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Change Management

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In talk with Doug Kirkpatrick, former CFO of 'Morning Star'

We had the pleasure to meet and discuss with Doug Kirkpatrick, who is the former CFO of Morning Star, the world’s largest tomato processor and long term self-managed organization. He is a consultant and book author of ‚Beyond Empowerment: The Age of Self-Managed Organization’. We discussed ways of transformation towards self-management and discovered the two at first sight contradictory elements: Belief and Economics.

Belief: The fundamental principles

To understand the core principles of Morning Stars organizational system it makes sense to have a brief look at the company’s history. After having operated in the industry for several years the founder and the management team realized limitations and found two epiphanies: It was just a waste of time for the CEO to sign every single piece of document. People make big decisions in their private life - like buying a house, just to name one. They are able to do so. Why shouldn’t they be able to take on more responsibility in their professional life?

Based on these considerations, two basic principles of human interaction crystallized and were applied as the organization’s core principles: First, no person should use force against another, and, second, stick to commitments – or renegotiate. These fundamental beliefs shall ensure a better place to work, happiness and prosperity. Going ‚beyond empowerment’ seemed logical and necessary since empowerment just meant loaning power to employees, and so could be taken back any time. The consequence was a totally hierarchy-free company, no bosses.

26 years later, there is (still) no traditional management in place, every ‚colleague’ at Morning Star acts according to his/her best possible contribution to the company’s mission and his/her personal concretization of the company’s mission, stating why, what and how to contribute.

The economics of self-management

Obviously these principles seem to work good enough to allow the organization to survive for almost three decades. Morning Star did not just survive but performed well. In terms of costs, e.g., they set a new industry benchmark, which, in combination with a high quality standard, made them become market leader. One of the underlying economic principles, Doug described, is the ‚Management Tax’.

Since everyone in the company takes his or her part of management tasks according to the agreed roles and responsibilities, manager per se are not necessary. Now assume that on average a manager earns three times as much as an employee and calculate the savings of not having paid people extra for doing management tasks. Depending on size, a quite huge amount of ‚tax’ is saved every month, every year. Economics of self-management, although, do not just mean direct cost effects. Much larger impacts come from the colleagues as ‚experts’ who understand  their tasks, fulfill their roles and, in discussion and alignment with colleagues. They find the best way to deal with challenges and contribute to the company’s purpose. The level of engagement is high and retention is so, too. Having in mind that average rate of employees who claim to be really engaged is, depending on the source, around 25-30 %, this should be reason enough to start thinking about introducing – at least selected aspects - self-management.

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