Businesses can’t maintain a frenetic pace forever

A post made today to the Harvard Business Review titled The High Overemployment Rate led me to this (unfortunately paywalled) four-page article on what’s been deemed “The Acceleration Trap” and how it can ultimately be detrimental to any organization. I’ve reprinted what’s not behind the paywall below.

The Acceleration Trap

Faced with intense market pressures, corporations often take on more than they can handle: They increase the number and speed of their activities, raise performance goals, shorten innovation cycles, and introduce new management technologies or organizational systems. For a while, they succeed brilliantly, but too often the CEO tries to make this furious pace the new normal. What began as an exceptional burst of achievement becomes chronic overloading, with dire consequences. Not only does the frenetic pace sap employee motivation, but the company’s focus is scattered in various directions, which can confuse customers and threaten the brand.

Realizing something is amiss, leaders frequently try to fight the symptoms instead of the cause. Interpreting employees’ lack of motivation as laziness or unjustified protest, for example, they increase the pressure, only making matters worse. Exhaustion and resignation begin to blanket the company, and the best employees defect.

We call this phenomenon the acceleration trap. It harms the company on many levels—over-accelerated firms fare worse than their peers on performance, efficiency, employee productivity, and retention, among other measures, our research shows. The problem is pervasive, especially in the current environment of 24/7 accessibility and cost cutting. Half of 92 companies we investigated in 2009 were affected by the trap in one way or another—and most were unaware of the fact.

If your company is caught in the acceleration trap, you have several ways to break free: Halt less-important work, be clear about strategy, create a system for winnowing projects, and declare an end to the current high-energy phase.

Stop The Action

Instead of asking employees to suggest new initiatives to improve the company, why not turn the question around? Ask employees for ideas about what to terminate. Employees often respond with a slew of good suggestions. At one company we studied, they came up with some 540 ideas, three times the annual number of new-project ideas they had been suggesting. The company ended up halting 40% of its projects. Regularly ask yourself, your managers, and the whole company: “Which of our current activities would we start now if they weren’t already under way?” Then eliminate all the others.

Be Clear About Strategy

Asking “What should we stop doing?” and then terminating nonessential tasks requires CEO fortitude. Projects that need to be killed may have highly placed sponsors, so the CEO must be prepared to step on some toes. Ultimately, the choice to keep or cut loose hinges on whether an activity directly supports the company’s strategy—so that strategy must be clearly understood throughout the entire firm.

Decide How To Make Decisions

Not every project that supports the company’s strategy is of major importance. So companies need a systematic way to make hard choices. When the Otto Group, a leading international trading and services corporation with 53,000 employees, restructured, managers found themselves burdened with 20% to 30% more work. So in 2007, the company initiated a stop-action review. Each executive was asked to select a single project that he or she wanted to complete by all means. But that still left too many in play, according to Thomas Grünes, then head of central services, so the list was then halved based on each project’s required investment, value-to-cost ratio, and, in certain cases, symbolic value for employees.

For example, the final list included a redesign of reception areas and staff restaurants, which increased pride and performance “and thus was a very important initiative, although the economic value was not obvious,” Grünes says. To guard against bloat, the company has made that process an annual activity.

Declare The Turmoil Over

If the acceleration trap consists not of a plethora of projects but of ceaseless turmoil, the CEO can extricate the company by calling an end to the current round of changes. After taking the helm at ABB, Jürgen Dormann instituted a number of emergency measures to relieve employees from change and frenetic activity.

In one of his weekly messages to employees, he declared that the reorganization crisis was officially over. “What we see today is more than just light at the end of the tunnel,” he stated. “This is the end of the tunnel.” Employees felt proud and relieved.

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