The Liberated company: some questions to be answered

The liberated company this, the liberated company that… these days everybody is under the impression liberated companies are the concept in business. There are rafts of articles on the subject, everyone is commenting and replying to comments; people claiming to be experts abound; admirers and fervent defenders of the idea stand face-to-face with consummate skeptics.

And the reason? The results cited are very appealing: 15% revenue growth, threefold cuts in the time it takes to process a job, an increase in productivity of 12% on average[1], etc. These developments have been seen in several companies that have adopted this type of operating model, and their employees say that they are happy!

The People & Change Team at Wavestone wanted to explore and test this concept on the ground. This piece of work aims to answer the following questions. Are we all talking about the same thing? Are there several different versions and definitions of the liberated company? Does the concept bring complementary elements to new managerial practices?  Do we need to take any precautions in relation to this concept and its operation?

The liberated company – the new buzzword in HR innovation

First, it is important to define the concept of the liberated company.  Let’s return then to this idea, which is generating so much noise.

The liberated company is built on the basic principle of consensus: all of the personnel within a company are important and can be part of the creation of wealth in a business. People want to invest in and enjoy their work, so all that needs to be done is give them an environment that allows them to do that.  It is about creating a virtuous circle of autonomy through responsibility.

This basic principle can be broken down into two assumptions:

• People are trustworthy, so they must be put at the heart of the business
• People long for freedom, even within their work

The liberated workplace is not a new concept.  It is based on a theory put forward in the 1960s by McGregor: Theory Y (“have confidence in people”) was placed in opposition to the model followed by more traditional organizations, Theory X (“people must be controlled”). This theory was taken up again by Isaac Getz and Brian M Carney[2] in order to explain the differences between “how” type companies (i.e. where decisions and actions are based on the question “how should we work?”) and “why” type companies (where the only question is “what must we do to make the customer happy?”). They support their idea with the true story of a cleaner at a company called Favi, who, left alone in the building one evening, picked up the telephone and realized that an important customer was stuck at the airport.  She took the initiative to go and pick him up, drop him off at his hotel and make him a new appointment.  All this was done discretely without making a fuss, and as a committed and liberated member of the Favi community.

Thus, according to Isaac Getz, a company counts as an liberated company when the majority of the members of staff use their freedom and their responsibility to undertake any action themselves that they think is best for the company.

Although this process – which Getz prefers to call a “philosophy” – of empowerment is neither linear nor sequential, defenders of the liberated business concept seem to agree on the common ingredients:

A decisive drive by the business’s leader, who will stand as the “liberating leader”

The “Liberating leader” causes the change: they bring about and share a vision of a business with shared values, bringing together all the employees.  They take on an active listening stance to allow the employees to speak. For example, Alexandre Gérard, the head of Chronoflex, decided to hand his company over to his employees for a year in order to open up the space for people to take the initiative.  For him, “the Liberating Leader” tries to make themselves dispensable in order to build confidence and enable self-realization and self-direction”.

• A stage of questioning of management roles
• Removing levels of hierarchy is essential. It involves the disappearance of bureaucracy, the transformation of the role of the manager and the elimination of forms of internal control.
• The new role of the manager is for each organization to create. Generally, it consists of supporting individuals and their teams while they make decisions.
• This re-questioning of approaches has concrete and immediate impacts on the organization. First, it will help its agility, the fluidity of communication and decision making.  An impact can also be seen on the wellbeing of employees and on the economic model: agility translates into time and cost savings.
• Empowering the workforce
• Every employee is able to realize their full potential, thanks to empowerment, autonomy and being valued… They are therefore “self-managing”.
• Responsibility for the outcomes of their work is given to the employees, including letting them organize themselves: they have to systematically prioritize the objective over the means of achieving it. This flexibility that is offered allows them to reclaim their jobs and pushes them to find their own solutions.   There is one condition however: any signs or practices that create a sense of inequality between members of staff must be removed.
• Through this freedom, employees will be more creative and stronger in their generation of ideas. They are placed in favorable conditions to put their combined brain power into work.

The liberated company offers a solution to wellbeing and motivational problems, and more widely to all the ills of the modern organization.  So does this count as a miracle cure?

The dark side of the liberated company

Having said all this, there is no need for a company to be liberated in order to respect its employees, have confidence in them, and to seek to improve the quality of their working environment through responsible management.

There are numerous recurrent reservations and issues:

• Without a manager, the ability of a team to deal with complex or dangerous situations is not certain;
• In advocating self-management, the risk of slipping towards control of everything by everybody is significant. Social pressure will be strong and internal politics will proliferate across the organization;
• The concept of the liberated company can hide what is actually cost cutting (especially in the reduction of support functions). It implies an increase in the capabilities of the employees without any real premium or financial advantage. The only compensation is the feeling of empowerment;
• Measures of performance changes in companies that have been liberated are not disclosed. Therefore, the positive effects on performance can be questioned;

• Even the longevity of the positive effects is disputed: whether the model will continue after the departure of the leader, for example, is not certain.

So, some argue that liberated companies would be heavily affected by burn-out and would not bring the motivation and well-being promised.  We may wonder whether the organizational and managerial complexities caused by the empowerment of a company are temporary and linked to changing to a different model, or inherent to the model of the liberated business itself; and, whether it is possible to limit these effects.

Between the attractive arguments for the liberated company and rational criticism of it, several questions remain to be answered.

A piece of research and field investigation is needed to better understand the liberated company

While we can all think of examples of liberated companies (FAVI,Sogilis, Chronoflex, etc), do we really know:

• How the transformation came about (the start, the participants) and with what support (the managers, support functions, the whole workforce – especially the more rebellious employees)?
• What was the reaction of the employees of these companies when these changes were announced? What were their feelings?
• What style of human resource management (in the sense of people) prevailed: what importance was given to social interaction, the integration of career management etc.? What was the role of HR in this transformation?
• Are there companies that have tried this transformation and have changed their minds or failed?
• How will this approach be seen in time?

In order to answer these questions, we have to examine the perspectives and testimonies of the leader-liberators, the skeptical leaders, of the employees who have lived through the process, and employees who want it in their workplace etc.  The liberated company is a relatively recent concept: taking a step back and providing a clear-cut analysis seems premature.  The facts presented above allow us to lay the foundations of the concept and to discuss the initial feedback.  The variety of perspectives that will gradually emerge will assess some genuine results from the field, as close as it’s possible to get to reality, and to carry out a critical evaluation.

[1] Harvard Business Review France – Et si salariés et patrons faisaient confiance à la… confiance [And what if managers could put their trust in… trust?], Jean-Gabriel Kern, Emmanuel Mas

[2] Book: Freedom, Inc.: Free Your Employees and Let Them Lead Your Business to Higher Productivity, Profits, and Growth, Brian M. Carney and Isaac Getz.