Consider this: If you are a teacher in Florida, it is illegal for you to use your judgment when assigning grades to your students. This is not an exaggeration. It is illegal. Driven by their mistrust and their desire to control, state legislators enacted a law defining percentages and grades. If a child scores above 94 percent, it is illegal for him to receive anything other than an A. If he scores between 85 percent and 93 percent, then he must receive a B. Arkansas is another state that saw fit to legislate away a teacher’s judgment, although they were a little more lenient on the children — in Arkansas 90 percent or above gets an A, while anything over 80 percent warrants a B.
Great school superintendents say that there is nothing wrong with offering teachers a grading/percentage guideline. Most states do it, and it helps to ensure consistency across districts. But a law? No wonder so many teachers feel they have lost the trust and goodwill of the people.
And what of the notion that “trust must be earned”? Sensible though it may sound, great managers reject it. They know that if, fundamentally, you don’t trust people, then there is no line, no point in time, beyond which people suddenly become trustworthy. Mistrust concerns the future. If you are innately skeptical of other people’s motives, then no amount of good behavior in the past will ever truly convince you that they are not just about to disappoint you. Suspicion is a permanent condition.
Of course, occasionally a person will indeed let you down. But great managers, like Michael, the restaurant manager from the introduction, are wired to view this as the exception rather than the rule. They believe that if you expect the best from people, then more often than not the best is what you get.
Innate mistrust is probably vital for some roles — lawyering or investigative reporting, for example. But for a manager it is deadly.
TEMPTATION: “SOME OUTCOMES DEFY DEFINITION”
Many managers say they would like to define the right outcomes and then let each person find his or her own route, but they can’t. Some outcomes, they say, defy definition. And if you can’t define the right outcomes then you have to try to define the right steps. It’s the only way to avoid chaos, they say.
From some angles this perspective is actually quite sympathetic. First, some outcomes are indeed difficult to define. Sales, profit, or even student grades lend themselves to easy measurement. But customer satisfaction doesn’t, nor does employee morale. Yet both of these are critical to excellent performance in many roles.
Second, if you do fail to define, in outcome terms, “customer satisfaction” or “employee morale,” then you still have to find some way to encourage people to pay attention to their customers and to their employees. Defining the right steps would certainly be one such way.
This perspective may be sympathetic, but it is not wise. These managers have given up too quickly. Just because some outcomes are difficult to define does not mean that they defy definition. It simply means that the outcomes aren’t obvious. Some thinking is required. If you do give it some thought, you find that even the most intangible aspects of performance can, in fact, be defined in terms of outcomes. And with these outcomes defined, you can then avoid the time-wasting futility of trying to force everyone to satisfy their customers or treat their employees in exactly the same way.
Let’s look at the outcome “employee morale” in more detail (we will address customer satisfaction later in the chapter). As we described in chapter 1, many companies have realized that the strength of their culture is part of their competitive weaponry. If they can treat their people better than their competitors, they will be able to attract more talent, focus that talent, develop that talent, and ultimately dominate. In their view, culture — how managers treat their people — has become tremendously important. Too important, it appears, to be left to chance.
Rather than defining a strong culture in terms of the employees’ emotional outcomes — “This is how we want our employees to feel” — many companies have chosen to break “culture” down into steps — “This is what all managers/leaders must do.” As we described in chapter 2, these steps are usually called “competencies.”
Once defined, competencies provide a common focus and a common language for a great deal of what happens within the company. New managers are required to learn them. Existing managers are rated against them, by peers, direct reports, and their superior. The picture of the perfect manager is he who possesses them all. Of course, everyone knows this person is a phantom, but that doesn’t stop you from becoming concerned if your direct reports rate you low on competencies like “Compelling vision” or “Calm under fire.” Nor does it stop your boss from telling you to improve your scores for the coming year if you are to earn 100 percent of your discretionary bonus. Yes, these competencies are quickly taken very seriously.
Not by great managers, fortunately. They know that you should not legislate in advance how a manager is to interact with his people, moment by moment. You should not try to script culture. First, it’s distracting — it focuses the manager on compliance to a “standard” while she should be figuring out what style works best for her. Second, it’s impossible — her innate talents, not her “competencies,” drive the manager’s moment-by-moment interactions, and talents cannot be taught.
But this does not mean that you should not hold your managers accountable for treating their employees well. You should. You just shouldn’t legislate how to do it, step by step by step. It would be more effective to identify the few emotions you want your employees to feel and then to hold your managers accountable for creating these emotions. These emotions become your outcomes.
As an example, take those first six questions of the twelve that measure workplace strength:
Do I know what is expected of me at work?
Do I have the materials and equipment I need to do my work right?
At work, do I have the opportunity to do what I do best every day?
In the last seven days, have I received recognition or praise for good work?
Does my supervisor, or someone at work, seem to care about me as a person?
Is there someone at work who encourages my development?
These questions describe some of the most important emotional outcomes that you should expect your managers to create in their employees. You want their employees responding “Strongly Agree” to these questions by the end of the year, and you certainly want to hold your managers accountable for securing these 5’s. But now that you’ve identified what you want their employees to feel, you are, happily, freed from forcing each manager to create these feelings in lockstep.
Take the emotion “trust,” as measured by the question “Does my supervisor, or someone at work, seem to care about me?” One front-line supervisor has a quiet, caring relationship style. One supervisor builds relationships through his straightforwardness and his consistency. One supervisor uses his rah-rah passion and humor. But the great manager doesn’t care one way or the other, as long as the supervisors’ employees respond “5” to the question “Does my supervisor, or someone at work, seem to care about me as a person?” The great manager knows that he doesn’t need to waste time and money sending the quiet one to public speaking class or the straightforward one to interpersonal sophistication class. (Of course, he may discover that a particular supervisor has no path of least resistance to building relationships with his people. For whatever reason, they just don’t trust him. We’ll describe how great managers handle this problem in chapter 6.)
As Gallup discovered, defining the right outcomes to measure “culture” can be quite a challenge. But it is worth the effort. If as much effort were spent identifying the right employee outcomes as has been spent trying to legislate the manager’s style, then everyone would be better off. The company would be more efficient. The human resources department would be more popular. The employees would be more trusting. And the managers would be themselves. Finally.<
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Rules of Thumb
“When and how do great managers rely on steps?”
The best managers avoid all of these temptations. They know that the manager’s challenge is not to perfect people, but to capitalize on each person’s uniqueness. They select for talent, no matter how simple the role. Their first instinct is to trust the people they have selected. And they believe that, with enough thought, even intangibles like “customer satisfaction” and “employee morale” can be defined in terms of outcomes.
However, this does not mean they dismiss the need for steps. They don’t. A manager’s basic responsibility is to turn talent into performance. Certain required steps can often serve as the platform for that performance. In the course of Gallup’s interviews, these managers described how and when they used required steps to drive performance. Here are the rules of thumb that guide them.
RULE OF THUMB #1: “DON’T BREAK THE BANK”
Employees must follow certain required steps for all aspects of their role that deal with accuracy or safety.
Take banking as an example. A bank performs many different functions, but in the long run it has value for its customers only if it handles their money accurately and safely. Therefore the foundation of every role within the bank, whether it be trader, investment adviser, or teller, is the need to do it accurately and safely. To show employees exactly what it means to be “accurate” or “safe,” the banking industry has defined regulatory steps, and each bank has its own internal guidelines. The bank’s employees must adhere to these. This isn’t the only part of their job, but it is the foundational part. Any manager who forgets this, who gives his employees too much room to maneuver, runs the risk of destroying the bank’s value.
The managers of Baring’s bank, a two-hundred-year-old English banking institution, forgot.
In late 1994 Baring’s general manager of futures trading in Singapore, twenty-eight-year-old Nicholas Leeson, began to invest heavily in the Japanese stock market, guessing that the market would rise. He guessed wrong. The market kept falling. And, naively, he kept increasing his bet, hoping against hope for an upswing. During November and December he lost a great deal of the bank’s money.
This wasn’t particularly unusual. Futures traders lose large sums of their company’s money all the time. When this happens repeatedly, the company simply cuts off the money supply, fires the trader, absorbs the losses, and chalks it all up to the cost of doing business.
What was unusual was that, in Nick Leeson’s case, it appears his superiors didn’t know about the extent of the losses. In a bizarre example of empowerment run amuck, his manager had given him control of both the front and back office in Singapore — he was a fox in his own henhouse, policing his own trading. There was no system in place to ensure that Leeson was following the guidelines for “accurate” accounting and “safe” investing. This made it relatively easy to do what more than a few desperate twenty-eight-year-olds might do: set up dummy accounts to hide his mounting losses. Back in London, blithely unaware, his manager kept the money coming.
Leeson took his final gamble in January of 1995. He bet the farm that the Japanese Nikkei index would rise, finally. He must have done something spectacularly bad in a previous life, because on January 17 a violent earthquake pummeled the cities of Kobe and Osaka, driving the Nikkei index down through the floor. The bet had failed.
The next morning Baring’s woke up to losses of over $1.3 billion, about $700 million more than they had in their cash reserves. A month later, on February 27, 1995, the bank collapsed. Leeson went to jail, and four thousand jobs were put in jeopardy. The two-hundred-year-old institution was destroyed.
This is a banking story, but it could just as well have been a story about jet engine manufacturing, theme park ride design, subway train operation, or scuba-diving instruction. All roles demand some level of accuracy or safety, and therefore all roles require employees to execute some standardized steps. Great managers know that it is their responsibility to ensure that their employees know these steps and can execute them perfectly. If that flies in the face of individuality, so be it.
Unrestrained empowerment can be a value killer.
RULE OF THUMB #2: “STANDARDS RULE”
Employees must follow required steps when those steps are part of a company or industry standard.
It would be hard to overestimate the importance of standards. And by “standards” we are not referring to moral or ethical standards. We mean languages, symbols, conventions, scales. These are the DNA of civilization. Without our ability to devise and then accept standards, we could never have developed such a complex society.
Standards enable us to communicate. Each language is simply a shared set of standards. If you don’t share someone’s grammatical standards, and if you cannot agree on what certain symbols mean, then you can’t speak that person’s language. All communication, no matter what its medium, demands shared standards — just ask a Windows user who has tried to download a document from his Mac-bound buddy.
Standards drive learning. The skill of arithmetic is teachable precisely because all the students and all the teachers know that they are adding and subtracting in “base ten.” Shared standards make skills transferable.
Standards make comparison possible. For example, in order to function, market-driven economies needed a standard system for comparing the value of one company with that of another. Until the late fifteenth century no such system existed. But in 1494 a Venetian monk, Luca Pacioli, formalized that system and communicated it in the first book detailing the standards of double-entry bookkeeping. Wall Street still uses that system today.
Counterintuitively, standards fuel creativity. Take music as an example. There is no right way to structure sounds. But in Western Europe in the late sixteenth century, a structured scale gradually became standard. This scale, called a “chromatic scale,” used twelve tones per octave, with each tone being one hundred cents apart in pitch — represented by the seven white keys and five black keys on a piano keyboard. On the surface this sounds as though it would restrict the composers’ genius. But the opposite was true. Being limited to just twelve tones didn’t dampen their creativity; it fostered their creativity. The chromatic scale, and its formal notation system, spawned two centuries of the most prolific and original composition. Composers as diverse as Vivaldi, Miles Davis, Stravinsky, and Madonna all used the standard chromatic scale to give voice to the unique music playing in their minds.
Standards, then, are the code in which human collaboration and discovery is written. Great managers know that if they want to build a cooperative, creative organization, they will have to ensure that their employees use the relevant codes. Lawyers must study case law. Air traffic controllers have to learn the standard navigational protocols. Accountants have to learn the rules of double-entry bookkeeping. And engineers have to design products that will operate on the standard electrical frequency broadcast twenty-four hours a day from the National Bureau of Standards’ radio station, WWVB.
If standards are important today, then that importance will surely multiply many times over in the coming decade. Here is how Kevin Kelly, writing in Wired magazine, describes this decade:
The grand irony of our times is that the era of computers is over. All the major consequences of stand-alone computers have already taken place. Computers have speeded up our lives a bit, and that is it. In contrast, all the most promising technologies making their debut now are chiefly due to communication between computers — that is, to connections [italics added] rather than to computations.
Connections mean networks, and networks require standards. And as we speed into this networked world, the companies that define the new standards — the new languages, platforms, scales, conventions — will gain a huge advantage over latecomers. They will be the gatekeepers, perfectly positioned to meet the needs of the hungry new community they helped to creat
e.
Making your standards universal is already a telling competitive advantage. This is how VHS beat Betamax. This is how Microsoft beat Apple. Over the next few years you will see more and more companies breaking all the rules of traditional business in order to build networks. This explains why Netscape gives away its browser; Sprint, MCI, and AT&T lure us with free cellular phones; and Sun Microsystems floods the market with Java. They are all trying to launch their standards toward the critical mass needed to become the standard.
Since building networks is so important, all employees will have to play their part. In the same way that Swiss clock makers were not encouraged to devise their own units of time, the employee of tomorrow will not be allowed to create his own standards. For example, given their intense competition with Sun Microsystems, Microsoft programmers will rarely be given the freedom to write new software using Sun’s version of Java. Or, in a less high-tech setting, with the national focus on standard achievement tests, teachers will not be permitted to redesign their curricula based on their own preferences.
This doesn’t mean that in the future management will be rigid and intrusive. It simply means that employees will have to express their creativity and individuality through a standard medium. Here again, unrestrained empowerment can kill a company’s value.
RULE OF THUMB #3: “DON’T LET THE CREED OVERSHADOW THE MESSAGE”
Required steps are useful only if they do not obscure the desired outcome.
Mark B., a manager in a large consulting company, was taking the four p.m. flight from New York to Chicago. His plane had already left the gate and was lumbering over to its designated runway. Suddenly the captain’s voice crackled over the intercom, announcing: “There is a weather ground stop at O’Hare. At this time, no planes are taking off or landing. Some delays may be possible. We’ll let you know as soon as we hear anything.”
First, Break All the Rules Page 12