Management Innovation and Employee Engagement … · Management Innovation and Employee Engagement 1 Challenges for the 21st Century Leader: Management Innovation and Employee Engagement

Management Innovation and Employee Engagement 1

Challenges for the 21st Century Leader: Management Innovation and Employee Engagement

Scott Thor


21st Century Management Challenge

The modern organizational leader is being challenged like never before to constantly

improve as global competitive pressures continue to rise. Managers of the 21st century are faced

with the task of creating high performance organizations to stay competitive in a global

environment. Management innovation and employee engagement represent two significant areas

in which leaders of the 21st century will need to focus their efforts to remain globally

competitive.

Over the past century the art and science of management has made significant strides in

improving organizational performance. Most of these improvements have focused on the process

of work. Hamel (2006) identifies 12 innovations that have shaped modern management that

include the following:

1. Scientific management (time and motion studies)

2. Cost accounting and variance analysis

3. The commercial research laboratory

4. ROI analysis and capital budgeting

5. Brand management

6. Large-scale project management

7. Divisionalization

8. Leadership development

9. Industry consortia (multi-company collaborative structures)

10. Radical decentralization (self-organization)

11. Formalized strategic analysis

12. Employee-driven problem solving (p. 80)


Each of these management innovations focuses on processes utilized by the organization.

An argument could be made that the focal point of management innovation in the 20th century

has been toward driving operational efficiency within the organization, and less emphasis has

been placed on individuals responsible for the execution of the processes. Towers Perrin (2003,

2007) and Gallup Consulting (2008) give credence to this argument, reporting that in the average

organization only 20 to 30 percent of employees are engaged in their work.

Why are so many people disengaged with their work? One argument, suggested by

Hamel (2007), is that management is out of date. For the past century the role of management

has been primarily utilizing techniques and methods that were created by individuals born in the

19th century. Hamel argues that modern management techniques do little to capture the initiative

and creativity of employees, which one could argue may be the reason for such low engagement

levels.

Albert Einstein is noted as believing that the same level of thinking that creates a problem

is unlikely to solve it. He was not talking specifically about management, but the point may still

be valid in that a new method of thinking about management problems may be needed to solve

them. It could also be argued that the existing methods of management thinking are in part to

blame for such low engagement levels in the typical organization. Perhaps the current

management methods have failed to keep up with the needs of employees, contributing to less

engagement. Gallup (2008) research shows that 63 percent of employees at world-class

organizations are engaged in their work. Is one of the reasons for such high engagement due to

innovative management techniques? This study seeks to understand whether or not a correlation

between management innovation and employee engagement exists.

Literature Review


Both management innovation and employee engagement are relatively new areas of

organizational research. Only within the last twenty years have researchers, academics, and

consulting organizations begun to focus their efforts on better understanding these elements and

their affect on organizational performance.

Management Innovation

When one reads about innovation thoughts rarely turn to the process of management. The

process of management is typically thought of as the traditional tasks of planning, organizing,

commanding, coordinating, and controlling (Fayol, 1930). Little research has been done on the

concept of management innovation. Early research included Kimberly (1981) who studied

management innovation related to health care, and Abrahamson (1991) whose research focused

on fads and fashions of management innovation and why some gain popularity and others do not.

Only recently has management innovation begun to gain popularity in the academic and business

world (Birkinshaw, Hamel, & Mol, 2008; Hamel, 2006; Hamel & Breen, 2007; Hamel, 2009;

Kaplan, 1998).

What is management innovation? No widely accepted definition has been generally

adopted, but several authors have proposed definitions that have many similarities amongst them.

Management innovation can best be defined as the process of inventing and implementing novel

management techniques, processes, structures, or practices that result in the advancement of the

organization in achieving its goals (Birkinshaw, Hamel, & Mol, 2008; Hamel, 2006; Hamel &

Breen, 2007; Hamel, 2009; Hargrave & Van de Ven, 2006; Van de Ven & Poole, 1995). Not

unlike other types of innovation such as product, process, and technological, management

innovation is based on finding new ways to improve the performance of organizations.


Reviewing the existing management innovation literature, Birkinshaw, Hamel, and Mol

(2008) have identified four distinct perspectives that include the following:

1. Institutional

2. Fashion

3. Cultural

4. Rational

The institutional perspective examines the environment in which management innovation

occurs from a macro view. The primary focus of this perspective seeks to understand what

conditions stimulate management innovation and cause them to spread across an organization

(Birkinshaw, Hamel, & Mol, 2008).

Fashion, a second perspective of management innovation, focuses on the supply and

demand of innovations between the managers using the ideas and the fashion-setters creating the

ideas. This perspective views management innovation from both a micro and macro perspective

and seeks to understand the reasons why managers buy into some ideas and not others

(Birkinshaw, Hamel, & Mol, 2008).

The cultural perspective seeks to understand how management innovation affects

organizational culture and the affect culture has on management innovation. This perspective

attempts to look at the interaction between individual attitudes towards management innovation

and how the organization introduces them to individuals (Birkinshaw, Hamel, & Mol, 2008).

Building on the idea that individuals within organizations create management innovations

to enhance performance is the basis for the rational perspective. The advocates of this

perspective believe individuals develop and implement innovative solutions to specific problems

facing the organization, and then lead the effort to implement and make the new technique,


practice, process, or structure part of the organization’s culture (Birkinshaw, Hamel, & Mol,

2008).

Sie, Chu, and Chen (2007) have a different viewpoint of management innovation and

offer three categories of innovation that include:

1. Organizational

2. Information

3. Technological

Organizational innovation relates to ways of organizing work. Some examples of

organizational innovation include TQM, Six Sigma, employee empowerment, and self-directed

work groups. Innovations in these areas are aimed at improving the performance of an

organization (Sie, Chu, & Chen, 2007).

Informational innovation is created through a complex interaction of individuals,

organizations and the data they use to make decisions (Sie, Chu, & Chen, 2007). Examples of

this type of innovation include enterprise resource systems, email, and web blogs.

Technological innovation is related to any technology that helps an organization quickly

adapt to change, which is essential to compete in a global market (Sie, Chu, & Chen, 2007).

Examples of this type of innovation include point of sale systems and consumer survey tools.

Employee Engagement

The concept of employee engagement has increased in popularity recently with large

consulting organizations such as Towers Perrin (2003, 2007) and Gallup Consulting (2008)

reporting exceedingly low engagement numbers for the majority of organizations throughout the

world. Both organizations report that employee engagement levels range between 20 and 30


percent of employees, and have linked engagement to business results, pointing to a significant

opportunity to improve organizational performance.

Khan (1990) first wrote about the concept of employee engagement in the psychological

literature describing engagement from three aspects that include emotional, cognitive or physical

engagement. Khan believes that employees can be engaged in one or more aspects at the same

time, and the higher an employee is emotionally and cognitively engaged the higher their

personal engagement will be. Khan argues that people experience states of engagement and

disengagement throughout the workday.

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 (2005) describe employee engagement as, “the illusive force that motivates

employees to higher levels of performance” (p. 1). No single definition exists that researchers

have agreed upon. Some suggest that engagement is a product of the workplace environment

while others suggest it relates more to what an employee brings to the workplace.

What creates engagement is more consistent between researchers and consulting

organizations. Gallup Consulting (2008) has been using a tool they call Q12 since 1998 that has

been utilized to measure the engagement levels of more than seven million people in 112

countries. In their research of organizations with highly engaged employees they have found that

12 key elements have a significant impact on employee engagement. The 12 elements include

the following:

1. Knowing what’s expected

2. Having the right equipment and materials

3. Being able to do what an employee does best everyday


4. Recognition and praise

5. Having someone at work who cares about the employee

6. Encouraging development of the employee

7. Having an opinion that seems to matter

8. Being connected to the mission of the organization

9. Working with fellow employees who are committed to quality

10. Having a best friend at work

11. Discussing progress with a manager on a routine basis

12. Being able to learn and grow (Wagner & Harter, 2006)

The surprising aspect of the 12 elements Gallup describes is that they do not include

compensation. Although compensation can be important to recruiting employees it is not a factor

in creating engagement (Towers Perrin, 2007). Wagner and Harter (2006), in their research of

Gallup’s data, believe that pay works in concert with the 12 elements of engagement. They

believe that money by itself is not a motivator, but coupled with the aforementioned elements it

helps drive engagement. When paid the same amount, an engaged employee is more likely to be

satisfied with their level of compensation than a disengaged employee. In relation to pay, similar

to the 12 elements of engagement, what employees give back to the organization links directly to

what the organization does for them.

Wagner and Harter (2006) have similar conclusions as Towers Perrin (2003) in relation

to managers having the most significant impact on creating engagement. Towers Perrin cite 10

critical factors in creating engagement that include:

1. Senior managers who have an interest in employees’ well-being

2. Challenging work


3. Decision-making authority

4. Evidence that the company is focused on customers

5. Career advancement opportunities

6. The company’s reputation as a good employer

7. A collaborative work environment where people work well in teams

8. Resources to get the job done

9. Input into decision making

10. A clear vision from senior management about future success (p. 9)

Each of the characteristics identified by Towers Perrin are directly controlled or

influenced by management. Both Towers Perrin and Gallup have similar themes in creating

engagement that center on developing an autonomous environment where employees have what

they need to do their jobs well, can make decisions, have opportunities to be challenged and

learn, and be surrounded by people who care about them and see their work as important in

making a contribution to the organization’s objectives.

Not surprisingly, both Towers Perrin (2003, 2007) and Gallup (2008) report that

organizations where engagement levels are high have better financial performance, less turnover

and theft, and fewer accidents. Towers Perrin (2003) also reports that engagement levels

correlate to job levels within an organization. Senior executives have the highest levels of

engagement while non-management hourly workers have the lowest. When one begins to look at

the typical day of an executive making decisions, being challenged to solve problems, etc., and

compares it to an hourly worker who mostly follows directions and produces a product or

provides a service, it is easy to see why engagement levels drop in the lower ranks.

Conclusion


The literature is clear on what creates engagement, and the data suggests managers of the

future have a significant opportunity to improve organizational performance by simply engaging

employees in their work. What is less clear are the methods upon which to create the

engagement. Innovative management techniques will likely need to be developed to increase

engagement. The techniques, processes, structures, and practices of the past are arguably the

foundation upon which managers need to build modern solutions. A complete rebuilding of

existing management techniques is likely not the solution to the engagement problem, but a new

viewpoint is needed that focuses less on the process of work and more on those doing the work.


References

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Management Innovation and Employee Engagement … · Management Innovation and Employee Engagement 1 Challenges for the 21st Century Leader: Management Innovation and Employee Engagement