Sunday, January 31, 2010

Knowledge Management A Necessity

Knowledge Management A Necessity | By Robin Trehan

Knowledge management is a structure within which the organization views all its processes as knowledge processes. In this view, all business processes involve formation, distribution, renewal, and application of knowledge toward organizational sustenance and survival. This concept embodies a transition from information value chain to a knowledge value chain.

The knowledge workers need to be facile in the applications of new technologies to their business contexts. Such understanding is necessary so that they can delegate programmable tasks to technologies to concentrate their time and efforts on value-adding activities that demand creativity and innovation. More importantly, they should have the capability of judging if the organization's best practices are aligned with the dynamics of the business environment. Such knowledge workers are the critical elements of the double loop learning and unlearning cycle that should be designed within the organizational business processes.

Knowledge is most valuable when it is controlled and used by those on the front lines of the organization. The knowledge workers should also have an overall understanding of the business of their organization and how their work contexts fit within it. Only if they understand the implications of changes in their work contexts for the business enterprise, they can be instrumental in synchronizing the organizational 'best practices' with the external reality of the business environment. "Knowledge is nothing without action. Nothing changes until you do something. What you do will directly determine what you learn." - James A. Belasco & Ralph C. Stayer, Flight of the Buffalo

Given the need for autonomy in learning and decision-making, knowledge workers also need to be comfortable with self-control and self-learning. In other words, they would need to act in an entrepreneurial mode that involves a higher degree of responsibility and authority as well as capability and intelligence for handling both. To do this they knowledge workers need to evolve knowledge sharing environment based continuous improvement and breakdown of the old process to develop new.

[Robin C. Trehan is an industry consultant in the field of mergers and acquisitions. He is also a motivational speaker and strategic management expert.]

The Zen of Management Maintenance: Leadership Starts with Self-Discovery

The Zen of Management Maintenance: Leadership Starts with Self-Discovery
by Jagdish Parikh

Are you successful or a "success fool"? According to HBS alum and leadership expert Jagdish Parikh, the most effective leaders realize they must first learn the skill of leading themselves.

Editor's note: Jagdish Parikh (HBS MBA '54), was a recent guest of the HBS Leadership and Values Committee in the Distinguished Speakers Series. We asked him to write about the subject of his talk, "Leading Your Self," based on his book Managing Your Self.

How can the concept of leadership be so rich in knowledge yet so poor in performance? Hundreds of books and "models" purport to suggest the best way to become a leader. Yet many people, asked to name a leader they would consider a role model, struggle to identify even a few individuals.

The gap between what we learn about leadership and what we actually implement exposes a fundamental flaw in most of the leadership models today. These models focus mainly on competencies required for leading an organization, but do not explain how to cultivate those core competencies. Therefore we face, in a sense, a crisis of leadership.

Actually, this is more a crisis of courage than of leadership, because what is lacking today is not knowledge about leadership, but the courage to convert such knowledge into actual performance. But courage does not come just by wishing—it only happens as a consequence of one's level of consciousness, one's inner experience, one's self identity. In this sense, what we are witnessing today is actually a crisis of consciousness. To cope with this, one needs an understanding and experience of a deeper level of consciousness and a higher level of self identity, as a precondition for cultivating the competences for leading others.

This is what Leading Your Self is all about.

Unless one knows how to lead one's self, it would be presumptuous for anyone to be able to lead others effectively. And, if you don't lead your self, someone else will! Leading one's self implies cultivating the skills and processes to experience a higher level of self identity beyond one's ordinary, reactive ego level. This facilitates the journey from reactive constraints to proactive courage leading to creative consciousness—a synthesis of intellectual, intuitive, and emotional intelligence. This enables one to effectively manage relationships with people, events, and ideas, which is the essence of leadership.

In these days of accelerating change and complexity, every manager needs to keep their physical, mental, and emotional dimensions in the fittest condition. This can be done through simple processes for minimizing stress, cultivating creativity, rebalancing emotions, and shared vision building, including Yogic exercises and meditation. "Leading Your Self" is the program that offers these with a unique synthesis of western and eastern, modern and ancient, concepts and processes.

Is stress good for you?
Does stress bring out the best in us? Many executives seem conditioned into believing that stress is beautiful—it pushes us into higher performance, they believe. Surprisingly, they even declare you should never be satisfied with your performance because satisfaction will dampen the drive to do more and better.

I, too, took on this mindset as an MBA student at HBS. I went to Bombay and became successful as a businessman practicing these tenets but began to suffer negative physiological and psychological symptoms of stress after just a few years.

At this stage, I seriously began to wonder if there was another way to be successful while also remaining satisfied and happy at the same time. After deep reflection and a PhD, I discovered that the missing link between success and happiness was lack of awareness of one's "inner dynamics."

It is essential to understand and learn to manage and lead one's own inner dynamics, one's own self, in order to achieve sustainable peak performance and a continuing experience of inner fulfillment. Often many people do perform at a peak level, but this is largely through a fear of losing—losing what one has accomplished now and what could be accomplished in the future. Fear creates peak performance by generating adrenaline, which is very energizing and addictive. But adrenaline is also self-consuming and not sustainable.

To achieve sustainable peak performance, learn to transform your motivation from fear of losing to joy of doing, which is a different chemistry—that of endorphins. I believe there are three fundamental laws of High Performance Dynamics:

  1. One never does anything unless one feels like doing it, either through negative motivation, fear of losing or positive motivation, the joy of doing.
  2. Unless you feel good within your own self, you can never bring about good results on a sustainable basis.
  3. Feeling good is a skill: cultivating a deeper awareness of one's self. It can be learned like any other skill.

This becomes most relevant when understanding that the essence of leadership is recognizing, discovering, and identifying with one's true self. The issue is that leadership implies functioning with proactive and creative attitudes. The fact is that mostly we function with reactivity. Why is this so? Because we normally identify ourselves with our body, mind, and emotions, which is a very narrow identity, described as the Ego identity. By its very nature Ego identity is bound to be self-centered and reactive.

How do we alter or expand our self identity? This can be experienced through a three-minute exercise called Performance Enhancing Process. PEP enables one to experience a sense of distancing, detaching from one's body, mind, and emotions and positioning one's awareness and experience deeper in one's "Inner Space," the "Inner Self," or the "Centered Self," which is also the "Proactive and the Creative Self."

The exercise is not only relaxing but also brings a positive, joyous feeling. In this way, one can function from that deeper, joyous, and proactive self through the ego, and not with the reactive Ego Self.

Each person, in a sense, is the owner/manager and observer/experiencer of his or her body, mind, and emotions. The simple metaphor of a chair, taken as representing one's body, mind, and emotion dynamics, can explain this clearly:

As long as I am sitting in the chair, (identifying with body, mind, and emotion), I cannot observe the whole chair nor "manage" the chair. In fact, the chair manages me! To observe the chair, I must get out of it. For this, I must first accept that I'm not the chair. The moment I can accept that, I can get out of it, and then I can manage, move, and lead the chair the way I want to. I become a master, a leader, of the chair.

This enables one to focus on developing the functionary dimensions of the self, namely, keeping the body healthy and energized, making the mind more open and creative, and preventing negative emotions.

That is why effective leadership is not just a personality trait, strategy, or tactic—not just a package of competencies. It is a transformative way of thinking, feeling, and functioning, a way of life, a way of being.

You can't lead something you yourself identify with. The paradox is that detachment (not withdrawal, escape, or indifference) coupled with involvement (not addiction)—in other words, detached involvement—enables mastery. Leadership then "happens" to you!


Peter Drucker on Making Decisions

Peter Drucker on Making Decisions
by Peter Drucker

Forget the idea that effective executives need charisma above all. In this excerpt from Harvard Business Review, Peter Drucker explains how the best executives take responsibility for their own decisions.

An effective executive does not need to be a leader in the sense that the term is now most commonly used. Harry Truman did not have one ounce of charisma, for example, yet he was among the most effective chief executives in U.S. history. Similarly, some of the best business and nonprofit CEOs I've worked with over a sixty-five-year consulting career were not stereotypical leaders. They were all over the map in terms of their personalities, attitudes, values, strengths, and weaknesses. They ranged from extroverted to nearly reclusive, from easygoing to controlling, from generous to parsimonious.

What made them all effective is that they followed the same eight practices:

  • They asked, "What needs to be done?"
  • They asked, "What is right for the enterprise?"
  • They developed action plans.
  • They took responsibility for decisions.
  • They took responsibility for communicating.
  • They were focused on opportunities rather than problems.
  • They ran productive meetings.
  • They thought and said "we" rather than "I."

The first two practices gave them the knowledge they needed. The next four helped them convert this knowledge into effective action. The last two ensured that the whole organization felt responsible and accountable. […]

Act
When they translate plans into action, executives need to pay particular attention to decision making, communication, opportunities (as opposed to problems), and meetings. […]

Take responsibility for decisions. A decision has not been made until people know:

  • the name of the person accountable for carrying it out;
  • the deadline;
  • the names of the people who will be affected by the decision and therefore have to know about, understand, and approve it—or at least not be strongly opposed to it—and
  • the names of the people who have to be informed of the decision, even if they are not directly affected by it.

An extraordinary number of organizational decisions run into trouble because these bases aren't covered. One of my clients, thirty years ago, lost its leadership position in the fast-growing Japanese market because the company, after deciding to enter into a joint venture with a new Japanese partner, never made clear who was to inform the purchasing agents that the partner defined its specifications in meters and kilograms rather than feet and pounds—and nobody ever did relay that information.

It's just as important to review decisions periodically—at a time that's been agreed on in advance—as it is to make them carefully in the first place. That way, a poor decision can be corrected before it does real damage. These reviews can cover anything from the results to the assumptions underlying the decision.

Such a review is especially important for the most crucial and most difficult of all decisions, the ones about hiring or promoting people. Studies of decisions about people show that only one-third of such choices turn out to be truly successful. One-third are likely to be draws—neither successes nor outright failures. And one-third are failures, pure and simple. Effective executives know this and check up (six to nine months later) on the results of their people decisions. If they find that a decision has not had the desired results, they don't conclude that the person has not performed. They conclude, instead, that they themselves made a mistake. In a well-managed enterprise, it is understood that people who fail in a new job, especially after a promotion, may not be the ones to blame.

Executives also owe it to the organization and to their fellow workers not to tolerate nonperforming individuals in important jobs. It may not be the employees' fault that they are underperforming, but even so, they have to be removed. People who have failed in a new job should be given the choice to go back to a job at their former level and salary. This option is rarely exercised; such people, as a rule, leave voluntarily, at least when their employers are U.S. firms. But the very existence of the option can have a powerful effect, encouraging people to leave safe, comfortable jobs and take risky new assignments. The organization's performance depends on employees' willingness to take such chances.

A systematic decision review can be a powerful tool for self-development, too. Checking the results of a decision against its expectations shows executives what their strengths are, where they need to improve, and where they lack knowledge or information. It shows them their biases. Very often it shows them that their decisions didn't produce results because they didn't put the right people on the job. Allocating the best people to the right positions is a crucial, tough job that many executives slight, in part because the best people are already too busy. Systematic decision review also shows executives their own weaknesses, particularly the areas in which they are simply incompetent. In these areas, smart executives don't make decisions or take actions. They delegate. Everyone has such areas; there's no such thing as a universal executive genius.

Most discussions of decision making assume that only senior executives make decisions or that only senior executives' decisions matter. This is a dangerous mistake. Decisions are made at every level of the organization, beginning with individual professional contributors and frontline supervisors. These apparently low-level decisions are extremely important in a knowledge-based organization. Knowledge workers are supposed to know more about their areas of specialization—for example, tax accounting—than anybody else, so their decisions are likely to have an impact throughout the company. Making good decisions is a crucial skill at every level. It needs to be taught explicitly to everyone in organizations that are based on knowledge.


How Do We Quantify the Impact of Faulty Hiring?

How Do We Quantify the Impact of Faulty Hiring?

We're trying to polish our recruiting efforts after some bad hires. How can we measure the impact, both in dollars and other costs, of poor hiring decisions?

—Penny-pinching Recruiter, government, Dee Why, New South Wales, Australia


Employee turnover is an important tool to use in measuring a company's success. But let's be honest: There are different costs associated with "good turnover," in which underachievers are separated, and "bad turnover," in which quality performers leave for other opportunities. Therefore the data alone does not tell a whole story. Radical as it may seem, some turnover can be good--even desirable, in some instances.

But let's start with the basics. There are certain quantifiable costs involved in filling a vacancy, whether it's caused by good or bad turnover. These costs are composed of employment advertising fees (print or online), recruiter fees (contingency or executive search), assessment tools and background checks, travel and relocation costs, HR staff time, and new employee orientation and training. Additionally, turnover will have a qualitative impact on productivity, with work being reassigned and new hires needing time to learn their new jobs.

Now let's take the analysis one step further and distinguish the differences between good and bad turnover. When a valued employee leaves, not only do you incur obvious costs, but the company also loses that employee's internal corporate knowledge and experience, external client contacts and sources–and it faces the possibility that the employee will use his or her skills to work for a competitor. Alternatively, when a marginal employee leaves, a company has the opportunity either to incur a savings by not filling the job or to recruit an employee that adds more value than the one who has left.

The obvious question from human resources' perspective is how to avoid bad turnover, rather than how to avoid turnover in general. In order to fight bad turnover, every manager in your company should be trained in employee relations, conflict resolution and the implementation of equitable corporate policies and procedures. An employee-retention program that is geared toward maintaining a positive corporate culture and employee well-being always attracts job applicants. However, discouraging bad turnover requires properly trained managers working with human resource strategists to recognize telltale signs of frustration among employees, especially in areas within their direct control. In the end, it is frontline supervisors who are accountable for employee satisfaction within individual departments. Success means giving those managers the proper tools.

SOURCE: Alice Winkler, E-Consortia, New York City, December 23, 2005.

Seven Tips for Communicating in Today's Diverse Workplace

Seven Tips for Communicating in Today's Diverse Workplace
by Kim Ribbink

Your employees may come from nations all around the world. The challenge: Ensure that their contributions aren't buried under language and cultural differences. Here are seven tips for improving communication.

David Cane is a manager at a U.S.-based scientific publishing house. Recently, when he needed to hire three new programmers, he ended up filling the slots with people who were born and educated in China.

The new programmers had the right skill sets, but Cane was concerned about how they would fit in at the company. So he set about devising ways to ensure that cultural differences—and the communications problems that can follow from them—didn't get in the way.

One of the first steps he took was to use reflective listening around business objectives and goals.

"I have implemented a policy where any projects that I assign should be reverse-specified by the assignee, meaning that they will write specifications for the assignment and we will review these together before the actual project is embarked upon," he explains. "In this way, everyone is clear what the requirements are and what the results should be."

This is but one example of steps managers are taking today to get the best out of a diverse group of employees. Immigrants have always been an important part of the U.S. workforce, and their contribution is growing. They bring with them a wealth of knowledge and expertise that is invaluable to businesses.

The challenge is to ensure that communication problems don't keep these sources of business benefit from being tapped effectively. Here are seven steps managers can take to meet that challenge.

1. Learn how the source culture best receives communications. Deborah Valentine, of the Management Communication Department at Emory University's Goizueta Business School in Atlanta, advises managers to analyze their audience to find the best way to communicate a message.

"Different cultures like to receive information—and trust information they receive from different sources—in different ways," she says.

People from some cultures don't trust information that comes directly from a manager, for example, preferring that the word comes instead from a leader of the employee group, a headman, or shop foreman.

Some workers don't feel comfortable being singled out for praise in front of the entire employee group—a typical way to dish out praise in the U.S. For these workers, quiet praise in a private office is much preferred.

2. Train international employees early and often. Many of the pitfalls of misunderstanding and cultural confusion can be prevented with early and ongoing training.

"It's very important that incoming employees be taught in orientation sessions and in ongoing training what the company's expectations are, that they be acculturated to the way that company does things," Valentine says.

Henry Miller, an executive search consultant with the Philadelphia office of Heidrick & Struggles International, points out that many misconceptions about conduct in the workplace can be avoided by ensuring that rules are defined and observed even during the interview process.

"It is also important to state with no ambiguity the policies and procedures adhered to in the U.S.," he says. "Addressing this area prior to coming on board will avoid pain on both sides later. Accepting some cultural nuances is important, but be careful not to adversely affect your existing culture by 'customizing' what is acceptable or appropriate behavior by individuals."

3. Train the non-foreign-born, too. The Boston Consulting Group (BCG) has training programs to ensure that its employees not only understand the mission of the company, but also the significance of diversity, both within the workplace and among clients.

"We train people to get into the shoes and the mindset of the person opposite them," says James Lowry, vice president and director of diversity at BCG. "The biggest mistake people make is to look at issues only through their eyes. There are major and minor cultural differences, and we cannot be effective in our area of business if we don't understand them and embrace them."

Managers also need to be taught that there is an acculturation process and should understand how that may affect employees. "Managers must be aware that immigrants go through stages of culture shock," Valentine says. "A manager who is not aware that a person is going through these stages is not as well prepared as he or she needs to be."

As someone who has gone through the acculturation process himself, having moved from Australia to the U.S. several years ago, Cane agrees.

"Employers need to understand that culture shock is real, and while there is little one can do, just evidence of understanding will help," he says. "It is not easy being placed in a foreign culture and being removed from the support network that you're used to. Anything that an employer can do, such as being very flexible with time off and being willing to provide 'local' information and contacts, will help build a good relationship with the employee as well as minimizing the stress that the employee is subjected to."

4. Assign mentors and take care of the spouses. Managers need to understand the important role they play in helping a new employee become an important contributor, no matter what her country of origin.

But the issue is especially important for foreign workers with different cultural expectations.

"As consultants in leadership issues," Miller says, "the best advice we could provide is to take two approaches. Firstly, assign a mentor in the business operation, preferably a well-respected person from the department who can assist in helping ease integration. Secondly, if a spouse or family is involved in the move, become involved in making them feel comfortable with the change."

Recent figures suggest that a failed expatriation can cost a company as much as $1 million and that 44 percent of expatriations fail because the spouse has been unable to adjust.

Effective mentoring can be critical. Valentine says, "Using peer groups, with one experienced employee mentoring a new employee from a different cultural background, will enable a person from a background unused to going to a manager to turn to the peer counselor to help mediate a situation."

Lowry has helped implement mentoring programs throughout BCG. "We try to mentor people of all backgrounds on the way we conduct studies and the way we look at and analyze issues," he says. "In addition, every professional has someone who guides them in the culture and in their professional skill development, and we have an evaluation process that parallels that. Our younger professionals are assigned a sponsor manager, who mentors and coaches that person in a way that will make them effective."

Coca-Cola is another company that has put a formal, one-on-one mentoring program in place.

"We wanted to create the best and most desirable working environment for our employees," says Dwight Williams, media relations manager at Coca-Cola. "This program can help promote employee satisfaction and development by forming one-on-one relationships that facilitate networking, coaching, counseling, and career and life lessons. It's a win-win for our employees and our organization."

5. Practice open-door communication—carefully. Keep in mind that employees unused to U.S. business practices may be reluctant to go to the head of their department for advice or guidance.

"The idea of the open door is so foreign to about three-fourths of the cultures of the world that it doesn't even translate," Valentine says. "And the downside is that sometimes the manager, by encouraging an employee from a different culture to talk directly to them, is seen as weak."

The option here may be to use an intermediary.

"Many times if you are dealing with a group and you're trying to get feedback, one idea is to use an elected representative who is empowered to report problems and suggestions to the department head," Valentine suggests.

Keep in mind that the best way to bridge the communication gap is to set a good example, says Miller. "Do not wait for them to come through the open door, go to them. Ask them about their concerns and questions. Nothing is more credible than setting the example. An open door goes both ways."

6. In company-wide communications, avoid jargon and slang. Employees from outside the U.S. may have difficulty understanding company communication that uses U.S. jargon and slang, as well as any number of culture-specific idioms.

"U.S. business is driven by sport and war metaphors because the rules of business tended, for years, to mirror the rules of engagement," comments Valentine, who, with Sherron B. Kenton, coauthored the book CrossTalk: Communicating in a Multicultural Workplace. "Using metaphors may be problematic with people from other cultures, even English-speaking employees, since they don't necessarily use the same metaphors."

Others with experience in the field agree.

"Slang and colloquialism are definite challenges in all areas of communication," Miller says. "I had a U.S. client who had been waiting for a signed acceptance letter from a candidate in the U.K. The U.S . client had expected to receive the fax the previous day and had left instructions and numbers via voice mail for the candidate. The candidate called me and said everything was fine, but he had a disturbing message from the U.S. client talking about needing a 'John Hancock' in order to formalize the relocation package. The confused candidate did not know any John Hancock and asked how John fit into the process.

"In the end, we obtained a signature and all was well."

Cane says, "When communicating with my Chinese staff, I am very careful to keep my spoken and written language very simple, avoiding jargon and colloquialisms at all costs. I learnt very early on that using such language was met by polite smiles and a look that said, 'I have no idea what you mean.'"

7. Play by the rules and stick to business. Finally, the best way to create an environment that people of all cultures and ethnicities can participate in is to ensure that the company's mission and goals are communicated clearly and that the workplace is driven by business requirements rather than personal preferences, says R. Roosevelt Thomas, Jr., a writer of many books on diversity, including Building a House for Diversity, and president and founder of The American Institute for Managing Diversity in Atlanta.

"It is important that managers and the people within the mixture make decisions that are not based on personal preferences, traditions, or conveniences, but rather on what is the mission and vision, and what are the requirements necessary for achieving that mission and vision," he says.

"Consistency of message from the top of the organization is important to avoid conflicting agendas," Miller points out. "At the local leadership level, a manager must determine the best way to communicate, which means knowing the team, seeing through the integration, and understanding their concerns personally and professionally."

Building a productive workplace with employees from many backgrounds can enrich a company on many different levels—but it's not a process one can take for granted. "Ethnic and cultural diversity can…enrich our lives if we are open to the possibilities of reaching out and learning new ways of communicating," the authors of CrossTalk write.

The bottom line? Diversity makes good business sense in today's globalized world.

Says BCG's Lowry, "We have to understand different markets and we have to have people of diverse backgrounds to understand those markets. So you're better off, from a strictly business perspective, to get a mix in your workforce.


Darwin Was Right; A Good Employee Selection Process Will Make You The Fittest

Darwin Was Right; A Good Employee Selection Process Will Make You The Fittest! | By John R. Hendrie

Beset with Turnover, a less than reliable labor pool which is shrinking, changing and alarming, and facing rising costs and expectations, Retail Businesses and specifically Hospitality are between that proverbial "rock and a hard place". Seeking Talent has been replaced by the "warm body" count mentality, untrained, unmotivated and unprepared employees thrust into the spotlight as our delivery point for service excellence. The door keeps revolving, any standards we might have or aspire to are diminished and the Guest, Customer and Visitor Experience is dashed. We can do better.

The Talent we wish to attract are Consumers, too, and they seek value in the relationship we promote. Becoming an "Employer of Choice" makes business sense. Most employers extol their virtues, although many deliver an empty promise. One, who "walks the walk, and talks the talk", is Marriott Hotels and Resorts, and J.W. Marriott, Jr. laid out their "Human Capital Strategy" at the turn of this Century. The tenets have not changed:

  1. Get it right the first time. Hire the right person for the right job. "Good managers identify, hire and wisely place top talent."

  2. Money isn't the only thing. "Money is just one component of value, and managers must offer the whole package: competitive compensation and a great workplace. …other factors combine to outweigh money—such as work-life balance, leadership quality, career development opportunities and work environment."

  3. Create a caring workplace. "Pay may keep people on the job, but it won't motivate them to produce more value for the company or go the extra mile. In our industry, a genuinely warm, caring, empathetic workplace is a clear driver of the quality of our product."

  4. Promote from within: "We give every associate the opportunity to advance as far as their abilities will take them. Not only does this help us build long-term leadership, it also enables us to perpetuate our culture, which provides our company with a sustainable competitive advantage."

  5. Build Your Brand: "Today more than ever, employees seek out brands with strong reputations and high standards."

Your Selection effort is an investment, and lack of time is not an acceptable excuse - you have all the time there is. Consider that Personnel Expense is your largest operating expense. Consider the amount of time you spend on Human Resources issues. Consider what it would mean if you got it right the first time.

SOLUTIONS:
It starts with Sourcing/Recruitment – how do you create the "buzz" and the resulting stream of Talent to your door? Firstly, think how much you are offering in terms of hourly rate. You get what you pay for – minimum wage can equal minimum talent and effort, sometimes even marginal or non-existent! One consideration is to add an additional .50 cents or a dollar to your hourly rate. The following is a guarantee: One, you will get volume; two, you will get notice; and, three, the improvement in applicant Talent level will rise. This additional "bump" is much less than what you currently expense for turnover (your cost for advertising, interviewing, processing, orientation and especially, training).

Another tried practice is a Referral Bonus paid to your existing employees. By and large, we, as individuals, will not "promote" someone who will fail and make us look bad. That is human nature! A Signing Bonus often makes sense, too, especially for the hard to find specialists or top talent. Lastly, there is a need for outreach to create relationships, which will provide you with that applicant flow. We know that our labor pool reflects more members of the workforce who are older, heavily female and mostly of immigrant status. There are churches, agencies, schools and associations which represent these diverse groups. And, here is a wild idea. Hotel Executives probably make sales calls with their sales and marketing staffs. Why not have your current employees be your Ambassadors to the community, helping to spread the message of your value as a top employer? They are more effective representatives than you, and this is a chance to give them some recognition (at paid time, of course)!

The next step in the Selection process is the Interview. Qualifications and experience are the initial "cut", but we know we should hire for attitude and be acutely aware of chemistry. A fit in the culture, our business culture, is essential. The Federal Law is very specific on discrimination and must be upheld, but your selection process can be enhanced in two ways: consider a team based approach for hire recommendation and have the applicant "observe" the work to be performed.

It makes sense that the existing employees who will work with the applicant should meet with them. It is surprising what will unfold during a conversation with one's peers. And, you, as the Manager, are encouraging teamwork, collaboration, performance standards and excellence, which will be further demonstrated to your Patron in a seamless fashion. Additionally, it shows your respect for your associates.

Many folks new to Retail and certainly Hospitality really have no idea what it takes. Let them "observe" a busy dining room, some guest rooms being cleaned, the mechanics of an amusement ride or even the delicate skills required in a retail store or any other type of Service environment. "Look before you leap" is an apt aphorism. Plus, their questions will demonstrate their interest and their appreciation for the job to be performed.

Your reputation as an "Employer of Choice" starts with the Selection process. How you treat your applicants from initial contact, through the Interview, to the first day of work indicates your passion for the business, your expectations, your respect for the individual and their dignity and the climate where they can excel. As Mr. Marriott said, get it right the first time!


Saturday, January 30, 2010

International Business Etiquette

International Business Etiquette
Working in foreign countries means working with foreign cultures. International business etiquette allows people to build better and longer lasting business relationships.

"To have respect for ourselves guides our morals; and to have a deference for others governs our manners." Lawrence Sterne, Irish novelist & satirist (1713 - 1768)

Etiquette, or good manners, is an important part of our day to day lives. Whether we realise it or not we are always subconsciously adhering to rules of etiquette. Much of the time these are unwritten; for example giving up your seat to a lady or elderly person, queuing for a bus in an orderly fashion according to who arrived first or simply saying "please" or "thank you". All are examples of etiquette; complex unwritten rules that reflect a culture's values.

Etiquette accomplishes many tasks. However, the one noteworthy function that etiquette does perform is that it shows respect and deference to another. By doing so it maintains good interpersonal relationships. Ultimately, it could be argued, etiquette is about making sure that when people mix together there are rules of interaction in place that ensure their communication, transaction or whatever it may be goes smoothly.

We all know how we or others feel when a lack of etiquette is shown. If someone jumps the queue, does not thank you for holding the door open for them or forgets to shake your hand, we naturally feel disrespected and perturbed.

International Business Etiquette

Keeping the above points in mind, now consider the complexities of working on the international stage. Modern business is global and demands people travel to foreign countries and mix with foreign clients, colleagues or customers. Each one of those cultures will also have their own etiquette rules, many of them unwritten. When two or more different cultures mix, it is easy for small etiquette mistakes to be made that could have negative consequences. Just as you may have felt annoyed when a foreign businessman did not shake your hands upon greeting you, imagine how your Chinese client must have felt when you wrote on his business card or your Indian colleague reacted when you flatly rejected an offer of a meal. Sometimes, not understanding the etiquette of another culture means you show a lack of manners and as Lawrence Sterne said, a lack of deference. This can and does lead to soured relationships, lost deals and in the end poor business results. Anyone working on the international stage needs to understand international business etiquette.

International business etiquette manifests in many shapes and sizes. Throughout the world people from different cultures have varying etiquette rules around areas such as personal space, communication, gift giving, food, business meetings and much more. For those wanting to make a good impression and understanding of international business etiquette is crucial. By way of introducing some of the key areas within international business etiquette we shall look at the following common areas...

Business Card Etiquette:
When you exchange business cards (even if you exchange them) do you simply pass it over and forget about it? In many countries the business card has certain etiquette rules. For example in the Arab world you would never give or receive a business card with your left hand. In China and Japan you should try and use both hands to give and receive. In addition it is always good etiquette to examine the card and make a positive comment on it. Whereas in the UK it may be OK to sling the business card into a pocket, in many countries you should always treat it with much more respect such as storing it in a business card holder.

The Etiquette of Personal Space:
How close do you stand to people? Is it impolite to touch somebody? What about gender differences? In the Middle East you may get very touchy-feely with the men, yet one should never touch a woman. A slap on the back may be OK in Mexico but in China it is a serious no-no. Touch someone on the head in Thailand or Indonesia and you would have caused great insult. Without an appreciation of international business etiquette, these things would never be known.

The Etiquette of Gift Giving:
Many countries such as China and Japan have many etiquette rules surrounding the exchange of business gifts. International business etiquette allows you an insight into what to buy, how to give a gift, how to receive, whether to open in front of the giver and what gifts not to buy. Great examples of gifts to avoid are anything alcoholic in Muslim countries, anything with four of anything in Japan and clocks in China.

The Etiquette of Communication:
Some cultures like to talk loudly (US and Germany), some softly (India and China); some speak directly (Holland and Denmark) others indirectly (UK and Japan); some tolerate interrupting others while speaking (Brazil) others not (Canada); some are very blunt (Greece) and some very flowery (Middle East). All will believe the way they are communicating is fine, but when transferred into an international context this no longer applies. Without the right international business etiquette it is easy to offend.

By way of conclusion we can state that etiquette helps maintain good relations with people. When dealing with people from a shared culture, everyone knows the rules and there is not much to think about. Those that lack etiquette are branded as uncouth and rude. However, this is not the same when working on the international stage. Someone may very well come across as being rude through a lack of etiquette but this may be because in their culture that behaviour is normal. As a result international business etiquette is a key skill for those wanting to be successful when working abroad. Through a great appreciation and understanding of others' cultures you build stronger and longer lasting business relationships.

[Source: Consultants United / Author: Unknown]

How Does HR Avoid Confusion About Its Role Regarding Labor Relations and Employee Relations?

How Does HR Avoid Confusion About Its Role Regarding Labor Relations and Employee Relations?

What role should our HR department play in both labor relations and in employee relations? Our HR department oversees both functions, which raises confusing questions about where its loyalties lie.

—Conflicted, principal, consulting/legal, Philadelphia



This combination of seemingly disparate functions is easier to understand if one starts from the premise of HR's role, which is to create better business incomes via a talented, focused, fired-up, capably led workforce.

Granted, the presence of a third party in the midst of the employment relationship frequently introduces an unwelcome and adversarial aspect to the equation. Yet it pays to remember that we in HR are with dealing with this third party because the relationship with employees somehow got mishandled in the first place.

As an HR professional, your loyalties are to the shareholders (or other owners) who invest in and pay for the business enterprise. Your charge: See to it that the organization's "people practices," programs and strategies are competitively superior, exerting a positive effect on business results every day. You are not there to "screw the union" or go soft on nonunion employees. Rather, you must be viewed as being "pro-people," including those people who happen to be customers and shareholders.

The workforce needs to have the best talent, tools and training we can muster. The fact that we in HR are called upon to deal directly with some employees and indirectly with others (in certain matters) is annoying and a little inefficient, but by no means insurmountable.

Success will be best ensured by keeping ourselves and all our employees focused on customer needs. Companies such as FedEx and the Pebble Beach Co. excel at this on a daily basis, and it pays off handsomely for their customers and shareholders alike. All of us in HR should try to emulate them and companies like them.

How Do We Get Managers to Understand the Importance of Justifying Salary Levels ?

How Do We Get Managers to Understand the Importance of Justifying Salary Levels ?

We run a broadband pay scheme, with two or three zones to each band. The problem I have is twofold: managing the broadband salaries budget and giving greater freedom to our HR community. We already allow local managers to exercise discretion when setting starting salaries, providing they can justify why pay should be above or below the norm. Yet they say they want more "freedom to act," without having to justify salaries based on a person's knowledge, skills and experience. How do I get the message across that local discretion is given, but must be justified to ensure fairness and consistency?

—Squeezed by Broadband, nonprofit, Chinnor, England


The problem you describe outlines the general difficulties of a broadband pay system, which is predicated upon giving managers latitude to appropriately reward high performers and effectively manage overall salaries. In addition, by de-emphasizing "grade creep," administration time decreases while your ability to pay competitively for each job role increases. However, the difficulty lies in the fact that the bands are much less constrained than typical grade structures. Budget limitations notwithstanding, managers who are not trained to "make the tough call" can rapidly drive pay levels out of control as they try to satisfy pay-increase demands for staff members.

Your problems lie both with positioning and communication. Broadbanding is not a human resources program, and should not be seen as such. Instead, it is a tool for management to allocate salary dollars to individuals within the organization. HR's role is not to control the program, but to train, educate and monitor. You should evaluate any materials you have that describe the program, including policy statements, procedural manuals, salary planning guidelines and managerial training documents, to examine how your company has positioned broadbanding.

In addition, the successful use of broadbanding as a system for pay administration involves educating managers and the HR team on market factors that determine competitive pay, how to manage performance and attending to internal equity. These three areas of focus affect the placement of jobs within the bands (or zones), the rate of pay for new hires and also the management of pay increases.

Jobs are positioned within the zones of each band based on a market evaluation of competitive salary data. You will want to educate managers on which market data are used as well as why a given zone reflects the appropriate competitive pay for the job. The zones reflect the actual cost of labor for assigned jobs or roles.

Salaries for newly hired employees are based on the person's relative knowledge, skills and experience in comparison with others in the same job. Salaries need to be based on something other than gut feel, and this methodology provides a relatively reliable way of setting new-hire pay. Human resources can provide guidance in determining equitable salary offers during the hiring process, but it needs to understand the fundamentals first and to have a basic analytical tool kit. This is not a matter of control or justification, but rather a matter of service to the management team.

Pay increases for employees within a particular group are based on some combination of performance, job competence and market competitiveness. Although budgets for annual salary increases generally are used to control costs, it is difficult to legislate managerial behavior simply through budgets. Instead, provide managers with training on salary administration to equip them with the tools, techniques and knowledge needed to use the system effectively (and also to help the HR staff support system operations). This in turn allows HR to assist its clients with implementation and to resolve any issues that arise. Training also serves to maintain consistency throughout the organization. In other words, the messages conveyed by managers are the same messages that get sent to all employees.

One last point: Messages you want to convey should start at the top and move down to all levels. As you address these issues, there are no better people to deliver these messages than your CEO and your vice president of HR.
[SOURCE: Bob Fulton, the Pathfinder's Group , Chicago, May 3, 2006.]

Personalizing Motivation

Personalizing Motivation
Sullivan, a professor of management at San Francisco State University, is one of the leading strategists in the field of workforce management. Human resource professionals must accept the responsibility of providing managers with a list of what motivates and frustrates a new or recently transferred employee.
By John Sullivan
veryone knows that a motivated worker is a more productive worker. Yet, you can search the hallways of HR for hours and never find the "nonmonetary motivation department."

So the question arises: Is there an easy way to increase the motivation of individual employees without spending any cash? Fortunately the answer is yes. There is a workforce management practice known as "personalized motivation," or "how would you like to be managed?" profiling. These approaches can be easily implemented and, in no time, enable you to give your manager information on the best ways to motivate their employees.

Baptist Health Care is breaking new ground in personalized motivation: One organization that has boldly adopted a personalized motivation process is Baptist Health Care of Florida. The approach is simple but effective. Baptist Health Care distributes a survey to employees asking them how they would like to be rewarded and recognized. From the survey, an individual manager can see what type of reward or recognition is likely to have the greatest impact on this particular employee. While Baptist Health Care focuses primarily on rewards and recognition, I suggest a slightly broader approach that also asks employees what excites and frustrates them.

Four powerful questions that are just never asked: I don't know about you, but my working life has spanned over 40 years and not once has any manager of mine ever asked a single one of these questions:

  • What would you like more of? That is, what are the elements of any job that excite, challenge and motivate you to be more productive?

  • What would you like less of? That is, what are the elements of any job that frustrate you or inhibit your productivity?

  • How would you like to be managed? Help me understand the best approach to get the most productivity out of you.

  • Why did you quit your last few jobs? Help me understand why you quit, so that I can avoid repeating the same mistakes that your previous managers made.

The advantages of personalized motivation: It's a common business practice in sales and market research to spend hours attempting to find out what motivates each individual customer to purchase a firm's product. That practice needs to be duplicated internally.

The need to identify employees' critical motivators is important because, simply put, most managers are terrible at motivating their employees. When managers don't know what motivates an individual, they mistakenly assume that all workers want the same thing, or they make random guesses about what motivates an individual. Both are serious errors.

If we expect managers to successfully motivate their individual employees, human resources professionals must accept the responsibility of providing managers with a list of what motivates and frustrates a new or recently transferred employee. I have found that even "bad" managers, when they are educated about what excites and challenges an individual worker, can become "good" managers in as short as a month.

Steps that you should take: Producing a "how I like to be managed" profile starts with developing a simple questionnaire that is administered to new hires and transfers during orientation. It can be a simple paper questionnaire, but it works best when it's available online.

If you are really bold, give the survey to every other hire in a particular job classification and see whether the "motivated" employees produce higher output, retention rates and performance appraisal scores after one year than the sample population that did not complete the survey. Calculate the dollar amount of any increased productivity, and show it to your CFO with a smile on your face and a swagger in your walk.

[Workforce Management, March 27, 2006, p. 50]

The Executive Mindset

The Executive Mindset
by Stever Robbins

Question What do executives do, anyway? What makes the job different from the other jobs in a company? What skills do I need to develop to become one?


Answer Executive jobs are the ultimate "buck stops here" jobs. The core of being an executive is decision making. Executives have the final say in their area of the organization. As I've written about before, the CEO is ultimately responsible for everything. But the CEO can't do everything, so she hires executives to help. Let's explore the essence of the executive mindset. What is so intrinsic to the executive that it can't be delegated?

What's an executive?
First, we need to find an executive. You can often spot an executive by her title. In industries like banking, title inflation has made everyone a vice president, but here I'm talking about real VPs, not the ones who took an impressive title when they could have asked for a raise instead.

"Chiefs" are special. Their titles imply specialty—CFO is finance, CMO is marketing, COO is operations—but that just describes their expertise, not their scope. Their job is making decisions from the perspective of the entire business. They think about making the entire business succeed, not just their own domain. You know that grand vision statement the company wrote last month? It's the chiefs who link the leadership vision with the strategy and tactics that get carried out.

Vice presidents should also be striving for global thinking, but they're more specialized. They often come in many flavors—VP of Northeast Sales, VP of Human Resources, VP of Quality, VP of Customer Service, etc. VPs are accountable first for their area, and then for the business as a whole. But they're still executives, at least with respect to their area.

Executives must think vertically
People generally rise from the bottom to become executives. They have experience at every level of the business. They know the issues, goals, and concerns of front-line workers, managers, regional managers, and directors. If they paid attention along the way, this makes them uniquely qualified to think up and down with their decisions.

It's Monday morning, and an eager young intern suggests, "Let's take our squeegee brushes and bundle them with free eyeglasses. It'll be the biggest promotion ever!" The VP can consider the suggestion at every level: Does this idea fit with the strategy? Does this idea make sense given the director-level org chart? Will it work in manufacturing?

The VP's job isn't to answer these questions, however, even if she knows the answer. The VP's job is to raise the questions with the right people so everyone at the appropriate levels does the in-depth analysis required to know if the idea makes sense.

In this way, the VP is doing her real job: building the organization. At lower levels of a business, everyone's delivering a product or service. It could be the new Mach 9 Razor (now with seven diamond-coated blades), or the Faster than Light Package Delivery Service (packages delivered the day before you mailed them). At the executive level, that changes. The deliverable is not a Mach 9 Razor; it's a business that delivers a Mach 9 Razor. The distinction is subtle but crucial.

The executive's job is hiring the right people, asking them the right questions, and engaging them the right way during decision making. That's why the VPs who think at all levels are so effective; they can spot opportunities throughout the business, and help the right people at the right level pursue them. Those people learn, and can spot the next opportunity on their own. Developing people and systems, now that's building a business, not just building a product.

Executives who rise too fast or didn't learn along the way often get stuck at one level. Some VPs think only at 50,000 feet. Their big picture thinking is great, but their strategy doesn't capitalize on the actual strengths of the organization. They don't know how to connect strategy with operations. Their strategies can range from completely unrealistic to merely a bad fit. And beware the 50,000-foot thinker with Attention Deficit Disorder! Every day brings a new initiative, any one of which would occupy the entire division for a year. Life with them is exciting and fast-paced, but somehow, not much progress comes from all that sound and fury.

Other VPs are stuck at 5 feet. While I was helping a finance company's senior team plan a strategy, one VP mentioned, "the customer service input screen needs a 'back' button." That may be true, but it's out of place when discussing fifteen-year industry trends. VPs mired in details micro-manage, and usually do it poorly. When they appear on the scene, everyone rolls their eyes, smiles fake smiles, and waits patiently to start cleaning up the mess when they leave. Their contribution to the business? Less than zero. They don't help at the top and they muck things up at the bottom.

Executives must think horizontally
Executives have entire functions or business units reporting to them. It's the executive's job to recognize how everything interacts and make sure those handoffs happen as they should.

In a start-up, everyone sits in one room. The product designers are three feet away from the people doing the invoices, and all of them gather in the storeroom every afternoon to manufacture that day's batch of product. Everyone hears customer complaints. Everyone hears internal issues. And everyone can work out who needs to hand off what to whom and when.

But as the business grows, the tasks get too big for one person to handle; now ten people take calls in a call center. They've never met the designers, and don't know what happens with the complaints they so dutifully record. Each customer service rep now does a tiny slice of the original one-person job.

As businesses grow, tasks grow. As tasks grow, any given job is a much smaller slice of the task. As jobs shrink, we need systems to link people, paper, and process so that everything gets done. Executives are the only people in the right place in the organization to identify all the different pieces and make sure the links happen.

Executives must think through time
The most critical decisions in a business are where to spend the limited reserves of time, energy, and money. Since executives are the ultimate deciders about their area's resources, how they direct people and dollars determines the fate of the company.

A front-line salesperson in a retail store needs only to think as far ahead as helping the customer select an outfit. Total attention span? Five minutes for the customer interaction. A middle manager might be in charge of a project that takes several months to complete, or even a couple of years. Converting 500 outlet stores to a new automated post-of-sale system doesn't happen overnight. The middle manager needs to make decisions balancing the emergencies of today with the need to move the multi-year project forward.

Good executives think long term, short term, and every term in between. As company stewards, they make decisions considering the effects on the short-term environment, all the way out to the long-term implications.

Many attractive short-term decisions become bad decisions years later. In many cases, this could be predicted in advance. Layoffs became a fad in the late 1980s' LBO craze. They produced (and still produce) short-term gain. But long term, they destroy trust and create a workforce that rightly feels very little loyalty to employers.

Start thinking now!

Success as an executive requires the ability to move freely from strategy to tactics, the ability to understand linkages across organizational boundaries, and the ability to balance short- and long-term concerns. Whether or not you've made it to the top of your game, start cultivating this flexibility and you'll be a prime candidate for the C-suite.

[Stever Robbins is CEO of The Stever Robbins Company, a firm that helps high-performing individuals build careers and lives that connect deeply to their passion.]


Corporate Values and Employee Cynicism

Corporate Values and Employee Cynicism
by Martha Lagace, Senior Editor, HBS Working Knowledge

A values-driven organization poses unique risks for its leaders—in particular, charges of hypocrisy if the leaders make a mistake. Sandra Cha of McGill University and Amy Edmondson of Harvard Business School discuss what to do when values backfire.

Positive values are a fixture on corporate mission statements these days. But when leaders fail to live up to the values they've articulated, it's a recipe for employee cynicism, according to Sandra Cha and Amy Edmondson.

Cha, an assistant professor at McGill University, and Edmondson, of Harvard Business School, have studied the risks and rewards of organizational values in depth using a young, ambitious advertising agency for a field study. What they learned about positive values surprised them, and their findings were published in the February issue of The Leadership Quarterly as " When Values Backfire: Leadership, Attribution, and Disenchantment in a Values-Driven Organization."

"Our research shows that values must be managed with care," Cha and Edmondson say.

Below, they join forces for an e-mail Q&A with HBS Working Knowledge.

Martha Lagace: How did you execute this study? How did you choose Maverick as a research site? Was the company open to this kind of study?

Sandra Cha and Amy Edmondson: Hypocrisy was not at all on our minds when we started the research. Our initial interest in this company was team creativity. Maverick Advertising was radically different from large, traditional Madison Avenue agencies. Instead of having stable teams based around individual clients, this upstart agency used ad hoc teams that formed and disbanded with every project. Clients commissioned specific projects rather than paying a retainer fee.

Many companies are a little hesitant about opening their doors to researchers, but when [we] called up the CEO without ever having met him, he was extremely open to learning from the research and to our spending a great deal of time at the company—sitting in on meetings, observing interactions, chatting informally with the employees, and conducting interviews.

Maverick Advertising is a pseudonym; it captured the spirit of the agency. The CEO/founder envisioned a new kind of unpretentious, collegial ad agency without the industry's characteristic love of competition, politics, and chrome and swank, as he put it.

Q: How did you come to see charismatic leadership as a potential double-edged sword? What observations led to your decision to investigate this topic in depth?

A: As we conducted our interviews with employees, there was a recurring theme: values. Many employees told us that the best thing about the company was its values. But employees also said that the worst thing about the company was that the CEO had been, from their point of view, breaching the values that he himself had developed for the company. Unwittingly, even a committed leader may appear to followers to be violating principles he or she has espoused.

Charismatic leadership has been defined in various ways, but a common thread across definitions is that charismatic leaders motivate people by creating a vision that revolves around some set of meaningful higher ideals or values. This was clearly the case at Maverick.

Q: What were some of the conditions at Maverick that led employees to feel disenchanted and to believe the CEO was behaving hypocritically? How did employees show their sense of disenchantment?

A: A key factor that set the stage for employees seeing the CEO as hypocritical was that employees interpreted the values somewhat differently than the CEO did. Specifically, they interpreted the values a little more broadly than the CEO intended; we call this "value expansion." For example, the CEO articulated values of unpretentiousness and a sense of community. Employees interpreted his statements as implying a core value of equality—an absence of hierarchy. As another example, discussing diversity, one employee made a leap to broader ideals of equality and treating employees like family:

Read the story of the company, it's . . . sophisticated. [The CEO] calls it diversity; I call it love your neighbor. But I think it's exactly the same thing. At its best you feel like you're not working for a company but a cause. . . . We're working for this notion of 'non-hierarchical,' 'treat people right.' It's like working for a much higher cause than 'create advertising,' 'make money.'

We recently saw this same type of tension at Hewlett-Packard, the Silicon Valley technology giant. HP is famous for its values, known as the "HP Way." Employees saw the actions of former CEO Carly Fiorina in 2001-2002, including large-scale layoffs and the HP-Compaq merger, as violating HP values, which they understood as revolving around mutual respect and the company as a family. Focusing on a different element of the HP Way, Fiorina saw her actions as consistent with the HP value of seizing opportunities.

At Maverick, employees' morale had gone down, but no one had quit. In my conversations with the CEO, he was eager to learn how employees were feeling about the company, but did not express awareness of this problem.

Q: In this firm or others, can such conditions be lessened or avoided? Are these potential risks at most other organizations?

A: One of the next steps with our research is to look at leader strategies that reduce the chances of becoming seen as hypocritical. We theorize—but still need to test the ideas—that employees are less likely to jump to and maintain this harsh conclusion about leaders when leaders do four things:

(i) Explicitly acknowledge the tension among multiple aims. Sometimes values bump up against one another—consider the cases in which leaders need to manage tradeoffs between maximizing profits and investing in employees in a given year. L'OrĂ©al manages such tensions by explicitly assigning responsibility for different values to specific people. Senior managers focus on short-term goals; HR is responsible for reminding them about long-term goals such as developing employees. These different foci are meant to trigger continuous dialogue about the tensions, leading to creative solutions.

(ii) Clarify the values' appropriate meanings, but not restrict their scope excessively. The problems at Maverick began with employees' interpretations of the corporate values, which were broader than the CEO intended, causing them to interpret some of his actions as breaching the values. Obviously, greater agreement about the values' meanings would have helped to prevent their reactions. At the same time, we believe that leaders should not clamp down hard on how employees interpret corporate values, because it is in the process of personalizing abstract values—of finding unique personal meanings—that employees find inspiration.

(iii) Proactively "give sense" around actions that could be seen as values-threatening. When another person takes an action that harms us, we tend to automatically assume that the other person is bad and has negative intentions. When employees witness a leader acting in ways that could be seen as threatening cherished values, they are quick to conclude that he or she is a hypocrite. But leaders who take the time to carefully explain the reasons behind negative decisions (which are often invisible to employees) may be able to show employees the ways in which they are trying to sustain the values, while also managing business realities.

(iv) Create a sense of psychological safety. Employees need to feel that it is safe for them to express negative views about leaders. Leaders can make this possible by seeking regular feedback through anonymous surveys or other safe forums. Dreyer's Grand Ice Cream (also sold as Edy's) is a fantastic example of the last two strategies. In the late 1980s, several employees accused Dreyer's leaders of being hypocrites who were not implementing the company's employee-centered values in practice. In response, senior executives began working hard to do a better job of supporting the values, conducting and responding to regular employee surveys about the values. Then in 1998, Dreyer's faced a number of serious challenges simultaneously. Among them: Competitors were engaging in aggressive discounting, the price of butterfat had skyrocketed, and the CEO was coping with a brain tumor. Dreyer's senior executives decided that they needed to restructure the company financially. The day after they announced the restructuring to the financial community, they were on planes all over the country, meeting face-to-face with every employee to explain the situation and the changes that would have to take place. Rather than feeling bitter or disenchanted, employees rallied around the company. Their efforts helped Dreyer's to recover from the toughest business climate it had faced in twenty years to become the leading U.S. ice cream producer today, with over 1.5 billion dollars in sales in 2004.

Q: What would you like our manager-readers to be aware of as they think about your research and try to apply it to the context of their organization? How should people on both sides of the fence (leaders and the led) avoid or diminish the kind of tension that happened at Maverick?

A: Leaders need to seek feedback before significant bad events transpire. At Maverick, although morale had gone down, there was no mass exodus of employees to other companies, no sharp decline in the quality of the work, no lost clients. Although employees were upset with the CEO they were still loyal to the organization, and they were still there. When people like Maverick's CEO are open to seeking feedback before there is any obvious signal of things being bad, there is a much stronger chance of identifying and fixing problems in the making.

Employees can help prevent their own—sometimes unwarranted—disenchantment by questioning their knee-jerk responses to leader actions that seem hypocritical. They can consider the possibility that external constraints and multiple, conflicting aims are driving a leader's behavior, and they can test these hypotheses by asking questions and sharing their concerns. But we think that the opportunity for fixing such problems lies mostly with a company's CEO and leadership.

Q: As more companies attempt to base their mission and culture around positive values, do you see foresee an increasing risk for similar problems at other organizations?

A: Many studies have shown the power of meaningful values to energize employees, providing them with a sense of purpose and identity in a world that is in flux. But our research shows that values must be managed with care.

Hypocrisy may be unavoidable for leaders in the modern world. With rapid changes in the environment, it can be very hard for leaders to keep promises at "Time 2" that they made at "Time 1." Companies also have more stakeholders—parties to whom the public feels they are responsible—than ever before. The public itself is a powerful stakeholder that is increasingly demanding about issues ranging from the environment to employee benefits. With the incredible speed and reach of modern communications, companies are now under unprecedented scrutiny, not only from their employees and shareholders, but also from advocacy groups, watchdog organizations, and an ever-savvier public.

The news these days is filled with stories about leaders and organizations that are seen as hypocritical by either employees or the public. For instance, the public has reacted negatively to Google's compliance with restricted access to information in China; this is seen as breaching the company's motto, "Don't be evil." In 2003, Jeffrey Leiden at Abbott Laboratories set off a furor by announcing a 400 percent increase in the price of the HIV treatment Norvir.

Q: How would you like to conduct further research on how values can backfire? Do you wish to possibly expand this study or investigate the subject from a different direction?

A: Our research so far has laid a foundation regarding how employees come to see leaders as hypocritical. The next step will be to investigate how leaders can reap the benefits of values while avoiding the pitfall of perceived hypocrisy. Most fascinating are organizations that explicitly embrace multiple, sometimes conflicting, values and goals. For example, healthcare organizations are increasingly facing a tension between providing quality care and access while controlling costs. Many businesses are also incorporating employee-centered values and socially responsible values into their core missions; these can appeal strongly to both employees and consumers while also creating the challenges we have identified.

We welcome suggestions from readers regarding organizations that are explicitly trying to manage such value tensions, and encourage them to contact us ( sandra.cha@mcgill.ca and aedmondson@hbs.edu).

[Sandra E. Cha is an assistant professor at Desautels Faculty of Management, McGill University. Amy C. Edmondson is a professor of business administration at Harvard Business School. She is currently chair of the Doctoral Programs and teaches an elective MBA course on managing service operations and a doctoral course on field research methods.]


Managing Alignment as a Process

Managing Alignment as a Process
by Robert S. Kaplan and David P. Norton

"Most organizations attempt to create synergy, but in a fragmented, uncoordinated way," say HBS professor Robert S. Kaplan and colleague David P. Norton. Their new book excerpted here, Alignment, tells how to see alignment as a management process.

To create synergy, we require more than a concept and a strategy. The enterprise value proposition defines the strategy for value creation through alignment, but it doesn't describe how to achieve it. The alignment strategy must be complemented with an alignment process. The alignment process, much like budgeting, should be part of the annual governance cycle. Whenever plans are changed at the enterprise or business unit level, executives likely need to realign the organization with the new direction.

The alignment process, of necessity, should be cyclic and have a top-down bias. The targeted corporate synergies should be defined at the top and realized in the business units. Just as the CFO coordinates the budgeting process, a senior executive should coordinate the alignment process—a responsibility for the Office of Strategy Management (OSM). 6 The annual planning process provides an architecture around which the alignment process can be executed. Following are the eight alignment checkpoints for corporate, business units, and support units of a typical multi-business organization to hit during the annual planning process.

  1. Enterprise value proposition: The corporate office defines strategic guidelines to shape strategies at lower levels of the organization.
  2. Board and shareholder alignment: The corporation's board of directors reviews, approves, and monitors the corporate strategy.
  3. Corporate office to corporate support unit: The corporate strategy is translated into those corporate policies that will be administered by corporate support units.
  4. Corporate office to business units: The corporate priorities are cascaded into business unit strategies.
  5. Business units to support units: The strategic priorities of the business units are incorporated in the strategies of the functional support units.
  6. Business units to customers: The priorities of the customer value proposition are communicated to targeted customers and reflected in specific customer feedback and measures.
  7. Business support units to suppliers and other external partners: The shared priorities for suppliers, outsourcers, and alliance partners are reflected in business unit strategies.
  8. Corporate support: The strategies of the local business support units reflect the priorities of the corporate support unit.

Using these eight checkpoints as a point of reference, an organization can measure and manage the degree of alignment, and hence the synergy, being achieved across the enterprise. Organizations that master this process can create competitive advantages that are difficult to dislodge.

Although it is not strictly part of organizational alignment—the primary focus of this book—the enterprise must also align its employees and management processes with the strategy. Having aligned and integrated strategies at all organizational units yields little if employees are not aware of the strategy and are not motivated to help their organizational unit implement it. Enterprises must have active policies to communicate, educate, motivate, and align employees with the strategy. They must also align their ongoing management processes—for resource allocation, target setting, initiative management, reporting, and reviews—with the strategy.

Case study: Sport-Man Inc.
We illustrate many of the alignment issues with a disguised case study, Sport-Man Inc. (SMI). The company founded in 1925 to manufacture and market men's work boots. Its early success was attributed to a classic waterproof, lace-up boot that became the standard for workers in construction, farming, and other professions that require strenuous outdoor labor. SMI built a successful national sales base from its headquarters in Massachusetts by establishing channels with large department and specialty shoe stores.

During World War II, SMI received a large contract from the U.S. Army that put its combat boots on the feet of more than two million soldiers. Its success carried into the postwar boom economy. Building on the Sport-Man brand, the company added a line of hiking boots and became more aware of opportunities for growth in the leisure market. In the 1960s, it added a line of men's casual shoes sold through company-owned retail stores. The 1970s saw a diversification into men's clothing, a new line of business (LOB) that focused on outdoor clothing for work or play. The clothes soon became synonymous with the "hunter look." Capitalizing on the growth of suburban malls, SMI soon had more than one hundred retail stores, mostly in the Northeast. During the 1980s, it took the product nationwide, with outlets in more than four hundred malls.

Growth slowed in the mid-1990s. Sport-Man was a great brand, but its market for men's outdoor shoes and clothing had become saturated. A comprehensive strategy review revealed that the Sport-Man brand could be extended to other apparel lines. Furthermore, its retail footprint in major malls throughout the United States provided an excellent channel for opening new stores for the new product lines. The new retail stores could be located in space contiguous to existing Sport-Man stores to make for convenient cross selling opportunities with existing customers. Finally, SMI's competency, developed over the forty-year postwar period, in sourcing products from factories in Europe and Asia would allow rapid growth in its new apparel lines, as well as permit significant cost economies.

Thus, the company embarked on its first major diversification program in thirty years by broadening its offerings under the Sport-Man brand. The specifics of the strategy were as follows:

  • Add two new lines of business to complement the two current lines of men's shoes and men's outdoor clothing:
    • A new LOB of men's casual clothing.
    • A new LOB focused on sporting goods: clothing, athletic shoes, and equipment.
    • Achieve distribution synergies by sharing real estate in the 400 malls that SMI already occupies.
    • Share customer lists and credit cards with the new businesses.
    • Share the company's competency in product purchasing.
    • Share key management skills with the new LOBS.

Financially, SMI had dual objectives: Maintain market share in its core outdoor shoes and clothing product lines and grow the new LOBs to a similar share over the next five years. SMI would harvest cash from its mature businesses to invest in the growth of the new businesses.

SMI's executives recognized that this strategy required extraordinary alignment and teamwork throughout the business lines. They wanted customers to view each brand as a stand-alone business, but they wanted the business units to cooperate by redistributing cash among them and sharing customer lists, credit cards, real estate, vendors, technology, key employees, and knowledge. With the exception of real estate, current businesses had been allowed to manage themselves independently, so the teamwork required by the new strategy would be a significant change.

SMI management turned to the Balanced Scorecard to help create the necessary organization alignment in the following ways:

  • Clearly define corporate's strategy for each of the business units and, in particular, how they would work together to create synergy.
  • Align the business units with the corporate strategy.
  • Align the support units with the business units.
  • Create a governance process to ensure that alignment is perpetually maintained.

The first step in this process: the creation of the enterprise scorecard, which describes how synergy will be created. Financial synergy at SMI will be achieved by using the surplus cash flow from the mature businesses to invest in the growth of the new businesses. The corporate measure, sales growth per store, emphasizes that existing stores must participate in normal industry growth while the new stores experience targeted revenue growth. The corporate scorecard also measures the amount of cash flow generated and invested.

The customer synergy comes from sharing SMI's current customer base with the new businesses. The corporate customer measure, percentage of revenue from common customers, monitors this objective directly, and annual growth in sales per customer emphasizes the importance of cross-selling across product lines.

SMI expected three sources of internal process synergies: (1) using a dominant product category to attract the customer into the store (measured by the category market share); (2) sharing real estate in malls by building clusters of SMI stores and brands (measured by sales per square foot and multi-store traffic); (3) purchasing economies of scale (measured by returns and order fulfillment).

Finally, learning and growth synergies would be achieved by rotating experienced professionals to key jobs in the new companies (key staff rotation), by sharing computer systems (common systems versus plan ) and knowledge (best-practice sharing), and, finally, by creating full organization alignment (alignment index).

This enterprise scorecard captures the essential elements of the overall strategy. It provides SMI with the top-down guidance from corporate to the business and service units that needs to be reflected in their strategic planning.

[Robert S. Kaplan is the Baker Foundation Professor at Harvard Business School. David P. Norton serves as President of the Balanced Scorecard Collaborative/Palladium.]


How Do We Develop Future Leaders Without Alienating Our Rank-and-file Workforce?

How Do We Develop Future Leaders Without Alienating Our Rank-and-file Workforce?

We want to develop the management and leadership capabilities of our staff members, especially those in positions of responsibility. Our goal is to recognize the important and complex responsibilities of our managers and equip them with tools to develop their potential. How do we do this without it seeming like a mandate sent down from above, which is our fear?

—Grooming Future Leaders, education, Philadelphia

It is great news that your organization recognizes the importance of developing the management and leadership capabilities of your staff, as well as the need do this in a way your employees will embrace. Since an organization's frontline managers are its direct link to employees, they exert strong influence on performance and morale. Getting managers to recognize this is only half the battle. The other half is to provide them with the opportunities and tools to develop those skills.

You may be surprised at how many of your staff welcome these opportunities. The farther a person advances in an organization, the more that interpersonal skill will replace technical skills as crucial drivers of success. The ability to lead and manage people, and to interact with and influence others, has become more important--and more complex--than ever.

Many managers are promoted into managerial roles because they exhibited strong performance as technicians. The shift from technical to strategic is often tough, and it's no wonder that a 2001 Harvard Business School study found that nearly 40 percent of new managers fail within their first 18 months. Unfortunately, many organizations provide no formal development for new managers and no refresher training for existing managers or high-potential employees.

It is not uncommon to encounter resistance from managers when presenting management-development opportunities. They may be hesitant to admit to areas of weakness, implying that they need additional training, and may raise many barriers to participation (most commonly cited is lack of time). Resistance to change and fear of failure are natural.

You can overcome this by answering the question many managers have: "What's in it for me?" By positioning your development as a way to grow with the organization, you provide an incentive for managers to participate and may overcome some of the barriers.

Managers need a broad variety of skills: leadership, coaching, communication, general business, organizational and technology. They need a solid understanding of the industry in which they operate and the structure and functions of your organization.

Understanding what is needed is the first step. One way to accomplish this is to talk with your staff members. This is a chance to understand their needs and concerns to ensure that they are addressed. This gives them a feeling of having more control and avoids the reaction that this is a mandate from the top. Getting all stakeholders involved in this process is a key component of success.

This input could also be part of a change-management strategy, although change management does not end there. Communication is a vital element and needs to be provided frequently, effectively and continuously. Training on how to deal with resistance to change also should be provided, along with a process that gives employees other opportunities to raise their concerns and issues.

Finally, recognize that management and leadership development is an ongoing process, not a one-time or annual event. Moreover, to be successful it should be integrated into daily business activities, take into account the current culture and style of your organization, and be perceived by participants as meaningful to them and their careers.

[SOURCE: JJ Thakkar, Capital H Group , the Woodlands, Texas, March 8, 2006.]