Monday, October 12, 2009

Followership or Citizenship?

Since it entered our repertoire, I have distrusted the term followership. It has percolated through writings in business for a number of years. It is weighted down, in my opinion, by the sense the term carries that followers are herd animals: subservient, uncritical. Here and there - following the Enron scandal for example - there has been an effort to blame followers for the failures of their leaders. These authors argue: if employees can do only a little more to let leadership know that their decisions might have bad consequences, then bad consequences can be avoided. This laughably turns responsibility on its head. It is the worst kind of revisionism to argue that Enron's executive leadership wouldn't have committed fraud if someone in a cubicle in accounting would have had the gumption to stand up and say: "Um, guys, what you're doing is deceptive and illegal." Leaders need to take responsibility for their choices and failures.

But part of the body of scholarship on followership has been concerned with constructing categories or taxonomies of followers. One of the researchers who takes this path, Barbara Kellerman from Harvard, makes a breakthrough by pointing the entire conversation in a new direction. A Political Scientist by training, and a Lecturer at the Center for Public Leadership at Harvard's Kennedy School, what Kellerman talks about in her work feels more to me like citizenship, rather than followership. In fact, most of her writings on her Washington Post-hosted blog don't deal with the workplace, but with politics.

Consider for a second what Kellerman says about "good followers:"

Good followers will actively support a leader who is good (effective and ethical) and will actively oppose a leader who is bad (ineffective and unethical). Good followers invest time and energy in making informed judgments about who their leaders are and what they espouse. Then they take the appropriate action.

Doesn't that sound a lot like what we expect (but too infrequently get) from an informed citizenry? This suggests that followers have responsibilities as well as rights (just as citizens do).

Here's what she says about "bad followers:"

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Bad followers will do nothing whatsoever to contribute to the group or organization. Or they will actively oppose a leader who is good. Or they will actively support a leader who is bad.

But why do bad followers behave the way they do? And how can you help facilitate the engineering of good followers? One part of the answer for Kellerman and others who write on this topic: workplaces are populated with "isolates" and "bystanders," who are willing (perhaps even happy) to collect their paychecks without being more involved in a company's affairs than is absolutely necessary. They are bad followers in the sense that they do nothing, or very little, to contribute to the organization's success. But the other type of bad follower - those that oppose good leaders and support poor ones - are, in my mind, equivalent to "low information voters" in a democracy. Low information voters got an unusual degree of attention in the last presidential election. Different writers have linked low information voters with different problems. For example, in a tight election - as the last several presidential elections have been - it is important to reach voters who don't have the resources or the interest to learn more about issues and candidates. So the race becomes a beauty pageant or gets bogged down in discussions about relatively meaningless public policy concerns, like the preoccupation with a gas-tax holiday that dominated part of the spring of 2008. Low information voters, like bad followers in the workplace, don't make informed decisions, they follow their gut, or stick with party labels, or embrace symbolism over substance, or do what's easy.

We know a little bit about what is necessary to improve voting behavior - crudely, to turn low information voters into responsible voters. The first is obvious, but hard to implement: we need to make information cheaper and easier to obtain. Studies show that most low information voters are low-income and less-educated. They don't have the time or money to invest in accessing more information about issues, or they lack the training in critical thinking that college education helps to provide. Making the implications of candidates' policies more accessible and comprehensible - through the media or other resources - can help these voters, and all voters, make better choices. But as a society, we haven't assembled the commitment or the right set of approaches to make information cheaper and more intelligible.

In the workplace, the solution seems easier: workers should be able to access on an ongoing basis basic information about how a company is doing, across a number of appropriate indicators. And that information should be factual and transparent. Where a firm has concerns about competitors putting their hands on this information, employee access can be limited to what is necessary for informed reflection. But in general, better informed employees can become better followers.

The other solution in the political sphere is restoring a sense of civic engagement among a population that has lost its sense of commitment to the wider public, the nation, and the state. Part of the problem is that low information voters don't feel motivated to seek out and make use of information that is available. We have a good sense of how to engineer greater engagement, but it takes a commitment of resources and a span of time to produce results.

Doing this in the workplace is considerably easier. It begins with recruitment and hiring: selecting employees who express a commitment to engagement, rather than docility, is the first step. HR shouldn't target candidates who appear to be easy to manage, they should seek out what Kellerman calls "activists," those who are "eager, energetic and engaged," and have an appetite for building relationships, rationalizing and improving processes, and are impatient with poor leadership.

So if we are talking about something that resembles citizenship, why not call it that, and dispose of the awful term followership?

Thursday, August 20, 2009

Different maps

As we have remarked on this blog, paths that might lead us out of the dead ends we find ourselves trapped in can go undiscovered because we don’t employ the right maps. We search and search the maps we have available to us, within our own narrow professions or disciplines, and find no direction. We remain unaware that colleagues working in adjacent professions or disciplines – perhaps several floors away within the same organization – could help us. They map the world differently, because their profession or field cares about different things, values different outcomes, measures success differently.

Sharing knowledge – initiating the right conversations – is the most difficult task many of us face in the workplace. A recent article in HR Magazine, “Managing the People Who Manage Projects,” (membership required) draws attention to the point of intersection between those who manage talent and those who manage projects, and the implication of the article is clear. HR managers – who have a key role to play in assessing talent, in managing the training and development of employees, and in shaping compensation packages – and project managers – who mainly focus their energies on project outcomes – need to work together more closely.

Firms aren’t going to stop using project teams to accomplish important tasks within their organizations or to accomplish the work firms do for their clients. In many ways, this is the new model for organizing work; it offers flexibility, efficiencies, and scalability. Project managers are everywhere, as shown by the membership growth of organizations designed to serve the professional needs of project managers. The Project Management Institute has doubled its membership in the past five years.

What type of challenges do project-oriented work processes present to HR managers? The article unpacks three concerns worth focusing on: 1. Developing employees, through training and organizational immersion, who can adapt quickly to new work environments, swiftly climb learning curves, and collaborate productively. 2. Managing reassignments efficiently so talent doesn’t sit on the bench unused. 3. Compensating employees – and engaging their loyalty – so they remain committed to the firm’s goals.

In reality, these challenges aren’t so exotic. HR managers have always needed to think about how they train, employ and compensate their employees. What the article opens our eyes to is this: all of these concerns take on a heightened relevance in a project-oriented workplace. First of all, training in emotional intelligence and programs that help employees walk in colleagues’ shoes give employees the tools to read co-workers on their team more quickly, and facilitates better working relationships. So the types of training HR managers in project-oriented workplaces provide may extend being technical job requirements. Inescapably, employees in project-oriented workplaces will be teamed with many different co-workers, sometimes colleagues from within the firm, sometimes clients’ employees. Quickly understanding everyone’s incentives, work culture, and objectives will help teams coalesce more quickly.

Second, HR managers need to follow project timelines, so they can know, for example, if a project scheduled to run for three months is on schedule, so they can have plans to transition team members to new assignments. Or, if it is delayed, they need to be prepared to recruit new talent (perhaps on a temporary basis) to fill out new teams beginning new projects. Under old staffing models, staff were recruited with an expectation that they would be in their positions indefinitely, and any change in that assignment would be signaled well in advance. Now, HR managers need to remain engaged, helping transition employers out of one project into another, keeping an eye on project deadlines, juggling team members.

Third, especially where employers are spending months at a time working under clients’ roofs, HR managers need to be attentive to the competitiveness of their compensation and benefits packages, in particular in relation to what clients might offer if they choose to lure away a top employee with whom they have worked closely. The goal is make sure that employees working outside the firm’s walls remember that they owe their principal loyalty to the employer signing their paycheck.

What’s the bottom line here? Conversations that bring in multiple perspectives are going to offer a broader field of vision. Reach out beyond your professional or occupational specialty, talk to people who map out the world – or more to the point, your workplace – in ways different than you. You’ll be more successful in navigating your responsibilities, and your organization will be much more likely to reach its destination.

Tuesday, August 4, 2009

Defining what we do

The Graham School of General Studies launched the Certificate in Human Capital Management last year to give human resource managers and other strategic officers the tools to design smarter workplaces and recruit and support talented, creative employees.

Like many of you, we are busy rebuilding the boat while we are at sea. The program has been a success. We feel like the questions at the core of the program, our approach to those questions, and the quality of the conversation in our classrooms distinguish us from any competing programs. Our instructors are all experienced practitioners, who are skilled at developing these topics in analytically challenging and professionally relevant ways. But, faced with requests from students, and a need to respond to the needs of the market, we are making some adjustments in the program.

We are trimming the program back from seven courses to four or five. The goal is to build a program that is more streamlined – to serve the needs of students trying to tool-up quickly – but just as rigorous and impactful.

We are retitling the program, to emphasize that the program is about talent management and building workplaces and processes that permit and encourage creativity, trust, and collaboration.

I need your help. We have two titles we are focus-group testing. Can you weigh in, by offering a comment?

Our leading candidate is Strategic Talent Management and Organizational Design. Another choice, which fared more poorly in our internal evaluation process, is Strategic Human Resource Management and Organizational Design. I would love to hear your opinion.

Friday, June 5, 2009

Inspiration in unlikely places

This recession has teeth. While some sectors of the economy have begun to improve, other industries are still struggling. With layoffs and the need to engineer creative and sustainable new strategies, talent has never been more important. Here’s the path forward: finding the right people, employing their talents effectively, while refashioning your workplace so talent and creativity can flourish.

The University of Chicago is known for a culture that celebrates uncertainty - students here are encouraged to believe they don't know everything. That might seem like an odd thing, especially from a celebrated institution of learning. Shouldn't we encourage students to move toward greater and greater confidence in their understanding of the world. Aren't we sharing knowledge with them? Teaching them how things work? No. That's not how we do things.

Mostly, what we aim to teach is how to ask questions about the world. If you get the questions right - if you develop the right analytical tools - you can find your own answers. Chicago students are characterized by their eagerness to explore the world and the ideas they find out there, and their eagerness to engage others in debate. One of the consequences of this appetite for exploration and insight is the opportunity to find inspiration and direction in the most unlikely places.

As I have been thinking about the demands of beginning a new business in this awful economy, I have been reading everything on the topic I can find. One of the best resources I have come across isn't a product of business writing. It wasn't authored by an MBA. It comes from an artist.

Artists can sell their art in a generous market. When everyone is doing well, people buy art because it strikes their fancy. But when the economy collapses, as it recently has, artists find themselves stuck with inventory they can't sell, they search for ideas that can capture the attention of a market that suddenly demands a return on the investment. Buyers are no longer just trying to ornament their lives, they need evidence that their purchase will have transformative benefits. Alan Bamberger, in a very smart essay called Art in the New Economy, makes the argument that buyers will be looking for "Excellence, quality, productivity, dedication, commitment, reputation, pride in workmanship." Unpacking this, he says:

Your art will have to fight for survival. You'll have to conclusively demonstrate why it's worth owning by offering tangible, intangible, theoretical, philosophical and related forms of proof (not the least of which is visual) that it embodies concepts, ideals, inspirations, and aspirations potential buyers can identify with - because convincing people to let go of their money will soon become more daunting than it's been in decades, assuming it hasn't already. Why does your art deserve a place in someone's home or business? How will it enrich or enhance another person's life?

The same is true in business. Contractors and consultants need to prove that what they offer will be transformative and that what they want is the same thing the client wants.

This might seem like a preposterously unlikely moment to go off on your own and begin a consulting business or any other type of new business. But it might also be necessary. And smart. As firms streamline their staff, it might make sense to engineer your exit, rather than waiting to be shown the door. Further, as firms let people go, they will need someone to pick up the work of doing the things these employees once did.

As you go off on your own, or continue to provide services, we encourage you to be open-minded. Develop a hunger for fresh insights. Maybe visit your local museum.

Tuesday, February 24, 2009

From Marx to Madoff: A Modest Proposal To Help Save Capitalism From Itself

This piece, like our last entry, is written by Gordon Medlock, an instructor at the University of Chicago Graham School, in the program on Human Capital Management. Gordon has a Ph.D. in philosophy from Yale, an M.A. degree in clinical social work from the University of Chicago, School of Social Service Administration, and currently works as a counselor, educator, and talent management consultant. Gordon also facilitates a public dialogue initiative to enable individuals to discuss and influence current political issues.

The Problem

Karl Marx once claimed that the pathology of capitalism was what he called the “fetishism of commodities.” What he meant was that under capitalism, the actual use-value of commodities (goods and services produced to meet our needs) is displaced by the exchange value (money) – with the latter becoming the dominant focus. The danger of distancing ourselves from real use-value is that we fool ourselves into thinking that value creation is about managing and making money, rather than about providing jobs and meeting basic human needs.

The ultimate extension of this pathology is Bernard Madoff’s now infamous Ponzi scheme. Madoff was able to convince thousands of trusted firms, colleagues, friends, and family to part with over $50 billion in a scheme that created absolutely no real value. It was the ultimate in the fetishism of commodities.

It would possibly be comforting to regard Madoff as an anomaly of the system. But unfortunately he is a logical extension of a system that considers the management of money to be the primary driver of wealth creation, rather than the actual production of goods and services. Just as Enron pushed the limits of accepted business and accounting practices to generate the appearance of extraordinary profits, Madoff pushed the limits of unregulated financial markets to give the appearance of extraordinary returns on investment. Neither scheme had anything to do with genuine value creation.

Of course Madoff was only the tip of the iceberg. By now you are probably familiar with how the financial crisis unfolded. You have read about the culture of greed of the eighties and de-regulation of the finance industry in the nineties. You are probably aware – at least to some extent – of the recent history of the subprime mortgage market, Ninja loans (no income, no job, no assets), CDOs (collateralized debt obligations), credit-default swaps, and hedge fund practices that represent the complete dissociation of the world of investment from the value creation process. You may even be familiar with the more distant history of the 14th Amendment after the Civil War, where laws designed to assure political rights for newly freed slaves were used more often to protect corporations – considered to be “persons” under the law – from “threats” of government regulation. But this is not the place or time to examine this important history. The more urgent question facing us is: what is to be done now? Given that we have gotten this far from the genuine purposes of business and investment, what can we do to get us back to fundamental values and sound business practices?

A Modest Proposal

I would like to put forth a modest proposal: that the current financial crisis is a consequence of a basic confusion of means and ends. I propose that we have mistaken the world of investment as an end in-itself, when it was originally conceived as a means for funding commercial enterprises. The true end or purpose of the economic system is the creation of value in the form of quality goods and services, efficiently produced, leveraging human talent and knowledge.

We have fooled ourselves into thinking that the most important activity of the American economy is the activity of Wall Street – as though actual value were created there. In fact, as we have seen, investors are perfectly willing to put the entire economy at risk, in order to maximize their own potential for accumulating private wealth. My proposal is that we as citizens and taxpayers take over the investment and commercial banks that are failing, re-organize them to ensure that they are fulfilling their primary purposes toward citizens and companies, and to pass the legislation required to keep investors focused on their primary purpose – to receive a fair return in exchange for the value they help to create.

I also propose that we structure our system of rewards, penalties and regulations so that organizations that develop new jobs in good times, and retain employees in hard times, are rewarded for their attention to the primary human purposes of enterprise, whereas those that fail to do so pay a penalty tax for each employee laid off. Perhaps more creative alternatives could be found to the lemming-like solution of mass layoffs in tough financial times.

Finally, I propose that government adopt the same principles for generating value that we expect from the private sector. That is to say, government needs to be committed to delivering quality products and services to citizens, to run lean, engage in continuous process improvement, respect and value employees, and focus on high performance and accountability. If government is to be part of the solution and not part of the problem, it needs to be accountable to the citizens that fund and benefit from it.

This should all sound like basic common sense. Indeed, most business analysts recognize that the leading indicators of organizational success are such things as customer and employee satisfaction and retention. Shareholder value and stock price are lagging indicators – highly variable measures of a company’s financial health. They are extremely important to investors trying to turn a profit on fluctuating stock prices. They are not, however, a viable focus for management decisions about the long term profitability of a company. The fetishism of short-term shareholder value obscures the organization’s basic purpose.

The irony is that long term profitability is actually associated with genuine value creation. On this point Marx was decidedly wrong. There is an entire movement of progressive companies, business leaders, managers, and scholars who are making the case for restoring the human side of capitalism. For the past 40 years or more they have been demonstrating that successful organizations are the ones that value and respect their employees, understand the needs and requirements of their customers, create quality products and services that satisfy (and even delight) customers, that engage in continuous improvement initiatives, that run lean, that grow gradually, and that assume a long-term strategic perspective. Organizations such as Toyota, FedEx, and Southwest Airlines are examples that truly walk the talk of human capital management and quality service to customers. They are able to avoid large layoffs, and even adopt no-layoff policies, because their business models include a long-term strategic perspective that anticipates economic downturns as well as periods of prosperity. They don’t just give lip service to the idea that people are our most important asset; they demonstrate that commitment in tough financial times. It is no accident that Toyota has become the leading automobile manufacturer in the world, and that taxpayers are now being called on to bail out financial strapped and mismanaged General Motors.

The human capital movement is much more than a new management fad. It is potentially a revolution in the way we think about American business, education, and government. In the spirit of this movement, and in the spirit of saving capitalism from its own folly, I propose that we:

1. Regulate banking and investment practices to ensure that they focus on their primary purposes – to provide stability to the economic system and enable genuine value creation, rather than simply optimizing opportunities for private wealth acquisition.

2. Pass legislation to prevent government regulators from profiting from relationships with the organizations they regulate – during or following their tenure as regulators.

3. Require that executive compensation be tied to the long term health and performance of the organization, and limited to a reasonable multiple of average worker compensation. Prevent extravagant executive compensation unrelated to genuine value creation or organizational performance.

4. Reward companies that adopt long term strategies that enable them to retain employees during economic downturns, rather than displacing costs through massive layoffs.

5. Use the current stimulus package to invest in our human capital infrastructure – including early childhood education programs, general public education, vocational education, and ongoing adult education and professional development training.

6. Address the problems of the growing federal deficit and the culture of consumption and consumer debt – to create a culture of ecologically sustainable and financially responsible development.

7. Make the hard choices needed to have a viable and affordable system of universal healthcare.

8. Create a culture of service where contribution to socially valued goods is prized and incentives are in place to attract needed talent.

These are the steps that are needed – and I am sure there are many others as well – to get our economy and our society back on track. This modest proposal is just good common sense, reflecting what ordinary working people, consumers, and business experts know to be the source of true value creation. We can no longer afford to treat the investment sector as the primary business of America, nor continue to privatize rewards when Wall Street is doing well, and then displace costs – on the backs of taxpayers and their children – when things go terribly wrong.

Friday, February 6, 2009

Grinding through without layoffs

Much of the discussion on this blog has focused on trust, and specifically, building workplaces where trust and respect and reciprocity help engineer employee loyalty and facilitate creativity. Nothing tests trust in a workplace more completely than hard times. The latest numbers are alarming: America lost 600,000 jobs in the month of January. In the past year the country has lost 3.6 million jobs. Some of these job losses were a result of firms closing their doors, but many of these are layoffs. Mark Zando from Moody's reports: “Businesses are panicked and fighting for survival and slashing their payrolls."
Where do layoffs get you? Gordon Medlock, who teaches in the Graham School's Human Capital Management program offers the following set of observations.

There are several studies that suggest that layoffs during times of economic crisis are negatively correlated with return of customers during the upswing and increase in shareholder (stock price) value. One of the clearest is the analysis of Southwest Airlines' no layoff policy and its responses to the airline industry crisis after 9/11. In a study comparing all the airlines during that period – “layoffs negatively predicted recovery of [a company’s] passenger traffic with 99% certainty, and negatively predicted recovery of its stock price with 95% certainty” (from The Southwest Airlines Way, by Jody Hoffer Gittell, published in 2003). In other words, the more employees you laid off, the longer it took for customers to return and for your stock price to recover.

Another (less rigorous) study by John Dorfman, a money manager and author of the article “Job Cuts Often Fail to Bolster Stocks,” reported that companies that announced job cuts during the period form 1996-1997 underperformed comparable companies from the S&P 500 by a difference of 0.4% growth versus 29.3%. Of course there could be other factors besides the job cuts to account for that difference, but it suggest that companies that, for whatever reasons, feel the need to make those cuts, are also the companies that are not doing as well as their competitors.

The key point in all of this, however, is that you can’t simply implement a no-layoff policy if it is not part of your long term strategy. Companies that have no-layoff policies, such as Toyota and Southwest and FedEx, all have business plans that enable them to retain valued employees during economic downturns. They include strategies related to retention of cash resources, lean organizations, gradual growth, long term strategy perspectives, continuous improvement strategies, and a commitment to valuing their people. If a company is not committed to these values and strategies – and the comparison between General Motors and Toyota is an excellent case in point – then it will be much more likely to use layoffs to cut costs.

Finally, there is a lot of research on the connection between employee engagement (the willingness to apply discretionary effort to achieve results on the job) and the financial success of an organization. It is well documented that layoffs adversely affect employee engagement, morale, trust, and productivity.