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The Power of
In my first meeting with Steve Messana, senior vice president of Human Resources at The Home Depot, he captured the power of frontline commitment in the following simple statement:
We encourage all of our people to come up with their own ideas to capture the customer's attention, and to try them outthere's no need for approval here. Sure, we get some lousy ideas along the way that we would rather not have had; but that's the price we are willing to pay for the widespread individual initiative that makes this place unique.
The Home Depot has been the leading home improvement retailer in North America for well over ten years. It continues to outpace the competition in growth, shareholder returns, and the emotional commitment of its people. Their remarkable commitment lies at the heart of the company's performance recordfar more so than its strategy or unique business concept. You can talk with virtually any employee and sense his or her strong feelings about having a role in the enterprise and its success.
"JUST A MOM"
Consider Deb Burke, an associate with The Home Depot in its Woodstock store outside Atlanta, Georgia. Deb joined The Home Depot about four years ago as a "peak timer." On average, peak timers account for about one-fourth of the workforce and work less than full time, often on an unpredictable, as-needed schedule. Unlike most of The HomeDepot's hires, Deb had virtually no relevant product or retail experience. Nor was she in search of extra money to help the family, since her husband runs a successful business. Deb was simply looking for interesting work outside the home. She was hired because of her positive attitude, obvious energy, and natural empathy with people, both potential customers and fellow employees.
She was assigned to Chris Fitzgerald, the assistant store manager for building products, who put her in the millwork department. Most millwork customers are construction-hardened tradesmen and carpenterspredominately macho males who think they know exactly what they want. At first Deb was terrified by the prospect of having to deal with these customers on a range of technical products with names that only a woodcutter could understand. Chris took her aside after the first day and said, "Look, the fact that you don't know anything is going to work in your favor. You can learn it right from the start. Trust me. Before long, you'll know more than anyone about millwork." He then took her through the pile of catalogs, pointing out where and how to find the answers.
For several weeks Deb found herself floundering around, doing her best to find answers for a group of customers who took great delight in confounding, if not embarrassing, her. More often than not, when under intense interrogation by a customer, Deb's last-resort response was "Look, I'm doing the best I can. Damn it, I'm just a mom!" That usually worked in several marvelous ways. First, since most customers had moms themselves, they went through a profound attitude change on the spot. They tried very hard to help her instead of embarrass her. Second, they were suddenly much more tolerant of her mistakes and of the time it took her to look things up. Third, they knew that although most moms don't know wood stuff, they probably know commonsense stuff. And most important, in Deb's mind at least, the customers could trust her as their very own mom surrogate. Both men and women found it hard not to trust a real-live, honest-to-goodness mom, particularly when she was so obviously trying to do her best in a difficult assignment.
By the time Deb left the department three years later (she was promoted to manager of another department), both she and Chris maintain that she probably did know more than anyone elsecustomer or managerabout the complicated world of millworking. Her achievement took a lot of hard work, however, under conditions of relentless pressure over many, many months. And remember, Deb didn't need or want the money. What motivated her, then, to work so hard, learn so much, and stay so long? What made her such an emotionally committed worker?
Deb's motivation stemmed from the same things that apparently motivate most of The Home Depot's associates. First, they savor the satisfaction of turning a frustrated customer into a happy one. As one associate put it, "The look on their face stays with you for days!" When asked how they would prove that they had a higher-performing workforce, Home Depot people often answer, "Look at the customer's faces when they leave hereyou see lots more smiles than frowns." Second, the associates thrive on the challenge of a frantic work environment, where one never knows who, when, or what will be the source of the next challenge. They welcome the opportunity for individual achievement and personal growth. During busy periods, the place looks more like a circus than a retail warehouse store. There is never a shortage of challenges for the individual achiever. Third, the Home Depot associates become part of the honest-to-goodness in-store family of people with whom they share respect and support. Finally, they like the content of the workhands-on problem solving that requires intricate product knowledge as well as superior customer relations capabilities. As a result, most associates can't wait to get to work, and almost hate to leave. One of Deb's colleagues said that she prefers working at the store on Saturday to working around the house at home. The place is truly funso much fun that Deb usually forgets to pick up her weekly paycheck until her husband, in mock desperation, blurts out, "So, did you get your check this week, or are you still working for fun?"
The Home Depot may be one of a kind in home improvement retailing, but it is not alone in depending on the emotional commitment of its front line. The performance record of KFC (Kentucky Fried Chicken), for example, is a bit more checkered than that of The Home Depot. When Colonel Harland Sanders and his wife founded Kentucky Fried Chicken in 1952, they launched a simple concept: a good family dinner that most people can afford. The idea quickly grew in the minds of thousands of franchisees, whose personal affection for the Colonel persists to this day. The early growth and performance record, however, was interrupted by a series of acquisitions by large enterprises that replaced the personal touch of the Colonel with consequence management at besta tough management style focused primarily on financial measures and rewards. As a result, the franchisees and frontline restaurant managers felt used and lost faith, and growth and stockholder performance suffered badly in the late 1980s. Recently, however, the company resuscitated its performance record by essentially resurrecting the Colonel into a culture that combines the personal touch of old with the consequence management principles of late. The powerful combination has clearly energized the hearts and minds of KFC's workforce and franchisees.
CONTAGIOUS EMOTIONAL ENERGY AT KFC
An Ohio River boat, the Star of Louisville, was the setting for my first direct encounter with the emotionally enthusiastic KFC people who represent the legacy of Colonel Sanders. Despite the size and conspicuously white facade of the boat, we had trouble finding it since it was anchored below a maze of connecting freeways and on/off ramps that converge along the emerging riverfront development of Louisville, Kentucky. As a result, we boarded just as the river cruise was getting under way. It was a beautiful evening, and both the KFC people and an unidentified wedding party that shared the boat ride were the beneficiaries of all the scenic beauty the Ohio River can offer. All evening long, the company's proceedings were punctuated with shouted slogans, Bronx cheers, inside jokes, and general hoopla. Later in the evening, a regional director of operations and recognition and the vice president of marketing made brief remarksamid a lot of good-natured jibes from the audience. By the end of the cruise, everyone clearly had received a full measure of fun and enjoyment, as well as conspicuous recognition for his or her accomplishments. The cruise was much more than a normal sales award dinner, however. It was a floating circusparades and all! Moreover, it was typical of many such events at KFC every month.
What explains this kind of emotional energy at KFC? Surely, the memory of a kindly Southern gentleman in a white suit is not the answer. Nor is it explained by a few simple rules and shibboleths that the Colonel promulgatedand that still characterize KFC's values. Nonetheless, KFC has recently turned itself around dramatically. Before 1994 the company had suffered five years of flat sales growth. From that point on, however, KFC enjoyed same-store sales increases of 7 to 9 percent while competitors continued to face declines. At the heart of this turnaround has been KFC's blatant return to its roots to re-create what newly anointed CEO David Novak called a "restaurant-operating culture." The culture focuses on a few key measures, such as the "Colonel's Dozen," twelve rules for restaurant service. KFC leaders ensure disciplined attention to building a strong culture of recognition, celebration, frontline leadership, and semiserious internal competition. The company's current success is also firmly grounded in an integrated set of processes and metrics that not only complement the Colonel's Dozen, but also ensure both shareholder gain and marketplace performance. As Chuck Rawley, chief operating officer of KFC, puts it, "We're in the people businesswe could probably sell anythingwe just happen to sell chicken dinners. This is all about `leveraging up' our forty thousand employees and the sixty thousand other people at the franchises."
The KFC approach, however, is very different from that of The Home Depot. Moreover, just as with The Home Depot, KFC's approach is not for everyone. A company has several options for obtaining an emotionally committed workforce.
IDENTIFYING HIGHER-PERFORMING WORKFORCES
The definition of higher-performing workforcesany significant group of employees whose emotional commitment enables them to make or deliver products or services that constitute a sustainable competitive advantage for their employerimplies the following criteria, which we used in selecting the organizations that we would study for this book:
· A larger than normal proportion (i.e., more than one-third) of individual workers consistently exceed the expectations of their leaders and customers.
· The average worker performs better than the average competitive workertypically through a cohesive set of management systems, programs, and motivating/energizing mechanisms.
· A strong emotional commitment to higher standards and aspirations is reflected all across the workforce and appears to create a multiplier beyond what rational systems and programs could explain.
· The collective performance of the entire workforce or of critical segments (typically at the front line) forms the core of the institution's competitive advantage and is extremely difficult to copy.
Unfortunately, these criteria are easier to observe and assess judgmentally than they are to measure in any quantitative or statistically provable way. Hence, we relied on a three-step approach to determine if the enterprise benefited from a peak-performance workforce. The first step was simply to track the performance of the enterprise over time, since it is difficult to meet our workforce criteria if the enterprise is not achieving superior results. The performance records of the sample are summarized in Table A-3 in the appendix. The second step was to conduct a series of in-depth interviews with executives and managers in each company to ascertain if and why they believed that the workforce was at the core of enterprise performance. The third step was to obtain as much evidence as possible (quantitative and qualitative) to confirm management's judgment. That is, we looked at whatever indicators of productivity, quality, turnover, and customer service comparisons were available. Highlights of this assessment are summarized in the appendix Table A-3. Often, we could not measure the workforce segments separately from the overall enterprise performance. Nonetheless, the research team probed until it was satisfied that the criteria for a higher-performing workforce were being met over time. In every case described in this book, our research team, as well as management at several levels, was convinced that the quantifiable aspects of enterprise performance directly resulted from a superior workforce effort grounded in the emotional commitment of individuals within critical segments of the workforce.
The peak-performance workforces that we explored are about performance from individuals themselves, rather than the process or technology with which they work. Such workforces involve both individual and collective performance and encompass much more than the efforts of "a few good men (and women)." Moreover, the most noticeable and compelling characteristics of these workers were their enthusiasm, energy, and emotional commitment to performwhich cannot be quantified. There is little doubt, however, that this extra energy at the front line explains the company's competitive advantage over time.
Although the previously listed criteria constitute a tough set of attributes to maintain, they also offer significant long-term rewards. At the highest levels of abstraction, enterprises that sustain higher-performing workforces have much in common. A company's distinctive focus and execution, however, more clearly explain its unique performance record than do its commonalties with other enterprises. In other words, examining the specific ingredients and how they are applied reveals no single "right" path for achieving and sustaining higher workforce performance. More than one way works.
Our criteria can apply to all employees or to particular segments. For example, at Southwest Airlines and The Home Depot the criteria apply to their entire workforce. In contrast, at Hambrecht & Quist the criteria apply primarily to its investment and distribution professionalsand BMC applies them to its sales account representatives and its "product authors" (software designers). In each case, however, the collective performance of these employee segments has largely determined the competitive success of the enterprise.
WHAT WE FOUND
Not surprisingly, when we looked at each institution, we found that each applies its own set of distinctive approaches, mechanisms, and toolssome entirely unique and some commonly held. The most compelling commonalities, however, were in the philosophical beliefs and practices shared by leaders at all levels, that is:
· They believe strongly in each employeeand that the strategic value and performance potential of the workforce can determine the relative success or failure of the enterprise. This belief is focused primarily on frontline people rather than those in the managerial ranks.
· They engage their employees emotionally as well as rationally. Enterprises that cultivate such workforces invariably go beyond rational motivation to engage and harness the emotions of employees. In fact, the employees' emotional energy is the most visible difference among the higher-performing workforces explored in this book. The energy is contagious across the enterprise and has a multiplier effect on collective performance.
· They pursue enterprise performance and worker fulfillment with equal rigor. They are extremely disciplined about maintaining a dynamic balance between the two over time. They insist on sets of disciplined behaviors in different places that create equal emphasis on fulfillment and performance. Moreover, the leaders maintain a balance wherein both factors are optimizednot a "zero-sum game," wherein one must be traded off against the other.
Beyond these three basic commonalties, however, many different approaches, mechanisms, events, and tools are applied to good advantage among the cases we explored. A handful of cohesive patterns or paths nevertheless consistently emerged across the cases, although some companies followed more than one path at a time. Each path was characterized by a consistently high level of workforce energy consciously channeled in ways that ensured a dynamic balance between enterprise performance and worker fulfillment.
WHY WORKFORCE BEHAVIOR MATTERS
TO TOP MANAGEMENT
Unfortunately, far too few companies make any serious effort to generate emotional commitment within their workforces. Many do not believe the effort will be worthwhile, thinking instead that average workforce performance is the best one can hope for. Of those who acknowledge the potential value of using worker fulfillment to engage emotions for performance, most go about it haphazardly, usually because they do not know how. For these companies, consequence management may be the only approach that they understand.
The successful efforts at peak performance are based on a high level of commitment to fulfillment and performance. The various tools that companies use to reinforce that commitment are tightly integrated into a cohesive, synergistic approach that both generates and channels human energy.
Clearly, top management must be involved in developing an emotionally committed workforce for many reasons. First, a cohesive approach is essential, and cohesiveness demands executive leadership alignment (i.e., the actions and decisions of leaders reinforce one another's contributions to performance). Second, most of the best sources of emotional energy cannot be tapped without the efforts of executive leadership. Finally, balancing enterprise performance and worker fulfillment requires trade-offs that can only be made at executive leadership levels.
Once we realized that no single pattern for peak-performance workforces prevailed, we wondered if the explanation was always situational. The good news is that there are five patterns that work. Thus, by focusing on one or two patterns that best fit its own business, marketplace, culture, and leadership, a company can greatly improve both how top management invests its collective time and resources and the results it can expect. The bad news is that companies with only average levels of workforce performance cannot achieve higher levels without investing a great deal of time and effortno matter what path or paths they choose to pursue.
THE CHALLENGE CAN APPEAR OVERWHELMING
Companies like Southwest Airlines (SWA) and The Home Depot energize their people in both dazzling and overwhelming ways. For example, in their highly revealing book, Nuts!, Kevin and Jackie Freiberg outline a seemingly unending list of what makes SWA's energizing machine work so well. They include thirteen core values, eleven philosophical attitudes, and ten "values in action." Most chapters end with a "Success in a Nutshell" summary list, all of which adds up to literally hundreds of action items important to the company's success. Similarly, the U.S. Marine Corps prides itself on its abbreviated briefing pamphlets for promulgating its rules of engagement. Even the short forms, however, constitute an intimidating inventory of what the Marines consider important.
Action lists like these can be useful reminders of what it takes to achieve peak performance within large complements of people. Unfortunately, however, they are not lists that the rest of us can hope to applylargely because we do not start from the same place. Few of us have had to fight for survival against unfriendly regulatory agencies and killer competitors as SWA had to. Nor can we resurrect the Colonel's legacy to motivate and build commitment as KFC did. And obviously, we do not face the threat of war to help us focus our hearts, minds, and souls as the Marines must. It would be folly for most institutions (whether military or business) to try to emulate SWA's hundreds of actionsor the Marines' years of tradition and valor. Instead, institutions with different cultural and business base points must decide which insights and ingredients of the winning combinations offer the best learning opportunity for themselves.
GOOD PEOPLE MANAGEMENT FALLS SHORT
Lacking such insights, most companies simply fall back on the more abstract and widely accepted principles of good people management. All good managers believe in treating people fairly, providing them with incentives to perform and opportunities to grow, and rewarding their performance with recognition as well as advancement. Good leaders also seek to recruit the best talent they can find and practice the doctrines of consequence management and individual accountability. These principles are hard to argue against, but seldom do they differentiate the higher-performing workforce from the average or normal workforce. This does not make the principles less valid, since they underlie the elements that do determine higher-performing workforces. The peak-performance quotient, however, invariably goes beyond these commonly accepted principles and engages the emotional commitment of the worker. To secure this commitment from its workers, a company must pay disciplined, consistent attention to worker fulfillment.
Moreover, the principles of good people management are so widely applied in both successful and unsuccessful workforce performance efforts that the list of good things to do has become virtually endless. Companies that try to give equal emphasis to all aspects of good people management invariably overload their system. Why, then, do the efforts of companies like SWA, KFC, and The Home Depot appear to emphasize so many elements, actions, and mechanisms? How can all these devices be integral to their success with their workers? The answer lies in the time frame.
Over time, the priorities and concentration of these companies have shifted. They have placed their primary emphasis on the few key elements that fit their circumstances during particular periods in their history. For example, SWA's legacy is much more important as a source of employee energy today than it was during the start-up period, when threats to survival dominated the scene. Sometimes this shift in company priorities occurs along a single path, and sometimes it cultivates a second, complementary path. In addition, some complementary activities just spring up in the same garden, as it were, to work in conjunction with the more formally cultivated key ingredients.
WHAT CAN BE LEARNED FROM THIS BOOK
This book is concerned with energizing people for performance and the different successful paths to that end. It describes how each path concentrates management attention on worker fulfillment to harness the emotions of many people in sustaining a higher-performing workforce. This is a different challenge than simply motivating people to meet demanding financial performance objectives. The latter is what most companies do, and it implies setting unambiguous goals, establishing clear measures, and holding people individually accountable for results (consequence management). Logical, rational motivation is certainly a good thing, but it is no match for engaged, emotional commitment. Just ask anyone who watched the New York Yankees in the 1998 playoff series games, which culminated in a World Series victory and the highest number (125) of games won in a single year by any major league team in baseball history.
Energizing people for performance elevates the game significantly, to the point that many employees go well beyond leaders' expectations, individual accountabilities, financial results, and short-term market objectives. This book describes how to unleash the full individual and collective potential of peopleat the front line and across the broad middleto achieve and sustain higher levels of performance than the workers themselves thought possible, than management or customers expected, and than competitors can realistically achieve.
Unleashing the full potential of people is undeniably a tall order; few institutions have managed to do it consistently. This book explores the approaches of those who apparently have gone far beyond any conventional notions of managing solely to meet ambitious financial objectives. It looks at how such institutions tap into worker fulfillment to develop the extra quotient of emotional commitment that deeply energizes many people to perform well beyond conventional norms.
Each successful institution we have explored pursues peak workforce performance within an integrated organization approach or path that generates widespread emotional energy and is disciplined about how that energy is channeled to yield higher performance. The energy sources and channels of alignment are supported by mechanisms that simultaneously impact performance and fulfillment.
FIVE PATHS THAT WORK
Five paths explain all the higher-performing workforce situations that we explored in depth. They are labeled "balanced paths" to reflect the critical importance of sustaining a dynamic balance between worker/enterprise performance and worker fulfillment (i.e., wherein both the company and its employees benefit by achieving distinctiveness along their chosen paths). This balance means the enterprise pursues simultaneous improvements along both dimensions; it does not trade off one against the other.
Each path constitutes a clearly different approach for energizing a workforce for higher performance. Certainly, there are overlaps and similarities among the paths, but the primary focus and value proposition of each is quite distinct:
1. Mission, Values, and Pride
2. Process and Metrics
3. Entrepreneurial Spirit
4. Individual Achievement
5. Recognition and Celebration
These labels convey the primary focus of each path as indicated by the case research. The paths were not among our initial hypotheses; nor did we select the case examples to highlight any path. Furthermore, the companies did not consciously create or decide on these paths. They emerged as dedicated leaders pursued a balanced performance/fulfillment result. We simply discovered the paths as we dissected each case to understand what was energizing the workers. As we explored further, five recurring patterns emerged in the sources of emotional energy and how that energy was channeled into peak performance. Hence, the five patterns, or balanced paths, have become the overarching concept or framework for this book.
Clearly the most noticeable difference between the higher-performing workforce and a normal workforce is in the level of energy and emotional commitment that employees exhibit. Even the casual observer can feel the difference when walking through the halls. People move faster, interact with more visible animation, communicate with more palpable emotion and excitement, listen more intently, and respond more vigorouslyand really enjoy themselves in the process. They pay little attention to the clock, with most arriving early and leaving late. When they are not on the job, they are probably thinking about improving the job. Moreover, this energy seems to persist throughout the dayday after dayin various parts of the organization. Some call it fun; others describe it as challenging and stimulating. To outside observers, it can appear exhausting as well.
What generates all this energy? Obviously, it must ultimately come from within the people themselves, when something occurs that engages their emotions. A few people, of course, can turn themselves on, so to speak. But within any large group of employees, most will need some kind of outside stimulation, usually on a regular or recurring basis. It can be provided by a leader, one able to reach outside himself or herself and draw upon something other than personal charisma or influence. Emotional energy can be generated by the dynamics of a marketplace, that is, growth, customers, or competitors. It can also come from a history or legacy of remarkable accomplishments, heroes, or martyrs. Whatever the generating source of energy, the leadership system must make a consistent effort to tap into it regularly.
Not all of the more obvious sources of extra energy for an enterprise are available to every aspirant to a higher-performing workforce. To be successful, however, a company needs to use more than one source over time. The examples in part II illustrate how important it can be for a company to have more than one source and a consistent and systematic way of keeping those sources burning brightly in the employees' eyes.
Unfortunately, a surge of extra energy can be a bit like a torrential downpour that causes rivers to overflow and run amok. Unless the energy is channeled properly, it can create confusion, do a lot of damage, and divert the organization from its purpose and goals. Enterprises that would sustain a higher-performing workforce by generating extra energy cannot afford to leave the alignment of that energy to chance. By alignment, we mean individual decisions and actions that reinforce one another in boosting enterprise performance. Nor can they count on shibboleths like empowerment, shared values, and individual freedom to keep things on target. Instead, the companies we studied are very disciplined about maintaining certain channels of alignment supported by a wide variety of mechanisms to ensure both enterprise performance and worker fulfillment.
These mechanisms can be categorized within several alignment approaches. Moreover, it is imperative to make such a choice. In other words, an enterprise wisely picks only a few approaches, which it expects to execute with distinction. This focused distinction within a few approaches differentiates the peak-performance workforce. Different enterprises choose to emphasize different channels and sometimes vary that emphasis over time. Unfortunately, many companies today are trying to pay equal attention to far too many alignment approaches. It takes remarkable disciplineboth applied by the enterprise and self-imposed by the workersfor an organization to be truly distinctive in a few approaches. Those few must also strike a dynamic balance between enterprise performance and worker fulfillment.
Certainly, engaging the emotions of employees can stimulate higher performance from them. Moreover, many factorsnot all of them positivecan stir the emotions of a workforce. Nonetheless, our research indicates that three basic lines of inquiry offer richer learning opportunities for the reader:
1. What are the five patterns or cohesive paths that lead to an emotionally committed, higher-performing workforce? What do they have in common, how do they differ, and what conditions favor following one path over the others?
2. Why do the more than twenty top-performing institutions, carefully selected and studied in depth, follow different paths, and how do they generate and channel the emotional energy that their choices require?
3. How can a company use this framework to decide on the right path(s) to pursue; the sources of energy to tap; and the approaches, mechanisms, and tools to channel that energy to higher levels of performance?
Above all, we hope the reader who sees the potential in an emotionally committed workforce will become as convinced as we are about the importance of being purposeful and disciplined in selecting and following one or two of these paths.
SHAPING A BALANCED CONSTRUCT
The primary purpose of this book is to help leaders shape their own balanced configuration or path. In each enterprise that we studied, we found a few critical sources of energy and a few alignment approaches to be instrumental in creating a balanced, distinctive construct, which sometimes integrates two paths. Though each company pays some attention to most of the approaches, each also concentrates on and integrates a few defining ones.
As previously mentioned, the more surprising discovery was that five paths (or combinations of energy sources and alignment approaches) seemed to explain all the cases that we explored. These unique configurations are all characterized by disciplined and distinctive execution of a few key alignment approaches and draw on more than one unique source of energy. Whatever path they take, companies with peak-performance workforces enjoy a common feature: a dynamic balance between worker fulfillment and company performance over time.