As the founder of Effectory, I have had a look behind the scenes at more than a thousand large and medium-sized companies that are doing well and not so well. So, what is the secret of the companies that are successful? Why has the shoe store vanHaren been a success and at the same time, Halfords went bankrupt? This is of course due to several factors, but by far the most important factor for the success of a company is the energy in the company.
In my opinion there are three interests that must be in balance for a successful company:
First of all there is the social interest. Why does a company do what it does and what is its social value? Or to say it in Simon Sinek's words: "What is the Why?"
You also have the organizational interest. A company must make a profit, grow and be professional to achieve that growth.
Thirdly, there is the individual interest of the employees. They must feel valued and taken seriously, not only through appropriate salaries and training, but also through experiencing good leadership and a pleasant, stimulating working environment.
If these three interests are all equally strongly represented within an organization, then the employee serves the organization and the organization serves society and energy flows. But with companies that don’t run well, a disproportionate amount of attention is often paid to one of the aforementioned three interests. And then it goes wrong.
Power game between three interests
If you make the social interest too big, as is often the case with charities, then there is a good chance that your organization will suffer from its own ideals. If you make the organization's interest too big, you can lose (social) relevance. Or the trust of employees. And if you make the interest of the individual too big, you can lose competitiveness.
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There is therefore always a power play between these three. Often, the interests of the organization win, when a board of directors constantly hears from its shareholders that more profits need to be made. Then the organizational interest quickly becomes disproportionately large. At the expense of other interests. Consider, for example, the broiler chicken and the crystal stamps from Albert Heijn, which put the company in a bad light, from which competitor Jumbo profited.
Wake up the board of directors
How do you balance the three interests within an organization? Have boards of directors, also because they are strongly driven by this, often primarily having the interests of the organization in mind. And many HR managers also opt for the interests of the organization, because they want to speak the language of the CEO and translate their HR objectives into the interests of the organization. The boards of directors mainly determine the direction of a company and therefore they must be the first to be woken up to look at the bigger picture.
At the same time we see an opposing force. Talented employees who have a choice, increasingly choose organizations they support. The organization is, as it were, used as a vehicle to serve society. So, if a board of directors doesn’t recognize the social interest, then millennials in particular are less eager to work for the organization. Consider, for example, Shell who had great difficulty recruiting technical talent because it was socially irresponsible. That was a big wake-up call for the Shell board of directors. Now, suddenly we see campaigns in which the company also embraces green energy, which increases the attractiveness to work there.
Sweet spot: involved and inspired
Employees who are involved in their organization and are passionate about their work have more energy and that’s where the sweet spot is.
For example, healthcare and legal staff are often enthusiastic about their work, but less involved with the company they work for. Here the organization must show more commitment. The other extreme are start-ups and hospitality companies, where employees are often very involved in the organization, but less enthusiastic about their work. So, here it’s important to make the content of the work more enjoyable.
Through employee feedback you can discover how employees really work. To what extent are they inspired and involved? How does that work per team, per age category, or per position? With a correct combination of questions you can get an exact insight into this sweet spot. This way you can go through any team with an app or gamification and use the knowledge gained to implement effective improvements.
An effective organization is an organization where energy flows and that makes it sustainably successful. A company like vanHaren is doing well because the management thinks along and is in touch with the employees. For example, they are allowed to make many decisions themselves about what happens in individual branches. People are happy here, energy flows here and more is sold. On the other hand, a once very successful company like Halfords went bankrupt because after a private equity acquisition it was run purely by bookkeepers. In such an organization, everything is dictated from above, from instore routing to margins. Then there’s no more room for entrepreneurship in the stores, employees no longer think for themselves and so their inspiration and energy disappears. So never lose sight of the human dimension!
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