Change Management

5 Lessons for Developing Culture in the New ‘Gig Economy’

By gothamCulture
Published at In Category Blog Tags: , ,
organizational culture gig economy

Guest article written by Levi Nieminen, Ph.D.

This brief article explores the meaning and management of organizational culture in the new ‘Gig Economy.’ The Cardiology Fellowship Training Program at the University of Michigan provides a fascinating case example of an organization whose people are always on the move. What they have learned about how to create (and sustain) their program’s culture holds strong relevance for many organizations today, including some (like Uber) who are defining new organizational forms, and many others who are grappling with a high-churn millennial workforce.

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The Power of Pattern Disruption as a Vehicle for Change

By gothamCulture
Published at In Category Blog Tags: , , ,
pattern disruption change

Every day, billions of people around the world wake up to a daily routine. Take a shower. Get dressed. Grab their favorite double tall latte from Starbucks on their way to work.

Humans are creatures of habit. Some more than others, of course. And while some patterns have positive impact on our lives, like scheduled sleeping times for children and adults, production of manufactured goods and weekly schedules, we also know that NOT following patterned behavior can be just as important. Read More…

Measuring Performance: Are You Collecting the Right Data?

By gothamCulture
Published at In Category Blog Tags: , ,
measuring performance data

We live in an age of data. Big data. The ability to collect and use data to make business decisions has become table stakes for any organization looking to gain operational efficiencies, drive innovation, obtain market share, and manage targeted and timely development of human capital. Looking back even five years, a McKinsey Global Institute report communicated the value of big data.

“We estimate that a retailer using big data to the fullest has the potential to increase its operating margin by more than 60 percent. Harnessing big data in the public sector has enormous potential, too. If US healthcare were to use big data creatively and effectively to drive efficiency and quality, the sector could create more than $300 billion in value every year. Two-thirds of that would be in the form of reducing US healthcare expenditure by about 8 percent.” (MGI, 2011)

Over the course of these past five years, we have gained a lot of capability and capacity to help us manage all of this data. And yet, many organizations still feel as though they’re falling behind.

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Considering a Mass Layoff? You Might Be a Knuckle-Dragger

By gothamCulture
Published at In Category Blog Tags: , ,
Considering a Mass Layoff? You Might Be a Knuckle-Dragger

It amazes me how many executives are knuckle-draggers. A knuckle-dragger, for purposes of this conversation, is someone who is unintelligent (or makes unintelligent decisions) and is stuck in the past, promoting and using antiquated and ineffective methods.

This is the person who is still wandering out of his/her cave with a club in search of something to knock in the head and eat for dinner. There isn’t a lot of thought that goes into a knuckle-dragger’s actions. In an office environment, it is the executive that screams at people when they make mistakes. Or a C-Suite that performs mass layoffs.

Yep, I said it. If you do mass layoffs, you are a knuckle-dragger.

According to CNBC, in January of this year, layoffs surged to a 6 month high. Over 75,000 planned job cuts by US-based companies were announced last month. That’s 200% more than December, and 42% higher than this time last year. Two of the major contributors are Wal-Mart and Macy’s, cutting 16,000 and 4,820 respectively.

People try to justify mass layoffs by talking about the good of the company, looking out for shareholders, blah, blah, blah. Here’s what they don’t tell you: They are laying off people because of their failure. Simply put, most executives rely on mass layoffs to compensate for their inability to lead properly and make the right decisions.

A great example is Al Dunlap, aka “Chainsaw Al.” He was famous for downsizing. Everyone thought his methods caused companies to become successful by “cutting the fat.” However, what people didn’t realize was his turnarounds were elaborate frauds. When Sunbeam brought him in to solve their financial issues, he downsized. Sunbeam went bankrupt, and he was caught trying to engineer an accounting scandal.

The Myths and Realities of Mass Layoffs

The simple truth is that downsizing and mass layoffs are BAD for your company. They will give you an uptick in profits at the end of the year if done at the proper time, but they are not a viable long term solution. In fact, in the long term they are detrimental to the sustainability of your company. Here are four myths and realities about layoffs:

Improving Productivity

Downsizing and mass layoffs are thought to improve the productivity of the organization. It supposedly motivates employees (which we will talk about later), consolidates resources, and makes the organization leaner.

But the simple truth is that organizations aren’t any more productive after a mass layoff than they were before it. The budget sheet looks better because there are less expenses, but productivity doesn’t increase. In fact, studies show you are likely to see a drop in productivity in the short and long term. Here’s why: When an organization has a mass layoff, they usually don’t determine who are the talent players (often because the people making the decision have no idea who they are laying off). So they choose some metric, and get rid of people using that.

Because they are only measuring performance based on a single factor, they get rid of both talented and untalented employees. The result is a smaller workforce, not a more productive one. Often mass layoffs cause employees to look for work elsewhere. Would you want to work where you could get laid off any minute? Usually, the better employees get hired at other places and leave. Once this happens, the level of talent at your organization actually decreases.

Motivating the Workforce

Downsizing and mass layoffs are thought by some to motivate employees. They don’t motivate, they distract. Think about it. When a company has a mass layoff, it causes widespread uncertainty and fear. Every employee wonders if they are the next to go. While they might work a bit harder for a short time, they are constantly worried about losing their job.

At best, mass layoffs motivate your most talented employees to look for jobs elsewhere.

Solving Financial Issues

Many people think mass layoffs will solve an organization’s financial problems. But rather than actually solving the problem that caused the budget shortfall, layoffs are usually used to offset it. An organization fires a large amount of people to help their budget and then, as things seem to get better, they hire all these people back until they are in the same spot they were in to begin with. 3-5 years later, they have to have another mass layoff. The cycle repeats itself.

In addition, studies show that layoffs actually drag down a company’s stock value.

Making the Company Stronger

There is this perception that mass layoffs make companies stronger. They don’t. Usually, its because they don’t solve the root of the problem. The problems might even be making the layoff decisions.

Other than some major external factors shifting without warning, the failures that lead to a mass layoff are the responsibility of the C-Suite. And in the end, it is the failure of company leadership that causes mass layoffs. Sadly, they often don’t see it and aren’t held accountable. Instead, they hold others accountable for their failure in leadership and decision making.

Are You a Knuckle-Dragger?

Considering a Mass Layoff? You Might Be a Knuckle-DraggerIt saddens me how many executives think mass layoffs are a viable option. To be fair, in some rare cases they are, but not usually. Yet, we have created a business culture that says it is just another way of doing business. But the ways of doing business are changing, and mass layoffs are more of a detriment to your organization than ever before.

Think about millennials, for example. We constantly hear companies complain that the millennials don’t want to work for them, or are more concerned with personal gain than their loyalty to the company. I’ve heard many business executives shake their heads, tsk and complain about this behavior. Guess what, knuckle-draggers? You caused it. Who’d want to be loyal to a company when mass layoffs are a just another way of doing business?

Financially, layoffs reduce stock prices. They reduce productivity and cause a need for payouts in severance, plus the cost of rehiring employees as business improves. They cause a burden on the tax payers because of the increase in unemployment recipients. They make people wary of working there, have a severe negative effect on employee health, and often leave the organization with a less capable workforce in the long run.

So, with the overwhelming amount of evidence about the detrimental effects of mass layoffs, why do they still do it? How do we get the knuckle-draggers to put down the clubs, become leaders, and make better decisions?

3 Development Principles to Reshape Performance Management

By gothamCulture
Published at In Category Blog Tags: , ,
3 Development Principles to Reshape Performance Management

Guest article written by Levi Nieminen, Ph.D.

As part of the debate over whether to end traditional performance management and where to go from here, one fundamental question that needs to be addressed is whether a single HR- Talent Management system can achieve both evaluative and developmental objectives? In this brief article, I describe a few of the principles that OD professionals live by and the challenges they present for the designers and overseers of “performance management 2.0.”

“Blow up” performance management

Over the last several months, the list of high-profile companies who have “blown up” performance management (PM) as they (we) once knew it has grown to include GE, Microsoft, Adobe, Gap, Accenture, and Deloitte. These are just the most recent public denouncements of what is certainly a long standing and widely held discontent over PM and appraisal practices. Two years ago, CEB’s research indicated that upwards of 90% of companies were looking at major overhauls to their PM systems.

These days, it appears that the debate over PM is taking on both on new heights (see Bersin by Deloitte report) and adding new angles of aerial attack. As an Organizational Development (OD) professional looking in from a semi-outsider perspective, it occurs to me that the latest round of scrutiny has focused on the many ways in which traditional PM systems fail not only from an evaluative perspective (i.e., valid appraisal of people), which is old news, but also from a developmental perspective. That companies want to invest more in the development of their people makes good sense. Whether this responsibility can or should be housed within traditional HR departments and aligned in other ways with formal PM systems remains to be seen.

I am biased however, to think that PM 2.0 will fail on developmental objectives until the old principles of PM are replaced with a radical new set. Though a much longer list is certainly possible, here are 3 principles that most OD professionals I know live by, and which might provide useful guideposts for PM 2.0… if we are to take the new focus on development seriously.

Principle 1: You can lead a horse to water…

PM 2.0 needs to turn the concept of who owns employee development on its head. In the past, we have pointed to management, the HR-Talent Management-OD department, and most recently, team leaders (see Deloitte in HBR) as the owners of the development process. While we talk about the idea that managers need to “develop their people,” from the employee perspective, this makes development feel like something “they’re doing to us.” Once the whole activity takes on an odor of compliance, what follows more often than not are check-the-box actions and commitments. There is an art form to giving ownership to employees that will no doubt involve learning new and productive ways to lead the horses to water. And some leaders and some cultures will support these coaching behaviors more than others.

One organization that has been leading this charge is the Federal Bureau of Investigation. Rather than focusing their efforts on manager-supervisor engagement in the process, they have recently begun to shift toward fostering employee ownership. One practice involves training employees in how to seek, receive, and use feedback. Culturally, they recognize the need to attract and hire the right people for this strategy to be effective.

Principle 2: From big data to small data

Many of the emerging trends of PM 2.0 [so far] have focused on solving the old problems of how to evaluate people, for example, how to fix ratings. As a result, many of the proposed solutions focus on giving bigger and better data to management so that organizations can make smarter decisions about how to compensate and utilize its people. On the hand, this is really good progress!

On the other hand, this progress seems to do little to address the development objectives. While new data-driven solutions are certainly needed on this side too, what’s needed will likely look very different than the recent clamoring for big data. Instead, it’s much more likely to look like small data–informal, ongoing, un-documented, and owned by the individual.

Every coach who has used a 360 with a client knows that there comes a moment-of-truth question when it’s time to ask the HR sponsor: “Who will own the data?” The old PM script that gives HR co-ownership of the data is one of the best ways to compromise the individual’s ownership of the process and certainly conflates the purpose of development with a new possibility that evaluation will sneak in. Even the best and most well-intended HR partners cannot be expected to un-see performance data they’ve seen and this can be a problem when it later comes time to weigh in on personnel decisions.

For PM 2.0 to truly prioritize development, organizations will need to add a healthy dose of small data that is owned by individuals and off-limits to corporate. This does not mean that the new systems will lack transparency, but that the modes for achieving transparency will need to be different. For example, the assessment data or feedback can be held and owned privately by the employee, so long as the process also encourages honest conversations about the key insights gained from that data. Those conversations are essential in order to gain the input and support of the boss, co-workers, and HR as the employee embarks on new development priorities and goals. As the next section describes, there is a certain “art form” in the coaching that is needed to guide a person through this process.

Principle 3: Feedback without coaching doesn’t work

Freeing managers from the burdens of ownership (Principle 1) does not let them off the hook. But it does allow for a shift in how they interact with the process and the skills they will need to build. In the big scheme of things, organizations might get more return-on-investment from PM 2.0 by wrestling a little less with the measurement of performance and a little more with teaching managers how to be good coaches for their people.

Recent research confirms that providing feedback without the adjacent support of a coach leaves a lot of the value in these exercises on the table, and in particular, whether the individual sees growth in him or herself as a leader over time. One reason is that the translation of the feedback into priorities and specific actions is rarely self-contained in the feedback. This takes work and requires not only a motivated individual who wants to change but also a supporting process that builds awareness and alignment with the key people around him or her.

In this respect, PM 2.0 will need to replace the old “compartmentalized” view of individual performance with a wider-lens that also shines a light on key elements of the team, organization, and strategy. The most value will be created when the development strategies for people accurately reflect the specific needs of the business strategy (read J. Boudreau’s, “Trouble with the Curve” for an interesting take on this). And it seems reasonable to expect even more demand on coaching and coaching skills as a more complex view of individual performance and the surrounding context is embraced.

Development and evaluation: A paradox?

Stanford business professor Charles Bonini described how it is not possible to create a model that is both accurate and useful. A model that is fully accurate is too complex to understand, and thus, we must compromise some accuracy in order to achieve some practical value. This is called “Bonini’s paradox.

As with the HR sponsor in the 360 moment-of-truth, the designers of PM 2.0 will need to decide what their ultimate priority is. If development is the priority, the new systems will need to be engineered with development principles in mind, and the solution will be as much about changing the culture as it is about improving the measurement. As my description of each principle has highlighted, these cultural shifts will most likely entail:

  • The shift toward employee ownership of development and corresponding changes to how HR and managers support and bring accountability to the process,
  • New norms that effectively balance privacy and transparency so that employees can own their feedback and data (e.g., 360 data) while also having the honest conversations needed to allow others to support their progress, and
  • A shift in management style and skillset that moves away from “telling and directing” and moves closer to “asking and coaching.”

This article first appeared on Denison Consulting.

Levi-NieminenLevi Nieminen, Ph.D. is the Director of Research and a Senior Consultant with Denison Consulting. His work focuses on conducting applied research on organizational culture and leadership and translating that research into improved solutions for clients and shareable knowledge for the larger scientific community.

End of an Era: Thoughtfully Planning the Departure of a Founder

By gothamCulture
Published at In Category Blog Tags: , , ,
End of an Era: Thoughtfully Planning the Departure of a Founder

I recently sat down with a good friend and fellow entrepreneur to catch up. We get together on a fairly regular basis and I value our time together as a chance to share our experiences, challenges and successes through our respective careers. And because we are at very different points in our entrepreneurial journeys, we are able to provide each other with a new perspective.

During our last conversation, my friend made a reflective observation that I really admired. He told me that he’d been recently pondering the impact of his inevitable departure from the company he has run for the past thirty years. Although he has no immediate plans to retire or leave, the truth is, he won’t stay in his role forever.

In a recent town hall meeting, he came to the stark realization that the way he behaved every day sent messages to his team. Whether intentional or not, his people took his cues on how to behave within the company to heart.

Faced with this immense influence and responsibility, my friend realized how deeply his departure would impact the organization he had worked most of his adult life growing. As a result, he has become very intentional in planning his departure in order to minimize any negative repercussions.

The Impact and Influence of Founders

Founders have enormous influence on the culture of their organizations. Their personal beliefs and assumptions about the right and wrong way to do things takes on a life of its own as they onboard new employees during the startup phase. If the beliefs of the founder don’t make for good business, the organization will fail to thrive and will likely shut down. If the organization succeeds, that success only serves to reinforce for members of the organization that those ways of working are, in fact, the right ways to work.

End of an Era: Thoughtfully Planning the Departure of a Founder As the organization continues to grow, new members will either adapt to the culture or fail and depart. More time and more success only serves to further embed the culture and way of doing things as the ‘right’ way. Even when founders leave an organization at this stage, their legacy can continue to drive thinking and behavior in the organization for years to come.

This isn’t necessarily a bad thing. The danger arises when the organization is reliant on the embedded ways of working despite changes in the environment that change the game. Being great at baseball is fantastic so long as the game doesn’t suddenly change to football and you’re left wearing a batting helmet.

A Challenge or an Opportunity?

When founders have been successfully leading their organizations for long periods of time, their departure can be extremely challenging. It may come at a time when the organization finds itself at a crossroads; a point where the old ways of doing things may not be the best path to the future.

In these cases, the culture may need to evolve in some ways to better position the organization moving forward. But a founder’s poorly planned (or unplanned) departure can leave the organization they created set on autopilot as the remaining team members continue on the path that was established for them.

This type of situation can bring an organization to its knees as people grapple to make sense of the departure and try to understand how they will continue without them.

While certainly challenging, this does provide the founder with the opportunity to be proactive about preparing their organization for the time when they finally make their exit.

How to Prepare for a Proper Exit as a Founder

Here are four things to ensure that your departure as a founder goes smoothly:

1. Take the time to properly reflect. Consider the beliefs, assumptions and values that you hold and how they have shaped your organization. This may require seeking the help of others as you reflect on the current culture of your organization and all the strengths that may come with it.

In order to do this right, founders and their leadership teams need to understand the culture in which they operate and think deeply about how it may serve the organization well, or potentially derail them, in the future.

Founders can then begin an intentional process of shaping the culture over time, by role-modeling needed future behaviors, by shaping recruiting processes to hire the right talent, by shaping the compensation structure to reward and reinforce the needed behaviors in the future, and by evolving other key systems and processes to carry the organization forward and yield sustainable success.

2. Don’t wait to develop your plan. Waiting until your departure is imminent will only leave you regretting the chance you had to plan ahead. More importantly, it puts the sustainability of your company at risk. If for nothing else than to mitigate risk, planning for your exit now helps ensure that no matter what, your team will be able to carry on in a sustainable way.

3. Select a successor early enough to implement a thorough transition. Often, founders will wait too long to identify and begin grooming their heir. Take the time to engage your successor in reflecting on the current culture and how it may need to evolve to help drive the behaviors required for success during their tenure. By partnering with your successor in this process, you can reinforce your underlying beliefs and assumptions about what is important. Then, you can both understand how those beliefs may or may not need to evolve to set the organization up for success once you are gone.

4. Keep your team engaged. As the time of your exit nears, take the time to engage your team to help them understand what is happening and what it means for them and the organization’s future. Culture is a collective concept; so actively engaging team members in understanding the culture, the strategy and the ways in which things may need to change can be beneficial. It allows people to become a part of the process rather than sitting back and feeling like something is being done to them. It also helps align them around what may need to change and what must remain stable in order to succeed in your absence.

Whether by design or default, no founder can guide the ship forever. Eventually, things will change. Preparing for this eventuality can have a profound effect on the future of what you and your team have worked so hard to build.

As a founder, you and your team have all had a hand in building a solid foundation that has weathered many storms. You’ve all seen it grow and evolve over the years and the foundational culture that you’ve created together has helped drive that success. Being thoughtful about your departure is like adding that final coat of varnish on the house that will help team members seal and protect that foundation as they carry on in your absence.

This article originally appeared on Forbes.