Leading During Tough Times – An excerpt from my e-newsletter

Tough Times may lie ahead. If so, than fear, both legitimate and overblown, will guide many decisions. Hatchet men for hire will have a field day, and companies will crack down on everything from spare parts to paperclips. For most organizations, there is a better way.

The evidence is clear. The more people are engaged…the more they are able to apply their minds to improving their work on a daily basis, not just as part of a faddish program…the more productive and efficient the organization. Persistent and structured engagement, linked to micro (work process) and macro (big picture) goals, creates the stable environment needed for high performance task execution and continuous improvement. Smart management knows that stability is good.

Workers at Toyota surface possible quality issues in good times and bad. They’re the best at what they do because management doesn’t continually change their approach to managing. They are “servant leaders” in the best sense, genuinely thanking the worker that surfaces a possible problem even if they stopped the production line to do so. Toyota gets it that the key to continuous improvement lies in the hearts and minds of their workforce. They are structured for engagement. They understand the paradox that the foundation for productive change lies in a stable approach to managing.

They also understand authority. They are servants to the right behaviors, but they won’t tolerate a worker that wont adhere to those behaviors. To fit in at a Toyota facility, you must understand and be committed through your actions to the system. For most, this is no problem, because the system makes sense, and respects the individual’s ability to think. It’s an environment that lifts the spirits of most workers, whether in the US, Japan, or any of their other far flung locations, and channels their energy on what matters. As John Dewey put it, “There is no freedom without structure.” Toyota is one of the most consistent examples of the power of structured engagement.

This is especially true during economic downturns. Cost control is traditionally approached as a numbers game, and managed top down, without consideration for the impact on the human system. As Benjamin Franklin put it, such an approach is “pennywise and pound foolish.” Employee engagement, trust, morale, and productivity erode. Discretionary effort, vital to high performance, becomes a casualty. On the contrary, resentment, absenteeism, employee indifference, grievances, and even sabotage and theft increase, predictably leading to further micro-managing and security measures. Attempts to address problem behaviors often impact the best employees along with the worst, and chip away at the bond between everyone and the company.

A 2007 American Management Association (AMA) study re-affirms what reams of research have shown, that “the most important relationship within any organization is the one between the employee and his or her immediate supervisor.” During cost-cutting, that relationship, often miss-managed during the best of times, is at risk. Activities that supervisors depend on not only for development but to bolster morale, such as training and business travel, become harder to justify. Wage increases may dry up. All that’s left to cement the relationship is the emotional intelligence (or EQ) of the supervisor (and to a lesser but still important degree, the EQ of the subordinates), and the approach the company and the supervisor take towards engaging employees in the work.

Even when the supervisor and/or the company have a high morale/high productivity/high engagement approach, cost-cutting through downsizing bites into the supervisor –employee relationship by shuffling and losing leaders throughout the system. Navy research, conducted in the late 50’s and early 60’s, documented a 6 month productivity dip every time a team goes through a leadership transition. Left to themselves, it takes that long for the team to understand and warm up to the new leader’s approach (if they ever do). Downsizing, while looking good on paper, creates a surge of productivity and morale disrupting transitions. The consequences, as documented in another (seemingly ignored), AMA study, usually outweigh the gains:

“Do blanket layoffs help business performance? In the American Management Association’s survey last year of 830 companies that downsized at least once since 1987, only 43 reported profit after making the cuts. Only 31 percent reported higher worker productivity. Not surprisingly, 77 percent reported poor morale among the remaining employees. AMA’s conclusion was that firing employees to control costs was largely an exercise in futility. AMA’s main finding? Layoffs are addictive. If you have one layoff, 63 percent of the time you will have another next year, whether or not the first one helped” (From John Trudel, The Ruinous Game Called Downsizing, Upside Magazine, November, 1993).

This isn’t to say that downsizing never makes sense. But it’s no panacea, and there are powerful alternatives.

What to do:

Take a consistent approach in good times and bad

Don’t swing back and forth from employee involvement to more autocratic management. Create an organized approach to continuous improvement at all levels in good times and bad. Everyone is already noticing what impedes their performance, and what aids it. Make sure they have tools for understanding and improving their processes, especially at the crossfunctional and upstream/downstream interfaces, where improvement requires collaboration.

There are many ways to structure engagement and improvement. Pick one and stick with it. Make sure every layer is coaching and supporting the improvement efforts of the layer beneath.

Insist on emotionally intelligent leadership at all levels

Call it what you want, but face the facts. How each leader treats their subordinates, and how they work with their peers, is a huge variable in the performance of your organization. And the higher up in the hierarchy, the bigger the emotional impact. Don’t leave the EQ at the top of the organization to chance. Even better, develop it throughout the organization, both in the interest of succession planning and immediate results.
Minimize disruption

Sometimes it seems that leaders must not think they’re doing something if they aren’t re-organizing. At times, of course, reorganizing is the right thing to do. A less disruptive alternative, however, is to work with the structure you’ve already got. There are many possible root causes for poor performance, besides structure. A lack of consistency, for example, is potentially one of them. Figure out what your predecessor was doing well, and what the organization has been doing well, and continue it. Have the discipline to target your change efforts. like a laser beam, on what has been lacking.

Manage transitions

There’s no need to leave leadership transitions, and the length of time it takes to for teams to achieve peak performance, to chance. Manage every leadership transition methodically. Standardize the process so that the individual leader’s ego doesn’t get in the way. Such a process is available as a free download on our website at http://crosbyod.com/NewLeader.pdf. Assure a quality outcome by providing skilled facilitation. Internal resources, especially following on-the-job training, can provide such facilitation on an ongoing basis.

Focus employees on critical targets, and engage them in a structured way in reducing costs

We haven’t met an organization yet where the employees didn’t know a 1000 ways to reduce costs while improving results. Of course, if that is already what people are working on daily, like at Toyota, there’s going to be less “low hanging fruit.” But most organizations, especially manufacturing operations, have huge gains to realize from involving the workforce in a structured manner in the reduction of wasted time, energy (electricity, oil, etc), and material…not to mention an upswing in mutual respect and morale. Crosby & Associates has helped implement engagement in hundreds of locations globally, and witnessed the results. If engagement isn’t a way of life in your organization, why not make it so?

About crosbyod

Crosby & Associates OD is a catalyst for high performance & morale. Our methods are a unique blend grounded in research and decades of experience. In the spirit of Kurt Lewin, the founder of OD, as we partner with you in the present we transfer our methods to you so you are independent in the future. Learn more at www.crosbyod.com
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