Strategies of Effective New Product Team Leaders

Article from the California Management Review; Winter 2000; 42, 2

Important characteristics of effective team leaders:

• Communication: both intra-personal and inter-personal as well as intra-organization and extra-organizational. A clear communication of expectations to team members, and a facilitation of communication between group members as well as outside the team. An information-rich environment is essential.
• Responsibility: Set goals, guide members, share burden; but be a coach and mentor not an autocrat.
• Autonomy: the team leader needs high levels of autonomy as well as do the team members. It is necessary that all involved be committed and interested. Team members need to come to “own” the process. The team leader should be a coach, who guides people and points them in the right direction; who empowers team members.
• Involvement: for all team members and stakeholders across all stages of a project; this helps to guard against functional silos.
• Balance: of technical and human issues. The human issues are often overlooked but are at least as important as the technical issues.

Effective leadership is “easier said than done” and there is often a falling into the knowing-doing gap. One’s guard needs to be up against letting talk substitute for action. Knowing some characteristics of effective leadership does not produce effective leadership. A transformation of the leader’s thinking, learning and doing (and the concomitant transformation that happens with the team members) is the path to effective leadership.

Many of us have been in team situations where cross-functional teams fall into functional silos in disparate thought worlds. Many problems develop from one team making decisions that make micro sense in the context of their own team but make macro nonsense when viewed from the big picture or even from the viewpoint of other teams. Workflows and activities tend to be disorganized and uncoordinated for the big picture. Keeping in mind the big picture view and losing turf-battleground mentalities and fostering collaborative decision making can help guard against functional silos.

 

A Mentor’s Advice: Timeless!

I recently wrote a guest post for Mary Jo Asmus’ Aspire Collaborative Services Blog.  It can be found here:

http://www.aspire-cs.com/a-mentors-advice-timeless

 

HBS: Sins of Commission: Be Careful What You Pay For, You May Get It

Commentary on a Harvard Business School Case Study about Extrinsic Motivators: specifically monetary compensation.

People sometimes do exactly what they’re paid to do, oftentimes to the detriment of company goals, such as the top line, getting new customers and retaining existing customers, as evidenced by the example of a car salesperson turning away a potential future sale simply because they are not ready to buy “today”. The salesperson saw their energy better directed to immediate and more achievable, short-term sales that would directly affect their commission, rather than fostering client relations.

In the case, the City of Albuquerque, in an attempt to incentivize their garbage collectors to be more efficient, instituted a policy of paying their garbage truck drivers for an eight-hour day regardless of whether they finished in more or less than eight hours. The City believed this would encourage their drivers to work more efficiently and finish quicker. In reality, it caused a lot of undesired and unintended consequences such as missed garbage pickups (City had to send trucks back out on second trips to pick up) and speeding tickets and increased vehicle accident rates. The City’s solution to its garbage collection cost problem ended up being more expensive than the original problem!

Lessons:

• Financial incentives can actually lead to undesirable behaviors. Companies who set themselves up with extrinsic motivation systems (e.g. pay) often experience failure in retaining talent, getting performance and avoiding ethical failures such as the ends justifying the means and the means can include “bad” behaviors.
• Companies need to shift their beliefs that financial incentives (external motivators) will be a better expenditure of energy than doing the more involved work of identifying and removing roadblocks to performance that exist in the architecture of the company’s systems.
• Financial and non-financial incentives need to be given as rewards for good work, not to entice good work or performance. This is easier said than done and the road to implementation of an effective pay-for-performance system of extrinsic motivators is laden with potential landmines.

Compensation-based “quick-fixes” (and other externally-based motivators) for various performance problems are certainly very prevalent today. However, other, intrinsic, motivators have been found to be more powerful. Take look at Dan Pinks’ book “Drive: The Surprising Truth About What Motivates Us“.

 

HBS: Compensation and Performance Evaluation at Arrow Electronics

This post is a commentary on a Harvard Business School Case Study about performance evaluations at Arrow Electronics.

On a quick, personal, third-degree-of-separation type of note: while I have no inside knowledge of Arrow Electronics, I have had the pleasure of designing their facility here in Reno, Nevada. The Case study indicates that, at the time of the study, Arrow had “no world class manufacturing facilities” but they do now have, among office and warehouse/distribution space, 60,000 sq ft of world class manufacturing space here in Reno.

Performance evaluations are a ubiquitous presence in nearly any business environment. We have probably all received and maybe even given them. Undoubtedly and, as the case study shows, oftentimes performance evals can have unintended effects and can be devoid of real, actionable information. They may actually be counter-productive to the all-important climate of continuous improvement and teamwork in an organization.

Arrow discovered that ‘evaluation inflation’ was at play in their evals. Consequently, the CEO sent the evals back to re-done and subsequently received back new and “improved” with an artificial, forced, normal-curve distribution. I the new evals there ended up still being no differentiation of the quality of employees (which was what the CEO was looking for, he just wanted the evals to contain some useful information and be a valid and reliable tool); there was just a lowered cluster of scores. The scores were now clustered around “average” but still mostly grouped in a cluster. This made the evals essentially a useless tool devoid of any real information.

Lessons:

• Performance evals cannot be mandated to meet an artificial normal distribution, else all useful information contained in them shall evaporate.
• Managers and employees can and will learn to manipulate the system and will begin to behave in a less then genuine manner which will impede learning, growth and teamwork; this will impede an atmosphere of continuous improvement, which is necessary for businesses to function and survive long term. Performance evals can lead to much energy being spent on “impression management” rather than the real business of the business, whatever it may be.

We have all probably experienced some of the dark side of performance evals: seen them used in negative-energy generating ways such a being a tool to engender and reinforce the power of the manager over the employee as well as a tool to justify little or no annual raise (justify labor cost goals of company). This approach totally misses the point and the opportunity of some positive-energy generation that can come from an effective performance eval.

Performance evaluations should effectively steer employees toward learning and growth, toward continuous improvement.

It might be a good idea to separate compensation and performance evaluations: compensation might better be based on market values. Performance evaluations might be reserved to help to foster honest discussion, teamwork and an atmosphere of continuous improvement. There would be more time for learning from mistakes and less energy spent managing perceptions and worrying about how one mistake might look on a review that affects one’s compensation.

A question for further thought: Is it really possible to institute a performance evaluation that is entirely objective, valid and reliable or is what the performance evaluation trying to accomplish necessarily subjective and subject to human relationships?

 

Commentary on a Wall Street Journal Article: ‘Get Rid of the Performance Review!’

From the October 20, 2008 Issue an article by Samuel A. Culbert, PhD, Professor of management at the UCLA Anderson School of Management.

In this article, Dr. Culbert lays out a compelling and thought-provoking case for abolishment of the traditional performance review and replacement with a performance preview. He makes 6 good points in his argument against the traditional performance review.

1. The mind sets held by the two participants (boss and employee) in a performance review work at cross-purposes. The boss wants to discuss performance and improvements while the employee is focused in issues such as compensation.
2. Claiming an evaluation can be objective is preposterous. Where you stand determines what you see.
3. Pleasing the boss so often becomes more important than doing a good job.
4. Personal development should be an important part of a person’s job. However, people don’t want to pay a high price for acknowledging their need for improvement—which is exactly what they would do if they arm the boss with the kind of personal information he or she would need to help them develop.
5. The boss in the performance review thinks of himself or herself as the evaluator, and doesn’t engage in teamwork with the subordinate. It isn’t “How are we going to work together as a team?” It’s, “How are you performing for me?”
6. It’s immoral to maintain the façade that annual pay and performance reviews lead to corporate improvement, when it’s clear they lead to more bogus activities than valid ones. The more positive an atmosphere we can create at work, the more positive an impact it has at home. In short, what goes around comes around.
   
   

In my experience, as both an employee and a boss, his points struck a chord with me and I recognized, from personal experience, the arguments he was making. The old style of regularly scheduled performance reviews does tend to steer the employee to aim his/her efforts at pleasing the boss rather than actually aiming to do a good job and perform well. The work environment becomes a game of perception management and drains precious energy away from the worthwhile and dividend-paying tasks and, ultimately, morale and quality suffer. There has to be a better way, a genuinely new and improved way of promoting straight talk relationships between bosses and employees and keeping precious energy focused in the high payoff places. Dr. Culbert may be on to something when he says: “It’s the boss’s responsibility to find a way to work well with an imperfect individual, not to convince the individual there are critical flaws that need immediate correcting, which is all but guaranteed to lead to unproductive game playing and politically inspired back stabbing. Keep in mind, of course, that improvement is each individual’s own responsibility. You can only make yourself better.” Doing away with the traditional performance review may start a positive trend of fostering better team relationships and keeping self-improvement in the realm of the individual.

 

Graduate School of Business, Stanford University Case Study: SAS Institute: A Different Approach to Incentives and People Management Practices in the Software Industry

The storyline for this case study goes that the SAS Institute was facing increasing competition, etc. and the question was: “Could and should the Institute maintain its unique approach to pay and other practices?” Had their success been a product of their approach or achieved in spite of their approach?

Attraction and retention of talent was certainly a key to SAS’s continued success. Some of the perks that their employees enjoyed included healthy retirement, bonus plans and a lot of autonomy, freedom and control over their day-to-day schedules. SAS was of the philosophy that if they made their employees happy, great revenue and customer service would follow. They employed a trickle-down philosophy—”if you treat your people well, things will take care of themselves.” They believed that motivation was largely intrinsic. One interesting example, in the case study, was of a SAS employee who quit after 2 weeks because when she arrived at 9 in the morning, she wanted someone to tell her what her job responsibilities were for that day. SAS is not set up that way; they assume that their employees have talent, creativity and initiative. Their approach is to “give people the tools they need to do their job then get out of the way.” They believe that management “…should be a relationship instead of an infrastructure.”

SAS’s philosophy of assuming that their employees are intrinsically motivated works well (and should continue to work well) for them because of their particular type of employee (i.e. professional, educated, self-starter, etc.) but would probably not work well with, for example, many non-professional, hourly-type employees.

Lesson:

• There are different (and distinct) levels of professionalism among different types of employees (i.e. professional, salaried versus non-professional, hourly). Each has different expectations of their work environment, need different levels of supervision and guidance and are motivated differently (intrinsically versus extrinsically). It is important to keep the two clear in management’s head, so to speak, to foster employee performance.

 

Harvard Business School Case Study: Nordstrom: Dissension in the Ranks?

The story of Nordstrom is one of a classic conflict between two competing business philosophies:

1) That one needs to do whatever is necessary to be effective and make the sale because business depends on it and

2) That employees should be able to work their scheduled hours, leave the job behind when they punch out and let their employer worry about the rest.

Business philosophy number 1 was Nordstrom’s operating philosophy and they applied it to their salespeople; treating them similar to independent contractors. This type of situation is often encountered (and encouraged) with white collar, salaried employees. Business philosophy number 2 is often encountered in situations involving blue collar, hourly employees. Our society (and the precedence of the law) seems to be comfortable with these two philosophies being applied separately to each of the aforementioned groups, but when the line gets blurred it becomes more contentious, as Nordstrom soon found out.

Nordstrom was historically well-respected for posting impressive financial numbers and having quality employees that “went the extra mile” to provide exceptional customer service. Their salespeople were hourly employees who could increase their earnings by increasing their “sales per hour”—a number that was calculated for each employee and made public. This public compensation program, combined with other systemic issues such as a decentralized management system and a lack of clear guidance for middle managers eventually manifested as various problems in employees attitudes and behaviors. An unhealthy competition among salespeople, including stealing of others sales, contributed to a drop in morale. The decentralized management and lack of clear guidance for middle managers created inconsistencies in the system and abuses such as managers creating, in the salespeople, a sense that their job was always in jeopardy and that they needed to work “off the clock” to get their numbers up. The Nordstrom system seemed to have attempted to give equal emphasis to the oft-conflicting goals of service, profitability and middle-management autonomy which manifested in these various deleterious attitudes and behaviors in the employees.

Ultimately, Nordstrom problems affected their bottom line: they suffered public perception problems and were sued and had to reimburse sales people for back pay for hours worked “off the clock”—to the tune of millions of dollars.

Lessons:

1. Sometimes a decentralized system of management, especially when combined with unclear direction from upper managers to middle managers, is not a good thing.
2. There are different (and distinct) levels of professionalism among different types of employees (i.e. professional, salaried versus non-professional, hourly). Each has different expectations in the way they should be treated and a blurring of these well-established and distinct lines manifests in undesirable attitudes and behaviors of the employees, society and the legal system.

 

Harvard Business School Case Study: Specialty Medical Chemicals

Specialty Medical Chemicals (SMC) is a specialty chemical company serving the pharmaceutical industry. In the case study, the company was plagued by poor growth performance and brought in a new CEO, Carl Burke, to ostensibly rekindle growth. Upon studying the company, Burke ascertained that the real task which lay before him was not revamping growth, but more remedially shaking up the management team and getting the right people in the right jobs to lead the company toward growth.

Burke found that the growth sectors were biotechnical companies and generic pharmaceutical companies and that SMC needed to form new relationships to tap into these markets. Furthermore, he found that the reps were not motivated to develop these new relationships because doing so would take time away from their existing accounts. A good idea here may have been to develop new branches of the company to strictly focus on the biotech and generic sectors (which Burke did end up doing).

In terms of the existing branches of the company, Burke decided that sales and manufacturing were top-notch and the product development, marketing and finance departments were also performing well. He felt that administration was weak in customer service and personnel. The head of each of these departments, with their weaknesses and strengths, comprised his core management team and the members that he would need to decide who stays and who goes in the new team.

Burke hired an outside management consultant, a PhD psychologist, to evaluate the management team and provide insight and recommendations. Among the problems they found was that each department was reluctant to comment on areas outside of their functional area and there was a “not my job or area of expertise” sort of attitude that hampered holistic functioning. Of note: Burke also commented that the review processes (of employee performance) were elaborate but essentially useless. The overarching input from the consultant told Burke that “you need to manage by setting the broad strategies and structures, putting the people in place that can do the job, and hold them to stand and deliver.” CEO Burke decided that the business should be reorganized into 3 new business units: pharmaceuticals, biotechs and generics.

Based upon the aptitude and personality results found by the consultant and summarized in the appendices of the case study my recommendations for filling each of the new management team positions is as follows:

• Install Robert Englehard as GM of Pharmaceuticals. Englehard is currently VP of Sales and is performing pretty well in this role. Pharmaceuticals is SMC’s core business right now and he has proven he can handle this task. There is a risk, however, based on Englehard’s personality, of losing him by not challenging him enough or giving him a new role.
  
• Install Michael Everett as GM of Biotech. His chemical and engineering background will help him succeed in this role.
  
• Recruit new talent for GM of Generics. The company desperately needs some new and fresh blood in the mix and this position is not readily fillable from in-house choices.
  
• Recruit new talent for head of Manufacturing. Jack Francis, current head of manufacturing is doing a pretty good job but does not seem to have the skills necessary to really help push the company to a new level.
  
• Keep current CFO, Roberta Janis, as head of Finance. She seems to have potential, and with some help and coaching, could really grow into a key player.
  
• Promote current personnel rep, George, to head Administration. Current head of Administration, David Rice, seems to not mesh well with the new direction of the company.
  

The more drastic changes, like in Manufacturing and Administration, would need to be done tactfully so as to minimize impacts on the company’s morale.

 

Commentary on a few news articles from the perspective of workplace motivation

From a Wall Street Journal article (Two Football Coaches Have a Lot to Teach Screaming Managers, January 29, 2007; Page B1), a Business Week article (Get Healthy—Or Else, Inside one company’s all-out attack on medical costs, Business Week, 2/26/2007) and a U.S. News and World Report article (Jesica’s Story: One mistake didn’t kill her–the organ donor system was fatally flawed, Avery Comarow, U.S. News and World Report, Washington: Jul 28, 2003. Vol. 135, Iss. 3, pp. 51-54).

In 2007’s super bowl, the two teams’ coaches were among the minority in the NFL: known for not screaming and yelling at players. They were also the first African-American coaches to lead Super Bowl teams. Whether this is correlated or not is another issue for discussion. While demanding of their players, they give directives calmly and treat them with respect. Ridiculing and screaming at team members can actually undermine productivity. “There’s a big difference between saying ‘you made a stupid mistake’ and screaming ‘you’re really stupid’.” This makes sense when viewed from the perspective of Jerald Greenberg’s concepts of procedural, distributive and interactional justice forms of fair treatment at work. A perceived lack of interactional justice is the most deadly form of injustice in terms of leading to stress reactions at work, which, in turn, are well-known to have negative impacts on motivation, performance and health. Even if screaming get ‘results’, they are likely short-term and higher employee turnover will result and the ends do not justify the means.

At Scotts Miracle-Gro Co. (SMG) an employee was fired for failing a drug test—the drug was nicotine! “How do executives looking to cut medical costs persuade employees to take better care of themselves without killing morale and spawning lawsuits?” Company-provided health insurance became prevalent during World War II and company-funded health insurance has been steadily becoming less prevalent since. Health insurance is a large part of most company’s budget and, historically, companies have used carrots such as lower premiums, free gym memberships, etc. to persuade employees to become more healthy thus decreasing company’s health costs. More recently, companies such as Scotts have instituted a sticks approach, such as higher premiums for not submitting to exhaustive health testing and not following personalized programs drawn up from the results of one’s health testing, to getting employees more healthy. The principal behind Scotts program is admirable but the means of telling people what to eat and when to exercise, etc. is downright Orwellian and probably a drag on morale (by taking away people’s control over their own lives) in most cases.

A young woman, Jesica Santillan, died an avoidable death because she was mistakenly received transplanted heart and lungs from a donor with a blood type that did not match. The surgeon, James Jaggers, admitted “I am ultimately responsible.” for not checking Jesica’s blood type. The hospital’s system of check failed as well for not catching the surgeon’s error in time. As well, U.S. News and World Report found that the entire national organ-transplant system played a role. Typos and errors were found to be common in match lists. Match list coordinators are instructed not to involve themselves in medical decisions; it may have helped catch the blood match error had these coordinators been able and encouraged to be more involved in the whole of the process. Along the chain of events that led to the error, there were also other people whose jobs appeared to be ‘compartmentalized’ which costed them the opportunity to catch the error. Sharing information (not just pieces and parts) and doing away with ‘not my job’ attitudes may have made for a different outcome in this case. The donor organs were clearly marked “Type A” but nobody in the operating room knew Jesica’s blood type of “O”. In the end, these grave errors, cost a young woman’s life but motivated the medical system to overhaul and put new safeguards, such as multiple checks and verifications, etc. into the organ transplant system. Errors and failures can certainly become strong motivation for improvement.

 

Southwest Airlines Case Study: Using Human Resources for Competitive Advantage

O’Reilly, C., & Pfeffer, C. (1995). Southwest Airlines: Using Human Resources for Competitive Advantage. Stanford, CA: Graduate School of Business, Stanford University.

This posting is about the Stanford University, Graduate School of Business Case study focusing on Southwest Airlines as an example of leveraging human resources into a distinct competitive advantage. Certainly, we’ve all hear lip service paid to the importance of people and probably, most of us, even view it as a cliché and just words without any substance. This is certainly the case more often than not but Southwest Airlines appears to be an example of a company that has done so and proved that a company’s personality and intellectual capital, its people, can indeed be leveraged into a distinct competitive advantage.

As anyone familiar with human resource departments can attest, human resource issues are very important to businesses and typically consume a large amount of a company’s time and energy. The question is: how to leverage a company’s intellectual assets (people)?

A little background from the case study

In 1994, a “Major Showdown in the airline industry” was shaping up involving Southwest, United and Continental Airlines. The other airlines (Southwest’s’ competitors) had been hurt by competition from Southwest and decided to try their hands at competing head-to-head with Southwest in the type of low fare, no frill, air service that Southwest had become known for. It didn’t work out as well for them as it had for Southwest. Continental Lite, could not match the efficiency of Southwest and their CEO was purportedly not particularly people-oriented. United’s “Shuttle” was plagued by unhappy employees and an abundance of intracompany rivalries and conflicts.

So where does Southwest’s completive advantage lie? Southwest believes their competitive advantage lies mainly with their people and how they are managed and not so much with their pricing structure. The leverage lies with the people! Among other things that were not so easy for the other airlines to imitate, Southwest encouraged their employees to deliver great customer service and have fun (which often go hand-on-hand).

Not to be underestimated is the fact that Southwest’s workforce is very productive. Their turnaround time (arrival at gate to next departure) is about 15 minutes, as compared to an industry average of about 35 minutes. Also Southwest accomplishes this with great efficiency; they use fewer people at gate and a smaller ground crew. Harold Sirkin, an airline specialist with BCG said, “Southwest works because people pull together to do what they need to get a plane turned around. That is part of the Southwest culture. And if it means the pilots need to load bags, they’ll do it.” Southwest averages nearly forty percent fewer employees dedicated to an aircraft than industry average (81 vs. 130), a testament to their productivity. This means they need a smaller load factor (about 55%) on their planes to break even.

A little evidence of Southwest’s success

When Southwest started, in 1971 with 198 people, Continental Airlines used every dirty trick in the book, including political, regulatory, litigious, etc. to make sure that Southwest did not get off the ground. An example is the Wright amendment (named after James Wright, then Speaker of the House). This amendment ostensibly was meant to encourage traffic through the new Dallas-Fort Worth hub (where Continental flew through) but effectively made the logistics of airline routes in and out of Love Field (where Southwest flew through) very difficult. This appeared to have backfired and made Southwest “mad” and even more motivated to compete and win; a culture which appears to continue into their competitive culture that persists today.

Before Southwest entered the Louisville-Chicago market, 8,000 people daily flew this route, after Southwest entered, 26,000 people flew this route daily. Most of the excess used to drive it. Southwest, with their strategy of low costs, low fares and frequent flights, was able to effectively create new customers that didn’t exist before.

For the period 1972-1992, Southwest stock earned the highest returns of any publicly-trade U.S. stock—a compounded return of over 21,000%.

Corporate Culture

Southwest’s “Work is important…don’t spoil it with seriousness” attitude may stem from CEO, Herb Kelleher’s, personality and relaxed management style. As well, he “…somehow managed to get union people to identify personally with his company.” He said “our essential difference is minds, hearts, spirits, and souls.” In a letter to employees he also quoted Winston Churchill: “Success is never final.” Kelleher said “Indeed success must be earned over and over again or it disappears. I am betting on your minds, your hearts, your souls, and your spirits to continue our success.”

Southwest’s human resources department is named the “people department” and stresses the two “C’s”” compassion and common sense. They tell people to “break the rules” if they need to.

The “Southwest Spirit” appears to be: creative, not too uptight (loose), strong on teamwork, positive, a bit non-conformist, a little outrageous and extroverted.

What lessons can be drawn?

• The leverage that corporate culture and the human resource can provide for strategic advantage and change cannot and should not be underestimated. However, it must also be “articulated, practiced and reinforced.” The employees who are the face of the company must also be bought in heart and mind, and actually do and say what the company values.
  
• It is good practice to put one’s energy in figuring out how to do better every day and how to achieve continuous improvement and not to waste too much energy worrying about the competition.
  
• An intracompany family spirit and atmosphere of trust as well as meaningful interpersonal connections go a long way to fostering motivation and a sense of job satisfaction. And have no doubt, this is directly related to the bottom line.
  
• Growing too fast can hurt the “family” feel of a company.