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For Professionals: Wisdom (2)

Thursday, 01 November 2012 13:29

The Uncompromising Leader

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The Uncompromising Leader

Key ideas from the Harvard Business Review article by Russell A. Eisenstat, Michael Beer, Nathaniel Foote, Tobias Fredberg, Flemming Norrgren

The Idea in Brief

Managing the tension between performance and people is at the heart of every leader’s job. Focus single-mindedly on delivering profits, and you disenchant your workforce, destroying your capacity to drive needed strategic change. Concentrate solely on employees, and you slide into complacency, eroding your competitive vitality.

Exceptional leaders refuse to choose between profits and people, say Eisenstat and coauthors. They take five actions to promote both:

  • •  Earning employees’, investors’, and other stakeholders’ trust
  • •  Engaging directly with employees
  • •  Maintaining focus and consistency of purpose
  • •  Building collective leadership power
  • •  Fostering shared purpose

By applying these practices, the CEO of diesel-engine maker Cummins turned the recession-stricken company around. He launched a global program to rearticulate Cummins’s mission and reaffirm its values. Then the company taught employees skills needed for a new strategy. Sales doubled. Stock price increased by one-third. And employees’ commitment to the new strategy soared.

The Idea in Practice

Eisenstat and coauthors recommend these five practices for promoting profits and people in your company:

  • 1. Earn Trust.

    Be open in sharing information with and receiving feedback from all stakeholders – from directors to front-line employees. You’ll foster a sense of shared reality and trust that enables you to build alignment around a new direction.

    Royal Mail Group’s chairman Allan Leighton doesn’t spare employees painful news (“We’re laying off 30,000”). Owing to his consistent candor, people believe him when he communicates positive news (“The new strategy is working”).

    • 2. Engage with Employees.

      Display authentic concern for employees, and communicate directly with them.

      Leighton personally visits most of Britain’s 1,600 delivery offices and routinely talks with mail carriers on their rounds. His “Ask Allan” e-mail account gets 200 messages a day; each receives acknowledgment immediately and a full response within seven days.

      • 3. Maintain Focus and Consistency of Purpose.

        Spearhead only a few major change initiatives at a time. Once you’ve selected these areas of focus, communicate relentlessly about them.

        • 4. Build Collective Leadership Power.

          Balance playing a strong personal role in focusing your company’s agenda with building collective leadership capacity. For example, assemble a core team of leaders whose strengths complement your weaker areas.

          • 5. Develop Shared Purpose.

            Forge an emotionally resonant shared purpose for the company that includes these elements:

            •  Building a better world. A strong social mission strengthens your firm’s brand
               and unleashes your people’s commitment and energy.

            •  Delivering performance to be proud of. People feel most fulfilled working for organizations recognized as high performers. To deliver
               exceptional results, establish a full set of performance indicators—not just financial performance—required to build a great firm.

            •  At IKEA, all leaders—from the CEO to the front lines—receive upward feedback about whether they’re living up to the company’s values
               and management principles.

            •  Providing personal and professional growth opportunities. People get excited by opportunities to advance their skills, not by cost
               reductions or capital efficiency.

            Every year at Standard Chartered Bank, each operating unit conducts a strategic people review, checking the health and diversity of its talent pipeline and updating succession plans for key positions. And the CEO personally monitors the company’s senior executives, regularly contacting them to see how they’re settling into a new position or whether they feel they need new challenges.

            Thursday, 01 November 2012 13:20

            Rethinking Trust

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            Rethinking Trust

            Key ideas from the Harvard Business Review article by Roderick M. Kramer

            The Idea in Brief

            Trust is essential for business and economic success. But recent financial scandals suggest that people aren’t always very smart about whom they trust. Bernard Madoff took in some of the world’s cleverest people.

            In evolution, trust served humans well because it increased the chances that vulnerable infants would survive. Our body chemistry rewards us for trusting, and we quickly decide to trust others on the basis of simple surface cues such as their physical similarity to us.

            Our readiness to trust makes us likely to make mistakes. At a species level, that doesn’t matter so long as more people are trustworthy than not. At the individual level, though, misplaced trust can get us into trouble. To survive as individuals, we’ll have to learn to temper our trust.

            Trust is essential for business and economic success. But recent financial scandals suggest that people aren’t always very smart about whom they trust. Bernard Madoff took in some of the world’s cleverest people.

            The Idea in Practice

            To trust wisely, we need to readjust our mind-set and behavioral habits, following seven basic rules.

            • Rule 1: Know yourself.

              If you tend to trust the wrong people, you must work on interpreting the cues you receive. If you’re good at recognizing cues but have difficulty forging trusting relationships, then you’ll have to expand your repertoire of trust-building behaviors.

              • Rule 2: Start small.

                Measured trust begins with small acts that foster reciprocity. A good example of the dynamic was displayed by Hewlett-Packard in the early 1980s. Management allowed engineers to take equipment home whenever they needed to, without having to go through a lot of red tape. That sent a strong signal that the company trusted employees, yet it involved relatively little risk, because the policy was tied to employees’ not abusing the trust.

                • Rule 3: Write an escape clause.

                  With a clearly articulated plan for disengagement, people can trust more fully and with more commitment. In Hollywood, scriptwriters register their pitches with the Writers Guild—a simple act that hedges against the risk that others will claim a story as their own.

                  • Rule 4: Send strong signals.

                    Most of us mistakenly believe our trustworthiness is obvious. We actually need to signal it more clearly. By the same token, we have to retaliate strongly when our trust is abused. Sending weak signals about our willingness to engage in trust or punish abuse of it makes us more vulnerable to exploitation.

                    What would you like to see in the next decade?

                    • Rule 5: Recognize the other person’s dilemma.

                      Because we worry so much about protecting ourselves, we often forget that the people we’re dealing with confront their own trust dilemmas and need reassurance about whether (or how much) they should trust us. Good relationship builders are proactive at decreasing the anxiety and allaying the concerns of others.

                      • Rule 6: Look at roles as well as people.

                        A person’s role or position can provide a guarantee of his expertise and motivation. But be careful; people on Main Street USA trusted people on Wall Street for a long time because the financial system seemed to be producing reliable results that were the envy of the world.

                        • Rule 7: Remain vigilant, and always question.

                          Many people whose trust is abused do conduct their due diligence initially. The trouble is that they don’t keep the due diligence up to date, because they find that being vigilant and ambivalent about the people they trust is psychologically uncomfortable.

                          About the Author

                          Roderick M. Kramer is a social psychologist and the William R. Kimball Professor of Organizational Behavior at the Stanford Graduate School of Business in Palo Alto, California. His most recent books are Organizational Trust (Oxford University Press, 2006) and, with Karen Cook, Trust and Distrust in Organizations (Russell Sage Foundation, 2004).




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