Is There A Rainbow Behind This Cloud?

As some of you may have noticed I posted a question on LinkedIn about our focus on leadership as opposed to management last week. More specifically I asked whether or not we were focused on leadership to the exclusion or minimization of management. Needless to say I got pretty good response to my inquiry.

A few people "educated" me as to the difference between leadership and management. Although I feel I recognize the differences between the two I appreciate the insight and feedback that people provided to me. Others challenged my assertion that we needed to focus on management as opposed to leadership and discussed the "leadership" void we find ourselves in in some many elements of our society, but especially it would appear in government and industry.

In candor I wasn't taking a position that we need management rather than leadership. My point is that both sets of skills are essential in a high functioning organization.

Marcus Buckingham has said that the most critical role of leadership is to create and reinforce organizational clarity. I agree with him. He states that clarity is the most important attribute of leadership; not charisma, technical ability, presence, or any of those other ethereal qualities we ascribe to and pine for in our leaders.

Richard Rumelt of UCLA says that the most important role of management is to remove ambiguity for employees. To create a direct personal connection of the tasks and activities we expect them to perform in support of the organizational mission. The CEO does that at a very high level for the whole organization, managers do that for their employees.

As a practicing human resources professional and consultant for almost 30 years I can tell you that both the "vision" and the removal of ambiguity are critical. People need clear expectations, constructive feedback, and ongoing coaching on a personal level. Charismatic leadership will not replace that.

There is some potential good news. Harvard Business School professor Bill George says that our current economic crisis may be both the wake up call and the catalyst for creating a new generation of leaders. He states, "... this new group will build organizations that produces long lasting value for employees and customers, not short sighted strategies focused on 'shareholder' value. Rewards will be for performance, not transactions."

Maybe I am reading into it too much , but that sounds a lot like engagement to me. If you look at where we are in the financial crisis I would submit that much of it derives from that focus on transactions not performance.

A colleague of mine who is focusing her energies in the criticality of trust in creating high performance cultures has been somewhat a victim of the "transactional" mindset. Her potential clients want to see statistical "evidence" of the link between trust and performance. They want a transaction process, not a relationship. I defy anyone to show me an organization with long term sustained high performance that has not created true engagement and didn't build that on a foundation of trust!

I recognize that there are organizations that have enjoyed a level of "transactional" success through the utilization of down sizing, outsourcing, and other "cost" based tactics; but now that we have run out of emerging economies to exploit and operate in a global economy how is that working for them?

I see questions on LinkedIn and other sites seeking the "technological" solution to creating engagement; guess what, there isn't one!

As my colleagues in LinkedIn pointed out to me we desperately need a new "leadership" model that has elements of both those ethereal qualities and heroes that we seek, but also the competencies of effective management. We also need a new value proposition based on relationship, not transactions. We need that between employee and employer, supplier and customer, and citizen and community. Transactions; creating short term value at the expense of others, is what got us here. The old solutions aren't relevant and simply won't work. So what do I suggest:

• Respect
• Personal responsibility
• Shared information
• Equitable rewards
• Mutual loyalty

Hmmm, sounds a lot like relationships based on trust on mutual benefit doesn't it. Who knows, maybe it will catch on.

Shifting Paradigms- An Interesting Endeavor

So here I am again talking about shifting paradigms and why that is so critically important at this juncture. Based on my experiences of the last few years, but especially the last few weeks I thought I would share and discuss "the road less traveled".

As my partner brilliantly explained several months ago, a paradigm is how we see things. It represents our "filter" or belief system. As you might suspect it plays a huge impact on how we do our jobs, live our lives, and view change as either a threat or an opportunity.

One of my clients is engaged in paradigms shifts in two fundamental areas that are both very different, yet intertwined. They are involved in the "business" of philanthropy. Actively seeking donations and dollars from people to invest in the infrastructure of health care delivery. I talk about at least two major paradigm shifts because at minimum that is what we are dealing with.

The cost and delivery of health care in the U.S. has reached critical mass. You can debate where the "fault" lies, but at this stage does it really matter? We have millions of under-insured and uninsured in the system. As the economy continues to falter those numbers will increase, not decrease. In addition to the cost dimensions of the crisis we are reaching critical mass in yet another dimension of delivery- the availability of trained health care professionals at every level, from primary care physicians to nurses and other related skills.

We have relied historically on employer and government based systems to provide much of the care. As employers "get out of that role" we will see increased pressure on the government side. Health care organizations are also seeing more patients "present" or access care through the emergency room, the least efficient way for that to occur. It is also the most expensive and providers are being forced to "write off" more and more care. As the economy declines I fear that trend will increase rather than lessen.

The philanthropy model in many cases has the "grateful donor" as its core. The grateful donor is based on care being provided to a loved one or the person themselves and their willingness to give something back. There is also the approach of providing for the less fortunate as a sense of "noblesse oblige". My concern is that neither of these models addresses the root causes of the problem.

Another client, also in the health care "business" is engaged in an effort to address issues like cost management, efficiency, reduced reimbursements, and other issues as well. Like many businesses engaged in such a culture change the tools of benchmarking, cost reduction, lean delivery, and others are being evaluated and implemented.

Next week, I am going to have the opportunity to talk about Web 2.0 or "social networking" with a group of business people and why it is relevant to them.

What ties all of these things together is that each requires a paradigm change, a new way of looking at things. That change is behavioral and emotional, not just systemic.

I have written a great deal about the concept and criticality of engagement over the last few months. Engagement is the art and science of successfully executing a paradigm shift. Done successfully the organization enjoys significant competitive advantages in productivity, profitability, and sustainability. Done unsuccessfully or attempting to execute change without considering engagement and you have a melt down. Can you say Detroit or the financial services debacle?

I had the opportunity to read an interview with Roberto Sebutal, CEO of Itau Unibanco in the McKinsey Quarterly. I am attaching the link for you here: http://www.mckinseyquarterly.com/Organization/Change_Management/Transforming_a_high-performing_company_An_interview_with_Roberto_Setubal_2312

I would suspect that most of you like me, have never heard of him before. He is the CEO of a financial institution that by market capitalization represents one of the top 20 banks in the world.

He may be my new hero. The interview describes his decision to boldly embrace a new paradigm and embrace a change strategy in an organization that was performing well and considered highly successful both internally and externally. Mr. Sebutal was a visionary who saw the need for change and embraced it before his institution was in crisis. His strategy also embraced some things that would bring terror to the average Boardroom, among them:

• Decentralization of decision making to the lowest appropriate level.
• Creating forums for people involved in the decisions to have input and challenge "conventional wisdom" without fear of retaliation.
• Changing the human resource management systems to include; hiring "right", performance management, compensation delivery, and other key behaviors and metrics.
• Making commitment to the new culture mandatory for continued employment and either allowing or encouraging individuals who couldn't or wouldn't make the change pursue other options.
• Building transparency into the decision making processes for both employees and customers.
• Holding himself and his executive team personally accountable for role modeling the appropriate behavior.
• Recognizing it is a journey rather than an event.

When asked where the bank was in the transformation process he responded " we have been at the process for about three years, I see us as being about halfway there."

Mr. Sebutal didn't just execute a change program, he is leading a paradigm shift. The other interesting thing is almost all of the key initiatives he discussed are about people and relationships rather than about systems and numbers. He is creating commitment rather than compliance and building upon a foundation of trust rather than systems.

So my point is that the paradigms we are currently using are going to have to change. The old ones simply aren't relevant and they aren't working.

If you take a look at Sebutal's approach and my Compliance to Commitment model(TM) you might just see some parallels.......

The "Turtle" or the Hare

In hockey there is an interesting expression called "turtling". It generally means that a player curls up rather than fight when confronted by a member of the opposing team. It struck me that businesses are going to have to make some of those same decisions as we continue in this economy for what looks to be the foreseeable future.
There are some strategies that are available to businesses right now to "survive" this economy and in fact even position yourself.
I was reading an article about President Obama and it was commenting on leadership and strategy during "turn around" times that have some interesting implications for these times as well.

One of the first "weapons" you want to have in your arsenal in times like these is great leadership. I want to be clear about what represents great leadership in my mind and to me it comes down to a couple of key factors- the first being what Marcus Buckingham describes as clarity. Clarity is ensuring that everyone in the organization understands the mission and where they fit in. If you are the CEO or another C level person that is absolutely critical right now.
I believe this is also a time for executive courage that is demonstrated by being visible, available, and personally accountable. This is not a time to hunker down in your office or in a conference room with your executive team. That's turtling.

If you are a middle manager your role is to minimize ambiguity. As managers our primary role is to remove the complexity from situations and make it very clear what each employee's role is and how it contributes to the bigger picture. In times of stress that becomes even more important.

I believe this is an excellent opportunity for transparency. By transparency I don't mean an "open" book policy. especially if you haven't previously had one. What I do mean is showing people the respect they deserve by being honest with them about the situation and potential outcomes and actions. They are adults. They need to be led not parented.

I think this is a great opportunity for collaboration. Most of us like to believe that we hire and retain competent management staffs. If that is the case why do we exclude them from the decision making process? I can't tell you how many times I have been in situations where the executive team dictated the "solution" to an issue, without engaging the participation and input of the people managing the actual work processes.. I am not necessarily arguing for negotiation about targets, but I am proposing that you may dictate the "what", but give them an opportunity to participate in the how.

I am a great believer in cautious optimism. They need to believe that you believe that you will come though this a stronger organization. If you don't and you feel that the "end is near" then do the right thing and resign and leave the leadership to someone who is still committed!

I am also a believer in making the tough decisions. Many people don't like Jack Welch's tough performance matrixing model, but the reality is that everyone doesn't perform at the same level. High performing organizations know this and they evaluate their talent pool constantly. People who can't or won't perform at the expectations set by the organization are given an opportunity to find a better fit at another organization. Consistency is highly overrated in the absence of good performance management. Consistency means we treat everyone exactly the same, the problem with that is everyone doesn't perform the same way. Your processes should be consistent, the application should not be. There is nothing illegal about treating your best performers and your non-performers differently, or treating your best performers differently than your "average " performers. Before you do an "across the board pay cut" ask yourself if you have the right people in the life raft.

As you all know from my previous blogs, writings and rantings I am a big believer in engagement. I am going to go on record here and tell you that engaged organizations will not only weather the impact of this recession, they will emerge stronger!. You see they have their foundation of clarity, transparency, trust, and commitment already in place.

So in this case the hare is better. One of my favorite expressions is "when you are being run out of town get out front and make it look like a parade". Curling up and "turtling" is not going to get us through this recession, but the recession could cause us to take actions we have neglected and build a new foundation.