The drive for teamwork in business organizations that started in (or before) the 1980’s was based in the recognition that people are more productive and do better quality work when they feel like part of a team with shared over-arching goals.  Teamwork relies on a sense of trust.   Unfortunately, many people are not trusting by nature, and, even more unfortunately, some of them are managers.I am now working in a place where the office area is on surveillance camera all the time, with the company security officer watching via large plasma screens on his office wall.  When the cameras were first installed one of my colleagues waved to one of them, and within seconds the phone rang on the desk of the person he was conversing with.  She answered it and turned to my colleague to say “Bob (the security officer) says ‘Hi Joe.’”  Perhaps Bob was doing that as a joke, or perhaps to underline the fact that he is watching us, and that we are being recorded on video all the time, but the word got around, and the effect was chilling in a subtle way.  We now occasionally joke about it, and wonder whether we are also being monitored and recorded by hidden microphones, though we haven’t been able to identify any.  I keep daydreaming of ways I would obstruct the view of the camera that watches me so many hours of the day.

Needless to say, this situation gives us a strong sense that we aren’t trusted, not a feeling that promotes teamwork, commitment, and high quality work.  I am sure that some manager somewhere feels that the company is better off, or will impress customers with its high security, but … we’re not a bunch of children or convicted criminals, and we’re not handling gold bars or loose diamonds.

The effects (loss to the organization) of having this surveillance system would be nearly impossible to quantify, but intuitively must be significant.  Productivity is extremely important to every business, everywhere, and every element of the business environment, systems, relationships, and culture has direct impact.  As a manager, would you want to promote anything that would decrease productivity by even one percent?  It would be easy to implement a variety of measures that would each detract from the average worker’s effectiveness.  Business is more competitive than ever in the 21st century.  Can you afford for your people to be even 5% less efficient than your competition?  Are you savvy enough to consider such things?  If you are, then you may have an automatic advantage over clueless competitors.

The manager with the better understanding of human nature and psychology always has an invisible advantage, and will tend to get more and better quality work from their people.  This knowledge doesn’t work well when used against people, however, as I have seen in some places.  It works when used to build a team of trusted individuals who can identify with their work, their colleagues, and their employer, and who take personal ownership of every aspect of personal and organizational development and success.  I have worked in situations where people enjoyed their work and pursuing the goals of the company so much that they raced to see who could be the first to open the door in the morning and had to be chased out of the building at the end of the day.  That culture would not have developed if they all felt spied upon.  It just makes sense: you will have difficulty building or maintaining a high performing team when they know you are watching their every move.

As always, I welcome your comments.  – Tim

Total Quality Management, or TQM, was prevalent in business thinking in the 1980s, and improved the work lives and productivity of many people as well as the fortunes of some major corporations in that era.  I won’t try to describe how to implement Total Quality Management here, as there are a great many publications on the topic. I will instead describe the most important and fundamental elements I believe an organization needs to achieve the full benefits of TQM, and discuss why I think it fell into disuse.

TQM is much more than just a tool set, which is an important part of why it works. TQM isn’t just a set of statistical tools and practices, though it includes them. It works best when its philosophical base is understood and supported, and when that understanding and support come from the top of the organization. The philosophical platform on which TQM is built and which produces the best results includes a general attitude of optimism and trust in people, a sense of respect for people, and a good perspective on human nature. Unfortunately, these qualities aren’t shared by many people, at least in American business culture, and bureaucracies naturally tend to work against such understanding, to the point where many people have never experienced a positive work environment or a respectful and collaborative management style.

Understanding human nature is fundamental to lasting business success. The basic fact is that everyone (who isn’t mentally ill) wants to make a positive difference in their job, as it is a part of creating and maintaining a positive self image. Unfortunately a variety of factors can subvert or block behavior based on this fundamental fact and make us lose sight of it. Many of those factors are endemic to bureaucracies, which naturally arise as organizations grow, but especially if top management is not savvy enough to understand and manage the process.

Positive opinions about human nature can be conditioned or “beaten” out of people. Unfortunately, bureaucracies naturally tend to create conditions which discourage people, making productive work needlessly difficult. Unless it is implemented with a fundamental understanding of human nature and the positive side of a healthy human’s psyche, and a justified expectation that people will do the right thing when given a choice, TQM becomes little more than a set of tools, and results are likely to be only modest.

W. Edwards Deming was perhaps the most prominent guru of TQM. One of the greatest proponents of TQM was W. Edwards Deming. His work led him from statistics to fundamental truths about both business and human nature over a period of decades. He taught us that “Quality is what satisfies the customer”, and “Quality can be no better than the intent at the top.” among many other things. His definition of quality became increasingly holistic, and included not only product durability and reliability, but the concept that a product or service should satisfy the needs, wants, and expectations of the customer as well as be profitable for the provider. This greatly expanded the thinking of many about what their business actually was, and those companies (and entire business cultures, such as the post-WWII Japanese) that internalized TQM tended to become leaders in their industries. Deming’s recognition that a company that involves the employees in making their jobs and products better will succeed far more readily than one in which employees are directed as to what to do, and where their input is not solicited or ignored, was striking and fundamental, and created big improvements in those firms who took it to heart.

Most organizations in the U.S. didn’t understand or implement TQM very well. The United States business community was already successful in the decades after World War II, and many saw no need to listen to experts like Deming. As a result the U.S. lagged in adopting the concepts of TQM, and did not accept them across the culture, but rather only in certain industries and firms. A general understanding of the sources of success in those industries and firms never developed in the culture, either. The long-extant focus on short term financial performance and the failure of most business schools to either accept or effectively teach TQM added up to a poor implementation in American business culture. With natural management turnover and continued pressure towards short term performance rather than lasting success, TQM was forgotten in many industries by the 1990’s. Some of the tools and techniques of TQM were retained and periodically revived in systems such as “Six Sigma”, from which certain authors and academics profited significantly, but, as Professor Deming, Stephen Covey, and others had taught us, techniques are not enough, and only an understanding and internalization of the fundamentals can lead to true success.

The fundamental principles of TQM still hold. I hope that the fundamental knowledge of TQM will be revived and further developed to produce a more positive and successful business culture in the future, but I understand that there are many forces that will impede such a change. Resistance to change and “if it ain’t broke, don’t fix it” thinking are natural human factors. Huge and entrenched bureaucracies are almost impossible to change in any fundamental sense, which explains why smaller, more aggressive firms frequently arise to join (or depose) the giants. The opportunity to implement TQM is still there, however, and I have hopes that the successful, fundamental philosophy and practices of TQM will return to prominence and bring a new era of high quality products and services, and leading edge companies and industries, to the American and world business cultures.

As always, I welcome your comments. – Tim

An interesting blog item (and WSJ article) on a zealous recruiter gave me pause to think about some of the ways our business community regards the individual. Here’s an excerpt from the item:

You can run but you can’t hide when Perry’s on the prowl.

According to Sarah Needleman of The Wall Street Journal, David Perry is a rogue recruiter.
I can’t see why. Just last week, I spoke to Jennifer McClure, a Cincinatti recruiter who insists that she only approaches potential candidates via members of their trusted networks. But if your network isn’t all powerful and you want to find someone special, you have to do some detective work and make a direct approach.

The thing about David Perry is that he’s so ballsy — and wily, too.

The first time I met him he told me that he had once rented a coffee truck and sold donuts at an industrial park until he got the name of a target who worked inside.

The “rogue recruiter” illuminates a frequently occurring flaw in Western business thinking. Reading how David Perry operates, I have to think there’s an ethical (and possibly legal) line there somewhere, and it sounds like David Perry may be crossing it at times. That’s not good, but his business is also evidence of the mistaken idea that some people are so superior to others that they are worth expensive and extreme efforts to recruit.

Is the “Star Player” a business myth? Certainly people have different abilities, personalities, etc., but to over-emphasize that point and ignore the impact of environment, corporate culture, business and market conditions, etc. on the individual is a mistake. Quite often the star performer achieves that status in a setting conducive to their particular attributes, before they are were identified as a “star”. Being regarded as a “star” may actually impede them from repeating previous successes. For instance, they may acquire an overblown ego, stress problems, or an oversensitivity borne of overly high expectations, with an attendant risk of frustration and depression.  Worse yet, once they are labeled as a star they can be promoted to a level or position they are not prepared for much more quickly. This kind of fast-tracking has produced mixed results in business, at best, from my observations.

There’s much more behind individual performance than the traits of the individual. In my experience the performance of any individual is as greatly affected by their work environment, the corporate culture, the expectations they perceive, and how they are treated by their superiors and everyone else around them, as by their personal skills, experience, and motivation. People who excel are often in the right place at the right time with the right stuff, a combination that may not exist elsewhere. Recruiters and others can lose sight of this and put people on a pedestal they don’t deserve, or in a new place that isn’t as conducive to that person’s success, with the kind of results we see in business all the time: the rising star winds up part of a business debacle of one sort or another.

Every recruiter has an incentive to behave as their client expects and bring back the best prospects, but that’s no excuse for compromising good principles. The best businesspeople achieve prolonged success because they stick to common principles of constructive, collaborative behavior and respect for others. Compromising good ethical and moral principles may achieve a short term result, but will create a bad image (self image as well as public) that will work against one in the future, and decrease the probability of repeat business and future successes.

The rogue recruiter may make money from clueless managers, but they may not be among his most successful clients. I don’t see David Perry as having any incentive to think about the understanding or motivation of his clients, and fully expect that some of the people hiring him are pretty clueless. As an experienced manager I believe it is far more important to concentrate on giving people the right environment, incentives, resources, training, and expectations. The results of doing this are usually far better than spending big money having people like David Perry run down a “star” who may not, in the end, perform as well as expected (or as well as a well chosen and groomed team). Most people have the ability to be stars when put in the right position and managed properly, pivotal skills for any manager.

Be wary of the “star performer” label, as it introduces problems into an organization. An organization that “fast-tracks” or otherwise glorifies what it sees as star performers risks demoralizing the rest of the workforce, which can cost far more than any gains to be produced by the “star”, though the losses may be difficult to measure. Fast-tracking often moves a prospective manager far too quickly through different parts of the organization, resulting in a person who knows too little about a lot of areas and may have serious misconceptions about important aspects of the business, often based on hearing too much of the top management view and not enough “in the trenches”. In general, a candidate for promotion is often evaluated solely on past performance instead of suitability for the job they could be promoted to – a major management mistake.

Where does the “star performer” concept come from in our culture? The concept of the “star performer” is an aspect of the American/Western “gunslinger” fallacy. While gunslingers existed in the American West of the 19th century, and were glorified in popular culture through literature and cinema, they were never the as important as our culture would have us believe.  When you look back in history the big successes in the Old West were produced by communities, not gunslingers, and that lesson carries through to modern day business.

The recruiter can’t be faulted for being part of a system that may ultimately harm a company. Given that the recruiter may be only following simple orders, they may not be able to see what is behind their mission, and thus have no responsibility for the result and only an incentive to score their commission. If they work for the company, however, they have a greater ability to understand the dynamics of the situation and a responsibility to at least suggest more appropriate recruiting to their superiors and constituents.

I expect that recruiters like David Perry are a small minority, and that’s a good thing. Recruiting is far too important a function to be taken lightly. The long term view of business success focuses on building high performing teams from well-chosen individuals who will stick around and sustain the company in the long term, even as they advance their careers. The fast movers and highly visible star performers are not often the best people to achieve lasting success for a company. At first I was thinking that David Perry is an anachronism, but more likely his tactics will always be present in some form. In the end it could be said that he profits from clueless managers who gamble with their company’s future, probably based on a misunderstanding of some past success.

As always, I welcome your comments. – Tim

The hummingbird identifies and harvests food sources with great but regulated energy, while the shrew forages furiously in a constant battle for survival. For purposes of discussion I will consider only the grass-roots startup company, not spin-offs or startups sponsored by existing companies.  Companies, like the people they are made of, exist on a continuum. Nobody is at the extreme or exactly in the middle of any range, but I will address relative extremes here to illustrate my point that well-planned and disciplined operations work best for the startup as well as the established company. The hummingbird illustrates the company that maintains and evolves a plan, and works to make the plan happen, while the shrew illustrates the company that operates on inspiration and enthusiasm, and often seems to be always late and scrambling, or operating as if in an emergency.  How does the startup company’s style of operation affect its prospects for successful growth and future prosperity?

A good business plan and process for evolving it, along with the discipline to follow it, permits a startup company to operate more like a hummingbird. Some startups operate like a hummingbird, busy but planned, while others operate like a shrew, foraging for opportunities that can be attacked and consumed in a frantic fight for survival that can risk burning out the participants. A good business plan, and the discipline to stick to it and evolve it on a regular basis, can provide a regulated, long term path to success for the company and all involved.

The hummingbird company, with a good plan to grow its business, can think and act with the long term in mind. Since the hummingbird, at least in the temperate region where I live, must migrate south for the winter, it must go through ordered phases of finding food sources, nest building, finding a mate, raising a family, and building up its energy reserves before the annual migration. Nature has evolved it to do these things in a timely way, and provides it the abilities it needs to not only do them but to adapt to changes in its environment. A surprisingly large proportion of its time is spent resting, which permits it to expend large amounts of energy in its daily forays to find food, though less than 15% of its time is typically spent in this activity. An intelligently run, hummingbird-like startup company similarly operates with realistic expectations as to the use of time, with substantial time spent on planning, recruiting, and other important support activities that enable the creative processes and “forays” to find and secure the customers it needs to survive. All activities are carried out in the context of intermediate and long term goals, which are typically established in a business plan of five or more years.

The shrew company, often without thinking, tries to substitute intensity for good planning. The shrew does not migrate, and seems more reactive in the way it lives. The shrew also lacks the mobility of the hummingbird, so it must find food in a smaller area, and it must find and often kill its food to survive. Both creatures have large daily energy requirements – each typically must consume 80-90% of its own weight each day to survive – but the hummingbird is better able to pace itself, map out and revisit its income sources, and survive in a more orderly way. The shrew company may come from a base of great inspiration and prospects, but often operates in a more haphazard, event-driven way that provides significantly less potential for long term success.

Failing to allow sufficient time for recruiting and interviewing can impede growth in a number of ways. A good long range plan, well-followed and including resources and time for the acquisition and training of new employees, can minimize thrashing and grow the company in an orderly way. Frequently a startup company’s operations are focused on landing those first customers or finishing the development of an initial product offering under significant time pressure, and activities such as staffing are not planned out. When the organization is responding to needs for more people in a reactive way, the process of interviewing and bringing new people in can be an extra and unplanned burden for people already fully absorbed in generating revenues or a first product. The result can be overwork and burnout for those responsible for new customers and/or products, with the result that those customer relationships or products may suffer from poor quality or omissions in their designs. Worse yet, the new employees selected may not be the best candidates, as their selection was rushed, or may have trouble quickly adapting and becoming productive as the existing employees don’t have time to bring them up to speed.

Maintaining a reasonable work week enables more effective performance over the long term. It is easy and natural, in the enthusiasm and big challenges of a startup environment, to work long hours and over-commit to the enterprise. It is an exciting thing to pursue new ideas and the promise of great success, and can stimulate high levels of adrenalin and other hormones, making one oblivious to the passage of time. People operate best, however, when they have had proper rest and are not struggling to manage their personal lives on top of their work. Working at high intensity and for long hours over too long a period can lead to burnout, with greatly reduced effectiveness on the job, and increased probability of personal crises that can take one away from the work entirely.

Startups that maintain realistic plans and reasonable expectations for their employees have better prospects in the long run. The 40 hour work week allows a planned and well-managed life, and provides the energy and distraction-free time to focus on the work and produce superior results. Sufficient sleep is essential to effective learning and good memory function, as well as the stamina needed to work with intensity throughout the day. The 50 hour or more work week can “stretch people thin”, leaving them sacrificing personal matters or their rest to keep up with the job, “contaminating” their work hours with excessive personal matters, or working at lower performance levels due to lack of rest or high stress. Travel times to many jobs effectively extend work hours, and highway travel in particular is stressful and exhausting. Many people in North America live an hour from their work, meaning that a 5 day, 40 hour work week is actually a 50 hour week, and overtime extends that even further. The hours in which they can maintain their homes and families and get adequate rest are compromised when overtime becomes the norm.

The thrashing and dashing operations of the “shrew” startup can extend to its later business phases. I have worked for companies of a hundred employees or more where, at least in some parts of the firm, shrew-like operations had persisted well past the startup phase. Sales departments, for example, may keep that hyper-intensity and “forage and kill” behavior pattern, burning out salespeople and resulting in a high turnover and lackluster results. Engineers and designers may work six and seven day weeks for months or years, leading to increased dissatisfaction, demoralization, mediocre performance, and high turnover, with negative impact on product quality and customer satisfaction.

A good business plan enables a better product and higher probability of long term success. A planned pattern of market expansion and sales growth integrated with a strategically managed product development effort can be much easier on the participants and much more productive. A realistic approach and good planning allow new customers and employees to be identified, contacted, groomed, and integrated in a much less stressful way, and product development to proceed in a way that minimizes cost and yields optimal quality. A staff operating under realistic expectations can be motivated and involved in the company’s success instead of driven to perform and overstressed by an environment of anxiety and demand, and can draw on their reserves when needed.

The startup that plans well and follows the hummingbird model will always do better than the model that thrashes reactively in a shrew-like way. Startup companies have differences from later stage organizations, including higher levels of intensity and demand on employees, but the hummingbird model allows the intensity to produce optimal results, and to be summoned when needed over the long term. Appropriate attention to planning and discipline, along with realistic expectations, will inevitably outperform pure inspiration and enthusiasm in the intermediate to long term, and short term performance doesn’t help if it doesn’t add up to long term success.

As always, I welcome your comments.  – Tim

Bad corporate culture arises naturally from human nature, lack of management savvy, and bad or clueless management behavior. Corporate culture is built from the combined experiences of the members of the organization, the quality of their interactions with each other and outsiders, the results of the organization’s efforts, and the psychological tone set by top management and every level of management beneath it. All of these factors are expressed in, and some are caused by, management behavior, and poor management behavior will always affect the culture negatively. The good news is that you can work to correct and improve the culture at your own level.

Understanding the fundamentals of human nature and the psychological origins of poor management behavior is key to being a truly “savvy” manager. One key factor working against being a good manager is the natural difficulty of keeping one’s perspective in a sustained group. While the classical groupthink phenomenon is one possible outcome, another is loss of personal perspective, often acquired through bad experiences. This problem comes from bad experiences with others, especially those we perceive to have power over us (managers).

Pain can make a person lose their perspective. Once one has been abused or injured, psychologically or otherwise, by another person, the remembered pain makes the incident loom large in one’s memory, and restoring proper perspective takes understanding and introspection. The perspective that is lost that most negatively affects managers is the knowledge that, at the most basic levels of motivation, everyone wants to feel good about themselves and wants to feel they are making a positive difference in their job. Keeping this fact foremost in our thinking is key to being an effective manager and getting the most from one’s subordinates. It also helps one delegate more effectively and manage one’s time more efficiently.

Psychological pain can come from common sources. All it takes, for example, is one boss treating you like you don’t know anything, making you do meaningless work, responding to their own insecurities by giving you punitive assignments because they feel threatened by something you said, or actually taking out their own past bad experiences and psychological issues on you, and the pain (frustration, feeling of being devalued, etc.) you experience will amplify the memory of the experience in your mind. It is human nature to recall much more vividly our painful past experiences, as it is a natural survival trait that helps us avoid recurrences, but it can also cause us to lose the perspective that the good experiences outweigh the bad by a huge proportion.

Painful experiences make people wary long after the original incidents. Once abused, most people will tend to be overly watchful for similar circumstances, even after the original incident is forgotten. They can become conditioned to expect similar treatment from other bosses even though they only experienced the abuse from one of many, and, worse yet, they may wind up emulating the bad behavior (forcing, for example) because it is their most memorable reference to how bosses act. In essence, they lose perspective and begin overgeneralizing (another aspect of human nature) and thinking that most or all bosses act badly, or that this is the way to manage others. It can happen to almost anyone, but the knowledge that it doesn’t have to is the starting point for being a better manager.

Common bad management behaviors reveal the prevalence of loss of perspective and an all-too-common poor understanding of human nature. The forceful, “Do it because I said so” management style is a good example. While management research has repeatedly shown that “forcing” and “command-and-control” style management are only appropriate in relatively rare circumstances, many people retain the mistaken opinion that it makes up a large part of the management function. Even the U.S. Army has found that command-style management is only of value in certain circumstances, as when one is leading a squad of inexperienced 18-year-olds into enemy fire, and is much less effective in other circumstances. The savvy commander knows a squad is far more effective with every member contributing their knowledge, perception, and creativity, among other assets, to accomplishing the mission. They also know that they need to engage their subordinates in a positive way to get the benefit of those assets. They often achieve this by maintaining a culture of teamwork, collaboration, and mutual respect in their organization.

A savvy manager understands that conditioning, a form of unconscious learning, can happen to anyone including them, and can be countered. It is easy to become conditioned to expect abuse or just poor quality management behavior from one’s superiors, and, in the absence of better knowledge and understanding, it is easy to model such behaviors in one’s management of others. I believe this accounts for the seemingly large number of bad experiences most of us acquire working in large bureaucracies. We can, however, counter our conditioning once we understand what is happening to us, and consciously replace it with real knowledge.

Changing or countering one’s conditioning is possible. Some of the best managers have undoubtedly taken the time and exercised the introspection to think through their beliefs about management, trace them back to past experiences and learning, and establish better ways of thinking, in effect reconditioning themselves to be better managers. A person may do this once in their life, or many times, but it is always an extremely productive (though not necessarily easy) undertaking.

Culture originates in the behavior of individuals. Organizational culture is built on the behaviors of the members of the culture, and poor management behavior at any level naturally affects the levels subordinate to it – “crap rolls down hill”, as they say. An abusive or clueless top or middle manager can create a culture of negativism and poor performance that extends beneath them all the way to the bottom of the organizational pyramid, and even to supplier organizations. Anyone who has worked in more than a couple of bureaucracies has most likely experienced or witnessed this syndrome.

Culture can be changed for the better. A savvy, positive thinking manager can create a constructive culture of productivity, creativity, and even fun among their subordinates, and achieve superior results, even amidst an otherwise negative culture. It is far easier, however, if the overall culture is at least tolerant, if not actually supportive, or if the manager setting the cultural tone and making the change is isolated from the rest of the organization in significant ways.

Changing culture in a positive direction is rarely easy. As W. Edwards Deming said, however, “quality can be no better than the intent at the top.” A good manager can move the culture of the organization beneath her or him in positive and more productive directions, but if a negative cultural tone is persistently coming from above, he or she will have to fight constantly to maintain that more positive cultural beneath them, and may be criticized and even undermined by their less savvy peers, who may feel threatened by their improved results. For this reason, an organizational culture will rarely be better overall than is determined by the behavior of the topmost management. Middle managers who buck a strongly negative culture often eventually burn out and leave the organization, are unrecognized and fail to be promoted, or give up their management role. While they “stick to their guns”, however, their results will tend to be superior, their employees happier and more productive, and their jobs more satisfying.

Bad corporate culture happens, but it can be corrected. In summary, while it is natural for bad organizational culture to develop, this tendency can be countered and a more positive and productive organizational culture can be produced, though it requires savvy and introspective management. It is within the power of each of us to do the introspective work and be more savvy, as managers or rank and file employees, and I highly recommend it. I also recommend, as you do this important work, to record your thoughts and experiences in a journal for later review. In doing so you will improve yourself, and give yourself increased capacity to influence your organizational culture in in more positive directions.

Personal note – My wife wanted me to include more of the personal anecdotes that have led me to these conclusions (which are by no means comprehensive), but I don’t want to write an entire book here. (perhaps at a later time – I’ve many times considered pursuing a Ph.D. in Organizational Behavior …)

As always, I welcome your comments and questions, as I always learn from them.

]]> http://oneffectivemanagement.wordpress.com/2008/08/19/where-does-bad-corporate-culture-come-from-and-can-it-be-corrected/feed/ 6 Tim Prosser, Mandolin Maniac http://oneffectivemanagement.wordpress.com/2008/07/29/after-cost-of-quality-cost-of-culture/ http://oneffectivemanagement.wordpress.com/2008/07/29/after-cost-of-quality-cost-of-culture/#comments Tue, 29 Jul 2008 15:59:28 +0000 timprosser http://oneffectivemanagement.wordpress.com/?p=24 ]]>

The “cost of quality” concept advanced management science, but what’s next? As the science of business management has progressed, cost measurement has long been a key endeavor, as it provides a lot of the information needed to know how the business is doing and to make decisions, solve problems, and make improvements. In the past few decades, areas of cost measurement such as cost of sales and cost of quality have provided helpful insights for management teams, and improved the competitiveness of companies that understood them. Famous business gurus have weighed in on cost measurement with great positive effect. W. Edwards Deming once said “The greatest costs in business are unknown and unknowable.” Finding ways to measure those unknown costs has produced significant gains in the understanding and effectiveness of business processes, and significant progress has been made in assessing increasingly tougher areas of business, but one area has always escaped effective measurement, though it has perhaps the biggest impact on business performance of any: the culture of the organization.

Measuring cost of quality was initially a conceptual challenge. At first, as I remember it, a lot of companies saw measuring cost of quality as difficult and costly, and it took years for the practice to be adopted. Many companies still do not embrace a holistic approach to product and service quality, and have only a rudimentary understanding of how their quality affects their costs. With time and effort, however, many companies came to understand that not only can cost of quality be measured in production processes, but customer perceptions of quality can be measured using surveys, warranty and customer complaint databases, and appropriate statistical techniques. In the 1980’s W. Edwards Deming taught us that giving the average worker the training and tools to measure defects and waste, and then involving them in the improvement process, can yield major benefits to a company. While many companies used concepts such as cost of quality and total quality management in the 1970’s and 1980’s with marked success, many dropped them later due mostly to top management turnover (my perception). Since then measuring and using the cost of quality has held on in some U.S. companies, though most made it the province of accountants and analysts, and not many kept the employee involvement part of the philosophy (to their detriment).

Among types of systemic issues, the cultural issues are most difficult to address, and possibly the most damaging in the long run. In the multiple industries in which I have spent my career I and my colleagues have often commiserated over our daily problems, and spent considerable time discussing the causes of less than optimal performance around us. When I look at the scale and scope of the things that went wrong, the worst were caused, not by an engineer’s mistake or even a marketing or senior manager’s mistake, but by what I frequently call SNAFUs. SNAFUs, in my mind, are those things that go wrong not through the fault of an individual, but because systems, standards, and expectations conflict or drive suboptimal decisions and actions. SNAFUs are often extremely hard to correct, and deserve considerable analysis on their own. The worst of the SNAFUs, however, are due to cultural factors such as shared beliefs, for example, that are outdated, incorrect, or based on values that drive dysfunctional behavior and decision making on the part of senior managers and executives. Culture exists in every organization, and it is driven as much by the attitudes at the top as by any other factor including the prevalent social culture in which it operates.

Defining cultural factors and determining how they influence company success and potential is tough but possible. Measuring culture is a big challenge as it needs first to be defined by experts who are not typically employed by most companies. Culture covers an enormous variety of aspects of the company and the environment in which it does business. Defining a company’s culture will require a detailed understanding of company history, even down to the personalities involved, a similarly exhaustive history of the industry, and of the social, political, and economic environment in which the company operates, to yield meaningful results. While such knowledge is not often assembled by companies in my experience, some excellent basic knowledge is available in a collection of papers by Abraham Maslow (the “Heirarchy of Needs” originator), a seminal work titled “Maslow on Management”. This book had great impact on me, and I consider it essential reading for anyone wishing to be an effective business manager.

The study of cost of culture begins with a clear definition of organizational culture. Culture is pervasive, and expresses itself in many ways. The appropriate place to start in the study of cost of culture may be to identify the individual aspects of culture, and then see how they exist within the subject organization. Comprehensive definitions are difficult, and I will continue searching for a truly definitive one, but Debra Thorsen’s is as good as I’ve come across (link).

Aspects of culture must be linked to both internal decisions, external factors, and business outcomes. The next and even more difficult task is to tie the various aspects of culture to specific positive and negative outcomes, and to identify patterns that show some amount of consistency in the way the organization’s culture plays out in business results. This may require a lot of root cause analysis, and the fact that this may bring to light mistakes by or under the authority of individuals may make this a highly politicized undertaking that may prove nearly impossible depending on the circumstances. One place that might be good to start is in the tracking of major decisions, the analysis of their results, using post mortem reviews to assess the results downstream, and deep-dive root cause analysis of poor timing (lateness) or mistakes in the process. This must be undertaken with the understanding, originally taught to us by people like Professor Deming, that people act according to the expectations they perceive in the system, as well as based on their experience, training, and personalities. Systemic factors that relate directly to culture, such as perceived expectations and prevailing management style, contribute a great deal to decision quality, and are responsible for organization performance in ways that range from easy to extremely difficult to quantify.

Organizational behaviors must be analyzed carefully, and academic research may present the best opportunity for acquiring knowledge. For example, a business culture which “deifies” one function over another will probably display dysfunctional decision making, as I documented in a previous entry, “Dysfunctional Organizations Are Like Dysfunctional Families“. A business culture that involves fear and intimidation will suffer from poor internal communications and sub-optimization at a department level as middle managers attempt to protect their jobs. A business culture in which the incentives for managers encourage competition instead of collaboration will suffer from poor communication and coordination of efforts, among other sub-optimizing behaviors.  An organization where second-level management is not given incentives and direction to work together as a team could suffer from frequent late decisions and reversal of decisions, generating needless waste and frustration throughout the organization. Many more examples come to mind, but, essentially, each situation needs to be dissected and analyzed carefully with a focus on identifying the overarching cultural variables so they can be measured and analyzed in an “apples-to-apples” comparison. An individual who undertakes such an analysis from within an organization could be placing his or her job in jeopardy. This suggests that an external academic study may have better potential for success. Any such study will still need detailed internal information, however.

A study of corporate culture has political implications that make it a difficult “sell”. In the end, only a progressively managed company may agree to such a study and, while that could benefit the company significantly, the results of the study will be skewed by including information from only similar companies. To obtain real knowledge about cost of culture, data on multiple organizations must be obtained, and coordinated studies done to compare them and find the common points where measurements can be applied and used to create and test theories.

Cost of culture would be valuable to understand, but difficult to study. There is much ground to be broken and a great deal to be learned in the development of a good understanding of the impact of organizational culture. I expect that deep involvement of behavioral psychologists and sociologists will be needed, but the work needs to be done and may represent the next great leap forward in the science of business management.

interesting reading and resources:
The History of Quality – Overview, The American Society for Quality
Using the Cost of Quality Approach for Software, November 1998, Herb Krasner, Crosstalk – The Journal of Defense Software Engineering (includes many pertinent and informative references – TFP)
The Cost Of Quality … Is Less Than You Think, September 1996, Guelph Food Technology Centre
Ten Parameters of Good Corporate Culture, Martin Hahn, Ph. D., www.ezinearticles.com

Dysfunction causes organizations and families to fail to meet their goals.  I wish I had time to do actual digging (and research) on this, but other things like … making a living … make that impossible.  Still, I have my observations, and here they are:

The impact of dysfunctional relationships and behaviors is almost always negative.  When an organization is dysfunctional, such as when one part of it has inordinate power, it will be challenged to meet its goals.  Quality, timing, and cost will all usually be less favorable than planned.  Projects will be routinely delayed, costs will routinely be revised upward, quality will be at risk of being forgotten in the quest for profitability and timeliness, products will be at risk of many and/or severe defects, and customer satisfaction will lag behind more capable and less dysfunctional competitors.  Similarly, a dysfunctional family will have parallel problems with achieving its goals.

An imbalance of power is a frequent cause of dysfunction in families.  Imagine: a family with several children embarks on a big project, a trip to Ocracoke Island, for example.  If one child is more demanding, needy, or otherwise exceptional, and the family has developed a dysfunctional behavior pattern centered on that child, things will be disrupted and plans will not work out.  The child may have to stop at every rest stop, and take a long time getting back into the car, delaying progress on the trip.  The father may know the ferry schedule for getting to the island, and know when the family needs to be at the dock, but he may not be able to change the child’s behavior, nor the behavior of the mother who caters too much to the demanding child.  Random and unanticipated delays caused by the child, who has no understanding of the constraints the father faces, make them late and they miss the ferry, incurring additional cost of a night’s stay on the mainland.

An imbalance of power is also a problem for large companies.  I have worked for companies in which one top manager or one function, product styling, for example, can cause a nearly-perfect parallel to the dysfunctional family.  The product styling group knows when they need to finish the design, but their job is to make the product look attractive, and they have so many people involved, from multiple levels of the organization, that they can’t get it done on time.  Top managers come through the studio to look at the new design, but, many having been engineers and designers in the past, they each see something they feel needs to be changed.  Since they don’t come through the studio until the design is supposed to be nearly complete, their suggestions set back the design process, and the design is late.  The engineers who have to integrate the design with functional parts are left to play “catch-up” with their designs, involving late changes, overtime, and a huge amount of rework to recast financial figures, get revised quotes from suppliers, re-time the plans, etc., etc.  The suppliers, too, have to change their plans and designs and renegotiate with their suppliers in turn, and are delayed as well.  Packaging, marketing materials, sales and service training classes, and many other efforts are all set back.  Even if top management is understanding and “lets well enough alone” from then on, the project is doomed to be over budget and late. 

It takes savvy management at the top, executives or parents, to limit dysfunctional behavior and keep things on track.  In my five different careers I have seen this same basic pattern repeated over and over, becoming nothing more than the standard way of doing business for some organizations.  The only mitigating force I know of is having really savvy upper management who understand how such things happen and are willing to actively work to avoid them.  A smart top manager can rein in the overzealous designers, for example, and understand the principles of diminishing returns and the need to understand when “roughly right” is good enough.  Similarly, the skilled parent can understand the problems caused by favoring one child over another, and carefully manage the behavior of the individuals in the family so that the family’s overarching goals are met.   Maybe it’s just my experience, but I have seen that such skill and savvy are all too rare.

Ethnic or national culture can be a significant factor in instances of dysfunction.  Interestingly, management savvy and parenting skill are heavily influenced by cultural factors.  In Western cultures where there is a strong value placed on individuality, managers can acquire the “gunslinger” mentality, which makes them think they have to do everything themselves and be the best at everything.  With such managers collaboration and communication can suffer and, while they may be stars in their own right, the organization can suffer from the conflicts and snafus that will result.  Similarly, in a strongly patriarchic culture, the father, feeling like he must be the all-knowing authority, may ignore the small child who hears the tire rumbling as it starts to go flat, and as a result miss the ferry due to a shredded tire and the time required to fix it.

Organizations can become dysfunctional by promoting those who do extremely well.  Some businesses promote engineers and designers who create great products to high level management positions, and then some wonder why the organization does poorly.  I have often noted that many engineers take this career direction because they don’t like dealing with people, and would rather “stick their head in a machine” and make it work as nearly perfectly as possible than negotiate with other people.  To take someone who, by their nature, hews to jobs that avoid interaction with people and put them in a job that requires excellent people skills is asking for trouble.  They will not only be uncomfortable and unhappy, but they may not understand interpersonal and organizational behavior well, struggle, and not do a very good job.  At the same time, to go back to engineering would be a terrible demotion and pay cut, so they are stuck, often for decades, in a position for which they are only marginally suited.

Many parents, like many executives, were never suited or well prepared for their roles.  Similarly, many parents become that by accident, perhaps through lack of proper attention to contraception, or through social imperatives - older family members who lobby hard for grandchildren, for example.  Some parents had tough childhoods, for example, and never had the chance to witness good parenting as children, yet they often find themselves responsible for a family with children and (perhaps) a spouse, and even elderly parents that need their care.  In a society with little focus on or cultural knowledge around good parenting, they will be severely challenged to run a family effectively or avoid the mistakes that were perpetrated on them as children. 

Dysfunction tends to stick around and follow organizations and families.  Thus, in both organizations and families, dysfunctional factors will exist from the start or creep in over time, and propagate forward from one generation or regime to the next.  It is for this reason that sometimes a board of directors of a corporation will dismiss not only a CEO but many of his reports as well, and bring in fresh management talent from outside the company to try to instill a new culture.  While this is drastic and difficult in a business organization, it is even more difficult and disruptive to a family, and usually involves social service organizations and courts intervening in ways that may or may not produce better long term results for the family members.  In both cases the situation must be extremely bad before such changes can be justified, and a majority of such situations probably are never very well addressed.

I am sorry I can’t present better ideas for mitigating dysfunction here, but because it is such a pervasive problem in business and society I will undoubtedly revisit again, do more research on the topic, and offer some approaches for improvement in future articles.

Please leave a comment, link to relevant information, or account of your similar experiences if you like.  These are extremely complex and difficult issues, and I am more than willing to learn more.  Thanks in advance — Tim

What is “command and control” management? Many good articles have been written on this by smart folks like Joel Spolsky and Bruce Nussbaum. A good description is included in the Traditional Management Model page of www.1000ventures.com in the section (near the bottom of the page) labeled “25 Lessons from Jack Welch“. Much has been written decrying “command and control” management, but what makes it a bad thing?

A manager-employee relationship is always a two way street. I believe when a manager takes an unnecessarily-authoritative or commanding position with a subordinate, the employee feels less respected, and will have a decreased desire to contribute. As a result, information flow up to the manager will be diminished. This will only reduce the manager’s ability to make good decisions, even to the appoint of reducing their apparent competence.

People work harder when they feel they are making a positive difference, an intrinsic motivation. The command and control management style works through extrinsic motivators such as threats, authority, and even monetary incentives, all of which prevent or even replace employees’ natural intrinsic motivation. A management style that gives people ownership of their methods, tools, and results, and in which people can feel good about collaborating with and helping those around them (coworkers, customers, and suppliers) provides intrinsic motivation, and people work hard because they like the way it makes them feel, and feel important and appreciated — the “psychological pay” principle. Everyone wants to feel good about themselves, but command and control takes that feeling away from them.

People work harder for someone they respect, and preferably like. A manager who understands that the workers in the trenches usually see the organization’s challenges and problems better than he or she can, can gain their input and support their efforts more effectively than a “commander” who assumes he or she knows, or is expected to know, more than their subordinates. This attitude only alienates subordinates and loses their loyalty, respect, and input. It may even move them to undermine the organization’s performance in subtle ways in an effort, possibly never acknowledged, and probably in a form that can’t be identified, that is based in nothing so much as a desire for revenge.

People work harder when they’re not doing it under threat. Some command and control-styled managers use subtle threats to do their job, and may unwittingly put employees in a situation where they can’t see a way to succeed. The results can be disastrous as far as morale and work performance, not only for the employee placed in that position, but for their coworkers who will see what is going on and fear being put in such a position themselves.

An example of that is a supervisor I once had. I had only been at the company for a few months, working as a lowly engineer, and one day my supervisor came in and asked me to fill out a performance review. He was having the other employees write theirs, and it was easier for him to just do everyone’s at once. I was instructed to write my own performance review and provided a standard form. Then, as he was about to leave, he turned back at the door and revealed that he had had nothing to do the previous weekend, and had written a performance review for me. I (brightly) asked if that meant that I didn’t have to write my own after all, and he said that, no, the company policy was that I would write my own. Perplexed, I asked him what it would mean if his evaluation and mine didn’t agree, and he said “Well, then … WE … have a problem.” and walked out. I’m sure he felt very powerful, secure, and in control. I, however, instantly saw I was in a no-win situation in which he was “power-tripping” me with his clear threat, and was taken aback. Not only did I lose respect for him as a boss, I also lost respect for him as a person. After that I was never again comfortable working for him, or even the company to some extent, and I was actually relieved when I was caught in the next down-sizing less than a year later.

People will passively or actively undermine a manager they think doesn’t respect them or is abusing them. Although it was said in jest, there were times in my past assignments when a particularly repressive manager would be discussed in his absence, and people would joke about having someone with a cold or flu be sure to sneeze on the next report they were to put on the manager’s desk. That is an extreme, but, once employees’ feel they are disrespected or abused, their productivity will decrease. Worse yet, the best and most marketable employees will find better employment, further damaging the organization.

Inevitably, once a manager has achieved a negative image it can take much longer to reverse that impression, even with superlative performance and efforts. In general, a manager must remember that it is possible to do damage to oneself in a minute that could take years to repair, and disrespect expressed towards an employee, even in confidence, is a huge risk.

This matter goes back to something my relatives taught me when I was a child: never say anything about someone who is absent that you wouldn’t be comfortable saying to their face. This is a hard thing for most of us, as we are all emotional and opinionated beings, each with our own flaws and preferences, but we must strive to remember this and be careful of what thoughts we express to others. I can’t claim perfection in this area either, but awareness is the first step to real personal integrity, which is essential to a good manager.

The risk of acquiring a negative image is higher for those of us with management responsibilities because our subordinates depend on us, and they need to be able to trust us to do a good job. We, similarly, are dependent on them to do a good job, and must therefore be careful to make the relationship as mutually positive and beneficial as possible. As I said at the beginning, the manage-subordinate relationship is a two-way street, and the manager who operates in a “command-and-control” mode will only diminish the performance of subordinates and the organization as a whole.

Interestingly, one of the sources linked in the first paragraph pointed out that there IS a place for command and control, but it’s when one must make 18-year-old soldiers charge, firing their weapons, across a mine field. I know of no business that operates in circumstances even remotely analogous to this.

I look forward to any comments or experiences you’d like to share. Thanks in advance – Tim

This morning NPR did a story on a woman writing a novel about a female horse trainer of the late 19th century, who used the “horse whispering” or “gentling” technique and was superior to the others in her profession.  The traditional method of breaking horses at the time (and still prevalent) was to have some big brute of a guy get on the horse and ride it, bucking and kicking, until it tired out and was “broken”.  Needless to say, horses trained in this way often developed personality disorders or other peculiarities that were occasional problems for the owner or rider.  I quickly began to see implications for the management of human organizations.

I thought about the Dog Whisperer TV show (on cable), which my wife and I like, and realized that, if there can be horse whisperers and dog whisperers who get superior results in dealing with those animals, why shouldn’t we recognize people whisperers.  These would be people who are skilled at reading, understanding, and working with other people.  It occurred to me that the people whisperer, like the dog or horse whisperer, succeeds by building a deep understanding of the species’ instincts, the society’s mores, customs, and conventions, and eventually the group or individual’s psychological makeup. 

It may be observed that managers of human organizations have too many people to deal with, and do not have the time to understand every individual, and thus need to use the more forceful (and inconsiderate) methods, but I disagree.  Just as the dog whisperer is more successful because part of his knowledge involves understanding the psychology of the pack, a good manager understands basic principles of organizational behavior and group dynamics, along with the culture and environment of the organization he or she is dealing with, and is thus much more effective than a manager who uses command-and-control techniques.

I won’t go into the destructive side effects of command-and-control management techniques.  The results are clear in the histories of the companies in which this sort of thinking (culture) predominates.  I suggest (and there is room for a study here to confirm or refute) that organizations with a command-oriented culture tend to succeed in boom times, but crash in hard times, in a scenario I have often described as muddling.  When things go well whoever is in control takes the credit, and when things go badly they blame first factors outside the company and then people or factors inside the company.  There is more volatility in their long term performance, higher turnover among the staff, poorer overall quality in their products, and inconsistent returns to their investors.  I can add that I have secured jobs with a number of these companies, often when their fortunes were in decline or bottoming out, due to my ability to synthesize my past careers and take on multiple responsibilities.  They were not generally comfortable places to work, and sometimes I have been released when they were caught in their next decline.

I believe that companies with a more positive and collaborative culture will keep their “people whisperer” managers longer, experience less volatility in the face of market and other changes, and generate a lot less misery and stress among their employees.  I also believe their culture can extend to their suppliers and customers, who will also be more willing to do business with them and, essentially, participate in their success.

Organizational culture is a huge topic all by itself, but I believe that the critical factor is, as W. Edwards Deming said, “the intent at the top”.  Every manager has a strong influence on the culture of the organization under his control, and it follows that the head of the company has more ability to affect the organizational culture than anyone else in it.  A mid-level manager has the same influence on the part of the organization beneath him, but will be exposed to the opinions and possibly interventions of his peers and superiors, making the maintenance of a subculture different from that of the total organization potentially difficult.

I once worked for a mid-level manager who joined in on some lunch hour sessions I organized to watch a series of training videos by W. Edwards Deming, Joseph Juran, and others that I found in the company’s library.  The teachings of W. Edwards Deming, in particular, though they started with the use of statistics to improve product and process quality, revealed the fundamental influence of culture in the workplace with specific demonstrations of how business results came from the systems and the expectations placed on employees, not on employees being specifically good or bad.  My boss found the material interesting enough to attend these viewings with us on many occasions, and I noticed that during this period his management style went through a transformation. 

When I first worked for this man, he was very controlling, to the point of being vindictive.  Once, in a hallway discussion with another person, I made a point that contradicted something he had said, and not in any “in your face” kind of way.  I believe I was objective and professional about it.  I later realized he must have felt embarrassed by that, however, and a couple of weeks later in a large staff meeting he put me on the spot and joined the others in questioning my judgement on a particular matter in an aggressive and embarrassing way.  I felt a lot of pain from being “hung out to dry”, but I figured out later that that was his revenge for my contradicting him in front of a peer previously.  We had a few other unpleasant confrontations over the following months, and I saw him behave similarly with others.

After he started viewing the Deming videos with the small group who had joined me, his manner significantly changed over a period of months.  He began to defend his people in meetings rather than “throwing us under the bus”.  He became increasingly collaborative, and the performance of his organization improved significantly.  If nothing else, it actually became fairly pleasurable to work for him, in spite of the fact that the company was going through very hard times, with layoffs occurring twice each year.  Somehow, and I believe it was due to his new leadership style, the group continued to be highly productive even as our numbers were cut in half over just a few years.

Unfortunately, I noticed that his relations with his mid-level peers in the management became harder for him.  A couple of them who worked most closely with him did not understand his changed approach to management, nor perceive the benefits of the more collaborative culture he maintained among his people.  I saw evidence they were accusing him of being “soft on his employees”, for example, and realized he was having to fight off criticism, however unjustified, to keep our work environment the way it was.

Sadly, after several years he eventually gave up the fight and voluntarily took a non-managerial position, which may have been part of the downsizing the corporation was experiencing as a whole, but was also, I believe, a matter of fatigue on his part gained from bucking the corporate culture.  I have since understood that it is a tough proposition for a mid-level manager, however enlightened and effective, to go against the culture of the larger organization.  It may cost him or her promotional opportunities, for instance, as well as the day-to-day stress of being noticeably different and misunderstood among peers. 

More unfortunate is my observation that companies and organizations with positive cultural values imposed from the top are rare, at least where my experience is in the rust belt of middle America.  There are certainly enlightened managers, and “people whisperers” around, but their work lives are not as good or productive as they might be, since they must buck their organization’s culture to reach their maximum effectiveness in their jobs.  Still, I can’t deny the observations I’ve made, and see only the need for studies to confirm or refute those observations.  Working for an enlightened manager can certainly be a great experience, while working for a poor one can be a living hell.  I can testify to having experienced both, and even under the same manager.

I look forward to reading any comments you have, as we can all learn about what makes for good or bad management from the experiences of others.