managing talent

The Real Bottom Line Impact of Managing Talent Through Freedom, Not Fear

By Traci Fenton

In 1964, in a farsighted Harvard Business Review article entitled, “Democracy Is Inevitable,” Warren Bennis and Philip Slater argued that organizational democracy and more freedom would be the trend in both the workplace and in the world because it is the most efficient system in times of unrelenting change.

They were right.

Today, we live in a time defined by unprecedented demands for participation, collaboration, and inclusion. The ideals of freedom and democracy are under pressure, even while they keep lifting us higher.

So what does that mean for us—leaders of organizations managing talent, HR executives, business owners, and entrepreneurs?

Customers expect us to listen to their valuable feedback as we develop the next version of our products or services. Employees are desperate to contribute their best ideas and greatest talents. Communities want us to be part of the conversation about growth and development.

If we ignore their demands, we’ll suffer the consequences.

To succeed in this new age, businesses must be freedom-centered (engaging, responsive, efficient, and adaptive). Outdated practices for managing talent based on control and fear only make meeting the new challenges harder.

Managing Talent Through Fear Doesn’t Work

Is fear rampant in your organization? You might not think so. The word fear sounds extreme. But look around and answer these questions honestly:

• How important is politicking?

• Who gets ahead, and why?

• How many departments or divisions are run as fiefdoms?

• What was the last great idea the company pursued that didn’t come from an executive?

• What is your employee turnover rate?

Most companies are driven by a fear-based mindset, leadership style, and organizational design–and they don’t even realize it. Fear runs throughout every level, from the front lines to the C-suite. Fear at work is hugely detrimental to a company’s ability to achieve its full potential and build a high-performing workplace culture.

Can we really be engaged when we are afraid?

Are we really innovative when we are afraid?

Do we really make wise decisions and do we give new ideas a chance when we are afraid?

Nope.

What is the solution? Freedom at Work.

For over 20 years WorldBlu has learned from, taught, and worked with leading brands—such as Zappos, Hulu, Pandora, DaVita, New Belgium Brewing, Menlo Innovations and the WD-40 Company. These organizations have focused on managing talent via freedom, not fear, thereby delivering high-energy, high-growth, and high-performing workplace cultures.

In the Freedom at Work™ system we have codified for how to create the optimal environment for success. It involves three key elements—cultivating a company-wide freedom-centered mindset, leadership style, and organizational design. Below are two examples of the system in action.

DaVita Case Study: From Bankruptcy to Revenue Growth

In 1999, a public company known as Total Renal Care (TRC) was going bankrupt. About half of the executives had quit or been fired, and the company was being investigated by the SEC and sued by shareholders.

As Kent Thiry, the man who would become CEO, said, “It was a brutally negative place. People were angry and scared.” KT, as he is called within the organization, was hired to lead the company out of the chaos.

KT’s first move with his new team was to focus on creating a meaningful, democratic community with the approximately 9,000 people who worked at TRC with the hope that they would offer their patients better care and share their gifts with the wider world.

Maybe a third of the leaders thought it was a ridiculous idea—that the ability to make payroll would be good enough. Another third thought it was a nice idea, but would fade away given the problems the company faced. But the last third or so connected with the new vision.

In KT’s words, they said, “I’ve always wanted to work someplace where that was one of the core objectives, to make it a meaningful place to work.”

One of the early initiatives was developing shared core values. Leaders spent more than eight months meeting with teammates in small groups around the country, asking, “What would you like to have emphasized? What would you like to have honored?”

After months of discussion, they held a democratic election and teammates voted on the final set of six values (the seventh core value of fun was voted in later). They also voted on a new name—DaVita, which is Italian for “he/she gives life.”

At DaVita, a WorldBlu certified Freedom-Centered Workplace since 2008, teammates begin their careers with the One for All training program, a comprehensive look at the company’s mission, core values, and Trilogy of Care. And everyone can call-in to the quarterly “Voice of the Village” calls modeled after Town Hall meetings. During the Q&A session at the end, any teammate can ask any question and provide advice on any aspect of the company.

KT, fondly referred to as the mayor, as well as the executive team, responds honestly and with transparency. DaVita is a place where people feel a sense of citizenship, they care about each other without relaxing performance standards, and they see themselves as stewards of the culture and the company:

“We embrace freedom and democracy at DaVita HealthCare Partners because it’s fundamental to being a community first and a company second. Central to that philosophy is maintaining a work environment that promotes engagement at all levels. A democratic workplace stresses collaboration and a team-based environment ensures that everyone has a voice, thereby promoting full buy-in to a company’s new strategy and direction.”

Revenue growth is one of the greatest measures of organizational health and sustainability. Today, DaVita is a publicly-traded company with more than 52,000 employees worldwide and over $15 billion in annual revenue. According to an independent analysis, companies that practiced the proven Freedom at Work™ system achieved on average 7 times greater revenue growth over a three-year period compared to S&P 500 companies.

Menlo Innovations: A Story of Resilience In Business

Revenue growth is important, but what about resilience—the ability to survive and thrive during times of change?

Challenges in the economic and business environment—large and small—will never go away, and in the past decade they have been greater than at any time since the Great Depression. Again, what we found is that companies that practice the Freedom at Work system out-perform industry norms.

During the Great Recession, over 10% of companies failed (meaning they went out of business), whereas WorldBlu companies practicing Freedom at Work had only a 4.6% exit rate, proving to be much more resilient during challenging economic times.

One company that stand as model to freedom rather than fear in the workplace is Menlo Innovations, a small custom software design firm in Ann Arbor, Michigan, that is known for its unique approach to work—an approach based on freedom and organizational democracy. Their president, Richard Sheridan, won’t pull punches when he talks about their struggles during the Great Recession:

“You can be resilient, but if your customers aren’t, you’re yelling into a very empty pipeline. All the companies that had big projects in play either stopped answering the phone or began saying, ‘A month from now. A month from now.’ That went on for almost three years. Fear reigned supreme. Real fear, not manufactured fear where the main question was: ‘Are we going to survive?’”

Yes. They did!

How did their unique approach to managing talent help them endure when revenues plummeted?

A big component was their very personal approach to work reduction. “At Menlo, we have a shared pain, shared reward pay system. When our core economic engine slows down, everyone in the company begins making less money, including the founders.”

Freedom, along with accountability, massively contributes to a company’s ability to attract and retain top talent, fully engage their people, and build a workplace environment where everyone can thrive.

But the leaders at Menlo didn’t take an across-the-board approach. Instead, they asked a critical question: “Who needs work more than others?”

One team member, Dan, was close to retirement and said, “Send me home.” He was financially secure, and he would use the extra time to work on personal projects, like building a small airplane. When they needed him, he would be there.

Other employees said, “I need as much work as you can give me.” Maybe they had young families or spouses who had been laid off.

“We just kept gathering the team together, listening to people’s stories, and paying attention,” Rich explained. “Some could take one for the team for the greater good, and some couldn’t. We empathized with them. We became a better team—more human.”

It would be wonderful if we could report that all Menlo employees got the level of work they needed, but that’s not reality. Menlo did not have enough work to go around and had to shrink. Employees who needed more steady income left. But the company helped them find new jobs and told them that they were welcome to come back when the economy and the business turned around.

And of course, it did.

Following the Great Recession, in April 2011, most of those clients who had put their projects on hold were ready to start-up again immediately. The team stepped up, reformulated, and made an amazing revenue year happen. Those who were available came back on board.

For Rich and the other partners at Menlo, their agility was proof of their freedom-centered, rather than fear-based, culture and design:

“People remember how you treat them in tough times. Whether they stay or not, they tell stories about you. And that pays incredible dividends. You have to get the people you need, but the bigger challenge is getting their minds, their hearts, their spirits. If they’ve left those at home, you’re not getting their best work, productivity, or engagement.”

Despite the fear they felt at Menlo when the recession took hold, leaders continued to operate with a freedom-centered mindset and design. The result was the engagement, agility, and innovation that would ensure their continued growth and success to this day.

Freedom, along with accountability, massively contributes to a company’s ability to attract and retain top talent, fully engage their people, and build a workplace environment where everyone can thrive. Freedom at Work is not a utopian concept—it’s a powerful organizational system and strategy that is proven to deliver sustainable revenue growth and resilience. And that’s something any business leader should want.

Traci Fenton Traci Fenton is the founder and CEO of WorldBlu. Learn about the Freedom at Work™ system at the exclusive Freedom at Work Experience, happening Oct. 22-23, 2018 in San Diego. Watch WorldBlu’s complimentary training on how to transform your mindset, leadership, and culture at www.WorldBlu.com.

Image Credit: Robb Leahy on Unsplash


Know the pulse of your team each week and improve employee engagement with 15Five.


Leadership

Recommended Posts

Increase Productivity And Employee Performance Or Boost Innovation – Which Would You Choose?

Recent trends point to a future work culture where remote teams are the norm. When geography stops mattering, you can source the best team...

Read More

Confessions Of A CEO: 5 Lessons To Improve Organizational Health At Your Company

Have you ever watched helplessly as your company was undergoing immense strain or was even burning to the ground? What did you do about it?...

Read More
Human Resources Today