The Performance Improvement Blog

Hierarchical Leadership vs. Networked Leadership

The Egyptian people have much work to do to create a democratic state and there is no certainty yet that they will achieve this dream. However, the one thing that is certain is that the way people choose to form and manage large organizations has changed forever.  We are witnessing a preference for networks as opposed to hierarchies. Leaders of complex organizations should be paying attention to what is happening in Egypt and all over the Middle East, for that matter.  

Leading a networked organization is very different from leading a hierarchical organization. Harold Jarche, in his blog, talks about the differences between a hierarchy and a networked organization and how that affects leadership. He writes:

It takes different leadership to increase collaboration and support social learning in the workplace. Leadership is the key, not technology. Most of our leadership practices come from a command and control military legacy that have been adopted by the business world for the past century. But hierarchies don’t help us manage in networks, whether they be social, value or organizational networks.

Egypt’s leaders learned this lesson when they tried to gain control of protestors prior to President Mubarak stepping down. The old guard seemed to believe that a nation state will plunge into chaos unless it has an iron-fisted ruler at the helm. 

And the media reinforce this way of thinking by asking the wrong questions. Wally Bock, in his blog, cites the situation in Egypt as an example. He writes

There's an interesting illustration of this principle playing out in the coverage of events in Egypt these days. Older commentators may wonder "Who's controlling the crowds?" but younger commentators ask, "How are the crowds organizing?"

Internet-age youth have shown to the world that they can organize themselves using email and social media. Governments as well as businesses and nonprofits should heed this lesson. Technology and the proclivities of the new generation of young adults are transforming organizations in ways that demand new kinds of leadership.

 

Egypt and the Vision Thing

In my February 10th blog post, I wrote about the importance of visioning and how Ari Weinzweig uses visioning with much success within Zingerman's, the company that he co-founded 25 years ago in Ann Arbor, Michigan. One commentor to my blog reminded me that some executives of large companies do not see the value of visioning. They don't want to be held accountable for a vision that will keep changing over time. If these executives want an example of the power of visioning in a large organization (How about 80 million people?), they should look at what took place in Egypt over the past two weeks. Many disparate groups coalesced around a vision: an Egypt of justice, freedom, and democracy and without Hosni Mubarak, the current ruler.

 

That vision drove their revolution. If they had tried to decide on "how" before deciding on "what", the revolution never would have happened. Now these various groups have the very hard task of agreeing on how they will make their shared vision into a reality. Maybe the devil is in the details, but if they keep focused on their vision for a new Egypt, they will succeed. People need a compelling vision, especially when we are asking them to commit fully to achieving grand and important goals. People will take extraordinary risks and accomplish extraordinary things when they have passion for the intended results. This goes for small businesses, large corporations, and nation states. 

The Vision Thing

Many companies, departments, and teams don’t know where they’re going. They know what they’re doing and what they’ve always done, but they don’t have a destination. This is very uninspiring to leaders who must provide guidance and to employees who want direction and a sense of purpose. It’s like building a house without a drawing of the finished structure. Not only would you not be able to make decisions about priorities and tradeoffs, but you and everyone else involved would lose interest in the project very quickly. We all need clarity about what we want our organizations to be in the future.

Ari Weinzweig explains the usefulness of having a vision in the February 2011 issue of Inc magazine. He describes how he uses a visioning process as co-founder of Zingerman’s Community of Businesses in Ann Arbor, Michigan, which has eight different businesses, 17 managing partners, and revenue of $37 million. He and the managing partners use visioning for each of the separate businesses under the Zingerman’s umbrella and they use the process when planning any new service or initiative.

At the core of the Zingerman’s visioning process are the questions that they ask themselves. Weinzweig writes:

A vision, quite simply, is a picture of what success will be at a particular time in the future. It encompasses answers to an array of questions: What does our organization look like? How big is it? What are we famous for? Why does anyone care about what we do? How do people who work here feel about their jobs? How do I, as the founder, feel about the business? What's my role in it? Complete the visioning process, and you'll have a clearly articulated end for your organization—something that won't change every time the market or your mood shifts.

In Zingerman’s, visioning is not a nice-to-do or something that is done if there is time. Rather, it is part of the culture of the organization. It is the way they work. A new business, a new project, a new department, or any kind of change goes through their visioning process. In tough economic times the tendency is for organizations to put things like visioning on the back burner. However, it’s in these tough, uncertain times that organizations need a vision more than ever. They need to be focused and they need to set priorities and they can’t do these without knowing the end goal. 

 

Training for No Results

Why do companies continue to deliver corporate-wide employee training in a way that ensures minimal results? Recently, I heard about two examples of national corporate offices requiring that employees in local offices attend their training programs. That is not necessarily a bad thing. However, the way in which each corporation did it is highly wasteful and does nothing to promote the respect and trust of employees, let alone improve performance. Unfortunately, this is typical of centralized training programs. In one case, franchisees were required to send all managers to a franchisor-led program on new customer-management software. In the other case, a local office of a national, land-development company was required to send all new employees to corporate-delivered, project-management software training. 

In each case, employees were told by the home office to attend multi-day training programs in a distant city without any direction to have conversations with their bosses about the importance of this training to the company. Learners and bosses did not talk about how the training fits with individual development goals. They did not discuss mutual expectations for applying the training in the workplace. They did not plan how the training would be applied back home to make a difference in the organization. And they did not identify measures they could use to know if the training had contributed to business results. Without these conversations and goal-setting with their bosses, these employees are highly unlikely to apply what they learned in any significant way. The companies will, once again, have wasted valuable resources. In fact, it probably would have been better not to have offered the training in the first place. 

Multi-location companies seem to believe that if they require employees in local offices to attend company training programs, that will ensure consistency in operations throughout the organization. This is purely wishful thinking. They will be lucky if more than 20% of those participants ever use what they learned back on the job. Many forces conspire to prevent application of learning, not the least of which is a lack of clear expectations for what will be learned and how that learning will be applied. For further explanation of the factors that ensure that training programs contribute to business results, read: The 5As Framework. 

Retaining High-Impact Employees

As we crawl out of the recession, high performing employees will be in greater demand than ever (See blog post: The Coming Turnover Storm.). What are you doing to keep them? Kelly Goldsmith, professor of marketing at Northwestern University’s Kellogg School of Management, and Marshall Goldsmith, executive coach and author, offer excellent advice for retaining these valued employees. They contend that companies need to do essentially six things to keep their talent: 1) show respect for them; 2) create a work environment in which they can thrive; 3) provide ongoing training and education to them; 4) develop a coaching relationship with them; 5) provide continual feedback to them; and 6) involve them in decision-making.

They make the case that developing these “high-impact” employees is strategically important to a company. They write:

Developing people is a strategic process that adds value to both the employees and the bottom line of the organization. Highly committed, highly competent people create financial rewards for the organization; organizations that develop their people and provide opportunities for growth are sought-after by high-impact performers. Great leaders know this simple formula. They understand it and strive to create an environment that supports it. And the result is success!

The tendency of executives is to assume that employees are motivated by money and that if they are paid well, they will stay with a company. Money is a motivator but it is not the only motivator and often it is not the strongest factor in retention. The opportunity to develop one’s skills and abilities, to continue to learn, and to feel respected and valued, are stronger drivers of retention for many high performing employees.

And this is not only true for high performers; all employees are happier and more productive when they feel respected, are developing their abilities, can contribute to the success of the organization, and are involved in making important decisions. The Goldsmiths' recommendations for retaining high-impact employees are also the characteristics of a high performance organization.