Intolerance.

The Oxford English Dictionary defines intolerance as the unwillingness to accept views, beliefs or behaviors that differ from one’s own.

In American politics, we have seen a level of bipartisanship that has Washington divided into Red and Blue extremes, and as Todd Purdum, National Editor of Vanity Fair, described in his September 2010 article, “Washington , We Have a Problem,” “the partisan calumny and contempt in Washington are today all-consuming.” Around the world, we are seeing intolerance take many forms from the rise of religious fundamentalism in both the Christian and Muslim worlds to “the blatant bigotry of many mainstream political leaders, journalists and other elites” in Europe (Washington Post).

In the workplace, intolerance reveals itself in a variety of ways.  It may be as blatant as a racial slur or ridicule of sexual orientation.  More often, it is as seemingly innocuous as a manager silencing a naysayer, discouraging the introduction of a new idea or calling a person “a negative thinker.”  It might also be demonstrated in customer-vendor relationships when battle lines are drawn, demands are made and both sides compete to determine how many pounds of flesh can be extracted before an mutually unsatisfying agreement is reached.

As stated by a VP of client management for a well-known enterprise technology vendor, “I went into the meeting thinking this client was one of our best relationships.  They rated our work highly, appeared arm-in-arm with us at conferences, and were one of our frequent testimonials.  I knew we were in trouble, though, when I walked into the conference room and saw their purchasing director and two attorneys.  It was as if today was the day they decided to beat the crap out of someone and it was our turn.  There was no give and take discussion.  It was all about how they were right and we were wrong.”

Intolerance of any kind in organizations is a form of workplace violence.  Plain and simple.  It may not lead to physical violence per se, but it is not about connecting, partnering or collaborating.  It is about dominating and eliminating that which is different.

Intolerance is an ideological fundamentalism that insists there is only one right way and that all other ways are wrong.  A fundamentalist is one who says, “If you don’t think the way I think, then you are unworthy.  And if you say that my way is the wrong way, then you are against me.”

This is a form of violence because ideological fundamentalism is closely followed by rhetorical fundamentalism which becomes a gateway to physical fundamentalism.  The initial thought of “you don’t think like me” often is carried further in the minds of intolerants when they say, “People who don’t think like me (or us) should get in line or leave.  My, gosh, they are anti-company.  They don’t buy into our values or our culture.”

Then rhetorically the intolerant might start asking questions such as “What should we do with people that are anti-company?”  Pretty soon we are ready for the final stage that says, “Anyone who is against the company should be fired” or “any vendor who is unwilling to see things our way should be sued.”

There is a temptation within intolerant thinking to escalate any variation from a “difference” to a “danger.”  And by talking about anyone who thinks differently as wrong, inappropriate, unsuitable or anti-company, you are laying the foundation for somebody in power to do something about it.

Listen, I’ve been around technology for most of my career, so I understand the idea of binary constructs. One/Zero.  Right/wrong.  Black/white.  Us/Them.  In/Out. Red/Blue.  Conservative/Liberal.  Capitalist/Socialist.  Yin/Yang.

It is human nature to try to make sense of an uncertain world with the certainty of binary thinking.  We seek to find an answer, the one answer, to every question.  And if we don’t know it, we search the web or hire a consultant and expect a presentation of THE answer.  We want to skip the organization assessment, skip the contextual analysis, skip the frameworks and methodologies and go right to the answer.  And we want the answer to be clear, concise and presented quickly.

Leaders often make the mistake of thinking they must be prepared to give one answer, the only answer, to every challenge that comes their way.  This faulty thinking creates a problem.  It makes leaders think that their answer must not only be right, it must be followed or else it is a challenge to their authority.  It presents another problem because when a leader finds the “right way” it means all dissention must be shut out.  Now, they might manage to have genuine sympathy for others in their wrongness, but make no mistake about it, they are wrong.

Leadership based upon this thinking means the right way is about my thinking, my approach, my team, my function, my division, my region, my company, my culture, my tribe, my dogma.  Any deviation from that is substandard.

But here’s the rub.  Organization effectiveness and intolerance cannot coexist.

We live in a business world that is increasingly partnered, contracted, outsourced, off-shored, virtual, international and matrixed.  Our organizations and project teams are flat, without any real hierarchy and without direct reporting lines.  There are multiple business models that work in a variety of contexts.

Dare I say it?  There is no One Right Way.  In fact, teaming, collaboration, invention, innovation and creativity require the expansiveness of multiple right ways.  They also demand a new way of thinking and a new way of approaching our interactions with the differences we encounter along the way.

Over the next few posts, I will begin to share (in fewer words) what I have learned about how we hack the code of collaboration in these evolving organization forms.

A few weeks ago I was talking with a project manager who wanted an assessment of his team’s capability.  The project had been moving along without significant problems, but was approaching an intense period with several critical milestones.  The project manager felt unsettled because his team was not providing the analysis and insight he expected.

“I don’t think I have a team that has the right skill set,” the project manager confessed.  “We’re coming up on some very important milestones and they’re not sharing the usual level of detail.  I’m concerned they don’t know what they are doing and that I’ll have to make some decisions without their input.”

When I spoke with the project team, they expressed a similar frustration.  “I don’t feel like he trusts us,” the validation lead shared.  “Meetings feel more like an inquisition.  We’ve all worked on similar projects before, but he hasn’t recognized any of our experience.  We know he’s a good project manager, but he doesn’t seem to know we’re good, too.”

There have been a number of studies that examined the relationship between trust in management and the actual performance at the group or organizational level.  One study, for example, found that when basketball team members trust their coach, their performance is better.  Another study found that when restaurant employees trust their manager the restaurant’s sales and net profits increase.  The results of these studies demonstrate that when employees trust management, organizations have greater success.

More importantly, a study by Sabrina Deutsch Salamon (York University) and Sandra Robinson (University of British Columbia) found that when employees feel that they are trusted by management, organizational performance is improved.  This is significant because it shows that a sense of “felt trust” affects performance beyond the effect of employee trust in management.  It shows that when employees feel trusted by management it can have a direct impact on the top and bottom lines.

This is a very different picture than the leader standing on a pedestal waiting for employees to prove themselves and earn his or her trust.  These results suggest that successful leaders start the relationship by actively showing employees they trust them through words and deeds.

For many organizational leaders and human resources professionals, this study validates what they have known intuitively for years: the more you engage and involve your employees, the more you give them autonomy to perform their jobs, the better you tap their intrinsic motivation and drive employee performance skyward.

Unfortunately, many of the well-developed techniques of organizational management and control work directly against these findings.  This is especially true of rigorous project management methodologies.  They enable companies to organize people in different places with different skills to perform tasks with structure consistency, but at the risk of marginalizing the relationship building skills that build trust.

It’s a delicate, but important, balance.  To be a successful leader, especially under the demands of time-intensive projects, requires that you apply the formal structures and process needed for systematic execution AND that you show a willingness to be “emotionally vulnerable and human with one another.” (Patrick Lencioni)

It turns out that Douglas McGregor was on the right track about how to manage in the future with his concept of Theory Y managers:  People are more self-directed, committed and creative when managers develop a climate of trust by communicating openly, minimizing the relationship distance between themselves and their subordinates, and creating a comfortable environment where employees can develop and use their abilities.

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Randy Nelson knows something about how to build collaborative, innovative cultures.  Although currently the Head of Artistic Development and Training at DreamWorks Animation, two years ago when he did this piece, he was the Dean of Pixar University.  For twelve years, Randy was responsible designing curriculum and delivering classes and programs to continuously increase the skill and collaborative ability of Pixar’s mixed technical, artistic and management staff.

Pixar’s business model differs significantly from the standard Hollywood model in which there is a production organization that is set up in an ad hoc way for each film.  Pixar is an organization with regular, full-time employees that has sought to shift the center of focus from the ideas to the people who create the ideas.  Central to this strategy is Pixar University, a cross between an art and film academy that seeks to develop the skills of the employees, the learning curve of the organization and the collaborative spirit of the culture.

So, for those of you interested in improving the collaboration environment of your organizations or project teams, here are a few takeaways:

• Like a good improvisational actor, accept every offer to collaborate.
• Make your partners look good.  It’s not about judgment or saying “This is pretty good. How can I make it better?”  It’s about saying “Here’s where I’m starting. What can I do with this?”
• Focus on error recovery, not failure avoidance.  It’s about resiliency, adaptability and the ability to make something from failure.
• Be interested, not interesting.  Be a great listener who amplifies the person talking.  Seek to know what others want to know.
• Use communication as an opportunity for translation. If you just emit “techie speak,” nobody really hears you. The responsibility for translation gets pushed to the receiving end of the conversation, and as a result, gets garbled. Do the translation at the sending end so that it doesn’t have to be done at the receiving end and the listener can say, “I understand.”
• See collaboration as amplification.  This means connecting a group of individuals that are interested in each other, that bring separate depth to the problem and that bring a breadth that gives them interest in the entire solution.  This combination it allows them to communicate in ways that promote understanding and add to overall solutions.

Ethan Zuckerman is the senior researcher at the Berkman Center for Internet and Society at Harvard University and he studies how the world uses new media to share information and moods across cultures, languages and platforms.  In this talk he identifies a troubling challenge:  While the internet connects the globe, most of us only listen to people just like ourselves.

“The world is, in fact, getting more global.  It’s getting more connected.  More of our problems are global in scale.  More of our economics is global in scale.  And our media is less global by the day.”

Our technological connectivity isn’t helping us understand the world.  It’s helping us become more myopic.  And at a time when the real problems of the world are global in scale and scope, we need to broaden our perspective and our sources of information.

That’s an effective practice even if our “world” is our own smaller workplace and community.  Our ability to solve problems, to innovate and to build sustainable businesses, ecosystems and societies, is entirely dependent upon recognizing our interconnectedness.

Just as there are parts of the world are dark spots in terms of attention, there are parts of our smaller world that are blind spots for us. Our ability to learn and understand these dark spots and to discover how they are vital to us, depends not only on the recommendations of guides, but on our desire to seek to understand the full “width and wonder of the world.”

Listening to global voices requires rewiring our own data gathering systems and taking the time to translate, understand and embrace the richness outside our perspective.

Robert Sutton, Professor of Management Science and Engineering at Stanford University, has been researching great bosses for many years.   His last book was the New York Times bestseller The No Asshole Rule: Building a Civilized Workplace and Surviving One That Isn’t.  His work suggests a number of techniques and behaviors that research has shown good bosses demonstrate.

More importantly, he has concluded that all the technique and behavior coaching in the world won’t make a boss great if that boss doesn’t also have a certain mindset.  Interestingly, these beliefs are held by the best bosses and rejected, or more often simply never even thought about, by the worst bosses.  Here are the key beliefs:

1. I have a flawed and incomplete understanding of what it feels like to work for me.
2. My success — and that of my people — depends largely on being the master of obvious and mundane things, not on magical, obscure, or breakthrough ideas or methods.
3. Having ambitious and well-defined goals is important, but it is useless to think about them much. My job is to focus on the small wins that enable my people to make a little progress every day.
4. One of the most important, and most difficult, parts of my job is to strike the delicate balance between being too assertive and not assertive enough.
5. My job is to serve as a human shield, to protect my people from external intrusions, distractions, and idiocy of every stripe — and to avoid imposing my own idiocy on them as well.
6. I strive to be confident enough to convince people that I am in charge, but humble enough to realize that I am often going to be wrong.
7. I aim to fight as if I am right, and listen as if I am wrong — and to teach my people to do the same thing.
8. One of the best tests of my leadership — and my organization — is “what happens after people make a mistake?”
9. Innovation is crucial to every team and organization. So my job is to encourage my people to generate and test all kinds of new ideas. But it is also my job to help them kill off all the bad ideas we generate, and most of the good ideas, too.
10. Bad is stronger than good. It is more important to eliminate the negative than to accentuate the positive.
11. How I do things is as important as what I do.
12. Because I wield power over others, I am at great risk of acting like an insensitive jerk — and not realizing it.

It’s simple, really.  Most “modern” corporations kill human capability the way we strip-mine and deplete the earth of natural resources.

Think about it.  We hire bright, ambitious, enthusiastic young people fresh out of the hope and idealism of school.  We stick them in cubicles under fluorescent lights away from windows so they can’t tell whether it’s day or night, sunny or rainy.  We tell them to dress a certain way, show up at a certain time, eat at a certain time, and stay late enough to make a good impression.  We encourage them to not express emotion, talk with the right jargon and tone, write with a particular style and embrace certain values and principles and mission statements.  And we force them to comply with standardized procedures, criticize their shortcomings when they fail to do so, and threaten their security if they get too far out of line.

It sounds a bit like the way cults program people, doesn’t it?  In fact, it’s not too far from the truth.  Cults program people to be silent, loyal, endure pain (to be “strong”), to do the jobs they’ve been assigned and to subscribe to the spiritual values of the group.

I’m not saying that corporations are cults . . . not really . . . I’m saying that the traditional structures of managerial control are designed for compliance and to produce performance within a steady, predictable, average range.

And that’s not good enough anymore.

While it’s cliché, the world is changing too fast, too dynamically, too organically, too symbiotically.  The old linear, command and control, carrot and stick model may work when you want compliance to routine tasks.  If, on the other hand, you want innovation, creativity and high performance, this doesn’t work.

Creativity expert Sir Ken Robinson argues that we don’t get the best out of people because we educate them to become good workers, rather than to be creative thinkers.  Sir Ken led the British government’s 1998 advisory committee on creative and cultural education, a massive inquiry into the significance of creativity in the educational system and the economy, and was knighted in 2003 for his achievements.

Students with restless minds and bodies — far from being cultivated for their energy and curiosity — are ignored or even stigmatized, with terrible consequences. “We are educating people out of their creativity,” Robinson says.

We can apply the same thinking to the way we manage people in organization life.  Take performance appraisal, for example.  The primary HR methodology pushed on organizations over the last 40 years is a standardized, “fast food” model.  It’s built around standard ratings as well as standard competencies or goals or some other check list for evaluation.  It’s meant to be batch processed once or twice per year and rolled up to higher executive, finance or HR authorities for approval.  The expectation is that our staff will fit a normalized distribution curve and that we won’t have too many people that exceed expectations.  This way the compensation distribution will fit the budget.

What’s the point of that approach?  Certainly not developing people.

To create an environment where people can reach their highest potential, you need the “Zagat or Michelin” approach where development, motivation, and engagement are “customized to local circumstances.”  In other words, talent is incredibly diverse even within the same department or function.  People have different aptitudes, passions and motivation.  To help them apply their unique gifts to their jobs, we have to tailor our approach and create the conditions where they will begin to thrive.

Instead of separating people from their natural talents so they can fit a standardized mode, we have to help them identify and connect those talents to the ways they can contribute.  Developing human potential is not a mechanical process.  It’s an organic process that requires customizing to your circumstances and personalizing our approach to managing to people we are managing.

We can’t do that simply by installing a new technology, rating methodology or competency model.  We do this by developing the ability of organization leaders to listen and identify the talents of employees, and to help them apply their gifts in unique and remarkable ways.

Sorry I’ve been away from blogging for a few weeks.  It has been a busy time and writing, unfortunately, has taken a back seat.  The upside to my absence is that the work I have been doing has provided an abundance of ideas and material to share, particularly with regard to innovation.  It continues to be a hot topic among companies waking from their economic slumber and looking for ways to reinvigorate their business.   

In my previous post, I left you with the thought that while innovation is a critical policy area for our national agenda, there was much that individual managers could do to foster innovation right now, at the micro level in our organizations.  Before I share those ideas, however, I think it is important to define it. 

Innovation, creativity, experimentation and invention are words that often are used interchangeably, but for our purposes—and those of scholars studying the subject—they are defined distinctly.  

• Creativity is the ability to think and act in ways that are new and different. 
• Experimentation is the process by which people become creative.
• Invention is the process of creating something that did not exist before. 
• Innovation is the process of thinking creatively about something that already exists. 

Innovation is about applying creativity for the purpose of improvement.  It may refer to an incremental change, or it may refer to a radical or transformational change.  In business, innovation also implies that the change has increased value.  It’s not change for change’s sake.  It’s purposeful change. 

Based upon these definitions, two things must be present for innovation to occur:  creativity and experimentation.  They are the seeds of innovation.  As a result, to foster an environment that generates innovation, a manager has to: 

• Allow the new and different,
• Allow experimentation and failure.

Unfortunately, most organizations, especially those defined by command and control cultures, don’t like the new and different.  It represents risk.  And they definitely don’t like failure. 

These organizations also are defined by a right-sized, Ready-Fire-Aim mentality where speed is valued over effectiveness.  Action is rewarded, thought of as practical and efficient, and the mantra of many corporate leaders is, “It’s better to keep pushing forward than to get caught up in analysis paralysis.”  

For these organizations, innovation is about applying the latest “best practice” whether or not it makes sense.  “It must be right if others are doing it.”  These organizations are marked by multiple change initiatives happening simultaneously:  technologies du jour; Six Sigma; BPM; restructuring; online leadership training; and an abundance of HR tools.  Before a new project is completed another appears.  There is little focus, little consistency and little follow through. 

Solution.  Solution.  Solution. 

Whenever I encounter one of these organizations—and I do all too often—I can’t help but think of one of my favorite quotes from Albert Einstein:  “If I had an hour to save the world, I would spend 59 minutes defining the problem and one minute finding solutions.”  Most organizations spend 60 minutes of their time finding solutions to problems that just don’t matter. 

So, in addition to creativity and experimentation, a culture that encourages innovation also must be skilled at surfacing, identifying and prioritizing challenges.  It requires listening.  It requires space. 

You can’t innovate if you are always in Fire-Fire-Fire mode (double entendre intended!).  

“The greatest scientists are artists as well,” said Einstein, who in addition to being one of the greatest physicists of all time was also an exceptional pianist and violinst.  For Einstein, insight did not come from logic or mathematics.  It came, as it does for artists, from intuition and inspiration.   

He once told a friend, “When I examine myself and my methods of thought, I come close to the conclusion that the gift of imagination has meant more to me than any talent for absorbing absolute knowledge.” Elaborating, he added, “All great achievements of science must start from intuitive knowledge.”    

It’s curious, isn’t it, that school performance has declined at the same time as academic intensity, homework and testing have increased, and at the same time the arts have been dropped from school programs. 

Google gets this.  They created 20 percent time to enable engineers to spend one day a week working on projects that aren’t necessarily part of their job descriptions.  They can use the time to develop something new, or fix something that’s broken.  

Best Buy gets this, too.  An employee-led movement toward results-only metrics has transformed their culture.  The nation’s leading electronics retailer has embarked on a radical–if risky–experiment to transform a culture once known for killer hours and herd-riding bosses. The endeavor, called ROWE, for “results-only work environment,” seeks to demolish decades-old business dogma that equates physical presence with productivity. The goal at Best Buy is to judge performance on output instead of hours. 

What can managers do to foster innovation? 

Allow the new and different.  Let employees experiment.  Create time, space and autonomy to listen, learn and think.  

Innovative companies, innovative schools, innovative lives are not about more work.  They about more fun.

The new reality show Undercover Boss from CBS should be required viewing for every corporate executive and everyone who aspires to be one.  It follows CEO’s as they slip anonymously into the rank and file of their companies.  While working alongside their employees, they see the effects their decisions have on others, where the problems lie within their organization and they get an up-close look at both the good and the bad of work life in their organizations.

This show demonstrates the power of listening and the deeper understanding that comes from seeing a situation from the eyes of others. Years ago, Hewlett Packard introduced the concept of MBWA, Management By Walking Around.  This show takes the concept one step further and introduces MBDTJ, Management By Doing the Job.

Larry O’Donnell, President and COO of Waste Management, found the experiences painful and eye opening.  He had no idea that the corporate office’s demand to increase productivity would result in an employee having to run to a time clock so she wouldn’t get docked twice her rate of pay.  He was shocked that a woman working on one of the garbage trucks has to “pee in a can” so she can meet her daily average of 300 homes a day.

As he said at the end of his episode, “In my role there are a lot of policies that I put out there and you all have to live with them.  I feel more of a connection with the folks that do the really hard jobs of this company.  I’m going to be a different manager because now I have a whole new appreciation of the impact of some of my decisions can have on you folks.”

In another episode, Dave Rife, one of the owners of White Castle, can’t keep up with the pace of a bun production line, and as a result, shuts it down causing waste of almost 5,000 buns. He talks about going into the role with a procedural mindset hoping to identify ways of making the operation better.  What surprised him was the way he connected with the people.

Both of those comments show a very real leadership challenge.  The demands of executive roles disconnect leaders from the reality of the organizations they lead.  They risk being disconnected from employees, disconnected from customers, and disconnected from the realities of daily work life.    That causes them to make decisions that are analytically incomplete because they lack a critical element of contextual understanding.

There really was something to the old school concepts of starting in the mail room and working your way to the top.  Even in family owned businesses, offspring worked summers on the front lines and in the bowels of the factory before they graduated from college and were given an piece of the business to lead.  You learned.  You cultivated an appreciation of the heart and soul of the business.  You developed empathy.

Empathy is a cognitive skill.  It starts to develop by age two at the emotional level when kids begin to feel empathy for another’s pain.  Later in childhood, kids develop the more cognitive aspect of empathy which involves the ability to understand that other people may have beliefs that are different from one’s own.  Just because empathy is a natural stage of cognitive development, however, doesn’t mean that it ever develops fully.  And this has a real impact on leading and managing.

A couple weeks ago David Brooks of the New York Times wrote a terrific Op-Ed piece called “The Power Elite.” He suggested that the meritocracy of our current world has made society fairer, but has created huge gaps in leadership capability.  The modern era emphasizes technical knowledge over contextual understanding, encourages excessive dog-eat-dog competitiveness, and creates huge chasms between social and professional classes.  He doesn’t suggest that we return to the days of white shoe elitism, but he does question whether the pendulum has swung too far in the other direction where our leaders lack the breadth of understanding required of their roles.

The lessons of Undercover Boss suggest that leaders can develop some of this insight when they actively listen to their organizations.

Unfortunately, the show becomes a narcissistic publicity stunt at the end when the executives provide grandiose offerings to their working class coworkers and stand on a stage spouting clichés that seem overly scripted and anything but heartfelt.  That’s likely the result of unimaginative network producers wanting a tidy conclusion.

The ending aside, the undercover experience is powerful.  Maybe if this became part of the regular routine for executives we would see higher levels of employee engagement, more innovation, real—not paper—gains to productivity, fewer layoffs, and best of all, leaders with the wisdom required to serve their organizations.

You better start loving up your employees.

As we begin to recover from the economic downturn, organizations will be relying on their workforces more than ever to help them return to stronger financial performance.  But with recent studies showing that fewer than 1 in 3 employees are engaged and as many as 55% are passive job seekers, the risks to organization performance are significant if companies are not prepared to actively reengage disaffected employees.

And that’s going to take a lot of love.

According to the research, companies with engaged employees—those that are fully involved in and enthusiastic about their work—have been shown to have higher levels of retention of talent, customer service, individual performance, team performance, business unit productivity, and even enterprise-level financial performance.  The research has also shown that emotional factors impact employee engagement four times as much as rational factors.  Recognizing this fact will be essential for managers because no matter how your company has fared during the last 18-24 months, employees everywhere are emotionally drained.

Layoffs, the threat of layoffs, tight and shrinking corporate budgets, stressed bosses, tense workplaces, fears about economy’s impact on personal and professional life.  These factors have our reptilian brains in high gear as we try to process the fears that are being triggered by this environment.

There are profound implications in Antonio Damasio’s research.  Emotions drive much of our decision-making processes because they allow us to mark things as good, bad or indifferent.  Our emotional responses to situations become memories, many of which are subconscious.  This means that we don’t just remember the facts; we remember our emotional perceptions of the facts.

So, given that even in the best workplaces fear has been running high, it’s no wonder, as the above statistics report, that employees will be, at best, indifferent to their jobs coming out of this economic period.  That’s not necessarily the fault of you or your organization.  It’s part of living in this time.  Nonetheless, it shouldn’t make us complacent.

To drive corporate performance, it is more important than ever to improve the level of engagement and begin to build back positive emotions.

And that brings us back to the love.

Creating employee engagement is about something more important than giving employees a $10 Starbucks gift certificate . . . although that can’t hurt.  The strongest driver of employee engagement comes from believing we are valued and involved.  That’s about some simple and very important things:

• Listening.  Employees need to feel able to voice their ideas and that managers value their contributions.  That sometimes means managers have to hang in there even when the view is voiced as a cheap shot or some other negative emotion.  Listening to understand and show empathy for the emotion helps employees move beyond the emotion and feel understood and accepted.
• Accepting.  Employees need to feel like you see their strengths as valuable and that you see their shortcomings as valuable, or at least a neutral part of an otherwise terrific package.  We get great performance when we help employees leverage their strengths for the best overall contribution.
• Involving.  Employees need to feel involved.  Involve them by over communicating and increasing transparency.  Involve them through problem-solving.  Best of all, involve them in decision making.

Helping employees get engaged during and after change requires that we create a workplace environment that builds positive emotional memories.  And the best tools to help managers do this are those that build relationships, gather insight and create opportunities for employees to shine.   This helps you not just get the most, but the best, from everyone in your organization.

The usual suspects were at the monthly review meeting for the North American division of a multinational firm with about 25,000 employees in the U.S. and Canada.    They included the president, the CFO, general counsel, the SVP of marketing, the CIO, SVP’s from two lines of business, and the SVP of HR.  The company had been performing reasonably well through the recession.  Revenue growth was flat and profitability was slightly below projections.

On this particular day, the CFO was first on the agenda.  After a review of the month’s numbers, he made the following statement:

“As all of you can see, we are only slightly behind our projections this year.  All things considered we have weathered the storm reasonably well.  The challenge we have for the remaining six months of the fiscal year is that if we want to make sure we get full bonuses, we’ll need to make a 5% headcount reduction.  A 2.5% reduction will get us to 80% payout, but a 5% reduction should get us to 100%.”

The overwhelming sentiment in the room was to move forward with the 5% reduction.  After he attempted one small protest that was quickly rebuffed, my friend (not the HR exec incidentally) sat quietly and wondered how he’d look under the blue and gold Sabrett’s umbrella.

Layoffs.  To make sure the executive team received their full bonus payout.

Companies have always cut back on the number of workers during challenging economic times.  There are circumstances where it is necessary for survival.  But for the last 30 years, it has become part of the standard operating playbook of American corporations even when they remain profitable.  There are many companies where RIF’s, restructurings, and downsizings have become a quarterly event.

Now, as reported by Jeffrey Pfeffer in the latest issue of Newsweek, there is a growing body of evidence to show us something we’ve always suspected intuitively.

Layoffs don’t work . . . unless, of course, the only goal is to secure bonuses.

I encourage you to read the article, and even better, read the research studies themselves.  Here are a few bullet points from the piece.  The facts are astounding.

• Companies that announce layoffs do not enjoy higher stock prices than peers—either immediately or over time. A study of 141 layoff announcements between 1979 and 1997 found negative stock returns to companies announcing layoffs, with larger and permanent layoffs leading to greater negative effects.
• An examination of 1,445 downsizing announcements between 1990 and 1998 also reported that downsizing had a negative effect on stock-market returns, and the negative effects were larger the greater the extent of the downsizing.
• Yet another study comparing 300 layoff announcements in the United States and 73 in Japan found that in both countries, there were negative abnormal shareholder returns following the announcement.
• Another myth: layoffs increase profits. Even after statistically controlling for prior profitability, a study of 122 companies found that downsizing reduced subsequent profitability and that the negative consequences of downsizing were particularly evident in R&D-intensive industries and in companies that experienced growth in sales.
• Layoffs literally kill people. In the United States, when you lose your job, you lose your health insurance, unless you can afford to temporarily maintain it under the pricey COBRA provisions. Studies consistently show a connection between not having health insurance and individual mortality rates.
• A study in New Zealand found that for people 25 to 64 years old, being unemployed increased the likelihood of committing suicide by 2.5 times.
• A recent National Bureau of Economic Research working paper reported that in the United States, job displacement led to a 15 to 20 percent increase in death rates during the following 20 years, implying a loss in life expectancy of 1.5 years for an employee who loses his job at the age of 40.