Tuesday, September 22, 2009

Participative and Reflective Openness

Previously I have written about the importance of leaders listening to organizational members, to be open to them, as a way to build an excellent organization. Today I would like to discuss this issue of openness.

In many ways, a synonym for excellent organization is learning organization. This term was made famous by Peter Senge. In his book, The Fifth Discipline, Senge states there are two types of organizational openness: participative and reflective. Participative openness exists when organizational members have the freedom to express themselves. Reflective openness occurs when organizational members allow themselves to hear and understand what others are saying. Participatory openness is necessary but insufficient in the creation of excellent organizations. Both types of openness are required for organizational excellence.

Too often, organizations espouse openness and pride themselves on having everyone speak their mind. “Enlightened” managers have learned that encouraging participation increases commitment, creativity, and hard work. So, given that, they ensure that everyone has the opportunity to speak in meetings before decisions are made. They may even pride themselves on drawing out those who are reticent to participate in group settings. The real question is, is anyone listening?

I know a manager that depicts this perfectly. Mary (not the real name) prides herself on being a participative manager. She would never make a decision without including her management team in a discussion. The problem, however, is she enters those discussions with her desired outcome firmly in mind and doesn’t allow anything to deflect her from that goal. If you were to observe her and her team in action, you might be impressed by the energy; you might notice that everyone speaks, or if they don’t that Mary asks his or her thoughts; and you might be impressed with the quality of the debate. Debate is the right word; Mary takes great pride in being able to convince people of the correctness of her ideas; she (and her reports for that matter) listens for openings where they can make their points and weaknesses in the statements of others that they can jump on. Clearly there is participative openness but there is no reflective openness; no one learning anything -- except how to argue.

So how might the scene be different if Mary’s organization had both participative and reflective openness? Mary might present the topic in the same way. After that, the dynamic would be dramatically different. Rather than engaging each other in a confrontational way, each team member would be listening to understand the spoken and unspoken assumptions held by the others. Further, everyone, including and perhaps especially Mary, would be willing to suspend their own assumptions. This does not mean they would deny, suppress, or ignore their own assumptions or experiences. On the contrary, they would willingly share their assumptions and invite others to ask questions that they might fully understand one another.

As each person listened to the opinions of the others, understanding their assumptions and experiences that led to those assumptions, and as they clearly presented their own point of view and the reasons for it, very possibly a synthesis of their ideas would occur and perhaps a course of action different from that anyone might have developed on his or her own would be adopted. It is also possible the team will end up with the outcome Mary favored from the beginning. However, if that did happen, there would be greater commitment to its accomplishment; organizational energy is more likely to fully focused on the jointly defined goal.

To a great extent, the difference between the two scenes is the difference between discussion and dialogue. Discussion came into English from Latin and had an original meaning of dash or shake apart. This original meaning carries forward to the implication in the current usage of using argument or debate to elicit the truth or to establish a point. It is related to words such as percussion and concussion. The image of discussion is two people firing verbal canon back and forth until one’s opponent is beat into submission.

On the other hand, dialogue, entering English from the Greek dialogous, or “meaning passing or moving through”; now denotes conversation between two or more people. The mental image is of two people reaching an understanding through the flow of ideas. The purpose of dialogue is not to “win” but for expand knowledge and understanding of truth for all involved.

While discussion satisfies our competitive nature, dialogue is more likely to lead to the development of new understanding and better decisions. I think it is clear which method will most likely help organizations achieve excellence. Therefore the skills of both participatory and reflective openness need to be developed. Are you open to that possibility?

Tuesday, September 8, 2009

Compensation and Organizational Excellence

Compensation does not affect all organizations, and therefore does not impact the efforts of all organizations trying to become high performing. Today I will address a key issue for those organizations that do pay their organizational members and issues associated therewith.

Given the importance of culture on organizations, it is not surprising that one’s native culture impacts how individuals, and thus the organizations made of those individuals, view an issue as fundamental as compensation. Do you believe that all employees should share equally in organizational success? Do you believe that compensation should be based on longevity with the organization or at least with one’s profession? Do you believe that individual contribution should be rewarded through pay for performance systems such as commission based pay or at least variable pay based on attainment of key performance indicators? Your belief in what type of compensation program is most likely to support the development of a high performing organization. Despite cultural preferences, objective evidence can point to aspects of compensation systems that promote or detract from organizational excellence.

There is a variety of compensation systems which are implemented, singularly or in some combination, in organizations. Typical systems include pay for performance (some degree of pay is tied to specific predetermined outcomes), promotion based systems (high performers are selectively promoted to higher paying positions), tenure systems (after multiple years of at risk employment, high performers are promoted to positions with essentially perpetual job security), up or out promotion systems (employees either continued to be promoted or they are discharged from the organization), and profit sharing program (through bonus or stock purchase/grant/stock option plans). Constraints of this blog preclude me from addressing all of these systems; I will focus on pay for performance and profit sharing programs.

Let’s start with pay for performance systems (PPS). My problem with PPS is not that they don’t work but that they work too well. Based on both my experience and research I believe that significant financial incentives can affect behavior, but the effects may not be in the best interest of organizational excellence. The problems are several fold.

First, since PPS do tend to work, those behaviors for which incentives are in place tend to receive focused attention to the detriment of behaviors that are also important for organizational success but are not covered by the PPS. Second, the incentives established for one part of the organization often conflict with incentives for another part. This typically creates a situation in which suboptimal decisions and actions are taken. Third, subjective measurement systems are rarely effective because of lack of trust that fair decisions will be made. Objective measurement systems are better but identifying measurable outcomes that move the organization towards its goals are often difficult to identify. Fourth, even for roles for which objective performance measures can be identified (typically sales roles for example) the accomplishment of those outcomes are rarely solely due to the efforts of those who receive compensation based on those outcomes.

The results of these limitations are resentment among those who do not benefit from the PPS, manipulation of performance (or reporting) to maximize reward rather than what is best for the organization, and suboptimal decisions and performance. None of these conditions are representative of high performance organizations. They may generate short term performance but they do not lead to long term, sustainable, organizational excellence.

Profit sharing programs (PSP), whether they are bonus or stock purchase/grant/option based, have the ability to align people around the overall performance of the organization. Bonus programs tend to focus attention on shorter term performance and stock based programs tend to build longer term organizational loyalty.

Assuming that base compensation is appropriate, providing variable compensation based on organizational performance, particularly if that variable compensation is tied to factors that lead to excellence can have a powerful impact on aligning incentives and performance. The percentage of any given person’s compensation that is variable, or the total dollar value of that variable compensation, is important but less critical that all receive greater or less benefit in synch with one another.

As I have said in previous blogs, one of the key characteristics of an excellent organization is a high degree of commitment throughout the organization to common goals. Given the power that compensation can have, why do we insist on implementing incentives that create conflict, confusion, lack of clarity, and focus on individual rather than overall organizational accomplishment?

Friday, August 28, 2009

Forming, Storming, Norming, Performing: A Better Model

In this post, I would like to expand on the topic of how excellent teams develop.

The most well known model for group or team development is probably the four stages of forming, storming, norming, and performing developed by Tuckman. Tuckman, in a later collaboration with Jensen expanded the four stage model into five stages with the addition of adjourning. Tuckman himself stated that the popularity of his model was probably based to a great degree on the rhyming terms he coined for the stages of development. As noted, while Tuckman’s model may be the most popular, it is definitely not the only one. A 1973 article by Hill and Gruner, relays an anecdotal account of someone who had collected over 100 distinct models or theories of group development. If there were over 100 in 1973, how many more must there be now!

One of the hundreds of available models that I believe adds a depth missing from Tuckman’s model is the TEAM model was developed by Morgan, Salas, and Glickman. In this model nine stages are identified (performing, forming, storming, norming, performing, reforming, performing II, conforming, and deforming). Several of these stages are the same as Tuckman’s but you may first notice the initial step is performing. This is an acknowledgement that for most teams, members have been performing prior to the formation of the new team. They may have associated with others in this new team; team members may be new to each other. In either case, team members come to the new team with life experiences that influence how they perceive teams, teamwork, and the role they anticipate playing in the new team.

The pre-existing assumptions about how a team is going to function can be a major hurdle in the effort to become high performing. Once I became the leader of a team whose other members had been together for some time. They were well entrenched in playing roles within the team that were not always emotionally healthy nor were they always productive. Further, team members had very strong feelings about the previous team leader and for the first few weeks of our working together, projected their beliefs about the motivations for his actions onto what I said and did. Finally, during one particularly dysfunctional meeting I said, “Stop. I am not Guy (not his real name). Stop projecting what you thought about him onto me.” Ultimately we were able to break through those preexisting expectations and become an excellent team. We began to look back at our early days together and laughingly referred to it as the former spouse syndrome – as the new team “spouse” I was getting blamed for everything the previous spouse had done and his motives were imputed to be mine.

A second feature assumed in the TEAM model is that a group could start at and proceed through any of the stages; revert back and revisit previous stages; basically break from the linear progression implied in Tuckman’s model. This non linear, often cyclical flow of performance depends on the previous experience of the group members with the task and with each other, on changes that arise within the group, and on environmental factors.

I have seen and worked with teams that moved quickly to the performing stage and stayed there, functioning at an acceptable to high level. I have also seen teams that seem to always be in a state of flux: team members are changing; expectations for output or team purpose are changing; relationships among team members are changing. In fact for some teams, flux may be a generous assessment and chaos may be closer to the truth. What causes this pattern to be broken and for the team to become at least better functioning if not high performing? Sometimes that change never happens and team members either give up and move on to other things, or the sponsoring organization shuts the team down. When a positive change does occur, the change can be prompted by a change in group membership (and thus dynamics), an external threat that causes the team to jell to meet that threat, or a clear unifying goal that becomes essentially a new team charter around which everyone can rally.

Another aspect to the TEAM model is the recognition there are two separate paths for team development. The first is the one in which the group learns what it must accomplish and what it needs to meet that outcome. The second path is concerned with the interpersonal and communication skills of the group. Ideally, both paths proceed in sync with each other leading to the highest level of performance and group satisfaction. As I have described in previous blogs, my research and experience clearly shows that high performing teams excel at both producing the expected outcomes of the group and in building supportive, helpful, caring relationships among team members. Excellence does not occur without both aspects.

Forming, Storming, Norming, Performing is a nice simple model that roles easily off the tongue. However, I believe the TEAM model is a better reflection of how teams actually develop and perform.

Thursday, August 20, 2009

A Thousand Hacking At Branches for One Striking At Roots

One of my favorite sayings is by Henry David Thoreau: “There are a thousand hacking at the branches of [a problem] to one that is striking at its roots.”*

What does this have to do with organizational excellence? Quite a lot, I think. Far too often companies launch into campaigns that are aimed at the symptoms (lower accounts receivable; improve employee morale; reduce calls to the help line) rather than identifying the root causes for those problematic symptoms and correcting them. So, what is the result of these efforts? There may be a short term improvement as attention is paid, but soon organizational will and attention wane and the problem returns. When it gets bad enough, another campaign will be launched. Often these campaigns take the form of trying to implement the management fad of the moment.

Taiichi Ohno, considered to be the father of the Toyota Production System, which became Lean Manufacturing, famously taught that organizations ask “The Five Whys” to identify the root problem(s) [there are usually more than one], before taking action. Simplistically, Five Whys is a methodology in which one keeps asking why until a fundamental, actionable cause is identified. Once that cause is identified and solved, the symptom will disappear. While this methodology implies by its name that root causes can be identified by five whys, it may take fewer or greater to accurately discover the root cause.

An Ishikawa or Fishbone Diagram is a tool often used to trace problems back to their root causes. At the top of the page is an example of such a diagram. The headings of equipment, process, people, materials, environment, and management are typical but can be adjusted to fit any particular organization. On the other hand, these categories are also broad enough that they would, in fact, be applicable to one degree and in one form or another for most organizations.

At the head is the problem. The headings are the major areas for investigation. The larger “fishbones” represent the major groupings of problems. The smaller groupings are subsets or more detailed items under the larger categories. It is not my purpose here to provide exhaustive instruction about how Ishikawa diagrams are used; it is sufficient to reiterate that the tool is used to trace problems back to their root causes, often using the Five Why methodology.

Once the root causes are identified (again, there are usually more than one) they can be listed and examined for relative importance (how much impact they have on the undesired outcome); ease of mitigation (how hard it would be to solve this root cause); and cost of mitigation (actual and psychic/emotional/cultural costs). From this a priority list can be established and an action plan created.

Ohno is quoted as saying, "The root cause of any problem is the key to a lasting solution.” As leaders of organizations take time to identify the true root causes and solve them, they will become one of the one in a thousand striking at the root rather than hacking at the branches. They will make lasting changes and help move their organizations towards excellence

*In the original quote, Thoreau wrote “evil” instead of my replacement of “a problem”. Although I believe both statements are true, my replacement moves it from the specific to the general.

Thursday, August 13, 2009

Employee Engagement

As I visit with leaders, senior managers, and executives of organizations of all sizes, a common complaint I hear is about employee engagement. Examples include: “I don’t know where to find good employees anymore. People just don’t seem to care.”; “Young employees don’t care about work anymore. All they want to do is go have fun.”; and, “Employees seem to think they are entitled to a job. They do the bare minimum to keep from getting fired but very few care enough about the company to really work for its success.” You get the idea. Very few of these organizational executives look at these concerns as symptoms of their own lack of leadership.

Today, I would like to address this topic head on by discussing employee engagement and how to increase it in your organization.

Peter Block in his book Flawless Consulting, describes engagement as the art of brining people together. I like to expand this thought to include bringing people and their talents, passions, experience, and skills together to work towards a common goal. Block states that in the end engagement is more powerful than articulating a clear vision, establishing performance standards, developing a rewards system, increasing training, or instituting formal measurement processes. It is not that those are not important features of excellent organizations, they are, but he believes we have over emphasized them at the cost of underemphasizing the power of engagement through dialog.

Traditionally, the steps of organizational change include: establishing a vision, setting standards for what is expected, building a reward system to reinforce the behavior, provide training if new skills are required, and then measuring the change. The problem with these necessary but insufficient steps is they assume the people in our organizations are placid objects that we can manage and manipulate. Do you resent feeling like you are being manipulated into doing something you don’t want to do? I certainly do. Even if it is something I want to do, if I believe my behavior is being manipulated, rather than asking me to give it freely, I have feelings of resentment and a desire to resist.

Like Block, I believe this also manifests itself in our organizations. We need to create opportunities for dialog with organizational members. These are not just forums for management to expound on their vision of strategic plans but a true dialog where organizational member of all stripes can explain why the organization is important to them, where they think the organization should go and what it should be doing, and how their personal values tie to the services and products the organization creates.

Establishing an opportunity for all organizational employees to dialog about the organization, its values, goals, outputs, and how that relates to the individuals values, and interests may seem like too great an investment, perhaps even a waste of time. There is thought among some in management that all that needs to be done is set a clear enough goal and people will work for it; and if they don’t they should be shed from the organization as quickly as possible.

However, I believe this approach neglects the energy, enthusiasm, and performance that can be realized from fully engaged people. Each of us is more than a “pair of hands” or a limited set of skills to be applied as management sees fit to solve a problem. When we care about the reason the organization exists; when the overlap between our values and the organization’s are clear; when our goals and objectives align with and support those of the organization, engagement occurs and we will do all we can to help the organization, and thus ourselves, succeed.

For a short time we can force engagement through fear, intimidation, or manipulation. In the long run it will only persist if freely given. I believe it will only be freely given if mutual understanding is developed. This does not have to be terribly time consuming but it does take effort. Even very large organizations have made an excellent beginning in a matter of a couple of days through whole system change activities and then ongoing dialogs that continue to invite organizational members to contribute and which actively listen to and respond to what is said. I personally have led organizations of several hundred members through such a process and have witnessed success in lower turnover, greater stated satisfaction in employee surveys, and high performance in terms of output and profitability.

If our organization members are not as committed as we would like; if they don’t work as hard as we want; if they don’t seem to really have the best interests of the organization at heart, whose fault is it? If as organizational leaders we hold even some of the blame, should we not quit making self justifying excuses and condemnations and take action? Employee engagement is possible. All we have to do is open ourselves and our organizations to the possibility.

Friday, July 31, 2009

Deliberate Organizational Culture

Today I would like to write a little more about culture, which I have written about in a previous blog (May 29th). As I noted in that blog, culture might most simply be defined as “the way we do things around here” and that it is typically built organically over time as the cumulative result of decisions and actions taken to solve issues as they arise.

What I would like to explore today is the idea that an organization (business, non-profit, school, church, family) might be able to “jump start” the development of culture through conscious, deliberate thought and action.

Suppose that the members of an organization took the time to carefully and deeply discuss their most closely held individual values, the values that if lived would most likely cause the organization to succeed in its goals, and where there might be differences between any individual values and the organizational ideal. Suppose further that this group was able to reach an agreement not only on the organizational ideal value set but for each value how those values would be expressed in behavior.

Let’s say the ideal value was “Act with integrity.” The group would explore and eventually agree about how they would act with each other, with clients or customers, with vendors and suppliers, and with the general public. They would not, most likely, be able to define every type of interaction that could occur within themselves of between their group and others. They probably could, however, identify and define key interactions that could serve as a benchmark for other undefined behaviors.

Once agreement had been reached by the group on ideal values and the behavioral expression thereof, let’s further suppose that in a caring, supportive environment, organizational members worked with each other to identify when behaviors that reinforced the ideal values were observed and times where a behavior breached those values. In the first case, those behaviors were lauded; in the second case, lapses were identified and more appropriate ways of behaving or dealing with those issues were discussed and agreed upon.

If such a scenario were played out in the real world, what would happen? I believe what you would see is the development of an identifiable culture built on the values and behaviors the organizational members had determined were most important. Further, if they were correct in identifying those values and behaviors, not only would an identifiable organizational culture be established but it would be making progress towards the objectives the organization held most dear.

Okay, assuming that my thought experiment is true, what are the implications? For one thing, an organization that wants to become excellent would now have a path to follow to achieve that goal. Another example where this could be very applicable is in an organization that operates multinationally or whose membership is multi-cultural and where there is a desire to have one unified organizational culture that transcends national or regional culture.
Not that such a process would be easy; just getting agreement on the most important values and associated behaviors would be a tremendous undertaking. There would no doubt be those who would resist this effort or see it as “soft” or a waste of time. There would be those, particularly in the example of the multinational organization that would chauvinistically cling to the attributes of their native culture as the ideal, rather than being open to other behaviors that might actually be more likely to achieve the organizational goals. There would surely be those who would say that overtly creating a culture is not possible, that people are who they are and they are not going to change.

In reality, people make conscious changes all the time. Such change is dependent on three things. First there needs to be a clear purpose or outcome in mind, which is considered to have great enough value to be desired more than the status quo and to overcome the fear of change. Second, the process to achieve the change is understood. Finally, there must be a fundamental belief that change can occur (that they are not predetermined to a certain life by fate, God, or the universe). If these three conditions are met, change, even profound change, can occur and occur quite quickly.

The question is, do those variables required for change exist? I would guess that in most organizations excellence and why it is worth pursuing is neither known nor discussed. Perhaps that is the place to start. For your organization, what does excellence look like and why is it important? In the words of Mike Myer’s character, Linda Richman in the Coffee Talk sketch from Saturday Night Live, “Talk amongst yourselves.”

Friday, July 24, 2009

What is you hedgehog?

I’ve mentioned Good to Great by Jim Collins in previous blog posts. I think it is one of the best books I have found for members of organizations that are interested in becoming excellent. Today, drawing on that book, I would like to write about the three questions that excellent organizations have to answer and the organizational strategy that should be derived by the answer to those questions.

The three questions are:
1) What are we passionate about?
2) What are/can we be the best at?
3) What drives our economic engine

What are we passionate about? This question points to the foundational motivation for outstanding or excellent organizations – they are passionate about what they do or they are passionate about what the organization accomplishes. We don’t often talk about passion, at least in for profit business settings. Collins notes, “…throughout the good-to-great companies, passion became a key [condition]. You can’t manufacture passion or “motivate” people to feel passionate. You can only discover what ignites your passion and the passion of those around you.”

What are/can we be the best at? Collins makes the point this may be different from an organization’s core competencies. He states that for an organization to truly be excellent they need to identify the thing(s) they can do that are the best in the world. Expanding on this point, Collins writes, “The good-to-great companies understood that doing what you are good at will only make you good; focusing on what you can potentially do better than any other organization is the only path to greatness.”

What drives our economic engine? To answer this question fully is to know more than “how do we make money?” Developing an understanding of the driver of an economic engine is to discover the key financial ratio that determines financial success and profitability; this is usually expressed as some form of money/variable. Collins provides a guide to help us determine our most meaningful economic ratio: “If you could pick one and only one ratio – profit per x (or in the social sector cash flow per x) – to systematically increase over time, what x would have the greatest and most sustainable impact on your economic engine?” He further states, “That denominator can be quite subtle, sometimes even unobvious. The key is to use the question of the denominator to gain understanding into your economic model.” Typically, this might be expressed in such things as profit per customer, revenue per hour, or profit per unit sold. The key is to spend the time to figure out what is the most important ratio for your organization.

These three questions are envisioned as intersecting circles. The area of overlap (where what we are or can be best in the world at, our economic driver, and our passion intersect) is where we should focus our strategic energy. I won’t go into why this term is used (I guess you’ll just have to read the book :-)), but Collins calls this intersection the “Hedgehog Concept”, which he defines as “a simple, crystalline concept that flows from deep understanding about he intersection of the…three circles.” A clear understanding of, and focusing efforts on, their “hedgehog” was the fundamental differentiator between good and great companies; one could say of excellent organizations.

While this may sound simple, Collins makes the point that actually determining an organization’s hedgehog is an iterative process that times; on average, the companies in his research took four years to identify and focus their efforts and resources on these key drivers of success. However, if it can move an organization to greatness, it is worth the effort.

One of the things I like about this concept is that it is applicable to us as individuals as well as to organizations. Imagine the joy that would accompany spending your life on doing something that you were passionate about, something at which you were or could become the best in the world, and something that brought you ample economic rewards. How many of us can truly say we have all three of these variables fully met in our current work? How would life be different if we spent our time in the intersection of these three circles?

In a conversation recently, a friend of mine made the point that when an organization’s hedgehog and the hedgehogs of the organization’s members are the same, tremendous power, energy, creativity and ultimately success is unleashed. This statement points to the need for leaders to guide their organizations through the process of identifying the organizational hedgehog, and at the same time uncovering their own, and helping organizational members discover their hedgehogs. Ideally, those hedgehogs will be the same, or very similar. If there is not close alignment, particularly for key organizational members, one has to wonder whether that organization will ever truly be able to be excellent and whether its members will ever be happy and fulfilled working there.

How’s your organization’s hedgehog? Have you identified it? Do you know your passions, what you are the best in the world at, your economic drivers? Is your organization acting accordingly? How’s your personal hedgehog? Thinking deeply about these questions and taking action as appropriate can lead to organizational excellence and personal satisfaction.