A Failure to CommunicateThe Perils of M,anagement By lnitistive And IWhat ToDo About Them

Niancv IBartels

The two reports referred to in this article, "The People-

wise™ Organization"and 'House Divided: Vi.ews on

Change from Top Management-and Thelr Employ-

ees." crossed our desks some weeks ago. They timulat-eda fair amount of discussion here. and we hope they

do the same in your offices. We welcome your respons-

es. How do you view the eerporatercempeairtveenvlren-

ment of the next. few years? How do you see yourselfand your company fitting in? Can these ideas work in

the gear industry? Let us know what you think.

The CEO of Bigger

& Better Gears isecstatic. ~is latest

, cost-cutting pro-gram , which implementeda team approach to produc-tion (eliminating two lay-ers of supervisory staff).changed the inventory con-trol. system and establisheda new set of quality control

dida't meet standards with-out wailing for approval.Then the first time therewas a production crunch,we got dumped on forholding up the line. Nowmorale stinks. My peoplethink: they've been lied to..Frankly. I think quality isworse than before becausenow nobody cares. I don't

MANAGEMENT MATTERSthree formal grievances hereceived this morning. Thatmakes a total of eight forthe month, more than werefiled all last year. Therevamping of inventorycontrol is not working. Ifanyone had bothered to askhim, he could have toldthem it wouldn't, Now hispeople are disgruntled and

goals. have cut his expens- know about you, but I'm are openly resisting thees in the last quarter by polishing my resume." attempt to form production40i1l. The expensive set ofinitiatives was worth it. B,

& B's competitive positionlooks much better; so doesit bottom line; the stock-holders will be pleased.

But at the other end ofthe plant, in the employeelounge. the quality-controlmanager is tal king to afriend from accounting:"What a joke. We spenttwo days talking about ournew philosophy of 'quali-

Her friend replies:"Yeah. They let half theaccounting department go.Of cour e, we still have thesame amount of work, sowe've hired back threeguys as consultants. Theonly difference is that nowthey're billing us 100.00an hour for their time. Somuch for cost cutting, If Ihear about one more man-agement initiative, I'mgoing to throw up."

"teams." They're using thework. rules in the unioncontract to obstruc I. thechanges about which theywere not consulted andwhich they distrust.They're fright-ened of anotherround of layoffs,and with a newcontract up fornegotiation inthree months,strike is in the air.

According to a surveyof 3,500 North Americanexecutives and 3,000 non-man ager ial employeesdone last year by Kepner-Tr eg oe , a managementconsulting firm withoffices around the world,this disparity between lopmanagement and employ-ee perception of change

ty-ba ed thinking.' Every- And down on the pro- A nightmare scenario,body was supposed to be duction line, the shop stew- you say. Never happen atfree to pull product that ard is mulling over the my plant. Are you sure?

Nancy IB,artel's,is Gear Technology'sSenior Edilor.

NOVEMBER/DECEMBER 1994 1:3

initiatives is all too com-mon; yet companies con-tinue to implement pro-gram after program,

The survey, "HouseDivided: Views on Changefrom Top Mangement->and Their Employees,"suggests that in the presenthypercompetitive globalmanufacturing environ-ment, many companies aresuffering from "initiativeaddiction," Forty-two per-

foster the growth of cyni-cism, and permanentlyalter the concept of"employee loyalty." Short-term numbers may lookgood, but the long-termhealth of these companieis not so promising.

Shifting ParadigmsThe reason for the

apparent failure of thesewell-intentioned programs,according to another Kep-ner-Tregoe report, "The

MANAGEMENT MATTERS

companies surveyed hadundertaken eleven or morechange initiatives, includ-ing strategy etting,employee empowerment.downsizing, customer ser-vice improvement, restruc-turing or productivityimprovement, in the lastfive yeats. Companies thathave already undertakenone such initiative are morelikely to do so again, andmost companies focus onthe immediate bottom-linereturn of these programsrather than on the long-termcompetitive health of theircompanies.

The result in many casesis that these initiativescause a steady drain onhuman assets, cost keyemployees and capabilities,

14 GEAR TECHNOLQGY

Peoplewlse'P'Organization," is a failureon the part of managementto understand the shiftingparadigms of the work-place. Historically, organi-zations have been seen asa collection of systems,processe and structures,To make change, youtin-kered with the system.The basic as umption wasthat changing the sy ternchanged peoples' behavior.

The truth is, it's the oth-er way around. "The Peo-plewise Organization"quotes Amy Marks. SeniorVice-President of HumanResources at USF&G:"The same people tend tobehave in the same wayeven when placed withindifferent organizationalstructures. Organization

structure and processes areenablers or inhibitors, butthey don t define how anorganjzation or an individ-ual behaves." Any programthat puts systems and struc-tures ahead of the peoplewho implement them runsthe risk of spectacular-and expensive=failure.

The report suggests thatthe people-based modelchallenges the very way welook at running a businessand managing people,According to Shari John-son, a principal at Kepner-Tregoe who has workedwith many automotive andheavy industry firms toimplement change, even

the tools for corporateuccess are different

now. "It used to be

acce, s to large amounts ofmoney or large infrastruc-tures globally were com-petitive advantage . Nowanyone has access to thosethings. Now it's what youdo with yourpeople andwhat your people do withtechnology that's the criti-cal difference."

In this model, it's thepeople and their accumu-lated judgment, percep-tions, experience, intuitionand intelligence that willdetermine the success ofthe organization. And theway to best tap this collec-tive wisdom i not the oldtop-down, pyramid-shapedmanagement system. Amore horizontal, flexiblemanagement model isevolving in some of themost successf 1companies.

Johnson says, "I see itgoing even beyond that. I

see organizations that don'thave official structures.Levels of management aregoing to greatly decrease.Already we're workingwith organizations thathave at a particular site aplant manager, his staff andself-managed teams, and Ithink we're going to see a

lot more of that "]I Johnson and the other

change gurus are right,then tile reason so manychange initiatives failbecomes clear: corpora-tions spend millions of dol-lars creating systems andstructures for the next mil-lennium and try to insertthem into a 19608 perfor-mance environment. Thenwhen the individual pro-gram fails to live up to itspromise, the tendency is tomove on to the next "newand improved" programand try it-every time deal-ing only with the symp-toms, not the real problem.Mr. Banthoom Lamsam,president of the Thai.Farmers' Bank, is quotedin the Kepner- Tregoereport: "So much changein organ! zations is littlemore than rearranging thechairs and tables, What'smost important is to get thepeople to change."

Impl'ementingPeople-Based ChangeThe fundamental point

of people-based change isto look at what a companyhas done traditionaUy-manufacture a product-from a different point ofview. Says Johnson, " .. ,what this [model] basicallysays is 'Let's put a differ-ent focus on what we are

doing and realize theimportance of people as wego about doing it. '"

This rs not to be con-fused with "managementby warm fuzzies." Accord-ing to Johnson, people-based management hasnothing to do with makingpeople feel good, buteverything to do with cor-porate survival. "Yourmotivation is not to makepeople feel good and/orinvolved," she says. "Yourmotivation is to be better(han your competitor." Andthe way to do that is to tapthe collective wisdom ofall your employees.

Step one is for top lead-ership-both managementand employee-to deter-mine a new set of valuesand beliefs that will be thebasis for change at thecompany and to do so withthe people directly in-volved in the change. Thiswill call for a sharing of

high-flown mission state-ment. Corporate leadershiphas to be willing to back itup with real time, realmoney and real change.

The second step is formanagement to demon-strate in significant waysits commitment to thesenew values by its behavior,Lip service is not enough.Says Johnson, "We are notjust role-modeling thingsthat are easy .. If you saythat independent decision-making is something youvalue in your organizarion,then you have to let. peopledo it. You can't second-guess them."

The other importantfactor in implementingchanges is to involve thepeople who will actuallybe affected by them. In aunion shop •.the union mustbe involved from the verybeginning. At the Chryslerplant in New Castle, [N,one of Kepner- Tregoe 's

goals, idea and traregies success stories, a plant inand for firm commitment danger of being closed wason the part of everyone turned around in two years

to the point where it iswrite out a

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16 GEAR TECHN,OlOGY

actually hiring people. In live is one that will affectthis case, the head of the thisgrollp' s perceivedUAW and the vice-presi- power. Says Johnson, "Adent of labor relations for lot of these people haveChrysler sal down together come up through the ranks.and hammered out what They've worked very hard

to become supervisors,and now they see their

Johnson says that power base being takenaway, so they're extremelyreluctant. "

She adds "The best. wayof getting something posi-tive to happen is to sitdown with them very earlyin the proces . Begin toarticulate what the supervi-sory role will look like inthe new organization, whatskills are needed, what vaJ-ues, what benefits."

Trust-BuildingThis early spade work is

essential for building thetrust necessary to makethese kinds of broad initia-ti yes work, But buildingtrust is not easy, especiallyIf your work force has beenburned in the past by anumber of failed initiatives.On tile other hand, H'swrong to a. sume that youcannot begin an initiativeuntil you have trust.

Trust is a process thatbuilds on itself. Every

worker involvement shouldlook like.

remembering the uniquecharacteristics of unions iscritical. to success .. Unionleaders are elected, andthey have to answer totheir constituencies. Theycannot be expected to takepositions that win be per-ceived as hurtful to theirmembers or willi jeopar-dize their re-election,

Learning to work withthe union contract is alsoimportant to implementingchange. If managementand union leadership sitdown together early in theprocess and agree on val-ues and beliefs and layoutgoals, and if managementshares corporate strategyand helps union leadershipto understand where theorganization is going, aunion contract can becomea tool for change. Johnsonsays, "We've gone through50 to 80 years of interpret-ing every word to the let-ter, but our experienceis that once youestablish a win/winapproach, a unioncontract is really aflexible instrument"

The other groupthat senior man-agernent has to'bring into the pic-ture is middle man-agement and super-visory staff, particular-ly if the planned initia-

LAYOFFS

succes ful tran action cre-ates more trust for thenext ti me. "There arealways individuals whoare looking, to a greateror lesser extent, for waysto prove that 'Here we goagain,.'" says Johnson,"but trust is the result ofactivities; it's not the pre-cur or of change."

Trust is also a two-waystreet. Management has totrust that its employeeswantthe company to uc-ceed. Johnson says, "Ourexperience is that peoplewant to be involved.Everybody in an organiza-tion from the CEO downto the hourly production

One way around this isthe dual-track approach.Johnson recommends be-

!

ginning with organizing i I

for the short term to focus I'on some significant areasof improvement where youcan facihtere quick turn-around. This tactic givesthe signal that the potentialfor real change is there.and it produces tangible,measurable results.

It also helps employees(and management) to "keepthe faith" during the diffi-cult middle phase of changewhen nothing seems to behappening or, worse, whentile program seems like afailure. This is the place

-

MANAGEIVIENT MATTERS--- - -

worker is working for per- where it is both hardest. andsonal reasons, but they are most important to sustainalso there to improve the leadership. and. accordingorganization's effective- to Johnsen.the point whereness at the point where most initiatives fail. "It'sthey can have an impact on like a rubber band. If youit. given the right environ-ment in which to do that."

Sharing the corporatestrategy and includingemployees in discussionsof ba ic value. reinforcesthese positive motivations.

The Dual-TrackApproach

One major reason em-ployees are so mistrustfulis that change initiativesfrequently bog down in themiddle. They begin withgreat fanfare and hype, and. ix months later things areback 10 where they were.Then management decidesit's time for a different ini-tiative. and the processbegins again, In the mean-time, trust erodes and cyni-cism builds.

take your right hand andpull and then let go, it 'sgoing to go back 10 its orig-inal position."

Breaking lhe InitiativeCycle-BeyondTrust-Building

Changing the corporatecultural environment is notunlike turning an aircraftcarrier at sea: it takes time.and it's not a one-personjob. But you can harne sthe people assets of yourorganization to initiateeffective change by provid-ing them with an environ-ment that contains certaincrucial elements.

First is role clarity,When the system is chang-ing, people are unclear as towhat their new roles should

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be. loa people-empoweredorganization, role clarity isill very difficult issuebecause the old, dearlydefined organizational box-es into which everyone fit<Iregone .. People need lime

to get u ed to a. fluid true-ture that allow them 10

move in and out of differ-ent relation hips given theparticular task.

The second factor thatwill impact people's will-

MANA'GEMENT MATTERS------------- - --- - - - - -

ingnes to becomeact ively

involved inchange i .

the conse-quences 'to them

personally.If you wan!people tobe involv-

ed. don't setup a ystern

where whenthey are, they

suffer negative con-equences, For example, if

suggest ionsare inv iledand then ignored, don't besurprised if no secondround of suggestions isforthcoming.

The third factor is theinverse of number iwo.People need po. irive rein-forcement. When cmploy-ee respond in a pu itiveway to change initiatives,s,ay by accepting morere ponsibf lity or beinginnovative about Ihe waythey do their jobs, theyneed [0 encouraged. SaysJohnson, "They need 10

hear. "Thi is good. Keepdoing this.'''

The people-ba ed orga-nization is an evolving one.At no point in developingsuch a structure do youarrive at 'the point whereyou can say, "Now we're

there. ow we can stop."But such an organization isinherently agile. ], canrespond smoothly andeffectively LO the changingdemands of the au I 'ideenvironment, h is al 0 theway to break. the initiativecycle. The reason is sim-ple. ay John on. "If youhave a uccessful initiative.one that' working for you,you may not ever need todo another one." .1IlIUstrtltiom .by DarrylSIJe.lIoIJ 0/ Shelton .D. sign.

TeU Us WhatY·ou Think ...If you found this article of inter-est and/or useful, please circleReader Service No. ,A-13.

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