In 1982, the Michelin North America factory in Nova Scotia had no work. A slow down in the economy and plummeting demand for tires could mean only one thing: the factory would have to shut down and many jobs would be lost. It was a familiar story, one that had been played out in many factory towns across Canada and the US – with one major difference. This time the story didn’t end quite the way we were used to.
Michelin and its employees at the Nova Scotia factory decided to take the long view and came up with a different answer to a familiar problem. They knew that good times would follow bad so they had faith in the future. The crisis concerned only the short-term, a year or so at most. Admittedly, a year can look like an eternity from the usual vantage point of North American companies, but Michelin had a different culture and set of values to draw on. The mature view of its European parent allowed the plant to decide that values and committed people should not be sacrificed to bumps in the road.
The factory did not have a reduction in work force, though there was no work to do. Instead of layoffs, every employee was retained in their current job at their current salary. Since there were no tires to make, employees made repairs, cleaned and upgraded the plant, built an employee sports center, did intensive skill training, retooled and readied themselves for a return to production. A year later, the factory fired up again. When production resumed, quality levels improved, absenteeism decreased and employee loyalty and commitment soared. The gamble paid off in terms of profitability, the usual gauge of the myopic. A legend exemplifying the company’s values had been added to an already strong corporate culture. To this day, long-term commitment to product quality and people is a key leadership behavior in Michelin’s global competency profile.
Michelin, as a European company, found the long-range view easier than most of the North American companies I have worked with. Perhaps that’s because European culture has been around for a lot longer than North American society. Europeans have seen governments rise and fall and companies come and go. Unlike most Canadians and Americans, they know that their culture will sustain itself beyond the current generation. In transferring that view to business, European workers tend to be more laid back and concerned with quality of life. Sometimes this is a detriment to productivity and profitability. But for those organizations, which are highly competitive in the global market, the mature perspective allows them to be alert to and aware of short-term concerns, without over-reacting to the crisis of the day. This is a mature - adult perspective on work and performance.
Japanese companies are famous for taking the long view when it comes to strategy, brand, value and human capital. The Chinese, a Japanese executive once told me, make the Japanese look myopic. Given everything that has happened to Toyota, and the mediocre performance of iconic companies like Sony, no one’s looking to the Japanese for management models these days, but the value of a long-range view is worth considering again. After all, think of the trouble that short-term thinking has created for North American companies recently. The flip side of cashing in during the bubble has been a more painful cashing out during the downswing. CEO pay structure that’s geared towards strike-it-rich payoffs has seriously undermined longevity. Heavy layoffs and divestitures improve profitability but seem out of line with vision, strategy or organizational growth.
If European companies sometimes seem overly comfortable in their maturity, many North American companies can’t help but remind one of adolescents. Since American culture has been exported to the world, it’s not surprising that it permeates corporate thinking everywhere. In its most depressing form, it’s often characterized by a what-have-you-done-for-me-lately attitude, a look-at-me flamboyance, an outgoing edginess that doesn’t consider cause and effect. Sounds like the stereotypical adolescent, concerned about the here and now and the experience, thinking that no harm can come their way; that they are invincible!
In the sequence of maturity, it is as though North American companies are in a state of adolescent rebelliousness. But what most people outside of developmental psychologists, school counselors and wise but weary parents don’t understand is that adolescent rebellion is not about breaking away, it’s about testing the limits to see how to fit in. Rebellion has more to do with the insecure need for immediate appreciation and recognition than it does with freedom. North American companies push the limits by seeking immediate gratification over sustainability and growth. One of the most common statements by employees at focus groups throughout North America is that they wish their executives would think long-term instead of short-term, results now.
The typical performance review system is representative of that level of maturity. We award short-term success over long-term track record, we talk team but in reality set up a systems to reward individual heroism over team triumph, flurries of activity that get results now over sustainable building. Organizations that have a more mature view of performance management link job behaviors to organizational values, follow track records over years not months, integrate personal development plans into the longer term business strategy and incorporate the feedback of key “touch points”, not just direct managers. As a case in point, one European corporation is now doing something very interesting with its performance reviews – it’s comparing what employees have been doing in the last 12 months to what they have been doing over the last three years. In this way, they track the trend of performance over the long-term. Making people decisions they way they make business decisions – from a longer-term perspective.
It seems to me that they are taking the long-range view to a deeper level in their new generation of people systems. They’re saying, we know we’re all here for the long run. We’re going to make it work. Let’s show how performance is linked to development that’s in line with organizational values and strategy. They have taken the traditional “management by objectives” and “feedback on behavioral competencies” and put everything into a perspective that we as mature adults do latter in life.
For organizations that are not moving to a more mature approach to performance reviews, they might consider what is holding them back as a firm from maturing. They also need to consider the message given by current people systems. How people are hired and fired, how they are rewarded and promoted, and how they are developed and trained, in good times and especially bad, is very telling when it comes to the organization’s attitude towards long-term thinking.
David Cohen is president of Strategic Action Group and the author of Inside the Box: Leading with Corporate Values to Drive Sustained Business Success and The Talent Edge: A Behavioral Approach to Hiring, Developing, and Keeping Top Performers.
