Speed Review: Under New Management

Speed Review: Under New Management

Speed Review: Under New Management

How Leading Organizations Are Upending Business as Usual

by David Burkus

Dr. David Burkus is a highly regarded and increasingly influential business school professor who challenges many of the established principles of business management. Drawing on decades of research, Burkus has found that not only are many of our fundamental management practices wrong and misguided, but they can be downright counterproductive.

Review

Revolutionary Ideas Hit Management

“Management,” declares business school professor and author David Burkus in the introduction to his new book, “needs new management.” According to Burkus, too many companies are clinging to old assumptions, old processes and old habits that have grown obsolete. In Under New Management: How Leading Organizations Are Upending Business as Usual, he introduces a number of modern, sometimes surprising, approaches to management that directly challenge past practices and attitudes.

Burkus describes, for example, how some companies let employees take as much time off as they want. There is no allocation and monitoring of vacation days: If you want to take a vacation, take a vacation. Burkett also describes the concept of paying employees to quit. The longer you’ve worked at a company, the more cash you will get paid for quitting (up to a certain threshold).

A sample of the other new management approaches covered in the book includes

  • Banning emails
  • Eliminating managers
  • Making salaries transparent
  • Abandoning open-office layouts
  • Putting customers second.

Although they may sound counterintuitive, if not fanciful in some cases, all of the new approaches presented by Burkus have been successfully implemented. The concept of paying employees to quit, for example, was made famous by Zappos, which will pay $4,000 in cash if new employees quit their jobs. Amazon has pushed the concept even further, offering cash for quitting once a year (the offer is a one-off at Zappos). The first year, employees are offered $2,000 to quit, and the offer goes up $1,000 every year after that until it reaches $5,000. The annual offer then stays at the $5,000 level.

Eliminating managers is one of the more surprising concepts in the book, yet it has also been successfully implemented. Burkus describes how new employees at Valve Software, an online gaming development firm estimated to be valued at $3 to $4 billion, have to get used to the fact that no one will tell them what to do. Full autonomy, in the opinion of company founders Mike Harrington and Gabe Newell, is the best way to enable and encourage full creativity and initiative.

Burkus does more than simply profile companies with interesting practices. He uses academic research and other sources to explain why these practices are effective. For example, employees who accept the cash-to-quit payout were probably not very engaged, and the company is better off without them. Those disengaged employees, however, would probably not have left because of the concept of “sunk costs” — they’ve invested time and effort in getting the job and are reluctant to leave it. The cash payment works because it disarms the sunk-costs concerns keeping unhappy employees.

The true value of the cash offer, however, is with the employees that turn it down. Behavioral research cited by Burkus shows that people tend to adjust their opinions and conclusions to justify their decisions. This is known as a response to post-decision dissonance. Thus, the employees who refused the cash think to themselves, “I must really like this job because I turned down money to leave it.”

Not All Radical Ideas

Not all of the ideas are as radical as paying people to quit or eliminating managers. The practice of team hiring — having a number of people involved in hiring decisions — is also becoming popular among many companies. For even the more familiar concepts, however, Burkus offers the research that supports the new approaches, and demonstrates through actual case studies the power of doing things differently. For example, Whole Foods has taken the idea of team hiring to a higher level. When new employees join the company, they provisionally become part of a team. After a certain period of time, that team votes on whether to keep the new employee. If the new employee is rejected, he or she must find another team or leave the company.

The value of Under New Management extends beyond the introduction of a number of innovative management ideas. Burkus has done the research to convince his readers that even the most surprising new practices in his book will work. Under New Management offers revolutionary ideas that are also practical and proven.

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