Articles

CEO Secrets – ‘My Billion Pound Company Has No HR Department’

March 24, 2021 - By Wendy Lambourne, Director, MA Industrial and Organisation Psychology, Registered Psychologist with SA Medical & Dental Council

By Dougal Shaw, business reporter, BBC News.

COMMENT ON THIS ARTICLE BY WENDY LAMBOURNE, LEGITIMATE LEADERSHIP: Let us not throw the baby out with the bathwater. There is a role for support functions in companies big enough to afford them. But they need to perform an enabling rather than a controlling or policing role. The HR function’s role is not to do the “care and growth” job for line managers but rather to enable and support them in doing so.

I love the story with the receptionist. She taught Greg a lesson which in a single instant helped him to “grow up”. Leadership requires a level of personal maturity that takes time to develop. In the process of leading others, the leader is the ultimate beneficiary – he or she grows as a human being.

THE ARTICLE: Greg Jackson is the founder and CEO of Octopus Energy, a UK start-up valued at more than £1.4bn ($2bn), selling green energy. Despite now having more than 1,200 employees, he says he has no interest in traditional things like human resources (HR) and information technology (IT) departments.

There is a tendency for large companies to “infantilise” their employees and “drown creative people in process and bureaucracy”, says Jackson.

HR and IT departments don’t make employees happier or more productive in his experience, he says. So he doesn’t have them.

Octopus Energy was set up in 2015, specialising in renewable energy for households. It has enjoyed huge growth, taking on the “big six” traditional energy firms, and now supplies more than 1.9 million homes in the UK and is expanding into other countries with its proprietary, energy-managing software.

It is now valued at more than £1.4bn ($2bn) by private investors, with permanent staff owning 5% of its shares.

Jackson is a serial entrepreneur who has previously run a mirror-manufacturing company, an online property management agency and a coffee shop.

His distaste for “command and control”, top-down management structures is born of experience, he says. Running smaller companies of around five people he would learn to cover HR and IT issues himself.

But what if there is a case of bullying to be resolved, or a contract dispute that requires specialist knowledge?

Jackson says he expects his managers to take personal responsibility for these things (with appropriate training) rather than “shelving responsibility to a third party” – just as he used to do when managing his teams.

He thinks this approach allows companies to scale faster, as well as making employees more self-reliant.

But it is a single, personal incident, which haunts him to this day, that really underpins his management philosophy.

“When I was 27, I was managing a manufacturing business in north London and there was a woman who ran the reception and also did customer service, who was in her 40s,” he remembers.

“One day I heard her speaking to a customer on the phone and I thought I could help, so I leaned in and gave her some wise words.

“She finished the call, like a consummate professional, and she turned to me and said: ‘Greg, I bring up two boys and a husband on the poxy wage this company pays. If I can do that, you can be pretty sure I can do anything this company wants from me. And by the way Greg, I was here before you were here and I’ll be here after you have gone. I love the company more than you do, so you never need to tell me what to do.'”

Jackson was stunned into silence because she had just given him – her boss – an incredible dressing down.

“I realised she was right, and I remember I gave her a hug. It was one of the greatest learning experiences of my life and it forms the basis of my management theory today.”

The episode taught him to favour a hands-off approach that lets individuals and teams sort their own affairs as much as possible without interference from above.

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