Archive for the ‘HR Strategy’ Category

Create Sustainable Growth in Leaders by Rattling their Core

Thursday, July 8th, 2010

Growing and sustaining leadership competence is a critical need for your organization.  A recent survey by ASTD indicated that leadership/executive level skills were the most critical gap across 10 categories of potential gaps organizations anticipate in the near future.  Identifying and nurturing high potential individuals who can move into leadership roles is a core strategy for meeting this need, along with providing development opportunities for your current group of key leaders.  But, how do you create leader growth in a way that it is sustainable?

In The Leadership Pipeline (2001), the authors suggest that at least six major transitions occur in the leadership progression from individual contributor to CEO level, and that each stage requires qualitatively different approaches.  They suggest that, to build effective leaders at all levels, organizations must identify high potential leaders early on, provide them with growth assignments, give them constructive and frequent feedback, and support them with coaching and mentoring. 

We agree.  However, we believe that sustainable growth occurs through an important paradox.  The lasting changes in leader effectiveness at various stages in the leadership pipeline are those that rattle or reorganize leaders to their very core, and at the same time, remain consistent with that core. 

Allow me to explain.  At the foundation of every leader is a unique pattern of personality characteristics and abilities.  We can assess these using standard personality inventories, as well as tests for strengths, motivated abilities, cognitive intelligence, emotional intelligence, etc.  At RLSI, we do this all the time on the front end of coaching engagements to help individual leaders and ourselves understand who they are at the core.  Moreover, we ask what energizes them and assess how their thinking patterns either support or get in the way of effective leadership.  We use all this information to help us determine who they are at the core. 

To be sustainable, growth must occur within the context of this core for each leader in your organization.  At the same time, true growth seldom occurs unless events rattle the basis upon which leaders think and respond, or circumstances force them to reorganize internally with each new stage in the leadership pipeline.  Psychologist Jean Piaget called this “accommodation” and contrasted it with “assimilation,” in which we simply incorporate new thoughts, ideas, perspectives, etc. into the mental framework we already have. 

In accommodation, however, we recognize the need to reorganize our internal framework in order to take into account our new experiences.  For most people, heading off to college for the first time is a clear example of needing to accommodate to a whole new existence that we had not imagined previously.  Other major life events like marriage, death of a close loved one, or the birth of children similarly cause most people to accomodate in order to take into account dramatically different circumstances.

Joe Folkman (The Power of Feedback, 2006) makes the case that genuine change in behavior requires changing core beliefs.  Not who we are at the core, but how we think about things and make sense of circumstances.  Folkman emphasizes that lasting behavioral changes are those that feel natural and consistent with our core character and personal style.  These two principles form the basis for this seeming paradox:

  • To shift our approach and show evidence of true growth, we must accommodate to new circumstances and demands by changing some of our core beliefs, which then shifts our behaviors; however,
  • To sustain this growth, we must stay within the boundaries of our core personality, abilities, and motivations.

At RLSI, we see this most clearly in our executive coaching.  Using a framework from my book, Fearless Leadership (2006), we help leaders recognize how irrational fears and faulty beliefs can become obstacles to high performance behaviors.  We coach leaders to recognize the symptoms when they begin to react poorly to situations, and we teach them how to create a set of healthy beliefs to shift their core thinking.  In the words of the paradox, above, we provide tools for shifting some of their core beliefs.  The beliefs we typically focus on are those they have held for many years, but have not examined closely.  For example, a leader might have operated for decades on the belief that she must always be correct and show no faults, or that he must avoid conflict situations and make sure that people do not become upset.  These kinds of faulty beliefs can undermine a leader’s success, especially when paired with irrational fears about looking incompetent or being rejected by senior management. 

You can use the two components of this paradox when growing leaders in your organization.  Find challenging tasks or problems, new reporting relationships, or different team assignments that will stretch the competence and confidence of your high potential and key leaders.  Use the experiences to identify faulty beliefs and approaches that limit their effectiveness, and help them accommodate to become more effective as a result.  However, as you put them in situations and provide support to help them change their faulty beliefs, make sure you affirm who they are at the core (their strengths, unique personality/style, motivators, etc.).  To sustain the growth, it is critical that they do not conclude that they must change who they are in order to be successful at the next level.

Leverage Your PAST to Lead Your Future

Monday, May 3rd, 2010

David and I had met a couple of times in our coaching engagement before he was comfortable enough to confide in me that he felt he needed to be someone totally different than himself to be successful in his role. His peer, Edgar, was in a similar business development role, and David began to believe that he needed to fashion his approach after Edgar’s personality and style.

I still remember the pained look in David’s eyes as he described how much better his peer was suited to their Director, Business Development role, and how much David felt out of Edgar’s league. As I listened to him, I recognized that he desperately needed an alternative perspective to help him take a stand and become highly successful in his new role.

Many leaders at all levels in your organization probably struggle with the same sense of inadequacy, particularly when they take on new roles or report to a different manager.

In working with others as a coach since my initial work with David, I began to talk with them more intentionally about leading from the center of who they are. The concept resonated with them, and they recognized more clearly how often they got in their own way by straying from the core of their effectiveness. 

From these conversations with organizational leaders, it has become very clear to me how important it is to lead from the core. In fact, my experience makes me conclude that trying to lead from someplace other than the core is the primary reason leaders derail. Attempting to lead others with an approach that is not grounded on who you are at the center of your being is a guaranteed recipe for failure. 

Why do organizational leaders think they must lead from someplace other than their core? Some, like David in the first example, start a new position and convince themselves—falsely—that they must approach things very differently than they have in the past in order to be successful. Others have deeply-rooted, fear-based doubts about themselves and lack of self-assurance at the core. Consequently, they struggle when they must take on a new role and they unwittingly undermine their ability to lead. Still others get the strong message from their manager or other senior leaders that they must function in a completely dissimilar way in order to be successful in a new situation. 

While it is often true that changes in position, manager, or organization require individual leaders to make some adjustments in their approach to the work, this almost never means that they must alter themselves at the core in order to be successful. In those very rare situations where individuals are not likely to ever thrive with what they bring to the table, the best resolution is for them to leave the position or the organization and look for a better fit. Changing who you are at the core is never the most desirable way to handle a set of circumstances or personalities in your work. 

To put it in simple terms, every leader at the core is the product of his or her PAST:

  •  Personality 
  • Ability
  •  Spirit
  •  Thinking 

You are a product of your PAST, as well, and it is the key to your future. At your core is a combination of personality characteristics, feelings, intellectual, emotional, and physical abilities, and a responsive spirit. At the center of who you are, there are also thoughts, beliefs, and opinions that you hold to be true, and that you have developed since early childhood. It is not feasible to leave your PAST behind. Wherever you go, your core personality traits, abilities, spirit, and thinking go with you. We will address each of these four components individually.

Personality (P). For the purposes of your own self-analysis, think about the aspects of your personality that uniquely define you. What are your signature leadership traits and
characteristics, the ones most central to your personality?
 

This includes characteristics like:

  • style and approach across various situations  
  • intensity of observable energy, degree of drive  
  • self-discipline, accountability, preference for structure  
  • emotions, feelings, degree of compassion 

Abilities (A). Included in the term abilities are your innate talents, gifts, motivated strengths, cognitive intelligence, and emotional intelligence. Abilities are innate capacities, not learned ones. Certainly, people develop their abilities over time, and those that receive the most focus tend to be their strongest and most recognizable. However, there is a clear line between knowledge and skills you develop, and abilities, talents, or gifts you possess from an early age.

Words like communicator, linguist, wise counselor, visionary, interpersonal facilitator, healer, educator/guide, motivator, or initiator reflect underlying capacities that can be expressed in outward behaviors and actions. Using this partial list of fundamental abilities as a starting point, what are your most motivated abilities as a leader? What do you do easily, that comes naturally to you, and that energizes you? What abilities do others most appreciate about you; what strengths do they leverage most often when involving you on team projects? 

Spirit (S). Your spirit develops from a very early age—perhaps at birth or even in the womb—and grows to become an integral aspect of your core being. In popular theological terms, the human spirit is a deeply situated, core aspect of the individual, subject to spiritual growth. In many ways, it is the very center of your capacity for joy and desire. 

Spiritual refreshment is one way you can think about the Spirit component of your core. What gives you the greatest sense of calm, relaxation, or inner peace? Which activities in your life resonate within you in a way that leaves you composed or serene? Alternatively, when are you most energized and excited in your work and life? What tasks or activities bring out the most intense feelings of joy, elation, and well-being? Or, when do you most have the sense that your life has meaning, or that it matters? What in your work seems most central to your life purpose? 

Thinking (T). This component includes your beliefs, values, and opinions based on your learning and experience. It includes your attitudes toward things, the way you make sense of the world, and the primary basis upon which you make decisions. Thinking includes logic and intuition, creativity and originality, common sense, and the recognition and understanding of others’ feelings and needs. In short, thinking includes any function within your core that involves thought processes.

Some thinking is healthy and leads to confident, competent performance as a leader. Other thinking based on faulty beliefs can undermine high performance behavior. For example, believing that you must prove you are right, avoid conflict situations, speak up first in a debate, convince others that their perspective is wrong, are all examples of faulty beliefs. 

Each of these four components of your leader core—personality, abilities, spirit, and thinking—are important for you and other leaders in your organization to understand and leverage. Trying to lead from someplace other than your core is an ultimately fruitless exercise. Helping others around you recognize and apply their PAST is an important aspect of you as a mentor or coach.

The Power of Leader Charisma in Employee Engagement

Saturday, April 10th, 2010

The last couple years have been tough on organizations on many fronts.  One area organizations are now struggling with in particular is employee engagement.  Through this trying time much has been written about what it takes for leaders to create and develop engaged workers at all levels of the company.  This entry pulls together some of those conceptual threads to suggest ways of using your personal charisma as a leader to help energize your employees.

Let’s start with a quick look at leader charisma.  First, what does charisma mean?  Wikipedia defines charisma as a personality trait that features personal charm and magnetism, along with powerful interpersonal abilities.  But what makes leaders personally charming or magnetic?  It might be helpful to think about what charismatic leaders do and what they do not do, what they embrace as behaviors and what they avoid or totally eliminate. 

One way to think about it is in terms of the interpersonal signals leaders emit to others around them.  This includes their non-verbal behaviors, like eye contact, facial and hand gestures, energy and enthusiasm, or how close they stand to people.  Signals also include verbal behaviors like word choice, vocal tone, and clarity of articulation. 

Successful, charismatic leaders.  The most charismatic leaders are those who exhibit an energized, enthusiastic presence.  They are verbal and talkative, but also spend a good portion of their time asking questions of others and deeply listening to the responses.  They recognize and appropriately respond to people’s interpersonal cues.  They draw people out with their gentle queries and encourage others to speak up and participate in conversations or discussions.  Optimistic and upbeat, they motivate others and help create a collaborative environment and culture. 

Charismatic leaders often set high standards for their teams, and they hold themselves to the same metrics.  They make their expectations clear, cast a motivating vision, and help remove obstacles so their team members can feel good about the progress they make.  Though serious in their focus on achieving objectives at the highest levels of quality, they also exhibit an inclusive sense of humor.  And they make it a priority to help their direct reports develop in their careers.

Sounds too perfect, doesn’t it?  The good news is that leaders do not need to be perfectly charismatic in order to have a very positive effect on their direct reports and others.  Even if they simply avoid the opposites from those attributes and approaches outlined here, most people will view them positively as leaders.  For example, just by avoiding things like accepting mediocre work, being closed to new ideas suggested by others, displaying a lackluster level of energy, and projecting a muddled vision, most leaders will exhibit a level of charisma.  You do not need to be perfect to be charismatic.

Engaged, resourceful followers.  You can also positively affect your team members by emphasizing the importance of facilitating “followership” as you lead.  This graphic outlines the various types of followers you may currently have on your team:

Thumbnail

In the lower left corner are those followers who are relatively disengaged from their jobs and the rest of the team, and, at the same time, likely to avoid decisions or actions that seem risky to them.  Your goal as a leader is to help team members move from this quadrant to the resourceful and engaged part of the graph.  Followers here display a good level of energy related to their tasks and responsibilities, and they are capable of coming up with new ideas for improving their approach.  One way to dial up your charisma and encourage development on your team is to identify which of your direct reports would best be described as:

  • Risk-averse and disengaged
  • Risk-averse, but engaged
  • Resourceful, but disengaged
  • Resourceful and engaged

Each category, above, requires a different charismatic strategy to generate enthusiasm and optimism on the part of your team members.  Of course, for the resourceful and engaged team members, the strategy is simple—keep doing what you are doing and try to stay out of their way!  But, what about the other three categories?

For the resourceful, but disengaged, the key is to figure out what is causing the disengagement.  Perhaps you have not sufficiently reinforced them for their resourceful ideas and actions, and, consequently, they have become discouraged.  Maybe something outside of work related to their personal situation is causing them to disengage from work.  They might even be depressed on some level and not cognizant of their level of disengagement.  Whatever the cause, your role is to point out examples of the disengagement and express your desire to help them re-energize and become engaged again.  Reinforce any behaviors you observe that seem energetic and positively engaged.

In the case of the risk-averse, but engaged, the primary need is to help them experience success in taking risks.  Start by giving them small stretches that might not seem risky to you, but may seem like major hurdles to them.  Give the degree of support they need as they work on the task, and encourage every resourceful step you observe.  Continue to give them assignments that stretch their comfort with risk, and make sure you positively reinforce every resourceful step you observe them take.

The most entrenched and difficult to move are the risk-averse and disengaged team members.  They need a consistent combination of reinforcement for small steps they take to optimistically solve problems or take a risk, as well as any expressions you observe that suggest energy and engagement.  You might consider pairing them on projects with someone who is both resourceful and engaged, to see if the enthusiasm of the one rubs off on the other.  As a last resort, you should consider replacing the person in the position.  Disengaged, risk-averse workers are not happy in their work, and might blossom in a very different role.  Sometimes, the most compassionate step you can take as a leader is to help someone exit their role or the organization.

The bottom line.  To function as a charismatic leader, you must exhibit energy, engage others in communication in which you both listen and convey your thoughts and feelings, and use humor to disarm stressful situations.  Make certain your expectations are clear, set high, but attainable goals, and ensure that the team makes good progress.  Prioritize the development of your team members so that they become more engaged and resourceful in their work.  The result will be one in which you, your direct reports, and the organization all win.

Get bang for your buck with selection assessments!

Saturday, April 3rd, 2010

Especially in these times of economic uncertainty, hiring top talent is of utmost importance.  To this end, organizations employ a wide range of assessment strategies, from a “one size fits all” approach to the other extreme, the “more is better” theory.  In the following post I will analyze both ends of the spectrum and use empirical evidence to suggest a best practice.


One-size fits all.  Those who trust in one standardized instrument, like the Predictive Index™, Caliper™, or Prevue™, use the same tool to help them make most hiring decisions.  They trust the instrument, are familiar with its content, and have a favorable view of its success rate in weeding out poor candidates and highlighting strong ones.  The advantages of such an approach include simplicity, minimum time and financial expense, and, oftentimes, a straightforward, common vocabulary to use in discussing candidates.  The primary disadvantage is that one simple approach for all levels of hiring decisions can miss important data and perspective, especially for senior positions that are critical to the organization’s success.  In these cases, one instrument is often not sufficient to pick up essential details.


More is better.  Contrasting with the one-size fits all proponents are those who believe in using complex assessment centers, or a wide variety of instruments and approaches to gather large amounts of data on each candidate.  These assessments typically include some combination of the following:

  • Structured interviews with multiple consultants
  • Personality tests
  • Abilities tests, including IQ tests
  • Work simulations (either tailored to the specific organization, or an “off the shelf” version designed for a marketing, engineering, or other functional area position)
  • Interpersonal role plays (individual, team)
  • Administrative in-basket exercises


The advantage of using such an approach is that the assessment views candidates from a variety of perspectives in order to draw a conclusion about them.  The instruments used typically provide a much greater level of depth than the one-size fits all, minimalist approach.  The multiple assessment components also offer a good deal of “face validity” in that it seems logical that multiple components would provide a more valid perspective than using a single test. 


While these advantages are enviable, there are many disadvantages to the more is better approach.  The cost per candidate can be prohibitive, especially if the assessment uses custom-designed work simulations, in-basket exercises, and role-plays.  The results across the various components often conflict and, consequently, are confusing.  The validity of these complex assessments is not significantly greater than the one-size fits all approach.  Let us look at each of these disadvantages separately. 


Prohibitive cost.  The up-front fees for designing and implementing an assessment center runs somewhere in the five figures range.  Even when formal assessment centers are not used, the cost per candidate for all the pre-work testing, the multiple interviews, and the in-basket, simulation, or role-play observers and raters is typically several thousand dollars.   


Conflicting, confusing results.  This happens because candidates usually do not respond equally well to each of the various assessment components.  They are not great actors, for example, so they struggle in the role-plays or simulations.  Perhaps they score well in the work simulations, but their personality testing raises red flags.  Or, they impress people in the interviews, but fail miserably in the in-basket exercise.  A related issue is that large assessment companies use multiple raters and observers across a group of candidates, often using consultants from geographically dispersed offices.  Despite the best efforts to train each of these consultants consistently on how to observe and rate candidates, their own individual biases and nuances in training introduce variability into the scoring process.  This adds to the conflict in results, and confusion in the interpretation.


When consulting companies determine the bottom line result/recommendation for such candidates, they usually sound confident in their decision.  As a client, however, you may not know what decision rules led to the conclusion and why they determined that the role-play was more important than the personality testing, for example.  The underlying decision rules, therefore, are critically important to the conclusions drawn, but these are often “hidden” from you as a client.


No real gain in validity.  How this can be, you might ask.  Why else would you include so many different assessment components, if not to substantially increase the validity?  From a strict statistical perspective, the validity of a set of assessment components is not appreciably higher than the validity of the most highly valid component. 


We know from employment research that the most valid single predictor of future job performance is general mental ability.  For this reason, any selection process should use some measure of mental ability as a primary differentiator between candidates.  From there, the question is which assessment component(s) add substantial incremental validity above mental ability, without prohibitive costs? 


A 1998 review of hundreds of assessment studies found that Assessment Centers have substantial predictive validity themselves but only add a 2% increase in validity when combined with a measure of mental ability.  In other words, applicants who score well on measures of intelligence typically also perform well in Assessment Centers, so there is little to no additional value in adding this substantial cost to the selection process.


On the other hand, both work sample tests and structured interviews add some incremental value when used in conjunction with mental ability.  A measure of mental ability plus a well-designed work sample test will predict 42% of a candidate’s performance, while mental ability combined with a structured interview will predict 40%.  However, the cost of developing a work sample test for a specific occupation in a particular organization is significantly higher than conducting a well-structured interview.  Again, the question is whether adding significant cost is worth the additional two percent in validity.


How do you get the most bang for the buck?  For most of the people they hire, our clients want an individual whose background, style, and skills match the demands of the role for which they are hiring, and give them the potential to move beyond that role.  As a leader in your organization with responsibilities for the hiring of new employees or the promotion of existing ones, you must answer the question yourself of how to get the most from your selection assessment process. 


At Roselle Leadership Strategies, we take a balanced perspective in the assessments we provide to our clients.  That is, we include tests of mental ability and structured interview as the data, above, suggest.  We typically include personality tests to help illustrate the candidate’s style and fit with the culture.  However, we avoid the excess of work simulations, in-basket exercises, and role-plays that can add major costs, with little additional validity.  Moreover, as noted above, the various components often confuse and obfuscate the bottom line results.  We try to get the clearest picture possible of the candidate, using responses from written and verbal interview questions, personality assessment, and mental abilities testing, and then we map that to the current and future needs of the organization.


Assessment results should act as a catalyst for further dialogue about a candidate, not pronounce indisputable judgment on them.  It is important to avoid situations like the one we recently encountered with a very successful director of a non-profit organization who went through an assessment.  The conclusion reached by the firm conducting the assessment was that he had “a 9 percent chance for success” in his current role.  Such a pinpoint conclusion by any vendor, in light of the limitations of the assessment components we just outlined in this paper, was either ignorant or arrogant, or both. 


The bottom line is that we suggest you use assessment tools that fit your budget and help you make better hiring decisions.  Understand that an assessment recommendation is a helpful part of an overall selection process, but should not be presented or interpreted as the final arbiter of a candidate’s chance of career success in your organization.

Under-reacting: Lessons from Ft. Hood

Wednesday, March 10th, 2010
The massacre at Ft. Hood, in which an Army major killed 13 and wounded 42 military and civilian personnel, raises important questions about a little-examined behavioral problem: under-reaction.  The media seems mostly focused on the question of whether this was a terrorist act or another example of someone “going postal” due to psychological problems.  We will not address that question in this paper. The more compelling question for those of us who coach and train organizational leaders is why so many people suspected issues with this individual, but neither reported them nor took them seriously enough.  The question we explore in this paper is what “under-reaction” is and why it exists in the repertoire of human behaviors. We know that people around Maj. Nidal Hasan noticed or documented these issues, but did not take decisive action:
  • A former med school classmate described him as a very outspoken opponent of the war in Iraq
  • In 2007, his supervisor at Walter Reed wrote a memo claiming that Hasan showed a pattern of poor judgment and lack of professionalism
  • Also in 2007, Hasan gave a slide presentation to fellow medical staff at Walter Reed Hospital, in which he stated Muslim soldiers should not serve if they are in a position to injure or kill fellow believers
  • In 2008, the FBI Joint Terrorism Task Force looked at his email exchanges with a US-born, radical Muslim cleric living in Yemen, but dropped their investigation
  • Earlier this year, he came to the attention of law enforcement officials for reasons that are unreported so far
  • He recently posted radical Internet statements regarding suicide bombings
There may be excellent reasons why no one connected the various “dots’ of issues with Maj. Hasan and concluded that he could be a danger to himself and others.  The issues involved unconnected agencies and individuals, occurred over several years, and could have been dismissed simply as cultural insensitivity on the part of the observers.  Yet, we cannot help but ask, “what if someone had stepped forward and acted decisively?” The broader question that becomes a lesson from this tragedy is why people, in general, observe situations and fail to respond appropriately to them.  More specifically, why do organizational leaders at multiple levels under-react? Under-reaction is fear-based.  When people fail to respond appropriately in a situation, sometimes it is the result of lack of knowledge or skill to do so.  Most often, however, failing to respond is the result of irrational fears and faulty beliefs that undermine a reasonable response.  Bruce Roselle describes this phenomenon in his book, Fearless Leadership (2006).  For organizational leaders, under-reacting to situations that present themselves is as dangerous, and perhaps more dangerous, than over-reacting.  The goal for any leader in any set of circumstances is to respond appropriately, with the right level of timeliness, force, and insight. What dynamics create the “perfect storm” to make a leader under-react?  The graphic, below, illustrates that the two primary factors are level of logical analysis and degree of fear of consequences: Thumbnail From the graph, we can see that as fear of consequences for taking action increases, the likelihood of an appropriate response occurring significantly decreases.  Most often, an appropriate response comes as the result of a moderate degree of logical analysis and a low fear of consequences.  When leaders over-react, it is usually the result of a knee-jerk reaction based on high fear of consequences and little forethought.  Under-reaction, on the other hand, results from high fear of consequences and too much thought.  Unlike over-reacting when a person or situation pushes your buttons, under-reacting stems from analyzing too much. In responding appropriately, leaders typically demonstrate these kinds of behaviors:
  • Trust gut intuition
  • Spend a reasonable time in analysis before taking action
  • Discuss the situation with trusted others for additional perspective
  • Use common sense (if it walks like a duck and quacks like a duck…)
  • Take personal responsibility to act, even if others are also likely to take action
By contrast, leaders who tend to over-react to situations often exhibit these types of behaviors:
  • Become defensive, angry, and resistant
  • Blame others for the situation, find fault outside themselves
  • Engage in cultural profiling, projecting their fears onto others
  • Sound and look irrational to observers
  • React with either passive avoidance or aggressive attack
The behaviors of leaders who under-react typically include these:
  • Worry about being politically correct
  • Afraid to take risks, make mistakes, or be seen as incompetent by others
  • Analyze situations to the point of paralysis, unable to take action
  • Believe that others who are more competent, confident will take action, step in to risk the consequences
  • Do not trust their intuition or common sense to be correct
Minimizing under-reaction in your leaders.  What can organizations do to apply lessons from the Ft. Hood tragedy in order to minimize the negative consequences of under-reaction?  Perhaps the most important lesson is to make certain that your organizational culture genuinely encourages leaders to reward risk-taking.  This does not mean kudos only for those who try and succeed, but also for those who try and fail, and learn valuable perspective in the process. A second critical lesson is to promote openness and honesty, even when it means, “blowing the whistle” on a situation or coworker that could be dangerous or problematic.  While you want to fall far short of creating a vigilante environment, it is possible to develop a team-based culture in which people talk straight to each other about behaviors they observe, and, if that fails, talk to their supervisors about potential problems. It is also important to encourage taking action, even if it may occasionally come off as a ready-fire-aim result.  Since a key factor in under-reacting is to analyze a situation too much, encourage leaders to move forward into action and know that they can adjust their direction as new facts become available.  Emphasize the importance of taking personal responsibility for taking action to address safety, quality, and other issues.  If five people shine a light on a potential problem, that should be viewed as preferable to only one person bringing it to someone’s attention. To paraphrase the observation of Sen. Joe Lieberman regarding the under-reaction at Ft. Hood, “When people become aware of someone behaving in a way that seems extreme, they must reach out to do something before real harm occurs.”  How can you reach out and do something?  Start with self-examination of the ways in which you might be guilty of under-reacting as a leader in your organization.  Then, begin to do what you can to reward risk-taking, promote openness and honesty, and encourage others to take action.

The Three R’s of High Performance Leadership

Sunday, February 7th, 2010

Although leaders do not need to be highly effective at every behavioral aspect of building relationships, achieving results, and demonstrating resourcefulness, they must maximize the strengths they have and minimize the impact of their weaknesses.  Using a multi-rater instrument like the FULLVIEW™ provides leaders with the in-depth perspective they need to identify their strengths and development areas as seen by their manager, peers, direct reports, and others. 

Once individuals receive feedback, how can you best work with them to leverage their strengths and ensure that they have no major gaps that might derail them?  In our work with client organizations, one approach we employ regarding this question is to provide Development Assessments to a group of leaders or high potentials.  This type of assessment typically includes FULLVIEW™ 360-degree feedback, personality testing, and an in-depth interview with each individual. 

The feedback results for leaders or high potentials on our FULLVIEW™ tend to cluster into a six-cell matrix, with different development strategies attached to each, depending on their strengths and deficits across the Three-R’s (relationships, results, and resourcefulness):


 

Some strengths in 1-2 areas


Solid strengths in all 3 areas



Standout strengths in 1-2

 

Minor deficits in one or more areas



Spend minimal development time, focus on strengths, consider band-width limitations



Develop strengths, spend minimal time on deficits

 

Leverage strengths, spend minimal time on deficits

 

Major deficits in one or more areas



Spend minimal development time, look to replace


Develop strengths, look for underlying issues in deficits, consider replacing



Leverage strengths, look for underlying issues in deficits

KEY:   red=low priority     amber=moderate priority      green=high priority development

Based on this matrix, we recommend minimal investment of development time for individuals with some strength in one or two areas (first column); if they have minor deficits across the three core competencies we often encourage spending some amount of time building their existing strength areas, if their potential has not been tapped fully.  For example, if you have a few young leaders who exhibit some ability to achieve results and can be resourceful on occasion, you might conduct other personality and ability/skills tests to determine their potential for growth.  If the results are encouraging, you could decide to invest some development time focused on their strengths.  For leaders with only some strength in one or two areas, but major deficits in the other areas, you would probably not invest development resources, but, instead, look to replace them.

On the other hand, for leaders who show a balance of solid strengths across all core competencies (second column), your inclination usually should be to invest resources to build on those strengths.  When they have only minor deficits, our suggestion is that you ignore these in favor of focusing on their strengths.  If they have major deficits, however, you will serve the organization best by looking for underlying causes.  These leaders are ones you probably want to keep, but you will need to invest in improving their deficit areas. 

Often, there are underlying causes like organizational obstacles, poor fit with boss, poor fit with primary responsibilities, or internal obstacles (perfectionism, defensiveness, low self-esteem, etc,) that get in the way in these situations.  Making changes, removing obstacles, and bringing in a coach are ways to remove or minimize underlying issues.  If these steps seem too costly, or they show little impact early on, consider replacing the individual.  In using our Leading Fearlessly™ model with such leaders, we often discover that underlying irrational fears and faulty beliefs cause or contribute to their ineffective reactions to situations.  Bruce Roselle’s book, Fearless Leadership (2006), provides a six-step approach for recognizing ineffective reactions and replacing them with high performance behaviors. 

For leaders with standout strengths (third column), get out of their way as much as possible.  Help them leverage strengths, but do not force them to spend much of their time in the deficit areas, especially if they are minor.  However, leaders with standout strengths and a major deficit or two are usually great candidates for coaching.  This is only true, however, if they recognize the deficits, take personal responsibility for them, and express genuine interest in becoming more effective in these areas.

All leaders with minor deficits (first row in the matrix), whether they have only one or two strengths or standout strengths, would also benefit from training in the areas of leadership effectiveness.  Learning and practicing a set of core skills and understanding the perspectives of high performance leaders can raise an individual’s level of overall effectiveness and offset minor deficits.  As an example, our clients often bring us in to provide sessions from our Good Managers to Great Leaders™ workshop series to enhance strengths and support development areas.  Although leaders do not need to be highly effective at every behavioral aspect of building relationships, achieving results, and demonstrating resourcefulness, the primary goal of any leadership development initiative should be to maximize the strengths they have and minimize the impact of their weaknesses. 

Core Capabilities of Effective Leaders

Tuesday, January 12th, 2010

For a number of years now, leadership theorists and designers of multi-rater feedback instruments have discussed and debated the number and nature of core capabilities that exist in an effective leader. Several have settled on five dimensions or five practices, others have identified as few as two and as many as eight dimensions. Most of these have not provided proof of the validity of the core capabilities they hypothesize exist. Consequently, it is difficult to know if their dimensions reflect real, measurable leader capabilities. 

In 2008, Roselle Leadership Strategies, Inc. embarked on a rigorous validation study of the FULLVIEW Feedback Inventory™, a 360-degree instrument developed in 1996. When we first constructed the instrument, we determined through our experience with high performing leaders and our analyses of other multi-rater instruments that there were three fundamental capabilities important in leaders at all levels in an organization. We called these Building Relationships, Solving Problems, and Taking Initiative. Then, we expanded these into 12 competencies, which we measured with 48 behavioral items and 14 sections of anecdotal comments.

Our construct validation study is now complete, and it includes FULLVIEW Feedback Inventory™ results of more than 300 leaders in various organizations. For the purposes of the study, the researcher (Colleen McGinnis) conducted separate factor analyses for each different perspective. That is, she analyzed Self, Manager, Direct Report, and Peer data individually and searched for the best fit for number of core capability factors. In each case, the researcher ran a factor analysis for two, three, four, and five factor possibilities. The results of this analysis indicated that, in fact, three factors best represented the data clusters across the 48 behavioral items for each perspective (self, manager, direct report, and peer).

Because the correlations of specific behavioral items from the 48 differed somewhat by self, manager, direct report, and peer perspective, the researcher created separate core capability data sets for each. She named them in a way that she felt best captured the content of the items in each set. It makes sense that the items would differ slightly across these four rater groups, because they each represent a unique perspective on the person they rated. For example, an item like “utilizes a wide range of approaches to persuade people, provide feedback and coaching, show appreciation,” fell into four different core capability categories, reflecting variations across the four perspectives:

  •  Inspires Others (self perspective)
  •  Achieves Results (direct report perspective)
  • Exhibits Resourcefulness (manager perspective)
  • Uses Resources Wisely (peer perspective)

Despite the variability of a few items like this one, however, the results clearly identified three factors across the four distinct rater perspectives. Using the criterion cut-off that at least three of the four rater perspectives must include an item in the same core cluster, the results showed 16 items in one category the researcher named “Achieve Results,” 16 items in a second category she named “Build Relationships,” and 8 in a third category she named “Adaptive Resourcefulness.” The three-factor analysis, then, accounted for 40 of the 48 total items—solid proof that our initial supposition of three core capabilities was valid.

The remaining eight items did not cluster significantly with any of these three core capabilities, but included important behavioral observations like “exhibits a model of healthy life balance and wellness,” “analyzes multiple perspectives before making decisions,” and “recognizes impact of actions on whole system.” Since these eight items did not exhibit a strong statistical relationship to each other, it was clear that they did not represent a fourth distinct leadership capability. One important outcome from this study is that we will revise or replace each of these “miscellaneous” behavioral items to create a better fit with the three core capabilities. All of the items on the revised FULLVIEW instrument (available at the end of 2009), then, will more closely align with these three validated factors of leadership effectiveness.

The results of this factor analytical study illustrate why we are so confident at Roselle Leadership Strategies when using the core competencies of the FULLVIEW Feedback Inventory™ in our Development Assessments, our Good Managers to Great Leaders™ workshop series, and our executive coaching engagements. These three core capabilities are the most foundational and critical to leader success across multiple levels in any organization. We have started to describe these three capabilities as the “Three R’s of Leadership” because they focus on

  • Relationships
  • Results
  • Resourcefulness

Is your 360-degree feedback system actually valid?

Tuesday, December 15th, 2009

One of the most popular recent advances in leadership development is the 360-degree feedback system. Many organizations use this type of assessment to collect information from various people who can accurately rate the performance of a specific manager with whom they work. In the eyes of most users, the strength in such instruments is their capacity to capture multiple perspectives that most often include manager, self, peers, and direct reports. If your organization has purchased and used a 360-degree instrument, do you know the validity of the feedback?

The results of these surveys provide the basis for important human resource decisions—such as individual development goals, promotion, and training emphases—that, cumulatively, can make or break the success of an organization over time. Most organizations do not use multi-rater feedback for selection or promotion decisions, in large part because the results rely on subjective perspectives, and the instruments are not designed for these purposes. Despite the popularity of these instruments, however, the majority do not report validity data to confirm that they actually measure the underlying leadership factors they purport to assess.

What is Multi-rater/360-degree Evaluation? Although leadership performance historically has been measured through performance appraisals delivered solely by an individual’s supervisor, the last three decades have seen the emergence of multi-rater, 360-degree feedback systems. Effective leadership is a complex construct, requiring leaders to master a host of sophisticated cognitive, strategic, and interpersonal skills. Starting in 1967, researchers began to note that using only a single rating source to evaluate leadership might not provide all of the information necessary to evaluate a leader’s performance properly. Since then, relevant research has convincingly demonstrated that a single assessment of a leader, either by self-evaluation or by a supervisor, is inadequate to capture that leader’s performance fully. First, individuals are not always the most astute evaluators of their own performance. Self-ratings of any behavior are often widely different in comparison to ratings of that same behavior when completed by another observer (Atwater & Yammarino, 1992). Second, various rating perspectives (i.e., supervisor versus peer, manager versus direct report) actually assess different underlying performance constructs (Turkel, 2008). That is, individuals in differing organizational roles have limited opportunities to observe a specific individual’s behaviors, so we need multiple perspectives to measure performance accurately. However, this leaves the question of how to interpret the variation in ratings between raters.

Measuring Validity and Reliability. Concern about inter-rater agreement focuses on the meaning of low agreement across organizational perspectives. If two perspectives disagree substantially in their ratings, the meaning of that discrepancy remains unclear. Theories range from those claiming that the data are inaccurate or meaningless, to those concluding that differing perspectives supply equally valid data. Tornow (1993) suggested that, “the very differences in perspectives among those who provide feedback can enhance the personal learning that takes place.” Therefore, the differences in rater perspectives are not treated as error variance (variation that needs to be reduced), but rather as critical additional information that makes the findings more reliable and gives them deeper perspective.

Further, Scullen et al., (2000), hypothesized that observed variations in ratings might reflect actual differences in performance, because a manager is likely to perform differentially in front of diverse groups of people. Specifically, they found that both supervisor and subordinate perspectives capture something unique to those perspectives, but peers do not. They suggest that these rating differences are more a function of true differences in the observed performance than of variations in the observers themselves (bias). Despite the fact that differing perspectives exist on each individual leader, Scullen, Mount and Judge (2003) also have shown that raters across various perspectives share a common conceptualization of a specific leader’s overall performance. 

Knowing that it is crucial to gather multiple perspectives when attempting to create the most accurate possible picture of performance, and with so many instruments from which to choose, how can you know where to start? According to VanVelsor et al. (1997), authors of these instruments must meet the guidelines of a comprehensive process for evaluating 360-degree instruments. According to them, an author of this type of instrument must:

1. Attempt to identify the full range of behaviors or skills believed to represent leadership competencies.

2. Provide reliability information regarding whether the instrument items cluster in behavioral competencies that are internally consistent, distinct from each other and useful for feedback.

3. Provide validity information about whether the scales actually measure the behavioral dimensions they purport to measure (construct validity).

If your company is currently using some form of multi-rater feedback, did someone scrutinize it for these three features? The majority of multi-rater feedback providers designed and implemented their 360-degree feedback tools with the assumption that they accurately measure the leadership skills necessary for success in a particular organization. They picked items that logically seemed important to leader success, or they evaluated data they collected on competencies that support or undermine leader success. Some used a combination of logic and data collection, but most did not assess them for validity.


Works Cited

Atwater, L.E. & Yammarino, F.J. (1992). Does self-other agreement on leadership perceptions moderate the validity of leadership and performance predictions? Personnel Psychology, 45, 141- 164.

Scullen, S.E., Mount, M.K., & Goff, M. (2000). Understanding the Latent Structure of Job Performance Ratings. Journal of Applied Psychology, 85, 956-970.

Scullen, S.E., Mount, M.K. & Judge, T.A. (2003). Evidence of the construct validity of developmental ratings of managerial performance. Journal of Applied Psychology, 88, 50 – 66.

Tornow, W. (1993). Perception or reality: Is multi-perspective measurement a means or an end? Human Resource Management, 32, 221-229.

Turkel, C.C. (2008). Female Leaders’ 360-degree self-perception accuracy for leadership competencies and skills. Dissertation Abstracts.

VanVelsor, E., Jean-Brittain, L. & Fleenor, J.W. (1997). Choosing 360: A Guide to Evaluating Multi-Rater Feedback Instruments for Management Development. Greensboro, N.C.: Center for Creative Leadership

What are you doing to protect your organization’s future in these troubled times?

Tuesday, November 3rd, 2009

In a shaky economy, many organizations take dramatic steps to freeze expenses related to new hires and promotions, downsize, and suspend or limit expenses.  This is the conventional response and it makes good economic sense.  In fact, these moves, plus a focus on protecting the existing business revenue, are often critical in the short-term to insure that organizations remain viable. 

For the most part, senior executives have little illusion about the severity of the current economic crisis, or the chance of emerging from it soon.  Most corporate leaders are taking deliberate, intentional actions to manage through the challenges, and part of that is to lower costs and increase efficiency by reducing headcount and restructuring jobs.

The conventional response.  Laying off a percentage of the workforce is one option companies choose, but often is not the best way to reduce expenses.  A 2001 study by Bain & Company, for example, found that it took companies six to 18 months to realize savings from job cuts after the 9/11 attacks.  The actual time to realize savings is probably longer, since these numbers do not reflect the additional costs of recruiting, hiring, and training new people when the economy turned back around.  Other options to decrease cost, and often better ones, include cutting salaries, reducing benefits and perks, mandating a standard number of unpaid vacation days for everyone, or offering financial incentives for voluntary separation.

For example, in a March 2009 study by Roselle Leadership Strategies, Minneapolis, that included 30 companies ranging in size from below $50M to more than $10B, 67% are making targeted cuts in workers and managers in what they deem the least critical areas, and 70% are working with vendors to reduce cost and/or inventory.  Nearly 100 percent indicate they are taking some steps to reduce costs.  The specific steps they identify include:  institute pay cuts, increase virtual meetings, freeze or limit new hires, close marginal business lines, reduce travel and other discretionary expenses, require all employees to take unpaid vacation time, delay the filling of vacant positions, make changes to existing health plans or 401K matching contributions, and put off various consulting expenses. 

Not all cost reductions are equally helpful.  The key to effective cost reduction is to keep your organization’s core competencies intact.  Leaders need to have clear understanding of, and commitment to, the capabilities that differentiate them from the competition.  Organizations cannot succeed long-term by making short-term decisions that undermine this strategic differentiation.

The challenge for leaders in trying times like these is to be courageous and strategic, and at the same time, practical and realistic.  This is the paradox at the core of an unconventional response to an economic  downturn.

The unconventional strategy involves four facets:

  • tapping into the creative ideas of the entire organization
  • creating a distinct process for strategic expenditures
  • investing in leadership development for the stars
  • attending to the personal lives of employees.

Tap all creative ideas.  While leaders seek areas in which to make financial cuts, it is important to tap into the creativity of the entire organization for future-oriented ideas.  In difficult situations, leaders too often hunker down and try to make all the brilliant decisions themselves to save the organization.  A better strategy is to tap into others at multiple levels to harvest their thoughts and energy.

Many corporate leaders recognize the importance of developing innovative approaches to address business challenges.  One way to foster creativity is to cultivate an open and collaborative culture.  The key is to develop a corporate mindset that stimulates people to think and do things differently, and then stays out of their way enough to let ideas percolate.  Workforce diversity helps fuel this process.

Success often depends on leadership’s ability to use open-ended questions to nurture inventive problem solving, encourage information exchange and scenario analysis, and challenge the status quo with a motivated vision.  Leaders must identify the innovators in the organization, the ones that can focus on the most important kernels without getting lost in the peripheral chaff.  Successful innovators can look at business challenges from multiple perspectives and identify those approaches most likely to fly in the organization’s culture. 

In our study, we found that fully 70% were making deliberate attempts to tap into creative ideas across the organization.  How are they doing this?  By asking questions and listening (57%), encouraging information exchange at multiple levels (53%), developing various future scenarios (60%), and sharing a motivating vision of the future (60%).

Create a process for strategic expenditures.  Recognizing that this economic downturn will not last forever in its current condition, and that the marketplace may not return to its former condition, organizations must develop new strategic initiatives, and set aside money to fund them.  These might include new products, reconfigured services, expanded marketplaces, new business models, and improved talent base.

The key here is to develop some likely strategies and allocate sufficient resources to test them.  History tells us that in the lean times, future orientation rules the day.  For example, from early 1973 to late 1974, the U.S. stock market experienced a 45% drop in market value.  Spikes in oil and gas prices, easy credit, and a murky military endeavor (Vietnam) preceded this dramatic drop.  Sound familiar?  Despite these challenges, companies like FedEx, Southwest Airlines, Microsoft, Apple, Genentech, Oracle and others were born during this difficult economic time.  

This next generation’s growth companies will be the ones that exploit technology and innovation and learn to thrive during periods of deflation, inflation, and delusion.  Even in this economic downturn, such companies will invest in new products and services, nurture innovation, leverage technology, and expand into new markets.  They will expand segments of their workforce in potential growth areas, at the same time they decrease headcount in other areas.   

The new growth companies will search their high potential talent pool to find innovative people and give them future-oriented projects with few parameters to limit their thinking.  Since innovators need access to resources and networks of people against whom they can bounce ideas, leaders will also remove obstacles, and encourage mentoring and peer feedback. 

Some companies will look for opportunities to increase the level of their talent by intentionally seeking innovative and self-motivated individuals from other companies who are frustrated at the reduced career options with their current employer.  In a 2009 Deloitte study conducted by Forbes Insights, nearly half of the 300+ senior business leader respondents indicated they would focus on product development and innovation this year.  Fully 40% indicated their organizations would recruit more for critical talent. 

These recruitment efforts might include deliberate steps to build a marketplace brand that identifies them as a highly desirable employer.  From our work with Target, for example, we know that their brand image, built on a combination of business success, appealing products, and corporate philanthropy, is a major attraction to potential employees. 

In our study, 83% of responding companies indicate they are intentionally setting aside funds and creating distinct processes for developing future-oriented products or services.  Most (70%) indicate a focus on expanding or re-defining existing marketplaces, while 43% indicate they are budgeting for new or re-configured products or services.  About a third indicate they are creating pilots of new business models, and another third that they are exploring new product test markets.

Invest in leadership development.  One type of expenditure that many organizations consider a strategic priority is to retain and develop the critical talent they currently employ, while they attract similar talent for their future needs.  Downturns present the perfect opportunity to enhance and deepen workforce skills and capabilities.  It is smart business to use this time to help high performing managers and high potential stars expand and deepen their leadership skills in areas like collaboration, team play, and big picture strategy. 

Talented people are difficult to recruit and retain, and even more difficult to replace if they choose to leave.  Retention of key talent is a major concern across many organizations this year.  In the Deloitte study, nearly half of the senior business leaders who responded indicated their intention to invest in building new workforce skills despite the economic climate.  The companies in this survey came from across the globe, and ranged in size from $500M to more than $20B. 

Market leading companies recognize that leadership development is not just nice to have; it is essential to maintain and build competitive advantage, especially in tough economic times.  For example, Toyota pulls people offline in these times and provides training.  They utilize this strategy because the costs involved in providing leadership preparation and coaching are relatively small when compared to the potential future ROI.  Growing leaders from within an organization by using strategic work assignments, internal mentors, external coaches, performance feedback, and structured succession planning is a strategy increasingly employed by successful organizations. 

72% of those polled in the Deloitte study indicated the intention to direct limited human resource dollars to the development of leaders and high-potential individuals.  The same group of business leaders indicated that 48% intended to invest in building new skills in their workforce.

We determined in our study that 100% plan to invest in their key leaders during this downturn.  With more specific responses, they indicate their intention to take steps to maintain high motivation and productivity (80%), enhance skills and develop leadership capability (70%), and work to increase the likelihood of success once the economy turns around (50%). 

Pay attention to the personal lives of employees.  It seems obvious that creating personal relationships will help leaders get the most out of their employees, but most managers believe they are better at this than they actually are.  Times of dramatic change create predictable stress and fear in your workplace.  In the Deloitte study, an average of 44 percent of surveyed leaders indicated a decline in the morale of their employees, and almost 30 percent reported a decrease in trust/confidence in leadership. 

Greater attention paid to employees’ lives outside of work, and the personal toll on them caused by the changes, usually results in greater productivity, morale, and trust.  Acknowledging the pressure and affirming people for their efforts creates greater loyalty and effort.

Among the methods utilized by the organizations in our study, 93% indicate they are taking steps to acknowledge and show concern for the toll taken on those who remain after layoffs.  More specifically, 77% point out that they are affirming employees for their efforts and 67% indicate they are showing compassion for the emotional toll and the strain on their families.  Only 30%, however, say they are providing individual or workshop-based counseling for those who remain.

Peter Drucker describes the essence of leadership as the balance between managing what you have, and creating future capacity.  The dilemma in this economy is how to make the best choices in the dynamic tension between surviving now and thriving in the future.  The key to the courageous response is to be adaptive, imaginative, and practical.  Tomorrow’s industry-leaders will be those that position themselves to move quickly and effectively when the economy inevitably comes back around.  They will do this by cutting the fat, nurturing creativity, encouraging new strategic initiatives, and developing the talent that remains.

When the economic outlook seems grounded, invest in the stars!

Thursday, September 10th, 2009

When storms keep fishermen at port, they spend the time mending nets, repairing their boats, and discussing strategy so that they will be more productive
once the storm clears.

The conventional response. In a shaky economy, many organizations choose to freeze expenses related to new hires and promotions, to downsize, and to suspend or dramatically limit expenses for things like travel and capital expenditure. These moves, plus a focus on generating new revenue, are often necessary in the short term to insure that organizations remain viable for the long term. However, it is critical to offset the increases in workload and frustration on remaining employees caused by such measures. Even the most talented and motivated workers will respond with fear and sub-optimal performance in response to such changes in the work environment.

The courageous response. A great way to offset the negative impact of cost-cutting measures is to invest in high potential and high producing leaders throughout the organization during the slow economic times. Relative to the savings netted by freezing new hires or downsizing overall head count, the cost of leadership development is small. However, to engage in such initiatives during an economic downturn, even a major one, sends a strong and reassuring signal to the star performers who remain. This is the courageous response, and it leads to stronger companies long-term.

Though it may run counter to conventional thinking, it is even more important in the midst of an uncertain business environment to invest in your star performers.  Although the tendency may be to put leadership development in the “nice to have” category, smart organizations invest in their retained talent.  They maximize the productivity of their people now, even with limited resources, to prepare for a quick and competitive start when the general business climate improves.

Some companies actually increase their market strength during tough times.  Toyota, for example, pulls people offline in the slow times and provides classroom training for them (based on an article in the December 2008 Training + Development Journal, American Society for Training and Development).  They do this to better position themselves for the inevitable upswing. 

Why develop your leaders?  It is helpful to remind ourselves why successful organizations invest in leadership development initiatives in the good times.  Our research with clients over the last decade indicates these primary reasons for investment in their leaders:

  • Increase productivity:  From a quality/continuous improvement point of view, people—like products and processes—need to become more effective; greater effectiveness yields greater productivity.
  • Retain top performers:  The relationship between manager/executive and his/her subordinates is the key factor in retention; when leaders are ineffective at building and maintaining relationships, when top performers are not developed to their full potential, retention suffers.
  • Plan for Succession:  Senior managers and managers must look at how to leverage strengths and manage their development edges every year to be ready for greater responsibility.  The leadership pipeline needs to be robust for the future, and stars need to see opportunities on the horizon.
  • Foster a Motivated Environment:  The effective role model of leaders who are motivated to become better, themselves significantly impacts the drive to continuously develop and improve.  Leaders set the tone, especially in economically shaky times.
  • Form More Effective Teams:  When leaders at multiple levels identify obstacles to the effectiveness of their team and exhibit a commitment to work through these, the team becomes more effective.  Often, their own leadership style and capacity is one of the obstacles.

The compelling three reasons.  If these five outcomes are important in the good times, how much more critical must they be during business downturns?  Here are three reasons your organization should plant leadership development seeds in its stars now (based on the results of several recent leadership surveys described in the Training + Development journal of the American Society for Training and Development), in order to harvest their increased capacity when business turns around later in 2009:

  • Increase motivation, productivity.  Though 75 percent of senior leaders identified leveraging leadership talent as a top priority, 60 percent of leaders at lower levels were not satisfied with their leadership development options.  This leads to reduced satisfaction and a less motivated and productive environment.
  • Maintain competitive edge.  Star performers want on-the-job opportunities for skill development, and this is even more important when their options for promotion or increased responsibility decrease in a sluggish economic climate.  With many organizations already lowering salary increases or freezing them in 2008, providing development opportunities is a way to offset the lack of financial reinforcement.
  • Retain top talent.  Close to 50 percent of high performers leave their jobs due to ineffective leadership above them and/or a poor relationship with their immediate manager.  Though these employees might not have the opportunity to leave your organization in slow economic times, up to 30 percent will likely jump ship quickly when opportunities open up in the marketplace. 

The bottom line.  Leadership development is not just nice to have; it is an essential competitive advantage in propelling your organization into the future.  Tomorrow’s industry-leading companies will be the ones that leverage the current economic climate by cutting the fat and elevating the talent that remains.  In so doing, these leading organizations position themselves to move quickly and effectively when the economy inevitably comes back around.  The cost of providing leadership training and coaching is relatively small compared with the potential ROI in the next year.

Pay for Performance?

Wednesday, August 26th, 2009

The goal of organizational architecture is to create an organization which will be able to continuously create value for present and future customers—essentially creating systems that will optimize and organize themselves.  Organizational Architecture involves three important aspects:  the assignment of decision rights (who makes what decisions), the methods of rewarding individuals, and the structure of systems to evaluate the performance of both individuals and business units.  Corporate America has re-engineered decision rights fairly well over the last 15 years by flattening out organizations and shifting manager responsibilities.  However, most companies are falling painfully short when it comes to administering rewards and evaluating performance.

Rewards are extremely important in corporate America.  Rewards can be anything from receiving a restaurant gift card for finishing a project, to getting a 100-inch plasma TV for being the best sales person in the nation that year.  In order to make a reward system successful three things must be true (expectancy theory).  The first is that employees must feel that if they put in the requisite effort, that they will be able to achieve the desired performance level.  Second, they need to trust that if they achieve the desired performance level, they will receive the reward from the company.  Third, the valence of the reward must be such to motivate the employee to put in the effort in the first place.   

Increased emphasis in American corporations is being placed on incentive pay, or performance-based pay, in an attempt to incent workers to achieve maximum results (or at least perform above the minimum level required).   One of the problems with performance-based pay is that in order to institute a policy of rewards, the company has to put some of each employees’ pay at risk—money is taken right off the top of their salary, and now they have to earn it by performing, in many cases, at a higher level than they have in the past.  This problem is often alleviated by the company building in the ability for the employees to earn more than they used to earn by achieving the highest performance threshold.  However, this system is suboptimal for employees who will never be able to perform up to the highest level, no matter how hard they try.  Although some degree of turnover is beneficial and necessary, most organizations can’t afford to lose up to 50% of their workforce at one time.  For this reason, sometimes companies will implement an incentive program without putting any of its employees’ money at risk all—simply by adding the incentive on top of regular compensation. 

So why doesn’t every organization use a pay for performance system?  Critics of incentive pay have two arguments: the first argument is that money does not necessarily motivate employees; and the second is that it is difficult to design an effective compensation plan that truly rewards the highest performers.  To me, the second argument is a lot closer to reality than the first. With increasing reliance on teamwork in companies today, the already vague line between acceptable and poor performance is getting evermore hazy.  For this reason a system for performance appraisal is vital to organizational architecture.  In order for a performance appraisal system to work, the employee or team output must be observable at low cost and difficult to manipulate by employees or the company.  In addition, when evaluating teams of employees, a measure of team performance is required while still recognizing individual contributions to the team.  For example, giving individual bonuses for work toward the team goal, and then giving a separate team bonus if the team reaches its goal.

Where most incentive programs fall short is in the expectancy link between achieving performance and being rewarded.  That is, when a company asserts that high performance is necessary to stay in business, but does not reward high performers, what does that say to those high performers who could go to another company and perform at the same level and be rewarded for it?  The opportunity costs for high performers to work at companies that do not adequately compensate for performance are the rewards (money, recognition, job security) they could be receiving elsewhere for the same effort.  To me, the extreme disconnect between performance measures and rewards is what will drive these companies out of business.

It all comes back to operant conditioning: why would the mouse keep trying to learn how to get out of the maze if she never got cheese when she found her way out?  Business leaders need to invest the requisite time and resources needed to design a maze that truly separates the high performing mice from the poorer performing ones.  Then, give your mice the cheese they deserve!