Unbound Ideas » David Cohen

Succession Planning Is Not Fast Food

David Cohen — Thu, 27 May 2010 18:11:00 +0000

It’s still a lesson to remember. In less than a year, MacDonald’s went through four CEOs. A sign of a company in distress? Usually, but not in this case. When McDonald’s was stumbling in the early 2000s, it avoided the knee-jerk instinct to pluck some celebrity CEO from the ranks of another company. Instead, it looked to its own culture and asked Jim Cantalupo, a retired executive, to right the ship. Significantly, one of Cantalupo’s first acts was to put a successor in place who would lead the company in the future. The future came more quickly than expected when Cantalupo died of a heart attack a few months later, hours before a major speech to McDonald’s franchisees. The succession plan was so solid, however, that Cantalupo’s successor, Charlie H. Bell, was able to give that speech as the company’s new CEO. Now that Bell has stepped aside because of colorectal cancer, his own carefully chosen successor, James A. Skinner, assumed the position without confusion. Mr. Skinner said he would continue with the strategies of his predecessors.[1]

Few firms could handle such tumult because few have a real plan for executive succession. Most companies don’t experience the tragic end of their leader while on the job. Instead, the proof of the general failure of succession planning can be seen in the frequency with which the revolving door spins at the top of organizations. New CEOs seem chosen for trendiness or popularity rather than by any consideration of the long-term strategy needs of the organization. Naturally, they don’t last as long as they used to.

The blame for that failure lies with two groups. First, the current CEO and board should be held accountable. Making sure that either a few potential successors have been selected and are being groomed should be one of their top three areas of concern from day one. As the time evolves the successor of choice should emerge. Too many CEOs seem to worry that an “anointed” successor represents a threat to their authority and ego. To leaders like Michael Eisner of Disney, grooming a replacement means relinquishing control – an inconceivable act. When I worked with the chief of police in one of Canada’s major cities, I learned how differently succession planning could be viewed. This person believed that the chief of police in any major metropolitan area should step aside after five years. Accordingly, the chief began the succession planning process soon after assuming command; and when five years were up, the chief stepped aside despite a contract renewal offer. To say that the vacating chief was a saint who lacked ego would be ridiculous. But this chief did have pride in knowing that success can be measured by judging the quality of those who continue the legacy. That attitude now permeates the organization’s culture and its top administrators. The greatness of leadership should be measured by how you leave the organization, not just what have you done for the company up to the point of departure.

While the responsibility and accountability for succession planning lies with the CEO, the obligation for assuring a good process is in place is too often “given over” to human resources. The problem with that, however, is threefold: Human resources rarely has the power or capability to execute a succession plan effectively; “mandating” humans resources with the process sends the message that succession is not a business tool; and there is no one right way of doing succession planning anyway. There are a number of “benchmark” studies on succession management but the reality is they contradict one another. Succession management is more than a program unto itself; it functions best when it is an integrated aspect of the firm’s human resources activities, aligned and supporting the corporate business strategy and rooted in the values of the firm. In other words, a firm can’t choose its path to succession from preset options like a customer chooses food at McDonald’s. This reality supports the reasons why succession works best when appointments are made internally. In effect, succession planning is actually effective and successful “talent management.”

To give human resources the power and capability to make a difference in partnering with the CEO and Board in facilitating succession management consider the following:

Succession planning has to be seen as a strategic business tool for which the CEO has full accountability, responsibility, and ownership.
You will know when succession planning is really integrated into the organization’s strategic mindset when promotions into key management and executive positions, regardless of business unit, are made only with the approval of those responsible for succession planning.
Every effort should be made to hire from within. Hiring outside often means that the firm has not identified and groomed the right talent. (Hiring from outside is a message to your core performers of the limitations you have for their future.)
Succession planning must be understood to be a process that can and should take people over a four to seven year period prior to promotion. (Most, if not all succession plans we have reviewed, are no more then glorified replacement-planning programs.)
All promotions must be made based on an individual’s alignment to the corporation’s values, as commonly defined and understood by all employees.
Succession planning should be one of the CEO’s key objectives from day one of assuming the top role. The process of succession should be reviewed with the Board at least twice a year for the top two levels of the organization.
Boards and CEOs must realize that corporate culture is greater and stronger than any one individual – even the best CEOs. Changing culture by choosing a particular CEO is an arduous, thankless, and probably quixotic task. In fact, I would guess (and could probably prove given the time and inclination) that most CEOs who are forced to leave organizations do so not because of simple performance issues but because the culture rejected them as a poor fit.

Some people believe that succession planning is an academic exercise with no business impact. How absurd. Not only is having the right talent in place at the right time critical for the health, competitive ability, and resiliency of the organization – but also succession planning is one of those activities, which can focus everyone in the organization on what leads to success.

A few years ago we worked with a firm to develop a profile of high potentials, which would create a level playing field for talent management activities like succession planning. The ranks of senior managers with whom we conducted focus groups were incredibly excited by this activity because it engaged them in openly defining the meaning of the corporate values in real terms and also set out clearly what leads to success in their firm. Even those who came to understand that they were not high potential still felt committed, even energized, to the goals of the process. Unfortunately, top management didn’t share that commitment and resisted participating. They did not see this as a business tool. Consequently they handed this off to Human Resources, refusing to participate in the process of defining success in terms that would force them to relinquish control of decisions about people. Needing to make what appeared to the employees as objective people decisions they instead turned to a classic “off-the-shelf” emotional intelligence testing system, which failed to capture what was specifically unique about the company, especially their values. Today, they’ve effectively abandoned both systems and still rely on the classic replacement approach to stock their top ranks.

Choosing your organization’s top talent is not something you can do at a drive-thru window at a fast food restaurant. It takes the commitment of the CEO and Board to consider what will celebrate the success, maintain the values, and move the business forward. How ironic that McDonald’s, of all companies, understands this so well.

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.

[1] “More of the Same for McDonald’s” NY Times, Saturday December 4, 2004, page C1 and C12.

Bringing No Answers To The Table

David Cohen — Thu, 20 May 2010 18:06:01 +0000

It’s been fifteen years since I attended my first Human Resources conference in which the grand rallying cry was “turning HR into a strategic business partner.” Recently, I attended another conference and saw a show of hands which revealed that the same issue was still the primary one on participants’ minds. How much progress has Human Resources made in assuming that leadership position, I wondered? The answer, although dismaying, contains a silver lining: the future is brighter than the statistics would indicate.

First, some bad news.

In a survey of HR professionals, only seven percent identified themselves as strategic partners. Moreover, as many can attest, HR has also suffered from the realignment and outsourcing of services – one of the few “growth sectors” where HR is concerned. Taken together, we can predict that many of the roles HR plays in today’s organizations could be replaced or outsourced in the near future.

And yet, the demand for what HR can provide has only gotten bigger. To answer the call, HR leadership has to establish its ability to connect the people side of the business with the operating strategy of doing business. This chasm is viewed myopically by most business leaders who have a tendency to be isolated in their various silos. Only HR has the inclination, let alone the capability, to energize business strategy across the organization by ensuring that the right people are in the right roles at the right time.

Why hasn’t HR assumed that leadership role yet? If we consider the duties that HR has traditionally covered within the organization, we get a sense of where we have come from and where we need to go.

Human Resources grew out of Personnel. The primary role that Personnel filled in the organization was soliciting interview candidates, attending dismissal meetings, filling out paper work, hearing grievances and seeing that compensation was dispersed as promised. Personnel might have been involved in some training work, but that was mostly left to training professionals, and the training itself would have been focused on technical skills.

The field of Organizational Development, to which Human Resources now aspires, is a relatively “young” idea. Many of its fathers and original teachers are still active researchers and passionate advocates, some of them fresh and insightful, others sounding a bit like broken records. Even so, as the new kid of the block, OD has not been embraced or supported by many companies until relatively recently.

HR has talked the mission of the OD function but walked the tradition of Personnel. In order to serve business leaders like a good cost center should, HR has provided a sense of comfort to the organization that it is taking care of its people, by supplying a sense of humanity and empathy, while making sure that decision makers don’t do any of the illegal employment practices that might land people in jail. Put in this passive role, HR still waits for its phone to ring, and it is quick to kow tow to the CFO whenever he screams for cost reductions.

Don’t believe that the situation is really so grim? Then think about the power of the language associated with the HR function. Often, when I speak to business leaders about people issues, I talk disparagingly about the way HR handles its role. I’ll say something like, “succession planning is not a bunny kissing, tree hugging, touchy feely endeavor, but a critical business concern.” Heads in the room will nod, and a different level of dialogue will result. It’s as though those business people are thinking to themselves: “Here’s someone who’s not going to make us sing Cumbaya for a change.” Together, we role up our sleeves and get to work to define the tough business challenges facing the organization and how we are going to meet those needs.

What I don’t bring to such meetings are pre-set answers. Business leaders do not want pre-packaged view points that don’t address real issues. They want outsiders to have fresh perspectives which challenge their thinking and help them to see. The answer is in not having any answers! I often picture the traditional personnel or HR manager as analogous to the fabled Maytag Repairman waiting for the phone to ring. When the executive suite finally calls and says, “We need this now!” HR is only too eager to please. In fact, that is not how a real business leader operates. A strategic partner worth his or her salt approaches the executive like an equal, armed with experience and perspective, to apply thought and feedback to the problems of the day, in order to build the organization’s capability for tomorrow.

Pushing back, challenging view points, being willing to bring no answers to the table – these are not behaviors which HR finds familiar or comfortable. But those are the mature skills which HR needs to adopt. By asking questions and not having pre-set answers, we engage others in reflective or creative dialogue. What is the impact of this strategy on the organization, and what kind of people are needed to deliver on it? How does the activity fit our corporate culture? What would be the result if we looked at this alternative? Thinking like a business leader whose own results are at stake can help the HR manager become a real partner.

In the final analysis, HR must look at itself with a positive perspective using positive words that move the business to a higher level. To assume its position at the strategic executive table, HR must:

Ask questions and stop having immediate answers.
Continue to push the dialogue until the next level of answer is discovered.
Develop processes and programs that demonstrably impact the following areas:
1. Customer service
2. Productivity
3. Quality
4. Safety
Ensure that people in the organization have a clear line of sight to the values and vision.
Learn how to say No.
Ask the question Why – What will this do for the organization a year from now that is not happening today?

To get into the game, HR must learn to speak and think like a business person charged with making strategy operational. HR must have the courage to ask: “Have we considered this…?” Answering the call of the business doesn’t mean doing what the business wants – it means doing what the business really needs. When that happens, the business will call on HR in a different way.

Pride and Passion

David Cohen — Thu, 13 May 2010 18:01:08 +0000

We were all proud of my youngest brother when he played basketball. He was so good that he became a starter in his freshman year for his NCAA Division I school. He was proud of his success on the court, too. He loved to play and succeed at top levels.

Which came first, my brother’s pride in being on the court or his passion for the game? That’s a question that came to mind after I read Jon Katzenbach’s latest book, Why Pride Matters More Than Money: The Power of the World’s Greatest Motivational Force. Katzenbach has written an excellent primer that touches on an issue I think is completely misunderstood in corporations today. People don’t work for money – what motivates them is something entirely different.

But what is that motivator?

For Katzenbach, it is pride. In his examples, successful organizations develop a culture of pride which draws committed people who excel at their jobs, thereby creating new success which further increases the pride factor. “Anticipatory pride” is the term he uses to describe how people are motivated to succeed by their desire for pride. Certainly, many of the great sports teams have gotten more out of their players because of the pride factor. There’s something about putting on the Fighting Irish football jersey at Notre Dame or wearing the pinstripes at Yankee Stadium which makes players put forward more effort. They feel responsibility to the tradition they represent – something that can feel like extra pressure. But that pressure is offset by the special accolades that come to someone who succeeds in those circumstances. For many baseball players, winning a Word Series title is wonderful; winning one as a Yankee is special.

According to Katzenbach, pride is reinforced in organizations by recognition. Organizations which want to instill a culture of pride must be sure that they recognize and celebrate employees who do the right things. This, of course, is the manager’s job; but if proper recognition is part of the organization’s culture, the manager’s efforts will resonate.

Notice again that we are not talking about money. Make no mistake, money is certainly a big issue. Pride or no, the NHL season and the future of professional hockey in North America is currently in jeopardy because of a dispute over money. There is a general belief that small market teams cannot compete with large market teams because they can’t afford to pay the best people. But this economic analysis does not take everything into account, including the pride factor. Low-budget teams can meet and beat teams with huge budgets. When pride clashes with pride, the results are entertaining with real passion on the line.

Indeed, many sports teams have created losing cultures by believing that money is the solution to their problems. Some teams with a lot money do well every year; but other teams with a lot of money never seem to get anywhere. The talented players they bring on board never perform up to expectations; and give the impression that they are hired guns, in it for the money and themselves.

In fact, Katzenbach warns us about the “self-serving behavior” that arises in cultures focused on money as a primary motivator. He couldn’t be more right. That’s why pay-for-performance programs fail in the long run, and why incentivizing CEOs with immense stock and options packages so often backfires. When you pay for performance you are feeding the ego of “self-service.” People motivated in such a way have a strong tendency to avoid what’s good for the group whenever it is superseded by what’s good for themselves.

Maslow’s hierarchy of needs makes us understand that money is a fundamental concern for human beings. Once that base need is fulfilled, other higher needs take precedent. To Katzenbach, one of those higher needs is the need for pride; but in my view, passion comes before pride. Get the passion right, and you will create the conditions in which people can excel.

Pride arises when passion leads to results. A government employee who really cares about their work is not in it for the money; chances are they have a passion to do something which money cannot satisfy. Same goes for an artist who foregoes a business career to make paintings; or a basketball player who puts all their spare time and then some into practicing.

Pride comes when passion fulfills potential and gets recognized. Notice how you never feel pride when someone you don’t respect says “good job” without really meaning it. When a parent, manager or coach recognizes your success, pride is increased. On the other hand, if you do something in search of pride and don’t receive the response you desire, it can be very painful. Ask a son or daughter who has been seeking parental approval all their life what it feels like when that approval never comes – the baggage is ever-lasting.

My youngest brother played elite basketball because of his passion for the game. But he decided to quit for two reasons. First, he had problems with the attitude of his coach – a tough man who did not recognize best efforts and reward passion. But second, and more importantly, he had greater passion for something else – academics. He knew that excelling as a student was impossible when excelling as an elite athlete. Making the decision to give up basketball was not so hard; but telling our father, who had such pride in his accomplishments, worried my brother deeply. There were many sleepless nights leading up to the call.

Our father was not disappointed, however; he was proud of my brother for the decision he made. Our father’s response further increased my brother’s pride in his life choices, and motivated him to seek more recognition and pride by being a great academic. The circle of pride was strong in our family.

I think Katzenbach’s book hits on many important themes: pride, recognition, passion and results. But it is when he focuses on passion that he gets to the heart of the real driver for success. Pride supports passion, but passion is why we do things. Find people with passion, recognize their efforts, and you will create the pride that keeps us all going.

Measuring Human Capital

David Cohen — Thu, 06 May 2010 17:57:16 +0000

At Human Resources conferences, it is not uncommon to hear a frantic call from professionals, in companies large and small, seeking help: “My CFO has just told me that I either show an ROI (Return on Investment) on our Human Capital initiative or it will be hard to justify the Human Resources budget!” It’s an agonizing plea coming from people who truly care about learning and development, but are afraid that it is going to be sacrificed on the altar of short-term profitability.

The question points to some deep conundrums. Can the human capital side of any business be measured in traditional dollar and cents terminology? What numbers are relevant to your human capital ROI? How many angels can dance on the head of a pin?

Measurement and human resources are like oil and water. The general stereotype is that HR professionals are not very numbers focused. Yet, they are arguably responsible for the largest capital asset of their organization. True, most other assets in the organization are tangible and can be valued by using a number of key indicators. Human capital, on the other hand, is “the collective sum of the attributes, life experiences, knowledge, inventiveness, energy and enthusiasm that its people choose to invest in their work.” (“Human capital- the elusive asset” by Leslie Weatherly, HR Magazine March 2003). Now go figure out how to plug those numbers into your abacus!

Traditionally, HR uses its numbers to focus on cost to hire ratio. While that might be a concrete statistic to quote in a report, if those hires do not produce quality employees who show long-term commitment, why should any CEO care? The real measure of a hire is three years out. But anyone pressed for ROI numbers probably can’t wait that long.

At the root of this ROI issue is a more basic problem. HR doesn’t get enough respect from line or executive managers. Consider: Who always gets blamed for bad hires? Who has to be the performance management police? Who has to fight for promotions that are a meaningful part of a succession planning strategy? The fact that these areas are in the HR domain and not a major business concern indicates that HR is not considered a contributor to business success.

If you want to prove ROI, I’m sure it can be done. I’m just not sure it will be meaningful. A whiz kid data cruncher I know told me that numbers can say anything you want. “Tell me what you want them to provide and I will show that they provide it.” His comment made me recall the saying that, “statistics are a group of numbers looking for an argument. Torture the data long enough and they will confess to anything.”

If ROI is the field in which you are fighting a budgetary war, the battle is already lost. To win the war for your organization, you need superior tactics. We in Human Resources make our roles more difficult then we have to. We simple don’t ask the correct questions. You must link every activity to the business strategy and the values of the organization. If you are adding value people know it because they invite you in to ask more questions and help them in the discovery of how to achieve success.

Some of the questions to ask are:

What are the goals of the company?
What needs to happen to meet the business objectives?
What do people need to know to make this happen?
What is the timeframe for it to happen?
Who already has the skill and knowledge?
If everyone learns what they ought to learn through your HR initiative what will the impact be on the business? If not learned, what will be the impact?
What is your biggest people issue?
What is the one thing that went so well last time you know it provided the foundation for success? Why?

Thinking in these terms makes HR more integral as a business partner because its efforts will be aligned with providing what the business needs. Line managers and executives have very simple concerns. By asking the right questions, at the beginning, of the right decision makers, HR can ensure that it develops activities (not necessarily training) that moves a group to achieve its business results. Accomplish that task, and I promise no one will ask you to waste time on statistics and longitudinal studies.

Let’s consider the work of one of our clients in the automotive logistics business. Recently the organization opened a new location and HR was involved in staffing and developing the work teams. To add value, they asked a number of important questions about the design of the processing line and came up with the following parameters:

That the process design complies to the performance characteristics of the customer’s new car model – to ensure that there is a smooth flow of just in time products.
That the computer system meet the standards of the client’s expectations and have significant IT infrastructure back up
That the price they set for the client will actually cover the cost of production

Not surprisingly, the ROI issue never came up because the business leaders in that organization know that ROI is the by-product of proper planning and execution.

As I listen to HR people at conferences and read the piles of articles and books on establishing ROI measurements, I can only think that with the amount of energy that goes into establishing questionnaires and data collection, we could have moved the company forward with significant human resources initiatives. It makes me believe that executives are asking for proof of your worth only because your efforts have not borne real fruit and they are wondering what you are doing with the corporate cash. If there is no evidence that training is improving customer service, productivity, quality or safety it is too late to begin to prove it through a study. The decision to have your budget cut has already been made. If your CEO can see the connection between your programs and business success, they will know your value add and support your expenditures.

Going Global … Transforming Local

David Cohen — Thu, 29 Apr 2010 17:53:25 +0000

Recently I attended a human resources conference in Jamaica. The focus was on the growing impact of globalization. The topic is not a new one. We have encountered it close to home before in the impact of NAFTA and the exporting of jobs to cheap labour markets. Although we talk about living in a global village, have we ever considered the total impact of making the world a smaller place? From the American and Canadian perspective our concerns are very parochial and focused locally. Shouldn’t participation in the global village give us the privileges as well as the rights of citizenship?

For instance, don’t we in the developed world not take as fundamental rights such benefits as social insurance and social assistance? Regardless of where you stand on the political spectrum, the question is not if but to what extent. Yet, our fellow citizens in the global village are barely aware that these rights even exist. They have limited social assistance and no social insurance. They have some access to education and yet the illiteracy rate of the working population is officially set at 35%. Indeed, experts in the educational and human resources groups say those are “adjusted” figures, and that the actual number is higher.

What issues would we face if the working age population within our community was confronted by the four perils that are impending in their community? Unhealthily high levels of unemployment coupled with those who are unemployable. Perpetual crises created by a never-ending cycle of natural disasters. An incidence of HIV/AIDS verging on pandemic. A lack of personal security manifested in high crime and violence linked with the drug trade and international terrorism.

When the United States was in the process of pulling itself out of the Great Depression, Franklin D. Roosevelt coined the concept of the “Four Freedoms”. The impact on the morale of the American people during those persistent tough times was devastating. Consider the even greater impact when our European neighbours did not accomplish the same recovery. The disaster was total when nations turned to dictatorships promising a panacea for all socio-economic problems.

The question then becomes, if are we members of the global village, are we not our brother’s keeper? A wise sage once put it this way: “If I am not for myself alone what am I, but if I am for myself alone who am I?” This concept, I suggest, applies to the problems facing our current world community and its nation states.

What is our responsibility as people who benefit form the resources of the global village? Are we allowed to take from others without ensuring all members freedom from the four fear enunciated by FDR? While there are a variety of means for doing this, we still need to provide a foundation so that the citizens of our neighbourhood can become productive and successful within a social framework that enables them to be less fearful of the powers of nature. What impressed me about the human resources community leaders in Jamaica was that they are, for the most part, concerned about the present as a pathway to the future. From our perspective, what contribution can we make to that future?

Let’s agree that social responsibility means “taking action to assist others to stand on their own feet”. If the world is a global village, and if the impact of suffering leads to stress and downward mobility for an entire region, is it not the responsibility of one’s brothers not merely to extend a “safety net” but to provide the resources and support so that we ensure that our brothers can achieve success through their own self sustaining efforts? If this includes improvements in literacy, health care, social insurance and other foundations that a healthy and motivated individual needs for productive, quality work, the impact of this type of stabilization could only mean a win-win for all people in our global village.

Many of the behavioural profiles we have written over the past year refer to or directly indicate an expectation of senior leaders and middle managers to “think globally and act locally”. As corporations expand, and benefit from the riches of that expansion, reinvestment into the local will probably significantly benefit the global company in the long run. In North America, in the near future, we will soon have more jobs available than people to fill them, and will require a mobile global workforce. From where will we draw these capable and entrepreneurial employees? We will look first to the Western Hemisphere and those who speak English. Ultimately, if for no other reason than the prudent investment in our own future, the efforts we make in bettering conditions among our neighbors will help abate our own impending employment resource problem.

As the trade agreements of the West begin to take root, they have already crumbled to a large degree through the efforts of special interests obtaining permission for bi-lateral conversations leading to one-off agreements. Too frequently, these conversations are between successful corporations and North American interest groups. Unfortunately, the potential exists that this could well make those who are rich today richer tomorrow without any reinvestment in the community.

What is the legacy we will be leaving for our global-village children if we continue to take from others while providing them little social support in return? If I am for myself alone who am I?

My concern is that the drive for profit, or short term ROI inculcated by the 90 day pressure from Wall Street, will focus those who can be for others solely on themselves. It compels us to short-term self-interest instead of the longer-term well-being of our neighborhoods.

It was not so long ago, in the great historical perspective, that the Jamaican economy was stronger than the American and Canadian economy. Perhaps we should listen more carefully to the words of the poet song writer of my generation: “the slow one now will later be fast as the first one now will later be last; for the times they (will be) changin’.”

Preventing The Decline & Fall of Your Corporate Culture

David Cohen — Thu, 22 Apr 2010 17:49:56 +0000

When you think about ancient cultures, it’s easy to wonder why we have not learned more from our collective pasts. Consider that the Egyptians were doing brain surgery and delivering infants through c-section long before contemporary medical practices. Concepts of social justice have also flourished then disappeared. Great wisdom can be lost in the transition from one civilization to the next.

However, while that culture is thriving, what is it that perpetuates its success? In these electronic and print media days, it’s easy to believe that the written word does the job. Upon examination, however, the common denominator between the past and today is “word-of-mouth.”

A culture’s oral tradition is the means by which a culture’s commitment and passion is made meaningful. When word-of-mouth fails, the oral tradition disappears, and so does the culture. Recently, while visiting The Alte Pinakothek, in Munich, it struck me that the details and massiveness of the art work comprised a cultural message that was frozen in time. Of course, the civilization that produced the art continued to change, as did its stories and legends. But the “picture” was forever in place while the culture evolved only after the oral tradition changed.

Looking at those medieval paintings, I could not help but think of the great efforts companies take to get their “message right.” Whether through poster or advertising campaigns or costly websites, companies produce a picture of the culture which is at best a poor rendering of the real thing. Consider how infrequently those pictures mean anything to the participants of the culture.

It is through corporate legends that a culture’s word-of-mouth survives and thrives. Those legends are the stories of the past, blended with the reality of the present and a hope for the future. In other words, they are timeless. Regardless of the timing of the event that prompts their telling, the story is told as if it is happening now. They are transmitted, not formally but informally, from one employee generation to the next as “living” examples of the correct way of doing things within that company. I see it time and again when I visit different areas of a company. Corporate legends exist across regions and divisions and are told using nearly the same words and context. This provides new employees with the same message about the culture as the previous generation.

Too often, leaders of institutions seek to control or manipulate the cultural message that they wish to perpetuate. Doing so often stifles the “living” nature of a culture and weakens its sense of purpose. Think about public school education as we know it in North America. At the beginning of the last century, public schools were designed to inculcate the masses of new immigrants in “the American way”. To do this they created legends which set the seeds of the American Culture, as we know it today. In the process, they broke the link of the oral history which the newly born generation otherwise would have heard from their parents. This became the foundation for the perpetuation of the transmission of the American or Canadian experience. The nature of that experience was an open and ever-evolving debate, colored by local history.

Many corporations have run a parallel course. While they are in a stage of growth and development, they engage in vigorous debates about right and wrong, and what’s best for the future. As the culture emerges they tell stories that reinforce what feels right, and defines the proper way of acting within the company. Then, at some point, it becomes wrong to engage in such debate and question the way things are within the firm. Company leaders, at this point, attempt to maintain what they feel is good and narrow or eliminate the debate and evolution of the culture.

Why do leaders feel they need to narrow a culture in the name of progress? Planners consider it a matter of efficiency ¾ something we’ve been through with the growth of our cities. Once upon a time, cities developed naturally, as people and commerce required, and took on distinct identities. Then, we went through a planning stage, in which the patterns of behavior got imposed on the city grid. Jane Jacobs first wrote about this in the Death and Life of Great American Cities. Today, in her new book, Dark Age Ahead, she writes that “efficiency has become an ideology instead of a practical, common sense thing.” Similarly, in our approach to education, efficiencies may help students meet expectations, but the once-enduring institution of the school system itself is crumbling.

In corporations, a focus on efficiency implies a similar focus on the bottom line. Downsizing, budget cutting, reengineering, and even the forming of strategic alliances with rivals are standard methods of creating efficiencies today, while sacrificing the past, and mortgaging tomorrow.

Leaders can be visionaries, however. Some think in terms of possibilities, not efficiencies. Those possibilities are focused on the future, relevant to the present, and strongly grounded in the past. Such leaders amplify word-of-mouth legends for the right reasons, to propel people into the future in a way which continues to connect them with the past. This results in a steadier feeling about today, a pride in yesterday, and an optimism for tomorrow.

I suggest, that to ensure your company’s future, you have to:

Celebrate what you have learned from the past while planning for the future.
Preserve the legends of the past while pursuing the possible.
Maintain the “oral history” by sharing legends, not through video or intranet sites, but by having real people tell real stories, from the first day of orientation on.
Recognize what efficiencies fit within the culture, and rely on them, rather than fitting ideology around new trends in bottom line management.
Foster leaders who lead from a shared past, to a shared future. That is what it means to speak of visionary companies rather than visionary leaders.

I don’t pretend to be an anthropologist or an art historian, but the writings of people like Jane Jacobs tell us a lot about the potential for self-destruction in our companies. This is not an article of despair, however, but one of hope. A thriving culture, the kind that gives us all room to grow, is a wonderful thing to be part of. Listen closely, the next time you go to a museum, and you will hear the voices of the past telling you so.

The Jolt! ? What Happens When Values Change?

David Cohen — Thu, 15 Apr 2010 17:39:53 +0000

A few years ago, I was shopping at Home Depot, and having a bad customer experience. They didn’t have anything I wanted and no one seemed interested in helping me. Checking out, I mentioned to the sales associate that the store didn’t seem the same. His reply, being a part-time employee and a first year business degree undergraduate, took me back: “Well, things have changed. We have a new CEO who is trying to shift the way we do things here and it doesn’t make any sense.”

Wow. If you ever suspected that values were critical, here was some proof. Home Depot had a new CEO, Bob Nardelli, who came to the organization from GE where he had been one of the top candidates for replacing Jack Welch. GE was a company that claimed much of its success came from a clear articulation and adherence to unique values. Ironically, when Nardelli and several other top executives left GE’s senior ranks to become CEOs at other companies they brought GE’s unique values with them to impose on their new organizations. Values, however, transcend generations and CEOs and are not easily changed without a significant emotional jolt. As expected, such a jolt usually brings a lot of pain and confusion.

Home Depot had its roots in MB & Associates. Founders Bernie Marcus and Arthur Blank knew that product knowledge and employee training led to customer satisfaction and business success. Typical employees at Home Depot enjoyed working there, because they had to know their stuff to be successful, and customers came to Home Depot expecting that kind of experience.

Nardelli’s success at GE was linked to his efforts at increasing efficiency. He centralized and streamlined operations and created competition among suppliers. He promised to bring that same discipline to Home Depot to maximize profits. Some months later, he was chastised by the Board and the public for not maintaining Home Depot’s high level of profits.

In time we saw that Nardelli wasn’t successful. But we should recognize what really happened to Home Depot as a Jolt! to its values. It happens all the time when CEOs join companies from different cultures. Witness the tumult created when Carly Fiorna joined HP as CEO. While the founders had been known for their casual Management By Walking About style, Fiorna was a media superstar who traveled by jet with a large security presence. While the organization had been divided into many autonomous business units, Fiorna centralized P&L into several mega business lines. No wonder that a hostile proxy battle, led by one founder’s heir, erupted over the Compaq merger. It was literally a clash between value sets.

Values are deeply held beliefs highly impervious to change. Consider whether any of your own personal values have really changed over the years. If so, what inspired that change? I suspect it was a life-altering experience, something as traumatic as a death in the family, an illness, a divorce, a serious health issue, a crisis of faith. One CEO that I know went through such an experience. He was a hard-driver who expected all his senior executives to burn the midnight oil, many of whom had young families. After his own grandson was tragically killed, he shocked the entire top team by commanding them to go home early on a daily basis and do more for their families. The gravity of what he had gone through led everyone to believe that he was serious. His actions in follow up confirmed it. When they saw that he now left the office before six thirty every day, they knew that one particular value of the organization had changed, and were able to follow suit and make it stick.

An unwanted value change will not occur without a fight. In fact, old values tend to return to the surface and dominate the “way we do things around here” after the initial jolt has passed. That’s the unwritten story beneath an awful lot of failed mergers and acquisitions. After the wedding day, problems set in because the people side of the equation has not been given as much weight as the financial one.

Recently, I received an email from a senior organizational development practitioner who asked if could assist him by providing “meaningful ideas/opportunities to blend cultures, work habits more quickly and efficiently.” His company had just merged with a smaller rival. Despite the strategic fit, and even ¾ on paper ¾ the value fit, there had been an alarming downturn in productivity and teamwork.

What went wrong? Well, despite the overlap in values as they were articulated on each company’s website, there was a great discrepancy in how those values were practiced. The larger company was stable and healthy with a great work environment. The smaller rival had a lot of hot talent and an aggressive style but terrible retention problems. It turns out, prospective employees were being wooed with the right words and approaches but found that to be a false reality once the job began. According to the Corporate Executive Board’s 2003 Recruiting Roundtable, the primary driver of high performance in new recruits is fulfillment of promises made during the recruitment process.

In the case of this merged company, employees from the smaller rival were used to a culture that claimed it trusted employees to make decisions but actually ruled autocratically. When management teams joined, employees were confused as to whether they were being empowered to be responsive to customers. Things got so bad that people kept boxes filled with personal belongings next to their desks in case the next meeting with the senior supervisor led to yet another dismissal.

To make value change a viable possibility consider the following ideas:

- When companies merge, look at the behaviors underlying the values not just the words to determine fit.

- Neither companies nor people can change overnight. Acknowledge the change, and celebrate the good in old and new ways to keep people engaged and optimistic.

- Have the courage to fire those who don’t fit the desired value set, even at the top.

- Due diligence in people systems has to include competency models not just policies, systems and procedures.

- Walk the Talk. From the top down. At all levels.

Value change is about long-term viability not short-term profitability. If it’s important and necessary, plan it out, acknowledge the change and live it. The longer view must prevail. In a blended family the integration of a handful of people can take years to accomplish. How can we expect thousands of people to merge or change in mere months? I have seen success stories, however. One firm we are working with is successfully navigating a merger because it identified similarities and differences in values beforehand. By finding common ground, and focusing on what is positive and meaningful, it is forging a new and unique organization.

The Hardest Conversation

David Cohen — Thu, 08 Apr 2010 17:36:12 +0000

Most managers cite performance reviews as their least favorite activity, next to dismissal. Not only is it time-consuming, but it can also be an emotional confrontation which leaves both parties upset, dissatisfied and bitter. In last month’s column we discussed why “a lack of time” is no excuse. Now it’s time to talk about how to make that conversation a productive and positive one that actually deepens a relationship instead of straining it.

It takes courage to tell the truth about a report’s capabilities, performance and attitude. To tell the truth in a way that increases mutual understanding, respect and commitment takes more than courage¾it takes skill and a few tools. Let’s look at how this can occur.

Francine has been running the division for three years. Alex is one of her top sales people but lately his numbers have dropped off, his attitude seems poor, and a key account asked if he was still with the company since he hadn’t been heard from recently. Francine suspects that Alex is focused on some outside activity, perhaps even a job hunt, but she wouldn’t dream of bringing that up. She’s afraid Alex would see her questions as threatening. If he wasn’t thinking about leaving already, she’d put the idea straight into his mind. Still, the group’s numbers are suffering as a result, and Francine keeps asking others to pull more weight. This is making those people resent Alex more and more, even as Francine is losing credibility in their eyes for not confronting Alex directly.

When Francine finally meets with Alex, she asks him how he is doing. “Everything is fine,” Alex answers, “but the economy is making sales really tough.” Francine thinks to herself, is it the economy’s fault that you haven’t contacted the ACME Account recently? But instead of asking that question, she steers the conversation toward a pep talk. “We all have to pull a bit more weight until things turn up,” she suggests. “Is there anything you think you can do to generate better numbers?” As soon as she says this, she sees that Alex’s pride is hurt. He knows that his numbers are down. Meanwhile, Francine is losing credibility in Alex’s eyes. Because of an account he lost unexpectedly last year, his bonus was much less than he’d hoped. Now he’s being asked to do more yet again with no assurance of a return. No wonder he’s been listening to what friends in other companies have to say about other positions. Still, he doesn’t mention that lingering bitterness, but nods and agrees to work harder. “Alright,” Francine says, “let’s get this performance review form over with so we can get back to business.”

Francine and Alex then turn to a list of behavioral statements and discuss them each in turn. Many are not specifically related to Alex’s job, and even those that are seem too general to generate any meaningful discussion. Nothing pertains to the problems Alex is currently having. Francine and Alex literally check off the list, and Francine gives Alex a passing grade, based more on his reputation as a top performer than his actual conduct.

Francine feels that she has failed as a manager, but doesn’t know what she could have done differently. She did not want to be confrontational with a key employee; but she also feels constrained by a process which did nothing to aid her in the discussion she should have had.

Part of Francine’s problem is that she is evaluating Alex by an indirect set of measurements. First, she is looking at his performance in terms of how it measures up against the business objectives. Alex’s inability to hit the numbers, however, is a result of his behavior not a cause of it. Talking about the results only touches on the behaviors, and not in a way that generates understanding and new solutions. The other part of Francine’s problem is that the performance appraisal form is not a concrete definition of what Alex needs to do to be successful in his job.

When the performance appraisal is based on an accurate job profile, it allows the manager to:

- develop vocabulary for discussing the nature of top performance and job success

- enhance cooperation and communication with the employee

- provide clarity around the crucial aspects of performance improvement

- outline pathways for career development

- promote commitment and retention

Imagine if Francine had before her a list of all the behaviors that Alex needed to demonstrate in order to be successful. Furthermore, a good performance appraisal form would note that it is not enough for a behavior to be demonstrated once, it needs to be demonstrated consistently. Francine and Alex could then have a discussion about actual occasions in which the behaviors were demonstrated or not demonstrated, and why. Out of that discussion some deeper truths could emerge since the focus on job-behaviors depersonalizes the assessment. No longer is it a matter of what Alex is doing outside the job or his attitude at work. Instead, Alex and Francine could discuss what Alex is doing in his job, and how consistently he is doing it.

The deeper question of why would then have a real basis for discussion. Since the assessment is objective and mutually agreed-upon, there is no need for unspoken recriminations and hurt feelings. Alex and Francine could then more accurately pinpoint the cause of the breakdown and decide what can be done to improve performance in the future. In most circumstances, just being able to acknowledge and hear a person’s concerns, through a constructive framework, can free everyone involved to let go of the emotional weight and move on

An accurate performance appraisal reaps benefits long after the event itself. Because Francine and Alex have had a meaningful discussion about the nature of top performance, that understanding becomes a reference point for all future performance conversations. Francine will know how to coach Alex to improve his consistency, and Alex will know what he needs to do to succeed. Each year, they can build goals based on behaviors that allow Alex to generate the growth, recognition and bonuses that he wants and needs.

Turning Performance Reviews Into A Meaningful Activity

David Cohen — Thu, 01 Apr 2010 17:32:45 +0000

Performance reviews are like the spring cleaning of the managerial world. Everyone knows it needs to be done. No one wants to get to work and do it. Still, you’ve been tripping over those boxes, piles and stacks for so long now that you don’t even remember what’s in them anymore. And your spouse, or at least your human resources representative, has been nagging you to do something about it non-stop. If you stare into the depths of your computer screen long and hard enough, will that give you more insight into the capabilities and competence of your direct reports? Maybe this year we can resolve to make performance reviews a meaningful activity.

Here’s a statement I make about performance reviews which always gets an uncomfortable but affirming chuckle: “Most managers assess performance based on the last complaint they had within the previous four to six weeks.”

In other words, they haven’t kept track of how their report has performed or developed since the last performance review; instead, they base their assumptions, evaluation, and future coaching on whatever issue has revealed itself most recently. If the manager is kind-hearted, this is a mutually embarrassing Kabuki ritual which gets forgotten by both parties as soon as it is over. If the manager has a vindictive streak, this gives him or her the opportunity to be cruel and arbitrary with some hard-to-dispute evidence as back-up.

The root cause of this emptiness is that even though some managers do performance management throughout the year, few can summarize that series of discussions in a way that makes sense and drives improvement. What should a performance review look like? First we should note that a performance appraisal form or process does not equal performance management. The two are interconnected but mutually distinct aspects. Performance management is an ongoing series of conversations that enable open and frank discussion between manager and employee based on actual events of which at least one party has direct knowledge. Manager and employee might not interpret those events in the same way, but at least they can talk about them in a meaningful way. A performance review, on the other hand, is that final discussion which takes place at the end of the year period which provides a meaningful summation of all those previous discussions.

There are two classic elements in performance appraisal. First, there is the business objectives, which boils down to the numbers one must attain. Then, there is the development plan, which is the path by which an employee grows in ability to attain those numbers. Connecting these two zones of concern are the employee’s behavioral competencies, which should be the focus of the development plan. In other words, if the employee gets the behavioral competencies right, the numbers should be attainable.

This mix of three elements cannot be dissected and parsed in a single session on a Friday afternoon. Instead, it takes careful thought and planning and requires regular meetings throughout the year interspersed with coachable moments and off-the-cuff conversations. Managers who think about what performance appraisal entails in its full entirety generally have one response: “I don’t have time for that! I need to get my job done.” And all that I have to say to that excuse is: “You don’t have time to do your job?”

If a manager’s job is not to develop and coach his or her direct reports, what is it? After all, how is a manager supposed to achieve the group goals set by his or her own manager? Surely, the manager is not meant to do this alone¾aren’t employees supposed to contribute? Not having enough time is an excuse which doesn’t hold up to scrutiny, even or especially in terms of the demands of the business. It also sends a very clear message to direct reports. Essentially, the manager is saying: “I don’t have time for you. You’re not important. Your success does not have anything to do with my success.”

The impact this attitude has on employee cynicism cannot be underestimated. Consider also, the organizational impact when such behavior is taking place across a number of managers. Not only is the organization getting low commitment and creativity from its employees, but it’s also losing them in droves. After all, I’ve said it before and I’ll say it again: “People don’t leave companies. They leave managers.”

Who, within your organization, is “auditing” the quality of performance appraisals? The organization that doesn’t ensure that this activity gets the time it needs to be meaningful is sending the message that people development adds no value to the business. All businesses are under the gun. All managers are being asked to do more with less, including less time. But we have plenty of time to do what really matters. The breakdown is not because of time; it is because the event does not rank in terms of our priorities.

It’s time to get those priorities straight.

Outsourcing Your Strategic Competitive Advantage

David Cohen — Thu, 25 Mar 2010 17:29:00 +0000

In tough times, all managers ¾ from the senior team to the middle ranks ¾ feel pressure to improve the bottom line. Unfortunately, the most expedient way to alleviate that pressure is by improving efficiency to achieve short-term profitability. All too often, this comes at the expense of the organization’s longer-term strategy. While managers get rewarded for this sacrifice with better quarterly numbers, their customers and rank-and-file employees suffer the consequences.

The efficiency charge has been with us for a while now. Many of the famous trends of the 1990s ¾ considered powerful new strategic tools at the time ¾ were no more than ploys to increase efficiency. Outsourcing, re-engineering, benchmarking, total quality management, sixth sigma and ISO 9000 activities all did their bit to make executives “look good” by improving the bottom line. Although each of these efforts did have an impact on efficiency, they had much less to do with strategic change than we were led to believe.

What research do I base this claim on? How about a recent experience at a telephone call center. I visited the center while doing work with an insurance company. This firm was behind a number of different credit cards. Each offered a similar coverage to their customers through the same insurer. While observing the call center area I witnessed an amusing coincidence. A man called in to see about his out-of-country coverage. He was not very happy with the answers he was getting. The next representative then took a very similar call on a different card from a woman. We learned, through the course of the conversation, that the man had gotten his wife to call their other card company at the same time to see if she could get a better answer. Soon the two representatives and the husband and wife were having a bizarre four-way conversation ¾ except the couple were not aware of it. The representatives of two different credit cards (backed by the same insurance company and working side by side at the same outsourced call center) struggled in stereo to explain the minute differences between coverage plans. Both calls ended with a very dissatisfied customer.

I wish I could have transported myself to that couple’s house to hear what they had to say next. Imagine the conversation:

Husband: “What did they tell you?”

Wife: “They offered me X. What about you?”

Husband: “X + 1.”

Wife/Husband: “Ugh! All credit card companies are the same!”

And husband and wife would be right. Both credit card companies were the same because of their outsourcing and efficiency approaches. Neither had any distinctive advantage, even though their brochures described in glowing terms how their service and coverage differentiated them from the competition.

I have no doubt that somewhere along the line the senior team of each company decided on a new efficiency strategy. That operational efficiency shift, however, made those companies indistinguishable. Call me naive, but I doubt the short-term profit gains will hold up under the loss of long-term customer good will. Stare into my crystal ball and you will see yet another merger of financial service providers in the future. Stare a little deeper and you will see some other as yet unidentified company with a more distinct approach to customer service sneaking up from behind with a bunch of happy employees in tow.

If you consider the service your company offers to be an aspect of its strategy, then outsourcing it reduces your competitive advantage. Why? Because your competitors can and will do the same thing when they benchmark the industry and see what you’re up to. While operational efficiency looks good in the short term, it is easily replicated.

A real strategy capitalizes on what makes your company unique. By drawing on your culture, values and vision for the future, your strategy sustains your company’s direction and your people’s values while providing a road map for the way forward. This means you are marching to the beat of your own drummer ¾ a music that others will not be able to copy even if they can benchmark it.

Outsourcing is a top-level decision typically made by the senior team. Nevertheless, managers at all levels make decisions every day which compromise long-term strategy at the expense of short-term efficiency. Although the pressure to do so is intense, a true leader will resist the temptation because he or she knows it is not right for the business, the customer or the team.

In the future, when you are considering doing what everyone else is doing, give yourself pause to reflect on the following:

What, if anything, in the activity is aligned to your corporate values?
Do your potential third-party vendors have a cultural alignment to your firm? Will your employees, customers and suppliers feel seamlessness in behavior and stability in the relationship?
What are the short-term benefits and long-term costs?
How does this support and sustain your long-term strategy?
Are you giving up an area of competence or a point of contact that gives you unique leverage?

These kinds of analytical questions can help you assess any efficiency strategy, but the final place to look is inside. If your intuition feels that it’s wrong, then it probably is wrong. Stick to what makes you unique. Your employees and customers will thank you for it ¾ in the long-term.

How We Stifle Our Strengths & Focus On Our Weaknesses

David Cohen — Thu, 18 Mar 2010 17:26:30 +0000

For decades educators have taught two important ideas about learning and development: 1) If you say that you believe in a student’s particular capability, and keep repeating it, after a while they will accept that belief as reality. 2) If you wish to get the best out of a student, find the best in a student.

Parents and classroom teachers have not taken these ideas to heart. Students, from a very young age, undergo “forced ranking” through the grading system, a competition which labels individuals as being at the top, middle or bottom of their class. (Enron raised the stakes with their “rank-and-yank” approach to firing underperformers which did wonders for long-term leadership development.) Not coincidentally, teachers habitually point out to students not what they do right but what they do wrong – over and over. Furthermore, they tend to focus their quality teaching time on those students who they perceive will answer a question correctly. As a result, students learn that the best way to succeed is to give the teacher what they want and not make waves. Even if you thought you were right, there’s no point in arguing with the person giving you your performance review, i.e. grades. It’s the rare and heroic teacher who breaks that pattern – check out Dead Poet’s Society, Finding Forester and Rudy for a few Hollywood examples.

Not surprisingly, when we get to the corporate world, we often discover that the leaders of organizations were people who flourished in the educational system of compliance. It’s natural for them to find faults in their reports and dwell on those faults until improvement is seen or the person goes away. The same applies with selection and promotion. Internal competition for the best jobs is based on who provides the right answers according to the boss rather than a good answer the boss may not have considered before. Similarly, organizations look to hire the person who graduated top in their class, not realizing that the person in the middle may in fact be the most innovative or driven.

Come performance review time, we see the way this impacts the bottom line. Performance management involves seeking out the areas where an employee has not had success. In our multirater data, we focus on the lowest results, and do training needs analysis and development activities to fill that gap. We fail to realize that the strengths a person has – if enhanced – will raise their performance to a higher level in a way that will be much more productive. We mistakenly think there is more value in taking a person from a 2 to a 3.5 on a 5 point scale, rather than helping them improve their 4.25 to a 4.75.

I once told a manager, “Stop trying to teach a bird to bark and a dog to sing. It only annoys the animals and frustrates the teacher.” Asking a person to work on the thing they have the least aptitude for is counter productive to development. It’s like putting an obstacle in front of a blind person. The message, reinforced continually, is “I don’t perform well.” The energy spent on filling those gaps draws from the energy that could be multiplied by excelling at strengths. The organization fails to benefit as well. By using a resource inefficiently, it is unintentionally hamstringing itself in the competitive marketplace. Better to focus on filling those gaps through complementary resources or different ones. Consider also that people who excel at their jobs are happier, more innovative and customer-focused; while adequate managers who build their strengths can become good or even excellent managers, multiplying their positive impact.

Most of us are conditioned to expect criticism during performance reviews – or we get bland assertions of positive but unhelpful data. Whenever I do feedback sessions with people seeking a behavior to work on, I suggest that they focus on one of their strongest and most frequently demonstrated behaviors. The reaction is like a deer in the headlights. “What are you talking about? I already do that well!” Yes, I answer, but what would the impact on your work be if you were to make incremental improvements that led to even stronger results? Imagine the excitement for your projects, goals and strategies if you were even better at what you do well now. Instead of struggling unsuccessfully with a weakness, I explain, you could focus on building and refining a strength. The lights begin to shine brighter because what I am saying actually makes sense.

Corporate performance improvement occurs only when people performance improves. For years, however, we’ve been stubbornly “herding cats” by forcing people who are unmotivated to change to adopt new behaviors. At a recent Linkage conference on Leadership Development, speaker after speaker raised this message. As Jack Zenger put it, leadership development is in its infancy because we have not yet focused on what makes the most dramatic difference in performance: improving our strengths. There were nods around the room, but also a lot of “deer in the headlights” expressions. When it comes to changing our cultural bias towards working on weaknesses, we still have a lot of work to do.

Here are some suggestions for managers and HR professionals to build strengths in others:

Eliminate packaged program development suggestions for low scores.
Focus on what people do well and can improve – in line with business objectives. As much as possible, employees should discover those areas themselves. Don’t provide suggestions just because you think you have to!
Provide positive feedback whenever possible based on constructive observations. Put the suggestions in the light of current behavior not the desired actions.
Confront inappropriate behaviors and set out clear action steps without losing sight of the positive.
If inappropriate behaviors violate cultural values, don’t hesitate to remove that person. The negative effect on others is higher than the effect of losing one employee, no matter how well they perform.

The Missing Peace

David Cohen — Thu, 11 Mar 2010 17:21:12 +0000

Is Work-Life Balance Worth Fighting For?

What makes an organization an employer of choice? So many people list “work-life balance” as one of the key knock-out factors. Like an elusive vision of an oasis in the desert, it radiates with simplicity and philosophical appeal. Some things are more important than work but what does “work-life balance” really mean? A source of much discussion and great frustration among employees, the idea of an organization with work-life balance doesn’t really stand up to scrutiny – it’s an oasis that will always exist on the distant horizon.

One shouldn’t despair – work-life balance may not be such a great idea anyway. The quest for it reminds me of Shel Silverstein’s wonderful story, “The Missing Piece.” Although written for children, it speaks most aptly to adults.

The story is about a circle with a wedge missing. Because of the missing piece, the circle can’t roll very fast. So it stops to smell the roses, look at the blue sky and drink iced mocha frappacinnos with good friends. But the circle does not feel complete so it continues rolling along looking for the piece it doesn’t have. It tries a number of shapes that don’t fit until – eureka! It finds a wedge that is just the right size!

Now the circle can roll very fast. This is fun, for a while, but eventually, the circle notices a downside: it no longer has time to smell the roses. Sadder and wiser, the circle takes out the wedge and goes back to its old ways, rolling along slowly – happy once more.

The moral is simple. Be careful what you look for; when you find it, you may not like the results. The same goes for work-life balance. An abstract concept, its meaning remains difficult to define. Like the idea of “customer service,” no two companies would describe it in the same way. For a retail worker, for example, work-life balance during the three months prior to Christmas would mean giving up 79% of the annual bottom line. For a financial planner, work-life balance in February or March would be a disaster. A manager or a doctor can’t keep things in balance when demands are high. Fire and police services need to put in overtime when necessary. Each company and each industry has its own natural rhythms and cycles. The idea of “balance” is a piece that doesn’t fit.

Try explaining that to employees who are being fed simplistic messages about balance by human resources “experts” and journalists. A scary thought – so I decided to do it. I was speaking with a focus group at one of the world’s best known pharmaceutical firms when the concept came up. “There’s no such thing as work-life balance,” I declared. “It’s a cruel joke perpetuated on us by well-meaning people.” They looked at me first with horror and then relief and a big smile – everyone knew it was true, but no one had said it aloud before. I told them a story. Once, I was in discussion with the CEO of a leading financial institution. He said that he could not understand why his HR people put a question about work-life balance onto a feedback survey. Work and life happen, he said. They are not always in sync nor predictable. So we have to realize there will be times when one comes before the other.

In fact, most of the time, work will come before life. This CEO said that when he sends an employee on the road for an important meeting, he expects the employee to be focused and involved in his work – not balanced. When the employee returns, he expects the manager to use good judgment and allow the employee some extra time for family, health or personal obligations. There doesn’t need to be a policy in place to ensure that the road trip is balanced by the half day off. It can’t be legislated. The confluence of personal issues, business priorities and yearly cycles are too unique. Ultimately, it’s about personal choice.

If a firm espouses “work-life balance” it needs to do so in a context that makes sense – otherwise it is setting up unreasonable and damaging expectations. If balance is a priority, it needs to be so not because of any ideas about social responsibility or retention but because it has a strategic or competitive pay-off. Here are some key considerations:

All companies and sectors are different. No right definition exists. You need to define it for yourself and your situation.
Don’t expect work-life balance just because the company says it is a priority. Look to the CEO and senior team to see how it is modeled.
The more senior you are, the less likely you will be able to choose when you can leave work behind.
Going to another firm will not change anything – change must be personal.
Recognize that going out on your own means the end of work-life balance period.
Balance does not mean mathematical equality. We need to be pragmatic and realistic about the formula.
It is more important to be defined by who you are not what you do. If you are not happy with who you are, don’t blame it on what you do!

As I write this article, I am off on another lengthy business trip away from my family. I enjoy the travel and what it represents – a full docket of work. More balance would be a negative not a positive. I think the same holds for many companies today. Before demanding a lesser load, we should think about Shel Silverstein’s story and consider whether the Missing Peace would really solve any of our problems.

Integrity Is Not A Value

David Cohen — Thu, 04 Mar 2010 17:17:16 +0000

I have a lot of trouble with integrity. That’s not a personal confession and it’s not a statement about today’s (occasionally challenging) business climate. Instead, it’s a problem I have with the word itself. My difficulties emerge when I’m doing a values exercise with a senior team. As we discuss what makes their organization unique, someone inevitably suggests that “integrity” be included on the list. That’s when my brow furrows and my headache starts.

According to a Harvard Business Review article[1], 55% of all Fortune 100 companies define integrity as one of their “core” values. When working with a senior team, I could just cite that statistic if I wanted to discourage the inclusion of integrity on their list. Or, I could add that integrity was one of Enron’s values too. But either because I’m too polite to take a cheap shot or an optimist at heart, I take a deep breath and say: “Okay. If integrity is one of your values, let’s define it in a way that is meaningful to your organization.” And let the fun begin.

I always find it difficult to mediate the ensuing debate. What is integrity? What does it mean for this organization? How do we define it in concrete terms to understand it better? Other values, equally over-represented on corporate mission statements, do not create the same trouble. For example, senior leaders also love the words teamwork, respect and stewardship. No problem. What kind of teamwork? Teamwork between front line staff and management to provide great customer service. What kind of respect? To one organization it means respect for the traditions of the brand, to another respect for the environment. How about stewardship? Sometimes it means financial oversight or prudent investment, other times it means stewardship over the community’s resources. Defining those values in specific contexts gives them power.

But when you get to integrity, it is much harder to come to common agreement. Are we talking about commitment to quality? Honesty in dealings? Trust between employees? It’s as though there are too many synonyms and analogous situations available to sift through for us to pinpoint an exact meaning. I am reminded, each time, of what a teacher told me many years ago in rabbinical school: no institution has integrity, only people do. It’s more personal than other values.

But a theological argument is not completely satisfying in explaining our difficulties. So I’ve spent a few years contemplating the issue. Here’s a list of possible answers. Is the problem with integrity that:

A) Corporations, by definition, don’t have any?

B) I can’t recognize integrity because there’s something wrong with me?

C) Integrity is not what we think it is?

D) All of the above?

If you answered A, you’re more cynical than I am or I need to tone down my sarcasm; B and I’m worried about my reputation; D and you take too many multiple choice tests. The correct answer, at least by elimination, is C. I only realized that recently, however, when grappling with a serious values issue with a major client.

The organization, an insurance provider, was going through its values exercise. At the same time, in a seemingly unrelated event, it was being sued by a family for coverage that hadn’t been provided after an accident because of an issue with a premium. We went through our values work as the newspapers blared headlines about the progress of the court case. Perhaps because of that contentious atmosphere, our debate was particularly rigorous and thoughtful. When we finally came to agreement, everyone in the room was happy. Then one executive threw cold water in our faces: “If all of these values are really true, and I think they are, then we’re doing the wrong thing fighting this family in court.” It was a sobering thought, but one that galvanized a powerful reaction. Immediately, it was decided that the company would reverse its stand and pay up. The lawyers couldn’t believe it. But the executive team had a good night’s sleep, comforted by the certainty that they had done right by the family and the organization.

The reaction to this switch was overwhelmingly positive outside the company. It was in fact an event which had the makings of a genuine corporate legend – one of those stories which demonstrates what an organization stands for better than any list of values. The press loved the decision. Politicians applauded it. The community genuinely appreciated it as a refreshing gesture. Other companies, at a conference that took place soon afterward, admired it. They understood that it takes a lot of courage to do the right thing when that costs money. More importantly, the people within the organization felt good about the decision. The employees held their heads a little higher and could explain it within the rationale of the values. The executives, as we mentioned, slept better at night. As one declared: “We acted with integrity.”

Stop the presses… Integrity was not one of their values. I wondered, should we A) rewrite the values to include integrity, or B) think about what acting with integrity really means?

The correct answer, of course, is B. This realization was a major “aha” for me. Integrity is not a value, I realized. Instead, it’s the act of living your values. To violate a value is to diminish your integrity. Think about the powerful emotions aroused when a company gets caught in a hypocritical stance. For example, when a senior team turns out to be crooked, or a finance firm permits harassment of women to take place systematically, or a manufacturer pollutes the environment, the public (and internal) reactions can be severe. But the reactions will be much more severe if that company espouses financial stewardship, teamwork or respect for the environment as differentiating values.

To include integrity in a list of values is a redundancy. Integrity is not a value unto itself but a summing up of the other values together. Organizations act with integrity when they live up to their values. Doing so can be difficult when it costs money, competitive position or strategy. But even though the benefits of acting with integrity may not always be as clear as with the insurance company I described, the reinforcement of integrity, internally and externally has its own well-deserved rewards.

[1] “Make Your Values Mean Something” by Patrick M. Lendoni, Harvard Business Review, July 2002, pp. 113-117

Taking The Long View

David Cohen — Thu, 25 Feb 2010 17:15:40 +0000

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.

Earned Cynicism

David Cohen — Tue, 19 Jan 2010 11:38:49 +0000

When an organization launches a new initiative, employees are usually eager to go forward together in an attempt to accomplish those aims. Of course, there are always a few cynical doubters, reluctant traditionalists or destructive naysayers in any employee population. But leaders are generally given the benefit of the doubt. If senior leaders say this is the way the organization needs to go, most people are willing to help get it there.

The credibility of leaders is like an inherited trust. Under normal circumstances, that account has a high balance.

Those who have a stake in the company, like shareholders, customers and employees, prefer to see the value increase rather than go down. In fact, it takes a lot to deplete the accounts and put the perceived “value” of the organization in dangerous standing. But when a leader or manager breaks promises or fails to live the organization’s values or is inconsistent in word and deed, the drop-off in committed belief is often proportional to the disappointment. It’s as though credibility, the currency of leadership, has proved to be nothing but counterfeit money. The result is something I’ve learned to call “earned cynicism.”

I first heard the term when I was working with a focus group to validate an organization’s value set. The group was composed of a number of middle managers – the key link between the leadership team and the rank and file. Most in the group had been with the organization for over ten years, but there were two outsiders who’d been hired within the last year.

As we discussed how the organization exhibits each value, sparks began to fly. One manager declared in an increasingly emotional voice that the values all sounded good but the organization never acted that way when the chips were down. In other words, she continued, we were talking about some ideal world, not reality. In the real world, internal politics would get in the way, or the organization would never stick to its guns, or some people – usually important people – would act contrary to the values and yet face no consequences. In other words, she said, whether the values matter depends on who your boss is, and how willing he or she is to live by them. What’s the point in declaring something to be a value if it doesn’t apply equally to all people and circumstances?

I waited to see what would happen. Finally, one of the recently hired managers, still energetic about the company, said that he thought the values were inspirational and could help guide people in their growth and decision making. Therefore, he said, “we should learn to live up to those values, instead of being cynical about them.” The older manager, who had seen initiatives come and go, said, “Just wait and see. When you’re here as long as I am, you’ll have earned your cynicism.”

People who’ve been around an organization for a long time know what it means to earn their cynicism. Although Dilbert may have lost its steam as a cultural phenomenon, it still strikes a chord. When people have been told that something is going to happen and that it’s going to create a new and better way, they get excited and become emotionally vested. When it doesn’t happen, or happens for only a short time, or happens on only a case-by-case, manager-by-manager basis, their cynicism grows.

Some examples: Management fads that come and go – to no lasting effect. Declarations that people are our most important asset – followed by layoffs or cutbacks in training budgets. Managers who don’t have the courage to deal promptly with underperformers or – just as important – with those who achieve results but do so in a way that is counter to the organization’s way. Rewards, recognition and promotions that go to the favored instead of the worthy.

Think about the impact on morale, on the spirit of bringing in new employees, on the enthusiasm of your current employees as ambassadors of your organization. Earned cynicism is such a powerful and destructive force because it is the offspring of broken promises.

It doesn’t have to be that way. Earned cynicism can be stopped by creating a series of safeguards from the top down, manager by manager. In fact, that’s what leadership is all about.

Start with this premise: talented people leave even the best run organizations when managers are poor; and they stay in bad organizations when managers are heroes or stalwarts. In other words, people don’t leave organizations, they leave managers. Add in the idea that values – the reasons why employees join an organization in the first place – are disseminated most directly by those managers and you hold in your hands the key to preventing or overcoming the destructive force of cynicism.

In real life, we don’t often think in terms of values. Instead we look to our manager for the definition of right behavior, understanding it through how those managers treat people and what they do during a crisis. To get ahead, we do what our manager does so that they will see themselves in us and review our performance favorably. In other words, our direct manager has the most influence on how we behave and how fully we believe in our organization’s stated intentions.

It starts with senior leaders. Leaders bring values down to the next level below them. Each level of manager or supervisor helps to reinforce the word through what they do and how they treat others. The manager who doesn’t believe in something perpetuates that cynicism and gives direct reports permission to do the same.

If your organization’s level of earned cynicism is high, try this approach when launching new initiatives. For the first 8 months post launch, allow 15 minutes on the agenda of each monthly meeting to be taken up by conversations about the initiative, what it means for the organization’s vision and strategy, and how it impacts daily work and decision making. Don’t allow this discussion to happen in isolation, however, but have two managers from different divisions meet with their direct reports together. This way, not only are managers reinforced by each other, but employees get to see how vital the ideas are to different areas of the organization.

The more ideas or beliefs are talked about, the more real they become. This isn’t a cynical trick but a basic aspect of human psychology. Culture is a system of shared beliefs. Organizations need a strong culture to thrive. Discussions about the ways beliefs contribute to achieving real-world objectives are natural and healthy. They help people grapple with the right way to accomplish their day-to-day work in ever-changing circumstances.

A healthy organization doesn’t shy away from that debate or sweep the issues under the rug. Instead, it brings them to the light, celebrates those who do the right thing, and is consistent about teaching those who don’t.

David Cohen is president of Strategic Action Group, and author of “Inside the Box: Leading with Corporate Values to Drive Sustained Business Success”.