“The effectiveness of organisations could be at least doubled if managers could discover how to tap into the unrealised potential present in their workforces.”
This powerful statement should make any serious business leader stop and think. After all there is no limiting qualification when it talks about organisations and ‘at least doubled’ implies that business is operating at less than 50% of where it should be. Nor does the fact that it was made by Douglas McGregor in his book “The Human Side of Enterprise”, published nearly half a century ago in 1960, make it any less thought-provoking today?
In questioning the statement, it seems logical to first consider whether his assessment is valid, before assessing the scale of the problem. Before doing so, however, it is perhaps worthwhile to consider the era in which the statement was made. After all the sixties could well be said to be one of the most pivotal periods of progress in human history – the time when individual freedom truly came to the fore; industrial development brought new-found prosperity; man landed on the moon and the Information Revolution was launched. In the light of such progress it seems contrary to talk about ‘unrealised potential,’ particularly as, commercially at least, the corollary is under-productivity – as McGregor himself implied by linking potential and effectiveness.
At this stage computers were still in their embryonic phase and manual effort was still paramount in all commercial endeavour. Consequently progress was almost entirely on the back of human effort and so, at first glance, it seems extremely harsh to judge people as being unproductive, for that prosperity was undoubtedly hard-earned.
Yet this was the era of mass-production, when both blue collar and white collar work was prescribed and so largely regimented and routine. It therefore seems highly likely that workers did only use a fraction of their true potential, which certainly justifies the assessment, but it is hardly prima facie evidence.
This is where the correlation between unrealised potential and poor productivity becomes significant, for it provides more substantial corroboration, as poor productivity was one of the major management issues of the day. In this case, however, it is also possible to use the benefit of hindsight, for the extent to which technology has replaced people and changed the nature of work confirms the lack of productivity of the era. Indeed, the replacement of people has always been one of the major factors used to justify investment in technology.
In fact, if you accept the logic of the relationship, the scale of technological development, with its effect on productivity and the workplace, not only validates McGregor’s statement, but simultaneously proves the secondary point about the scale, even without the ability to actually measure potential. So, having established its validity, we now need to look at it more closely and see whether lessons have been learned and the problem has been resolved.
The biggest challenge here is, of course, that there is still no way to measure potential. Consequently, while managers continue to do what they can to bolster productivity in order to boost performance, perhaps the best indicator of their success is ‘employee engagement.’ This is itself an indicator of the extent to which people management issues have evolved over the subsequent decades and the greater emphasis placed on people within the workplace. It is therefore truly ironic that such measures are uniformly bad. The most recent Gallup Employee Engagement Index indicates that only 29% of US employees are engaged and, shocking though this is, it is still the best in the developed world and around 10% better than the UK.
The irony lies in the fact that, in all probability, had such measures existed in the sixties, the results could have been a lot worse, for the fact is that, “in real terms,” work conditions have improved manifestly since the sixties. Unfortunately expectations have increased at the same time, which makes employee engagement an unfortunate measure because it is largely subjective, measuring perceptions rather than reality. And, as anyone who has watched “X Factor” can tell you, this can be dangerous for perception can lead to expectations that are widely divorced from reality!
Nevertheless, while it may seem grossly unfair to penalise managers for such poor measures, the fact is that running any business operating with such low levels of employee engagement is like trying to run a four cylinder car on only one cylinder. It hardly matters what the potential is, for even in the unlikely event that everything else is operating at 100%, the business itself is operating at only 20-30% of its capability.
Continuing the motoring analogy, you could argue that it is no more possible to realise a person’s full potential than it is to drive a car at anything close to its top speed, but even a car needs a good long journey and the opportunity to “stretch its legs” once in a while, if it is to operate at anything like its most efficient even on the school run. The difference is that a car doesn’t have feelings and the more people’s feelings are disregarded or discounted the more damage that they can do. That is why the employee engagement surveys cited earlier indicate that there are active disengagement levels of close to 20%.
Regardless of the validity or otherwise of the measure, the fact is that if people are not applying their full effort to their work, the organisation is operating at a sub-optimum level and its results will be worse than they should be. Consequently, one has to conclude that McGregor was correct, and that even today business effectiveness could be more than doubled if a way could be found to address this lost human potential. It therefore appears that his warnings fell on deaf ears and that business has learned nothing over the past 50 years about how to use its human assets more effectively. This is wanton waste.
While the past is past and cannot be retrieved, it is therefore important that we do something now to ensure that we do not repeat the mistakes of the past. This lost human potential that McGregor refers to, is what I call ‘human economic waste.’ It is what led me to develop my methods for treating people as the assets and why I am so excited about the potential this brings. There are currently many initiatives to address some of the symptoms of employee disengagement but the vast majority are all aimed at improving motivation and so depend on external factors to try to shape behaviour. The Zealise approach is different, because it starts with the individual – the person who is best placed to shape and develop their own potential. It thus creates a formal mechanism that:
• aligns individual and organisation;
• builds an effective partnership to optimise the individual contribution;
• properly recognises and rewards effort;
• allows consistent measurement and equitable comparisons.
It therefore not only provides a realistic solution to the problem of employee disengagement, but creates an ideal response to McGregor’s issues by providing the mechanism to tap into the unrealised potential of people and thus to at least double the effectiveness of the organisation.