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Over the past twenty years, Hamel has authored 15 articles for the Harvard Business Review. He has also written for the Wall Street Journal, Fortune, The Financial Times and many[…]

Bestselling business author Gary Hamel says that companies’ largest source of exploited value is the fact that staffers don’t unlock their full potential.

Question: What is the number one issue businesses should worry about today?

Gary Hamel: The big HR [human resource] consulting companies, they do surveys every few years of employee engagement, and they've been doing this for many decades and the results are kind of depressingly consistent.  What they find is that, on average, around the world, less than 20 percent of employees are highly engaged in their work.  Often in many countries, the number who are positively disengaged is even a bigger number. And then you have the ones in the middle who kind of show up, collect the paycheck, but really aren't very excited by what they're doing. 

So you think about that, around the world, the vast majority of employees, 80 to 90 percent of employees, are there physically, but they're not there emotionally.  They're not there with their full kind of creative spirit. And this is a price that we can no longer afford.  When we were back in the traditional economy, where success was simply about diligence and focus and discipline and so on, it really didn't matter that people were being treated like, and were kind of behaving like, automatons.  There was not much of a price to be paid for that.

But in the creative economy, where wealth creation is a product of new ideas and innovation, this is a hugely expensive waste of capability.  Most of you, you'll remember [Abraham] Maslow's hierarchy of human needs with water, food and so on at the bottom; self-actualization at the top. Let me suggest there's another kind of hierarchy that might be useful, given our conversation here, and that's the hierarchy of human capabilities. 

At the bottom you have obedience, people who show up every day, they do as you ask them to, they follow the rules, ethical and otherwise. 

A level up from that you have people who are diligent, they work hard, they stay till the job is done.

On top of that, people who have world-class skills, well trained and great intellect.  Now I would argue, those are all important human capabilities, but obedience and diligence and intellect, they are becoming global commodities.  I can buy those capabilities for next to nothing from Bangalore to Guanshou or all around the world; and if that's all you're getting out of the people who work in your organization, you're really not going to be able to compete in the global economy.  Not unless you want to join the race to the bottom.

So we have to go beyond obedience, diligence and intellect and ask, what else should we be getting?  How about initiative?  People who see new opportunity, see problems, they start moving before anybody asks them.  They don't wait to be directed. They're out there moving before the boss even knows about it.  Folks who bring their creativity to work, who are looking at other industries, learning from other venues and places, challenging the rules of the game in their industry.  And finally, people who bring their passion to work, who look at their job as the way they make a difference in the world.

Now those higher order capabilities: initiative, creativity, passion; those are the things that create wealth in the creative economy and yet those are also the things that people are not, by and large, bringing to work today.  Initiative, creativity, passion, these are gifts.  People literally choose whether they bring them to work every day or not, but they can't be commanded.  Not like obedience or diligence can be commanded.

So if, in fact, these are the capabilities that create wealth in our economy, if these are the capabilities that hold the secret to getting your company to outperform a very dismal economy, number one, and number two, if these capabilities cannot be commanded, but can only be volunteered, that really causes us to turn our old management model inside out.  Tip it over, 180 degrees. Management is not today about getting employees to fulfill the organization's goals, serving the organization's kind of objectives.  Today, management is about creating the work environment, a sense of purpose, a sense of excitement, the right climate, where people are willing to bring those gifts of creativity and passion and so on, they're willing to bring those to work every day.

That is the new challenge of management. And only if you meet that challenge, do you have a hope of outperforming the economy.

Recorded on August 15, 2009.