In other words, does the ability of leaders to interact well and empathize have any proven effect in a complex organization?
And if so, what effect does it have, how do we know about it and what can we do about it in the short term?
See there is buzz, but there is also a lot more to unpack!
Starting from the idea of a complex organization… we know complexity is growing pretty much everywhere. Take enlarged competition, faster markets and quick changes that happen all the time… But there are at least two situations where complexity for an organization goes through the roof:
Rapid Growth and
Take an SME or a medium-scale startup. At a certain point, because of a new investment round or because of success in what they do, they need to scale up their workforce.
It’s not uncommon to see companies having to double their workforce and hire 300 new people in three months!
In that case, what do you do with your organization? And your leaders… do you:
hire new ones from outside that may have the experience but no idea of what the company is about, or
bump up people from lower ranks, so they know the company but don’t necessarily have the experience to be in a leadership position?
Another case is an existing large organization, with stable structures and processes that decides to radically change course – digital transformation comes to mind.
In that case, how do you adapt processes and structures to fit your new direction? Specifically with leaders, how do you move people in key positions away from their usual and old structures and processes?
Interestingly, in both of these cases the endgame is the same. What you want to have is more:
resilience to change and
creativity for problem solving or innovation.
And the only way you will get there is if everyone is on board and knows everything they need to.
Think of a small team or small-scale startup: all the information of the company is around a table with four people working together. Everyone is on the same page and everyone can join the dots and change course appropriately – because everyone is always up to date with every level of detail.
THAT’s what you want to have!
And if that is the case, the question becomes: how do you keep that level of communication and interaction that gave your company pace and speed once you double in size? Or how do you gain it with a complex organization if you didn’t have it in the first place?
Whenever you get to questions like these, there is always one concept that comes up: culture.
“Culture eats strategy for breakfast”
That’s a great sentence, again with loads of buzz, that also begs the question:
Really? Or is culture just something nice to think about?
Well.. if you look at evidence and dig slightly deeper into research, you will have studies and test literally screaming at you a resounding “YES!”
It is true. Whenever you are going through organizational change and complexity hits harder, culture is the first or even the only thing you should focus on.
A study (HBR 2018) goes even as far as saying that if you only focus on culture, the right organizational and strategic changes will be generated bottom-up, without any need for strategy.
Which all sounds great, except there is also another question to answer namely:
Ok, but how?
Usually, when it comes to change management for innovation, the process is this:
In other words:
You look at what values you live by (e.g. profit) and decide to move towards an innovation-conducive one (e.g. learning);
On that basis, you make up some ideas on how people should behave (social norms). For example you expect people to be more constructive in meetings instead of being competitive and cut-throat;
Afterwards you build the infrastructure around it (artifacts), for example you move from cubicles to open spaces to create a room that helps collaboration and interaction.
All of this will stimulate the adoption of innovative behaviours, and innovation, as we all know, leads to better financial performance.
All great right?
Except that this process doesn’t work when put to the test!
It works well in manufacturing, but in anything related to services, the link between norms / artifacts and behavioural change is not always there. In other words, you can’t reasonably expect that all your work will lead anywhere!
This is because every company is different, and you can’t use a one-size-fits-all strategy… and also because if you look at the process per se, it only focuses on strategy, never on culture…
So if this doesn’t work in complexity, we need to find something that we can rely on.
Luckily, there are two concepts we can fully trust:
Information brokerage has to do with how information flows across people.
Take a simple case of a communication network — “who talks to who” basically:
At first you talk to four people, then as the organization works you need teams, and as they grow you have 4 clusters within which people communicate and you interact with everyone.
In this case information flows perfectly, and you and everyone else is on the same page.
Except, you can see that it’s not scalable! We all have a limit on the amount of high-level interactions we can have.
Once we go over it, we can’t expect to be passing on information well, and pieces of it will get lost.
Something we can do to get around it though is using information brokers
In this case, as the network grows and teams develop, we keep on talking to the same four people, the team leaders. These ones, in turn relate information to their teams and vice versa – that’s the role of an information broker.
And if you look at results, the amount of information flowing through a network with brokers is exactly the same amount as in a network where you interact with everyone.
The only difference is that you only have to deal with four people, and that makes the whole thing scalable.
The only condition to making this work is having leaders know their role as brokers and give them the right skills to fulfil that role, otherwise the whole thing backfires.
Leader-Member Exchange (LMX)
Simply put, LMX is “your relationship with your boss”. It boils down to whether you trust your boss and you like working with him or her.
From an employee’s perspective, though, this is much more than that. Your boss is the interface through which you perceive the rest of the company.
If you are a bottom-line employee and have no access to the higher spheres of decision-making, your image of management will be 100% related to how you work with your boss.
In this sense, leaders become ambassadors of the company, its strategy and culture, and your engagement to your leader will be exactly the same thing as your engagement to the company.
Bringing it back to complexity and change: the better your relationship with your boss is, the more engaged you will feel towards the company (McCarthy 2017), and the more you will be open to change processes (Van Dam): you trust those decisions because you trust your leader – and as a result transformation processes have much better odds of succeeding (McKinsey 2007) because of the ability of solid LMX to curb resistance to change.
Back to Leadership, Interaction and Empathy
We started this whole journey with a simple question: does a leader’s ability to empathize and interact have any effect on complex organizations?
We got to to talking about information brokerage and LMX, two concepts we know work, and if you look at them, the links are quite clear:
information brokerage connects to interaction skills; and
LMX connects to empathy skills.
Leaders who know how to interact and empathize have incredible effects on companies in complexity because of information brokerage and LMX.
If that’s the case we get two conclusions out of it:
Culture DOES eat strategy for breakfast! If you build a culture of interaction and empathy from your leaders onwards and enable them to pass it on to other leaders, you will rake in agility, engagement, creativity and resilience.
It all start from skills. Even when complexity does go through the roof, having leaders in key position with the right skills (empathy and interaction first) will keep you afloat, and when things settle, they will be the ones giving everyone else the ability to create, interact, be agile, flexible and resilient.
–Burt, Roland “The Social Structure of Competition” (1992)
–Dam, Karen Van, Shaul Oreg, and Birgit Schyns. “Daily Work Contexts and Resistance to Organisational Change: The Role of Leader–Member Exchange, Development Climate, and Change Process Characteristics.” Applied Psychology 57, no. 2 (April 1, 2008): 313–34. Strategy vs Culture focus
–Hogan, Suellen J., and Leonard V. Coote. “Organizational Culture, Innovation, and Performance: A Test of Schein’s Model.” Journal of Business Research 67, no. 8 (August 1, 2014): 1609–21.
–Georgalis, Joanna, Ramanie Samaratunge, Nell Kimberley, and Ying Lu. “Change Process Characteristics and Resistance to Organisational Change: The Role of Employee Perceptions of Justice:” Australian Journal of Management, May 23, 2014.
–Hede, Andrew, and Wayne H. Bovey. “Resistance to Organisational Change: The Role of Defence Mechanisms.” Journal of Managerial Psychology 16, no. 7 (November 1, 2001): 534–48.
–Mccarthy, Vikkie, Gary Covella, Belal Kaifi, and Daniel Corcoran. “Leadership’s Role in Employee Retention.” Business Management Dynamics 7 (December 1, 2017): 1–15.
–“The Culture Factor.” Harvard Business Review, January 1, 2018.
–Zheng, Wei, Baiyin Yang, and Gary N. McLean. “Linking Organizational Culture, Structure, Strategy, and Organizational Effectiveness: Mediating Role of Knowledge Management.” Journal of Business Research 63, no. 7 (July 2010): 763–71.