Future of Management 1

Scott Thor – BUSG 707 – Executive Level Management

The Future of Management: Creating Employee Engagement

Scott Thor

George Fox University

Doctor of Management

BUSG 707 Executive Level Management

January 5, 2010
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Scott Thor – BUSG 707 – Executive Level Management

The Future of Management

If you were to transport a successful manager from the 1960’s to an office of

today how would they react? Would they be able to quickly adapt to the changes that

have been made in recent years? How long would it take them to regain their position

as an effective manager in our modern business world? No doubt they would struggle

with the innovations in technology such as computers, email, voicemail, cellular phones,

video conferencing, Internet, etc., but most likely once they mastered using the

advancements we have made in technology much of the role of managing would seem

quite familiar to them.

An argument can be made that the key functions of management described by

Fayol eighty years ago are still valid today. Fayol (1930) described management as

planning, organizing, commanding, coordinating, and controlling. Look inside any

modern day organization and you are likely to see these activities at the center of most

managers’ key responsibilities. The majority of the core management techniques and

tools used today were created by individuals born in the 19th century, and the art and

science of management has changed little since their contributions to management

were made (Hamel & Breen, 2007).

There is little doubt that the work done by the management theorists over the

past century has resulted in a significant improvement in the performance of

organizations. The challenge in utilizing only these techniques in the modern business

environment is that they leave little room for capturing the passion and creativity of the

workforce. Many successful organizations are now tapping into this source of creativity
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by innovating the activity of management, resulting in strategic advantages that are

difficult to mimic by competitors.

This paper begins with a description of management innovation and how it can

create strategic advantages for organizations. The paper also describes some of the

biggest challenges facing managers of the future, and provides guidance on areas in

which managers need to innovate in order to truly capture the capability of their

workforce to ensure the future success of their organization.

Management Innovation

What is management innovation? Hamel and Breen (2007) describe

management innovation as anything that changes what managers do that enhances the

performance of an organization. Hargrave and Van de Ven (2006) add to the definition

by including the caveat that the change be novel or an unprecedented departure from

the past.

When thinking about innovation most people tend to visualize some type of

technological advancement such as the personal computer or cellular telephone.

Management and innovation have not been viewed as a combination that naturally go

together, which provides some insight into why managers traditionally do not view their

role within organizations to be innovators. Hamel and Breen (2007) also argue that most

managers view their role as the activity of doing and not dreaming.

In a world of rapid change and the availability of technological resources,

operational, product, and strategic advantages no longer provide a long-term

competitive position. Any organization with the financial resources can quickly duplicate

and/or improve upon a competitor’s operations, product, and strategy. What are difficult
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to copy are the unique combinations of management innovation utilized within the

organization, which create a long-term advantage (Hamel & Breen, 2007).

Challenges for the Future of Management

Managers in the 21st century face a number of challenges. Hamel and Breen

(2007) suggest that the three most formidable challenges facing organizations in the

21st century include:

1. Dramatically accelerating the pace of strategic renewal in organizations large and

small.

2. Making innovation everyone’s job, every day.

3. Creating a highly engaging work environment that inspires employees to give the

very best of themselves (p. 40-41).

Change is a constant in the modern business environment. Hamel and Breen

(2007) suggest asking the question, “Are we changing as fast as the world around us?”

(p. 42). If not, an organization may not be changing fast enough to stay ahead of

competitors and meet the needs of customers. Hamel and Breen believe the goal for

organizations must be “trauma-free renewal” (p. 43).

In a world where competitive forces are much higher than in the past, a second

challenge is capturing the creativity of the workforce to be constantly looking for a better

way to stay ahead of competitors. An argument can be made that both change and

innovativeness will be difficult in an environment where employees are not engaged in

their work, which is perhaps the most significant opportunity for managers to innovate.
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Employee Engagement

What is an engaged employee? How does one define engagement? No single

definition of engagement exists, but several authors, researchers, and consulting

organizations have offered definitions to describe engagement.

• Harter, Schmidt, and Hayes (2002) define employee engagement as, “the

individual’s involvement and satisfaction with as well as enthusiasm for work”

(p. 269).

• Wellins and Concelman (2004) describe employee engagement as, “the illusive

force that motivates employees to higher levels of performance” (p. 1).

• Towers and Perrin (2003) define engagement as, “employee’s willingness and

ability to contribute to company success” (p. 2).

No matter how you define it, engaged employees care about the organization

and are driven to perform. The challenge facing the future of management is creating an

environment that fosters engagement, and recruiting employees who have a high

probability of becoming engaged in the organization’s environment.

Engaged Employees Lead to Results

Research conducted by Gallup Consulting (2008) and Towers Perrin (2003,

2007) came to similar conclusions in measuring employee engagement. Gallup

research data suggest that only 30 percent of employees are engaged, 50 percent are

not engaged, and 20 percent are disengaged in their work. Towers Perrin survey data

suggest that 20 percent of workers are highly engaged, 60 percent are moderately

engaged, and 20 percent are disengaged. What is blatantly evident from both studies is
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that organizations have a significant opportunity to improve performance by simply

engaging employees in their work.

Is there a quantifiable benefit to creating engaged employees? Towers Perrin

(2003) found a strong correlation between engagement and customer focus, revenue

growth, and the cost of goods sold. Highly engaged employees were also found to be

less likely to leave an organization for another job. Sixty-six percent of highly engaged

survey respondents said they had no plans to leave the organization, versus 51 percent

of disengaged employees who said they were not looking for another job, but would

consider the right opportunity.

Wagner and Harter (2006) describe research conducted by Gallup that suggest

organizations with engaged employees have 27 percent less absenteeism, 51 percent

less turnover, 51 percent less theft, 62 percent fewer accident, 12 percent higher

customer satisfaction scores, 18 percent higher productivity, and 12 percent higher

profitability than organizations with a high proportion of disengaged employees.

Towers Perrin (2007) conducted similar research with 50 global companies over

both a one and three-year period. Organizations who had highly engaged employees

resulted in a 19.2 percent increase in operating income, 13.7 percent increase in

income growth, and a 27.8 percent increase in earnings per share over the one year

study period compared to organizations with low employee engagement whose results

were negative in all three categories. Positive results of a 3.7 percent increase in

operating margin and a 2 percent increase in net profit margin were also found in

organizations with highly engaged employees over a three year period versus negative

results for the same time period for organizations with low employee engagement.
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What leads to engagement?

Towers Perrin (2007) believes that “engaged employees are not born, but made”

(p. 2). The environment an employee works in has a significant influence on creating

engagement, according to their research. Some of the critical elements found to

improve employee engagement include senior management taking a sincere interest in

employee’s well-being, being given the opportunity to improve skills and capabilities

over the past 12 months, input into decision making, career advancement opportunities,

and a good relationship with the employee’s direct supervisor.

Wagner and Harter (2006), in their review of Gallup’s research, came to similar

conclusions that include having a valued opinion, working for a supervisor who cares

about the employee, and having the opportunity to learn and grow. What is clear from

both research groups’ data is that managers have the ability to create an environment

that stimulates engagement.

Creating Engagement: An Opportunity to Innovate

The data on employee engagement overwhelmingly points to a significant

opportunity for managers to innovate. The traditional methods of management clearly

focus on getting things done and not on the people doing them. In some respects these

results should come as no surprise. Business as we know it has focused more on the

results of organizations and not on the individuals who they are made up of. To truly

become management innovators we will need to focus on the individuals within the

organization to tap into their adaptability, resiliency, and innovativeness that can not

only contribute to the goals of the organization, but also, and maybe more importantly,
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to the sense of fulfillment of individuals within the organization who come to work each

day striving to make a difference.

There is no simple algorithm that equates to increasing engagement, but data

from the study of employee engagement over the last decade provides areas in which

managers can focus their innovation efforts (Towers Perrin, 2003, 2007; Wagner &

Harter, 2006; Gallup Consulting, 2008). To begin the initiative managers should ask the

following questions to better understand opportunities to increase engagement through

innovative solutions:

• How can the organization ensure all employees know what is expected of them?

• How can the organization provide employees with the opportunity to do what they

do best every day?

• How can the organization provide recognition and praise to employees?

• How can the organization encourage the development of employees and provide

career advancement opportunities?

• How can the organization make employees feel that their opinion counts, and

provide opportunities to make decisions that affect their work environment?

• How can the organization ensure employees feel a connection with the mission

of the organization?

• How can the organization do a better job of talking to employees about their

performance?

• How can the organization provide challenging work to employees and provide

opportunities to learn and grow?

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Discovering the answers to these questions can come in the form of a survey or

focus groups. The answers to these questions will provide an organization’s leaders

with insight into how to increase employee engagement. Traditional management

techniques are not likely to be linked to the answers of these questions. To create an

engaging environment will require innovative solutions to these challenging problems

found in most organizations.

Conclusion

People make up organizations, and when given the opportunity and the

resources they can make great things happen, so it is surprising how little attention has

really been given to them throughout the history of business. If one looks back on the

history of business theory most of the focus is on processes and not people. Few

innovations are likely to be found in these processes so the time has come to focus on

the people utilizing the processes. The 21st century manager has to make a paradigm

shift from just doing to dreaming and doing. The future of management lies in

developing innovative solutions that capture the full potential of employees.

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References

Fayol, H. (1930). Industrial and general administration. Geneva: International

Management Institute.

Gallup Consulting (2008). Employee engagement: What’s your employee engagement

ratio. Retrieved November 26, 2009, from

http://www.gallup.com/consulting/File/121535/Employee_Engagement_Overview

_Brochure.pdf

Hamel, G. & Breen, B. (2007). The future of management. Boston, MA: Harvard

Business School Publishing.

Hargrave, T. & Van de Ven, A. (2006). A collective action model of institutional

innovation. Academy of Management Review, 31, 864-888.

Harter, J. K., Schmidt, F. L., & Hayes, T. L. (2002). Business-unit-level relationship

between employee satisfaction, employee engagement, and business outcomes:

A meta-analysis. Journal of Applied Psychology, 87(2), 268-279.

Towers Perrin HR Services (2003). Working today: Understanding what drive employee

engagement. Retrieved November 10, 2009, from http://tinyurl.com/ybmyx78

Towers Perrin HR Services (2007). Closing the engagement gap: A road map for driving

superior business performance. Retrieved November 20, 2009, from

http://tinyurl.com/y9mhhtj

Wagner, R. & Harter, J. K. (2006). 12: The elements of great managing. New York:

Gallup Press.
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Wellins, R. & Concelman, J. (2005). Creating a culture for engagement. Workforce

performance solutions. Retrieved November 26, 2009, from

http://tinyurl.com/ydm5ek7