Finance: Survive and succeed with the human touch

MOST OF the attempts to respond to the rapidly changing and increasingly chaotic world brought by technological advances, increased competition and globalisation have focused on the mechanics of business operations and strategy. But it appears that emphasising "the human element" of business might be more successful.

This might sound too "touchy-feely" for many tastes. But there is plenty of evidence to suggest such an approach is already at the root of the success of some organisations, say Roger Lewin and Birute Regine in their book The Soul at Work. They say: "A shift is taking place in the world of business, where valuing people and relationships is not just a good or espoused idea but a conscious management action that has a positive outcome on the economic bottom line."

Studies by Lewin and Regine, respectively a science writer and academic and a developmental psychologist and therapist, checked organisations from a family chain of painting and decorating shops, the St Luke's advertising agency and the industrial company DuPont. They found: "People had become the new bottom line, not simply for humanistic reasons but as a way of promoting adaptability and business success ...

A collective effort - a recognised need for others - becomes the means of survival and success."

If that sounds far-fetched, the authors trace their thinking to the increasingly widely-discussed notion of complexity science. Their book's sub-title is Unleashing the Power of Complexity Science for Business Success. They feel most studies in this developing science concentrate on applying complexity thinking to the operational and strategic planning aspects of business, so they see particular potential for the "organisational dynamics" side.

This is because it is all about people and relationships, or "how people interact with each other, the kinds of relationships they form". Lewin and Regine say in an old-style, linear world, things may exist independently of each other and, when they interact, do so in simple and predictable ways, in a dynamic, non-linear environment, "everything exists only in relation to everything else, and the interactions among agents in the system lead to complex, unpredictable outcomes".

Pretty much like the living organisations the authors and other complexity advocates say businesses and other organisations resemble more than the machines to which they are generally likened. Companies that - wittingly or unwittingly - are managed according to the principles of complexity science tend to be organisationally flat, have fewer levels of hierarchy and promote open and plentiful communication and diversity, suggest Lewin and Regine. They also have greater tolerance of mistakes.

They describe how Mike Ockendon, chief executive of the home finance arm of Barclays reacted when the computer system crashed the Friday before a Bank Holiday, threatening to prevent many homebuyers from moving in as planned. Rather than reprimanding the person identified as responsible for the problem, he thanked the individual, because his action had demonstrated the vulnerability of the system. "If you make a mistake, then it's a learning experience," he is quoted as saying. "It's an opportunity; use it. Don't shy from it."

And Lewin and Regine describe how a West Virginia chemical plant of the mighty US industrial company DuPont, maker of Lycra, was performing so badly it was in danger of being closed.

The manager charged with turning it around was a traditional command- and-control man. But, says the book, he "came to see that the way you get the best out of people is not to bully them but to reach out to them as human beings, to let them see you as a human being". The result, say Lewin and Regine, was that after eight years, in a plant that was physically and psychologically in decay, injury rates dropped 95 per cent, environmental emissions were reduced by 87 per cent, productivity increased by 45 per cent and earnings per employee tripled. The plant is one of the company's stars.

The authors also laud Monsanto for turning itself from a traditional chemicals company into a life sciences organisation, only to see it buffeted by the outcry over genetically-modified foods. Perhaps that proves the point about the unpredictability of the non-linear world.

`The Soul at Work' by Roger Lewin and Birute Regine, Orion Business, pounds 18.99