Managers are the core problem in business

People don't leave companies. They leave managers--it's their number one reason to leave. The U.S. Department of Labor says the average tenure of an employee is now only 1.5 years. Salary.com says 75 percent of the reasons workers give for leaving a company have to do with their manager. Eliminate managers and you do away with almost all of the reasons why people leave. Zappos is just one company that has figured that out.

Managers were invented

There's a good reason why people are so manager-averse. We're not built to be managed. For thousands of years, 80 to 90 percent of all adults in the world owned their own businesses. Managers were invented for the Industrial Age factory system. They were a bad idea then and a worse one today.

One man, Frederick Winslow Taylor, had more to do with the invention of managers than any other. Peter Drucker says Taylor had as much impact on the 20th century as Darwin, Freud, and Marx. Taylor proposed a fatally flawed definition of the modern employee that Industrialists found very convenient. In his paper Scientific Management, published in 1911, Taylor defined employees as 1) stupid and 2) lazy.

So if people were, for the first time in history, all of a sudden widely stupid and lazy, how did you solve that? Taylor made it easy. You simply find the very few smart and motivated people and place them "over" the stupid and lazy ones to make them productive. In this way management was born.

Modern business structures are built on a fundamental system of mistrust, division, and antagonism I call LCD management--managing to the lowest common denominator. Taylor's definition required that companies ask, "What's the stupidest and laziest thing a person could do here, and how do I create a system where they can't act that stupid and lazy?"

Of course no modern manager would say the people who work "under" them are stupid and lazy. But the fact is managers exist because they are assumed to somehow be smarter and more motivated--better at creating solutions, leading, motivating, monitoring processes, communicating, etc.

If they can do it, so can you

Yet all of these assumptions have been proved wrong time and again by companies of all sizes, in every industry, that have operated without managers for decades, including our own, Crankset Group. Huge tomato processors like the Morning Star Company, medical device companies like Davita, manufacturers like Semco, GE Aviation, and W. L. Gore, service companies like Buurtzorg and Precision Nutrition, and scores of newer and technology-oriented companies like Zappos, Menlo Innovations, Valve Software, and Appster--all of them are highly profitable with lower turnover because they have self-managed people who don't report to managers.

How to build a company without managers

In short, replace every five to 10 managers with one leader, to whom no one reports directly, and who exists to serve, champion, guide, train and connect others with the resources they need to be successful.

Remember, managers were invented just over a century ago. Leaders have been around for thousands of years. We conflate the two, when in fact they are radically different. Businesses that run without managers have great leaders, and a lot fewer of them. They don't hire, fire, or solve problems like managers. And they lead only because people are following, not because they have a title that demands people follow them. Here are a few clear distinctions between managers and leaders.

If you want great creativity, leadership that serves the team, higher profitability, the highest employee retention in your industry, and the most tightly run processes, you just need to give everyone their brains back. They will create a better system that runs without managers.

Dispelling the myths

1. This isn't new or a fad--many companies, of every size, have been doing it with smashing success since the 1950s.

2. It isn't chaotic--every managerless company I know runs with tighter processes, better communication, and greater stability and longevity than their managed competition, which only makes sense since they have more committed and engaged people at every level.

3. It isn't for specific industries--there isn't an industry out there that hasn't been doing it for decades.

4. Management still exists--self-managed people manage themselves.

Why your company isn't doing this yet

So why aren't all companies running without managers? Because the only ones who have anything to lose in the transition are the managers, the ones with the power to make it happen. They fear they will lose control and be shown to be unnecessary. And because they are presently in control, it is the managers who must either make the transition, or get out of the way. And it is not in their nature to get out of the way.

Tony Hsieh has recognized that managers have been holding back his company. On its way to being managerless, Zappos has just offered all its managers a severance package if they leave by the end of April. Hsieh says the company should have done this sooner. The nature of managers is to build fiefdoms to demonstrate their value and to justify their promotion to bigger fiefdoms. In contrast, the nature of leadership is to serve and train others, then get out of the way.

It's inevitable

The data is too compelling not to join the emerging managerless work world. But it threatens a 150-year-old legacy system that won't go down without a fight. Those who want control and authority will continue to resist this, even though it's better for everyone, including them. But managers who want to become leaders will run to, and embrace the emerging work world of the Participation Age, and thrive. Those who don't will be left behind. Your choice.

Published on: Apr 21, 2015