Story:
Giving up power can significantly boost performance and profits: A case of CSC Germany

It is well known that empowering employees can boost morale, engagement and productivity, but surprisingly few organisations are genuinely strategic in taking such an approach. CSC Germany, a division of the leading global IT consulting and services firm managed to achieve this. After experiencing poor financial and market performance, the division realised in 2007 that a move away from a command and control style of leadership could reduce bureaucracy, improve communication, innovation and boost performance and profits. Starting in the Enterprise Content Management unit comprising 60 employees, the division implemented a new corporate strategy for a knowledge culture based on collaboration and distributed leadership and decision making as previous emphasis on hierarchy has slowed down the decision making process. The initiative was led by Dr Carsten Hentrich.

Whist leadership had previously been focused on delegating tasks and monitoring results,  the new priority was on instilling a sense of shared responsibility and motivation to succeed by freeing staff to work on topic areas (known as ‘communities’ in areas such as innovation or strategy) according to what they feel best matches their interests and strengths. Through this practice of ‘mutualism,’ community members take decisions collectively through discussion; they also agree their own community leaders, democratically and on a shifting basis as they see fit.

It became apparent that values such as trust, responsibility and innovation are far more likely to motivate staff, particularly in knowledge companies such as CSC Germany, than numerical goals or measurements. Achieving the numerical goals did happen, but as a results from leadership that is not about dictating vision and strategy but engaging and empowering staff. A formal organisational structure, with clear reporting lines remained in place but it was overlaid by informal structure of the communities based on talents and skills. The whole focus shifted towards forming an environment based on collaboration and shared responsibility. The distribution of responsibility, decision making and control, as well as the mentoring and coaching system that was set up to support this strategy, lead  intrinsically to more motivated and energised employees. Perhaps paradoxically, leaders realised that while it may not initially be easy to give up power, more power and influence are gained subsequently by letting go.

The positive impact of this approach to bottom line profits has been very impressive, leading CSC Germany to extend it to another unit - IT Architecture. The Enterprise Content Management unit’s improvement in performance started three months after implementation of the new strategy and has continued since. For the first year of the new leadership paradigm, the profit margin target achievement was 151 %, and for the following year it was 238 %. The overall long-term target achievement over the period was 205 %. The staff grew by 13 people during the first year, representing an increase in resource utilized of 36 % for that year, and the resource utilized grew a further 18 % in the subsequent year.

When CSC Germany’s senior management extended the strategy to the IT Architecture unit, results were even better than they were for the ECM unit. Utilization target for that unit was 93.5% for in the first year. Only six months after implementing new leadership culture, 295% of the performance target was achieved.

More details about this success story are published in

Amar D. Amar, Carsten Hentrich and Vlatka Hlupic: “To Be a Better Leader, Give up Authority”, Harvard Business Review, 87(12), pp.22-24, December 2009 issue,  ISSN 0017-8012. (Received the Bright Idea Award in Management of New Jersey Policy Research Organization (NJPRO) Foundation in 2010).