5/30/2017 | Chuck Leddy

In Under New Management, bestselling business author David Burkus explains how leading organizations (many in the middle market) are innovating the way they work. Burkus, when not authoring business books, is a regular contributor to Forbes and Harvard Business Review, as well as a much sought after speaker. He’s also a professor of management at Oral Roberts University. The NCMM caught up with Burkus recently to discuss the management of middle market companies.

This is an edited transcript of our discussion. To hear the full interview with David Burkus, click on the podcast embedded below.
You open “Under New Management” by looking at F. W. Taylor. Who was he and why is he relevant to the management of middle market companies?
Burkus: Frederick Taylor was the father of scientific management. He was most active a century ago and he advocated for a different way of managing factories, which was the industry of the time. In management circles, we talk about his famous stopwatch and the idea that he was timing a different repetitive motion. But the core of his philosophy was this idea that it was the job of management to figure out what to do, how long it would take, and what type of person was required. And it was the job of labor to not think and respond to what managers told them to do. This was the beginning of defining the role of managers and defining it as the one who thinks and labor was the one who acts.
What factors have led to the present day “rethinking” of Fred Taylor's management approach?
Burkus: We need labor to think now. As we've shifted from an industrial economy to a knowledge economy to a creative economy, everybody needs to be thinking. They need to be creative, coming up with solutions for customer problems, innovative products, innovating processes. This idea that management knows best and labor's job is to just execute doesn't hold water anymore. 
So you see this trend towards self-managed teams. But even among traditional organizations, a lot of what an old-school manager once did is now up to individuals, because they know the work they’re doing better than the managers do.
The highly-successful supermarket chain Wegmans intentionally puts customers second. What could middle market companies learn from Wegmans?
Burkus: Wegmans isn’t saying that customers aren't important. We know that customer satisfaction is a big predictor of profitability. The problem is that customer satisfaction turns out to be a result of employee satisfaction. So Wegmans believes the way we get customer satisfaction is by focusing first on employees. Wegmans puts employees first so that employees can put their customers first.
Wegmans invests in employee knowledge. If you are working in the bakery, you’ll get sent to France to learn about bread-making or cheese. A lot of Wegmans HR and benefit systems are top-ranked, enabling them to invest in their employees' knowledge and passions, so employees can then shine in finding the right product for the right customer. 
Why might middle market companies want to offer their employees a bonus to quit their jobs?
Burkus: Online retailer Zappos pioneered this idea when they were a small and then medium-sized company. The idea is simple: after employees have gone through primary training, they understand the Zappos culture; they understand the level of performance that is required of them. Every employee is then given “the offer”: if you feel you’re not a good fit, Zappos will pay you a month's salary to quit right there.
This “bonus to quit” works. Zappos would rather know about a “bad fit” now than six months from now. The overwhelming majority of employees don't take the offer. If an employee doesn’t take the offer, then you have confirmation bias at work trying to strengthen why you decided not to take the offer. The employee starts actively looking for reasons to stay. For middle market companies, this is a great deal because you get the benefits of a more engaged employee and you didn't have to pay the bonus because people didn't leave. 
How might middle market companies rethink the way that they manage employee performance and conduct annual performance reviews? 
Burkus: Many large organizations are now deciding that the annual performance review isn't worth the effort. So before middle market companies revamp their performance review process, it might be better to eliminate it entirely and/or replace it with a managerial coaching program, which is what tech firm Adobe did. Adobe skipped the annual performance review, but they trained managers on coaching. Adobe managers learned to conduct check-ins, which is a three part conversation focusing on expectation, feedback, and growth and development. As long as you can have an honest conversation with your employees, and do it more frequently, you end up driving higher employee morale and performance.
How might middle market companies think about better designing work spaces to enhance employee engagement?
Burkus: There is definitely a trend right now towards open offices, where everybody works at large tables or in a bullpen like Mayor Michael Bloomberg had with New York City. Open offices support collaboration and serendipitous insights, but also tend to be cheaper with smaller square footage per employee. A lot of organizations are finding out now that it's not worth the money saved because of increases in employee stress and decreases in productivity. 
Middle market companies need to be looking at more effective uses of space. Open versus closed is a false choice. We need to be designing spaces that can accommodate lots of different styles and ways of working. 
How can middle market leaders rethink the ways that they try to give employees autonomy while keeping them aligned with organizational goals?

Burkus: Middle market companies should begin asking the question "How much self-management can my employees do?" Yes, we do need to keep them aligned with the organizational goals, but the question isn't “should they have a manager or not?” We need to be thinking about what teams can do to manage themselves and how much autonomy we should give to them. It’s a continuum and every company is different, especially in the middle market. Autonomy can increase motivation, and you often end up better managed when your employees are self-managed.
What  final thoughts might you have for middle market leaders who want to start rethinking their approaches to management?
Burkus: When it comes to innovating the way you work, you can get a lot of traction just by looking around your existing management approaches, your existing policies and procedures to see if there are things that are well-meaning, but are blocking employees from doing their best work. A lot of the practices that are profiled in Under New Management actually started with processes of elimination. You can get a high return on investment just by finding the things that your people are frustrated about and finding a way to eliminate them. 

Listen to "David Burkus Interview" on Spreaker.