The Sickness of Large Organisations

Every year, the Chartered Institute of Personnel and Development conducts a survey of sickness absence in the UK. And every year, we see a similar pattern emerging. Here are some statistics from 2016 on average sickness absence per employee: 1-49 employees: 4.0 days; 50-249 employees: 5.5 days; 250-999 days: 6.7 days; 1,000-4,999 employees: 8.1 days; 5,000+ employees: 9.4 days.

Sickness absence increases with the size of the company. It is true that sick pay schemes tend to be more generous in larger companies, encouraging lengthier absence. It is also true that the public sector has higher sickness absence, and its generally larger organizations may somewhat skew the results. But these may also be excuses that cloud the reality. Private industries with a preponderance of large companies, such as ‘finance, insurance and real estate’, also reported high sickness absence.

When we place these results next to available data on employee motivation according to the size of the company, a cogent narrative emerges. A 2016 Gallup survey found that workers become steadily less engaged as the company gets larger. Engagement is highest in organizations with fewer than 1000 workers, and lowest in those with more than 5000.

Big companies deflate energy and commitment. We can presume that a significant number of their workers routinely avoid turning up for work, despite being physically able to do so, because they really don’t like it. Plenty more similarly disengaged colleagues turn up, but do little and achieve less.

Many studies purport to demonstrate the impact of engagement on productivity. These inevitably draw scepticism – it is exceptionally difficult to isolate the impact of an engagement or refute the possibility that good company performance boosts engagement, not the other way round – but we know instinctively that motivated staff will generally produce more than less motivated colleagues.

Size is everything

It could be therefore that many large companies dominate their sectors not through the herculean efforts of allegedly talented employees, as they profess, but more often because they operate in an uncompetitive oligopoly. Large companies find all sorts of ways to delay this process, ranging from illegal cartels to convoluted regulation that stretch the limited resources of upstart competitors.

Eventually and inevitably, though, they become victims of Joseph Schumpeter’s ‘gale of creative destruction’, usurped by hungrier and more imaginative small companies, before the cycle is re-established.

So what can large companies do to mitigate the disadvantages of size?

• Divide and rule. A disruptive but potentially effective way to deal with up and coming competition might be to mimic them. Keep splitting your large organisation into smaller parts. Small teams are far better at forging an identifiable purpose and identity. Reinforcing this esprit de corps should be a manager who wants to manage, leading the team with the enthusiasm of a small company boss, and incentivised to achieve team results.
• Strengthen middle management. Many companies insist on disregarding the evidence, with news stories and experts continuing to tell us that middle managers are an unfashionable species, to be dispensed with at any given opportunity. But this is not a pointless layer of bureaucracy but should be a committed cadre of experienced people who can get things done. Companies should be seriously asking themselves whether such culls are really in their long-term best interests.
• Promote engagement through the immediate supervisor. In their extensive annual workplace surveys, Gallup has consistently revealed the huge influence of the immediate supervisor on engagement and performance. This works at all levels of the organization. Consider these snippets from a 2015 survey: managers account for up to 70% of variance in engagement; employees who hold regular meetings with their managers are almost three times as likely to be engaged as other employees; more than half of employees who strongly agree that their managers are open and approachable are engaged, but only 2% of employees who disagree with this statement are engaged.
• Ditch the employer brand. Abandon any pretence that you can bind tens of thousands of far-flung employees into one coherent whole, energising them with a vision of a corporate culture that is unlikely to exist at all and even less likely to be consistent. To avoid the cancer of cynicism, resist the temptation to peddle a narrative from the remote corporate hierarchy.