How can you navigate your organisation through this complex world?

Rising energy prices, the war on talent, and increasing costs of materials. The world is getting more and more chaotic and demanding. It becomes difficult to keep organisations running with so much instability. Energy usage of (office) buildings is one of the highest expenses of companies, employees nowadays switch jobs more often, and non-resilient organisations lose their competitive advantage. Several companies have been forced to shut down because of energy costs and a lack of employees and materials is faltering production processes. So how can you navigate your organisation through this complex world?

The war on talent

With an ageing population, it becomes much more difficult to attract and find the right employees in a scarce pool of talent. Highly specialist older workers, known as “Machine whisperers”, are now leaving the workplace with valuable knowledge (source). Especially for large technology organisations with complex software, hardware and infrastructures, it becomes challenging to replace these machine whisperers. This is accompanied by the fact that many organisations today have issues with retention. Millennials often switch between jobs; “job hopping” becomes their new normal. For example, 91% of millennials expect to leave their job in less than three years (source). Job hopping makes it difficult to train employees towards becoming the next machine whisperers. So how can we improve employee attraction and retention and sustain the organisational machines?

Working on employee experience is one way to attract and retain employees as discussed in our last whitepaper. There is strong scientific evidence that enhancing employee experience is indeed beneficial. For example, a recent scientific meta-analysis across 230 independent organisations found a significant, strong positive correlation between employees’ satisfaction with their company and employee productivity, customer loyalty and employee retention. Many organisations are now heading towards this direction already. According to Willis Tower Watson, who surveyed a total of 1,550 employers representing 9.45 million employees, 92% of employers are now increasingly focusing on employee experience, which was much lower pre-Covid. However, high employee well-being and satisfaction can be achieved in different ways.

To understand attraction and retention, Mckinsey coined the term “Employee Value Proposition,” or EVP: what employees get for what they give. “Gives” comes in many flavours: time, effort, experience, and ideas. “Gets” include tangible rewards, the experience of working in a company, how its leadership helps employees, or the substance of the work.

The “Gets” might become more and more important for young people. Because there is no doubt employees are feeling economic uncertainty too. They are struggling with fuel prices, heating their homes, and have a fear of the effects of climate change (source). So having reasonable salaries and job certainty is something that talent is searching for. But that’s not all. The fear of uncertainty also makes young people desire to prevent the world from getting worse. Organisations that contribute to the world in a positive way, such as fighting climate change can count on many applicants. For example, the sustainable clothing brand Patagonia receives about 9.000 applications for 1 open position and their problem is their high retention, nobody wants to leave the company.

Altogether, in order to attract and retain employees and develop them to become the next machine whisperers, employees need to be able to find what they need. They can find a sense of certainty through salary and career development, or/and a sense of meaning through contributing to a good cause. By creating an organisational ecosystem of balanced Gets and Gives, you will be able to attract and retain employees. In our whitepaper about employee well-being, we formulated the model shown below. And in our recent blog we extended this knowledge by seeing organisations as well-being ecosystems.

Figure 1. This model created for (and further elaborated in) our previous whitepaper, shows the “job” relationship between an organisation and its individual employees. Work processes and the work environment facilitate the process of interaction, while effort and rewards are exchanged in different ways such as recognition and meaning, creating a sustainable relationship.

Read our whitepaper about the bright side of the pandemic: moving to employee experience and well-being.

Read it here

Expenses

The increasing costs of energy, electricity and resources weigh more and more heavily on company budgets. Moreover, (inflating) office rent and salaries take a large part of the budget. All the rising expenses are threatening organisations with bankruptcy. Luckily, other developments such as hybrid working, and sustainable innovation provide opportunities to mitigate these expenses.

Office use

In general, people enjoy working remotely and having the ability to do this helps with retention and attraction. Furthermore, hiring remotely increases the reach of your organisation to find the right talent. While on the other hand, hybrid/digital working causes suboptimal utilisation of the office. Today, office occupation is only 35% on average according to our recent study. Still, company offices take a large part of the organisational (inflating) expenses. Reducing the square metres of office space, by sub-renting or selling office space can make a huge cut in expenses. Moreover, this contributes to lower energy consumption for heating the office space. Of course, there are several factors that might hinder the ability to sub-rent or sell office space. Reducing office opening hours or heating hours could be another solution to save expenses. For example, our data shows that Friday is the day of lowest occupancy with 14%. So, one could decide to close the office on Friday and make this a company wide work-from-home day. This reduces energy consumption and synchronises employees’ location schedules.

Production processes

Another large part of organisational expenses goes into production processes. With increasing costs of materials, fuel, electricity and labour, inflation skyrockets. While all of these get increasingly unstable. The lack of availability of the required elements to sustain the production processes increases uncertainty. To sustain supply chains, organisations must be more resilient in finding multiple suppliers and/or be innovative in providing new or/and a range of services or products. While on the customer side, the demand will likely decrease due to inflation. Therefore, this moment might be the right time to hop on the trend of sustainable practices and the circular economy (also remember the Patagonia example from the previous paragraph?). For example, the scarcity of materials and increasing labour costs make it a perfect moment to refurbish, reduce, reuse, repair, recycle, recover and rethink (known as the 7 R’s of the circular economy). Combined with innovative business models (such as turning to service models), new approaches cut largely in material and electricity costs (read the famous “light as service for Schiphol case”). While the increase in fuel prices (and the environmental effects of it) evokes trends to locally produced products. It is also likely that government taxes and funds will soon favour sustainable practices in order to reach the 2-degree IPCC global warming goal. And lastly, producing sustainable products will also probably become more popular among increasingly conscious consumers. Although sustainable production might still be an investment, because many aspects still require innovation, dozens of organisations are jumping into this opportunity. Known as B-corps, leaders can be certified and join a global movement that works toward an inclusive, equitable, and regenerative economy. 6,322 companies with 536,055 workers have joined this movement already by this time of writing (January 2023).

Connecting well-being

So, as a manager, it’s important to manage, attract and retain your own employees while sustaining the work process. You need to navigate through the complex “outer world” that turns more chaotic. Improving employee well-being, improving the planet’s well-being while reducing unnecessary expenses on means such as energy and office space to improve “organisational well-being” seems to be the arc across this story. And in the end, the planet’s well-being and employee well-being are strongly connected together. The recent developments of COVID, climate change, and the Ukrainian war showed the global connectedness of supply chains, energy prices, and people. While this global connectedness also showed to have a large effect on individual employees and organisations. One cannot simply exclude themselves anymore from the global theatre. Although working on solving global problems might not be the fundamental responsibility of corporate organisations, it might be something that is necessary to sustain organisations, and production processes, and to sustain the well-being of its employees. Organisations can be seen as a fundamental structure that facilitates collective action to connect global well-being with individual well-being. In this view, managers are there to smoothen the process and optimise collective action by bringing them together through leadership. Moreover, working on global challenges that improve well-being, probably provides continuous demand for work, receives support in funds and taxes, improves employee attraction retention and well-being, while employees will work harder to improve their own but shared future.

Read our recent blog about seeing the organisation as a well-being ecosystem.

Read it here

A systems mindset

Although it’s one task for a manager to sustain the organisational system with all the employees and work processes. Each manager also takes a place in a global system of organisations interacting with each other. On this higher (but entangled) level, managers need to navigate the complexity of global challenges. But there’s no doubt that tackling global (and thus local) issues, such as climate change, requires a multidisciplinary and multi-scaled approach. Therefore, on this level, it should be the goal for organisations to enable each other to increase impact. So instead of competing with each other for prices and salaries, the focus shifts towards working together for a better-shared future, supporting each others’ well-being on multiple scales. Like employees working together within a local organisation, organisations can also work together within a global connected world. Rotterdams Blue city, is a perfect example of a circular and collaborative approach between organisations. You could split the field of systems on several scales. We have the micro-systems (employees), the meso-systems (the organisations), and the macro-systems (the global economy). Managers need to navigate and switch between these worlds and sustain the “well-being” of all. Managers should satisfy their employees, the interaction between them to realise efficient work processes while connecting these work processes to the global environment.

Sustaining their organisation might be seen as a fundamental task for managers, but the organisational function can change in relation to (sustaining the well-being of) its employees and its environment. The organisation is thus nested within the global environment, while employees are nested within this organisation. Managers should satisfy both scales in order to sustain their organisation. To put it more proactively, managers should actively work on aligning both scales while using the organisation as a tool between the both scales. In this sense, one can regard an organisation as a tool or platform that unites employees to work together on a shared purpose on a higher scale. It’s then the purpose of managers to coordinate and organise these employees efficiently and establish a shared function, which then on a higher scale creates a purposeful output for its environment (e.g. customers and suppliers).

Figure 2. Employees are nested within a system called the organisation, while the organisations are nested within a larger environment of several organisations (such as client organisations and competitors).

Conclusions

By focusing on well-being, managers can improve productivity, attract and retain employees within their organisation. On a higher scale, organisations should sustain (“the well-being of”) organisations by working on expenses through managing the changing office use and production processes, and thus improving the organisation on a meso-systems scale. Moving towards sustainable and circular processes connects to the higher macro-systems scale, where global challenges reside such as climate change. With a systems mindset, managers could resiliently navigate through this complex world by finding their place in the higher macro-system, while leading and changing the meso-system (the organisation), and satisfying the micro-system (its employees). We know, it’s a daunting task but if we focus on supporting and collaborating with each other from micro to macro systems, we can navigate together through the complex world of today.