Freedom, Inc_ - Brian M. Carney [18]
Toyota’s performance is impressive, but it is possible to go much, much further than it has done—as we shall see. Even so, its very existence is a standing rebuke to the executives of other automakers who argue that they are doing the best they can with the tools and the people they have.
The companies in this book compete in a wide array of industries, from manufacturing to services and technology. Each of them is proof that, whether you are in insurance, manufacturing, software, or some other field, you can set your people free and reap the rewards of their knowledge and initiative. If, like GM, you have the misfortune of competing against a world beater like Toyota, you may already feel the pressure to understand what makes them “great” while you are merely “good.”
But if there is no Toyota or Gore or FAVI breathing down your neck—or leaving you in the dust—you may suppose that the old, supposedly proven ways of managing people and businesses are just fine. After all, there are plenty of profitable and even growing companies out there that no one—least of all their employees—would call “free.” It’s fair to ask whether, at the end of the day, there is anything wrong with that. To answer that question, we need to take a closer look at the performance of these traditional firms.
THE HIDDEN COSTS OF “HOW” PERFORMANCE
Great Britain’s Royal Mail is the oldest and most famous post office in the world. In the early 2000s, on any given day, 10,000 of its 170,000 employees were absent without any valid reason. Desperate to reduce absenteeism, the post office offered raffle tickets to employees who bothered to show up for their jobs for six months without missing a day. The prizes included thirty-four $24,000 cars and sixty-eight $4,000 holiday vouchers.11
We can assume that this lured back at least some of the malingerers. But we’re willing to wager that the managers of the missing ten thousand employees would have been just as happy if they’d stayed home. In offering enticements totally extraneous to their work—on top of, you know, paying them—the Royal Mail was engaged in an extreme version of treating the symptoms rather than the disease. It must have seemed far easier to the Royal Mail’s top management to offer prizes than to examine why they had such a terrible absentee problem. Dave Ward, the local union official, offered them some free advice: “The company needs to get to the root of the problem, which is low morale, poor pay and conditions. That is the cause of sickness and absenteeism.” Now, union officials always say that more pay will mean more-productive workers. That’s their job. But by bringing in low morale—disengagement—Ward was on to something, even if it is a subject that management wants to talk about even less than low pay. Increasing pay is, at least in principle, something management can easily do if it wants to. But improving morale is a lot harder than signing a check—because it requires management to examine their role and the structures they put in place that contributed to the problem in the first place. Far better, then, to ignore the causes and attack the symptoms—in the case of the Royal Mail, bribing employees to do what they had already legally contracted to do.
The Royal Mail’s “solution” was extreme, and this institution, in many ways, is incomparable to better-performing companies. Most good firms, especially private ones, are motivated by profit and never allow things to get quite that bad. Absenteeism cost the Royal Mail $500 to $700 million a year; few private firms can afford a deadweight loss like that—as even GM has recently discovered. But all around us, every day, most of our organizations, large and small, instead of addressing