Business Success from the Bottom Up

Business Success from the Bottom Up
by Laura W. Geller

4/08/08
Management consultant Ralph Sink believes that people, when given ownership and held accountable, will shine.

In the Autumn 2007 issue of strategy+business, Ralph Sink, a consultant on high-performance systems, wrote about his decades of experience implementing the approach on the factory floor and as a human resources executive (“My Unfashionable Legacy”). High-performance systems, also known as self-organizing teams and participative management, require employees to take ownership of their jobs, to collaborate with one another to establish control over their work, to be innovative, and to deliver results — to maintain accountability for the business and be treated with corresponding respect, regardless of their level within the organizational hierarchy. In his essay, Sink lamented the decline of this approach, but expressed a belief that, in the end, it will make a comeback. But is there an appetite and an aptitude for this type of management today? What could it mean for companies coping with globalized business models and waves of corporate scandals? Sink spoke with strategy+business recently about the challenges of employing participative management in today’s business environment.

S+B: Why is the high-performance systems approach needed today?
SINK: Many of the young people I’ve spoken to who are being hired straight out of school actually come into corporations expecting participative management. The innate desire is there. Yet we’ve programmed managers to say, “Implement these rules. Follow these procedures.” People in organizations no longer think freely for themselves. They’re in survival mode, and some of them are doing pretty well that way; they are earning big bonuses. Everybody is pushing to get short-term financial results.

Moreover, there’s no loyalty in business today, on either side. When young people enter the workforce, they don’t want to wait 30 years to make good money. They want to come out of school and make it right off the bat, and a lot of them are able to. And they recognize that they can get to be 50 years old and then suddenly be let go by the company they devoted themselves to. People don’t stay at the same company for their whole career anymore; everyone is looking for the best deal.

But what if companies told their employees, “You can be involved, you can lead your own segment, you can have some space and leeway as long as you meet these parameters and grow”? People want their thinking to count. If there’s a better way to accomplish a task, they want to be able to identify it and use it. If they have ownership and they’re involved, they’ll do unbelievable things.

S+B: How do you convince executives to stop focusing on short-term gains?
SINK: I like to use an analogy about making wine. Managers who operate by metrics, paperwork, and numbers say, “OK, we’ve analyzed wine. It has sugar in it. It has pulp. It has yeast. It has grapes.” So, they dump those ingredients in a pot, stir it, drink it, and say, “but this doesn’t taste like wine,” and wonder why. It’s because the wine had to go through a process. They may have had the components right, but they overlooked the principles for transforming grapes and water into wine.

These managers will look at our approach and say, “Oh, I see what this is. You operate with 20 percent fewer people. You eliminate the supervisors, and everybody is self-managed.” So without any development process, principles, or leadership, they go in and cut head counts. And when they end up with a catastrophe, they say, “This approach didn’t work.” From their perspective, they analyzed the pot and put the elements in and stirred it up, so when it failed, they weren’t to blame. If you look across the United States, it’s happening left and right in corporations.

When I go into a company I may see potential for a dollar’s worth of improvement, but I’ll accept five cents, 10 cents, or 15 cents at first, because if you try to go for the whole dollar right away, management won’t believe it. You have to start small and show them that it works. At one company where I was working with an order fulfillment group, I told finance that I needed US$180,000 to build a room where the various people involved in the process could operate as a team. They would have desks but no walls, and when they ran into a problem, they would meet at a table in the middle, solve it, and move on. They would run their unit like a business. The head of finance initially laughed at my request, but after we did it, the company’s distributors told the CEO that they had never before experienced the service, quick response, level of quality, or ease of paperwork that they now found with this company. Soon after, the people who once scoffed at $180,000 were giving me $1 million to implement the approach more widely.

S+B: What type of leadership is needed?
SINK: Schools focus on developing functional capability. They don’t develop character and state of being, and they don’t develop the creativity of individuals. Organizational effectiveness and development should be a discipline, but instead we’ve made it a gimmick. I think we should teach people to be systemic, holistic thinkers, and to manage people’s energy.

For example, when I was moved from manufacturing to human resources at CPFilms, I put a big board up on my wall with pins on it to represent the people I was responsible for. No matter where they were in the organization, I was there to develop them. This was a different approach. I said, “Let’s take a look at your performance. Let’s see if it can be enhanced.” After I did that with people in research and development, the company started to win awards for its new products, and all we did was change the managing process.

Everybody thinks that they’re a visionary, but few are. We’ve educated and programmed people to analyze things, to break them down into their parts, and so forth, but what about the ability to see the big picture? Successful leaders, like Apple’s Steve Jobs and Starbucks’s Howard Schultz, have a vision. To create one, management has to ask itself, Do we have vitality in the organization? Do we have spirit? What’s missing? What do we want to be as an organization, and who do we want to be as a group of people?

S+B: How would your ideas apply to today’s globalized business model?
SINK: Large multinational corporations should have a corporate umbrella that embraces a basic principle and a set of ethics. They should then allow each region to adjust its functions based on the local culture. Just as members of a business unit or employees on the factory floor should be given responsibility and encouraged to problem solve and innovate, so should regional offices have their own space and boundaries so long as their activities don’t conflict with the overall principles of the corporation.

An example of a failure to do this is Wal-Mart in Germany. If Wal-Mart had adjusted to German culture and allowed Germans to take ownership, the company would have been a huge success there. Instead, executives took the model from Arkansas and dropped it in. The German culture is very sophisticated, and also very independent. Germans didn’t need a greeter at the door and, in fact, having one there made them suspicious. They disliked grocery baggers, not wanting strangers to handle their food and personal items. The company also tried to enforce its American-style company code of ethics, causing an uproar among German employees. In 2006, Wal-Mart sold its German stores to a local rival, losing $1 billion in the process.

S+B: What do the corporate scandals of recent years say about the current state of management?
SINK: When the CEO of Merrill Lynch loses billions of dollars and then leaves the company with a $161 million severance payout, it’s fairly sad. He should have been fired for his incompetence and not given a dime. People at all levels, including those at the very top, should be paid based on performance and held accountable, and they should be fired for underperformance. I would tell employees at orientation: “We’ve got a strange company here. You have to progress, or you’re out. You will be held accountable. You’ll have ownership. You’ll become a businessperson and grow. If you don’t take care of the business, the people around you, and your safety, you’ll be fired.” We fired more people for not progressing than for almost any other reason.

Today I think we create systems with the potential for people to take advantage. Many organizations post mission statements on the wall. But they are just taking up space, because nobody within the organization owns them, and no one is held accountable. You see it every day.

Yet in a high-performance system, as a manager, you have to see your employees as professionals and demand that they perform accordingly. When you start saying, “Everybody can now hold one another accountable, including the top guy,” it makes people nervous. Accountability is tough. But if you’re up-front about it, lay it out, and enforce it, this approach works. Ninety-seven percent of your people want to do the right thing. It’s when you let the 3 percent drag it out while the others are working hard and performing that morale and performance deteriorate. The 3 percent becomes 6 percent. Then the 6 percent becomes 12 percent. And this cannot last.

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Laura W. Geller is deputy managing editor of strategy+business.

Emotional Intelligence

Since Daniel Goleman's bestselling book Emotional Intelligence: Why it Can Matter More Than IQ was first published in 1995, a cascade of books, articles and papers has followed-most of it gushingly positive. It sounds almost too good to be true: People who are self-aware and in tune with other people's feelings are more successful on the job, or so the theory goes. The reality is a bit more nuanced. Emotionally intelligent project managers are no more likely to achieve project goals than their "unenlightened" peers. The ways in which they achieve those goals, however, tend to win them praise and promotions, while many of their counterparts are left stewing over why their careers are stuck in neutral.

John D. Mayer, Ph.D., professor of psychology at the University of New Hampshire,Durham, N.H., USA, offers the example of two team leaders, one with low emotional intelligence, the other with high. "Let's say, for example, that both leaders get a job done on time and with equal quality," he says. "The difference is that the person with high emotional intelligence will create a team environment where people feel liked and respected-where they enjoy their work and feel better about the organization. The leader with low emotional intelligence will more likely leave his [or her] team frustrated, nervous about their jobs or unhappy with the company:'

A person who has high emotional intelligence can read facial, verbal and physical cues that express how a person is feeling as well as manage their own emotions. "It's about how well people can deal with their own emotions and recognize emotions in others," he says.

A high emotional intelligence rating does not necessarily mean someone is highly emotional, says Tim Sparrow, founder of the Centre for Applied Emotional Intelligence, a Cheltenham, England-based trade group for emotional intelligence practitioners in Europe. "You don't want someone who is always pessimistic as a leader, nor do you want someone who is 'wildly optimistic," he says.

The key to strong emotional intelligence is having a balanced and appropriate approach to emotions. And the higher someone is in the team hierarchy, the more important it is for that person to have the trait. "When leaders are not emotionally intelligent, they spend a lot of time fighting, worrying and protecting themselves and that's all a disb'action from the project," Mr. Sparrow says. "As a team leader you need to be flexible and responsive, balancing the skills and needs of everyone on the team."

A person with high emotional intelligence can "have a profound impact on the success and longevity of teams," says David Caruso, Ph.D., research affiliate in the psychology deparbnent at Yale University, and founder and CEO of consultancy EI Skills Group, both based in New Haven, Conn., USA. "They are better able to read the emotional needs of others and manage their own emotions, which enables them to evade conflict and resolve relational issues among team members before they impact the project."

Being able to accurately interpret how a decision will affect people and relationships is especially critical when the implementation of new programs or other events will have a negative impact on the team, says Connie Wayne, manager of executive development for Eaton Corp., Cleveland, Ohio, USA. "With change management, leaders can't just look at the corporate impact of a new system," she says. "They need to examine how it will impact the people and how to help them embrace change. A leader with high emotional intelligence will be more successful in achieving that."

Test Time

The question is, can you boost your emotional intelligence? It's one thing to recognize the importance of being responsive to the team's emotional needs but quite another to figure out how to do that when the project is over budget and everyone is fighting over who is at fault.

Emotional intelligence can indeed be improved upon, although it may not be a topic that belongs in a classroom.

First, you have to figure out where you rank and what your shortcomings are. Of the many tools available to measure a person's emotional intelligence, the best-known is probably the Mayer, Salovey, Caruso Emotional Intelligence Test, designed by a team of subject matter experts that includes Dr. Mayer and Dr. Caruso. The test measures the ability to perceive, understand and manage emotions, Dr. Caruso explains. It can be useful to get a base reading on an individual or team, but should be followed up with a feedback session on what the results mean and what can be done to improve the score.

In Control

Developing greater self-awareness is the first step in gaining more control over the way you manage your own emotions-and how you react to others, says Valerie A. Jachimowicz, PMP, project manager in the information services group at Wyeth Pharmaceutical Co., Philadelphia, Pa., USA.

"As a project manager, anything that helps you understand yourse1£ is helpful," she says. Ms. Jachimowicz discovered emotional intelligence in 2000 when she read Mr. Goleman's first book, which she credits with helping her connect the dots on elements of her behavior that were holding her back on the job. "I have a 'smart mouth,' and sometimes it gets me into trouble" she says. "When I get frustrated or angry, I can lose control."

Because of her emotional outbursts, people didn't want to work with her and she was criticized for the way she communicated. By doing her own research into emotional intelligence and using her reviews. to evaluate how her emotions were impacting her performance, she was able to make some changes. "I learned that when I get emotional, I have to be more careful. I don't get sucked into emotional situations like I used to," she says. "I found that once was more aware, I became better at managing myself."

Even so, Ms. Jachimowicz says emotional intelligence doesn't make for a great training topic for teams. "You have to he ready to make changes," she says. "If you have emotional issues, then you are likely not self-actualized enough to benefit from emotional intelligence training."

Therein lies the rub of emotional intelligence. Because people deal with their emotions in unique ways, a classroom training program isn't likely to have a big impact. "Training can be useful to teach people the concepts of emotional intelligence, but everyone's emotional intelligence needs are different and what you need to do to enhance your emotional intelligence depends on where they are," adds Calha Bright, principal consultant of Galba Bright & Associates, a provider of emotional intelligence knowledge products and services based in St. James, Jamaica. "Results are much more likely to come from coaching than training."

That coaching can take many forms. Trusted colleagues, for example, can serve as "a good low-cost means of improving emotional intelligence," Mr. Bright says.

If you recruit someone inside your company, choose a peer; preferably someone working on the same project, who will be close enough to see you work during high-stress situations, suggests Anthony Mersino, PMP, president of the Project Advisors Croup, a project management consulting firm in Chicago, Ill., USA. "After a meeting, ask that person how you did and what you could have done better."

This kind of feedback should never be given unsolicited, he warns. If you see someone struggling with their emotional responses or cues, first ask yourself if pointing out their shortcomings is in the best interest of the person or team-or just payback for bad behavior. Also consider your own feelings to see if you are sad or angry at that person. "If you think your comments will help, begin by asking, 'Can I give you some feedback?'" he says. "And don't just point out the negatives."

If there's no one on the team you trust to tell you the unvarnished truth, consider bringing in professionals, Mr. Mersino says. He started working on his own emotional intelligence with a life coach five years ago and believes it changed his career. After years of working on mid-level projects at IBM, Ameritech and Unisys, Mr. Mersino was frustrated by his inability to move up-but looking back, he can see why it was happening.

"I was abrasive and communicated with a lot of inappropriate humor and sarcasm," he says. Solely focused on tasks, he avoided relationship-building opportunities, going so far as to remove the visitor's chair from his office so people wouldn't stop in to chat. "1 was there to work, not to make friends," Mr. Mersino says. "But as a project manager, you can't do that. Projects are about people, not tasks."

His life coach helped him see that work was not about a "to-do" list, it was about relationships. Thanks to his newfound emotional awareness, "I've been financially rewarded and have had greater success on projects."

Mr. Mersino's transformation wasn't immediate, though.

It can take years to reverse ingrained behaviors and emotional responses, Mr. Bright says. "You have to think about emotional intelligence improvement as a process," he says. "People change when they recognize the need for change, internalize new behaviors and learn to get out of their own way."

Sarah Fister Gale is a freelance business writer based in Chicago, IL., USA.

Slack Off - If you really want to improve your job performance, go ahead and take some time off.

WORK+LIFE »BY KAREN M. KROll www.pmi.org

Every three months or so, Trelman de Villiers, Ph.D., an engineering manager at Bateman Minerals and Metals in Johannesburg, South Africa, takes a long weekend getaway. He spends time with his wife and focuses on interests outside of work, such as photography and gardening.

"The main reason for taking time off is to rest and recharge. Coming back from a break, or even a weekend without work, I have renewed energy for the tasks ahead," says Dr. de Villiers, who normally works 60 to 70 hours a week.

Taking time off can help improve your performance on the job in several ways. First, a break is invigorating and can prompt you to tackle your work responsibilities with more enthusiasm once you return.

It also gives you an opportunity to step back, n says Lisa Gundry, Ph.D., professor of management and director of the Leo V. Ryan Center for Creativity and Innovation at DePaul University, Chicago, III., USA. Focusing on an activity outside of work can lend a new perspective on the challenges you're facing on the job.

This method is referred to as "pattern-breaking thinking," based on the work of Edward de Bono and other creativity experts. By immersing yourself in an unfamiliar environment or experience, you gain new insights.

Dr. Gundry takes several of her classes to the Art Institute of Chicago to view French Impressionist Claude Monet's "Stack of Wheat" series. Each painting pictures a wheat stack in a different light and season. While the wheat presumably is the focus of the paintings, it's the background that actually distinguishes each picture. "Often, you don't notice what's around you," she says. "It gets people to consider that the problem you're given may not be the real problem."

A Little Peace and Quiet Many weekends, as Beverly Stocker, PMP, hikes several miles, answers to work challenges often become clear. "When I get my mind quieter, the solution will dawn on me," says Ms. Stocker, a project manager at Matanuska Telephone Association Inc., Palmer, Alaska, USA.

In 2004, Ms. Stocker was trying to new figure out how to improve communication among the 150 stakeholders working on a project to automate the provisioning of services. With team members working in different locations and for different departments and business units, communication on the project was unwieldy.

She'd been relying on e-mails with documents attached, as well as regular status meetings. However, team members would often arrive at meetings lacking the information or materials they needed, because not everyone received updated e-mails on a timely basis.

While hiking one weekend, Ms. Stocker thought of Microsoft Project Server. After looking into; the software,she found it would allow her team to set up a central repository for status reports, Gantt charts and other information team members needed. Now, they simply go to the site and click on the hyperlink to access resources.

Back to Basics Stepping into the role of a beginner can help project managers develop a greater appreciation for the effort younger team members must make to master their roles, says Kay Fleischer, PMP, an independent project manager in Chicago, III., USA.

After wrapping up a project in the spring of 2005, Ms. Fleischer spent several months learning to sail competitively. It was her first extended period of time off, and the first time in a long time that she was back in the role of a novice. "At some point, you're at the top of your game professionally, and you just keep doing things that you're good at," she says. "You do forget that you really need to be patient and can't assume things."

Her sailing experience helped her appreciate anew what it's like to be a beginner. Like many disciplines, sailing has its own vocabulary, and novices probably don't know what jib and spinnaker mean or how these items are used. Similarly, Ms. Fleischer says, many newer project team members assume that a Gantt chart will suffice as a project plan.

How Free? free time should be just that -without strict deadlines and goals- it helps to have a loose plan, Dr. Gundry says. That's especially true if the time off extends beyond a few days.

"If you take a sabbatical, you have to plan," says Seppo Halminen, senior manager, project management at Nokia, Espoo, Finland. In 2000, Mr. Halminen took a six-month sabbatical after he finished overseeing construction of a recreational complex.

Initially. he enjoyed relaxing and working on house projects he'd put off. After several months, however, he was ready t do something productive. So Mr. Halminen and his wife began a project they'd long talked about: making a movie to promote travel in Finland. Their creation, "Winter Holidays in Finland," was shown to more than 20 million TV viewers in Eastern Europe.

I Making the decision not to work for a while "freed the mind from the pressureoff or normal work tension to think creatively, which then led to the extraordinary thing of producing a movie," Mr. Halminen says.

A Short Break Taking off an extended period of time isn't always feasible, of course. But even get ting away from work and into a new environmentforan hour or two can help. "I'm a firm believer in taking breaks that don't very long," says Renee Hopkins Callahan, director of insights and innovation at Decision Analyst, a marketing consultancy in Arlington, Texas, USA. Something as simple as reading a book in a genre you usually overlook can be enough to help you think in new ways.

Creativity often involves making connections between situations or topics that don't initially seem particularly similar, Ms. Callahan says. The broader your range of experience, the more material you'll have to draw from when it's time to think of new ideas. "You need to seek out experiences that push you out of your routine," she says.