Dave Berzack loves his career.  Check out his website, www.daveberzack.com, and you will see more evidence of the passion, and talent, he has for his chosen profession.  (Shout out to Dan Schawbel for pointing me to this video.)

Droppin science (here’s the secret) for live (for a great) 9 to 5 (career):  It’s about finding your passion.

Said in geeky consultant language:  The key to high levels of performance and achievement is aligning your work with your sources of intrinsic motivation . . . It’s about finding your passion!

When you can get out of bed every morning with the same spirit and sense of fun that Dave shows, you have found your bliss.  And bliss leads to the biggest career reward of all:  satisfaction.  If your goal is to make millions of dollars, well, success will depend upon your career choice, your effort and a bit of luck.  But if your definition of success is to have a sense of purpose and meaning,  to thrive and to have a consistent source of satisfaction, then build your work around what you love.

A young student from my alma mater called me a few months ago to learn more about the consulting profession.  He did a nice job of providing a verbal resume outlining his well-chosen major, his proper corporate summer internship and the reasons why that prepared him for an entry level job in consulting.  Based upon the facts alone, he was a good candidate for a job in the field.  Based upon the level of excitement in his voice, however, I was compelled to ask another question.

“What do you do for fun?”

He responded by saying, “Since I was a little kid I’ve played hockey.”  And for the next ten minutes told me about playing in hockey leagues four seasons every year, reffing for younger leagues when he was in high school and during the summer, coaching hockey at summer camps and meeting his favorite players at various events.  His tone was entirely different.  You could hear the smile in his voice.

“What are you doing with that?”  I asked.  Silence.

Not everyone can be a professional hockey player.  Not everyone can get a job in the hockey industry on a team, a league office, or an equipment manufacturer.  Although the more we talked, the more he discovered his options were much greater than the “conventional” jobs found in the college placement office.  He realized there were countless careers in the hockey world that were not just about playing.

More importantly, the more we talked, the more he realized there were aspects about hockey that could be translated to other potential career choices.  He enjoyed the camaraderie.  He enjoyed the competition, but he really valued the learning and growing and hard work, whether winning or not.  He also really enjoyed the teaching and development of others when reffing and coaching.

We didn’t have to talk any more about consulting.  He was fired up to listen to his heart and think about options that were more closely aligned with his innate talents, interests and joy.  He may yet end up in consulting, but if he does, it will be when he discovers it is the best place to live his purpose.

Oh, yeah, and by the way . . . If you are on the other end of this and looking for the job candidates who are going to knock your socks off, remember that no matter how killa the resume, you have to listen to the heart of the candidate.  It’s the employees who work from a sense of purpose and passion that will always, always kick it.

Are we really surprised?

Companies have been obsessed with pay for performance for almost two decades.  And like any obsession, it has clouded the judgment of executives and others, such as human resources professionals and consultants, who should know better.

The problem is that pay for performance is founded on a two faulty beliefs:

1. If you reward something you get more of the behavior you want.
2. If you punish something you get less of the behavior you don’t want.

Unfortunately for our misguided execs, study after study has demonstrated results that massively contradict this way of thinking.  It’s hard to fault them entirely.  Logically, one would think that incentives work.  The science, however, has proven otherwise and has found:

1. As long as the job involves only mechanical skills or rules-based tasks, incentives work as expected.  The higher the incentive, the better the performance.
2. But once the job calls for even rudimentary cognitive skill—some conceptual and/or creative thinking—a larger reward leads to poorer performance.

These results have been replicated over and over again by psychologists, sociologists, and economists . . . including those funded by that left-wing, socialist institution, the U.S. Federal Reserve.  Even a recent study from McKinsey found that three noncash motivators—praise from immediate supervisors, attention from leaders, and a chance to direct projects—are at least as effective as the three most highly rated monetary ones.

Now, don’t misunderstand me.  Money is a motivator.  If you don’t pay people enough, they won’t be motivated to do the job.

Once you pay people enough, however, it is no longer a factor in motivating performance, especially in jobs that require basic cognitive, conceptual and creative skill . . . the majority of jobs in the U.S. economy.

Organizations must stop drinking the pay for performance Kool-Aid.  Pay for performance, carrot and stick management, performance appraisal, time clocks, verbal and written warnings, and many other management and HR practices are outdated and just don’t work.

Instead, it’s time to equip managers with the tools to manage in the modern workplace and support them with HR programs and practices that encourage the right behavior.  That’s about redefining what it is to manage and it’s about completely overhauling HR.  More importantly, it’s founded on the notion that we stop treating people like cogs in a machine and start treating them like smart, creative, self-motivated people who want to at all times do their best.

That’s not just some feel good manifesto.  It’s the fact-based, scientific reality required to be a high performing organization.

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.

“This integrated talent management solution ushers in a new era for our company that’s about improving how we think about and manage talent.  These new tools will enhance our ability to identify the talent our business needs to grow and to be successful.  Acquiring, rewarding and retaining high performers are the keys to our success as a company.”

It’s hard to disagree with the above statement (except for the notion that technology will solve the problem!).  It boldly reaffirms the old homily:  People are our greatest asset.

But that’s just the point.  It’s unimaginative, overused, and as a result, rarely perceived as sincere.  And in the case of most companies, especially in the era of constant “restructuring” (see The Trouble with Layoffs), it rarely is sincere.

If you think I’m being tough, just listen to some of the quotes from employees and managers working for companies pushing the talent mind-set:

• Across the organization, I’m not sure we do a good job of hiring.  We seem to be more impressed with credentials than capability.  What I mean is it’s more important for you to have gone to an Ivy, than to actually be able to do the job.
• Performance management is a once a year process that managers and employees dread.
• Performance appraisal is not really about performance.  It’s about adjusting ratings to fit the merit budget.
• We believe in pay for performance.  High performers get significantly greater merit increases and performance bonuses.  But beyond sales, I’m not sure we measure performance well.
• We are very proud of our succession planning process . . . but we have never promoted anyone as a result of the effort.  The information isn’t used.
• We do not actively manage the development of our employees, even high potentials (Note:  the engagement survey data confirmed this).

The obsession with talent is a sign that executives aren’t leading.  They are failing to appreciate and nurture the potential of their existing employees.

Like love-struck teenagers, these executives are unpredictable, reactive and focused desperately on short-term gratification.  They are always on the lookout for the perfect resume, the “star,” the romance of the moment.  They seek the dream employee who is so smart that no training, motivation, supervision or coaching will be required.

Much of this obsession is based on the faulty assumption that top performance depends primarily on talent—innate, genetically-based qualities.  There is considerable evidence that hard work and intrinsic motivation—which can be supported or undermined by the social environment—also play central roles.

For example, researchers studying the impact of learning environments on cognitive skills have discovered that students who over an extended period of time are treated as if they are intelligent actually become so.  If they are taught demanding content, and are expected to explain and find connections as well as memorize and repeat, they learn more and learn more quickly. They think of themselves as learners. They are able to bounce back in the face of short-term failures.

These results are giving rise to the new idea of intelligence-in-practice:  Intelligence is the habit of persistently trying to understand things and make them function better.  Intelligence is working to figure things out, varying strategies until a workable solution is found.  Intelligence is knowing what one does, and doesn’t, know, seeking information and organizing that information so that it makes sense and can be remembered.  In short, one’s intelligence is the sum of one’s habits of mind.

Maybe in the case of executives currently obsessed with finding unicorns, intelligence is knowing that such potential is already hard at work in their own organization.  Intelligence is knowing when you lead them, they will perform.

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.

Nicholas Kristof’s column in yesterday’s New York Times shared that the origins of political judgments may in part be the result of our fundamental personality type and even in the hard-wiring in our brains.  While even the researchers agree there is more work to do to validate these findings, it is consistent with the growing body of research suggesting that our brains may control us more than we control our brains.

The way we think and learn, the way we process information, the way we experience the world and the way we express ourselves are deeply encoded in our DNA.  It’s unique, personal and very “customized.”

Yet all too often we approach change in mechanistic and standardized ways.  It doesn’t matter whether we are changing a political point of view, changing a technology or asking an individual to change their job performance.

The point of this isn’t to say that creating change is impossible.  Instead, it suggests that creating change starts with understanding those who we are trying to influence.  Especially since their ability to change is all in their head.

“We need to discuss your performance.”

There are few phrases that cast more fear in the hearts of employees.

I was talking with a client last week about managing change for their implementation of performance management technology.   After a quick technical chat about scope, the vendor, the timetable, resources and current tools and process, I asked the obvious question, “What are the larger objectives you are hoping to achieve with this implementation?”

I expected her to say something about improving process efficiency or ease of data entry or access to data.  I also wouldn’t have been surprised if she had said that her HR function wanted to increase the number of managers completing appraisals on time.

Instead, she said, “Our CEO wants to create a high performance culture and we think that a better performance appraisal process and the right tool to deliver it will get us there.”  Their new and “improved” system included a 10-point scale (up from 5), a new universal competency model and the addition of an evaluation for how employees exhibited company values.

Pretty snazzy, but . . .

This is the moment where I take a deep breath and remind myself that being a change management consultant often requires detached responsibility*.

It’s amazing to me that 45 years after the Harvard Business Review published “Split Roles in Performance Appraisal” (Myer, Kay, & French), we still believe performance appraisal works.  The study, conducted at GE, found that the company’s performance management system not only didn’t work, it produced results that were the opposite of what was intended.  The researchers found:

• Criticism has a negative effect on achievement of goals
• Praise has little effect one way or the other
• Performance improves most when specific goals are established
• Defensiveness resulting from critical appraisal produces inferior performance
• Coaching should be a day-to-day, not a once-a-year, activity
• Mutual goal setting, not criticism, improves performance
• Participation by the employee in the goal-setting procedure helps produce favorable results
• Performance appraisal “interviews” should not be conducted with salary or promotion in the balance.

Countless other scientific studies conclude the same thing.  And more powerfully, research conducted with brain scanning technologies such as SPECT (single photon emission computed tomography) have shown us these result are directly connected to the way the brain works.

Yet, we still insist on conventional approaches to performance appraisal.  The technology and evaluation frameworks may provide more sophisticated window dressing, but the underlying process remains flawed and the results are questionable.

So, what works?  What generates higher performance?

Two things.

First, intrinsic motivation.  High performance comes when people love what they do.  Some of the most dedicated employees on the planet work for free.  They are called volunteers.  And they work countless hours for organizations that give them a sense of purpose.  They don’t care if they get raises, bonuses or even praise.  They volunteer because their work has meaning to them and because they feel like they are making a contribution.

We all know people who approach their day jobs with the same passion.  They are engaged, plugged in and having fun.  There’s no need to manage their performance.  They are too busy managing it themselves.

Second, goals.  High performance also is achieved with goals.  These aren’t the goals that are set once per year and forgotten about until it’s time for the annual review.  These are goals that are set, reviewed and tweaked every day.  Myer and company called this WP&R, or Work Planning and Review.  WP&R discussions between an employee and manager are an ongoing process built on a foundation of collaborative problem solving.  No judgment.  No rating scale.  Just the continuous process of improving.

That’s what passionate people living their purpose do.  They strive to be better.

Amazing, isn’t it?  Getting high performance from employees is not about some Frederick Tayloresque command and control system of alpha dominance.  It is about engaging employees and tapping passions.  It’s not about incenting behavior with rewards and punishments or demanding compliance to some generic norm.  It is about collaboration.

High performance happens when you gather people who enjoy what they do and who have fun figuring out how they can do it better together.

My suggestion is that we set aside the folly of formal appraisal as well as any notion of a manager being able to improve performance.  Instead, let’s focus on making sure our managers know how to listen to employees, understand and sometimes draw out their passions, and create collaborative cultures working toward a purpose greater than next quarter’s earnings.

• Detached responsibility—the ability to educate, resolve conflict, or manage change by taking responsibility for what is within our control and letting go of the need to resolve issues out of our range of immediate and direct influence.  For more on detached responsibility and the other Principles of Interaction read, Listening to Conflict:  Finding Constructive Solutions to Workplace Disputes.

I am often asked by executives and project leaders to share the results of the latest research studies on change management.  Sometimes they are interested because they want to understand the risks associated with not budgeting to address the human side of change.  Other times they know the risks all too well and are looking to make the business case for additional change management resources to support a project.

In all cases, however, the need for statistics and research points to the recurring question about the value of change management.  And with project budgets already slim because of the stressed economy, global competition or the need for higher project ROI, most organizations struggle to justify spending money on something that they believe should be a core competency of those asked to lead change.

Unfortunately, this highlights a sad fact:  When it comes to managing change, most organizations are operating in a state of denial.  And the majority of managers need a little . . . well . . . help.

Let’s look at the facts.

Countless studies examining the change efforts of thousands of companies have concluded unequivocally that 50% of all change efforts fail.  Or it might be 80%.  Well, sometimes it’s 25%.  But it is definitely between 25% and 80% . . . Definitely!

Okay, I know.  The research is all over the map depending upon whether they are examining technology or outsourcing implementations, mergers, product launches, customer relationship initiatives, organization restructuring, leadership transitions or less complex forms of change.

It also depends upon how the researchers define failure.  Is failure defined as total failure, such as cancellation of the project?  Sometimes.  More often, it is defined as some degree of budget overrun, project delay, reduced ROI or some other variation of less-than-expected results.

When you strip away the variations in the research, however, study after study suggests that at the very least, change gets derailed with some degree of regularity.  Even if you use the best-case data and pick, say, 25% as the likely failure rate, it is still remarkable.  A 25% risk of project failure is significant considering how frequently organizations undergo some form of change.  And since most of the research suggests that the failure rate is more than 50%, organization leaders should take pause.

The research results also suggest that change failure is not solely the result of a lack of managerial capability.  A recent study by the Ken Blancard Companies showed that only 29% of change initiatives are launched without some formal structure or methodology (Those 29% are in complete denial!).

This means that we have many motivated, skilled, and historically successful leaders who apply a proven change methodology and still fall short of their organization or project change objectives.  And yet, project leaders and their executive sponsors come to work each day convinced that this time it will be different.  You gotta love the optimism!  Or the naivete!  Or the denial!

It’s time organizations come to accept a few inconvenient truths.

First, leading change is hard.  As Niccolo Machiavelli said more than 500 years ago:

There is nothing more difficult to carry out, nor more doubtful of success, nor more dangerous to handle than to initiate a new order of things.

Change requires hard work, focus, and patience.  Humans are hard-wired neurologically to resist change. So, there is much work to be done to achieve the results desired from any change initiative, especially those requiring even small measures of transformation.

Announcing change does not mean that employees will embrace change, and taking a hard-line, change-or-leave approach is out of touch and doesn’t recognize the realities of the modern workplace.

The change management effort begins before project launch and continues long after the technical effort is complete.  It is an ongoing process  that requires an understanding of both the technical and behavioral objectives in order to anticipate human emotional reactions and develop action plans to address them.

Second, effective change management requires budget and resources.  There is no way around it.  Either you budget for change upfront or you risk paying more throughout the life of the project because of delays, rework and unrealized goals.  How much you budget will depend upon a number of factors, but as a rule of thumb, plan to spend 5-15% of your total project cost on resources to support change management-specific activity.

And finally, methodology is not enough.

The difficulty leveraging the value of proven change models may lie less in the construct of any change model itself, and more in the challenge of applying a rational and uniform framework to the irrational and unpredictable elements of human behavior.  As Frank Lloyd Wright once said about architecture, “the architect’s most useful tools are an eraser at the drafting board and a wrecking bar at the site.”  So, too, with managing change, the most useful tools are those that help you behave adaptively once the project begins.

Successful change leaders apply these tools, like the eraser and the wrecking bar, to adapt the methodology-driven blueprint to the situational realities encountered on change initiatives.  They have learned how to go beyond the blueprint to adapt the design and make it more actionable.  Their flexibility helps them rapidly assess obstacles to generate workable solutions.

That’s the hard work.  That’s the reason why change management requires proper resourcing.  It is this adaptive capability when developed, that can help organizations move beyond statistical chance to achieve change management success more consistently.

Oh, and by the way, before I close, here are even more statistics to help you build your business case . . .

• CIO.com cites a Dynamic Markets survey of 800 IT managers, reporting that 62 percent of IT projects fail to meet their schedules.
  • 49 percent suffered budget overruns
  • 47 percent had higher-than-expected maintenance costs, and
  • 41 percent failed to deliver the expected business value and ROI
• Researchers at the Ken Blanchard Companies found that 70% of change initiatives fail or get derailed
• The Standish Group’s Chaos Report reports 44% of projects are challenged (late, over budget, and/or less-than-expected results) and 24% fail (cancelled prior to completion).
• The PricewaterhouseCoopers survey on Current Program and Project Management Practices reports that 50% of all change initiatives fail.
  • 20% determine project success based on the satisfaction of their stakeholders, 19% on on-time delivery, 18% on budget, 17% on the delivery of benefits, 15% on quality, 9% on acceptable ROI and 2% on other factors.
• Gartner’s industry analysts report:
  • 55-70% of CRM projects fail to meet their objectives
  • 70% of ERP project fail
  • 70% of Supply Chain Management projects fail
  • Fewer than 10% of projects in large corporations are delivered with the functionality specified at the beginning
• Over 30% of web development teams deliver projects late or over-budget, according to a survey commissioned by Ruby development shop, New Bamboo.  According to the report:
  • 24% of website projects fail to be delivered within budget
  • 5% were unable to confirm the final cost of their web development project
  • 21% fail to meet stakeholder requirements
  • Nearly a third of web based projects (31%) were not delivered within the agreed timescales

Fiona MacLeod, president of BP’s Convenience Retail USA & Latin America, spoke about these issues recently at Wharton’s Leadership Conference on the challenges of event driven change (http://tinyurl.com/mewr9p). She said that many change management programs fail because:

• New leaders are often more concerned with “making a big splash” than with following through on a long-term plan to monitor change and keep the program on track.
• Organizations often revert to old habits because employees do not understand why change is needed, or they lack the tools and training required to sustain the new approach.
• Nothing changes because ownership of the change rests with an external team or consultants, rather than with the leaders responsible for running the business.

MacLeod also urged managers to attend to the “soft” side of change by putting in place programs to fully engage leaders and employees in the process of creating change.  According to MacLeod, this not only includes articulating the business case and vision of the future, it also includes gaining the commitment of leaders who are ultimately responsible for ensuring the change is sustainable.