Book Review: Humanocracy by Gary Hamel and Michele Zanini

Book Review: Humanocracy by Gary Hamel and Michele Zanini
Humanocracy: Creating Organizations as Amazing as the People Inside Them
Genre: Management

Hardcover | 368 pp. | Harvard Business Review Press | | 1st Ed.
Buy on Amazon
5.0 rating

Humanocracy is the latest work of Gary Hamel, this time supported by Michele Zanini, co-founder of The Management Lab. I’ve already mentioned that Hamel has been a great inspirer of my approach to work. In his book Leading the Revolution, he helped me understand there was nothing wrong in trying to be a rebel at work, provided there was a just cause to follow. With this book, the authors work on detailing a lot deeper what the cause is: fighting bureaucracy.

The book lands into a cluster of similar works that are questioning the traditional form of the organisation. Like for example Corporate Rebels, uses several examples from real-life “vanguard” companies, to explain how it is possible to re-think a different organisational model rooted in a more human-centric view, rather than in a process and power centric model as built by traditional bureaucracies. I think that the most important added value this book entails is the Business Case against bureaucracy, which is made in the first part of the book with accurate data, and a model that can also be used inside organisations.

it’s possible to capture the benefits of bureaucracy—control, consistency, and coordination—while avoiding the penalties—inflexibility, mediocrity, and apathy. When compared to their conventionally managed peers, the vanguard—many of which you’ll meet in this book—are more proactive, inventive, and profitable.

Gary Hamel and Michele Zanini, Humanocracy, p. 15

Redefining Jobs

An interesting concept that the book explores is the nature of work and Jobs in the current reality, with a lense that happily complements the point of view I have started to frame in Reinventing Work. The authors examine elements of current trends, such as the fact that in recent years most organisations have created value solely for top-paid jobs. One of the challenges posed at the centre of the humanocracy problem is what an organisation can do about the so-called “low skilled jobs”. “What makes a job low skilled is not the nature of the work it entails or the credentials required, but whether or not the people performing the task have the opportunity to grow their capabilities and tackle novel problems.” Using the example of Buurtzog and Morningstar, the authors crystallise what they define as “workplace alchemy”: turning dead-end jobs into get-ahead jobs, which is possible when an employer (page 23):

  • Teaches frontline staff to think like businesspeople
  • Cross-trains associates and organises them into small, multifunctional teams
  • Gives these teams accountability for a local P&L
  • Pairs new employees with experienced mentors
  • Encourages employees to identify and tackle improvement opportunities
  • Grants associates the time and resources to run local experiments
  • Gives employees a financial upside that encourages them to do more than their job strictly requires
  • Treats every individual and role as indispensable to collective success

I found this concept as one of the most foundational in the book. After all, the authors are not suggesting one alternative organisation model. Instead, are looking at the improvement of self-expression and responsibility that given to workers allows demolishing the pernicious aspects of bureaucracy. “Bureaucrats wrongly assume that commodity jobs are filled with commodity people. Unfortunately, this prejudice tends to be self-validating.” A fascinating lesson also in the wake of the concepts of automation in the workspace often led directly by this commodity-like thinking. And it is interesting to notice how the authors have chosen case studies mostly from traditional industries, rather than focusing on digital-natives or start-ups. 

Moving away from core incompetencies.

Yet for all their accomplishments, our organizations are inertial, incremental, and uninspiring.

Gary Hamel and Michele Zanini, Humanocracy, p. 32

These are the elements that the authors define as core incompetencies of the organisations based on bureaucracy.:”human-built organisations have scant room for precisely those things that make us furless bipeds special—things like courage, intuition, love, playfulness, and artistry“.

The elements that organisations are missing the most are Resilience (substituted too often by institutional inertia); CreativityPassion. All traits that are common in human beings (but that bureaucratic attitude instead interprets as scarce across employees). But what are the characteristics of a bureaucratic system? The authors identify these as a bureaucratic blueprint (p.46):

  • There is a formal hierarchy
  • Power is vested in positions
  • Authority trickles down
  • Big leaders appoint little leaders
  • Strategies and budgets are set at the top
  • Central staff groups make policy and ensure compliance
  • Job roles are tightly defined
  • Control is achieved through oversight, rules, and sanctions
  • Managers assign tasks and assess performance
  • Everyone competes for promotion
  • Compensation correlates with rank

All this has created a system for which, similarly to hierarchy, we assume there’s no alternative. The book tries exactly to demolish this assumption, proposing an alternative that addresses each point of the blueprint above, which lies into a foundational question.

Fig.1: Bureaucracy versus Humanocracy. Source: Gary Hamel and Michele Zanini, Humanocracy, p. 48
Fig.1: Bureaucracy versus Humanocracy. Source: Gary Hamel and Michele Zanini, Humanocracy, p. 48

Suppose in a bureaucracy the core question is “How do we get human beings to better serve the organisation?”. In that case, the issue at the heart of humanocracy becomes: “What sort of organisation elicits and merits the best that human beings can give?”. Seems a simple swap, but the implications are profound.

The costs of Bureaucracy

Chapter three is the most interesting, as it builds the business case against bureaucracy. Probably there are few people around who would defend this system, yet so far, there has been scant evidence of the total cost of the “incompetence” created by bureaucrats. And what happens is that this system is familiar and accepted by all of us, and is self-replicating. Think about technologies and how much these reinforce top-down structures rather than replace them.

The authors propose an instrument (the Bureaucratric Mass Index) which covers ten questions across seven categories of bureaucratic drag. The tool was used to build a cross-industry baseline with an online survey. Each item was scored from zero (absence of bureaucracy) to 10. The average score was sixty-five. A result that starts to bring the cost of bureaucracy into focus. It is possible to survey your organisation directly online.

The authors also investigate the total cost of bureaucracy for the economy, with a specific focus on the US. What they identified as Bureaucratic class claims $ 3.2 trillion in compensation (which is about one-third of America’s total wage bill). But this does not include the time spent by nonmanagerial employees in bureaucratic chores, which would add 19 million bureaucrats. The consequence is simple: busting bureaucracy is probably the most profitable thing any organisation can do.

Humanocracy in Action

The book analyses several companies pointing at how these transformed by substantially reducing the impact of bureaucracy, and bu truly putting the employee first in their strategies. Nucor with its mantra that decisions should be “pushed down to the lowest level”, is an extraordinary example, as the company belongs to the Steel Industry, not the first one you would think would adopt a human-centric approach. Similarly, Michelin is cited at length in the book, as an example of a “bottom-up” revolution strategy, where the change came from initiatives in individual plants and is now pervasive across the organisation. Haier is given as an example of a strategic choice that impacted the organisation, as it transformed itself in a network of microenterprises. Svenska Handelsbanken is described as a key example where the bank’s humanistic model yields better decisions with more autonomy and less centralisation. Vinci is another example of a company in a not so sexy industry (general services), which got right the idea that you need to be small inside to grow, through small units and a leaner organisation.

Across all these cases (and many others), the authors identify what they define as a DNA of Humanocracy. Which looks at seven powers that are invariably mastered by these organisations:

  • Ownership, which is distributed across the entire organisation
  • Markets, by using market rules to allocate resources and create internal competition.
  • Meritocracy, to avoid promotion by loyalty and insist on competency development
  • Community, looking at how you need to build a sense of belonging for people to thrive
  • Openness, as a clear alternative to bureaucratic secrecy and opaqueness
  • Experimentation, as a clear way to become resilient and sustain the speed of change
  • Paradox, to substitute consistently or with and across what seem to be different alternatives of action.

Conclusion

Humanocracy gives a lot of coherent considerations about how to build a human-centric organisation, without resorting to suggesting a specific alternative model. It aligns with my view that we need to be intentional in designing an organisation, and think about all of its components consistently, But above all, we need to ensure we put principles first and derive from there how our organisations can generate impact.

Executives, desperate to offset the stultifying effects of bureaucracy, resort to desperate means. They slash investment to juice short-term earnings, buy back stock to inflate the share price, and acquire competitors to boost market power and political clout. None of this is good for investors, for customers, or for citizens. But it’s employees, in their millions, who pay the biggest price. The bureaucratic caste system deprives them of the chance to acquire new skills, exercise their ingenuity, and enlarge their impact. Stripped of agency and upside, they have little opportunity to raise the emotional and financial returns on their work.

Gary Hamel and Michele Zanini, Humanocracy, p. 352

The value of this book is that it builds the case for change with an extraordinary effort also on sizing the “cake” and that it indicates that this can start from hacking organisations from the inside. It’s not a read just for some illuminated CEO, but for every person that feels they must work for the improvement of how we work.

Humanocracy paints a possible itinerary with multiple different scenarios ahead of us. It invites us to start the road.

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Humanocracy: Creating Organizations as Amazing as the People Inside Them
Genre: Management | Rating: 5/5
By Gary Hamel and Michele Zanini
Hardcover | 368 pp. | Harvard Business Review Press | 18/08/2020 | 1st Ed.
ISBN: 9781633696020
Buy on Amazon
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