In our first article, we introduced some of the founding principles and practices of self-managed systems of working (little or no hierarchy, autonomy and choice with alignment to team, functional and enterprise-level goals and prioritised objectives).
And it’s the latter here—goals and objectives—that still frame how a self-managed organisation sets itself up to succeed.
Self-management in a working system is not a reason to be overly self-indulgent. Otherwise, the enterprise becomes more of a social club than an effective organisation!
- Performance
Performance is still critical, but instead of being determined only by senior leaders in a hierarchical power structure, it’s set as more of a shared understanding and accountability.
- Learning
Similarly, learning is not “gifted” by benevolent leaders but determined by individuals and their colleagues. It focuses on what capabilities and skills are essential to learn and share so that performance is optimised.
- Reward
Reward is perhaps the most emotive and contentious subject in the world of work for individuals, and it can also become a more socialised, open and transparent process and can be “self-set”.
The question we’ll be exploring here…. Is this self-management approach an unbelievable level of utopian participation or a total folly restricted only to tiny enterprises that couldn’t possibly work in large-scale corporations?
Let’s do as we did before – look at some case studies.
Reward: Case studies
10 Pines
10 Pines is a software company based in Argentina. Throughout their evolution and operating systems, they have adopted sociocratic and open-book styles of “management”. Sometimes called Radical Transparency, the approach is that the company’s financial data is open to all employed at 10 Pines. Some of their practices include the following:
- New hires, are presented to the entire company and their starting salary is set by the “crowd” This takes into account their talent and skills, the competitive nature of the market the company operates in and therefore from the start, openness comes to the fore.
- Three times per year, the company’s employees propose their own increases. This open and participative approach helps set raises by formulating a calculation that considers their contribution to success, the company’s financial performance, and the market rates.
10 Pines adopts novel approaches for roles that help this process – with Padawans, Knights and Masters (a clear homage to the Jedi Order in the Star Wars universe) to give some indication of bands for salaries.
What has come from this is a key differentiator in retention and a feeling of worth and value.
And yet a Bloomberg video using 10 Pines as a lead case study (and then spending a lot of time on the neuroscience of this and talking to Netflix founder Reed Hastings) attracted huge negativity in the comments. It was almost like people preferred the secretive “scales” structure and someone—a manager—deciding on the merit of raises.
What’s evident from 10 Pines is that they have grown way beyond Argentina’s economic struggles to be profitable year-on-year. Their Glassdoor scores are 4.8 out of 5, with 100% recommendations to work there. Something larger corporates can only dream of, perhaps?
Can this system be gamed? Possibly.
Is the traditional and pseudo-mechanical banding, rates and market calculations fairer? Doubtful.
We are used to being in a machine-like system, so this departure may seem radical and even comical, but for 10 Pines, it’s a vital component of what makes them unique. They advocate for their approach with such passion and conviction that it makes it easy to see it’s working well for them.
Learning: Case study
The other part of organisational life in the middle of an employee’s lifecycle is learning. Career progression, acquiring new and strengthened skills and capabilities, and diversifying talent are all important aspects.
How does it work in a self-managed environment?
2 large organisations that have this embedded in their operating principles are Global enterprise WD-40 and California-based Tomato processor Morning Star.
WD-40
WD-40 (apparently called so because the other 39 formulas for the famous blue and yellow spray can failed) fosters an environment where mistakes are not punished but are seen as opportunities for growth – as they say; learning moments.
Colleagues are encouraged to share these moments openly, promoting a culture of trust and continuous improvement. At the individual level, WD-40 supports personal development through various training programmes and resources aimed at enhancing skills and knowledge.
This commitment to individual growth is part of their broader mission to ensure that every team member thrives, both personally and professionally, fostering a strong sense of belonging and accomplishment.
Morning Star
Morning Star has been a famous manager-less organisation for decades and is the world’s largest tomato processor. Morning Star’s organisational model is a prime example of self-management, where colleagues draft their own roles and performance agreements with their peers.
The company promotes a learning culture through an open approach to initiating improvement projects and participating in decision-making processes that affect their work.
Performance: Case studies
And then there is overall performance. How can self-managed systems possibly improve performance when people choose what to work on and how?
Here’s a couple of examples.
Haier
A Chinese multinational consumer electronics and home appliances company, Haier has transformed its business model to what it calls ‘Rendanheyi’ – a model where microenterprises within the company operate independently.
Team members are encouraged to innovate and pursue customer-driven solutions, and they are supported in continuous learning to remain competitive and responsive in a fast-changing market.
People in these micro-enterprises are so customer and product-obsessed that they outperform on innovative and quality standards and self-organise around who from the company will recruit the best engineers, reskill their designers, and bring the most innovative marketing and pricing models to out-do competitors.
Nucor Steel
Known as one of the largest steel producers in the United States, Nucor Steel is celebrated for its innovative management practices and its ability to outperform many competitors in the steel industry.
Nucor’s management philosophy is highly decentralised, allowing its plants to operate as individual profit centres. This helps colleagues at all levels to make decisions that directly affect their work and the overall performance of their plant.
The company promotes a strong colleague participation and engagement culture, encouraging teamwork, innovation, and personal responsibility. Profit-sharing and team-based performance bonuses have optimised their creativity, productivity and efficiency.
This combination of self-management and incentive-based compensation has contributed to Nucor’s reputation as a flexible, efficient, and highly competitive company in the steel industry.
Menlo Innovations
Menlo Innovations in Michigan (featured in the first article) is smaller but stronger. Their rotating pair-working approach delivers good skills, learning transfer, and, more so, the quality of their output.
The software that Menlo Innovations releases works for the first time all the time. Because their performance success is made at the exact point of creation, the “quality assurance” is always pre-release, and within seconds of creating the error, the error is spotted and then put right.
Each person in the pair is the other person’s quality checker and performance coach in real time!
Conclusion
So, in summary? Does self-management mean more chaos, less control, and a lack of performance because there are no managers “supervising” people and their quality, pay, and learning?
Far from it.
Some of these examples prove that management – the 20th-century version anyway – is an outdated “technology” needing overwriting and an upgrade installation.
Next, we look at self-managed organisations and perhaps their more famed strengths in terms of purpose, culture, and belonging.
