The recent "shareholder spring" and increased investor activism has drawn huge focus on corporate under-performance. Executives at Barclays, Citi Group, Goldman Sachs, Inmarsat, NY Stock Exchange, and Xstrata have been dealt a tremendous bruising for under-performance. Activism has claimed CEO scalps at Astra Zeneca, Aviva, and Trinity Mirror, and there's trouble looming for the executives at Centrica, Man Group, Premier Foods, Unilever, William Hill and WPP.
These won't be the last companies to feel the wrath of their shareholders. There is undoubtedly more to come.
This has led us to wonder why so many high profile executives are struggling to articulate their performance goals and justify their investments in cost controls and staff productivity. After all, the scalps are being claimed from some of the most experienced and previously highly-regarded executives in industry.
It's not through a lack of tangible evidence. Over the last decade, our research has delivered a wealth of facts showing direct causal links between an organisation's financial performance and investing in changing work practices.
For example, the gap between 'expecting change' and 'having successfully changed in the past' is 10 points smaller for financial over-performers compared to financial under-performing organisations.
The smaller gap is not because financially over-performing corporates face fewer challenges or expect less change – to the contrary, over-performers actually anticipate more change. It's quite simply that over-performers are more successful at managing workplace change.
The key to successful transformation is fundamentally changing the organisation's mind-set. For executives at large organisations, it is all-too-easy to be complacent. Realising successful mind-set change demands that executives cannot shrink from addressing outmoded work practice habits and conventions.
Research continually highlights the over-inflated opinions of executives when it comes to managing change, particularly the transformational nature of work change. In our latest study, we found that almost eight out of 10 (78 per cent) of executives describe themselves as competent at changing work practices. Yet, pose the same question to staff and only four out of 10 (42 per cent) believe their business leaders excel at changing work practices.
This 36-point reality gap shows an alarming a failure to understand the difference between linear 'process' change verses transformational change and the absence of clearly articulated analytic metrics.
The ability to change and adapt workplaces quickly and successfully is a critical skill. Here's a few pointers for business leaders charged with investing in new work practices;
Accept change as a state of being. In today's new economic landscape where markets, operations, and business models are in a permanent state of flux, clear management values and goals provide alignment and cohesion, and create a culture where employees are comfortable with change and unpredictability.
Hire, promote, and reward innovators and change leaders. Changing work practices demands visionary challengers – people who question workplace assumptions and stereotypes. They are willing to suggest radical, and what some might initially consider impractical, alternatives.
They must strategically place charismatic leaders who set direction, inspire, and move the organisation forward. And they must recognise that high performers deserve differentiated rewards to reflect their contribution to inspiring and changing the work practices.
Focus on delivering business outcomes. Our study of work practice change showed that three-quarters of organisations surveyed stated their approach to change management was usually informal, ad hoc, or improvised. However, transforming work practices demands change be defined and managed with precision analytics, structured around and driven to deliver defined business outcomes.
Analytics must track the tangible business benefits of work practice change together with ongoing management effectiveness. Strong work practice change management must be regarded as a core competence throughout all levels of an organisation and nurtured as a professional discipline, not an "art".
Operate like a venture capitalist. Business leaders must establish processes and structures that inspire innovation and transformation. This environment actively manages a portfolio of workplace strategies and investments, protecting and supporting the fledgling ideas whilst systematically weeding out the weak ones.
Analytics – getting smart about your workplace
In an environment of accelerating complexity, executives are feeling new pressures to act with speed and conviction. The workplace stands out as being particularly volatile, subject to uncertainty and critical to performance – especially when it comes to optimising forward-looking performance in three areas: cost control, staff productivity, and competitiveness.
Precision workplace analytics draw on statistical and behavioural models that integrate internal and external data and events to define forward investment decisions. The models help organisations focus limited resources on critical performance and cost control decisions – and do so inside 4-5 weeks.
Where leaders' experience and instincts were once their best guides, analytics now confer laser-sharp acuity about the environment organisations operate in today – and where they will find themselves tomorrow. Analytics allow business leaders to identify the components of complex workplace ecosystems, understand dynamics and interdependencies, make predictions, and recommend the best action to take.
Could it possibly be that the best outcome of the "shareholder spring" will be a long-overdue adoption of analytics for changing work practices – shifting what once seemed incomprehensible to being entirely knowable and predictable?