Archive Article:
Executive Coaching is Hot
Archive Article:
Emotional Intelligence
Archive Article: Feeling Good
Sustaining Results: Balancing
People, Values and Business
Coaching
Matters; Vol. IV, No. 5; Dec02/Jan03
In the
last few years several books have addressed why some companies
are more enduring than others. What distinguishes the great
from the merely good? What factors contribute to sustaining
success in today’s rapidly changing economic environment?
Built to Last, Good to Great, Hidden Value,
The Knowing-Doing Gap, and Peak Performance are
just a few of the books that are providing answers.
Really great
companies, even in bad times, place people and values first.
The obsession with stock prices has obscured our vision. The
late 90's caused companies to lose their way. The current
economic shake-up will cause them to find their way again, or
sink.
The link
between people and the bottom line is becoming clearer.
Organizations that succeed over time are those that have a
strong values-driven culture. They are people-centered
organizations.
The
quality of the interaction with and among employees drives the
quality of the products and services. A focus on treating
employees with warmth, dignity and respect pays off in how
customers are treated and consequently in how the business
performs.
Many
organizations seem to forget the connection between customers,
employees, and financial results. If you want to have great
business results, you need to have customers who love your
products and services ─ customers who believe that
they're getting excellent treatment from the company. In order
to do that, you have to have employees who are motivated,
committed, and using their talents on behalf of the
organization.
The best companies
are able to get extraordinary results from their people
because they lead with people-centered values.
Values come first. After clearly identifying and defining core
values, these companies ensure that their business strategy is
consistent with people’s values. This violates the “business
first” mentality so common in today’s organizations. By doing
things this way, successful, enduring companies have been able
to align the company’s purpose with the spirit of their
employees, capturing their emotional as well as
intellectual energies.
Successful, enduring organizations offer their employees more
than a job ─ they offer a sense of community, security
and mutual trust and respect. Although these concepts may be
out of favor, they are at the heart of what it means to unlock
the value hidden in organizations. Charles A. O’Reilly III and
Jeffrey Pfeffer talk about this in their book, Hidden
Value: How Great Companies Achieve Extraordinary Results with
Ordinary People (2000). They emphasize that this hidden
value is not scarce or unique; it can be found in all
companies. It resides in the minds and hearts of its people.
But most organizations squander this resource and even ignore
it.
Underlying the over-stated cliché that “people are our most
important asset” is a deeper truth ─ to the extent that
any organization can truly become people-centered, it will
increase its chance of success. Most organizations do not tap
into the energy of their people by connecting through values.
Successful companies place high importance on their values and
the alignment between values, strategies and their people.
Aligning values, strategies and management practices may be
simple to understand but it is very difficult to actually
implement.
In the
conventional way of designing strategy, executives answer two
fundamental questions:
1. What business are we in?
2. How shall we compete?
This is
reasonable, rational and likely exciting only for those at the
top engaging in this intellectual exercise. It is not engaging
to those charged with implementing the strategy. It does not
engage anyone on an emotional level. After the strategy is
announced, only then are managers encouraged to ensure that
the “values” and practices of the organization are aligned
with the strategy. The message is to pick values that fit the
strategy. And only afterwards are lower-level managers and
employees involved in order to get “buy-in.”
A
values-based view of strategy starts with a set of fundamental
values that are energizing to everyone in the organization,
especially front-line employees. These values are capable of
unlocking the human potential of their people. Such values may
include fun, fairness, challenge, trust, respect, community
and family. All management practices are screened for how they
are consistent with these core values. In this approach to
management, strategy comes last, after the values and
practices are discovered and aligned, and after the company
produces capabilities that set it apart.
As Herb Kelleher
of Southwest Airlines is fond of saying, "We put our employees
first, our customers second, and our shareholders third. In
that order it works and out of that order nothing works.
It is
crucial that the organization has a well defined competitive
strategy that helps it make decisions about how and where to
compete, but these strategic decisions are secondary to living
a set of values and creating the alignment between values and
people.
Companies
such as Southwest Airlines, The Home Depot, The Men’s
Wearhouse, SAS Institute, AES, New United Motor Manufacturing,
Inc. and Cisco Systems are examples of organizations that
place people and values first. George Zimmer, founder and CEO
of The Men’s Wearhouse, puts it this way: “Most business
practices repress our natural tendency to have fun and
socialize. The idea seems to be that in order to succeed you
have to suffer….When people feel connected to something with a
purpose greater than themselves, it inspires people to reach
for levels they might otherwise not obtain…Our business is
based on human potential.”
In his
book Good To Great, Why Some Companies Make the Leap…and
Others Don’t, Jim Collins and his research staff
discovered some fundamental differences between companies that
outperformed the market and comparison companies that were
“merely good.”
The
good-to-great companies founded their strategies on a deep
understanding of answers to three key questions:
- What
can we be the best in the world at?
- What
drives our economic engine?
- What
are we deeply passionate about?
You can’t
manufacture passion or “motivate” people to feel passionate.
It is not something that can be formulated, but must be
discovered. It is assumed to be there and only through an
exploration process can it be found. Those companies that
discovered their passion tapped into an energy that led them
to generate cumulative stock returns that beat the general
stock market by an average of seven times in fifteen years.
Where’s the evidence?
A wealth
of empirical evidence shows the effectiveness of a
people-centered approach that delivers value to the customer,
the employee, the organization, and the shareholders. Consider
the following studies (cited by O’Reilly and Pfeffer in
Hidden Value, Harvard Business School Press, 2000):
One study
found that by using multiple samples and measures, a change of
one standard deviation in an index of innovative human
resource management practices produced increases of $20,000 to
$40,000 in stock market value per employee. Another study
reported that companies that were one standard deviation
higher in their use of high-performance work practices enjoyed
more than $27,000 in increased sales per employee, $18,000 in
increased market capitalization and $3,800 in profits as well
as a decrease in employee turnover.
A study
of the five-year survival rate of 136 companies that made
initial public offerings in 1988 revealed that those companies
that survived at a much higher rate were those that emphasized
the importance of their people and offered rewards to
everyone, not just senior management.
The
Gallup organization surveyed more than 2,500 business units in
24 organizations, using 12 questions that constitute the
Gallup Workplace Audit. They reported than “every one of the
12 questions was linked to at least one of the four business
outcomes: productivity, profitability, retention and customer
satisfaction…The 12 questions were capturing those few, vital
employee opinions that related to top performance.”
Similar
results are found internationally. In Germany, a study found
that companies that place employees at the core of their
strategies produced higher shareholder returns than industry
peers. And Korean enterprises discovered from one research
study that “dedicated positioning strategies appear to be
executed more effectively where organizations exhibit a high
level of commitment to their employees.”
What do People-Centered
Companies Do?
According
to Pfeffer and O’Reilly in Hidden Value, three common
themes underlie the things that successful companies do to
develop and tap the potential of their people:
- The
company has a clear, well-articulated set of values that are
the foundation for management practices that provide for the
company’s competitive success.
- The
company has a remarkable degree of alignment and consistency
in the people-centered practices that express its core
values.
- Senior
managers in these companies (not just the founders or the
CEO) are leaders whose primary role is to ensure that the
values are maintained and constantly made real to all of the
people who work in the organization.
The most
visible characteristics that differentiate the successful
companies are their values and the fact that the values come
first even before stock price. Why are values so important?
Because money by itself isn’t sufficient for motivating
long-term high performance. Most of us need to believe that
what we are doing makes a difference to others and that our
work is important. We also want to feel that we are valued as
people, not simply as economic agents. We want to be respected
for who we are, not simply what we do.
It is not
enough to articulate values and to put them into formal
company literature. They must be living values that show up in
the day to day operations. A value is the basis for a set of
norms or expectations about appropriate attitudes and
behaviors. They act as a powerful social control system. They
form the basis of organizational culture in which people share
expectations that guide behaviors.
An
example is a company that values “fun.” It does not mean that
playing games or kidding around is emphasized, but that the
company values an environment that encourages smiling and
laughter, where people can use their gifts and skills to make
a difference without fear of being squelched, where creativity
and interpersonal relationships are important. Southwest
Airlines and Walt Disney come to mind as examples of companies
that live this value.
Critical
areas where values show up are during the hiring process where
potential employees are screened for fit with the culture,
training and development opportunities, an emphasis on
information sharing, team-based systems, and in rewards and
recognition programs.
You do
not create core values. You discover them. You do not deduce
them by looking at the external environment. You understand
core values by looking inside. Ideology has to be authentic to
the people within the organization. Ask yourself: “What core
values do we truly and passionately hold?” You should not
confuse values that you think the organization ought to have,
but does not, with authentic core values. Those authentic core
values that have been weakened over time can still be
considered a legitimate part of the core ideology, as long as
you acknowledge to the organization that you must work hard to
revive them.
As we
continue into this new century with new uncertainties,
companies will need to draw on the full creative energy and
talent of their people. Why should people give full measure?
Peter Drucker points out that the best and most dedicated
people are ultimately volunteers, because they always have the
opportunity to do something else with their lives. Confronted
with an increasingly mobile society, cynicism about corporate
life, and an expanding entrepreneurial segment of the economy,
companies more than ever need to have a clear understanding of
their people and their values in order to make work meaningful
and thereby attract, motivate and retain outstanding people.
There must be a balance with people, values and business.
[Back page]
15 Questions to Ask to Create
a People-Centered Organization
Once core
values are clearly defined and articulated, then they should
become living values that get communicated and reinforced
continually. Otherwise they do not do much good. In the
absence of repetitive reminders of these values, other
implicit and negative values can take over, such as individual
ambition at the expense of team work. The only insurance
against such undermining is to constantly reinforce values in
both language and in actions.
John
Miller authored QBQ! The Question Behind the Question:
Practicing Personal Accountability in Business and in Life,
(www.qbq.com).
He suggests asking some questions in order to stay connected
with core values:
- How
can I reinforce and communicate our core values on a daily
basis?
- How
can I create and communicate a clear vision for the part of
the business that I manage?
- What
can I do to help others understand how our values drive our
strategies?
- How
can I provide the people with whom I work with clear
performance objectives that support our values?
- How
can I create an atmosphere in which people feel included and
valued?
- What
can I do to ensure that everyone is heard?
- How
can I help my people succeed?
- How
can I show people they’re important to our success?
- What
can I do to maximize the talents of those who work with me?
- How
can I help people learn from their mistakes?
- What
can I do to ensure that people have the knowledge, skills
and tools they need to be successful?
- How
can I build better relationships with my customers?
- How
can I increase the value my customers receive?
- How
can I build better relationships with my suppliers?
- What
can I do to build strong relationships with the local
community?
John Miller, QBQ! The Question Behind the Question:
Practicing Personal Accountability in Business and in Life,
www.qbq.com.
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