse with more than $2bn (£1.5bn) in annual revenues and a $13bn market cap. So he probably knows a thing or two.
‘Traditional management developed in the late 1800s, basically to co-ordinate uneducated people to perform rote tasks in a very static environment’ he tells MT. ‘The problem is in the intervening 150 years the world has fundamentally changed. Rote tasks have or are being automated, so generally the people we hire now are hired to apply a degree of initiative, judgement or creativity to their jobs. This whole concept of a static environment where you say "let me plan what I want to do and then tell people how to do it just doesn’t work anymore – the world is moving too fast.’
Most executives still try to use these old school solutions they learned at business school, he suggests, and as a result they’re failing to get the best out of their workforce. Here are his suggestions for making sure your organisation keeps up with the changing times.
Give workers meaning and context
The role of today’s manager, says Whitehurst, is to ‘create a context in which people can do their best work.’ An important part of that is giving the work they do some meaning. ‘You need to start off with the mission of the company, why we’re doing it, why it transcends just a paycheck – meaning is absolutely critical.’
Mission statements are a bit old hat now but it’s nonetheless true that workers want to have a non-financial reason to do their job. At Red Hat that’s an obsession with the philosophy of ‘open source’ software development. A more down-to-earth example could be as simple as helping customers try great food or manufacturing the highest-quality widgets in the country.
Workers also need to see their role in delivering on that purpose. ‘People need to understand the strategy of the company and how they fit that strategy deeply,’ says Whitehurst. ‘They need to understand the context of how to make the right decisions.’
Don’t be ‘terminally nice’
Whitehurst was previously COO at Delta Airlines. ‘When Delta was in bankruptcy some of the advisers had a term: ‘terminally nice’. Companies often end up in that situation because people aren’t willing to have tough conversations. That happens a lot in business.’
While co-operation is good, sometimes sparks need to fly for things to progress. ‘You get better decisions if people have straightforward, open, honest conversations – even if they’re painful,’ he says. The role of managers is to get rid of the ‘elephant in the room’ to make sure that people are willing to have them.
Hire people that will fit in
‘As soon as you recognise that people aren’t emotional cogs, that they are emotional beings, you have to recognise that you’re not just hiring for skill sets, you have to hire for cultural fit as well,’ says Whitehurst. Lots of managers do that, but it’s often implicit, rather than explicit.
At Red Hat, ‘we recognise that we need people who are comfortable with ambiguity, that are very self-starting that actually thrive in a world where there’s not a lot of rules.’ One way they do that is by pro-actively hiring through employee referrals – ‘nobody knows a red-hatter like another red-hatter.’
It's a controversial tactic - focusing too much on cultural fit means closing your business to different ideas that could help it thrive. Managers need to tread the balance between hiring people that will work well within their organisation and bringing in identikit yes men.
Make decisions inclusively
In many businesses, ‘change management’ is about making a decision at a high level and then communicating the reasons for it to employees. Whitehurst says that’s the wrong way around. ‘It’s so much more effective to engage people in making the decision and then you have no "change management" – it happens during the decision-making process.
That’s partly about improving the decisions that are taken – ‘I’ve been shocked at how much better the decisions are because the people close to the problems are involved,’ says Whitehurst. But it’s also about making people feel they have a say. ‘In the less hierarchical socially connected world we live in today, the millennial type of people that you want to hire expect that they’re going to be heard.’
That doesn’t mean you have to do what they say, of course. ‘People don’t necessarily expect their opinion to win,’ says Whitehurst. They just want to have a say.