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October 2008

Leading out of Recession

“Given the difficult times, we have to invest in good quality leadership rather than reorganising and restructuring or trying to manage our way out.” Dominic Turnbull, MD McLane Group (quoted in Top Consultant Newsletter)  

This is one of the most sensible statements about the current financial and economic climate I have read in weeks. It is also a very polite, diplomatic way of saying that the knee-jerk response of managers to reorganise and restructure is simply shuffling the deckchairs on the Titanic and doesn’t achieve anything other than prove they are devoid of any better ideas and lack a basic understanding of how business actually works.

Clearly I lack the same diplomacy, but it is something I feel strongly, not least because a common side-effect is redundancy.   

Why should a change in market conditions demand a change in organisational structure? Despite Gordon Brown’s wishful thinking, one of the only givens of the market is that it experiences rises and falls. A well-managed business should plan for both, and be structured to best serve its customers, which means there is no logical connection between structure and market conditions.

I have never forgotten the sense of pride I had working for IBM after learning that it was a company that had refused to lay-off a single employee during the Great Depression. Not only did it feel good to be associated with such a company but it was also made quite clear that IBM’s subsequent success stemmed from that policy, giving it a head start when the economic climate changed. That exemplifies the real difference between long-term and short-term thinking, as well as the value of higher principles on the part of leaders.

My experience, however, highlights important lessons that are borne out by research. Companies that avoid mass lay-offs or downsizing:
1. Get a more loyal, productive workforce.
2. Snap back faster with the economy.
3. Have far higher customer-satisfaction.
4. Have a recruiting edge.
Most significantly of all, however, they have people who aren’t afraid to innovate. This is key, because it is true leadership and occurs at all levels of the organisation. When times are tough it is imperative for everyone to be pulling together, and this is more likely to happen when people feel engaged - valued and part of a team. It may be trite to say that managers do not have exclusive rights to new ideas, but the one that gives a company a new competitive edge may just come from an employee who might otherwise have been made redundant. 

I am not sure whether this is precisely what Turnbull means by “investing in good quality leadership” but it works for me and I hope it does for you too. 

Emotion and Employee Engagement

“The state of many organisations today is like that of a body-builder who exercises only one arm.” Michael Lee Stallard in “Fired up or Burned Out” published by Thomas Nelson 2007. 

This metaphor sums up the operating effectiveness of most organisations brilliantly. It is totally unrealistic for any management team to think to compete effectively when three quarters or less of their employees are engaged in their work.

It is a no-brainer that companies with higher employee engagement generate higher shareholder returns, and study figures quoted by Stallard indicate that committed employees outperform the average employee by 20% and are 87% less likely to leave.

Simply extrapolating from those numbers suggests that a company  with total employee engagement would outperform one with only 25% employee engagement, by a factor of 100 x 20% vs. 25 x 20% or 4:1 – and that would be before any of the costs of replacement are factored in which would be just over 10% of the latter! That certainly justifies the analogy. But perhaps the challenge isn't as daunting as it first seems!

Stallard quotes a 2004 research study undertaken by the Corporate Leadership Council of 50,000 employees at 59 global companies that found, “emotional factors were 4 times more effective in increasing employee engagement than rational factors.”  This has profound implications for managers who, if they are responsible for employee engagement, are then also clearly responsible for the emotional well-being of their people.

But emotions are intensely personal and no-one - even managers - can reasonably take responsibility for another’s emotions: at the very most they can only endeavour to facilitate an atmosphere that fosters another’s positive emotional state. 

Consequently any manager endeavouring to remedy the employee engagement problem is attempting the impossible; it is inappropriate to try and unreasonable for anyone to expect it of them. It is therefore little wonder that such efforts appear futile and the disengagement numbers keep increasing despite best efforts to turn things around.

Certainly managers have a part to play in improving employee engagement, but only to the extent they can be held accountable for developing an environment that stimulates appropriate emotional responses by their people. Perhaps it is efforts to do more that are undermining their own emotional well-being and compounding the problem. It just needs a lighter hand with recognition of the need to be leaders rather than managers. Rather than exercising the other arm more, managers would do better to exercise the powerful arm less!    

Flaming Enthusiasm

“Flaming enthusiasm, backed up by horse sense and persistence, is the quality that most frequently makes for success.” Dale Carnegie

This past Saturday I had the pleasure and the privilege of meeting Jack Mitchell, someone who is the embodiment of flaming enthusiasm, common sense (a much nicer term than horse sense) and persistence! Jack is the CEO of Mitchells, Richards, and Marshs, three of the most successful men’s and women’s clothing stores in the world, and the author of “Hug your Customers” and “Hug Your People.”

Jack’s greeting on meeting me was warm and sincere and made me feel that I was a long-time friend that he just hadn’t met before. He very briefly explained their philosophy and invited me to walk around the magnificent Richards store (in Greenwich, Conneticut) and chat freely to his “associates.” I did, and there wasn’t one who wasn’t cheerful, engaged and absolutely committed to their life at Richards.

I chatted to around a dozen or so and every single one said that they enjoyed being there because it was fun and like being part of one big, happy, harmonious family. When I challenged one, a charming lady called Nadia, and said there must be days when she doesn’t enjoy coming to work, she admitted that there had been an occasion recently when she hadn’t, but that was only because “there had been a bad accident on the freeway and it had taken her three and a half hours to get in.” Other than that she couldn’t recall a single instance in 9 years!

Wow! This is the truly an organisaton of the “FAT People” I described in my book, people for whom, in Jack’s words, “work will never, ever seem like work again.”  It epitomises everything that the Zealise approach is endeavouring to facilitate and make universal. I recommend Jack’s books as compulsory reading for anyone looking to build and sustain success.

Henry Ford said, “The only foundation of real business is service.” I don’t know whether Jack Mitchell is familiar with that quote, but his business sure lives it. The customer service I witnessed was an experience unlike anything I have ever seen, and it appeared to more like an all day open-house drop-in-when-you-can social occasion. Even more, though it showed that success is rooted in “flaming enthusiasm” and in something that he does say: “You can’t do it alone.”