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BRING OUT THE BEST IN EVERY EMPLOYEE
HOW TO ENGAGE YOUR WHOLE TEAM BY MAKING EVERY LEADERSHIP MOMENT COUNT
By DON BROWN, BILL HAWKINS
The McGraw-Hill Companies, Inc.Copyright © 2013Situational Services, Inc.
All rights reserved.
No-Normal: Capacity Without Headcount
Let's begin your journey to bringing out the best in others. Let's start by considering the macro, which is the set of global dynamics that seem to be affecting every one of us no matter where we are on the planet—the new normal. You hear about it everywhere. The new normal continues to resonate on radio, television, and social media. You've seen it on ABC News, Fox, National Public Radio, and even the McKinsey Quarterly. The tales of woe follow a similar theme: lower starting wages, vanishing job security, pay cuts of 5, 10, or even 20 percent, furloughs, unpaid work, unaccustomed thrift, double-digit unemployment, underemployment, five-figure job cuts, and punitive new procedures for the lending and borrowing of capital. Conventional wisdom would have you believe that our collective economy and existence has finally settled into a new set of norms and expectations.
We'd like to propose a change in perspective to that of no normal!
Normal [nawr- muhl]:
Conforming to or establishing a common standard or type ... the acknowledged average, commonplace, customary, habitual, natural, orderly, ordinary, prevalent, regular, routine, run-of-the-mill or typical.
Are you witnessing anything today that conforms to the above definition or synonyms for the term normal? Is there anything habitual, orderly, or routine about what you see going on around you? We would submit that normal has yet to gel again. Just when we think things have settled down, a new frontier for chaos opens up. Change that was once seen as a well-deserved realignment of an antiquated rust belt or dot-com paradigms now bleeds over into public and private education, state and municipal government, housing and construction, and even whole societies and cultures around the world.
So there is no normal. The consensus seems to be that it could take another decade before any new normal settles out of the clutter and discord that make up our daily lives. And this isn't just our opinion. We mention in our introduction that we conducted in-depth interviews with thought leaders, executives, academics, and practitioners alike, and their views are presented here. From the formal interviews we conducted for this book, as well as dozens of off-the-record conversations we've had with executives and managers in our client organizations, the resounding chorus is one of often not having a clue as to what is coming next. Where once the job at the highest level was to plan and execute, today it is simply to create readiness to adapt, to respond, and to essentially prepare for possibilities. This scary environment of externals driving the enterprise is hardly a normal scenario by any definition. No-normal rules.
Understanding is the first step toward acceptance and adaptation. What do we know at a macro level about how to define this new era? Three standout variables characterize business dynamics today: growth, change, and relationships. These words aren't new to you; these ideas in one form or another have been part of our organizational lexicon for a long time. The form is the key, what is new is the very nature of the growth, change, and relationships that you see. Let's take a look.
Believe it or not, there is still a great deal of growth taking place these days, just not here, just not in the United States, or perhaps not in the shape or form we are accustomed to. For a long time, strategic planning meant looking at last year's financial results, adding some factor of 10 or 20 percent, and calling it targeted growth. Expansion, emergence, consolidation, and connection define growth today. Growth no longer takes the form of simply striving for more of everything. Growth can mean a shift in complexity. Growth can be seen as dynamic movement from one stage or form to another.
Let's look at a first example of what growth means today, in the BRIC (Brazil, Russia, India, and China) markets. These markets are emerging areas of tremendous economic, political, and social transformation, and they will continue to be for the foreseeable future. One high-tech CEO (whose name you would instantly recognize) was asked not that long ago what his organization was up to in India. His response was short and to the point: "We're not up to anything; they don't buy what we make."
That's no longer the case. The economies of Brazil, Russia, India, and China now rank seventh, eleventh, ninth, and second, respectively, in GDP, according to the CIA World Factbook. And these four economic engines rank fifth, eighth, second, and first in terms of their population, which is their consumer base. Either way, these economies are now forces to be reckoned with. Their growth cannot be ignored. One of the "big three" U.S. automobile manufacturers is currently targeting a significant reduction in the number of retail dealers that represent it here in the United States (let's face it, they all are). That same brand is also currently striving to add some 1,300 dealers in these developing markets around the world; this is what growth looks like today!
In a no-normal state, growth often means consolidation. Organizations still become larger, just not the way they used to. Building new plants, hiring massive numbers, investing heavily in research and development are now seen as excessive and unacceptable risk. It's better to acquire another organization to grow by 40 percent in staffing and revenue. It's better to acquire the small entrepreneurial company that has developed the latest game-changing technology rather than develop it in house. Growth strategies today, like any investing, are all about capturing as much up side as possible. But even more importantly, it's about minimizing the down capture. First, do no harm.
A final manifestation of growth to consider is perhaps counterintuitive and has to do with simultaneous increases in efficiency and complexity. The work we all have to do is growing. More with less is a very real mantra for just about anyone, and perhaps even more for less if you've taken a pay cut. We've all had to become much more efficient, just as our jobs are expanding! There's nothing mysterious here. It's a simple fact of employment and capacity. We have been losing jobs in the workforce in the United States and Europe, and even across Asia. The total numbers vary based on the particular day and the data source, but let's turn data into usable information. Tens of millions of people are out of work. If you're not working, you're not spending. If you are afraid of losing your job (or your market share), you are afraid of spending. Consumers (and companies) hunker down and hold back when they're uncertain of their income. Unlike public sector strategies of spending as a way out, in private we get thrifty when money gets tight.
And what effect will this reduced demand have on capacity then? Any "right-sizing" of the workforce is a balancing act of capacity with current demand, and we're not done yet, not by a long shot. Companies and countries are still paring back. Industrial capacity utilization is still at one of its lowest levels ever, and, given excess capacity, we won't be rehiring. And while we right-size the labor force, we also bring additional pressure to bear on getting better, faster, and cheaper. This applies to all of us, companies, contractors, governments; here and abroad. All of us.
But wait, becoming more efficient is a good thing, right? Not for jobs. Employers will add hours before headcount every time. For decades it was believed that labor had the upper hand, and as workweeks contracted, the workforce grew. Now the trend has reversed: People are working more hours, not fewer. And if we get only 1 percent more efficient, that's 1.5 million jobs that won't come back—ever. No matter how you look at it, the math is working against us. If we lose 20 percent of any labor pool and then gain back 20 percent, we're still down. Think about it. If we lose 20 percent, we then need a 25 percent gain to get back level. If we lose 50 percent, we need 100 percent employment growth just to get back to where we started!
So our labor force is becoming smaller but more efficient. What does that do to complexity? It causes no-normal growth in the complexity of what we do every day. Let's face it. People go away, but the work doesn't, and therefore the complexity of our jobs as leaders expands. We all have to know more about financials, demographics, operations, psychology, law, and government, and the pace of learning is accelerating!
Growth is a significant part of a no-normal economy. It's just a new kind of growth. It comes in new forms. It happens somewhere else. It happens through consolidation and acquisition rather than organic expansion. It is happening with very low tolerance for risk or down capture. It causes our jobs to expand, not our workforce. It demands a significant increase in personal capacity with a zero increase in headcount.
Change essentially means to make different. Change has been a huge part of our professional lives up until now, and traditional change dynamics are still here, although the cycles have become shorter and shorter. What has changed about change is, again, the nature of the beast. Through our interviews with executives of global organizations, we've learned two very important lessons about change in a no-normal world; first, it's an interactive global curve; there's nothing isolated about it. The second lesson is that change is now all about an externalization of events—things happening to us.
With respect to the global change curve, every context and continent has undergone change in the last decade, and managing this change hasn't been easy by any means. What is the difference today? We're never in it alone. Think about any given "day in the life": bankruptcy proceedings for what was once the largest company on the planet, a cruise ship capsizing and killing dozens in the twenty-first century, oil rigs spilling millions of gallons of crude oil, the entire national economy of Greece melting down and fellow Eurozone countries bailing the country out, new nations being born, new big kids on the block, the beginnings of democracy where dictatorship long ruled, tsunamis wreaking havoc across an entire people, modern day piracy on the high seas, the very real possibility of nuclear weapons in the hands of many, not just a few. The nature of change has morphed into one of everyday occurrence, of pervasive examples that all interact with one another.
Consider the dynamics of perhaps a single, powerful global change curve—pervasive change bringing pervasive opportunity, but also pervasive uncertainty. Uncertainty brings reticence. Reticence brings delay in adding new people, in starting new ventures, in taking risk. You know you need more capacity. And you know you won't get more headcount.
What do we mean then by change and the externalization of events? The global curve tells us that it's happening everywhere. Externalization means that it's happening to us outside in. The pace of change is so rapid that a cumulative effect of change has kicked in. A critical mass of change has found its own momentum, so that change isn't planned anymore. Change usually isn't even expected or anticipated anymore. Change can hardly be imagined anymore, let alone foreseen. Change today can only be accommodated and responded to. If you can't imagine it, you can't foresee it. If you can't foresee it, you can't plan for it. If you can't plan for it, how do you prepare for it? Through agility and resilience. Through the capacity to respond quickly and without sustaining mortal injury to the enterprise.
The new capacity we need is not in the form of more people. The capacity growth we need lies within the people we already have. It is all we're going to get right now.
The final no-normal variable for consideration is the nature of our relationships going forward. Think about it for a moment. Take a deep breath.
What does pervasive and unforeseen change tend to do to relationships? What impact will it have on certainty? On trust? On permanence? On forgiveness? It will crush them:
* Organizational loyalty to employees is more conditional than ever.
* Employee loyalty to one's employer is more tenuous than ever.
* The number of economic hostages is higher than ever.
* The number of organizations using the liquidation of human assets as a means to short-term earnings has never been higher.
* Commitment, on either side, is at an all-time low.
Does that sound like a marriage made in heaven? What odds do you give to "divorce" as the ultimate outcome? Even if we do stay together because we have no other option, what are the odds that we are getting all we can out of the relationship? As an employee, how much vulnerability will I be willing to risk in uncertain times? As an employer, how much of the potential of our human resource do you think is being captured right now? Unfortunately, the answer is probably quite low, but the flipside is that we have a fantastic opportunity to increase our team's capacity without adding headcount.
Our people are waiting to be engaged. Our research for this book makes this very clear. We spoke with followers around the globe to ask them, and they are waiting to give more discretionary performance. We can get significant increases in capacity without adding numbers. Capacity without headcount is doable. You can do it by simply bringing out the best in those people you count on for results.
New Era—New Perspectives
A great deal of research and discussion and many interviews have been organized into a treasure trove of new perspectives to match this new business era. Throughout this book, you will learn from the voices of several individuals uniquely qualified and uniquely experienced to help us understand this new era. What follows are verbatim observations from:
* James D. Farley, group vice president, global marketing, sales and service, Ford Motor Company: Jim Farley is Ford's first single global leader of marketing, sales and service.
* Raoul Quintero, president and CEO, Maquet Medical Systems: Raoul has over 30 years of experience driving sales growth in the medical device industry.
* Charles E. Sykes, president, Sykes Enterprises: Chuck Sykes leads the organization that carries his name, close to 50,000 people in North America, Latin America, Europe, and Asia delivering contact center, product assistance, and telehealth services.
We initiated the discussion with two questions for the three men. What they had to say was very powerful:
Bring Out the Best: At a macro view of the economy, what's different about today versus 10 years ago, and what will be different in another 10 years?
Jim Farley: The main difference today is that the externals now drive the business. We as leaders like to think that we control everything, but that's just not true anymore. The big change is what is happening to us and around us—the externals. Your second question, how is this going to be different in another 10 years, is that the externals will be more and more important. We will have less discretionary control over our company's future, because more and more will be done to us. No one would've predicted a commodity crisis or the emergence of the middle class in Brazil, India, and Indonesia. No one would have predicted the collapse of the financial system, nor does it matter.
For us in the automobile business, one of the externals that is emerging involves population growth and city center density rising to a point where emissions control and fuel economy and consumption will be the primary driver of buying automobiles around the globe. We will see mass electrification in our industry in the next few years—the electrification of the automobile. It will affect every part of our business.
Raoul Quintero: What is really different about today in medical equipment? For me it's the fall of the transformational leader. At one time there appeared to be individuals who were building the visions and goals. They were offering support and stimulation to an organization to create a future. Ten years later we find a transactional leader where every decision seems to pretty much revolve around a profit and loss responsibility, where everything is measured in currency. There was once a lot more room for error—but our collective margin for error has been reduced dramatically today.
Ten years ago we were a smaller entrepreneurial organization among a collection of small entrepreneurial efforts within the company. Each of us a small component of a big company, we could have been a rounding error with no real significance, just a little piece of the much bigger picture. If we missed our targets, no one got badly hurt. If we overshot our targets, no one much celebrated either. In the bigger picture, we were no more meaningful than rounding up or down. Fast-forward 10 years of consolidation and integration, and now we are a half a billion dollars. We're nobody's rounding error anymore. If we don't hit what we say, everyone knows it; everyone feels it. If I make a mistake now, the entire company has a big problem. I think that same clustering will continue to take place, and that's why organizational forgiveness seems such a thing of the past. Everything is scrutinized. Everything is important to everyone today.
Excerpted from BRING OUT THE BEST IN EVERY EMPLOYEE by DON BROWN. Copyright © 2013 by Situational Services, Inc.. Excerpted by permission of The McGraw-Hill Companies, Inc..
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