The Performance Improvement Blog

Blog Post Chosen as Pick of the Week

Wally Bock picked my blog post, “Don’t Throw Lean Out With Toyota’s Bathwater,” as one of his independent business blog posts of the week. I am honored to have my blog post chosen for recognition. Bock writes:

Stephen Gill notes that many writers are taking Toyota's current troubles as "proof" that their success of the last couple of decades was some kind of sham. Those lean techniques still work. From my perspective, what got Toyota in trouble was that it lost focus on them and started thinking about getting bigger and bigger.

That particular post was inspired by an article written by University of Michigan School of Business professor Izak Duenyas for “The Business Thinker”. He argues that Toyota's current problems aren't because of "The Toyota Way", rather the problems are because the company lost its way.

Telling the Truthiness

 truthiness: "truth that comes from the gut, not books" (Stephen Colbert, Comedy Central's   "The Colbert Report," October 2005); “the quality of preferring concepts or facts one wishes to be true, rather than concepts or facts known to be true" (American Dialect Society, January 2006)

Some business leaders appear to prefer truthiness to truth. This is evident in two high profile examples: Toyota and BP, who have repeatedly made public statements later found to be false or misleading. It may be that their CEOs don’t know the truth. It may be that no one around them is willing to tell them the truth. This contributes to a culture that is bad for business, and, in the case of Toyota and BP, bad for consumer safety and protection of the environment. Jeffrey Pfeffer, professor of organizational behavior at Stanford’s Graduate School of Business, in his Bnet.com blog, writes:

…a culture of lying is contagious, and it’s very hard to run an organization if the leader doesn’t know the truth about what is actually going on…If you want to understand the one cause of the recent financial carnage, Toyota’s quality problems, and many other corporate misdeeds and mistakes, look to the organizational culture and whether telling the truth, even when unpopular or unpleasant, is rewarded or punished. There are, of course, lots of causes of company problems that depend on the specific circumstances, but one common thread in many of these incidents is a story of deception.

Speaking “truth to power” is risky. Many senior leaders intentionally or inadvertently create a work environment that discourages employees from reporting accurate information about what is happening in the company, especially if the facts are not consistent with the way that leader wants to view the company. When an employee does step forward with the truth, a CEO might “shoot the messenger” (discredit the person speaking the truth) as a defense against hearing something that he or she does not want to hear. The employee faces the real possibility of negative consequences for doing the right thing. It is up to senior leaders to develop an environment that makes it safe for employees to express well reasoned viewpoints. Ralph Jacobson, in his blog Leading for Change, puts it this way:

Many employees are hesitant to express their concerns because they feel that they will be viewed by their managers in a less than favorable light. In an economy with excess supply of labor, employees may feel vulnerable. So the role of the senior leader is to create a culture where speaking truth is understood as good for business. Those who appropriately raise concerns and create viable options are rewarded with higher-level work and opportunities for professional development. They need to find ways that mid-level managers understand that questioning the status quo is acceptable behavior.

Businesses are not sustainable when they are built on lies, half-truths, and truthiness. Even major juggernaut companies like BP and Toyota can be hurt severely for many years to come when they are not totally honest about problems that affect their customers and stakeholders. 

Don't Throw Lean Out With Toyota's Bathwater

I’ve been wondering (see post) how Toyota, the world-wide, benchmark manufacturing company for quality and a leader in promoting continuous improvement (The Toyota Way), suddenly finds itself responsible for the recall of millions of cars, payer  of a major fine to the U.S. government, and the brunt of late-night TV humor. Izak   Duenyas, writing in “The Business Thinker”, offers an explanation. He writes:

In the past, Toyota was very deliberate in adding new suppliers, developing a close working relationship with them, and ensuring they can meet Toyota’s stringent quality and on-time delivery requirements. One of the causes of the current quality issues is  that in the haste of meeting the objective of becoming the largest car company, Toyota did not allocate (nor did it have) sufficient internal resources to develop the kind of close working relationships with the new  suppliers that would have maintained the expected  quality performance.

It wasn’t a failure of “The Toyota Way” and its “lean” principles, Duenyas argues, but rather a failure of the company to apply its own dogma consistently over the long-term. The kind of culture that must be in place to support high performance and high quality is not something that, once in place, will continue indefinitely without constant attention and nurturing. Complacency will set in if the organization is not vigilant, especially, as in the case of Toyota, where the accolades and awards were flowing to them for several decades. This is a very important lesson for other companies aspiring to implement the lean approach, or any major culture change, for that matter.

What do we know and how do we know it?

Surveys say that only 30% of employees are engaged in their work, 54% of employees are likely to look for a different job as the economy improves, and 96% of CEOs believe their companies should be doing more to measure the business impact of learning and development programs. Other studies report evidence that pay-for-performance programs increase productivity, diversity programs don’t contribute to the bottom-line, and Millennials are motivated more by flexible schedules than by money. Every day it seems, a new measure of employee attitudes and behavior is reported in the press. These pronouncements are gobbled up by the public and treated as if they are new truths. John Allen Paulos asks us to examine the way in which these studies are done before we believe everything they say. He writes in the New York Times Magazine:

…do we hold an outsize belief in our ability to gauge complex phenomena, measure outcomes and come up with compelling numerical evidence? A well-known quotation usually attributed to Einstein is “Not everything that can be counted counts, and not everything that counts can be counted.” I’d amend it to a less eloquent, more prosaic statement: Unless we know how things are counted, we don’t know if it’s wise to count on the numbers.

Additionally, he writes that we should be wary of the methods used:

No method of measuring a societal phenomenon satisfying certain minimal conditions exists that can’t be second-guessed, deconstructed, cheated, rejected or replaced. This doesn’t mean we shouldn’t be counting — but it does mean we should do so with as much care and wisdom as we can muster.

I think we rely too much on responses to a few survey questions and on counts of a small number of isolated behaviors. That kind of data, as Paulos suggests, cannot give us an accurate picture of the complexity of human behavior and the situations in which people find themselves. 

In many cases, only an employee’s story can give us the information that we need. By “story”, I mean the narrative of how the organization, other people, and events influenced a change in attitudes and behavior and how that change affected business results. My experience is that success stories are more informative than stories about failures, but both types can be useful. Robert O. Brinkerhoff has developed a method that uses success stories to evaluate the impact of training and development programs. René Lavinghouze writes about using success stories to evaluate the progress of disease prevention programs. Stories about people and their experiences often are more accurate and more useful then things that can be counted.   

I'm Your CEO. Don't Be Afraid.

In my previous post, I wrote about the difference between command-and-control leadership and people-centered leadership. Cartoonist John Junson has drawn a cartoon that first appeared on The Employee Engagement Network, and captures, with humor, this dichotomy and the internal struggle with control that challenges many leaders. 

Command-and-Control Leadership vs. People-Centered Leadership

Command-and-control leadership remains pervasive throughout business, government, and nonprofit organizations. Bnet.com defines command-and-control as:

…a style of leadership that uses standards, procedures, and output statistics to regulate the organization. A command and control approach to leadership is authoritative in nature and uses a top-down approach, which fits well in bureaucratic organizations in which privilege and power are vested in senior management. It is founded on, and emphasizes a distinction between, executives on the one hand and workers on the other. It stems from the principles of Frederick Winslow Taylor, and the applications of Henry Ford and Alfred P. Sloan, Jr. As more empowered, flat organizations have come to the fore, command and control leaders have been increasingly criticized for stifling creativity and limiting flexibility.

Given the large number of books, articles, blogs, and nings written about employee engagement and people-centered management, you’d think that the command-and-control style of leadership had gone   the way of the ivory-billed woodpecker. But not so. According to John Seddon’s book, Freedom from Command & Control: Rethinking Management for Lean Service, command-and-control is still the dominant style of leadership. The author attributes the persistence of this style to leaders not knowing that there is a better way. He writes:

The better way has a completely different rationale to command and control, and that, perhaps, is the reason it remains unknown. It is difficult to understand a different logic. People interpret what they hear from within their current frame of reference, so that what they “hear” is not necessarily what is meant – it is the frame of reference from which they “understand” that gets in the way of understanding. 

I don’t think it’s as much a matter of not knowing as it is a fear of losing control. Business leaders today are exposed to every management theory and best practice. However, switching to a people-centered approach means relinquishing control to others and trusting that employees will not abuse that responsibility. This is not easy to do for most leaders; it takes someone who is very confident and comfortable in his or her role to pull it off. And in times of stress, it is the human tendency to narrow our field of vision and revert to controlling behaviors that feel safe and less risky to us, whether they are or not.

Command-and-control is not always counter-productive. However, many managers in positions of authority will try to control schedules (e.g., time in the office), output (e.g., number of sales calls), and budget (e.g., line item for travel) before they have earned the trust of their employees. So at the same time that they are trying to control everything they can, they say they want employees to be creative and innovative and to respond rapidly to marketplace changes. The problem is that people won’t be creative, innovative, and responsive, and they won't stay in their jobs, if they feel disrespected and distrusted by their managers. Leaders can’t have it both ways.

John Baldoni makes this distinction when he talks about “leadership presence” in his new book, 12 Steps to Power Presence. He argues that it’s not enough to have a position of authority. A leader has to earn   the trust and respect of followers. This is done through delegating decision-making and giving employees the opportunity to implement their own ideas. John writes:

Leadership presence is “earned authority.” Those two words are important. Earned means you have led by example. Authority means you have the power to lead others. While organizations confer management roles, it is up to the leader to prove himself or herself by getting others to follow his or her lead. A leader must earn the right to lead others. Title is conferred; leadership is earned… While leaders project power through presence, it is followers who authorize it with their approval.

As organizations of all types emerge from the recession and as many, new, entrepreneurial companies are born, managers should be very conscious of their leadership styles. Certain situations might require an authoritarian and directive response. However, most companies, to be successful, need leaders who, through a mostly people-centered management style, earn that designation by giving up control to their employees.

Post-Recession Retention

One of the biggest challenges faced by companies in this post-recession economy is attracting and retaining talent. In an invited article I wrote for BusinessThinker.com, a blog published by Dr. John Psarouthakis, I describe the kind of organizational culture that is motivating to high performing employees. I argue that these environments have six, key factors:

1. Clear and frequent communication
2. Trust-building
3. Continuous learning
4. High level of employee engagement
5. Recognition and reward for success and risk-taking
6. Leadership that is people-centered

Without these you will have a disengaged, unmotivated, low performing, and high-turnover workforce.

Every executive needs to work on lowering costs, increasing revenue, and improving customer service. But if these executives don’t also pay attention to developing a high performance culture, in the long run, those other factors won’t make any difference. Organizations won’t have the talent they need to survive and thrive. 

Build Trust, Not Control

As we come out of the recession and companies prepare for hiring and growth, the level of trust in a company’s culture will have a lot to say about whether that organization will be successful or not. Without trust, employees become what Judy Bardwick, in her article titled "The High Cost of Mistrust," calls actively disengaged. She writes: 

The absence of trust is not simply passive—that something is missing. Instead, in the vacuum of trust, mistrust rushes in and fills the void. Mistrust is dangerous and expensive. It means people expect the worst and behave in line with that. Rules to control behavior proliferate, but they are inevitably ineffective because only shared values and trust can really govern behavior. In the face of mistrust, cooperation and teamwork are merely slogans shouted out by executives in the face of increasing narcissism and territoriality. Mistrust means everyone watches their back and not anyone else’s.

And once trust is lost, it is very difficult to earn back. There are exceptions. Burlingham, editor-at-large for Inc. Magazine, writes about a company that had a culture of “trust and track”, lost it, and is now getting it back. Nick’s Pizza & Pub, with two locations in the Chicago suburbs, has an employee turnover rate of just 20% in an industry where 200% is typical and has a net operating profit of between 14% and 18%. But the owner, Nick Sarillo, became sidetracked for a period of time while he was trying to expand into Chicago, and let his systems break down. In the void, his managers created a command-and-control environment that led to costs increasing beyond an acceptable level. Burlingham writes:

 The system is an important mechanism for creating a trust-and-track culture and for breaking the habits of command and control. "Managers trained in command and control think it's their responsibility to tell people what to do," Sarillo says. "They like having that power. It gives them their sense of self-worth. But when you manage that way, people see it, and they start waiting for you to tell them what to do. You wind up with too much on your plate, and things fall through the cracks. It's not efficient or effective. We want all the team members to feel responsible for the company's success."

Sarillo discovered through his own experience that trust doesn’t mean the absence of accountability. In fact, employees don’t want blind trust. They want to be trusted with responsibility and given the opportunity to succeed, but they need to know how well they are doing and what they need to do to improve. If companies want to avoid “active disengagement” as they emerge from the recession they need to intentionally create and monitor a culture of trust.