Does better management lead to better performance?

Engagement and enthusiasm bring business results, says Professor Vlatka Hlupic. The question is how to harness and quantify them

For years, HR managers have struggled for equal status with their counterparts from finance and operations. The value they add, through training and development or measures to enhance engagement, has not been correlative, perhaps given the difficulty of pinpointing the causes and effects of engagement. This state of affairs has been puzzling; after all, the bulk of the value in any enterprise lies in the collective ability of the people employed.

Fortunately, the research base has been quietly building over the years, and the links between the ways in which people and teams are organised, deployed and motivated, and the business results, can now be seen more fully. Employee opinion surveys are well established, but as an isolated indicator, engagement scores can be inadequate, especially in fast-changing markets with disruptive technologies. They may tell us something about where in the organisation the high-performing teams are located, but little about why some are more effective than others.

For 20 years, I have been researching this matter. For my latest book, Humane Capital, I interviewed 58 business leaders. The sample was selective; their organisations all combined high levels of engagement and enthusiasm with outstanding business results. The aim was to identify, in rich qualitative detail, the approaches that create such ultra high-performing dynamics. This work built on my research for an earlier book, The Management Shift, which identified five levels of organizational dynamic, from Level 1 (a toxic environment), to command and control at Level 3, to the highly engaged Levels 4 and 5.

What I have learned is that the most effective employers attend to all the disciplines necessary for high teamwork and engagement, and make sure they are the responsibility of everyone. Rewards are shared generously among the teams as they flow in.

Many of my interviewees are entrepreneurs who became frustrated with the command and control mindset. I interviewed Doug Kirkpatrick, one of the former leaders of the US-based tomato processing firm Morning Star. Its approach is based around teamwork and accountability, while it harnesses a strong sense of purpose and togetherness. 

In his interview for the book, Doug said: “We experienced our first kind of qualitative experience with self-management when we built the first factory in 1990. And we felt that we could not have built the factory as quickly as we did, and brought it successfully online as quickly as we did, had we been trying to structure ourselves around a hierarchy with command-and-control and official channels of communication.” The firm is now the largest tomato processor in the world, with a turnover of $700 million. 

In another interview, Jack Hubbard, the founder of Brighton-based Propellernet, a digital marketing agency, described the ‘Dreams Come True’ reward scheme he set up. When the company hits a target, a lucky employee wins the ‘Dream Ball’ lottery and selects their exotic wish. Examples so far have included a trip to Brazil to the World Cup, and hiring a ski chalet for a week. This shows just how inspirational reward schemes can be, once firms reach Levels 4 and 5. 

Jack said: “I don’t want to always wait to hit a target to make someone’s dream come true, so I’m always looking down the list of dreams and seeing what I can make happen anyway, regardless of the target.” Propellernet always has a long waiting list of would-be applicants, wanting to join the firm.

The implications of the research go far beyond incremental performance improvements from higher employee engagement. Instead, they point to the transformational potential of recognising an enterprise as one that comprises people as the source of all value.

Professor Vlatka Hlupic is the author of Humane Capital, published by Bloomsbury Press