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.

Nobody likes to fail.  We think failure is the opposite of success.  In organization life, failure is unacceptable.  It demands action.  It requires a response.  It gets you fired.  It is better to maintain the status quo and achieve mediocre results than to take a risk and fail.

Unless you are an effective change leader.

If you are an effective change leader, failure is a part of the process of achieving success.  Failure is data.  It’s information that helps you understand more about what it will take, or not take, to create a successful outcome.  It’s a sign that it’s time to make a change.

Get low scores on stakeholder satisfaction surveys?  Maybe it’s time to do a needs analysis or review design specifications.

Continuing to miss project deadlines?  Maybe it’s time to rework the project plan or assess whether you have the right resources.

Project teams not performing?  Maybe it’s time to learn what makes each individual tick or adjust your management style to be more effective.

Failing again and again?  Maybe it’s time to understand the root causes and systemic challenges (rather than continuing to treat problems with band-aids).

Change agents, innovators, entrepreneurs, R&D professionals, athletes and high achievers of every kind see failure as part of the continuous process of improving.  Failure is the feedback we need to adapt our efforts in the direction of our objective.

If you are a change leader who cares about success, then you may want to rethink your response to failure.  Instead of irritation, try curiosity.  Instead of hiding it, highlight it.  Instead of scolding those who fail, embrace them and have them share what they learned.

Failure is achievement because it shows we are reaching for something far beyond our immediate capability.  Even when we falter, we learn, grow and are strengthened for the challenge ahead.

Orchestra conductors must exercise a unique style of leadership.  They must listen intently, and without saying a word, draw out strong performances from their orchestras.  This requires that they learn to be the ultimate collaborators,  understand the unique capabilities of each musician and decide how best to blend them into a coherent whole.

In this video, Itay Talgam shows that contrary to their popular image, the best conductors are not dictators.  Instead, they are successful by being great teachers and by mastering the art of helping others give voice to expressive contributions.  The most successful conductors believe in the inherent capacity of the people they lead to accomplish whatever is required.  The players may need to be coaxed, nudged and enticed, but masterful performances reside within them.

Benjamin Zander, conductor for the Boston Philharmonic and author of The Art of Possibility, suggests that one way to determine whether you are on track is to look into the eyes of those you lead.  “The eyes never lie. If the eyes are shining, then I know that my leadership is working. Human beings in the presence of possibility react physically as well as emotionally. If the eyes aren’t shining, I ask myself, ‘What am I doing that’s keeping my musicians’ eyes from shining?’”

Conductors, or leaders, who recognize that they do not need to make a sound or dominate or control, can focus on enabling others to be more effective.  They can help others feel energetic, lively, engaged and focused not only on the task at hand, but more importantly, connected and listening to the other musicians, their orchestral collaborators, required to make beautiful music.

How to love.  How to live.  How to fix anything.  How to lose weight.  How to stop worrying.  How to find your passion.  How to train your dog, bird, cat or dragon.  How to make money.  How to get into college.  How to stay in college.  How to interview.  How to get a job.  How to get a good paying job.  How to start a business.  How to sell.  How to manage projects.  How to manage time.  How to set goals.  How to influence people.  How to negotiate anything with anybody.  How to teach.  How to train.  How to write.  How to retire.  How to survive the end of the world.

We live in a “How-To” world.  A quick search of “How To” in Amazon.com yields over 300,000 books with the phrase in the title.  The popular For Dummies series has over 1700 titles and the Idiot’s Guide series has nearly as many.  And take a look at your local newsstand and you’ll see magazine covers littered with articles telling you the 5 things you must know, the 3 insider secrets that will guarantee success, or the 7 steps to improved performance.

We love quick solutions that are easy to identify and implement.  It is comforting to think that the answer to all of our problems—with romance, with money, with business—can be provided with a few simple action steps or the application of a “best practice.”

We know through our own experience, however, that the How-To’s don’t always solve the problem because they rarely have the depth required to affect our particular situations.  The quick fix might get us part of the way there or solve the problem momentarily, but inevitably we revisit the same issue again and again looking for another band aid to stop the bleeding.

Here’s the deal . . . Managing change well is not about a quick fix.  It’s about a mindset.  It’s not about a multitasking shortcut or a cell phone app.  It’s about consistently applying the disciplines of listening, understanding, adapting, learning, changing, creating, inventing, and engaging.

So, go ahead and stock up on the tools, templates, technologies and How-To manuals.  They will help you get started and be a reference when you get stuck.  But then, let go.  Roll up your sleeves, dig a little deeper, let your mind take flight, color outside of the lines, play, innovate and have fun with the real, collaborative work required to create sustainable change.

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.

Business has become incredibly sophisticated. We have phenomenal technology and analytical tools as well as proven frameworks and methodology. Our ability to use science and reason has taken a significant amount of guesswork out of decision-making.

In addition, the number of college graduates in the U.S. workforce grew from 29 million in 1993 to 40.6 million in 2003. The number of college graduates who completed degrees in more than one broad field also increased from 3.4 million in 1993 to 5.6 million in 2003.

We are smarter, better, faster (cue the Six Million Dollar Man theme song).

Yet we still struggle to manage the human side of change or to have a conversation with an employee about job performance. It just goes to show you that intellect alone cannot improve our organizations.

I wonder whether it is because we have forgotten to put first things first: compassion, meaning, purpose. These, too, are the tools of great leaders.

The single-minded pursuit of financial return above everything else has given us . . . financial return. We got it, and now we can’t buy with it what we want to buy. We have pursued immediate gains while waving the flag of rational, practical decision-making. And in retrospect, we have made anything but rational, practical decisions.

The trouble with being rational is that it focuses too much on what is. And “what is” keeps us stuck in the weeds. Instead, we should be irrational dreamers focused on what can be because “what can be” raises our sites and lifts us higher.

In the above video from 1972, legendary psychiatrist and Holocaust-survivor Viktor Frankl delivers a powerful message about the human search for meaning — and a most critical way of approaching our work with others. Frankl says,

“If we take man as he really is, we make him worse. If we over estimate him and look at him higher, we promote him to what he really can be. We have to be idealists. If you don’t recognize man’s search for meaning, you make him worse, you make him dull, you make him frustrated. There must be a spark of a search for meaning. Let’s recognize it. Let’s presuppose it, then you will illicit it and you will make him become what he is principally capable of becoming.”

Take it higher . . .

“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.

After struggling to develop a viable electric light-bulb for months and months, Thomas Edison was interviewed by a young reporter who boldly asked Mr. Edison if he felt like a failure and if he thought he should just give up by now. Perplexed, Edison replied, “Young man, why would I feel like a failure? And why would I ever give up? I now know definitively over 9,000 ways that an electric light bulb will not work. Success is almost in my grasp.” And shortly after that, and over 10,000 attempts, Edison invented the light bulb.

Failure is one of the best things we can do to enhance our ability to be successful. It’s too bad that so many organization leaders don’t understand this.

Stanford University psychologist Carol Dweck has been studying how people handle failure for 40 years. Her research has led her to identify two distinct mind-sets that dramatically influence how we react to it.

A fixed mind-set is grounded in the belief that talent is genetic–you’re a born artist, athlete, or financial whiz.  Individuals with a fixed mind-set believe they are entitled to success without much effort and regard failure as an outrage and caused by something outside of themselves. When things get tough, they are quick to blame, withdraw, lie, and even avoid future challenge or risk.  In the fixed mindset it’s not enough to succeed, you have to be flawless and you have to be flawless right away.  Either you have “it” or you don’t.

A growth mind-set, on the other hand, assumes that talent is not genetically based and that effort and learning make everything possible. Because the ego isn’t on the line as much, the growth mind-set sees failure as opportunity rather than insult.  When challenged, it’s quick to reassess, adjust, and try again.  In fact, it relishes this process.

When those with growth mind-sets fail at a task, Dweck found that they enter a more focused mental state as they try to figure out their mistake.  And in subsequent trials, they improve. In effect, they’ve learned, and their brains have “grown.” Those with fixed mind-sets, however, never enter this focused state of learning and show little, if any, progress.  Researchers at Washington University School of Medicine in St. Louis and the University of Chieti, Italy, back this up and have used MRI’s to show that individuals with a growth mind-set actually “sculpt” the brains wiring.

Interestingly enough, the fixed mindset and its desire to think of oneself as perfect is often referred to as the “CEO disease.”  To be fair to CEO’s I would extend this obsession with infallibility to all the wannabe kings that exist in organization life . . . right down to many project managers.  And this explains why so many leaders fail to behave adaptively during times of change.

One of the primary reasons I’ve seen change initiatives fall off the rails is because project teams hate reporting bad news.  And they hate reporting bad news because project sponsors, project managers, organization leaders, procurement, and other technically-focused, fixed mind-set types sit on the sidelines waiting to pounce.  When something goes wrong, they quickly point the finger . . . at the vendor, the contract, the functional leader, each other or whomever and whatever is an easy scapegoat.

Consequently, this kind of environment causes project managers and teams to hide problems rather than coming clean about a missed deadline or an unclear project specification.  Eventually the problems escalate, and instead of learning, growing, and moving the project forward, everyone starts worrying about being judged.  As Dweck says, “It starts with the bosses’ worry about being judged, but it winds up being everybody’s fear about being judged.  It’s hard for courage and innovation to survive in companies with this mindset.”

Amen, sister!

Years after his mother pulled him out of school when the teacher thought him unteachable, Edison recalled, “My mother was the making of me.  She was so true, so sure of me; and I felt I had something to live for, someone I must not disappoint.”  She didn’t see the imperfection.  She saw the potential.

Success is not defined by perfect pedigrees, perfect resumes, and perfect personas.  It’s not even defined by perfect project plans or perfect execution.  Instead, it’s achieved by adapting, learning, growing and the constant warts-and-all quest for improvement.

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.