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February 2008

January 2008

Is Management the Brake on Performance

If you had a squeaky door that was driving you nuts, would you decide to wait until it had stopped squeaking before you oiled it? Of course not! Yet that is precisely the attitude all too often adopted when it comes to managing people.

Too many organisations have evolved a culture where training is perceived as a reward for good performance: where training is the next best thing to a holiday, giving the ‘lucky’ recipient a chance for time out of the office, away from the routine of everyday activities and responsibilities.

Now clearly that is not the intention, and most managers would be appalled to think that such a culture prevailed in their operation. Yet, I am sure that a little honest consideration of the subject would elicit an admission that this was at least partly true of training in many organisations. 

What makes me so sure? Well, I see this as a consequence of a more serious problem highlighted recently by an objection to treating people as assets. A manager who was happy to concede the 'theoretical merits' of the proposition felt that it would create too much pressure to train his people, who would then up and leave. His argument, fundamentally, was, “Why should I invest in training someone, who will immediately leave and go somewhere else – most likely my competitor?” 

I wish I had been quick-witted enough at the time to riposte with the question, “What if you did not provide the training and the person stayed?” Yet the point about treating people as assets is actually irrelevant here. The fact is his viewpoint encapsulates the attitude to training and people development prevalent in most organisations today and proves the analogy: investment in training is a reluctant investment, almost a last resort and, in such an environment something best given to ‘loyal’ (read ‘unambitious’) employees.

If the concern is truly about wasting training on people who are likely to move on as a result of increased marketability as a result thereof, then it is incumbent on management to ensure that the training is in the context of personal performance where the totality of its provision includes providing an environment in which it can be properly applied and in which the recipient has no inclination to move. It therefore seems to me that treating people as assets is the ideal way in which to both:
a)    Break down such reactionary attitudes;
b)    Create an environment where people and their abilities are better managed.

Such attitudes and their prevalence, however, sometimes make me wonder if I am a voice in the wilderness. Surely I am not alone in thinking such attitudes are clear evidence that it is management itself that is the brake preventing superior organisational performance and that the treatment of people as assets offers the means to change?

Meaning & Purpose

“The fundamental responsibility of authentic strategic leadership is to provide meaning and purpose for the activities of all people within the organisation through effective and ethical strategic visioning.”

This preface to a management seminar invitation certainly attracted my attention, particularly after the McKinsey report highlighting management’s ineffectiveness at dealing with the ‘war on talent’ that prompted my last blog. I was particularly struck by the implicit underscoring of the sidelining of HR and the categoric placing of responsibility for addressing their concerns in management’s own court.

Of course management is ultimately responsible for the direction and the priorities in any organisation, but it seems a shame that the apparent consensus seems to be that there is no role for the people who should be pre-eminent in this capacity.

But there is another significant point in the statement: the reference to leadership rather than management. The fact is, in 21st Century business, management is increasingly an automated process: delivered by systems and the Management Information and Key Performance Indicators (KPIs) these deliver. This inevitably tends to make relationships more impersonal and diminishes the human element, paradoxically at precisely the time when it is people who provide businesses with their competitive edge, and thus when teamwork and organisational alignment is paramount.

As a result leadership is essential and organisations require those ‘at the top’ (i.e. those ultimately accountable for the organisational performance) to be capable of building and sustaining an effective team. This covers the whole spectrum of shaping the values, culture, communication and human interaction within the organisation, and, I believe, is what is fundamentally meant by providing “meaning and purpose for the activities of all people within the organisation through effective and ethical strategic visioning.”

For many this is new territory. The lack of confidence in HR is therefore ironic, as they should be best placed to guide. Unfortunately both parties need to break the “habits of mind” I referred to last time in order to work better together. My paper, “Lighting the Fuse”, (available as a free download from my website,) is intended to help, but does not cover the subject of talent management and its specific issues.

One of the main effects of the ‘talent war’ has been an increasing tendency to rely on contractors or consultants to fill gaps in the organisation. This undoubtedly meets short-term needs but can have severe side-effects that are seldom if ever considered: creating a “body-shopping” economy where contractors move to the highest bidder and offer little or no long-term commitment to the business. While this can be bad in itself, the effect on regular employees is perhaps even worse, for it:
•    Creates a two-tier structure that undermines all efforts to build teamwork, continuity and alignment;

•    Destroys morale and motivation; eroding the very things that leaders should be trying to build. 

It is impossible under such conditions to build an environment in which happy people are engaged in their work and contributing all they are capable of to sustained competitiveness. Thus the challenge is definitely on for leaders who can create meaning and purpose. 

Sounding the Charge!

“Companies like to promote the idea that employees are their biggest source of competitive advantage. Yet the astonishing reality is that most of them are as unprepared for the challenge of finding, motivating, and retaining capable workers as they were a decade ago.” 

That opening paragraph in The McKinsey Quarterly (January 2008) highlights one of the greatest management paradoxes of our time and is a bugle call to action if I ever heard one. The entire article illustrates the extent to which management action appears to contradict their statements and beliefs.

For instance it begins by revealing the concerns highlighted by two global surveys they conducted of business leaders that show:
1.    Finding talented people is likely to be the single most important managerial preoccupation for the rest of the decade. (2006)
2.    No other global trend was considered nearly as significant as the intensifying competition for talent, which will have a major effect on their companies over the next five years. (2007)
Yet despite this, McKinsey statistics and work by the Saratoga institute “separately found that less than two-thirds of all HR directors report directly to the CEO” and furthermore that “HR influence is declining.” 

There can only realistically be three possible explanations for this dichotomy:
•    Management does not believe what it says; or
•    Management does not know how to meet the challenge; and/or
•    Management does not believe HR is capable of helping meet the challenge.
The first is virtually impossible as the 'War for Talent' has been recognised as an issue for 10 years, which means it has to be one or other, or both, of the others. The report itself appears to favour the HR shortcomings, quoting one HR director as explaining, “senior executives don’t see us as having business knowledge to provide any valuable insights … they don’t see HR as a profession.”

Ultimately, however, that is just one person’s opinion, and a more insightful and constructive observation is one that, “Habits of mind are the real barrier to talent management.” This suggests it is a combination of both elements and underscores the need for a completely new approach to people management. If this doesn’t happen that bugle call might just turn out to be 'The Last Post'!

Fortunately this does not have to be the case. Not only does the Zealise proposition offer the perfect remedy to break down old habits and inculcate new attitudes, but there was some evidence of this beginning to happen this past week with the exciting news that my friend Alex Kjerulf, The Chief Happiness Officer, will be partnering with Hewlett Packard to provide free consultancy to UK businesses on how to improve ‘happiness’ within the office. Alex has been championing the cause of happiness at work for a number of years now and this new arrangement, with his recognition by HP as “one of the world’s leading experts on happiness in the workforce,” is evidence that attitudes are changing and that keeping people happy is being seen as a vital part of the solution. Are you ready to rise to the challenge and answer the call? 

Who is to blame

In my last blog about the fiasco on the British rail network and the inability to complete scheduled engineering works over the holiday season, I questioned management’s response to the situation and its validity. It appears, however, that I may have been too quick off the mark in questioning whether it was an indictment on their management capabilities.

Further statements from management have expressed disappointment at the performance of the engineering contractors and thereby implicitly laid the blame at their door. Yet this ultimately does not change anything – the points are still valid and the questions remain: why was the planning and execution so bad that the problems were not identified earlier and contingency plans put in place to reduce the impact on the ultimate customer – the commuter?

This new explanation, however, does raise another very important issue. Who is to blame? In an age of political correctness it may be inappropriate to talk about blame, but the fact is that someone has to be accountable. And, in a world where outsourcing is rife, the question of who this is becomes crucial.

It seems entirely logical that, notwithstanding a business decision to outsource work,  the organisation that is seen by the ultimate consumer to be the provider of the service being purchased should be the one which bears the onus of responsibility and thus should be held accountable. So, in this instance, notwithstanding the fact that they had contracted out the engineering work, Network Rail retains the accountability,and it was therefore incumbent on their management to ensure that proper plans were in place and that these were effectively implemented. Whatever service level agreements existed between the two parties are to all intents and purposes irrelevant at this stage; the public relations disaster remains theirs.   

I cannot help wondering, however, if, in the wider scheme of things, this is something that management generally tends to overlook. In efforts to streamline organisations and remove operational problems outside the organisation, has management been too eager to embrace outsourcing as a remedy, without properly thinking the matter through? I suspect this is the case, and that this may be just one example of a potential iceberg that faces all businesses that have embraced the concept.

Outsourcing, by definition, adds another party to an existing customer relationship and so unavoidably complicates that relationship, perhaps distancing Operations from the consumer, thereby creating a risk of degradation in customer service. Furthermore, although the provider specialises in the service offered, this specialism likely precludes a picture of the total customer relationship. Combined with the pressures to keep costs to a minimum, this can create a tendency towards an homogenised product that becomes a commodity, undermining the uniqueness of the original relationship and potentially further undermining one or other, or both, customer relationships. While by no means inevitable, avoiding such situations necessitates the transferor business being on top of its own processes and performance, before any decision to outsource is taken. Unfortunately, all too often outsourcing is seen as a convenient way to reduce costs and/or to eliminate operational headaches, and thus it starts from a poor base which increases both the likelihood of customer dissatisfaction and employee disillusionment and disengagement. This would make degradation of customer relationship inevitable. 

Without proper systems and key performance measures in place, prior to outsourcing, it is likely that service level agreements will be ill-defined and/or inappropriate for the longer term (and expensive to change.) While this may or may not have been the case in this instance, it highlights the potential danger for every organisation that has succumbed to the fashion for outsourcing. Fundamentally, outsourcing inherently conflicts with aims of good customer service, and since that is management’s ultimate responsibility, it is incumbent upon them to ensure that this is not lost sight of when considering outsourcing.

Thought & Organisation Building

“First comes thought, then the organisation of that thought into ideas and plans. Then transformation of those plans into reality.” Napoleon Hill

On the surface this looks a pretty obvious statement. Thought does comes first. In reality nothing ever happens without thought. Whether conscious or unconscious, all action begins in the mind. For that reason the transformation of plans into reality also requires thought. Perhaps then this statement is not as clever it first appears and is in fact typical of traditional management thinking, that regards “the plan” as paramount. 

Perhaps, in traditional command and control structures, a plan was generally enough (assuming it was an appropriate plan to begin with) because people could be relied upon to do what was expected of them. If their actions resulted in a reality different to that which was expected, then the pace of business was such that deficiencies in the plan could be identified and responded to by management over time, without undue risk, and fresh instructions issued to the employees responsible for carrying them out. Ultimately people were paid to do what they were told and not to think for themselves.

The change of pace with its concomitant increase in risk has changed this and nowadays people are required to be able to think for themselves. Of course, this has been widely recognised, and new knowledge management initiatives introduced to try to cater for it. Yet even so, such efforts still tend to fall short, perhaps because they reinforce Hill’s thinking and fail to close the loop.

This shortcoming has been clearly revealed over the past few days with the chaos on the British railway network through engineering work not being completed on schedule over the holiday period. Particularly damning was the response of Network Rail Management which explained that the overrun was due to a shortage of engineering staff over the holiday. They compounded this by saying that this shortage was exacerbated by the fact that many engineers had been entitled to their leave as they had worked over Christmas for several of the past years! Surely the engineers who apparently insisted on taking their leave would have been happy to forego it for bonuses that would have been just a fraction of the potential fines the company is facing?

If the situation wasn’t so serious that response would almost be funny. Not only do I not consider management's response any kind of justification at all, but in my opinion it simply shows them to be incompetent. Not only does it point to poor traditional management with both inferior initial plans and an inability to oversee their execution, but in addition it shows that there was no thinking or organisational teamwork anyway in the process. There is no way that the overrun could not have been anticipated long before commuters tried to return to work on January 2nd but clearly there was neither a contingency position nor the ability to create an alternative plan during the process, and no communication during the holidays while the work was being carried out. Not only was the plan deficient, but it appears there was no thinking at all afterwards!

It will be interesting to see what the consequences will be, but the threat to the organisation of million pound fines is clearly little threat at all. It will:
•    Not affect managers in any tangible way;
•    Hurt the shareholders;
•    Exacerbate the organisation’s financial position;
•    Delay future capital and maintenance expenditure;
•    Increase the likelihood of such problems recurring in the future.
Even worse, the whole situation demonstrates complete lack of consideration for the ultimate consumer, and, for an organisation that has already had more than its fair share of problems and bad publicity, it makes it even less likely to be a place that decent, self-respecting people would want to work.

The saddest thing of all though, is that this is by no means unique, but simply a different manifestation of the problems recently experienced by HMRCE, and their infamous missing records. Clearly if we want to turn around service, in public and commercial sectors alike, we have to find ways to involve everyone in the organisation and get them all thinking.