How devolved management is sweeping through business

14 May 2015 -

As George Osborne outlines further plans to hand power out to big UK cities, we look at how managers have farmed out big decisions to their staff

Jermaine Haughton

A Cities Devolution Bill will be in the Queen’s Speech later this month, chancellor George Osborne has confirmed, handing some of the UK’s largest urban centres power over their own housing, transport, planning and policing. The plans build on measures that – as Insights reported – have already been announced for the Greater Manchester area, and show that the Conservatives are enthusiastic about putting big choices in regional hands.

But this trend is not restricted solely to politics – it is also very active in business, where some bosses have taken innovative steps to boost employee engagement by empowering their staff.

Here are six examples of firms that have farmed out decision making to their ground troops…

1. Permanent vacation?

In keeping with boss Richard Branson’s mantra “empower your employees, don't rule over them”, the tycoon brought in an “unlimited leave” policy last autumn. The new system hands all UK and US staff blank cheques on the number of days they can take each year, and the amount of consecutive days they take at any one time. Workers are free to make those decisions without approval from managers. Branson was inspired to kick-start the policy after his daughter Holly drew his attention to a similar policy at the fast-growing Netflix, which had led to marked improvements in the US media firm’s morale, creativity and productivity.

2. Hotline to the top

Since going public in 2004, technology giant Google has come on in leaps and bounds from its search engine roots, garnering fame for winning forays into mobile, online content and media production. This has all been driven by the firm’s innovation policy, which encourages its workers to think entrepreneurially, welcomes new and disruptive business ideas and makes staff feel like integral parts of the overall business strategy. Google’s 30,000 staff are able to directly email company leaders with their concepts, and are allowed to abandon their main tasks to work on impromptu “Fixit” challenges, where they must solve a specific problem in 24 hours. Google People Operations senior vice president Laszlo Block explained: “We try to have as many channels for expression as we can, recognising that different people, and different ideas, will percolate up in different ways.”

3. Paradise Hotel

Devolving powers to staff is not just a chance for them to share their ideas, but to feel confident in carrying out their roles. Luxury hotel brand Ritz-Carlton has nailed this by entrusting each employee with $2,000 of company funds per day – for every guest they deal with – to guarantee excellent customer service. Ritz-Carlton Leadership Centre chief Diana Oreck explained: “We are saying to our employees – we trust you. We select the best talent – just help the guest. We do a lot of training around empowerment. So I would say this: you need to empower employees. You also need to make sure that you are inspiring employees to bring their passion to work every day and to volunteer their best. And you do that by reinforcing their purpose – not their function.”

4. Crunching the rules

PR expert and business author Carmine Gallo described how Apple Store cleverly turns customers into evangelists by empowering staff to do whatever it takes to provide excellent customer service – even if that means flouting company policy.

Gallo shared an anecdote of how his brother missed a 30-day renewal window for his membership of Apple Store’s “One to One” scheme because he was recovering from a back problem. Gallo wrote: “When my brother told the story to a customer service specialist the first thing the employee asked was, ‘How's your back now?’ My brother was pleasantly surprised because he didn't think any employee would bother asking him about his health. After a short discussion the Apple specialist said, ‘I’d be happy to accommodate you,’ and allowed my brother to renew his membership without a hassle – even though he visited the store months after the 30-day window had ended. The specialist had technically violated store policy because he was empowered to do what is best for the customer.”

5. Turning it upside-down

Manchester-based retailer Timpson has been going for more than a century, but its recent innovations in management structure have been crucial for its evolution into a £100 million-plus company. Boss John Timpson made the bold step to reformat the firm around his “Upside-Down Management” philosophy, founded on a desire to have happy customers and provide great jobs. As long as shop workers committed to looking professional and making decisions that put smiles on customers’ faces, they were free to charge whatever they liked for store products and could spend up to £500 to settle a customer complaint without management say-so. Timpson stressed that frontline shop staff are the company’s most important asset and, like Ritz-Carlton, it is important to give them the confidence to perform at their best. “You can train for the job,” he explained, “but you can’t train for personality.”

6. It takes a village

A staunch believer in the principle of participative management – initially proposed in Douglas McGregor’s landmark 1960 tome The Human Side of Enterprise – Semco boss Richard Semler attributed his company’s success to its flexible leadership structure. The “company as village” philosophy that McGregor extolled trusts employees to apply their own creativity and ingenuity in service of the whole enterprise, and to make important decisions close to the flow of work. As such, Semco’s employees set their own work hours and pay levels, while frequently reviewing – and even firing – their supervisors. Staff have the power to elect corporate leaders and they are not restricted by any organisation charts, five-year plans or policy statements.

If CMI’s recent Management 2020 report is anything to go by, devolved management could be more common as time goes on and “Generation Y” employees become more of a force in the workplace. The report noted: “Millennials tend to be extremely independent and resistant to micromanagement … Instead, members of Generation Y prefer to be self-managed and receive feedback and coaching, rather than subject themselves to more traditional “management”.

Find out more about Management 2020.