16
image
Designing Your Job Means You Have the Power to Choose!

201

The waiter approached the table to clear the last of the breakfast dishes. “Folks, we’ll be serving lunch in about an hour,” he said. “Would you like a menu?”

Kip answered, “What do you all think?”

“This is as good a place as any to spend a few more hours talking,” said Lucy. “Frankly, I’d rather sit here than go back to the compartment.” Yolanda agreed, and Pete chimed in, “Fine with me.”

“Well, I don’t have anything more important to do, so why not?” said Hank.

Pete asked, “Kip, I was thinking about helping my people take responsibility for their jobs. And I think I understand how to do that, but I’m still not clear about how to get them to take responsibility for the organization’s systems. Could you tell me how you do that?”

“Now that’s something I’m interested in, too,” said Lucy.

“Pete,” began Kip, “it’s all about giving people the personal responsibility to own the systems. We do that by creating flexible systems that give individuals a great degree of freedom to serve their customers.

“Designing flexibility into your systems begins by asking two questions.” Kip held up two fingers. “First, we need to ask, ‘Who’s our customer?’ and second, ‘Do the existing systems support or restrict our ability to serve our customer?’ Now, this is no longer management’s job, it’s everyone’s job to answer at every level of the operation.202


Designing Flexible Systems



“As I said earlier, a freedom-based organization designs every system to provide maximum flexibility in order to better serve customers. Sometimes this means building in redundancy, not removing it. Conversely, control-based management systems are designed primarily for maximum efficiency, and often they put into place systems that maximize resources but poorly serve the customer.”

“I know all about that,” said Yolanda, shaking her head in dismay. “All you have to do is call up any government agency. Do you get a live voice on the other end? Not on your life. You get an answering machine.”

Pete interjected in commiseration. “When’s the last time you called a bank to get your balance? You get the same thing—an answering machine. It’s incredible the number of buttons you have to push. And when you finally get to talk to a real, live person, they ask you for your account number all over again!” Everyone laughed in unison.

“Yeah, and what I want to know is, who’s the genius who started all this?” said Hank.

“Why, so you can fire the guy?” said Lucy, laughing.

“Maybe,” said Hank with a wink.

“Yes,” said Kip. “Often when we design for maximum efficiency—with the bank and the government phone systems being great examples—we restrict our ability to serve customers. And we underserve them, not intentionally, but the net effect is the same. By requiring our staff to follow any system, policy, or procedure blindly—whether doing so serves customers or not—we undermine our organization’s reputation.

“Lucy, I’m not talking about getting rid of sensible processes or approaches that work, but leave that decision up to the frontline people. I’m talking about blindly following procedures that make no sense or that don’t support your people’s goals and the Keen Internal Vision.”203

“You know, you’re right, Kip,” said Pete. “Customers judge our organization based on a single interaction with just one employee. To that customer, that employee is the company. If the interaction is positive, the customer concludes that our company is a good one. If the interaction is negative.…” Pete raised his palms upward and dropped his head to one side to emphasize his point to the group.

“I agree with you, Pete,” said Yolanda. “Put bluntly, customers don’t really care why an organization’s systems exist or how they’re supposed to work. They just want good products and good customer service—when they want it!”

“Yeah, and without excuses,” said Hank, poking his finger toward Kip.

“So providing customers with high-quality products and services,” said Kip, “is greatly enhanced by designing flexible systems with the full participation of the staff who live within the systems. After all, who knows your customers better than the people on the front lines who serve them?” said Kip.

Pete added, “That’s a good point, Kip. As CEO, I rarely interact with customers anymore unless they are really upset.”

“That’s a common situation for senior executives,” concurred Kip. “And it’s a compelling argument for why it’s so important for CEOs to continually encourage staff members to modify the systems that don’t meet their customers’ needs. But changes shouldn’t be made willy-nilly. Rather, the senior executive needs to remind folks that just because the systems work well for most customers doesn’t mean they work well for all customers.”

Lucy nodded, “We’ve been trying to design the perfect customer service process for years, without success. Now I see how my organization can add value to that design with our existing clients and with new ones when they come along.”

Kip nodded at Lucy and continued. “A luminary on the subject of customer service is Hal Rosenbluth, CEO of Rosenbl·uth Travel, a billion-dollar travel business. Hal talks about treating employees like customers. His approach is simple: Treat your employees well, and they in turn will treat your customers well. Conversely, treat your employees poorly, and they will treat your customers poorly.”204

At this, Hank noticeably perked up. Now Kip had his undivided attention. “Here’s how Rosenbluth puts it,” Kip said. Grabbing a piece of paper from his briefcase, he began to read aloud:

When news spread of our company’s 7,500-percent growth in revenue over the past fifteen years (from $20 million to $1.5 billion while maintaining profitability above industry standards), we began to be literally inundated with requests to share our “secret” of success. Our secret is controversial. It centers on our basic belief that companies must put their people—not their customers—first. You might wonder how our clients feel about this. For our people, the clients are priority number one. Our company has built a solid reputation in the field of customer service (in fact, our client retention rate is 96 percent), but we have actually done it by focusing inside, on our own people.1

“To become a world-class customer service organization,” Kip continued, “Rosenbluth counsels, ‘organizations must first turn their attention to serving internal customers.’2 And serving internal customers requires systems that make it easy to serve external customers. This requires flexibility.”

“Kip, by advocating flexibility, you’re not promoting permissiveness, are you?” asked Lucy.

“No, I’m not,” responded Kip looking at Hank, “nor am I suggesting that the systems should be soft, fuzzy, or ill defined. Rather, I’m arguing that flexible structures are designed, monitored, and modified by the staff members who work within them to meet the needs of customers.

“One of the key indicators of the potential success of this approach occurs when the lion’s share of the folks who are involved and touched by the change welcome it. Ultimately, you need to look at all policies and systems as works in progress, not sacred cows. And the less involvement you as a leader have in the development of any new approach, the better. People will more readily embrace changes if they are the ones who introduce it to you!”205

Ultimately, you need to look at all policies and systems as works in progress, not sacred cows.

“Well, that’s a lot different than the way we make changes to our systems now,” said Pete, “but I can see how important it would be in a freedom-based operation.”

Hank Striker was taking all this talk in. He remained silent. No more wisecracks, no more stupid remarks.

“Speaking of changes to the system,” interjected Pete, “I’m guessing that the most politically volatile change in a freedom-based operation is to the compensation system. Certainly, there ought to be a relationship between compensation and the market value of each job.”

“Sure,” said Kip, “in a freedom-based organization, compensation systems are designed primarily to encourage staff members to take on greater responsibilities. And people are rewarded for their ability to transfer knowledge and experience to other staff members.

In a freedom-based organization, compensation systems are designed primarily to encourage staff members to take on greater responsibilities. And people are rewarded for their ability to transfer knowledge and experience to other staff members.

“At Johnsonville Foods, for instance, compensation is spread over four pay ranges, depending on one’s range of influence.”206

“That’s a different way of paying people,” noted Yolanda.

“You bet, Yolanda,” continued Kip. “It suggests a different way to create an incentive approach for people that is positive and constructive and doesn’t include bribing them.”

Hank interrupted. “Hey, I know Johnsonville. They’ve got great brats and sausage!”

“I will sure agree with that,” exclaimed Kip. Turning and grabbing a clean piece of paper, he took out his pen and began writing. “Level 1 pays people who are able to manage themselves in their own jobs. If you can’t do this within the first ninety days, you can’t stay at Johnsonville Foods!

“At level 2, pay increases as staff members are able to influence other members of their work group.

“Level 3 pays staff members more for being able to influence others throughout the entire organization. And, at level 4, members are rewarded for being able to influence the entire industry.”

Pete thought for a moment and then asked, “You’re saying that at Johnsonville, pay is not necessarily tied to job titles and promotions.”

“That’s exactly what I’m saying, Pete,” said Kip pointedly. “But I’m not saying Johnsonville’s approach is the only way to pay people. No one compensation program or approach is appropriate everywhere.”

Yolanda nodded her head in agreement with Kip’s last statement. “That’s for sure.”

“Here’s another example of what I think you’re talking about, Kip,” said Lucy. “At Egon Zehnder International, an executive search firm, seniority and company-wide results determine the pay. Their approach is a little out of the ordinary, I know. That’s why it caught my interest, because it was so different from the current thinking in the compensation.”

Pete turned to Lucy. “Great, tell us about it.”

“Egon Zehnder, the founder and retired chairman,” began Lucy excitedly, “explains his unique approach to paying people this way. Let me see if I can remember how he said it. Oh, yeah: ‘Today, most consulting firms, law firms, and so forth, consider seniority irrelevant—and occasionally something much worse. They believe pay should be based on performance and, more specifically, individual performance.’207

“‘At Egon Zehnder International (EZI), we prefer to stick with the old-fashioned way to pay. In addition to base salaries, the firm gives partners equal shares of the profit and another set of profit shares that are adjusted only for length of tenure as partner.’3

“Listen to these results,” continued Lucy. “Using this old-fashioned system, EZI has an annual turnover rate of just 2 percent, while the industry average is 30 percent! This difference in turnover costs EZI’s competition a bundle of money, while bringing significant dollars to their bottom line. EZI reports billings and profits that have expanded steadily for thirty-seven years.”4

“But why does EZI’s old-fashioned compensation system work so well?” asked Yolanda.

“Zehnder says there are two main reasons,” Lucy answered. “First, the system attracts people who are inclined to collaborate with others and encourages the sharing of information. Second, the system requires the firm to look for people who desire long-term employment. As a result, EZI retains very experienced consultants who, because of their numerous contacts, are able to match executives to organizations exceptionally well.”

Kip summed up what his and Lucy’s examples implied: “It would seem then that regardless of how you design your compensation system, great care should be taken to pay people fairly based on how much they contribute to the success of the organization. To that end, freedom-based organizations try to design compensation systems that do not create extrinsic distractions.”

Freedom-based organizations try to design compensation systems that do not create extrinsic distractions.

Yolanda pondered Kip’s comment for a moment before responding. “So, regardless of how you design your compensation system, freedom-based organizations pay people based on what they contribute. I can see the logic of that approach, but how do you let people know how much they’re contributing?”208

“Let me take a crack at that,” begged Lucy. “I think the worst way to let people know how they’re doing is by using a performance appraisal.”

Kip interrupted Lucy, saying, “Excuse me for cutting in, Lucy, but I keep this quotation around for just such occasions.” He pulled a tattered file from his briefcase where he kept his oft-used quotes. Pete glanced at Hank assuming that whatever this quote was, it would set Hank off.

Kip began reading:

[Performance appraisals impede] the reception of feedback, and there is no solid evidence that they motivate people or lead to meaningful improvement. Due to its inherent flaws, appraisal produces distorted and unreliable data about the contribution of employees. Consequently, the resulting documentation is not useful for staffing decisions and often does not hold up in court. Too often, appraisal destroys human spirit and, in the span of a thirty-minute meeting, can transform a vibrant, highly committed employee into a demoralized, indifferent wallflower who reads the want ads on the weekend.5

“Put bluntly, performance appraisals don’t work!” said Pete.

“Yes, Pete, they don’t work and should be abandoned,” agreed Kip.

“I love performance appraisals!” said Hank, with a look of astonishment.

Pete continued down the same path: “To quote Chuck Colson of the Nixon administration, ‘When you’ve got a hold of their you-know-whats, their hearts and minds will follow!’”

“Yeah,” Lucy responded, “he and the rest of that paranoid gang ended up in federal prison.”

There was dead silence for a moment, then Yolanda wondered aloud, “Why don’t performance appraisals work, and what do you replace them with?”209

Hank had not responded to any of their comments, which surprised Pete greatly.

“Yolanda, they don’t work because most performance appraisal systems are a form of judgment and control. Basically, they’re an attempt to manipulate behavior,” said Lucy.

“Right, Lucy!” said Kip, smiling, in recognition of his ally. “On the other hand, Yolanda, freedom-based organizations think of staff members as partners. By shifting the focus from performance appraisal to personal development, staff members take ownership for both their past performance and their future skill development. This kind of feedback is given daily. Periodic appraisals are eliminated. Freedom-based organizations think of staff members as partners. By shifting the focus from performance appraisals to personal development plans that the individual creates, staff members take ownership for both their past performance and their future skill development.

By shifting the focus from performance appraisals to personal development plans that the individual creates, staff members take ownership for both their past performance and their future skill development.

“Periodic performance appraisals put people on the defensive and create a passive-aggressive relationship between boss and employee.”

Pete added fuel to the discussion. “I recently read an article by Max DePree, chairman and CEO of Herman Miller Inc., a furniture maker recognized by Fortune magazine as one of the best companies in America to work for. He suggests that an effective approach might involve an annual planning session asking questions like these:



Kip recognized that Pete and the others were now fast becoming total converts to the freedom-based philosophy—well, all except perhaps Hank.

Kip pointed out, “Treating staff members as partners includes providing opportunities for long-term career development as well. Of course, not all organizations can provide the opportunity for every staff member to advance his or her career within the organization over an entire working lifetime.”

Turning to Yolanda, Kip continued, “And, of direct interest to you, Yolanda, this is the direction I’d say the incentive industry could entertain for their future value-added offerings.”

Lucy piped up, saying, “The consulting industry, like many others, is notorious for turnover. My experience suggests that very few of our people can expect to be with us for their entire careers.”

Pete commented on Lucy’s point. “That’s the case in most organizations. But I think what Kip is saying to us is, helping staff members develop the skills they need for their next position, whether it’s within our organization or elsewhere, provides benefits to both the employee and the employer.”

“Precisely,” said Kip. “When staff members benefit from a growing sense of confidence and a greater depth of knowledge, the organization benefits by not trapping them in jobs they’ve outgrown or that have outgrown them.”211

“You’re not suggesting we spend our time helping our people develop skills that might take them out of our organization, are you?” questioned Lucy in astonishment.

“That’s exactly what I’m suggesting,” Kip replied. “Demonstrating an unselfish interest in helping staff members develop long-term career skills is an excellent way to gain their loyalty. This approach creates a bilateral agreement in which the organization accepts the responsibility for providing long-term career growth opportunities, while, at the same time, the individual accepts the responsibility for their own career development.”

“Are you all from Mars?” asked Hank incredulously, unable to contain himself any longer.

Pete looked at Hank again with his Marine Corps stare and said, “Maybe we are, but this makes a lot of sense.”

“And maybe, just maybe, I’ll have someone beam you up, Hank!” said Lucy, with a wry smile.

Kip wanted the group to get back on point. “Pete, here’s an example from the beverage industry. The typical career of a soft drink or beer delivery driver ends when their back gives out, usually some time in their forties. Planning for the driver’s next nondriver position begins the day they’re hired. This might involve planning a transition to some other position within the company, such as sales and marketing, management, or support. The transition might just as easily be to a whole new career outside the company.

“Regardless of the career track chosen, the newly hired delivery driver understands that driving a delivery truck is not a job that will last forever. They take ownership of preparing for an inevitable change in jobs, just like a professional athlete would. The point is that developing people is good for them and good for the business.”

“So by helping people develop their skills, individuals become responsible for their own futures,” added Pete.

“I’ve got another question for you, Kip,” chimed in Lucy. “What about the organization’s internal communications systems? How do you get people to take ownership of them?”

“In an increasingly technological society,” said Kip, “we’ve come to rely more and more on electronic means of communication to solve that problem. But using electronic communications systems in the wrong way can be detrimental. I recently picked up an article on just this subject. In it, Edward M. Hallowell, instructor of psychiatry at Harvard Medical School, points out that e-mail and voice-mail are poor substitutes for face-to-face conversations.”7212

“I absolutely agree,” interjected Yolanda wholeheartedly. “In fact a friend of mine who worked at Microsoft in the early years said that e-mail at Microsoft was viewed as a contact sport.” Everyone laughed, including Hank.

“Now that paints a picture, doesn’t it?” said Kip, smiling.

“Yeah, but I’ve found that many of my people will do almost anything not to deal directly with people!” observed Pete.

“That’s true, Pete, but Hallowell tells us why that’s true. ‘Human moments’ require energy, energy that we sometimes lack due to our harried, overextended existence. Even when face-to-face exchanges are brief and businesslike, they require our complete attention. We must put aside anything else we’re doing to engage effectively with another human being.

Lucy countered, “But you’ve got to admit that electronic forms of communication have significantly increased the speed of information transmission and the volume of information available to us.”

Kip acquiesced, “I’ll give you that, Lucy. But while adding convenience, they’ve also deluged us with daily communications.

“Freedom-based organizations are careful to keep human moments in mind when designing their communications systems. Pete, it’s essential that standards of conduct for meetings, e-mail, voice-mail, telephone conversations, memos, and other forms of communication be established. The challenge is to think of how others will perceive the information they’re receiving and to design the systems with human moments in mind.”

“Enough about the people stuff; how about quality?” added Lucy.

“Lucy, nearly every American organization has implemented some kind of quality initiative,” said Kip. Lucy nodded in agreement.213

“Quality initiatives of every type,” continued Kip, “have played an important role in our evolving economy as organizations have tried to become more efficient and more competitive. Yet what the quality initiatives have often left out is the human element. Even Deming wasn’t able to get his message totally across.”

“Maybe,” proposed Lucy, “that’s because quality initiatives are designed by engineers and statisticians whose intentions are good, but who find it difficult to deal with people.”

“You could be right, Lucy,” Kip assented. “Still, freedom-based organizations gladly embrace quality initiatives provided they don’t impose manipulative forms of controls on the people who must work within them. In a freedom-based organization, the people who are accountable for quality design the processes and measure their own work.

“In an article by the retired chairman and CEO of Harley-Davidson, Rich Teerlink, he writes about the importance of creating an organization where ‘decisions and accountability are owned by all.’ Here’s what he says:

It’s important for people to understand that even if you are hardwired, like me, to be a leader who shares power rather than exerts it—even if you set out to be a listener and a team player—the command-and-control model is hard to avoid. That’s because the top management job carries certain expectations on behalf of employees, colleagues, and the outside world. It takes trust on the part of employees and discipline on the part of the leader to push back on those traditional expectations and create a company where decisions and accountability are owned by all.8

“Teerlink clearly understands the importance of people ‘owning’ the quality initiatives and measurement systems. He concludes:

Everybody hasn’t fully bought into the inclusive approach. We still have some people who think they know all the answers, but these people are getting fewer in number. We still have people who just want to bring their bodies and not their whole selves, mind included, to work. But their ranks are dwindling, too. We’ve been transforming ourselves since the buyout and will still be at it ten years from now. It is a journey that will never end unless we let it.9214

“Deming got us to fix the processes,” Kip continued, “but other TQM gurus didn’t listen to his plea to treat people with dignity, trust, and respect. The other gurus led us to fix the processes, but we ignored the people responsible for making the processes work.”

Kip nodded with pride. He was witnessing Pete, Lucy, and Yolanda growing as freedom-based philosophers.

As for Hank Striker, Kip felt like he was hoping for a miracle.