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September, 2010 |
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2009
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Winning with Jack and Suzy Welch |
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Business Today, Feb 2010 |
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Once you’ve got the right players on the field, you’re off to a great start. Now they need to work together, steadily improve their performance, stay motivated, continue with the company and grow as leaders.
In other words, they need to be managed. There are library shelves stacked with books on people management, not to mention plenty of courses in business schools.
There are training programmes, magazines and websites, many offering sound advice. And then there is experience. Mine shows that people management covers a wide range of activities, but it really comes down to six fundamental practices.
1. Elevate human resources to a position of power and primacy in the organisation, and make sure that HR people have the special qualities needed to help managers build leaders and careers.
HR should be as important as any other function in a company. After all, as the director of personnel, the head of HR knows just how good each employee is. Unfortunately, at a lot of companies, HR isn’t granted the stature it deserves.
A winning HR team will listen to people vent, broker internal differences and help managers develop leaders and build careers. That’s why the best HR staffers are one part pastor, who hears all sins and complaints without recrimination, and one part parent, who loves and nurtures, but gives it to you fast and straight when you’re off track.
2. Use a rigorous, non-bureaucratic evaluation system.
There is no one right way to evaluate people, but any good evaluation system should:
Be clear and simple.
Measure people on relevant, agreed-upon criteria that relate directly to an individual’s performance.
Ensure that managers evaluate their people at least once a year, and preferably twice, in formal, face-to-face sessions.
Include a professional development component.
In addition, someone has to have the responsibility – and the accountability – to ask whether the evaluation system is capturing the truth, just as a good audit team does with the numbers.
3. Create effective mechanisms – money, recognition and training – to motivate and retain.
There is hardly anything more frustrating than working hard, meeting or exceeding expectations and then discovering that it doesn’t matter to your company. You get nothing special, or you get what everyone else does. People need to get differentiated rewards and recognition to be motivated. It’s that simple.
Another key to motivate and retain is through training. If you’ve hired the right people, they will want to grow. Like rewards and recognition, training motivates people by showing them how to grow, that the comp-any cares and that they have a future there. 4. Confront charged relationships head on.
Like families, companies have relationships filled with history or fraught with tension. Managing people well means paying special attention to these hard relationships, not just letting them fester – an approach that often ends in a mess. Good people management requires companies to address their charged relationships with candor and action.
For example, let’s look at one such charged relationship: managing stars. I have always advocated identifying your stars – that top 20 per cent – and stroking and rewarding them in an outsize way. But a star’s ego can be a dangerous thing. The minute a star seems to be getting arrogant or out of control, someone has to call the person in to have a candid conversation about values and behaviours. Now, sometimes stars surprise you and up and leave.
Ideally, that person will be replaced within eight hours. That’s right, eight hours. This immediate reaction sends the message to the organisation that no one is indispensable.
The only way to be able to replace a star swiftly is to have a slate of people ready to do so. That’s where good evaluation systems come in. Just don’t wait until the star leaves to start the replacement process. By then it’s too late to make the point.
5. Fight gravity, and instead of taking the middle 70 per cent for granted, treat them like the heart and soul of the organisation. Managers often devote most of their people-management energy on charged relationships.
While that’s natural, well-managed companies fight that pull and make sure managers spend at least 50 per cent of their people time evaluating and coaching their biggest constituency: the middle 70 per cent. Further, they don’t forget the middle 70 when it comes to rewards, recognition and training. After all, if you’re going to manage people well, you simply cannot forget the majority of them.
6. Design the organisation chart to be as flat as possible, with blindingly clear reporting relationships and responsibilities.
Layers only add interpretation and buzz as information travels up and down the ladder. They also add cost and complexity to everything. They slow things down because they increase the number of approvals and meetings required for anything to move forward. They have an odious way of burying new businesses, or small units in big companies, in honeycombs of bureaucracy. They tend to make little generals out of perfectly normal people who find themselves in hierarchies that respond only to rank.
After you’ve hired great people, your job becomes managing them into a winning team. These six practices take time, that’s true. But companies are not the buildings they owns, or their machines or technologies. They are their people. Besides managing those people, what work matters more?
Reasons to hate differenatiation and not:
I am a huge fan of differentiation, which is as sound a management system as can be. I have seen it transform companies from mediocre to outstanding.
Companies win when their managers make clear and meaningful distinctions between top-performing and under-performing businesses and people – when they cultivate the strong and cull the weak. Companies suffer when every business and person is treated equally and bets are sprinkled evenly.
When all is said and done, differentiation is just resource allocation. A company has only so much money and managerial time. Winning leaders invest where the payback is highest and cut their losses everywhere else. If that sounds Darwinian, let me add that I am convinced that along with being the most efficient and most effective way to run your company, differentiation also happens to be the fairest and the kindest way. Ultimately, it makes everyone a winner.
Because managers must assess their employees, separate them into three categories in terms of performance – top 20 per cent, middle 70 and bottom ten – and act on those distinctions, differentiation receives a lot of criticism. Some of these criticisms have some truth in them, but more often than not, they don’t! Here’s what I mean:
Differentiation is unfair because it is always corrupted by company politics – 20-70-10 just separates the people who ingratiate themselves with their manager from those who don’t.
It’s true that at some companies differentiation is corrupted by cronyism and favouritism. Luckily, differentiation abuse can generally be prevented. Differentiation should be implemented only after a candid, clear-cut performance system, defined goals and timelines, and a programme of consistent appraisals has been put in place.
Differentiation is mean and bullying. Weak employees are made objects of ridicule.
When differentiation is working, people know where they stand. You know whether you have a strong shot at a big promotion or if it’s time to start looking for other opportunities. When you know where you stand, you can control your own destiny, and what’s more fair than that?
For those managers concerned about firing underperformers who are nice people, keep in mind that protecting underperformers is detrimental to both the company and the underperformers themselves.
By not carrying their weight, the underperformers make the pie smaller for everyone, which can cause resentment. It’s also unfair, which undermines the atmosphere of trust and candour. The worst thing, though, is that protecting people who don’t perform hurts them in the long run since they remain blissfully unaware of the truth about their results.
Differentiation pits people against one another and undermines teamwork. Differentiation rewards those team members who deserve it. By the way, that annoys only the underperformers. To everyone else, it seems fair. And a fair environment promotes teamwork. Better yet, it motivates people to give their all, and that’s what you want. Differentiation is fine for the top 20 per cent and the bottom ten per cent because they know where they are going. but it is enormously discouraging to the middle 70 per cent, who end up in an awful kind of limbo. First, differentiation forces companies to manage themselves better. Leaders tend to scrutinize people more closely than they ordinarily would so as to provide more consistent, candid feedback, and it pushes organisations to tackle the problem of how to provide training that will really make a difference.
And while being in the middle 70 per cent may be discouraging for some, it actually revs the engines of many others. For the people in the top 20, for instance, the very existence of a middle 70 gives them yet another reason to pull out all the stops every day. After all, they have to keep improving to keep their high standing! For a lot of people in the middle 70, improvement is energising too. Reaching for the top 20 gives them a tangible goal, which in turn makes them work harder, think more creatively and overall, fight the good fight every day. It makes work more of a challenge and a lot more fun. Differentiation favours people who are energetic and extroverted and undervalues people who are shy and introverted, even if they are talented.
The world generally favours people who are energetic and extroverted. That’s something you learn young, and by the time you get to work, if you are still shy and introverted, there are professions where those characteristics are advantageous.
And with differentiation, you can be sure that your results will speak for themselves, loud and clear. I
f you want the best people on your team, you need to start differentiating. I don’t know of any management system that does it better – with more transparency, fairness or speed.
It isn’t perfect, but differentiation, like candor, clarifies business and makes it run better in every way.
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