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Michelle Tryon-Schneider
Consultant 714 414-2228 michelle@futuresense.com
Michelle’s more than 15 years of experience span Human Resources, Entertainment and Sales & Marketing. She credits her diverse background to an inquisitive spirit and her great fortune in working for the Walt Disney Company, where she was afforded many opportunities to explore new horizons. A self-admitted Jane of All Trades, Michelle’s significant skill sets are in the areas of content and relationship development. Some examples of which are:
Public Relations
- Presentation skills - on and off camera
- Crafting and delivering your media message
- Preparing and coordinating marketing events (conventions, tours and local events)
Sales Development
- Developing a consultative sales team
- Utilizing incentives to increase sales
Human Resources
- Training in behavioral interviewing techniques, work-style identification and issue resolution
- Developing tools to support internal sourcing
- Defining values-based behaviors
- Creating and maintaining a successful virtual work program
- Creative meeting facilitation
Michelle is a talented communicator with an effusive and inspirational style. She finds particular satisfaction in developing content, whether for marketing or training, that is uniquely effective for each client. She is effective at working with new managers and seasoned executives, in small or large organizations.
Michelle has most recently been consulting in the field of selection and recruiting. She started her career as a performer on stage and touring in shows. She transitioned into Human Resources and worked in Training & Development for several years. After being selected as the official company spokesperson and ambassador of goodwill, she moved into public speaking and marketing. After working on the launch of a new business venture in Japan, Michelle left the Walt Disney Company and found a natural fit for her abilities in coaching and developing sales teams. She attended Cal State Fullerton and studied Communications with an emphasis in Public Relations.
Michelle volunteers her time with learning-challenged children in her community and enjoys traveling abroad with her husband and two children.
Matt Finkelstein Leaves FutureSense
One member of the FutureSense family is leaving to follow his passion. Matt Finkelstein has just been accepted into the apprenticeship program at the Center for Agroecology and Sustainable Farming Systems at UC Santa Cruz. After the six month intensive program beginning in April 2010, Matt will receive his certification in Ecological Horticulture. Matt has long been involved in social and environmental activism in the area of sustainable organic farming with San Diego Roots (www.sandiegoroots.org) - a non-profit organization working to educate, cultivate, and empower sustainable food communities in San Diego. From farm to fork, they focus awareness and work toward a more ecologically sound, economically viable and socially just food system in San Diego. Most recently, he has contributed to this growing non-profit organization by serving on the Board of Directors, as a project coordinator, and educator speaking to a wide-range of organizations.
Kyle Jaimerena has worked side by side with Matt in order to provide seamless coverage to our clients as Matt transitions out of FutureSense. Matt will continue to make contributions to the team on an as needed basis.
While we will miss his full-time contributions, we are extremely proud of Matt and his commitment to this socially and culturally important endeavor. We are expecting great things from this accomplished member of the team!
Kelly Hansmann
Consultant
415-730-0434
kelly@futuresense.com
Kelly is a seasoned compensation and benefits consultant with a collaborative approach to developing creative and practical HR solutions. She has over 15 years of experience designing, implementing, and administering compensation and benefit programs. Consulting with companies of various sizes and industries has given her both a deep and broad perspective. She has significant expertise in:
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She is an effective project manager experienced in working with executives, compensation committees, and cross-functional teams. Kelly is both strategic and tactical, and has a passion for streamlining operations. She is an excellent communicator with a warm, influence-building style.
Kelly was previously a managing consultant at a large international accounting firm and mid-sized consulting firm. She began her career as an actuarial analyst, and then expanded her focus to include compensation and HR strategy. She holds a B.S. in Statistics from North Carolina State University.
She is an active member of the community and dedicates much of her time to Protea, a women’s clothing line that she created to combine her love of entrepreneurship and design. Together, consulting and Protea give her the ideal balance between her analytical and creative sides.
Publications
Publications
As leaders in thought capital, FutureSense offers a wide range of articles and publications to inspire, question, evaluate, and discuss. We offer these free of charge to the public, but would like to know who is reading our materials :). Please register or login below before viewing. Thanks!
- Alphabet Soup - Blending the Best of Gen X and Gen Y.pdf
- HR - Managing the Investment to the Bottom Line and to the Top of the Company
- Make Sense of HR - Future Healthcare
- People - Managing the Human Resource Function to the Bottom Line
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Speeches, Workshops, and Retreats
Hire a FutureSense speaker for your next event!
At FutureSense, we have become students of organizations and people. As speakers, we inform, engage and motivate our audiences to think outside their own experiences to address the challenges presented to them in these interesting and dynamic times. We will work with you to design and conduct an event -- a speech, a workshop and/or a retreat - to provide your team colleagues with entertaining and thought-provoking ideas for change, transformation and above all, productive action!
Read about our speakers: Jim, Margaret and Matt - their experiences, interests and styles -- and feel free to contact any one of them to inquire about an engagement. We are available as individuals and as a team.
Site Map
Generation Issues
We wrote the book on workplace generational issues and the 21st century. Literally.
We know how to combine 20th century workplaces with 21st century workforces, to ignite the full potential of businesses and nonprofit organizations. To combine the knowledge, experience and perseverance of 20th century workplaces with the speed, digital intelligence and global view of 21st century workforces, to ignite a high-productivity and profitable future for your organization.
It is done through curiosity, conversation, comprehension, cross-fertilization and consensus. It is done by communicating the expectations, assumptions and realities of managing and working in today’s 21st century, multi-generational, decentralized organizations. Most of all, it is done through interactive, content-rich multimodal materials that engage across the entire spectrum of learning styles. Whether your needs involve onboarding new workers; making your employee handbook interactive; upgrading your website to compete for Millennial eyeballs; teaching your managers how to use digital media to engage their staffs; or democratizing employee communications through an intranet, blogs and video uploads, we can provide strategy, content, design and the appropriate media.
Our Approach
Listen. Ask. Consult. Collaborate. Engage.
We bring our communications expertise to every facet of your business. We understand the wildly diverse folks in your workforce, in your customer base, and in your external constituencies. We know how to communicate with them specifically and effectively, from simple oratory to print pieces to multimodal digital media2.0.
Cultural Transformation
From strategic planning to product innovation to talent retention, every decision made and action taken in a corporation is shaped by its culture. When business leaders lack valid information about their corporate cultures, they don’t really understand their business. And if they don’t really understand their business, they simply won’t succeed.
Cultures are supposed to change, morph and adapt to business conditions, economic pressures and life conditions. But often, they don’t change nor transform and stay stuck in old school thinking, narrowly defending their old values or visions in order to hold onto the past. This reduces the ability of an organization to create momentum, infuse energy and move forward.
Mergers, consolidations, restructuring, and rapid growth will always be a part of business. Out of necessity or opportunity, organizations must continually adapt to succeed in ever-shifting business environments. At FutureSense, we help organizations adapt to change.
Our Approach
We recognize that successful organization and cultural change and transformation consists of the following components:
- Understanding the past. This is the process of discovering the timeless guiding principles that either drive or keep an organization stuck.
- Empowering Strategic Thinking. Focusing people on long-term challenges and opportunities; hurdles and possibilities.
- Aligning All Stakeholders. Creating a long-term mutually rewarding relationship in the best interest of the company for all parties – and learning how to communicate and engage all stakeholders in the creation of the future.
- Fostering Organizational Efficiency and Effectiveness. Distributing responsibility to maximize skills, talents and institutional knowledge. This helps to promote timely and effective decisions and ensure proper accountability.
- Managing Risk. Planning for contingencies and being prepared for the unexpected and “what if” scenarios. Building organization capacity to move with uncertainty.
- Creating the Future. Defining the hopes, dreams and aspirations and building organization confidence and commitment to drive a new culture and behavior and produce results. And implementing it with passion!
Communication With Employees
We cover the spectrum of organizational communications, both print and digital.
We do communications assessments, looking at marketing, HR and PR campaigns. As stand-alone consultants or working with communications and marketing staff, we can develop proprietary training materials; required HR materials (including web-based Employee Handbooks); internal communications resources, including multimodal employee materials to engage across the spectrum of learning styles; and external communications resources including news media, blogs, webcasts, RS feeds, website updates and other new media techniques. In other words, we can help you update all of your communications to reach each of your specific constituencies.
We also collaborate on positioning and branding strategies for media, employee and customer campaigns. We advise on communications staffing, strategies and downsizings as one-off consulting or as part of our Organization Development and Succession Planning work. We also are experienced in crisis communications, working with employees, regulators, communities and media to tell the truth as it affects each constituency; moving your organization beyond the event and preserving its reputation.
Our Approach
Listen. Ask. Consult. Collaborate. Engage.
We bring our experience to your business. Your organization is unique in culture, market niche and vision of the future. We are good listeners, empathic observers, networked professionals and results-oriented team members. There are no blanket solutions to communications issues; we weave together your story and our expertise to create specific means of engagement for each need.
Engaging Employees
In the 20th century, the prevailing metrics of the effectiveness of communications and other human resource programs were the proverbial employee “satisfaction” surveys. Done retrospectively in arrears, they surveyed the damage done or certainly the work to be done. Now the construct for measuring the impact of how well we are doing as organizations is employee engagement.
Whether it is Gallup’s or Blessing White’s or Towers Perrin’s or a myriad of other firms’ research, the message is the same – most American workers are not engaged or are actively disengaged from their work. We know that if an organization’s entire employee population won the lottery and were financially set for life, 95%-98% would not show up the next day.
Engagement remains the ultimate prize for employers in the war for talent, and the "endgame" is the same for everyone: it takes discretionary and concentrated effort to make win. Competitive advantage has become a difficult goal to achieve and an even more difficult advantage to retain. Building business momentum through an engaged workforce takes more than an expression of management commitment. It takes passion, reinforcement and commitment from all levels of an organization.
Our Approach
At FutureSense, we work with our clients to understand how to combat the natural tendencies people have to not enjoy and not engage with work. To truly motivate and engage your people, you need an understanding of why they think and act the way they do…essentially an understanding of their Cultural DNA™.
- We discover through surveys, focus groups and interviews the current state of your employee engagement.
- We design the action plans and work with your teams to create connections, passion and enthusiasm.
- We deliver solutions to listen, ask, consult, collaborate and engage your workforce – without us needing to be there after we are done.
Performance Management Consulting
Performance management is the process by which we hold our people accountable. And, the process by which we help our people get better at what they do.
It identifies the expectations, the results, and the gaps. It is also is the methodology by which we identify the assets we have and the development plans to help those assets improve and learn.
In the 20th century, we unfortunately overshadowed the developmental importance of performance management programs with the need to “pay for performance.” This phrase has been in the management lexicon now for eons. At its best, it is a driving corporate cultural value, a meta-theme, a call to action, a tour de force. At its worst, it is a management “fad de jour”, another example of corporate administrivia, bureaucracy on steroids. It is as oft dreaded as final exams and term papers. Which is it in your organization?
Like being in a movie, employees are actors looking for their motivation: are they looking to truly improve performance or to survive out of fear? Further, it appears that many people in supervisory or management positions don’t know how to assess behavior, traits or performance but rather are given forms and processes but not the skills to inquire, discover, analyze or discuss, much less coach or mentor. Often the discussion devolves into either a pedantic set of criticisms (not always constructive) or the much easier “you’re wonderful” which does produce an adrenalin rush – for about a day.
Our Approach
At FutureSense, we encourage our clients to blend pay and development into the fabric of their performance management programs. We explore with our clients 21st century alternatives to the “old school” pay for performance methodologies of the 20th century.
We encourage authentic and transparent conversations between an employee, his/her leaders, co-workers and peers around the creation of value in the work that an employee does as well. We look for the long-term developmental opportunities as well as the chance to immediately sharpen skills and correct deficiencies.
In short, our methodologies for working with our clients in the design and implementation of effective performance management programs centers on the need to:
- Reward performance
- Drive results
- Attract, retain and motivate people
- Engage and excite people
- Transform organizations
- Change behavior and attitudes
- Develop valuable skills for the organization
Hire A Speaker
Hire Margaret as a Speaker for Your Next Event
When Margaret speaks, it is all about the people. Margaret believes that people make or break an organization and help to define its success. When she speaks, it’s about finding the good in people and about working with them to create amazing working relationships. It is about connecting the people to the organization and helping them see the value in the work that they do for that organization. If Margaret has the ability to work with individuals, teams and organizations, these connections will happen!
Margaret brings 20+ years of human resources experience, her passion of coaching and development, the value of being part of a team, and the goal of “winning.”
Margaret enhanced her human resources experience by receiving her graduate degree in organizational development from the University of San Francisco in 1995. She teaches at Chapman University in their Organizational Leadership program. Her passion about creating great work environments for people motivates her each and every day!
Download CV (.pdf)
Contact Margaret
Margaret's Blog
Margaret brings 20+ years of human resources experience, her passion of coaching and development, the value of being part of a team, and the goal of “winning.”
Margaret enhanced her human resources experience by receiving her graduate degree in organizational development from the University of San Francisco in 1995. She teaches at Chapman University in their Organizational Leadership program. Her passion about creating great work environments for people motivates her each and every day!
Download CV (.pdf)
Contact Margaret
Margaret's Blog
Hire A Speaker
Hire Matt as a Speaker for Your Next Event
"The workplace is changing dramatically. This time of transition gives us a wonderful opportunity to reevaluate the ways in which we conduct business, treat our people, and examine how our organizations impact society and the environment."
Matt Finkelstein is not your typical speaker. He is a young professional with a holistic perspective on modern workplace culture. A self-proclaimed "Millennial advocate," he understands the unique relationship between Boomers and Millennials at work, and can speak to both groups about how best to leverage their skills.
Matt is also passionate about social justice and environmental sustainability. He believes strongly that organizations of any size have a terrific opportunity to make changes now that will benefit society and the environment as a whole, and will also ensure short- and long-term profitability, viability, and sustainability.
Matt graduated in 2007 from the University of California, San Diego with a B.A. in Psychology. In addition to his work with FutureSense, he has continued to follow to his passions as a volunteer coordinator for the San Diego Roots Sustainable Food Project.
Download CV (.pdf)
Contact Matt
Matt's Blog
Matt Finkelstein is not your typical speaker. He is a young professional with a holistic perspective on modern workplace culture. A self-proclaimed "Millennial advocate," he understands the unique relationship between Boomers and Millennials at work, and can speak to both groups about how best to leverage their skills.
Matt is also passionate about social justice and environmental sustainability. He believes strongly that organizations of any size have a terrific opportunity to make changes now that will benefit society and the environment as a whole, and will also ensure short- and long-term profitability, viability, and sustainability.
Matt graduated in 2007 from the University of California, San Diego with a B.A. in Psychology. In addition to his work with FutureSense, he has continued to follow to his passions as a volunteer coordinator for the San Diego Roots Sustainable Food Project.
Download CV (.pdf)
Contact Matt
Matt's Blog
Our Approach
Some management consultants say "we think outside of the box."
At FutureSense, we say "what box?"
Our approach is practical, intuitive, and common sense driven. We look for and find solutions. We do not necessarily subscribe to “best practices” rather we look for the “right practices” that work with the uniqueness of each client. We also tell our clients what they need to hear not what they want to hear. We do not have black box solutions that we superimpose on everyone.
We work with a philosophy of speed of thought, speed of action and speed of results™. We balance the need for deep analytics with the need for momentum and results. We do not produce lengthy reports.
Our process for consultation will vary from situation to situation. We facilitate, we direct, we educate, we listen, we inform – we discover, design and deliver solutions.
In short, we work with our clients to get it done.
The measure of our success is what gets implemented and the effect it has on organization performance and the people of that organization who have made it happen!
Your Challenges and Our Expertise
We address organization development, compensation and communications from the perspective of understanding OUR CLIENTS’ challenges and providing OUR expertise in partnership to help resolve those challenges.
Some of the challenges we have faced with our clients include:
- Sustaining growth and success. What do we do for an encore after great success? How do we deal with the ups and downs of our economy? How do maintain our momentum?
- Motivating people. How do we energize and engage? How do we keep morale high in tough times? What melts people's butter?
- Creating succession plans. How do we continue our legacy? How can we build our bench strength and capacity? What are the gaps that we need to address?
- Communicating the plan and goals. How do we inform people? What are the messages? How do we engage people in the spirit of our mission, vision and values?
Specifically, our expertise centers on:
What We Do
FutureSense, Inc. is a management advisory and consulting firm specializing in the areas of organization and people. Specifically, our expertise is in organization development, compensation, and communications.
We advise our clients on how to build and sustain their human capital capacity and improve organizational performance by attracting, developing, engaging, motivating and retaining people.
We are also available for speeches, workshop, and retreats and have recently published FUSE: Igniting the Full Power of the Creative Economy.
You can learn more about our team and our approach, read about what we think, check out our media library, or contact us by following these links or using the Navigation Bar above.
Kyle Jaimerena
Consultant
949-584-9965
kyle@futuresense.com
Kyle joined the FutureSense team in February of 2009 as a consultant specializing in the area of quantitative analysis. His primary roles are in compensation, organizational development, and communications. Kyle aims to bring his unique millennial perspective and wide array of skills to help organizations thrive in the dynamic 21st century workplace.
Kyle joins FutureSense from the Capital Group Companies, where he worked as an Adviser Marketing Representative. He offered sales, marketing, and technical support to financial advisers across the country within the American Funds products. His professional experience also includes an internship with Unified Financial Group, where he successfully completed his primary task of researching, developing, and implementing a solution to a project concerning recycling leads for the mortgage consultants while also working alongside senior loan consultants to learn the intimate details of the mortgage industry.
Kyle graduated from the University of California, San Diego, with a joint degree in Mathematics and Economics. While studying at UCSD, he was a member of the surf team, a student supervisor for UCSD Catering, and a devoted math tutor. He established his own private tutoring business and also provided assistance to the TRIO outreach program, a college prep summer camp at UCSD for low-income, minority high school students.
Kyle currently resides with his fiancé in San Diego, Ca, where he enjoys surfing, cycling, hiking, basketball, and traveling. He is an active member of the Surfrider Foundation, a non-profit grassroots organization dedicated to the protection, preservation and enjoyment of our world’s oceans, waves and beaches. Kyle is determined to make a positive impact on his friends, community, and future clients.
HR Investigations
Do you know what steps to take after you receive an employee complaint?
How can the right investigative strategy limit your liability?
Will you miss any critical steps?
We are trusted partners with our clients’ Human Resource departments to assist them in areas where it is appropriate to involve an outside, third party to discover, design and deliver solutions. Click on detailed product definitions of our services below for further information. Typical engagements include:
HR Interventions – Coaching and Mentoring Individuals and Teams
One of your employees and or teams is making “noise.” They are not performing to the best of their abilities and you are hearing about it through others. You are not prepared to terminate the employee or the team, nor are you prepared to write them up or issue a performance plan. You need an intervention to discover what is happening, coach and mentor the individual and/or the team and improve the situation.
Our Approach
We evaluate what is occurring for the individual and/or within the team (team dynamics, building a new team, conflict among the team, defining roles, etc.) and what the anticipated outcome needs to be. We take an individual or a team (initially without the department head/team leader) through what is working and what isn’t working in relation to the issue/conflict. Other influences that may be affecting individual or team performance - communication, working relationships, etc.- are drawn in. The FutureSense mentor/coach provides the opportunity for a trusted relationship, which enables the development and progress toward a successful and positive outcome, with the individual or the team ultimately owning the outcome.
HR Investigations - Handling Employee Complaints & Problems
An employee just left your office complaining of inappropriate behavior from a co-worker. You know that you could conduct a brief investigation, talk with others, make a recommendation and be done with it. But emotions are running high, people are already talking about the issue, and you aren’t sure how you can present an impartial picture.
Our Approach
A complete, impartial, and timely investigation is one of the most important tools for maintaining a safe and productive workplace – and keeping your organization out of legal trouble. HR lawsuits are incredibly expensive in terms of time, money, employee morale and loss of reputation. FutureSense will help you with the actions you will have to take, and decisions you will have to make, to resolve issues within your workplace.
Programs
- Individual Interventions
- Team Interventions
- HR Investigations
Leslie Gordon
Business Development
415-317-1811
leslie@futuresense.com
Prior to her affiliation with FutureSense, Inc. Leslie spent five years as Director of Member Services for The Bar Association of San Francisco. In this executive management position she oversaw five departments and was responsible for: business development and marketing, membership, publications and advertising, member benefits, strategic partnerships, educational and special events and programs. Leslie had a keen ability to drive both mission and revenue.Leslie is an attorney with over 20 years of experience in intellectual property, commercial and employment counseling and litigation. Over the course of her career, Leslie has worked with a variety of highly respected law firms, including Wilson Sonsini Goodrich & Rosati in Palo Alto and McCutchen, Doyle, Brown & Enersen (now Bingham McCutchen) and Jackson & Wallace in San Francisco and Shea & Gould of New York. Leslie also worked as Director of Marketing and Development for KJAZ Radio station.
Using her management, strategic planning, business development and marketing experience and her legal background, Leslie has now turned her focus to working with clientele in the legal profession and legal industry on strategic planning, succession planning, organizational design and development, talent training and development. She is part of the business development and marketing team at FutureSense.
She sits on the Board of Directors of City Youth Now, a non-profit dedicated to serving youth in the foster care and juvenile justice system.
Leslie graduated cum laude from Dartmouth College with a B.A. in government and her J.D. from Georgetown University Law Center.
Download CV (.pdf format)
Testimonials
Jim,
We are thrilled to have had you participate in today's [executive] roundtable. The feedback we're getting on the evaluation forms is all very positive! Everyone seemed to be very engaged--great program. One person's comments were "I wish it had lasted longer..." THAT'S a good sign!! Thanks again for your excellent moderating prowess--and for helping make today's program such a success.
— Client email to Jim
Jim worked with us to re-design an organizational structure that better aligned Marketing with the rest of the organization. It was a very involved and detailed scope of work that he managed with finesse, integrity, creativity and attention to detail. He guided us through the sometimes politically-charged waters, staying objective and clear, while building very strong relationships with key stakeholders so we got to the best end result. I subsequently engaged Jim to help with further implementation and role definition. He is not your typical consultant, selling you a PPT deck that he revises and sells the next guy. Every work product is unique and entirely based on the job at hand. He does best with clients who are motivated to complete a task at hand and who work fast. I recommend him very highly.
—Client recommendation on LinkedIn
At the recent TriAssociation conference for Occupational Health Nurses, one of our speakers was Jim Finkelstein who speaks on the “iGeneration” (generational differences between workers). He was excellent and nearly every one of the attendees commented on his presentation and were asking for more.
—Client email to colleague
We are thrilled to have had you participate in today's [executive] roundtable. The feedback we're getting on the evaluation forms is all very positive! Everyone seemed to be very engaged--great program. One person's comments were "I wish it had lasted longer..." THAT'S a good sign!! Thanks again for your excellent moderating prowess--and for helping make today's program such a success.
— Client email to Jim
Jim worked with us to re-design an organizational structure that better aligned Marketing with the rest of the organization. It was a very involved and detailed scope of work that he managed with finesse, integrity, creativity and attention to detail. He guided us through the sometimes politically-charged waters, staying objective and clear, while building very strong relationships with key stakeholders so we got to the best end result. I subsequently engaged Jim to help with further implementation and role definition. He is not your typical consultant, selling you a PPT deck that he revises and sells the next guy. Every work product is unique and entirely based on the job at hand. He does best with clients who are motivated to complete a task at hand and who work fast. I recommend him very highly.
—Client recommendation on LinkedIn
At the recent TriAssociation conference for Occupational Health Nurses, one of our speakers was Jim Finkelstein who speaks on the “iGeneration” (generational differences between workers). He was excellent and nearly every one of the attendees commented on his presentation and were asking for more.
—Client email to colleague
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Sample Presentations
As leaders in thought capital, FutureSense offers a wide range of articles and publications to inspire, question, evaluate, and discuss. We offer these free of charge to the public, but would like to know who is reading our materials :). Please register or login below before viewing. Thanks!
- Pay for Performance: Hype or Reality?
- What Makes People Tick
- Workforce Planning: An Integrated Approach
- Keeping Up Morale In Difficult Times
- Total Rewards
Log In
Not yet a member?
Register now for free!
Register
Management Training and Development
Are you providing the right learning opportunities for your people to help you grow the business?
Are you building confidence in your supervisors and managers?
A new manager was captured saying, “I want to be a great manager! This training is wonderful in helping to grow people and stay excited about the work that we do.”
Managers, new and seasoned, are hungry to learn new ways to tackle issues - sometimes as a refresher or sometimes to tackle something new. And when things aren’t working well, the ability to work with a coach or mentor to help work through issues and get managers back on the right track helps to reinforce the learning experiences that they have in the classroom or experientially.
Our Approach
By offering a variety of different level supervisor and manager development training offerings, FutureSense can provide learning opportunities to meet the development needs of your future leaders. The take-away from these training sessions are useful tools and resources to bring back to the work environment as well as the ability to share collective wisdom through group interaction and problem solving. We have a robust curriculum of course (see below – Management Training), that support other corporate and HR initiatives. We also design custom courses to meet the unique needs of our clients and challenges they may be facing or anticipating.
When issues arise, we provide coaching and mentoring to a supervisor or manager that needs some one-on-one development. Sometimes working with a neutral, trust partner is all it takes to get a manager re-focused. Intervention, coaching and mentoring sessions provide the manager individual time to work with a coach on issues determined by his/her supervisor or by an organizational need. The sessions provide learning opportunities for the manager and “how to” recommendations to bring back to the workplace. The goal is to resolve the issue, provide growth and a new level of leadership to the manager.
And when a manager or department leader is having difficulty with team dynamics, a new team or working through team issues, we provide a neutral coaching approach for the team. Intervention, coaching and mentoring sessions in a team environment help surface the issues, work on what is viewed as “getting in the way” and a positive approach to a successful team outcome. The goal is to resolve the team issue and create more positive team interactions and engagement throughout the department and the organization.
Course Curriculum and Summaries
Margaret Walker
Organization Development
949-230-6311
margaret@futuresense.com
Margaret’s personal and professional goal is guiding people to their fullest potential. Her expertise is in 1:1 coaching, interventions and mentoring, leadership and organization development training, HR assessment and investigations and performance management and work plan development. She has more than 20 years experience in all areas of human resources, people and organization development.
Margaret received her master’s degree in human resources and organization development from the University of San Francisco, and her bachelor’s degree in business administration. She began her career in human resources with the American Association of Critical Care Nurses in Aliso Viejo, CA. She later served as a human resources consultant for Mercer HR Consulting. She has held executive-level HR positions in both health care and the real estate arena including Human Capital Partner for PacifiCare Health Systems, a United Health Group Company, during which she guided the organization through a successful acquisition. She also has extensive consulting experience in the entertainment, hi-tech, health care and hospitality industries.
Margaret is an adjunct faculty member at Chapman University where she teaches in the Organizational Leadership program, teaching graduate level organization behavior, organizational development and change management. She is a certified consultant (2008) for Harrison Assessments (www.harrisonassessments.com).
Her passion lies in the work, teaching and life lessons of John Wooden, highly acclaimed head basketball coach, Emeritus at UCLA: “Success is peace of mind, which is a result of selfsatisfaction in knowing that you did your best to become the best that you are capable of becoming.”
Margaret resides in Costa Mesa, CA. with her three daughters, She volunteers and supports AYSO, the American Red Cross, the Susan G. Komen Foundation, and the National Multiple Sclerosis Society, as well as Ensign Middle School, Newport Harbor High School and University California, Irvine.
Media Library
FutureSense offers many resources to help your organization engage, motivate and reward people. From white papers to case studies, slide decks to podcasts, our principals share their experience and expertise.
Please follow the links to the right to find this content and learn more! A free registration will be required to view our White Papers, Case Studies, Publications, and Sample Presentations.
Please follow the links to the right to find this content and learn more! A free registration will be required to view our White Papers, Case Studies, Publications, and Sample Presentations.
Hire A Speaker
Hire Jim as a Speaker for Your Next Event
"I believe that determining the unique right practices for each situation is preferable to flocking like sheep to the slaughter by following perceived best practices."
Jim Finkelstein speaks from the heart about engaging and motivating people in business. He has a keen eye for the convergence of environment, culture, development, incentive and compensation needed to improve business performance through human capital. He has applied his competencies in all areas that impact people at work—from why they show up to why they stay. His special interest is in either end of the employment spectrum: onboarding millennials – how to engage and captivate the 20-somethings; and business sustainability – meeting the needs of the present without compromising the ability of future generations of business leaders to meet their own needs.
An expert in the field of Human Capital Management, Jim has appeared on numerous web, television and radio broadcasts and is a frequent speaker at business events ranging from executive seminars to national conferences.
Jim received a B.A. in Psychology and Economics from Trinity College and an M.B.A. in Organization Behavior and Development from the Wharton School of the University of Pennsylvania.
Download CV (.pdf)
Media Room (See sample slide decks)
To inquire or to hire Jim to speak to your group, click here
Jim's Blog
“Excellent. Thought-provoking ideas and concepts. Too bad this wasn’t a 3-hour seminar.”
“This was a fantastic and practical session which will affect my thinking on this subject every day to come.”
“Thank you very much for your inspirational talk. I was beginning to lose faith that the concepts that you spoke of and which I have seen in action aren’t possible in the Utility industry. You have given me a new sense of energy around trying to make these concepts work in my organization.”
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Jim Finkelstein speaks from the heart about engaging and motivating people in business. He has a keen eye for the convergence of environment, culture, development, incentive and compensation needed to improve business performance through human capital. He has applied his competencies in all areas that impact people at work—from why they show up to why they stay. His special interest is in either end of the employment spectrum: onboarding millennials – how to engage and captivate the 20-somethings; and business sustainability – meeting the needs of the present without compromising the ability of future generations of business leaders to meet their own needs.
An expert in the field of Human Capital Management, Jim has appeared on numerous web, television and radio broadcasts and is a frequent speaker at business events ranging from executive seminars to national conferences.
Jim received a B.A. in Psychology and Economics from Trinity College and an M.B.A. in Organization Behavior and Development from the Wharton School of the University of Pennsylvania.
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Jim's Blog
Feedback
“Excellent. Thought-provoking ideas and concepts. Too bad this wasn’t a 3-hour seminar.”
“This was a fantastic and practical session which will affect my thinking on this subject every day to come.”
“Thank you very much for your inspirational talk. I was beginning to lose faith that the concepts that you spoke of and which I have seen in action aren’t possible in the Utility industry. You have given me a new sense of energy around trying to make these concepts work in my organization.”
“More!”
Mary Gavin
Director, Communications
707-833-4519
spriter1@aol.com
Mary has over 25 years’ experience in goal-oriented executive-level communications ranging from the high-tech of websites and podcasts to the high-touch of human resources material and customer campaigns. Her specialty is taking communications to the next level by converging information steams and transcending words with graphics-rich, interactive content.
With extensive background in law, financial services, alternative energy, dot.com, diversity and regulated industries, Mary has designed and implemented successful communications strategies for Fortune 500, national nonprofit and government organizations. She does communications audits of clients’ internal and external communications, advising on advertising and marketing; public relations, capital and media campaigns; website and print materials for employees and customers; and positioning strategies. She develops and directs strategies for downsizing and crisis communications. She is especially interested in using media 2.0 technologies – 3-D website portals, webinars, blogs, podcasts – to engage and captivate audiences.
Mary received her J.D. from the School of Law at the University of California, Davis, where she was Executive Editor of the Law Review. She earned her B.A. in Political Theory from The George Washington University, Washington, D.C.
Matt Finkelstein
Consultant
415-999-4419
matt@futuresense.com
Matt’s personal and professional goals converge and activate at FutureSense. He believes strongly that organizations, corporations, and institutions of any size and purpose have a unique opportunity and responsibility – right now – to be leaders in the movement towards sustainability for business, society, and the environment and that actualizing these goals and principles of sustainability will enable both immediate and long-term prosperity on behalf of ourselves and for future generations.
Matt’s primary roles at FutureSense are in Millennial/Boomer workplace relations, thought leadership, organization development, compensation and communications. He uses his broad range of experiences in research, organizational psychology, philosophy, and other social sciences to help clients respond to immediate challenges and to establish a framework for future success. Matt is also the author of Living Business, a series of thought-provoking writings and practical advice about organizations, their relationship with society and the environment, and why intimately reconnecting them will prove to be mutually beneficial for all creatures on this planet (www.futuresense.com/wordpress).
Matt joined FutureSense in 2007 after graduating from the University of California, San Diego with a B.A. in Psychology. Matt’s broad involvement on-campus included NCAA athletics (soccer and lacrosse), the Sigma Chi Fraternity, numerous clubs promoting environmental consciousness and social justice, and running an organic and fair-trade coffee shop.
Matt continues to follow his passions through his work at FutureSense and also as a volunteer coordinator for the San Diego Roots Sustainable Food Project, a non-profit organization dedicated to strengthening the local food movement in the San Diego region (www.sandiegoroots.org). He has focused on creating opportunities for the UCSD community (Matt’s alma mader), organizing several sustainability events on- and off-campus and acting as an advisor for a related student organization. He has been featured as a guest lecturer about food systems and sustainability for several classes, seminars, and clubs. He also serves on the Roots Board of Directors.
Matt currently resides in La Jolla, Ca, where he enjoys surfing, hiking, gardening, music, and reading in his spare time. He is inspired by the words of one of his favorite Reggae artists, Midnite, to “Love the life you live, and live the life you love.” Matt is available for speeches, workshops, and personalized client work with your organization. As every client’s situation is unique, he invites you to contact him with your questions, challenges, and inquiries to see what he might be able to do for you!
CEO Compensation
Why can't we get this done?
FutureSense facilitated the completion of a CEO contract for a large, non-profit health system working on behalf of the Board of Directors through a special sub-committee of the Compensation Committee. The objective of the engagement was to provide a fair, unbiased assessment of the competitiveness and reasonableness of the CEO contract which had been under discussion between the CEO and the Board of Directors.
This client had struggled for over six years to gain consensus on the components of the contract and had numerous advisors (consulting, law and insurance) engaged to bring the contract to conclusion – without success. FutureSense was able to get the job done in 60 days – consolidating volumes of past history, conducting current analysis and drafting components of the contract in an easy-to-understand, organized format (for review by legal counsel, of course).
As a result of our work, the Board of Directors finally approved and signed the CEO contract.
FutureSense facilitated the completion of a CEO contract for a large, non-profit health system working on behalf of the Board of Directors through a special sub-committee of the Compensation Committee. The objective of the engagement was to provide a fair, unbiased assessment of the competitiveness and reasonableness of the CEO contract which had been under discussion between the CEO and the Board of Directors.
This client had struggled for over six years to gain consensus on the components of the contract and had numerous advisors (consulting, law and insurance) engaged to bring the contract to conclusion – without success. FutureSense was able to get the job done in 60 days – consolidating volumes of past history, conducting current analysis and drafting components of the contract in an easy-to-understand, organized format (for review by legal counsel, of course).
As a result of our work, the Board of Directors finally approved and signed the CEO contract.
FutureSense Related Articles
Linking Retention and Succession
Best-in-class organizations prepare for these situations by implementing creative programs to retain top talent and by crafting a clearly articulated plan of action to address succession.
Retaining Top Talent and Creating a Strategic Succession Plan
February 2006
by Dan Parry and Rob Mason of FutureSense, Inc.
Executives, managers, and HR professionals all dread walking into the office to find that one of their top employees has decided to leave the company. Worse yet is the knowledge that there are no internal candidates in the talent pipeline to replace them, thus leading to the distasteful “timely and costly external search.” Best-in-class organizations prepare for these situations by implementing creative programs to retain top talent and by crafting a clearly articulated plan of action to address succession.
Now More than Ever
According to the Bureau of Labor Statistics the voluntary unemployment rate is at its highest level since November 2001 and productivity gains of the past two years have not been matched by equal salary increases.1 A 2004 study by Hewitt Associates identified “retaining key talent/skills” and “succession planning” as the two most important workforce planning issues; however, several studies suggest that only 30–45% of companies have a succession plan in place for the CEO.2 Today’s environment calls for rigorous, strategic succession plans with a clear relationship to long-term goals. Similarly, a retention strategy is much more than simply striving to decrease the “turnover percent” that is calculated in the HR annual report. True retention strategy involves identifying top talent and creating attractive career paths to retain these employees.
Organizations that thrive at identifying and retaining top-tier talent are rewarded with a strong, diverse pool of qualified internal candidates ready (and capable) to step up when executive positions are vacated. By executing the necessary due diligence of retention strategies, organizations gain the luxury of appointing the candidate that best fits the current and future strategic direction of the company. The first step is identifying the skills, leadership traits, and performance assessment tools that are the most valuable to your organization. Then, with a clear criteria in place, the important work can begin.
Retention Strategies
Employee assessment and identification is crucial. Each department must mark its top talent and “high potentials.” Although this is an iterative process, it is important to start cultivating employees in their first year. Identification of talent is a company-wide necessity and to ensure continuity and effectiveness, the process should be driven by a leadership development committee headed up by the CEO and HR leader. Following appraisals, top-tier employees from all levels should enter into a constant cycle of training, coaching, and mentoring in order to lead to promotions.
In one study it was estimated that top-tier employees are four times more likely to leave their jobs.3 In instances where a lack of succession events causes a lack of opportunity for high potential employees, new responsibilities need to be added to create new challenges and learning opportunities. The goal is to reduce the number of top tier employees lost as a result of being under-challenged, under-compensated, and under-trained.
What concrete steps can be taken to keep these employees? A recent strategy involves linking the compensation of executives and managers to their retention of top talent. Though the supervisor employee relationship is thought to be the most powerful tool in retaining top talent, only an estimated one in ten companies practice this today.4
Another useful method of retaining top talent at lower levels is to increase interaction between top executives and young top talent. At one best-in-class Fortune 500 Company, if a top performing employee at any level has decided to leave, the CEO, COO, and senior VP of HR contact the employee immediately in an attempt to make a counter-offer.5
One of the most basic yet often overlooked components of retention is coming to learn your “employer value proposition” in the employer-employee relationship. Knowing why people choose your company over others in the interview process and why they stay can help identify your value-proposition to your employees. One company may pay top dollar and offer great retirement benefits while another may offer an attractive work-life balance along with a pleasant corporate culture. Identifying your company’s strengths and value to current employees will help ensure retention of top talent.
By encouraging on-the-job learning, companies show that they are willing to invest time and energy into the career development of their employees, thus solidifying the bond between employee and organization. Further promotions and succession events will help to retain the top employees as they are challenged professionally and compensated for their success. According to a study of employee satisfaction by the Center of Organizational Effectiveness at the Marshall School of Business, top tier employees are committed to companies that create “strong mentoring relationships and challenging work assignments.” Retaining this top talent will lead to a rich pipeline of candidates for successions and promotions.
Start From the Top: CEO Succession Planning
Given that the average CEO takes the helm between the ages of 46 and 52 it is not unreasonable to start developing potential CEO candidates at 30 years old.6 Consequently, building a successful succession plan is heavily reliant on the retention process described above. Since the inception of the new Sarbanes-Oxley legislation in 2002 succession planning has taken a backseat to accounting issues with many executives and Boards. Looking forward, the leaders of these companies need to make succession planning a paramount focus, starting from the top with an effective CEO succession plan. Average CEO tenures have dropped from 11.4 years in 1995 to 7.6 years in 2005, and two-fifths of new CEOs are replaced within their first 18 months.7
The succession plan for a CEO must be definitive yet malleable—working in concert with the evolving strategy of the company. When a CEO leaves, companies too often seek the same type of leader. A succeeding CEO should be well equipped with the skills necessary to lead the company to its desired future market position. If no internal candidates exist, a clearly defined strategy should be in place in to retain an external executive recruiter. It is up to the board and owners to propel the search by providing a clear, concise description that focuses primarily on career experience and measurable results.
One of the most successful (yet tragic) CEO succession plan implementations in recent history occurred at McDonald’s Corporation. In early 2004 then CEO Jim Cantalupo had begun to steer the strategic direction of the company towards more healthy offerings in the face of harsh criticism from public health officials. In April, Cantalupo died suddenly while attending an employee convention in Orlando. Within hours then President and COO Charlie Bell was appointed CEO by the Board of Directors. A day later, Bell gave the same keynote address that Cantalupo was scheduled to deliver at the convention. Just seven months later, when Bell resigned from his post due to health problems, the Board did not hesitate in appointing Vice Chairman James Skinner to CEO and promoting Michael Roberts to president and COO, making him next in line for the CEO position. In another seamless transition Skinner and Roberts continued to carry out the strategic initiatives that Cantalupo and Bell had championed. This was a remarkable feat, considering that most companies are not prepared to replace one CEO, let alone a second only seven months later. Companies should strive to have a plan in place where several qualified, prepared successors exist internally.
Trickle Down Succession: Executives and Managers
With a CEO succession plan in place, companies need to be prepared for the domino effect that ensues as a result of an internal promotion. If the President/COO succeeds an outgoing CEO, the CEO must be replaced, and so on. One of Jack Welch’s greatest successes at GE was that he always had a hand-picked successor each time he was promoted.8 Welch excelled at cultivating talented individuals into successful leaders and managers, ensuring that his department would perform just as well (or better) when he left. As executives and managers put more energy and resources into retaining and training their top talent, they will find it easier to promote from within when they are called up to a higher position.
One of the most basic yet necessary resources that every company should utilize in succession planning is a “leadership succession roadmap” that captures data on all executives in the company. Data for the dashboard must include past experiences, strengths and weaknesses, potential future promotions, and career goals. The dashboard should be populated by a combination of supervisors, employees, and HR officers. With the click of a button the HR leader and the CEO should be able to do a “leadership gap analysis” to determine how many potential internal candidates exist for each executive position within the next 0–1 years, 1–3 years, 3–5 years, 5–10 years, etc. Adding a rigorous data capturing element to the succession planning process will help determine where gaps may exist in the leadership development of the organization. With this knowledge, emphasis can be placed on both developing more internal candidates to fill gaps and looking externally for potential leaders.
Over the next ten years the battle for top-talent in all industries and geographies will intensify. The companies that are able to better retain there “high potentials” will be better equipped with the personnel needed when a succession event does occur. With clearly laid out succession plans in place these seamless transitions will be the norm as less time and money will be lost in searching for potential replacement candidates. The “people strategy” of these best-in-class companies will pave the way for strong financial gains as the right minds will be in place to form a winning business strategy and the right rising stars will be in place to carry out that strategy.
Footnotes
1 Bureau of Labor Statistics. “Job Openings and Labor Turnover Survey,” (February 2006).
2 Hewitt Associates. “Preparing for the Workforce of Tomorrow,” (February 2004).
3 Finegold, D. and S.A. Mohrman. “What Do Employees Really Want? The Perception vs. The Reality,” USC, Marshall School of Business, The Center for Effective Organizations. (2001), Paper presented at the annual meeting of the World Economic Forum, Davos, Switzerland.
4 Monster Intelligence. “Retention Strategies for 2006 and Beyond,” (February 2006),.
5 Charan, Ram. “Ending the CEO Succession Crisis,” Harvard Business Review, vol. 83, issue 2, (February 2005), 80.
6 Charan, 75.
7 Lucier, Chuck, Rob Schuyt, and Edward Tse. “The World’s Most Prominent Temp Workers,” Booz Allen Hamilton, 8.
8 Charan, 75.
February 2006
by Dan Parry and Rob Mason of FutureSense, Inc.
Executives, managers, and HR professionals all dread walking into the office to find that one of their top employees has decided to leave the company. Worse yet is the knowledge that there are no internal candidates in the talent pipeline to replace them, thus leading to the distasteful “timely and costly external search.” Best-in-class organizations prepare for these situations by implementing creative programs to retain top talent and by crafting a clearly articulated plan of action to address succession.
Now More than Ever
According to the Bureau of Labor Statistics the voluntary unemployment rate is at its highest level since November 2001 and productivity gains of the past two years have not been matched by equal salary increases.1 A 2004 study by Hewitt Associates identified “retaining key talent/skills” and “succession planning” as the two most important workforce planning issues; however, several studies suggest that only 30–45% of companies have a succession plan in place for the CEO.2 Today’s environment calls for rigorous, strategic succession plans with a clear relationship to long-term goals. Similarly, a retention strategy is much more than simply striving to decrease the “turnover percent” that is calculated in the HR annual report. True retention strategy involves identifying top talent and creating attractive career paths to retain these employees.
Organizations that thrive at identifying and retaining top-tier talent are rewarded with a strong, diverse pool of qualified internal candidates ready (and capable) to step up when executive positions are vacated. By executing the necessary due diligence of retention strategies, organizations gain the luxury of appointing the candidate that best fits the current and future strategic direction of the company. The first step is identifying the skills, leadership traits, and performance assessment tools that are the most valuable to your organization. Then, with a clear criteria in place, the important work can begin.
Retention Strategies
Employee assessment and identification is crucial. Each department must mark its top talent and “high potentials.” Although this is an iterative process, it is important to start cultivating employees in their first year. Identification of talent is a company-wide necessity and to ensure continuity and effectiveness, the process should be driven by a leadership development committee headed up by the CEO and HR leader. Following appraisals, top-tier employees from all levels should enter into a constant cycle of training, coaching, and mentoring in order to lead to promotions.
In one study it was estimated that top-tier employees are four times more likely to leave their jobs.3 In instances where a lack of succession events causes a lack of opportunity for high potential employees, new responsibilities need to be added to create new challenges and learning opportunities. The goal is to reduce the number of top tier employees lost as a result of being under-challenged, under-compensated, and under-trained.
What concrete steps can be taken to keep these employees? A recent strategy involves linking the compensation of executives and managers to their retention of top talent. Though the supervisor employee relationship is thought to be the most powerful tool in retaining top talent, only an estimated one in ten companies practice this today.4
Another useful method of retaining top talent at lower levels is to increase interaction between top executives and young top talent. At one best-in-class Fortune 500 Company, if a top performing employee at any level has decided to leave, the CEO, COO, and senior VP of HR contact the employee immediately in an attempt to make a counter-offer.5
One of the most basic yet often overlooked components of retention is coming to learn your “employer value proposition” in the employer-employee relationship. Knowing why people choose your company over others in the interview process and why they stay can help identify your value-proposition to your employees. One company may pay top dollar and offer great retirement benefits while another may offer an attractive work-life balance along with a pleasant corporate culture. Identifying your company’s strengths and value to current employees will help ensure retention of top talent.
By encouraging on-the-job learning, companies show that they are willing to invest time and energy into the career development of their employees, thus solidifying the bond between employee and organization. Further promotions and succession events will help to retain the top employees as they are challenged professionally and compensated for their success. According to a study of employee satisfaction by the Center of Organizational Effectiveness at the Marshall School of Business, top tier employees are committed to companies that create “strong mentoring relationships and challenging work assignments.” Retaining this top talent will lead to a rich pipeline of candidates for successions and promotions.
Start From the Top: CEO Succession Planning
Given that the average CEO takes the helm between the ages of 46 and 52 it is not unreasonable to start developing potential CEO candidates at 30 years old.6 Consequently, building a successful succession plan is heavily reliant on the retention process described above. Since the inception of the new Sarbanes-Oxley legislation in 2002 succession planning has taken a backseat to accounting issues with many executives and Boards. Looking forward, the leaders of these companies need to make succession planning a paramount focus, starting from the top with an effective CEO succession plan. Average CEO tenures have dropped from 11.4 years in 1995 to 7.6 years in 2005, and two-fifths of new CEOs are replaced within their first 18 months.7
The succession plan for a CEO must be definitive yet malleable—working in concert with the evolving strategy of the company. When a CEO leaves, companies too often seek the same type of leader. A succeeding CEO should be well equipped with the skills necessary to lead the company to its desired future market position. If no internal candidates exist, a clearly defined strategy should be in place in to retain an external executive recruiter. It is up to the board and owners to propel the search by providing a clear, concise description that focuses primarily on career experience and measurable results.
One of the most successful (yet tragic) CEO succession plan implementations in recent history occurred at McDonald’s Corporation. In early 2004 then CEO Jim Cantalupo had begun to steer the strategic direction of the company towards more healthy offerings in the face of harsh criticism from public health officials. In April, Cantalupo died suddenly while attending an employee convention in Orlando. Within hours then President and COO Charlie Bell was appointed CEO by the Board of Directors. A day later, Bell gave the same keynote address that Cantalupo was scheduled to deliver at the convention. Just seven months later, when Bell resigned from his post due to health problems, the Board did not hesitate in appointing Vice Chairman James Skinner to CEO and promoting Michael Roberts to president and COO, making him next in line for the CEO position. In another seamless transition Skinner and Roberts continued to carry out the strategic initiatives that Cantalupo and Bell had championed. This was a remarkable feat, considering that most companies are not prepared to replace one CEO, let alone a second only seven months later. Companies should strive to have a plan in place where several qualified, prepared successors exist internally.
Trickle Down Succession: Executives and Managers
With a CEO succession plan in place, companies need to be prepared for the domino effect that ensues as a result of an internal promotion. If the President/COO succeeds an outgoing CEO, the CEO must be replaced, and so on. One of Jack Welch’s greatest successes at GE was that he always had a hand-picked successor each time he was promoted.8 Welch excelled at cultivating talented individuals into successful leaders and managers, ensuring that his department would perform just as well (or better) when he left. As executives and managers put more energy and resources into retaining and training their top talent, they will find it easier to promote from within when they are called up to a higher position.
One of the most basic yet necessary resources that every company should utilize in succession planning is a “leadership succession roadmap” that captures data on all executives in the company. Data for the dashboard must include past experiences, strengths and weaknesses, potential future promotions, and career goals. The dashboard should be populated by a combination of supervisors, employees, and HR officers. With the click of a button the HR leader and the CEO should be able to do a “leadership gap analysis” to determine how many potential internal candidates exist for each executive position within the next 0–1 years, 1–3 years, 3–5 years, 5–10 years, etc. Adding a rigorous data capturing element to the succession planning process will help determine where gaps may exist in the leadership development of the organization. With this knowledge, emphasis can be placed on both developing more internal candidates to fill gaps and looking externally for potential leaders.
Over the next ten years the battle for top-talent in all industries and geographies will intensify. The companies that are able to better retain there “high potentials” will be better equipped with the personnel needed when a succession event does occur. With clearly laid out succession plans in place these seamless transitions will be the norm as less time and money will be lost in searching for potential replacement candidates. The “people strategy” of these best-in-class companies will pave the way for strong financial gains as the right minds will be in place to form a winning business strategy and the right rising stars will be in place to carry out that strategy.
Footnotes
1 Bureau of Labor Statistics. “Job Openings and Labor Turnover Survey,” (February 2006).
2 Hewitt Associates. “Preparing for the Workforce of Tomorrow,” (February 2004).
3 Finegold, D. and S.A. Mohrman. “What Do Employees Really Want? The Perception vs. The Reality,” USC, Marshall School of Business, The Center for Effective Organizations. (2001), Paper presented at the annual meeting of the World Economic Forum, Davos, Switzerland.
4 Monster Intelligence. “Retention Strategies for 2006 and Beyond,” (February 2006),
5 Charan, Ram. “Ending the CEO Succession Crisis,” Harvard Business Review, vol. 83, issue 2, (February 2005), 80.
6 Charan, 75.
7 Lucier, Chuck, Rob Schuyt, and Edward Tse. “The World’s Most Prominent Temp Workers,” Booz Allen Hamilton, 8.
8 Charan, 75.
Leadership 2
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Case Studies
As leaders in thought capital, FutureSense offers a wide range of articles and publications to inspire, question, evaluate, and discuss. We offer these free of charge to the public, but would like to know who is reading our materials :). Please register or login below before viewing. Thanks!
- How do we cope with growing pains?
- Where do we to go, and do we have the right people to get there?
- Why can't we get this done?
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Growing Pains
How do we cope with growing pains?
A billion-dollar non-profit healthcare system engaged FutureSense to improve organizational strategy and effectiveness. The organization had a strong management team with a successful track record. Over time, the team had become over-extended and recognized that the “wheels were beginning to wobble.” The time had come for the organization to make the transition from a large independent hospital to mature health system.
New growth opportunities existed in the field, but they required more than just opportunism. These prospects necessitated proactive identification, accelerated decision-making and effective execution. With this transformation on the horizon, FutureSense, the CEO, and leadership team worked together to:
• Distill the organization into core functional areas;
• Create new roles and responsibilities to streamline decision-making, break down the silos, and ensure proper accountability; and
• Institute a formal process for vetting, approving, and acting on new ideas.
The Board’s approval and preliminary response were overwhelmingly positive. With help from the FutureSense team, the client swiftly implemented all changes.
A billion-dollar non-profit healthcare system engaged FutureSense to improve organizational strategy and effectiveness. The organization had a strong management team with a successful track record. Over time, the team had become over-extended and recognized that the “wheels were beginning to wobble.” The time had come for the organization to make the transition from a large independent hospital to mature health system.
New growth opportunities existed in the field, but they required more than just opportunism. These prospects necessitated proactive identification, accelerated decision-making and effective execution. With this transformation on the horizon, FutureSense, the CEO, and leadership team worked together to:
• Distill the organization into core functional areas;
• Create new roles and responsibilities to streamline decision-making, break down the silos, and ensure proper accountability; and
• Institute a formal process for vetting, approving, and acting on new ideas.
The Board’s approval and preliminary response were overwhelmingly positive. With help from the FutureSense team, the client swiftly implemented all changes.
Corporate Culture
"Like it or not, every business has a culture – that intangible thing that governs how we actually interact with each other, how we communicate, how we behave, how change is handled, how all of the people-related side of the business occur."
Corporate Culture: Power to Greatness
September 2003
by Alice Branch of FutureSense, Inc.
What makes a company great, regardless of size? What makes a company great whether it employs a hundred or a hundred thousand employees, and yields a hundred million or a hundred billion dollars in annual net revenues?
It’s in the culture. Culture? Like it or not, every business has a culture – that intangible thing that governs how we actually interact with each other, how we communicate, how we behave, how change is handled, how all of the people-related side of the business occur. It’s common to hear that this or that company believes that “people are our most valuable resource.” However, the proof of that lies in a company’s culture.
Some basic considerations about corporate culture
In the beginning, cultures reflect the founder(s)’ values regarding business in general and their company in particular. Over time, these values are either strengthened (to the benefit or detriment of the company) or weakened (again, to the benefit or detriment). Whether the culture works to support or impede the company depends on the nature and strength of the founder(s)’ values and the business practices of the company.
Cultures need to morph with the changes in business and business climate. What worked well in years past may not work well for today or for the future. “Why not?” you might ask. When a company is small, everyone knows everyone else; the rules are easy to learn and understand. When a company experiences growth, things get more complicated, there is less time for everyone to get to know one another, and people can no longer assume that everyone knows everything about what’s important.
Cultural morphing can be unintentional or (preferably) intentional.
What is in corporate culture?
There are many ways to “slice & dice” a culture. One of the simplest (and best) is illustrated in the figure below, which shows six dimensions to corporate culture (Weisbord 1978).
The more in balance these six dimensions are, the easier it is to align the culture; the easier to align the culture, the healthier the culture; and the healthier the culture, the stronger your company’s business performance can be … assuming, of course, that the boxes are in positive alignment.
How should cultural dimensions be aligned?
Studies have shown that business performance is positively impacted when an organization’s culture[1] :
Places a premium on employees’ direct involvement with the business, whether in decision-making, innovation, or product and service generation and delivery. You don’t need a beer-bust or coffee and donuts in the morning so much as you need to have your people thoroughly understand and participate in the business.
Has a strong market-driven focus that emphasizes business results through customer-centric and other stakeholder-centric practices. Over the years, we’ve learned that customer focus is very important, but not too many companies actually practice TCE – or total customer experience, which examines the customer’s experience with the product or service from the very first point at which a product is envisioned (“conception”) to the very first point a customer will come into contact with the product to the purchase and ultimately, to the end when the customer no longer wants or needs it (“death”).
Is clearly articulated and systematically integrated into internal and external business practices.
Corporate culture as power behind business performance
In the early 1990’s, Alberto-Culver North America found itself dangerously stagnant, earning roughly one cent for each bottle of its most popular shampoo brand. The CEO set out to systematically turn the company around from this dismal performance through revitalizing the culture (Bernick 2001). Since 1994 (start of the cultural shake up), Alberto-Culver NA gained an increase of 83% in sales and 336% in pre-tax profit. Employee turnover was cut in half. States Bernick, “culture and performance tend to become self-perpetuating circles.”
Home Depot’s CIO describes the corporate culture as one that emphasizes doing “what’s right for the customer, the employee, and the community” (Bresnahan 2001). To ensure customers have a great experience, employees undergo extensive training on home building tools and materials, as well as engage in construction projects so that they can provide informed advice to customers and get to know the products. In addition, Home Depot employees often exercise the opportunity to use their skills within the community through projects such as building homes for low-income families. By making sure their employees can relate to the customer, Home Depot ensures they get a sizable portion of the $50,000 that the average American homeowner spends in his or her lifetime on home improvements.
Kyocera Corporation, headquartered in Japan, was founded on an initial investment of US$8,300 and became a multi-billion dollar, multinational company (Kotter & Rothbard, 1993). Among the practices originated by its founder is the “amoeba” management style that creates a flattened organization where title and seniority are not the basis for power, and individuals are engaged in running the business in a hands-on way. Although now a global corporation, Kyocera consciously keeps a “small organization” feel by limiting the size of the business units to about 200 people.
There are many more examples of companies that have done well through wielding the power of their corporate cultures. Among these include such very different companies as Shell Oil, Levi-Strauss, and Hewlett-Packard. Just about any company can wield its corporate culture to sustain and/or improve business performance. You don’t have to be in the Fortune 50, or 100, or 500, or 1,000 to be a great company.
It is admittedly unusual to ascribe corporate culture as a “power” and to say things like, “wielding the power of corporate culture.” It is probably not a politically correct thing to say that corporate culture is a resource or tool that can be used consciously for business performance. The reality, however, is this: corporate culture exists, is born out of the dynamics between leaders and people interacting with each other, and sets the pace from the beginning of how business gets done. When properly and consciously engaged, it can be a force behind a company’s performance. “People are our best resource.”
Who or what wields the power?
You probably already know the answer -- the company’s leadership, and specifically the CEO with his/her executive team (if not, then the company is probably in trouble). We have a glimpse into the significance of leadership in corporate culture. We mentioned that culture begins with the strength and nature of the founder’s values. Our six-box model states that leadership’s role in culture is to keep all of the other five boxes in balance. In each of our real life examples, leadership sets the tone for sustained excellence in business performance.
References
Bernick, C.A. (2001, June). When your culture needs a makeover. Harvard Business Review, pp. 53-61.
Bresnahan, J. (1998, May). Shoptalk: Home Depot’s Ron Griffin on how IS benefits from corporate values. CIO Magazine, 2p.
Dominguez, A. (1998, July 6). Bossless company goretex maker gaining reputation for unusual ‘boss-less’ management style. Greensboro New Record, B8.
Duffy, D. (1999, January 15). Cultural evolution. CIO Enterprise Magazine, 5p.
Kotter, J.P. & Rothbard, N. (1993). Kyocera corporation. Publishing Division, Harvard Business School, Case Number 9-491-078.
Maignan, I, & Ferrell, O.C. (2001). Antecedents and benefits of corporate citizenship: An investigation of French businesses. Journal of Business Research, 51(1), 37-51.
Maignan, I., Ferrell, O.C. & Hult, G.T.M. (1999). Corporate citizenship: Cultural antecedents and business benefits. Journal of the Academy of Marketing Science, 27(4), 455-469.
O’Reilly, C.A. & Thuraisingham, C. (2001). Homestead technologies: a start-up built to last. Graduate School of Business Stanford University, Case Number: HR-18.
Rowlinson, M. & Procter, S. (1999). Organizational culture and business history. Organization Studies, 20(3), 369-396.
Salva-Ramirez, M-A. (1995). McDonald’s: A prime example of corporate culture. Public Relations Quarterly. 40(4), 30-32.
Stoica, M. & Schindehutte, M. (1999). Understanding adaptation in small firms: Links to culture and performance. Journal of Developmental Entrepreneurship. 4(1), 1-18.
Weisbord, Marvin (1978). Organizational diagnosis: a workbook of theory and practice. Addison-Wesley: New York.[/size]
Footnotes
[1] See Maignan, et al (1999) & Maignan, etal (2000); Anfuso (1999), Dominguez (1998), Duffy (1999), O’Reilly & Thuraisingham (2001), Rowlinson, M. & Procter, S. (1999), Salva & Ramirez (1995), and Stoica, M. & Schindehutte, M. (1999).
September 2003
by Alice Branch of FutureSense, Inc.
What makes a company great, regardless of size? What makes a company great whether it employs a hundred or a hundred thousand employees, and yields a hundred million or a hundred billion dollars in annual net revenues?
It’s in the culture. Culture? Like it or not, every business has a culture – that intangible thing that governs how we actually interact with each other, how we communicate, how we behave, how change is handled, how all of the people-related side of the business occur. It’s common to hear that this or that company believes that “people are our most valuable resource.” However, the proof of that lies in a company’s culture.
Some basic considerations about corporate culture
In the beginning, cultures reflect the founder(s)’ values regarding business in general and their company in particular. Over time, these values are either strengthened (to the benefit or detriment of the company) or weakened (again, to the benefit or detriment). Whether the culture works to support or impede the company depends on the nature and strength of the founder(s)’ values and the business practices of the company.
Cultures need to morph with the changes in business and business climate. What worked well in years past may not work well for today or for the future. “Why not?” you might ask. When a company is small, everyone knows everyone else; the rules are easy to learn and understand. When a company experiences growth, things get more complicated, there is less time for everyone to get to know one another, and people can no longer assume that everyone knows everything about what’s important.
Cultural morphing can be unintentional or (preferably) intentional.
What is in corporate culture?
There are many ways to “slice & dice” a culture. One of the simplest (and best) is illustrated in the figure below, which shows six dimensions to corporate culture (Weisbord 1978).
The more in balance these six dimensions are, the easier it is to align the culture; the easier to align the culture, the healthier the culture; and the healthier the culture, the stronger your company’s business performance can be … assuming, of course, that the boxes are in positive alignment.
How should cultural dimensions be aligned?
Studies have shown that business performance is positively impacted when an organization’s culture[1] :
Places a premium on employees’ direct involvement with the business, whether in decision-making, innovation, or product and service generation and delivery. You don’t need a beer-bust or coffee and donuts in the morning so much as you need to have your people thoroughly understand and participate in the business.
Has a strong market-driven focus that emphasizes business results through customer-centric and other stakeholder-centric practices. Over the years, we’ve learned that customer focus is very important, but not too many companies actually practice TCE – or total customer experience, which examines the customer’s experience with the product or service from the very first point at which a product is envisioned (“conception”) to the very first point a customer will come into contact with the product to the purchase and ultimately, to the end when the customer no longer wants or needs it (“death”).
Is clearly articulated and systematically integrated into internal and external business practices.
Corporate culture as power behind business performance
In the early 1990’s, Alberto-Culver North America found itself dangerously stagnant, earning roughly one cent for each bottle of its most popular shampoo brand. The CEO set out to systematically turn the company around from this dismal performance through revitalizing the culture (Bernick 2001). Since 1994 (start of the cultural shake up), Alberto-Culver NA gained an increase of 83% in sales and 336% in pre-tax profit. Employee turnover was cut in half. States Bernick, “culture and performance tend to become self-perpetuating circles.”
Home Depot’s CIO describes the corporate culture as one that emphasizes doing “what’s right for the customer, the employee, and the community” (Bresnahan 2001). To ensure customers have a great experience, employees undergo extensive training on home building tools and materials, as well as engage in construction projects so that they can provide informed advice to customers and get to know the products. In addition, Home Depot employees often exercise the opportunity to use their skills within the community through projects such as building homes for low-income families. By making sure their employees can relate to the customer, Home Depot ensures they get a sizable portion of the $50,000 that the average American homeowner spends in his or her lifetime on home improvements.
Kyocera Corporation, headquartered in Japan, was founded on an initial investment of US$8,300 and became a multi-billion dollar, multinational company (Kotter & Rothbard, 1993). Among the practices originated by its founder is the “amoeba” management style that creates a flattened organization where title and seniority are not the basis for power, and individuals are engaged in running the business in a hands-on way. Although now a global corporation, Kyocera consciously keeps a “small organization” feel by limiting the size of the business units to about 200 people.
There are many more examples of companies that have done well through wielding the power of their corporate cultures. Among these include such very different companies as Shell Oil, Levi-Strauss, and Hewlett-Packard. Just about any company can wield its corporate culture to sustain and/or improve business performance. You don’t have to be in the Fortune 50, or 100, or 500, or 1,000 to be a great company.
It is admittedly unusual to ascribe corporate culture as a “power” and to say things like, “wielding the power of corporate culture.” It is probably not a politically correct thing to say that corporate culture is a resource or tool that can be used consciously for business performance. The reality, however, is this: corporate culture exists, is born out of the dynamics between leaders and people interacting with each other, and sets the pace from the beginning of how business gets done. When properly and consciously engaged, it can be a force behind a company’s performance. “People are our best resource.”
Who or what wields the power?
You probably already know the answer -- the company’s leadership, and specifically the CEO with his/her executive team (if not, then the company is probably in trouble). We have a glimpse into the significance of leadership in corporate culture. We mentioned that culture begins with the strength and nature of the founder’s values. Our six-box model states that leadership’s role in culture is to keep all of the other five boxes in balance. In each of our real life examples, leadership sets the tone for sustained excellence in business performance.
References
Bernick, C.A. (2001, June). When your culture needs a makeover. Harvard Business Review, pp. 53-61.
Bresnahan, J. (1998, May). Shoptalk: Home Depot’s Ron Griffin on how IS benefits from corporate values. CIO Magazine, 2p.
Dominguez, A. (1998, July 6). Bossless company goretex maker gaining reputation for unusual ‘boss-less’ management style. Greensboro New Record, B8.
Duffy, D. (1999, January 15). Cultural evolution. CIO Enterprise Magazine, 5p.
Kotter, J.P. & Rothbard, N. (1993). Kyocera corporation. Publishing Division, Harvard Business School, Case Number 9-491-078.
Maignan, I, & Ferrell, O.C. (2001). Antecedents and benefits of corporate citizenship: An investigation of French businesses. Journal of Business Research, 51(1), 37-51.
Maignan, I., Ferrell, O.C. & Hult, G.T.M. (1999). Corporate citizenship: Cultural antecedents and business benefits. Journal of the Academy of Marketing Science, 27(4), 455-469.
O’Reilly, C.A. & Thuraisingham, C. (2001). Homestead technologies: a start-up built to last. Graduate School of Business Stanford University, Case Number: HR-18.
Rowlinson, M. & Procter, S. (1999). Organizational culture and business history. Organization Studies, 20(3), 369-396.
Salva-Ramirez, M-A. (1995). McDonald’s: A prime example of corporate culture. Public Relations Quarterly. 40(4), 30-32.
Stoica, M. & Schindehutte, M. (1999). Understanding adaptation in small firms: Links to culture and performance. Journal of Developmental Entrepreneurship. 4(1), 1-18.
Weisbord, Marvin (1978). Organizational diagnosis: a workbook of theory and practice. Addison-Wesley: New York.[/size]
Footnotes
[1] See Maignan, et al (1999) & Maignan, etal (2000); Anfuso (1999), Dominguez (1998), Duffy (1999), O’Reilly & Thuraisingham (2001), Rowlinson, M. & Procter, S. (1999), Salva & Ramirez (1995), and Stoica, M. & Schindehutte, M. (1999).
Kolbe System
"The Kolbe System is a statistically proven methodology used to leverage people’s instincts for enhanced individual and company performance."
Kolbe System...enhanced individual and company performance.
April 2004
About the Kolbe System
Developed by Kathy Kolbe over 25 years ago, the Kolbe System is a statistically proven methodology used to leverage people’s instincts for enhanced individual and company performance. The Kolbe method is based on the knowledge that creative instincts are the source of the mental energy that drives people to take specific actions. Kolbe Consultants work with companies worldwide to positively impact ROI through better alignment of their people’s innate talents.
Defines the Influence of Instinctive Power
Creative instincts are separate and distinct from passive thoughts and feelings. They manifest in an innate pattern (modus operandi or MO) that determines each person’s best efforts. Although subconscious, a person’s MO is quantifiable and observable, and governs an individual’s actions, reactions and interactions. It determines a person’s use of time, as well as his or her natural form of communication. Exercising control over this mental resource gives people the freedom to be their authentic selves. MOs vary across the general population with no bias by gender, age or race.
Predicts Individual and Team Performance
Unlike other psychological tools that focus on personality or cognition, the Kolbe system measures conation, instinctual behaviors which remain the same throughout a person’s lifetime, so Kolbe has greater validity over time. Individual performance can be predicted with great accuracy by comparing instinctive realities, self-expectations, and requirements. It will fluctuate based on the appropriateness of expectations and requirements. However, in more than 6,000 interpretations by trained consultants, more than 90% of respondents confirmed that the Kolbe A™ index accurately identified how they act.
When groups of people with the right mix of MOs function interactively, the combined mental energy produces synergy. Such a team can perform at a higher level than is possible for the same group of people functioning independently. Team performance is accurately predicted by a set of algorithms that determine the appropriate balance and makeup of MOs.
Optimizes Individual and Team Performance
Leaders can optimize individual and group performance by:
• Giving people the freedom to be themselves
• Assigning jobs suited to instinctive strengths
• Building synergistic teams
• Reducing obstacles that cause debilitating stress
• Rewarding committed use of instinctive energy
• Allowing for the appropriate use of time
• Communicating in ways that trigger the effective use of the natural, universal, and unbiased energy of creative instincts
Examples of how Kolbe has been used in other companies:
Stanford University used Kolbe to put together teams for the Stanford MBA program, and Kathy Kolbe has lectured at Stanford’s Executive Program.
American Express increased its management team effectiveness through use of the Kolbe system.
U.S. Army psychologists went through Kolbe certification and used it with high-level groups like the Delta Force Team, and tactical helicopter squadrons from Fort Campbell, KY. CIA Special Services also used the Kolbe system, although Kolbe cannot release specific information about work they conducted.
Xerox used Kolbe with their management team to facilitate a higher level of productivity by helping team members recognize and capitalize on their innate strengths.
What others say about Kolbe:
“Kathy Kolbe has created a book that is a god-send to managers trying to pull together the human resources needed to get their jobs done. This is one of the most useful and best books of the year.”
-Jerry Porras, PhD., Professor, Stanford University, Graduate School of Business Management, and co-author of Built to Last, speaking about Pure Instinct, Kathy Kolbe’s introductory book
“Kathy Kolbe has produced a fascinating and insightful work that adds a rich dimension of understanding to the critical task of job performance and individual success. It should be invaluable in helping to direct one's own efforts as well as directing the efforts of others."
-Steven C. Wheelwright, PhD., Professor, Harvard University, Graduate School of Business Administration
“Using Kolbe has made the difference between a mediocre management team and one that works together and wins all the time.”
Richard Weden, Executive, American Express
“Nothing has ever so clearly pinpointed organizational problems or been so prescriptive in helping to solve them.”
-JoAnn Jones, Director of Quality Improvement Process, Honeywell, Inc.
Presentation content reproduced with permission from Kolbe Corp. Copyright 2002 Kathy Kolbe and Kolbe Corp.
April 2004
About the Kolbe System
Developed by Kathy Kolbe over 25 years ago, the Kolbe System is a statistically proven methodology used to leverage people’s instincts for enhanced individual and company performance. The Kolbe method is based on the knowledge that creative instincts are the source of the mental energy that drives people to take specific actions. Kolbe Consultants work with companies worldwide to positively impact ROI through better alignment of their people’s innate talents.
Defines the Influence of Instinctive Power
Creative instincts are separate and distinct from passive thoughts and feelings. They manifest in an innate pattern (modus operandi or MO) that determines each person’s best efforts. Although subconscious, a person’s MO is quantifiable and observable, and governs an individual’s actions, reactions and interactions. It determines a person’s use of time, as well as his or her natural form of communication. Exercising control over this mental resource gives people the freedom to be their authentic selves. MOs vary across the general population with no bias by gender, age or race.
Predicts Individual and Team Performance
Unlike other psychological tools that focus on personality or cognition, the Kolbe system measures conation, instinctual behaviors which remain the same throughout a person’s lifetime, so Kolbe has greater validity over time. Individual performance can be predicted with great accuracy by comparing instinctive realities, self-expectations, and requirements. It will fluctuate based on the appropriateness of expectations and requirements. However, in more than 6,000 interpretations by trained consultants, more than 90% of respondents confirmed that the Kolbe A™ index accurately identified how they act.
When groups of people with the right mix of MOs function interactively, the combined mental energy produces synergy. Such a team can perform at a higher level than is possible for the same group of people functioning independently. Team performance is accurately predicted by a set of algorithms that determine the appropriate balance and makeup of MOs.
Optimizes Individual and Team Performance
Leaders can optimize individual and group performance by:
• Giving people the freedom to be themselves
• Assigning jobs suited to instinctive strengths
• Building synergistic teams
• Reducing obstacles that cause debilitating stress
• Rewarding committed use of instinctive energy
• Allowing for the appropriate use of time
• Communicating in ways that trigger the effective use of the natural, universal, and unbiased energy of creative instincts
Examples of how Kolbe has been used in other companies:
Stanford University used Kolbe to put together teams for the Stanford MBA program, and Kathy Kolbe has lectured at Stanford’s Executive Program.
American Express increased its management team effectiveness through use of the Kolbe system.
U.S. Army psychologists went through Kolbe certification and used it with high-level groups like the Delta Force Team, and tactical helicopter squadrons from Fort Campbell, KY. CIA Special Services also used the Kolbe system, although Kolbe cannot release specific information about work they conducted.
Xerox used Kolbe with their management team to facilitate a higher level of productivity by helping team members recognize and capitalize on their innate strengths.
What others say about Kolbe:
“Kathy Kolbe has created a book that is a god-send to managers trying to pull together the human resources needed to get their jobs done. This is one of the most useful and best books of the year.”
-Jerry Porras, PhD., Professor, Stanford University, Graduate School of Business Management, and co-author of Built to Last, speaking about Pure Instinct, Kathy Kolbe’s introductory book
“Kathy Kolbe has produced a fascinating and insightful work that adds a rich dimension of understanding to the critical task of job performance and individual success. It should be invaluable in helping to direct one's own efforts as well as directing the efforts of others."
-Steven C. Wheelwright, PhD., Professor, Harvard University, Graduate School of Business Administration
“Using Kolbe has made the difference between a mediocre management team and one that works together and wins all the time.”
Richard Weden, Executive, American Express
“Nothing has ever so clearly pinpointed organizational problems or been so prescriptive in helping to solve them.”
-JoAnn Jones, Director of Quality Improvement Process, Honeywell, Inc.
Presentation content reproduced with permission from Kolbe Corp. Copyright 2002 Kathy Kolbe and Kolbe Corp.
Deferred Compensation
"To those who are using these plans as a form of intermediate capital accumulation or tax avoidance, then you may be playing the game for the wrong reasons and putting your retirement at risk."
Pay Me Now, or Pay Me Later: The Truth behind Deferred Compensation
December 2004
by Rob Mason of FutureSense, Inc.
For those senior executives out there with a non-qualified deferred compensation plan (“NQDC”), it is time to ask a fundamental question: why?
Yes, I know it is the end of the year and you are swamped trying to keep your “eye on the ball” and “head above water,” while “putting out the occasional fire.” Business-ese always seems to flourish this time of year. I realize you are busy, but it is time to readdress some taken-for-granted truths – this year it is deferred compensation.
NQDC plans are not for everyone. They are designed for the highly-compensated; otherwise, a company runs the risk of it becoming a “qualified plan.” According to Hewitt Associates, 71% of companies offer their highly paid executives a NQDC plan – that is the withholding of a percentage of salary which is not taxed until received at some later date.1 The goal of such plans is to compound earnings tax free until the money is withdrawn, typically at retirement. Given that 401(k) plans are capped at $13,000 a year (plus another $3,000 for those older than 50), NQDC offer another retirement vehicle.2 NQDCs can be voluntary with elective deferrals or involuntary, which requires no decision by the executive but is inherent in the understanding of his/her agreement.
The catch, for both voluntary and involuntary NQDCs, is that these funds are at risk; companies do not put money aside in a special pool. Thus, if the company goes belly-up at some future date, you have to stand in line with the rest of the creditors. For those who have faith that their employers will be around for some time, this plan may not be such a big risk. In this light, NQDC plans are quite innocuous – essentially “forced savings” for when you actually retire. You can pay taxes now or pay taxes later, in the end it is a wash.
Yet, somehow I get the feeling that not all use NQDC plans in this way. To those who are using these plans as a form of, a) intermediate capital accumulation or b) tax avoidance, then you may be playing the game for the wrong reasons and putting your retirement at risk.
Short-term thinking…
One detour on the road to retirement is “intermediate capital accumulation” – the use or leveraging of retirement vehicles (NQDCs and 401(k)s) for purposes other than retirement. This trend has become quite prevalent as more men and women have chosen to postpone marriage and family until later in life.
According to the most recent US Census Survey, the percentage of men 30-34 who have never been married has quadrupled since 1970 – now accounting for about a third of men in that age group. Similarly, about a fourth of women 30-34 have never married – also a fourfold increase since 1970.3 Not surprisingly, these people are focusing more on their education and jobs than raising a family.
The net result of this demographic shift is that these “late marry-ers” are often using their retirement plans to fund their current living. In order to pay for that new “family” house when they finally settle down and college tuition later on, these individuals are withdrawing from their NQDC plans or taking out loans against their 401(k)s. Assuming they can make up the difference or “live on less” in retirement, executives are often left scrambling when that retirement age does come up.
Tax scheming...
Then there is tax avoidance. Let’s assume you are making $250,000 in total cash compensation (base salary and bonus) each year. You feel that you can live your current lifestyle with $200,000, so you decide to put $50,000 into a NQDC plan. The idea is to pay fewer taxes, on that deferred $50,000, when you are taking home a smaller paycheck at retirement (from your 401(k), pension plans, social security, etc.). While logical, this thinking assumes that you will be in a lower tax bracket at retirement; plausible, but highly unlikely. While I am certain that you can live on $120k a year after the kids are out of college, but many will find that $80,000 gap quite difficult to bear – particularly if you are still paying off college loans and mortgages as explained above. Downsizing, while pragmatic, is always easier said than done.
Moreover, I would not bet on taxes being lower in the future if the US keeps spending and borrowing at its present pace. The OECD’s latest Economic Outlook predicts that the current-account deficit will rise to $825 billion by 2006 (6.4% of America’s GDP) – clearly uncharted territory, both as a share of the economy and in terms of the share of foreign savings it soaks up.4 Economists squabble over how this imbalance will be corrected (i.e. greater demand outside of the US vs. higher US saving vs. declining value of the dollar), but most agree that it must, at some point, be corrected. If you think higher taxes are not going to be a part of that adjustment, then you can roll the dice and take your chances. In reality, those making over $200,000 dollars a year should pay taxes under the current Bush tax plan, because they are not going to be lower anytime soon.
New legislation…
Thanks in large part to the boys at Enron; the IRS has closed a few other loopholes with the “American Job Creation Act of 2004.” In general, this new legislation makes deferred compensation plans (as well as stock appreciation rights, phantom stock plans, and some severance agreements) less flexible with high penalties for non-compliance. In the past, executives were able to change their election schedule for a small “haircut” penalty (typically 10%); thus, Enron execs accelerated their NQDC payment schedules when they realized the company was going bankrupt. The American Job Creation Act essentially closed that loophole so that there is now a real risk of forfeiture – which, of course, was the intention of the plan in the first place.
Is it worth it…?
When used as a “forced savings” vehicle for retirement, NQDCs do make sense for the highly-compensated. But, these plans are a risk and you should be clear as to why you have it in the first place because they are not for everyone. NQDCs, as a vehicle for intermediate capital accumulation, may be a short-term necessity if bills need to be paid; however, be sure to consider the long-term consequences and adjust your retirement plans accordingly. As for tax scheming, be warned that the IRS is on the hunt – albeit slowly. While you should not abandon NQDCs out of fear of the “taxman,” all should ask…is it worth it?
Footnotes
1 Simon, Ruth. “Tax Bill Targets Executive Pay Perk,” The Wall Street Journal. August 13, 2004: page D1.
2 Katzeff, Paul. “Rules Make NQDC Plan Less Flexible,” Investor’s Business Daily, November 15, 2004: page A14.
3 U.S. Census Bureau < http://www.census.gov/population/www/socdemo/hh-fam.html >.
4 “The Disappearing Dollar,” The Economist, December 4, 2004: page 9.
December 2004
by Rob Mason of FutureSense, Inc.
For those senior executives out there with a non-qualified deferred compensation plan (“NQDC”), it is time to ask a fundamental question: why?
Yes, I know it is the end of the year and you are swamped trying to keep your “eye on the ball” and “head above water,” while “putting out the occasional fire.” Business-ese always seems to flourish this time of year. I realize you are busy, but it is time to readdress some taken-for-granted truths – this year it is deferred compensation.
NQDC plans are not for everyone. They are designed for the highly-compensated; otherwise, a company runs the risk of it becoming a “qualified plan.” According to Hewitt Associates, 71% of companies offer their highly paid executives a NQDC plan – that is the withholding of a percentage of salary which is not taxed until received at some later date.1 The goal of such plans is to compound earnings tax free until the money is withdrawn, typically at retirement. Given that 401(k) plans are capped at $13,000 a year (plus another $3,000 for those older than 50), NQDC offer another retirement vehicle.2 NQDCs can be voluntary with elective deferrals or involuntary, which requires no decision by the executive but is inherent in the understanding of his/her agreement.
The catch, for both voluntary and involuntary NQDCs, is that these funds are at risk; companies do not put money aside in a special pool. Thus, if the company goes belly-up at some future date, you have to stand in line with the rest of the creditors. For those who have faith that their employers will be around for some time, this plan may not be such a big risk. In this light, NQDC plans are quite innocuous – essentially “forced savings” for when you actually retire. You can pay taxes now or pay taxes later, in the end it is a wash.
Yet, somehow I get the feeling that not all use NQDC plans in this way. To those who are using these plans as a form of, a) intermediate capital accumulation or b) tax avoidance, then you may be playing the game for the wrong reasons and putting your retirement at risk.
Short-term thinking…
One detour on the road to retirement is “intermediate capital accumulation” – the use or leveraging of retirement vehicles (NQDCs and 401(k)s) for purposes other than retirement. This trend has become quite prevalent as more men and women have chosen to postpone marriage and family until later in life.
According to the most recent US Census Survey, the percentage of men 30-34 who have never been married has quadrupled since 1970 – now accounting for about a third of men in that age group. Similarly, about a fourth of women 30-34 have never married – also a fourfold increase since 1970.3 Not surprisingly, these people are focusing more on their education and jobs than raising a family.
The net result of this demographic shift is that these “late marry-ers” are often using their retirement plans to fund their current living. In order to pay for that new “family” house when they finally settle down and college tuition later on, these individuals are withdrawing from their NQDC plans or taking out loans against their 401(k)s. Assuming they can make up the difference or “live on less” in retirement, executives are often left scrambling when that retirement age does come up.
Tax scheming...
Then there is tax avoidance. Let’s assume you are making $250,000 in total cash compensation (base salary and bonus) each year. You feel that you can live your current lifestyle with $200,000, so you decide to put $50,000 into a NQDC plan. The idea is to pay fewer taxes, on that deferred $50,000, when you are taking home a smaller paycheck at retirement (from your 401(k), pension plans, social security, etc.). While logical, this thinking assumes that you will be in a lower tax bracket at retirement; plausible, but highly unlikely. While I am certain that you can live on $120k a year after the kids are out of college, but many will find that $80,000 gap quite difficult to bear – particularly if you are still paying off college loans and mortgages as explained above. Downsizing, while pragmatic, is always easier said than done.
Moreover, I would not bet on taxes being lower in the future if the US keeps spending and borrowing at its present pace. The OECD’s latest Economic Outlook predicts that the current-account deficit will rise to $825 billion by 2006 (6.4% of America’s GDP) – clearly uncharted territory, both as a share of the economy and in terms of the share of foreign savings it soaks up.4 Economists squabble over how this imbalance will be corrected (i.e. greater demand outside of the US vs. higher US saving vs. declining value of the dollar), but most agree that it must, at some point, be corrected. If you think higher taxes are not going to be a part of that adjustment, then you can roll the dice and take your chances. In reality, those making over $200,000 dollars a year should pay taxes under the current Bush tax plan, because they are not going to be lower anytime soon.
New legislation…
Thanks in large part to the boys at Enron; the IRS has closed a few other loopholes with the “American Job Creation Act of 2004.” In general, this new legislation makes deferred compensation plans (as well as stock appreciation rights, phantom stock plans, and some severance agreements) less flexible with high penalties for non-compliance. In the past, executives were able to change their election schedule for a small “haircut” penalty (typically 10%); thus, Enron execs accelerated their NQDC payment schedules when they realized the company was going bankrupt. The American Job Creation Act essentially closed that loophole so that there is now a real risk of forfeiture – which, of course, was the intention of the plan in the first place.
Is it worth it…?
When used as a “forced savings” vehicle for retirement, NQDCs do make sense for the highly-compensated. But, these plans are a risk and you should be clear as to why you have it in the first place because they are not for everyone. NQDCs, as a vehicle for intermediate capital accumulation, may be a short-term necessity if bills need to be paid; however, be sure to consider the long-term consequences and adjust your retirement plans accordingly. As for tax scheming, be warned that the IRS is on the hunt – albeit slowly. While you should not abandon NQDCs out of fear of the “taxman,” all should ask…is it worth it?
Footnotes
1 Simon, Ruth. “Tax Bill Targets Executive Pay Perk,” The Wall Street Journal. August 13, 2004: page D1.
2 Katzeff, Paul. “Rules Make NQDC Plan Less Flexible,” Investor’s Business Daily, November 15, 2004: page A14.
3 U.S. Census Bureau < http://www.census.gov/population/www/socdemo/hh-fam.html >.
4 “The Disappearing Dollar,” The Economist, December 4, 2004: page 9.
Leadership
"The real question we should all be asking about leadership is: how is it possible to know so much and fail so often? Despite the overabundance of wisdom about leadership, many of us frequently fail in our attempts to lead."
It’s a Question of Leadership
June 2002
by Karen Sella of FutureSense, Inc.
There is no question that most business people are familiar with the concept of leadership. There is certainly an abundance of materials on the subject. In fact, there are articles, books, and manifestos ad nauseam on leadership. We’ve heard about leadership principles, styles, and habits. We’ve participated in leadership surveys, assessments, and training. These days, even airline magazines are featuring articles on leadership, and every third seat is filled with a self-proclaimed leader on something. There is no excuse, it would seem, for any of us to be ignorant about leadership.
Everyone, it appears, has something to say on this topic, and people are saying a lot of wonderful things. Of course, people are also saying a whole lot of the same wonderful things. Plus ca change, plus ca meme chose. The more things change, the more they stay the same.
What We Already Know About Leadership
Let’s review what we already know. Some of the more common qualities used to describe leaders include:
Purpose—leaders express and exemplify a common purpose for a greater good that inspires others to join in its fulfillment. They passionately and effectively engage people to pursue a common vision.
Integrity—leaders are trustworthy. They “walk the talk,” their actions are congruent with their words. Their interactions with others are characterized by authenticity, consistency and caring.
Credibility—leaders not only know what they’re talking about, but they consistently demonstrate it. They exhibit leading values, skills, and knowledge. They have expertise and competence in their fields.
Self-awareness—leaders know themselves—how they think, how they act, how they learn—their biases, mannerisms, and thought processes. They reflect on themselves, their values, and their impact. They set personal goals and work towards self-improvement.
Learning– leaders take responsibility for their own learning and foster the learning of others. They are informed and informative, constantly seeking to improve performance with valid feedback. Leaders view every experience as an opportunity for learning, including their mistakes.
Ok, so we all know that leaders are purposeful, credible, and self-aware. They have integrity and they like to learn. They provide hope, inspiration, and direction for others. So far so good. We recognize the fundamental standards for leadership. With all the books and binders, the inspirational tapes and motivational speeches, the training and development programs devoted to the subject, one hopes that we know something about it.
In fact, based on everything we already know about leadership, there’s hardly a need for any more writing on the subject. So why, you may well ask, does this look suspiciously like another article on leadership? (Excellent question! I’m so glad you asked.) Even with all of our leadership knowledge, most of us still find it challenging to effectively and consistently lead.
The Real Question About Leadership
The real question we should all be asking about leadership is: how is it possible to know so much and fail so often? Despite the overabundance of wisdom about leadership, many of us frequently fail in our attempts to lead. In fact, many of us simply fail to attempt to lead in the first place. This doesn’t mean that we are not high-performing and successful individuals. We may even have coveted leadership roles within our organizations. But how many of us sincerely believe that we are great leaders? How many of our people would agree that we are great leaders?
Think about it. How many of us can honestly say that we consistently express and exemplify our organizational purpose? That we inspire others to work toward this vision? How many of your current staff followed you to this company? How often do you take the time to ask others what they think about important issues? Do you ask people who may challenge your perspective about the situation? If asked, would your colleagues and employees agree that you care about them as individuals? What do you do on a regular basis to increase your self-awareness and support your personal growth? What do you do on a daily basis that demonstrates your excellence as a leader?
Assuming that most of us are knowledgeable, interested, and making an effort, what prevents us from consistently succeeding in our leadership efforts? Well, historically, leadership has been something of a rarified field, reserved for people that ooze charisma and perform extraordinary feats of unmistakable daring. Some of us are simply unsure of our leadership capabilities. We’ve bought into the outdated notion that people have to be charismatic and larger than life to be great leaders. However, most of us know that this is simply untrue.
In fact, recent research suggests that great leaders frequently lack charisma. As Jim Collins noted after studying numerous successful executives, “The most powerfully transformative executives possess a paradoxical mixture of personal humility and professional will. They are timid and ferocious. Shy and fearless. They are rare—and unstoppable” (Level 5 Leadership: The Triumph of Humility and Fierce Resolve, Harvard Business Review, January 2001). Indeed, for every George Washington, there is an Abraham Lincoln.
So much for charisma. Let’s face it, the main reason that our leadership efforts don’t meet with more success is that many of us are just plain lazy. We lack the discipline it takes to become great leaders. We’ve read the books. We’ve attended the seminars. We’ve done the personal inventories. Most of us are smart, educated, and well intentioned. Indeed, our pursuit of knowledge is commendable. Yet, we regularly fail to apply our knowledge with any real diligence. Despite our tremendous interest in leadership, our wealth of knowledge on leadership, and the profusion of programs for leadership, most of us do little more than talk about it.
It’s not that we don’t want to be great leaders. After all, who wouldn’t want to be a great leader? It’s just that we don’t have to be great leaders. The truth is that we can have perfectly respectable—even successful—careers without ever developing ourselves as leaders.
That’s ok. We’ve been conditioned to forego dreams and daring for security and success. Anything beyond that takes extra effort and requires additional risk. Besides, being a leader is a big commitment, and followers are frequently harsh critics. As long as we don’t mistake ourselves for great leaders, or complain about the leaders we choose (yes, choose) to follow, security and success are certainly worthy objectives. Leadership is not for everyone.
However, if we see opportunities to improve the way our companies do business and the way we work together—if we recognize the need for change and we sit quietly waiting for the leaders, or even worse, complaining loudly about the leaders—maybe it’s time for us to do something more than talk about it. Perhaps we should take responsibility for something more than our own security and success. After all, if our own security and success come at the expense being true to our own beliefs, or come at considerable cost to others, is it really worth it?
Yes, leadership requires a greater commitment. It’s not enough to know the material. As aspiring leaders, we have to work harder at applying what we know. Every day. To be great leaders, we have to lead—express and exemplify the shared vision, stand for something greater than ourselves, risk personal security and success in order to fulfill the collective dream. We know what we need to know. The real question is: will we choose to do what we need to do?
What to Do with What You Know
As we’ve established, leadership is hard work. It doesn’t happen over night. Like personal fitness, leadership requires consistent and vigilant practice over time to achieve any meaningful results. After all, knowledge without application is about as useful as the exercise machine gathering dust in the garage. If you are genuinely interested in being a great leader, develop your leadership practice—and practice. Here are a few steps to get you started:
First, commit to some personal and professional development. Decide that you are going to dedicate some time each week to learning about yourself as a leader and practicing leadership.
Second, get to know yourself. There are several personal inventories designed to help you become more aware of your personality, learning, and leadership styles—Myers-Briggs, Colbe Index, etc.
Third, review what you know about leadership. Learn your leadership style, your company’s perspective on leadership. If you haven’t already done so, go ahead and read an article or two on the subject. Purchase a book. Here’s a list of resources:
Jim Collins, Level 5 Leadership: The Triumph of Humility and Fierce Resolve, Harvard Business Review (January 2001).
Max DePree, Leadership Jazz, (New York: Dell Publishing, 1992).
Peter Drucker. Management Challenges for the 21st Century, (New York: HarperCollins Publishers, Inc., 1994).
Don M. Frick & Larry C. Spears, Editors. The Private Writings of Robert K. Greenleaf: On Becoming a Servant Leader, (San Francisco: Jossey-Bass Publishers, 1996).
Willis Harman, Global Mind Change: The Promise of the Last Years of the Twentieth Century, (Indianapolis, IN, Knowledge Systems, 1988).
Ronald A. Heifetz. Leadership Without Easy Answers, (President and Fellows of Harvard College: Unite States of America, 1994).
James M. Kouzes & Barry Z. Posner. Credibility: How Leaders Gain and Lose It, Why People Demand It, (San Francisco: Jossey-Bass Inc., 1993).
Jean Lipman-Blumen, The Connective Edge: Leading in an Independent World, (San Francisco: Jossey-Bass Publishers, 1996).
Fourth, identify your strengths and weaknesses as a leader. Be honest. Ask some trusted colleagues for a candid assessment of your skills as a leader.
Fifth, set weekly and monthly leadership goals for yourself. Ask yourself, what do I really need to practice? How am I going to apply what I have learned about leadership to my work? Remember, signing up for gym membership is easy—it’s the regular workouts that are the hard. Whether it’s increasing your professional credibility or communicating your company mission, determine two or three specific, measurable, and actionable goals. For example:
• To become more knowledgeable of multiple perspectives on a particular topic, you might ask at least one person daily to share their perspective about that topic.
• To increase your competence in your field, you might decide to enroll in a class one night a week.
• To show appreciation for your colleagues, you may elect to thank at least one person daily for something he or she has done.
Sixth, track your progress. Check off your leadership “to do” list. Keep a journal. Start a leadership community of practice. Hire a coach. Do whatever it takes to ensure that your leadership practice stays at the top of your list.
Seventh, recognize your success. No matter how small, every time you follow through, it’s worth acknowledging.
So congratulations on knowing something about leadership! Now, let’s do something with all of that knowledge!
June 2002
by Karen Sella of FutureSense, Inc.
There is no question that most business people are familiar with the concept of leadership. There is certainly an abundance of materials on the subject. In fact, there are articles, books, and manifestos ad nauseam on leadership. We’ve heard about leadership principles, styles, and habits. We’ve participated in leadership surveys, assessments, and training. These days, even airline magazines are featuring articles on leadership, and every third seat is filled with a self-proclaimed leader on something. There is no excuse, it would seem, for any of us to be ignorant about leadership.
Everyone, it appears, has something to say on this topic, and people are saying a lot of wonderful things. Of course, people are also saying a whole lot of the same wonderful things. Plus ca change, plus ca meme chose. The more things change, the more they stay the same.
What We Already Know About Leadership
Let’s review what we already know. Some of the more common qualities used to describe leaders include:
Purpose—leaders express and exemplify a common purpose for a greater good that inspires others to join in its fulfillment. They passionately and effectively engage people to pursue a common vision.
Integrity—leaders are trustworthy. They “walk the talk,” their actions are congruent with their words. Their interactions with others are characterized by authenticity, consistency and caring.
Credibility—leaders not only know what they’re talking about, but they consistently demonstrate it. They exhibit leading values, skills, and knowledge. They have expertise and competence in their fields.
Self-awareness—leaders know themselves—how they think, how they act, how they learn—their biases, mannerisms, and thought processes. They reflect on themselves, their values, and their impact. They set personal goals and work towards self-improvement.
Learning– leaders take responsibility for their own learning and foster the learning of others. They are informed and informative, constantly seeking to improve performance with valid feedback. Leaders view every experience as an opportunity for learning, including their mistakes.
Ok, so we all know that leaders are purposeful, credible, and self-aware. They have integrity and they like to learn. They provide hope, inspiration, and direction for others. So far so good. We recognize the fundamental standards for leadership. With all the books and binders, the inspirational tapes and motivational speeches, the training and development programs devoted to the subject, one hopes that we know something about it.
In fact, based on everything we already know about leadership, there’s hardly a need for any more writing on the subject. So why, you may well ask, does this look suspiciously like another article on leadership? (Excellent question! I’m so glad you asked.) Even with all of our leadership knowledge, most of us still find it challenging to effectively and consistently lead.
The Real Question About Leadership
The real question we should all be asking about leadership is: how is it possible to know so much and fail so often? Despite the overabundance of wisdom about leadership, many of us frequently fail in our attempts to lead. In fact, many of us simply fail to attempt to lead in the first place. This doesn’t mean that we are not high-performing and successful individuals. We may even have coveted leadership roles within our organizations. But how many of us sincerely believe that we are great leaders? How many of our people would agree that we are great leaders?
Think about it. How many of us can honestly say that we consistently express and exemplify our organizational purpose? That we inspire others to work toward this vision? How many of your current staff followed you to this company? How often do you take the time to ask others what they think about important issues? Do you ask people who may challenge your perspective about the situation? If asked, would your colleagues and employees agree that you care about them as individuals? What do you do on a regular basis to increase your self-awareness and support your personal growth? What do you do on a daily basis that demonstrates your excellence as a leader?
Assuming that most of us are knowledgeable, interested, and making an effort, what prevents us from consistently succeeding in our leadership efforts? Well, historically, leadership has been something of a rarified field, reserved for people that ooze charisma and perform extraordinary feats of unmistakable daring. Some of us are simply unsure of our leadership capabilities. We’ve bought into the outdated notion that people have to be charismatic and larger than life to be great leaders. However, most of us know that this is simply untrue.
In fact, recent research suggests that great leaders frequently lack charisma. As Jim Collins noted after studying numerous successful executives, “The most powerfully transformative executives possess a paradoxical mixture of personal humility and professional will. They are timid and ferocious. Shy and fearless. They are rare—and unstoppable” (Level 5 Leadership: The Triumph of Humility and Fierce Resolve, Harvard Business Review, January 2001). Indeed, for every George Washington, there is an Abraham Lincoln.
So much for charisma. Let’s face it, the main reason that our leadership efforts don’t meet with more success is that many of us are just plain lazy. We lack the discipline it takes to become great leaders. We’ve read the books. We’ve attended the seminars. We’ve done the personal inventories. Most of us are smart, educated, and well intentioned. Indeed, our pursuit of knowledge is commendable. Yet, we regularly fail to apply our knowledge with any real diligence. Despite our tremendous interest in leadership, our wealth of knowledge on leadership, and the profusion of programs for leadership, most of us do little more than talk about it.
It’s not that we don’t want to be great leaders. After all, who wouldn’t want to be a great leader? It’s just that we don’t have to be great leaders. The truth is that we can have perfectly respectable—even successful—careers without ever developing ourselves as leaders.
That’s ok. We’ve been conditioned to forego dreams and daring for security and success. Anything beyond that takes extra effort and requires additional risk. Besides, being a leader is a big commitment, and followers are frequently harsh critics. As long as we don’t mistake ourselves for great leaders, or complain about the leaders we choose (yes, choose) to follow, security and success are certainly worthy objectives. Leadership is not for everyone.
However, if we see opportunities to improve the way our companies do business and the way we work together—if we recognize the need for change and we sit quietly waiting for the leaders, or even worse, complaining loudly about the leaders—maybe it’s time for us to do something more than talk about it. Perhaps we should take responsibility for something more than our own security and success. After all, if our own security and success come at the expense being true to our own beliefs, or come at considerable cost to others, is it really worth it?
Yes, leadership requires a greater commitment. It’s not enough to know the material. As aspiring leaders, we have to work harder at applying what we know. Every day. To be great leaders, we have to lead—express and exemplify the shared vision, stand for something greater than ourselves, risk personal security and success in order to fulfill the collective dream. We know what we need to know. The real question is: will we choose to do what we need to do?
What to Do with What You Know
As we’ve established, leadership is hard work. It doesn’t happen over night. Like personal fitness, leadership requires consistent and vigilant practice over time to achieve any meaningful results. After all, knowledge without application is about as useful as the exercise machine gathering dust in the garage. If you are genuinely interested in being a great leader, develop your leadership practice—and practice. Here are a few steps to get you started:
First, commit to some personal and professional development. Decide that you are going to dedicate some time each week to learning about yourself as a leader and practicing leadership.
Second, get to know yourself. There are several personal inventories designed to help you become more aware of your personality, learning, and leadership styles—Myers-Briggs, Colbe Index, etc.
Third, review what you know about leadership. Learn your leadership style, your company’s perspective on leadership. If you haven’t already done so, go ahead and read an article or two on the subject. Purchase a book. Here’s a list of resources:
Jim Collins, Level 5 Leadership: The Triumph of Humility and Fierce Resolve, Harvard Business Review (January 2001).
Max DePree, Leadership Jazz, (New York: Dell Publishing, 1992).
Peter Drucker. Management Challenges for the 21st Century, (New York: HarperCollins Publishers, Inc., 1994).
Don M. Frick & Larry C. Spears, Editors. The Private Writings of Robert K. Greenleaf: On Becoming a Servant Leader, (San Francisco: Jossey-Bass Publishers, 1996).
Willis Harman, Global Mind Change: The Promise of the Last Years of the Twentieth Century, (Indianapolis, IN, Knowledge Systems, 1988).
Ronald A. Heifetz. Leadership Without Easy Answers, (President and Fellows of Harvard College: Unite States of America, 1994).
James M. Kouzes & Barry Z. Posner. Credibility: How Leaders Gain and Lose It, Why People Demand It, (San Francisco: Jossey-Bass Inc., 1993).
Jean Lipman-Blumen, The Connective Edge: Leading in an Independent World, (San Francisco: Jossey-Bass Publishers, 1996).
Fourth, identify your strengths and weaknesses as a leader. Be honest. Ask some trusted colleagues for a candid assessment of your skills as a leader.
Fifth, set weekly and monthly leadership goals for yourself. Ask yourself, what do I really need to practice? How am I going to apply what I have learned about leadership to my work? Remember, signing up for gym membership is easy—it’s the regular workouts that are the hard. Whether it’s increasing your professional credibility or communicating your company mission, determine two or three specific, measurable, and actionable goals. For example:
• To become more knowledgeable of multiple perspectives on a particular topic, you might ask at least one person daily to share their perspective about that topic.
• To increase your competence in your field, you might decide to enroll in a class one night a week.
• To show appreciation for your colleagues, you may elect to thank at least one person daily for something he or she has done.
Sixth, track your progress. Check off your leadership “to do” list. Keep a journal. Start a leadership community of practice. Hire a coach. Do whatever it takes to ensure that your leadership practice stays at the top of your list.
Seventh, recognize your success. No matter how small, every time you follow through, it’s worth acknowledging.
So congratulations on knowing something about leadership! Now, let’s do something with all of that knowledge!
Corporate Hype
"Are the world’s “most admired” companies really living up to their billing? These purported goldmines of best practices and sound investments are too frequently turning up fools gold for unfortunate investors, shareholders, and employees."
Flocking Like Sheep: The Culture & Culpability of Corporate Hype
September/October 2002
by Jim Finkelstein, Karen Sella & Rob Mason of FutureSense, Inc.
Are the world’s “most admired” companies really living up to their billing? Amidst a sagging economy and business scandal, the answer, it seems, is sadly obvious. The resounding exaltation of Wall Street and beyond rings decidedly hollow through the empty halls of former industry giants; Enron, WorldCom, Qwest… Indeed, the story is becoming all too familiar as we sift through the records of one prodigal company after another. These purported goldmines of best practices and sound investments are too frequently turning up fools gold for unfortunate investors, shareholders, and employees.
Yet this is not another fiery critique or a dire prognosis, but rather a reflection on the culture and culpability of corporate hype. We recently conducted a study to determine if those organizations touted as “most admired/respected” actually outperform other companies. Given the widely publicized array of corporate debacles, perhaps our results are not surprising: those firms consistently labeled as “most admired”—the subjects of countless case studies in best selling books—rarely do better than average in the marketplace.
An over reliance on these “most admired” lists in the glossy “who’s who” of industry magazines has the capacity to severely limit independence, innovation and good old-fashioned common sense. As a result, we have seen business leaders “flocking like sheep” to keep up with the “most admired” without a thorough understanding of actual relevance and application within their respective organizations.
The FutureSense 40 “Most Admired”
We cross-referenced several of the “most admired/respected” lists published annually in magazines, such as those in Fortune and the Financial Times, as well as those companies most mentioned in best selling business books within the last five years. Forty firms showed up repeatedly as being ideal companies to follow. To gauge their performance in comparison to the overall market average, we then reviewed these companies’ stock prices against the S&P 500, the NASDAQ, and the Dow Jones over the last five years.
Out of the 40 “most admired” companies, only 14 (or 35%) outperformed all three composites while 11 firms (or 28%) performed below (often far below) all three. Thirteen (or 33%) of the top 40 firms performed with mixed results with their stock prices lurching above and below the overall market over the five-year period in a rather volatile fashion. Neither outperforming nor under performing, 2 (or 5%) companies consistently matched the market.
Review our findings in greater detail: FutureSense40.
Flocking Like Sheep
Since 26 (or 65%) of the 40 “most admired” companies did not perform better than market average, one has to question what being “most admired” really means. Fortune and the Financial Times surveyed executives across the globe about specific (?) criteria such as “quality of management” and “global business acumen” in order to compile their lists. Thus, their respective data may indicate the businesses most admired by business leaders. On the other hand, those companies in best selling business books are generally mentioned in service of the authors’ biases—sometimes supported by quantitative data and more often, qualitative anecdotes. Indeed, some of the books about “great” companies are simply self-serving marketing vehicles produced by the very same “great” corporations to drive public admiration their self-proclaimed “greatness.”
Since executive and expert opinion together created a top forty list in which the clear majority regularly performed below the market, we can only assume that there is much misconception amongst executives and experts alike as to which companies are truly great and what really defines greatness. It seems obvious that great popularity is hardly an accurate indicator of great performance, and yet it would seem that many of us still confuse the best and brightest for the bright and shiniest.
Relying on opinions without independent thought and critical analysis may be expedient, but it is hardly admirable. In fact, this tendency to follow the “most admired” often results in generally smart companies flocking like sheep to achieve little more than the latest conventional thinking and corporate hype.
Exercise Common Sense
Unfortunately, the reliance on “top 40” lists is firmly rooted in the corporate world and perhaps our own cultural ethos. There is a distinct tendency, one might say even an infatuation, to readily consume “best of” lists which systematically arrange anything from universities to mountain bikes in some hierarchical fashion. In fact, by creating our own “top 40” list, we are certainly subject to our own criticism.
Our point, however, is that these lists and case studies—while not inconsequential—are inadequate in defining admirable corporate trends. Some companies, such as GE, have consistently done well and outperformed the market, but other “highly most admired” firms such as Ford Motor have gone in the opposite direction. Both are considered “great” by the same standards, yet the two really do not match up in the market.
Here’s a novel thought: judge other companies by your own professional and organizational standards before leaping to join the ranks of the “most admired.” After all, truly great organizations are led by those who recognize the difference between worthless hype and valuable innovation.
September/October 2002
by Jim Finkelstein, Karen Sella & Rob Mason of FutureSense, Inc.
Are the world’s “most admired” companies really living up to their billing? Amidst a sagging economy and business scandal, the answer, it seems, is sadly obvious. The resounding exaltation of Wall Street and beyond rings decidedly hollow through the empty halls of former industry giants; Enron, WorldCom, Qwest… Indeed, the story is becoming all too familiar as we sift through the records of one prodigal company after another. These purported goldmines of best practices and sound investments are too frequently turning up fools gold for unfortunate investors, shareholders, and employees.
Yet this is not another fiery critique or a dire prognosis, but rather a reflection on the culture and culpability of corporate hype. We recently conducted a study to determine if those organizations touted as “most admired/respected” actually outperform other companies. Given the widely publicized array of corporate debacles, perhaps our results are not surprising: those firms consistently labeled as “most admired”—the subjects of countless case studies in best selling books—rarely do better than average in the marketplace.
An over reliance on these “most admired” lists in the glossy “who’s who” of industry magazines has the capacity to severely limit independence, innovation and good old-fashioned common sense. As a result, we have seen business leaders “flocking like sheep” to keep up with the “most admired” without a thorough understanding of actual relevance and application within their respective organizations.
The FutureSense 40 “Most Admired”
We cross-referenced several of the “most admired/respected” lists published annually in magazines, such as those in Fortune and the Financial Times, as well as those companies most mentioned in best selling business books within the last five years. Forty firms showed up repeatedly as being ideal companies to follow. To gauge their performance in comparison to the overall market average, we then reviewed these companies’ stock prices against the S&P 500, the NASDAQ, and the Dow Jones over the last five years.
Out of the 40 “most admired” companies, only 14 (or 35%) outperformed all three composites while 11 firms (or 28%) performed below (often far below) all three. Thirteen (or 33%) of the top 40 firms performed with mixed results with their stock prices lurching above and below the overall market over the five-year period in a rather volatile fashion. Neither outperforming nor under performing, 2 (or 5%) companies consistently matched the market.
Review our findings in greater detail: FutureSense40.
Flocking Like Sheep
Since 26 (or 65%) of the 40 “most admired” companies did not perform better than market average, one has to question what being “most admired” really means. Fortune and the Financial Times surveyed executives across the globe about specific (?) criteria such as “quality of management” and “global business acumen” in order to compile their lists. Thus, their respective data may indicate the businesses most admired by business leaders. On the other hand, those companies in best selling business books are generally mentioned in service of the authors’ biases—sometimes supported by quantitative data and more often, qualitative anecdotes. Indeed, some of the books about “great” companies are simply self-serving marketing vehicles produced by the very same “great” corporations to drive public admiration their self-proclaimed “greatness.”
Since executive and expert opinion together created a top forty list in which the clear majority regularly performed below the market, we can only assume that there is much misconception amongst executives and experts alike as to which companies are truly great and what really defines greatness. It seems obvious that great popularity is hardly an accurate indicator of great performance, and yet it would seem that many of us still confuse the best and brightest for the bright and shiniest.
Relying on opinions without independent thought and critical analysis may be expedient, but it is hardly admirable. In fact, this tendency to follow the “most admired” often results in generally smart companies flocking like sheep to achieve little more than the latest conventional thinking and corporate hype.
Exercise Common Sense
Unfortunately, the reliance on “top 40” lists is firmly rooted in the corporate world and perhaps our own cultural ethos. There is a distinct tendency, one might say even an infatuation, to readily consume “best of” lists which systematically arrange anything from universities to mountain bikes in some hierarchical fashion. In fact, by creating our own “top 40” list, we are certainly subject to our own criticism.
Our point, however, is that these lists and case studies—while not inconsequential—are inadequate in defining admirable corporate trends. Some companies, such as GE, have consistently done well and outperformed the market, but other “highly most admired” firms such as Ford Motor have gone in the opposite direction. Both are considered “great” by the same standards, yet the two really do not match up in the market.
Here’s a novel thought: judge other companies by your own professional and organizational standards before leaping to join the ranks of the “most admired.” After all, truly great organizations are led by those who recognize the difference between worthless hype and valuable innovation.
Corporate Culture
"The simple truth is that business leaders’ perspectives on culture are often limited to their own special blend of hype and hope—corporate ideals frequently promoted but rarely practiced."
Beyond the Corporate Looking Glass: Understanding Corporate Culture
April 2004
by Daniel J. O’Connor & Karen Sella of FutureSense, Inc.
From strategic planning to product innovation to talent retention, every decision made and action taken in a corporation is shaped by its culture. When business leaders lack valid information about their corporate cultures, they don’t really understand their business. And if they don’t really understand their business, they simply won’t succeed.
Yet, many business leaders assume they know everything they need to know about culture. Ask about their corporate culture and they will tell you all about their mission, vision, and values. They will gladly explain the strategic intent and core competencies that set their companies apart from the competition. And they may even regale you with stories of legendary founders, time-honored traditions, and the high performers who ensure a bright, bullish future.
The simple truth is that business leaders’ perspectives on culture are often limited to their own special blend of hype and hope—corporate ideals frequently promoted but rarely practiced. Craft a mission statement, have a company retreat, throw in some teambuilding, and call it “culture.” Better yet, publish a best practices manual, polish some sound-bytes, and issue a press release. While these ideals and endeavors are all legitimate indicators of a corporate culture, they generally fail to reconcile the underlying tension between what is desired and what is realized. To appreciate why, we need to develop a better understanding of corporate culture.
What is Corporate Culture?
Corporate culture may be defined as a pattern of shared values that the directors, officers, and other employees of a corporation have learned over time while working among themselves and navigating the markets in which they do busines.1 While all corporations may share certain elements of a common business culture, each corporation has its own unique pattern of shared values that help individual members respond appropriately to the specific challenges of the workplace and the marketplace.
In contrast to those values that are proudly espoused throughout the organization, the values that actually govern the organization are often subconscious or tacit values just beneath the awareness of those who hold them. These tacit values represent taken-for-granted ways of perceiving, thinking, feeling, and acting that have been so successful in meeting past challenges that they are now assumed to be the best ways to conduct business. Accordingly, they exert a tremendous amount of influence on the strategic and tactical decisions being made each day.
Consider, for example, a manufacturer with a successful track record of product innovation. Such a corporation may gradually institutionalize a pattern of shared values that includes such assumptions as: our engineers are the best in the industry, our customers care more about product features than price, and our marketing department has the easiest job in the world. When combined with other assumptions that support, say, a strong preference for quantitative over qualitative information and consensus decision making by those with the requisite expertise, this corporate culture would generate a rather distinctive approach to strategy and organization.
But will this culture prove successful in the years ahead? Will product innovation always trump price and service in the eyes of the customer? If the product becomes more of a commodity, will the dominant engineering culture welcome a more influential marketing department? Will their emphasis on quantitative information undermine their capacity for organizational change? Perhaps most importantly, will consensus decision making be effective when a decisive change of direction is required? Only time will tell.
As an alternative, consider a new competitor that has quickly established itself through a series of acquisitions and strategic alliances with suppliers of essential components and major customers that sell to end-users. This corporation might develop a culture that assumes: revenue growth is more important than high margins and long-term alliances will prove more important than technological innovation. If these shared values were combined with a preference for centralized decision making and a ruthless disregard for ethics, this culture would certainly support a very different approach to business. Whether or not this corporation will prove more successful than its competitor will depend upon the degree of alignment between each culture and the challenges it must face, as well as the degree of awareness that corporate leaders bring to this adaptive process.
Culture provides the members of a corporation with a legacy of tacit values that help them make sense of challenging situations, take action to achieve their desired results, and learn from experience in order to improve their performance. Culture helps an executive team map the strategic landscape and evaluate new market opportunities. It also helps a marketing team position a new brand in relation to the competition. It can even offer employees, both new and old, with unambiguous guidelines regarding who should make this decision, what information they need, and how they should measure success. Without a corporate culture, people would be forced to deal with every business situation as if it were a completely new set of circumstances.
Nevertheless, corporate culture can also limit the way people respond to business challenges. While their particular culture may support the pursuit of certain market opportunities, it may also blind them to the existence of even better opportunities. It may encourage them to analyze the return on investment for a new marketing strategy, while discouraging them from considering its moral implications. And their culture may do such a fine job of preserving and disseminating itself that it actually undermines the critical self-reflection and dialogue that is necessary for organizational learning and strategic innovation. 2
Therefore, corporate culture can be a double-edged sword, tacitly supporting current performance while tacitly thwarting even better performance, both within the workplace and throughout the marketplace.
Looking In… Understanding Workplace Culture
To begin to understand corporate culture, business leaders must discover the underlying shared values alive in their workplace. Much of what defines a company’s workplace culture lives deep within the collective memory, current experience, and future aspirations of its members. Without this valuable knowledge, business leaders will have a difficult time preserving and improving their corporate cultures.
Imagine, for example, that you are an investor in a middle-market company with about a thousand employees and a 20-year history of success in a typical competitive environment. Now imagine what would happen if we replaced, overnight, all the employees with an equal number of new recruits who, despite being very bright, qualified businesspeople, have no prior experience in this particular company. Mind you, the mission statement hasn’t changed, the strategic plan is still on every manager’s bookshelf, and the operational infrastructure is still in place. Furthermore, for just a few more minutes, all the other stakeholders of this company—from investors to customers to suppliers—remain unaware of the dramatic change that just occurred.
Now, setting aside considerations of insider trading, would you prefer to buy, hold, or sell shares in that company before news leaks of the change? If you’ve got a pulse, you would certainly prefer to sell every share you own. But why is this the obvious answer? Because the critical difference between the company today and the company yesterday is that yesterday there was a culture that supported performance. Absent that culture, the new employees will have to learn for the first time much of what the previous employees took for granted about how to make this business successful. Such learning takes a great deal of time and the markets in which this business must survive are not likely to grant the new employees the time they need to figure out how to create the sort of value that these markets take for granted.
As this thought experiment suggests, a company’s culture is extremely valuable and impossible to replicate. The very notion of total turnover, even with exceptional new talent, makes most of us uncomfortable with our investment in the company. Despite the company’s history of successful performance and the assurance of formal strategic and operational continuity, we realize that the original employees left with more than their individual talents. The company’s culture just walked out the door with them, and we understandably have doubts about whether this new group of talented individuals will be able translate the same context into successful performance. The fact that this valuable, complex thing we call culture can make or break a company is precisely why it is so important to understand.
As we have noted previously, corporate culture is rooted in tacit values or deeply held assumptions that people have learned over time in their day-to-day experience of working together. How work gets done, what behaviors get rewarded, who makes the decisions, what gets communicated to whom, and how change is handled are just a few examples of cultural assumptions and values at work. Consider Douglas McGregor’s classic theory of motivation: Theory X / Theory Y. As you may recall, his research supported the idea that certain fundamental assumptions about human nature underlie all management practices. Thus, whether employees are believed to be hardworking, self-directed, trustworthy people (Theory Y) or lazy, irresponsible, incompetent sods (Theory X) determine the difference between more authoritarian or more egalitarian management practices.3 Likewise, as many other researchers have discovered, assumptions about the value of independent achievement versus teamwork can be the difference between compensation and incentives based on competitive individual ranking or those based on collaborative team performance.
To further complicate matters, particularly within more mature organizations, the assumptions held within different functions (e.g. engineering vs. human resources), within different levels (e.g. executive management vs. line management), or across geographical locations (e.g. national vs. international) of the organization can vary. Whether executive committees, boards of directors, departments, project teams, silos, skunk-works, unions, or communities of practice, people who work together more frequently over time tend to establish their own unique subcultures with their own assumptions about what matters and what doesn’t, who’s in and who’s out, how things should and shouldn’t be done.4 Moreover, these subcultures may or may not be aligned with the prevailing corporate culture, as evidenced by the off-hand references to “corporate” or “headquarters” by those within corporate subcultures.
As a corporation grows in size and complexity, it is increasingly important that its leaders understand how their workplace culture is evolving, for better and for worse. Those who decide to take a deeper look at culture must expect to do more than simply validate what they already know. They must be prepared to topple some sacred cows. After all, companies, like people, rarely live up to their aspirations without taking a good hard look at themselves and making some tough decisions. There is an inevitable, dynamic gap between corporate ideals and corporate reality. Exploring workplace culture could be the difference between short-term glory and long-term success—the difference between falling into the gap and building a strong bridge for the company’s future.
Looking Out… Understanding Marketplace Culture
Most efforts to understand corporate culture begin and end with an internally-focused analysis of those values governing the way people communicate and collaborate within the workplace. This workplace culture is certainly essential to any cultural assessment. But it is just as important to extend the analysis externally into the realm of marketplace culture, uncovering the shared values that shape the way corporate directors, officers, and other employees engage with the various markets in which they do business. These values represent the difficult lessons learned over many years of surviving and thriving in the changing marketplace. They are perhaps most prevalent in the process of strategic decision making, subtly influencing people’s perspectives on what business they are in, how they create value, what distinguishes them from the competition, and to whom they are accountable outside the corporation.
Imagine, once again, that you are an investor in a middle-market company with about a thousand employees and a 20-year history of success in a typical competitive environment. Now imagine what would happen if we replaced, overnight, all the people who currently do business with this company—such as customers, suppliers, and investors—with different people whose demands for this business are entirely novel. As before, the mission statement hasn’t changed, the strategic plan is still on every manager’s bookshelf, and the operational infrastructure is still in place. Moreover, all the original employees are filing into the workplace, prepared to make the best of the situation.
But are they really prepared for the new marketplace they must face? Will their culture help them adapt to a radically new competitive environment or will it consign them to a failing business model? Most importantly for you, as an investor, is whether you will prefer to buy, hold, or sell shares in this company. Need we ask?
Granted, a complete turnover in the corporation’s customer, supplier, and investor markets is even less likely than a complete turnover of employees within that corporation. But in some ways, this little thought experiment is suggestive of the sea change in marketplace culture that business leaders are likely to navigate in the years ahead. For there is another side to marketplace culture that business leaders must recognize: the culture of the markets themselves.
Every market, whether it’s a market of customers, suppliers, investors, or potential employees, can be defined by its participants. And those participants bring their own individual and shared values to bear on the market decisions they make each day. Many market participants are acting on behalf of organizations with their own distinct cultures. And even those who are not doing so may nevertheless be acting on behalf of much larger cultures that encompass millions of individuals sharing similar worldviews.
For example, one of the most interesting recent assessments of the American culture, conducted by Paul Ray, found three general subcultures, each of which reflected the shared values of tens of millions of people.5 According to his research, the Traditionals share such values as: family, church, and community; traditional roles for men and women; support for big government and particularly the military; a belief that rural and small-town life is more virtuous than big-city or suburban life; a belief that preserving civil liberties is less important than restricting immoral behavior; and a disdain for foreigners. The Traditionals make up about 25% of the American population and, although they are declining in number, their agenda is evidently quite influential in national politics.
The Moderns share what are generally considered to be mainstream values, such as: making or having a lot of money; climbing the ladder of success; being on top of the latest styles, trends, and innovations; supporting big business and big government; admiring the technical and scientific fields; and rejecting the values and concerns of native peoples, rural people, and all those who do not follow a Modern lifestyle. The Moderns account for nearly 50% of the American population and they are probably the dominant culture within the business world, setting the agenda for most large corporations.
There is, however, a third American subculture on the rise. These so-called Cultural Creatives share such values as: personal authenticity, ecological sustainability, social justice, corporate responsibility, and entrepreneurship that resolves economic, social, and ecological problems. They demand good information and have exceptionally good deception-detectors for ads and misleading corporate or political claims; make carefully researched purchases, regularly reading both the labels and the fine print; strive to balance economic growth with environmental protection; and believe that business and government don’t pay enough attention to our longer-term future. They account for about 25% of the American population and are the fastest growing subculture.
It is worth emphasizing that all three subcultures have their virtues as well as their limitations. But it is just as important to acknowledge the dramatic shift that is under way, with the Traditionals in rapid decline, the Moderns holding steady, and the Cultural Creatives in rapid ascent. It is entirely possible that within the first two decades of the 21st century, the Cultural Creatives will establish themselves as the dominant subculture in America, not only in numbers, but in social, political, and economic influence. If this should come to pass, then it stands to reason that the majority of business leaders in the not-too-distant future may be Cultural Creatives, or at least speak to these values as part of their enhanced cultural fluency. The key question is how many of today’s business leaders will survive the shift.
When considering the specific markets in which their corporations operate, business leaders must be aware of the evolution of such distinctive marketplace subcultures. After all, to mistakenly assume that all the investors, customers, or employees of a corporation belong to a single, homogenous, mainstream culture is to risk losing them as soon as viable alternatives become available. With this awareness, business leaders can begin to adapt their corporate cultures to the various subcultures in their marketplace.
Looking Beyond…
In order to sustain success in the years ahead, business leaders will need both the courage and capacity to look beyond the surface of their corporate ideals and take a closer look at the cultural realities of their workplace and marketplace. The challenge for business leaders is clear: they must become conscious of their corporate cultures, thereby enhancing their capacity to lead, or they will be managed by their cultures in ways that undermine their credibility as leaders.6
Footnotes
1 Adapted from Edgar H. Schein (1992) Organizational Culture and Leadership, San Francisco: Jossey-Bass, p. 12.
2 Chris Argyris (1990) Overcoming Organizational Defenses: Facilitating Organizational Learning, Englewood Cliffs, NJ: Prentice Hall.
3 Douglas McGregor (1985) The Human Side of Enterprise, Boston: McGraw Hill.
4 Edgar H. Schein (1999) The Corporate Culture Survival Guide, San Francisco: Jossey-Bass, p. 106.
5 Paul H. Ray and Sherry Ruth Anderson (2000) The Cultural Creatives, New York: Harmony.
6 This last point paraphrases Edgar H. Schein (1992) Organizational Culture and Leadership, San Francisco: Jossey-Bass, p. 15.
April 2004
by Daniel J. O’Connor & Karen Sella of FutureSense, Inc.
From strategic planning to product innovation to talent retention, every decision made and action taken in a corporation is shaped by its culture. When business leaders lack valid information about their corporate cultures, they don’t really understand their business. And if they don’t really understand their business, they simply won’t succeed.
Yet, many business leaders assume they know everything they need to know about culture. Ask about their corporate culture and they will tell you all about their mission, vision, and values. They will gladly explain the strategic intent and core competencies that set their companies apart from the competition. And they may even regale you with stories of legendary founders, time-honored traditions, and the high performers who ensure a bright, bullish future.
The simple truth is that business leaders’ perspectives on culture are often limited to their own special blend of hype and hope—corporate ideals frequently promoted but rarely practiced. Craft a mission statement, have a company retreat, throw in some teambuilding, and call it “culture.” Better yet, publish a best practices manual, polish some sound-bytes, and issue a press release. While these ideals and endeavors are all legitimate indicators of a corporate culture, they generally fail to reconcile the underlying tension between what is desired and what is realized. To appreciate why, we need to develop a better understanding of corporate culture.
What is Corporate Culture?
Corporate culture may be defined as a pattern of shared values that the directors, officers, and other employees of a corporation have learned over time while working among themselves and navigating the markets in which they do busines.1 While all corporations may share certain elements of a common business culture, each corporation has its own unique pattern of shared values that help individual members respond appropriately to the specific challenges of the workplace and the marketplace.
In contrast to those values that are proudly espoused throughout the organization, the values that actually govern the organization are often subconscious or tacit values just beneath the awareness of those who hold them. These tacit values represent taken-for-granted ways of perceiving, thinking, feeling, and acting that have been so successful in meeting past challenges that they are now assumed to be the best ways to conduct business. Accordingly, they exert a tremendous amount of influence on the strategic and tactical decisions being made each day.
Consider, for example, a manufacturer with a successful track record of product innovation. Such a corporation may gradually institutionalize a pattern of shared values that includes such assumptions as: our engineers are the best in the industry, our customers care more about product features than price, and our marketing department has the easiest job in the world. When combined with other assumptions that support, say, a strong preference for quantitative over qualitative information and consensus decision making by those with the requisite expertise, this corporate culture would generate a rather distinctive approach to strategy and organization.
But will this culture prove successful in the years ahead? Will product innovation always trump price and service in the eyes of the customer? If the product becomes more of a commodity, will the dominant engineering culture welcome a more influential marketing department? Will their emphasis on quantitative information undermine their capacity for organizational change? Perhaps most importantly, will consensus decision making be effective when a decisive change of direction is required? Only time will tell.
As an alternative, consider a new competitor that has quickly established itself through a series of acquisitions and strategic alliances with suppliers of essential components and major customers that sell to end-users. This corporation might develop a culture that assumes: revenue growth is more important than high margins and long-term alliances will prove more important than technological innovation. If these shared values were combined with a preference for centralized decision making and a ruthless disregard for ethics, this culture would certainly support a very different approach to business. Whether or not this corporation will prove more successful than its competitor will depend upon the degree of alignment between each culture and the challenges it must face, as well as the degree of awareness that corporate leaders bring to this adaptive process.
Culture provides the members of a corporation with a legacy of tacit values that help them make sense of challenging situations, take action to achieve their desired results, and learn from experience in order to improve their performance. Culture helps an executive team map the strategic landscape and evaluate new market opportunities. It also helps a marketing team position a new brand in relation to the competition. It can even offer employees, both new and old, with unambiguous guidelines regarding who should make this decision, what information they need, and how they should measure success. Without a corporate culture, people would be forced to deal with every business situation as if it were a completely new set of circumstances.
Nevertheless, corporate culture can also limit the way people respond to business challenges. While their particular culture may support the pursuit of certain market opportunities, it may also blind them to the existence of even better opportunities. It may encourage them to analyze the return on investment for a new marketing strategy, while discouraging them from considering its moral implications. And their culture may do such a fine job of preserving and disseminating itself that it actually undermines the critical self-reflection and dialogue that is necessary for organizational learning and strategic innovation. 2
Therefore, corporate culture can be a double-edged sword, tacitly supporting current performance while tacitly thwarting even better performance, both within the workplace and throughout the marketplace.
Looking In… Understanding Workplace Culture
To begin to understand corporate culture, business leaders must discover the underlying shared values alive in their workplace. Much of what defines a company’s workplace culture lives deep within the collective memory, current experience, and future aspirations of its members. Without this valuable knowledge, business leaders will have a difficult time preserving and improving their corporate cultures.
Imagine, for example, that you are an investor in a middle-market company with about a thousand employees and a 20-year history of success in a typical competitive environment. Now imagine what would happen if we replaced, overnight, all the employees with an equal number of new recruits who, despite being very bright, qualified businesspeople, have no prior experience in this particular company. Mind you, the mission statement hasn’t changed, the strategic plan is still on every manager’s bookshelf, and the operational infrastructure is still in place. Furthermore, for just a few more minutes, all the other stakeholders of this company—from investors to customers to suppliers—remain unaware of the dramatic change that just occurred.
Now, setting aside considerations of insider trading, would you prefer to buy, hold, or sell shares in that company before news leaks of the change? If you’ve got a pulse, you would certainly prefer to sell every share you own. But why is this the obvious answer? Because the critical difference between the company today and the company yesterday is that yesterday there was a culture that supported performance. Absent that culture, the new employees will have to learn for the first time much of what the previous employees took for granted about how to make this business successful. Such learning takes a great deal of time and the markets in which this business must survive are not likely to grant the new employees the time they need to figure out how to create the sort of value that these markets take for granted.
As this thought experiment suggests, a company’s culture is extremely valuable and impossible to replicate. The very notion of total turnover, even with exceptional new talent, makes most of us uncomfortable with our investment in the company. Despite the company’s history of successful performance and the assurance of formal strategic and operational continuity, we realize that the original employees left with more than their individual talents. The company’s culture just walked out the door with them, and we understandably have doubts about whether this new group of talented individuals will be able translate the same context into successful performance. The fact that this valuable, complex thing we call culture can make or break a company is precisely why it is so important to understand.
As we have noted previously, corporate culture is rooted in tacit values or deeply held assumptions that people have learned over time in their day-to-day experience of working together. How work gets done, what behaviors get rewarded, who makes the decisions, what gets communicated to whom, and how change is handled are just a few examples of cultural assumptions and values at work. Consider Douglas McGregor’s classic theory of motivation: Theory X / Theory Y. As you may recall, his research supported the idea that certain fundamental assumptions about human nature underlie all management practices. Thus, whether employees are believed to be hardworking, self-directed, trustworthy people (Theory Y) or lazy, irresponsible, incompetent sods (Theory X) determine the difference between more authoritarian or more egalitarian management practices.3 Likewise, as many other researchers have discovered, assumptions about the value of independent achievement versus teamwork can be the difference between compensation and incentives based on competitive individual ranking or those based on collaborative team performance.
To further complicate matters, particularly within more mature organizations, the assumptions held within different functions (e.g. engineering vs. human resources), within different levels (e.g. executive management vs. line management), or across geographical locations (e.g. national vs. international) of the organization can vary. Whether executive committees, boards of directors, departments, project teams, silos, skunk-works, unions, or communities of practice, people who work together more frequently over time tend to establish their own unique subcultures with their own assumptions about what matters and what doesn’t, who’s in and who’s out, how things should and shouldn’t be done.4 Moreover, these subcultures may or may not be aligned with the prevailing corporate culture, as evidenced by the off-hand references to “corporate” or “headquarters” by those within corporate subcultures.
As a corporation grows in size and complexity, it is increasingly important that its leaders understand how their workplace culture is evolving, for better and for worse. Those who decide to take a deeper look at culture must expect to do more than simply validate what they already know. They must be prepared to topple some sacred cows. After all, companies, like people, rarely live up to their aspirations without taking a good hard look at themselves and making some tough decisions. There is an inevitable, dynamic gap between corporate ideals and corporate reality. Exploring workplace culture could be the difference between short-term glory and long-term success—the difference between falling into the gap and building a strong bridge for the company’s future.
Looking Out… Understanding Marketplace Culture
Most efforts to understand corporate culture begin and end with an internally-focused analysis of those values governing the way people communicate and collaborate within the workplace. This workplace culture is certainly essential to any cultural assessment. But it is just as important to extend the analysis externally into the realm of marketplace culture, uncovering the shared values that shape the way corporate directors, officers, and other employees engage with the various markets in which they do business. These values represent the difficult lessons learned over many years of surviving and thriving in the changing marketplace. They are perhaps most prevalent in the process of strategic decision making, subtly influencing people’s perspectives on what business they are in, how they create value, what distinguishes them from the competition, and to whom they are accountable outside the corporation.
Imagine, once again, that you are an investor in a middle-market company with about a thousand employees and a 20-year history of success in a typical competitive environment. Now imagine what would happen if we replaced, overnight, all the people who currently do business with this company—such as customers, suppliers, and investors—with different people whose demands for this business are entirely novel. As before, the mission statement hasn’t changed, the strategic plan is still on every manager’s bookshelf, and the operational infrastructure is still in place. Moreover, all the original employees are filing into the workplace, prepared to make the best of the situation.
But are they really prepared for the new marketplace they must face? Will their culture help them adapt to a radically new competitive environment or will it consign them to a failing business model? Most importantly for you, as an investor, is whether you will prefer to buy, hold, or sell shares in this company. Need we ask?
Granted, a complete turnover in the corporation’s customer, supplier, and investor markets is even less likely than a complete turnover of employees within that corporation. But in some ways, this little thought experiment is suggestive of the sea change in marketplace culture that business leaders are likely to navigate in the years ahead. For there is another side to marketplace culture that business leaders must recognize: the culture of the markets themselves.
Every market, whether it’s a market of customers, suppliers, investors, or potential employees, can be defined by its participants. And those participants bring their own individual and shared values to bear on the market decisions they make each day. Many market participants are acting on behalf of organizations with their own distinct cultures. And even those who are not doing so may nevertheless be acting on behalf of much larger cultures that encompass millions of individuals sharing similar worldviews.
For example, one of the most interesting recent assessments of the American culture, conducted by Paul Ray, found three general subcultures, each of which reflected the shared values of tens of millions of people.5 According to his research, the Traditionals share such values as: family, church, and community; traditional roles for men and women; support for big government and particularly the military; a belief that rural and small-town life is more virtuous than big-city or suburban life; a belief that preserving civil liberties is less important than restricting immoral behavior; and a disdain for foreigners. The Traditionals make up about 25% of the American population and, although they are declining in number, their agenda is evidently quite influential in national politics.
The Moderns share what are generally considered to be mainstream values, such as: making or having a lot of money; climbing the ladder of success; being on top of the latest styles, trends, and innovations; supporting big business and big government; admiring the technical and scientific fields; and rejecting the values and concerns of native peoples, rural people, and all those who do not follow a Modern lifestyle. The Moderns account for nearly 50% of the American population and they are probably the dominant culture within the business world, setting the agenda for most large corporations.
There is, however, a third American subculture on the rise. These so-called Cultural Creatives share such values as: personal authenticity, ecological sustainability, social justice, corporate responsibility, and entrepreneurship that resolves economic, social, and ecological problems. They demand good information and have exceptionally good deception-detectors for ads and misleading corporate or political claims; make carefully researched purchases, regularly reading both the labels and the fine print; strive to balance economic growth with environmental protection; and believe that business and government don’t pay enough attention to our longer-term future. They account for about 25% of the American population and are the fastest growing subculture.
It is worth emphasizing that all three subcultures have their virtues as well as their limitations. But it is just as important to acknowledge the dramatic shift that is under way, with the Traditionals in rapid decline, the Moderns holding steady, and the Cultural Creatives in rapid ascent. It is entirely possible that within the first two decades of the 21st century, the Cultural Creatives will establish themselves as the dominant subculture in America, not only in numbers, but in social, political, and economic influence. If this should come to pass, then it stands to reason that the majority of business leaders in the not-too-distant future may be Cultural Creatives, or at least speak to these values as part of their enhanced cultural fluency. The key question is how many of today’s business leaders will survive the shift.
When considering the specific markets in which their corporations operate, business leaders must be aware of the evolution of such distinctive marketplace subcultures. After all, to mistakenly assume that all the investors, customers, or employees of a corporation belong to a single, homogenous, mainstream culture is to risk losing them as soon as viable alternatives become available. With this awareness, business leaders can begin to adapt their corporate cultures to the various subcultures in their marketplace.
Looking Beyond…
In order to sustain success in the years ahead, business leaders will need both the courage and capacity to look beyond the surface of their corporate ideals and take a closer look at the cultural realities of their workplace and marketplace. The challenge for business leaders is clear: they must become conscious of their corporate cultures, thereby enhancing their capacity to lead, or they will be managed by their cultures in ways that undermine their credibility as leaders.6
Footnotes
1 Adapted from Edgar H. Schein (1992) Organizational Culture and Leadership, San Francisco: Jossey-Bass, p. 12.
2 Chris Argyris (1990) Overcoming Organizational Defenses: Facilitating Organizational Learning, Englewood Cliffs, NJ: Prentice Hall.
3 Douglas McGregor (1985) The Human Side of Enterprise, Boston: McGraw Hill.
4 Edgar H. Schein (1999) The Corporate Culture Survival Guide, San Francisco: Jossey-Bass, p. 106.
5 Paul H. Ray and Sherry Ruth Anderson (2000) The Cultural Creatives, New York: Harmony.
6 This last point paraphrases Edgar H. Schein (1992) Organizational Culture and Leadership, San Francisco: Jossey-Bass, p. 15.
The Right People
Where do we want to go, and do we have the right people to get there?
A billion-dollar real estate company sought guidance on its executive succession planning program. They were enjoying financial success, but a recent acquisition had illuminated difficult questions about the company’s strategic direction and whether their current employees were capable of driving future growth.
Working with key stakeholders – owners, employees and investors – we strategized, built and executed a unique integrated framework that took into account four complimentary perspectives on the core challenge of executive succession:
• Market Issues – How will future market conditions influence our performance?
• Strategic Issues – How can we continue to create value for our customers, employees and investors?
• Organizational Issues – How will the business be organized and who are the future leaders?
• Financial Issues – How will executives be compensated through salary, bonus, profit-sharing, and equity participation?
Using FutureSense’s unique framework, we collaborated to:
• Build a new organizational structure;
• Define new and evolving roles;
• Assessed the people; and,
• Implement a new incentive plan
As a result, we identified areas of improvement throughout the organization and addressed developmental opportunities.
The culmination of our work was the creation of a Human Capital Roadmap – a dynamic organizational chart that graphically portrayed executive succession so that the client knew who was in the pipeline for each position.
A billion-dollar real estate company sought guidance on its executive succession planning program. They were enjoying financial success, but a recent acquisition had illuminated difficult questions about the company’s strategic direction and whether their current employees were capable of driving future growth.
Working with key stakeholders – owners, employees and investors – we strategized, built and executed a unique integrated framework that took into account four complimentary perspectives on the core challenge of executive succession:
• Market Issues – How will future market conditions influence our performance?
• Strategic Issues – How can we continue to create value for our customers, employees and investors?
• Organizational Issues – How will the business be organized and who are the future leaders?
• Financial Issues – How will executives be compensated through salary, bonus, profit-sharing, and equity participation?
Using FutureSense’s unique framework, we collaborated to:
• Build a new organizational structure;
• Define new and evolving roles;
• Assessed the people; and,
• Implement a new incentive plan
As a result, we identified areas of improvement throughout the organization and addressed developmental opportunities.
The culmination of our work was the creation of a Human Capital Roadmap – a dynamic organizational chart that graphically portrayed executive succession so that the client knew who was in the pipeline for each position.
Co-Dependence
"It is time for all business people to stand up and take a stand—to recognize our complicity in our complacence and exercise more due diligence in our business relationships. It is everyone’s business to re-establish trust in business."
Co-Dependence at the Helm
July/August 2002
by Jim Finkelstein and Karen Sella of FutureSense, Inc.
We’re missing the point, and we’re all to blame. Somehow, in the culture of corporate America, we have decided that everyone else is to blame for the fundamental lack of ethics that we are witnessing. With the Enron and WorldCom disasters, we are looking to vilify the corporate executives who were at the helm, the Board, the advisors, the analysts. The President, Congress and business pundits are calling for reforms in accounting and accountability – all of which are necessary – but will not solve the problem.
In reality, the villain is our venerable culture itself—a corporate America that has allowed such shocking misuse of power to become so commonplace. In the quest for corporate celebrities, we have elevated mere caricatures of leadership into power and into office. It is time for all business people to stand up and take a stand—to recognize our complicity in our complacence and exercise more due diligence in our business relationships. It is everyone’s business to re-establish trust in business.
Can You Trust Your Trusted Advisor?
Perhaps, we should start with our most trusted alliances—our advisory relationships. It seems all too common these days to discover that the foundation of mutual trust between advisor and advisee has eroded beyond recognition—that there is instead an unholy alliance between advisor and advisee that is based on avarice and arrogance. Clients used to expect unbiased, third party counsel, and consultants used to provide it. Clients depended on consultants to provide impartial expertise, and consultants depended on clients to provide work opportunities. It was a simple contract based on a mutual regard for the truth.
Clients still depend on consultants to provide impartial expertise, and consultants still depend on clients to provide work opportunities. But the contract has changed; the truth is no longer regarded as essential. The truth is that clients don’t always want to hear what consultants have to say, especially if it challenges their assumptions, and consultants don’t always want to say what clients need to hear, especially if it costs them more business.
Today’s relationship between advisor/consultant and advisee/client is often predicated on the granddaddy of addictions—co-dependence. Clients pay consultants to say what they want to hear—not what they need to hear. And, consultants say exactly what will lead to the next piece of business—not what they need to say.
At $1Million+ A Year, How Objective Can You Be?
If you put yourself in the shoes of the Arthur Andersen partner who orchestrated a $25+ million a year account at Enron, or at WorldCom, or at Harken Energy, it’s not surprising. Imagine the power of “owning” that relationship, of leading a large team in “service” to that account. There is direct correlation between the value of that account and the number of Partner “units”—his /her measure of status and wealth—to which he/she is distributed personal income during the year. Believe it or not, a Partner with that type of account was clearly earning at least $1 million per year from that account alone!
When the client suggests that the sky is pink – and not so subtly alludes to the fact that many other consultants would agree—do you think that the Partner will reveal that the sky is blue? We think not. Despite claims to ethics and integrity, when faced with the possibility of losing the account—a choice between morals and money—many partners fail to tell the truth. After all, the truth is inconvenient. It’s much easier to simply agree that of course, the sky is pink—and pocket the green.
And so it goes. This unholy alliance—where the truth is never spoken—is established. Is this bribery? Not entirely. Is it co-dependence? Absolutely. The Client gets what they want—justification for their perspective; the Partner gets what he or she wants—a happy client and a fat wallet—until the truth is revealed, and they are exposed. It’s the co-dependent perversion of “the client is always right.”
Co-Dependence Beyond Creative Accounting Practices
Co-dependence in the relationships between advisors and advisees exists well beyond the field of creative accounting. We see it in relationships between consultants and clients, corporate executives and boards of directors, stockholders and analysts. It’s evidenced in the development of excessive executive compensation programs, the installation of problematic enterprise systems, and failed mergers and acquisitions.
Take executive compensation, for example. Executive compensation used to be about rewarding excellence in performance—where all stakeholders win—the employees, customers, shareholders and executives. Nowadays, corporations depend on executives to be prestigious figureheads, elevating the organizational status and company stock price; executives depend on corporations to elevate their professional status and professional stock price. While we can certainly argue that there are far nobler aspirations for organizations and their leaders, this alone is not without merit. It generally works well for everybody—until people get greedy. Then, the goal becomes celebrity status and corporate glory at everybody else’s expense. In a codependent relationship, both the corporation and the executive achieve widespread recognition and the company stock price and the executive stock price are raised (inflated) beyond reason.
How many times have we seen the demise of an organization where the Executives get theirs at the expense of everyone else? How many employees could be re-employed for the billions of dollars spent in aggregate floating obscene golden parachutes or “competitive” (or rather, excessive) compensation packages? Executive Compensation is out-of-control and demonstrates an unhealthy co-dependence between executives and the Compensation Committees of the Boards.
Then, there’s those widely touted and highly expensive enterprise systems. How many organizations have been encouraged to implement an enterprise-wide system by their “independent consultant” to see millions of dollars wasted on a system that doesn’t deliver the desired results? How many consultants provide “objective, third party” feasibility studies that simply validate the need for them to do the implementation work? Implementation revenues for the consultant may be ten to twenty times the amount they got for their “objective” work.
And, what about mergers and acquisitions – the transaction fees that occur when consultants secure an M&A account for just one behemoth is a legendary career maker. How often have you heard that at least 60%-70% of mergers or acquisitions have failed to deliver what they were intended to deliver to shareholders? The truth is that due diligence studies performed by trusted advisors typically only examine the financial fit – and frequently fail to explore the people and cultural fit (often referred to as the “soft stuff”). Most mergers and acquisitions fail because the people dimension is forgotten. Convenient, eh? Co-dependent—most assuredly. Check it out with the folks on Wall Street promoting these deals. What is their motivation to say no? And perhaps more importantly, what motivates them to say yes?
Twelve Steps to Battling Co-Dependence at the Helm *
Obviously, there are completely trustworthy and functional relationships between advisors and advisees, but with the increasing evidence of widespread ethical morass, we think that it is important to review the foundations of advisory relationships. An honest exploration all too frequently reveals a surprising erosion of ethics that requires a fundamental reconstruction or termination. It is time—really, long past time—to apply some reality checks—to reconstruct and re-establish the fundamental trust and integrity required—or should be required—to lead in business.
* The concepts here are derived from basic Twelve Step programs:
1. Admit you are now powerless over the entire situation and that the system is totally out of control!
2. Start believing that only a major change in how you conduct yourself in business is necessary or only government and regulatory intervention can restore sanity to this mess.
3. Make a decision to turn these relationships over to a truly independent advisory board or incur the scrutiny of government, Congress and Harvey Pitt.
4. Make an honest inventory and assessment of what is not working; stop being in denial that “it isn’t happening here.”
5. Admit to your stakeholders the exact nature of your relationships with advisors. Assure them that the Independent advisors are truly independent. Disclose your fees and the value received.
6. Be truly ready to make a change – not an incremental one, but a sweeping change – as to how you conduct business.
7. Discover the true meaning of the word – humility – and start building an ethical organization from the ground level – again and again if necessary.
8. Understand the impact that previous and new decisions have had and will have on all of your stakeholders – employees, customers, shareholders and executives – and be willing to change them if they do not meet the standards you have set.
9. Acknowledge the damage caused by these relationships and be willing to make amends to your stakeholders as necessary—particularly to people who have suffered unnecessarily (most likely your employees and customers).
10. List your relationships in the forms of assets and liabilities – and make the balance sheet work for you. Limit your liabilities and maximize your assets. Don’t hide behind the excuse that “it is too hard to change advisors” – sometimes it is the hard work that makes things better.
11. Develop a conscious awareness of the nature of all of your relationships and keep examining their ethics, values and morals.
12. Carry these messages to others in your business community.
It is only through constant awareness and commitment that we will break the cycle of this dysfunctional system—the unholy alliance between advisor and advisee—and bring trust and integrity back to the forefront.
July/August 2002
by Jim Finkelstein and Karen Sella of FutureSense, Inc.
We’re missing the point, and we’re all to blame. Somehow, in the culture of corporate America, we have decided that everyone else is to blame for the fundamental lack of ethics that we are witnessing. With the Enron and WorldCom disasters, we are looking to vilify the corporate executives who were at the helm, the Board, the advisors, the analysts. The President, Congress and business pundits are calling for reforms in accounting and accountability – all of which are necessary – but will not solve the problem.
In reality, the villain is our venerable culture itself—a corporate America that has allowed such shocking misuse of power to become so commonplace. In the quest for corporate celebrities, we have elevated mere caricatures of leadership into power and into office. It is time for all business people to stand up and take a stand—to recognize our complicity in our complacence and exercise more due diligence in our business relationships. It is everyone’s business to re-establish trust in business.
Can You Trust Your Trusted Advisor?
Perhaps, we should start with our most trusted alliances—our advisory relationships. It seems all too common these days to discover that the foundation of mutual trust between advisor and advisee has eroded beyond recognition—that there is instead an unholy alliance between advisor and advisee that is based on avarice and arrogance. Clients used to expect unbiased, third party counsel, and consultants used to provide it. Clients depended on consultants to provide impartial expertise, and consultants depended on clients to provide work opportunities. It was a simple contract based on a mutual regard for the truth.
Clients still depend on consultants to provide impartial expertise, and consultants still depend on clients to provide work opportunities. But the contract has changed; the truth is no longer regarded as essential. The truth is that clients don’t always want to hear what consultants have to say, especially if it challenges their assumptions, and consultants don’t always want to say what clients need to hear, especially if it costs them more business.
Today’s relationship between advisor/consultant and advisee/client is often predicated on the granddaddy of addictions—co-dependence. Clients pay consultants to say what they want to hear—not what they need to hear. And, consultants say exactly what will lead to the next piece of business—not what they need to say.
At $1Million+ A Year, How Objective Can You Be?
If you put yourself in the shoes of the Arthur Andersen partner who orchestrated a $25+ million a year account at Enron, or at WorldCom, or at Harken Energy, it’s not surprising. Imagine the power of “owning” that relationship, of leading a large team in “service” to that account. There is direct correlation between the value of that account and the number of Partner “units”—his /her measure of status and wealth—to which he/she is distributed personal income during the year. Believe it or not, a Partner with that type of account was clearly earning at least $1 million per year from that account alone!
When the client suggests that the sky is pink – and not so subtly alludes to the fact that many other consultants would agree—do you think that the Partner will reveal that the sky is blue? We think not. Despite claims to ethics and integrity, when faced with the possibility of losing the account—a choice between morals and money—many partners fail to tell the truth. After all, the truth is inconvenient. It’s much easier to simply agree that of course, the sky is pink—and pocket the green.
And so it goes. This unholy alliance—where the truth is never spoken—is established. Is this bribery? Not entirely. Is it co-dependence? Absolutely. The Client gets what they want—justification for their perspective; the Partner gets what he or she wants—a happy client and a fat wallet—until the truth is revealed, and they are exposed. It’s the co-dependent perversion of “the client is always right.”
Co-Dependence Beyond Creative Accounting Practices
Co-dependence in the relationships between advisors and advisees exists well beyond the field of creative accounting. We see it in relationships between consultants and clients, corporate executives and boards of directors, stockholders and analysts. It’s evidenced in the development of excessive executive compensation programs, the installation of problematic enterprise systems, and failed mergers and acquisitions.
Take executive compensation, for example. Executive compensation used to be about rewarding excellence in performance—where all stakeholders win—the employees, customers, shareholders and executives. Nowadays, corporations depend on executives to be prestigious figureheads, elevating the organizational status and company stock price; executives depend on corporations to elevate their professional status and professional stock price. While we can certainly argue that there are far nobler aspirations for organizations and their leaders, this alone is not without merit. It generally works well for everybody—until people get greedy. Then, the goal becomes celebrity status and corporate glory at everybody else’s expense. In a codependent relationship, both the corporation and the executive achieve widespread recognition and the company stock price and the executive stock price are raised (inflated) beyond reason.
How many times have we seen the demise of an organization where the Executives get theirs at the expense of everyone else? How many employees could be re-employed for the billions of dollars spent in aggregate floating obscene golden parachutes or “competitive” (or rather, excessive) compensation packages? Executive Compensation is out-of-control and demonstrates an unhealthy co-dependence between executives and the Compensation Committees of the Boards.
Then, there’s those widely touted and highly expensive enterprise systems. How many organizations have been encouraged to implement an enterprise-wide system by their “independent consultant” to see millions of dollars wasted on a system that doesn’t deliver the desired results? How many consultants provide “objective, third party” feasibility studies that simply validate the need for them to do the implementation work? Implementation revenues for the consultant may be ten to twenty times the amount they got for their “objective” work.
And, what about mergers and acquisitions – the transaction fees that occur when consultants secure an M&A account for just one behemoth is a legendary career maker. How often have you heard that at least 60%-70% of mergers or acquisitions have failed to deliver what they were intended to deliver to shareholders? The truth is that due diligence studies performed by trusted advisors typically only examine the financial fit – and frequently fail to explore the people and cultural fit (often referred to as the “soft stuff”). Most mergers and acquisitions fail because the people dimension is forgotten. Convenient, eh? Co-dependent—most assuredly. Check it out with the folks on Wall Street promoting these deals. What is their motivation to say no? And perhaps more importantly, what motivates them to say yes?
Twelve Steps to Battling Co-Dependence at the Helm *
Obviously, there are completely trustworthy and functional relationships between advisors and advisees, but with the increasing evidence of widespread ethical morass, we think that it is important to review the foundations of advisory relationships. An honest exploration all too frequently reveals a surprising erosion of ethics that requires a fundamental reconstruction or termination. It is time—really, long past time—to apply some reality checks—to reconstruct and re-establish the fundamental trust and integrity required—or should be required—to lead in business.
* The concepts here are derived from basic Twelve Step programs:
1. Admit you are now powerless over the entire situation and that the system is totally out of control!
2. Start believing that only a major change in how you conduct yourself in business is necessary or only government and regulatory intervention can restore sanity to this mess.
3. Make a decision to turn these relationships over to a truly independent advisory board or incur the scrutiny of government, Congress and Harvey Pitt.
4. Make an honest inventory and assessment of what is not working; stop being in denial that “it isn’t happening here.”
5. Admit to your stakeholders the exact nature of your relationships with advisors. Assure them that the Independent advisors are truly independent. Disclose your fees and the value received.
6. Be truly ready to make a change – not an incremental one, but a sweeping change – as to how you conduct business.
7. Discover the true meaning of the word – humility – and start building an ethical organization from the ground level – again and again if necessary.
8. Understand the impact that previous and new decisions have had and will have on all of your stakeholders – employees, customers, shareholders and executives – and be willing to change them if they do not meet the standards you have set.
9. Acknowledge the damage caused by these relationships and be willing to make amends to your stakeholders as necessary—particularly to people who have suffered unnecessarily (most likely your employees and customers).
10. List your relationships in the forms of assets and liabilities – and make the balance sheet work for you. Limit your liabilities and maximize your assets. Don’t hide behind the excuse that “it is too hard to change advisors” – sometimes it is the hard work that makes things better.
11. Develop a conscious awareness of the nature of all of your relationships and keep examining their ethics, values and morals.
12. Carry these messages to others in your business community.
It is only through constant awareness and commitment that we will break the cycle of this dysfunctional system—the unholy alliance between advisor and advisee—and bring trust and integrity back to the forefront.
Conformance Management
"What is performance management? What approach makes the most sense for your company? ......what kind of performance is worth managing? Do you want meaningful action or merely an act?"
Conformance Management: All Act, No Action
June 2003
by Karen Sella of FutureSense, Inc.
con•form•ance \kon-‘for-man(t)s \ n 1 : correspondence in form, manner, or character : AGREEMENT 2 : an act or instance of conforming 3 : action in accordance with some specified standard or authority : OBEDIENCE <~ to social custom>
per•form•ance \pe(r)-‘for-man(t)s\ n 1 a : the execution of an action b: something accomplished: DEED, FEAT 2 : the fulfillment of a claim, promise, or request: IMPLEMENTATION 3 a : the action of representing a character in a play b : a public presentation or exhibition 4 : the ability to perform : EFFICIENCY.
Webster’s Ninth New Collegiate Dictionary,Merriam-Webster, 1985
What is performance management? What approach makes the most sense for your company? When it comes to successfully managing performance, there are several questions to consider. However, the most critical question to ask is what kind of performance is worth managing?
Do you want meaningful action or merely an act? Think about it. Performance, depending on one’s definition, is both an action and an act, both substance and pretense. Too often, when it comes to managing performance, companies manage only the act without any meaningful action, conducting annual pro-forma appraisals that cover everyone’s you-know-whats without ever realizing anyone’s potential. Performance Management without meaningful action is nothing more than “Conformance Management.”
Conformance Management: Act I, Scene 1
Supervisor's Office
Short on time and short on trust, the two main characters, Supervisor and Subordinate meet to review the Subordinate’s annual performance appraisal. Both ill conceived and overdue, this once a year meeting takes place during some inconvenient and inadequate time between other meetings. It has probably been re-scheduled at least once due to feigned illness, overbooking, procrastination, or any other “legitimate” excuse. However, last year, Human Resources implemented a policy that precludes the provision of annual bonuses prior to the completion of annual performance appraisals; and there’s only one week left.
During the meeting, Supervisor and Subordinate sit at the Supervisor’s desk across from one another. The chair behind the desk is slightly higher than the chair in front of the desk. The Supervisor begins the meeting with his/her appraisal of the Subordinate’s performance, and notifies the Subordinate about any resulting compensation or advancement decisions, making sure to leave at least ten minutes for the Subordinate to respond. The Subordinate listens, nods encouragingly, and responds as requested with appropriately accommodating remarks. This exchange takes place amidst ringing phones, beeping pagers, and other, most unfortunate (although sometimes welcome) distractions that make it next to impossible for either to concentrate on the task at hand. However, both perform admirably, managing to act as if this is a meaningful exchange that will lead to meaningful action while simultaneously fulfilling their meaningless obligation.
The characters: The Supervisor and The Subordinate.
The Supervisor: Generally overextended and exasperated with the amount of requisite paperwork generated by the performance appraisal process, the Supervisor is a reluctant participant in the process. (S)he views performance appraisals as a compulsory interruption from more significant work. In this scene, the Supervisor’s primary goal is to get the Subordinate to conform to company expectations with as little discomfort as possible. (S)he:
• Shows an interest in the Subordinate’s development without revealing that there are at least a dozen, higher priorities to accomplish by the end of the day—not to mention, the five other appraisals to be completed by week end.
• Delivers his or her evaluation of the Subordinate’s performance, informing the Subordinate about strengths and “opportunities for improvement” (a.k.a. politically correct term for “weaknesses”; it seems that these characters are of such weak character that they lack the integrity to simply speak the truth, thus conforming to what is deemed to be more appropriate, less threatening language developed by well-intending egalitarians).
• Notifies the Subordinate about any advancement and compensation decisions, making sure to justify these with appropriate information and documentation.
• Ensures that the Subordinate understands and conforms to cultural and positional performance expectations — particularly those that reflect on the Supervisor’s performance within the company.
The Subordinate: Usually overworked and undervalued, although frequently well paid, the Subordinate is equally unenthused by the annual performance appraisal process. (S)he thinks that performance appraisals are just the company’s attempt to hold employees accountable for unreasonable and unclear expectations that bear little resemblance to the actual job anyway. The Subordinate’s main goal is to preserve his or her employment while optimizing opportunities with as little discomfort as possible. (S)he:
• Presents information, as requested by the Supervisor.
• Appears interested and open while avoiding or minimizing as much as possible any mention of weakness (ahem, opportunity for improvement).
• Demonstrates initiative while carefully following the Supervisor’s lead.
• Creates performance objectives that won’t interfere with any real work that needs to get done (ideally, these please the Supervisor, look good on paper, imply great effort, but are easily achieved, so the next appraisal clearly demonstrates outstanding performance).
Granted, I exaggerate—just slightly. But even caricatures resemble reality. What leads otherwise honest and caring individuals to engage in such an unproductive and apathetic exchange? Ignorance? Exhaustion? Distrust? Symptoms. Often, the underlying reason is a purely administrative approach to performance that amounts to little more than compulsory conformance.
Despite the rhetoric about valuing employees—the “greatest company asset”—when it comes to allocating resources, companies frequently fail to make any investment in performance beyond competitive compensation, mandatory training (sexual discrimination, for example), and the annual performance appraisal. This approach may lead to material wealth, but does little to encourage actions that support more meaningful success.
How do you manage performance instead of conformance? Create a culture that values performance and a structure that actually supports it: adopt a developmental approach.
Administrative versus Developmental Approaches
Let’s start with the basics. There are two fundamental aspects that govern companies’ approaches to performance: administrative and developmental. The administrative, conformance-focused aspect includes all those event-based, transactional tasks associated with assigning employee compensation and advancement, such as bonuses or promotions. The developmental, performance-focused aspect refers to a cyclical, results-oriented process—continuous efforts designed to motivate and develop employees—including performance planning, formal and informal feedback, and coaching. As any good manager can attest, it is challenging to achieve an effective balance between the administrative and developmental aspects of managing performance. Most companies lean toward one aspect or the other.
An Administrative Approach: Appraise & Awards
Those companies that rely on a more administrative or appraise & awards approach primarily assess performance—usually on an annual basis—to determine salary increases, bonuses, promotions, layoffs, demotions, transfers, etc. In this approach, the main function of the performance appraisal is to decide individual compensation and advancement awards. Professional growth and planning are secondary to this primary aim. Payoffs and promotions are assumed to be the primary motivators for employee success.
A purely administrative approach is burdensome on supervisors and subordinates alike because each is aware that comments related to performance appraisals will directly impact the financial and career success of those being evaluated. Since compensation and advancement are often addressed during the appraisal session, supervisors are more likely to provide “safe” feedback or rely on carefully constructed remarks designed to explain compensation and advancement decisions. Genuine disclosure that could encourage greater professional development is sadly neglected in favor of “nice” conversation or “sound” explanation. When forced to play the conflicting roles of judge (administrative conformance) and coach (developmental performance)—supervisors frequently find themselves caught in the bureaucratic middle—going through the motions, completing the paperwork, and justifying the numbers rather than initiating any more meaningful action. However, the administrative value of employees—the total compensation awards—cannot compensate for not valuing employees enough to invest in their development.
Likewise, in a conformance environment, subordinates also play it safe, recognizing that their financial and job security is dependent on positive performance appraisals. They work hard to conform, performing the role of a “top performer,” whatever that may be (team-players with positive attitudes who anticipate problems and offer solutions, arrive early, stay late, and get along with their superiors are popular descriptions). It is hardly surprising. What incentive is there to explore “opportunities for improvement” in perhaps the only conversation devoted to performance during the entire year?
Most are prepared to highlight achievements and defend any shortcomings, if they are even asked to speak. Unfortunately, it is common for subordinates to leave their performance reviews having barely said a word, victims or co-conspirators in Conformance Management. When anything they say “could, though won’t necessarily, be used against them,” is it any wonder that they opt to preserve and defend? If the choice is between possible self-incrimination and self-discovery, they elect to do both in private.
A Developmental Approach: Review & Results
In contrast, more forward-thinking companies are adopting a developmental philosophy for performance where employees are encouraged and expected to guide their careers with the support of management (not to be mistaken with another current trend—expecting employees to guide their careers with little or no support from management). Given competitive compensation, intrinsic rewards—such as recognition of individual performance contributions and professional development opportunities—are assumed to be the primary motivators for employee success.
These companies that subscribe to a more developmental or review & results approach regularly review performance—usually every one to two months—with an emphasis on improving individual abilities for better performance results. Subordinate views are actively sought and respected, so both parties’ perspectives guide the review process. A formal annual review is conducted to discuss the individual’s ongoing professional development within, and contributions to, the company, as well as to plan for the following year. Professional development and performance planning are the primary purpose of the review. Issues of compensation and advancement are discussed separate from the performance review, which albeit a somewhat contrived solution, seems to help people focus on the issues at hand.
Because supervisors and subordinates communicate about performance in regular review sessions, and compensation and advancement issues are discussed separately, they are more likely to speak candidly about performance. Supervisors are likely to provide more balanced and timely feedback in environments that support such efforts. Likewise, subordinates are less inclined to be defensive when participating in ongoing, constructive conversations about their performance.
Consistent communication also allows employees to be more proactive in taking any needed corrective actions. Thus, they can feel more confident about their formal annual reviews—which despite the separation from compensation and promotion discussions, inevitably impact compensation and promotion decisions. Since supervisors and subordinates work together to evaluate and improve performance throughout the year, the end-of-year review is just that—a review.
Performance Management Essentials
Words to the wise: if you must err toward either an administrative or developmental approach, err on the side of development. But only do so if your company is prepared to do it right. Any effective Performance Management initiative includes:
A developmental perspective – recognize that performance management is an ongoing, cyclical process with planning, feedback, coaching and reviews throughout the year.
Planning session – engage in collaborative planning (between supervisor and subordinate) to mutually agree upon position responsibilities, goals, and measures.
Regular performance reviews – meet together every one to two months to track progress against the goals, and discuss any professional development issues.
Ongoing coaching for improvement – work together to identify areas for improvement and provide (supervisor) additional coaching and resources.
Annual performance review – engage in a more formal two-way, collaborative, future-focused discussion designed to review or re-examine feedback given to the employee throughout the year, as well as plan for the upcoming year.
Adequate performance documentation – sacrifice brevity rather than quality when it comes to performance documentation and expect clarifying comments from reviewers.
Furthermore, it is important to recognize that for Performance Management to be effective, a company must provide training in such critical skills as performance planning, constructive feedback, and coaching. For example, participants must know how to write good work objectives—those that clearly communicate expected performance (remember SMART? Specific, Measurable, Achievable, Relevant and Time-based). Without skillful performance objectives, you may succeed in creating a more communicative workplace—not a bad result in and of itself—but fall short of overall performance improvement. Similarly, employees must be able to give and receive constructive feedback. After all, it does little good—and more than a little damage—to initiate regular feedback that results in a series of disappointing experiences because the people involved don’t know how to communicate effectively. This can be counterproductive, leading to conflict and destructive working relationships. To initiate a developmental approach without investing in the necessary training is to initiate disaster.
In summary, to move from Conformance Management to Performance Management, you must not only create a culture that really values performance, but also invest in a structure that truly supports it. The only structure that supports performance is one that provides both the resources and processes to continually improve performance over time. Otherwise, all you really have is conformance masquerading as performance—pretense without substance—all act, no action.
June 2003
by Karen Sella of FutureSense, Inc.
con•form•ance \kon-‘for-man(t)s \ n 1 : correspondence in form, manner, or character : AGREEMENT 2 : an act or instance of conforming 3 : action in accordance with some specified standard or authority : OBEDIENCE <~ to social custom>
per•form•ance \pe(r)-‘for-man(t)s\ n 1 a : the execution of an action b: something accomplished: DEED, FEAT 2 : the fulfillment of a claim, promise, or request: IMPLEMENTATION 3 a : the action of representing a character in a play b : a public presentation or exhibition 4 : the ability to perform : EFFICIENCY.
Webster’s Ninth New Collegiate Dictionary,Merriam-Webster, 1985
What is performance management? What approach makes the most sense for your company? When it comes to successfully managing performance, there are several questions to consider. However, the most critical question to ask is what kind of performance is worth managing?
Do you want meaningful action or merely an act? Think about it. Performance, depending on one’s definition, is both an action and an act, both substance and pretense. Too often, when it comes to managing performance, companies manage only the act without any meaningful action, conducting annual pro-forma appraisals that cover everyone’s you-know-whats without ever realizing anyone’s potential. Performance Management without meaningful action is nothing more than “Conformance Management.”
Conformance Management: Act I, Scene 1
Supervisor's Office
Short on time and short on trust, the two main characters, Supervisor and Subordinate meet to review the Subordinate’s annual performance appraisal. Both ill conceived and overdue, this once a year meeting takes place during some inconvenient and inadequate time between other meetings. It has probably been re-scheduled at least once due to feigned illness, overbooking, procrastination, or any other “legitimate” excuse. However, last year, Human Resources implemented a policy that precludes the provision of annual bonuses prior to the completion of annual performance appraisals; and there’s only one week left.
During the meeting, Supervisor and Subordinate sit at the Supervisor’s desk across from one another. The chair behind the desk is slightly higher than the chair in front of the desk. The Supervisor begins the meeting with his/her appraisal of the Subordinate’s performance, and notifies the Subordinate about any resulting compensation or advancement decisions, making sure to leave at least ten minutes for the Subordinate to respond. The Subordinate listens, nods encouragingly, and responds as requested with appropriately accommodating remarks. This exchange takes place amidst ringing phones, beeping pagers, and other, most unfortunate (although sometimes welcome) distractions that make it next to impossible for either to concentrate on the task at hand. However, both perform admirably, managing to act as if this is a meaningful exchange that will lead to meaningful action while simultaneously fulfilling their meaningless obligation.
The characters: The Supervisor and The Subordinate.
The Supervisor: Generally overextended and exasperated with the amount of requisite paperwork generated by the performance appraisal process, the Supervisor is a reluctant participant in the process. (S)he views performance appraisals as a compulsory interruption from more significant work. In this scene, the Supervisor’s primary goal is to get the Subordinate to conform to company expectations with as little discomfort as possible. (S)he:
• Shows an interest in the Subordinate’s development without revealing that there are at least a dozen, higher priorities to accomplish by the end of the day—not to mention, the five other appraisals to be completed by week end.
• Delivers his or her evaluation of the Subordinate’s performance, informing the Subordinate about strengths and “opportunities for improvement” (a.k.a. politically correct term for “weaknesses”; it seems that these characters are of such weak character that they lack the integrity to simply speak the truth, thus conforming to what is deemed to be more appropriate, less threatening language developed by well-intending egalitarians).
• Notifies the Subordinate about any advancement and compensation decisions, making sure to justify these with appropriate information and documentation.
• Ensures that the Subordinate understands and conforms to cultural and positional performance expectations — particularly those that reflect on the Supervisor’s performance within the company.
The Subordinate: Usually overworked and undervalued, although frequently well paid, the Subordinate is equally unenthused by the annual performance appraisal process. (S)he thinks that performance appraisals are just the company’s attempt to hold employees accountable for unreasonable and unclear expectations that bear little resemblance to the actual job anyway. The Subordinate’s main goal is to preserve his or her employment while optimizing opportunities with as little discomfort as possible. (S)he:
• Presents information, as requested by the Supervisor.
• Appears interested and open while avoiding or minimizing as much as possible any mention of weakness (ahem, opportunity for improvement).
• Demonstrates initiative while carefully following the Supervisor’s lead.
• Creates performance objectives that won’t interfere with any real work that needs to get done (ideally, these please the Supervisor, look good on paper, imply great effort, but are easily achieved, so the next appraisal clearly demonstrates outstanding performance).
Granted, I exaggerate—just slightly. But even caricatures resemble reality. What leads otherwise honest and caring individuals to engage in such an unproductive and apathetic exchange? Ignorance? Exhaustion? Distrust? Symptoms. Often, the underlying reason is a purely administrative approach to performance that amounts to little more than compulsory conformance.
Despite the rhetoric about valuing employees—the “greatest company asset”—when it comes to allocating resources, companies frequently fail to make any investment in performance beyond competitive compensation, mandatory training (sexual discrimination, for example), and the annual performance appraisal. This approach may lead to material wealth, but does little to encourage actions that support more meaningful success.
How do you manage performance instead of conformance? Create a culture that values performance and a structure that actually supports it: adopt a developmental approach.
Administrative versus Developmental Approaches
Let’s start with the basics. There are two fundamental aspects that govern companies’ approaches to performance: administrative and developmental. The administrative, conformance-focused aspect includes all those event-based, transactional tasks associated with assigning employee compensation and advancement, such as bonuses or promotions. The developmental, performance-focused aspect refers to a cyclical, results-oriented process—continuous efforts designed to motivate and develop employees—including performance planning, formal and informal feedback, and coaching. As any good manager can attest, it is challenging to achieve an effective balance between the administrative and developmental aspects of managing performance. Most companies lean toward one aspect or the other.
An Administrative Approach: Appraise & Awards
Those companies that rely on a more administrative or appraise & awards approach primarily assess performance—usually on an annual basis—to determine salary increases, bonuses, promotions, layoffs, demotions, transfers, etc. In this approach, the main function of the performance appraisal is to decide individual compensation and advancement awards. Professional growth and planning are secondary to this primary aim. Payoffs and promotions are assumed to be the primary motivators for employee success.
A purely administrative approach is burdensome on supervisors and subordinates alike because each is aware that comments related to performance appraisals will directly impact the financial and career success of those being evaluated. Since compensation and advancement are often addressed during the appraisal session, supervisors are more likely to provide “safe” feedback or rely on carefully constructed remarks designed to explain compensation and advancement decisions. Genuine disclosure that could encourage greater professional development is sadly neglected in favor of “nice” conversation or “sound” explanation. When forced to play the conflicting roles of judge (administrative conformance) and coach (developmental performance)—supervisors frequently find themselves caught in the bureaucratic middle—going through the motions, completing the paperwork, and justifying the numbers rather than initiating any more meaningful action. However, the administrative value of employees—the total compensation awards—cannot compensate for not valuing employees enough to invest in their development.
Likewise, in a conformance environment, subordinates also play it safe, recognizing that their financial and job security is dependent on positive performance appraisals. They work hard to conform, performing the role of a “top performer,” whatever that may be (team-players with positive attitudes who anticipate problems and offer solutions, arrive early, stay late, and get along with their superiors are popular descriptions). It is hardly surprising. What incentive is there to explore “opportunities for improvement” in perhaps the only conversation devoted to performance during the entire year?
Most are prepared to highlight achievements and defend any shortcomings, if they are even asked to speak. Unfortunately, it is common for subordinates to leave their performance reviews having barely said a word, victims or co-conspirators in Conformance Management. When anything they say “could, though won’t necessarily, be used against them,” is it any wonder that they opt to preserve and defend? If the choice is between possible self-incrimination and self-discovery, they elect to do both in private.
A Developmental Approach: Review & Results
In contrast, more forward-thinking companies are adopting a developmental philosophy for performance where employees are encouraged and expected to guide their careers with the support of management (not to be mistaken with another current trend—expecting employees to guide their careers with little or no support from management). Given competitive compensation, intrinsic rewards—such as recognition of individual performance contributions and professional development opportunities—are assumed to be the primary motivators for employee success.
These companies that subscribe to a more developmental or review & results approach regularly review performance—usually every one to two months—with an emphasis on improving individual abilities for better performance results. Subordinate views are actively sought and respected, so both parties’ perspectives guide the review process. A formal annual review is conducted to discuss the individual’s ongoing professional development within, and contributions to, the company, as well as to plan for the following year. Professional development and performance planning are the primary purpose of the review. Issues of compensation and advancement are discussed separate from the performance review, which albeit a somewhat contrived solution, seems to help people focus on the issues at hand.
Because supervisors and subordinates communicate about performance in regular review sessions, and compensation and advancement issues are discussed separately, they are more likely to speak candidly about performance. Supervisors are likely to provide more balanced and timely feedback in environments that support such efforts. Likewise, subordinates are less inclined to be defensive when participating in ongoing, constructive conversations about their performance.
Consistent communication also allows employees to be more proactive in taking any needed corrective actions. Thus, they can feel more confident about their formal annual reviews—which despite the separation from compensation and promotion discussions, inevitably impact compensation and promotion decisions. Since supervisors and subordinates work together to evaluate and improve performance throughout the year, the end-of-year review is just that—a review.
Performance Management Essentials
Words to the wise: if you must err toward either an administrative or developmental approach, err on the side of development. But only do so if your company is prepared to do it right. Any effective Performance Management initiative includes:
A developmental perspective – recognize that performance management is an ongoing, cyclical process with planning, feedback, coaching and reviews throughout the year.
Planning session – engage in collaborative planning (between supervisor and subordinate) to mutually agree upon position responsibilities, goals, and measures.
Regular performance reviews – meet together every one to two months to track progress against the goals, and discuss any professional development issues.
Ongoing coaching for improvement – work together to identify areas for improvement and provide (supervisor) additional coaching and resources.
Annual performance review – engage in a more formal two-way, collaborative, future-focused discussion designed to review or re-examine feedback given to the employee throughout the year, as well as plan for the upcoming year.
Adequate performance documentation – sacrifice brevity rather than quality when it comes to performance documentation and expect clarifying comments from reviewers.
Furthermore, it is important to recognize that for Performance Management to be effective, a company must provide training in such critical skills as performance planning, constructive feedback, and coaching. For example, participants must know how to write good work objectives—those that clearly communicate expected performance (remember SMART? Specific, Measurable, Achievable, Relevant and Time-based). Without skillful performance objectives, you may succeed in creating a more communicative workplace—not a bad result in and of itself—but fall short of overall performance improvement. Similarly, employees must be able to give and receive constructive feedback. After all, it does little good—and more than a little damage—to initiate regular feedback that results in a series of disappointing experiences because the people involved don’t know how to communicate effectively. This can be counterproductive, leading to conflict and destructive working relationships. To initiate a developmental approach without investing in the necessary training is to initiate disaster.
In summary, to move from Conformance Management to Performance Management, you must not only create a culture that really values performance, but also invest in a structure that truly supports it. The only structure that supports performance is one that provides both the resources and processes to continually improve performance over time. Otherwise, all you really have is conformance masquerading as performance—pretense without substance—all act, no action.
The Future of HR
"We will empower HR, or destroy it in the process. The time has come for HR to stand on its own two feet or face being put out of business."
To be or to be obsolete…the future of HR?
January 2004
by Rob Mason of FutureSense, Inc.
With the dawn of any new year, reappraisals of the past and forecasts for the future become something of a cottage industry for us business pundits. We like to think big, and the beginning of a new year always seems ripe for bold proclamations and new mandates. At the risk of falling prey to this institutional norm, I am going discuss the current state of affairs in the human resource business.
WARNING: my message is not new. In fact, it is the same message FutureSense has put forth from its beginning: we will empower HR, or destroy it in the process.
While this FutureSense-ism may be bold, we know that we are not alone in our sentiments. Leaders of the field, such as Dave Ulrich and Jac Fitz-enz, have written extensively for years on the need for HR to think more strategically; to stand shoulder to shoulder with senior management and provide organizational expertise in order to maximize intellectual capital. Yet, in many firms throughout many industries, the status quo remains. Efficiency and cost reduction continue to be the primary measure of HR performance, which “ultimately results in HR being managed like a commodity – rather than a strategic asset.”1 Enlightened executive teams have come to recognize HR’s potential, but few have actually realized that potential.
Given this reality, this article will explore HR Metrics and the “Return on Investment” (ROI) of Human Capital as a means to empower the field. The time has come for HR to stand on its own two feet or face being obsolete.
HR Metrics
Having used metrics since the 1970s, most HR professionals have gotten a handle on the basics such as vacancy and turnover rates. These quantitative measures provide a benchmark so HR knows where it stands in terms of its own historical record as well as how it compares externally to its peers.
These common functional metrics do have their place in the arsenal of HR tools. For example, if management claims HR is taking too long to recruit key positions, HR’s defense will be severely limited without a “time to fill” metric demonstrating that its record is above the mean. Better data fosters increased credibility within any organization since “metrics are a tangible way of demonstrating the value of HR to non-HR people.” 2
However, efficiency metrics and benchmarking are not enough to truly demonstrate HR’s value. Ultimately, the future of HR will depend on its ability to become accountable for delivering results that are integrated with the overall business strategy. The key word is integrated for if HR is to survive as an integral part of business, the industry must develop strategies and design systems – directly linked to the strategic direction of the business – that allow the organization to realize the value of its people.3
People are an organization’s greatest asset, providing the intellectual capital that drives differentiation and value-added services. Put more simply, an organization’s success largely depends on human application to transform inert buildings and equipment into value.4 Given the nature of HR as the “people department,” the field is in a position to rise above its current administrative existence and make better use of its resources. While the operational basics (i.e. benefits administration, entry level hiring, basic skills training, etc.) are a necessity not to be overlooked, HR ought to focus on creating winning strategies so that “intellectual capital grows, stays and is accessible.”5 These factors should be the measures of success, and the ROI of human capital is the means to that end.
Return on Investment of Human Capital
The ROI of human capital is a developing science with the goal of measuring and evaluating an organization’s entire portfolio of human capital investment. In terms of HR, ROI can be defined as “any economic returns, monetary and non-monetary, that are accrued through investing.”6 Human Capital ROI can be measured in two ways:
1. Quantitative Data: Accession rates, turnover rates, employees per HR staff, etc.
2. Qualitative Data: Customer satisfaction surveys, 360-degree review, focus groups, etc.
A quantitative approach tells us what happened, while a qualitative assessment explains why something happened. Together these two types of data offer insights into the drivers or causes of a particular outcome. Yet, it is important to bear in mind that success in this kind of analysis greatly depends on a balanced approach and grounding in commonsense. Focusing on hard data alone often can get HR into more trouble than if metrics were avoided all together. For example, reducing turnover is not intrinsically good or bad since an HR specialist can reduce the metric by hiring people that never leave – failing to take into account if the new hires actually add value to the organization. Numbers do not always tell the whole story, and all should be wary of “measures myopia.”7 Moreover, it is not always possible to pinpoint causation. High voluntary turnover and low morale are likely to be directly related, but their relationship can also be coincidental.8 Greater in-depth analysis should always follow the discovery of parallel movement among various metrics.
Below is a sample scorecard, or matrix, that integrates various ROI metrics in order to gain a comprehensive view of an organization’s ability to utilize its human capital. This scorecard focuses on recent or current events; so future planning is not included – albeit, once finished, the scorecard should serve as a guide for planning. The scorecard comprises of four quadrants of the human capital supply chain within an organization.
Human Capital Scorecard Example
Acquire
Time to Hire
Accession Rate
New Hires per Recruiting FTE
# of “Call Me” Resumes on File
Maintain
Avg. Pay per FTE
Avg. Benefits per FTE
Total Injuries per 1,000 Employees
Performance Reviews Tied to Salary Increases
Develop
Training as % of Operating Cost
Leadership/Professional Development Initiatives
Skills Attained and Used within 6 months
360-degree reviews
Retain
Turnover Rate
Avg. Retention of New Hires
Avg. Length of Service for Those Terminated
Succession of New Hires
Acquire: Why are people applying to your organization? What do applicants experience in the job selection process? Why do they walk away from your offers? Organizations often fail to ask themselves these fundamental questions as they focus on putting warm bodies in their seats. The hiring process has two components: attraction and acquisition. Attraction focuses on the more intangible and human aspects. Attraction has everything to do with an organization’s culture, and the pipeline of talent waiting to be tapped. Does your organization have “call me” resumes on file of people just waiting for a position to become available? Or, would one of your employees refer a friend to an open position? These are two quantifiable metrics that reflect your ability to attract new talent.
After an organization has attracted an applicant pool, the next step in the hiring process is to acquire the best candidates. Overall, the focus in this area should be factors such as cost, time, quantity and quality. Once you have developed a pipeline of talent, you need to efficiently select and process those who will truly add value to the organization. While the interviews and paperwork take time to carry out, the acquisition process should not months to complete.
Maintain: This quadrant focuses on a broad range of activities focused primarily on paying salaries and providing benefits, while also rewarding the most deserving. Any asset needs to be maintained in order to retain its value, and human capital is no different. There are numerous administrative and tactical tasks associated with maintaining your human capital; some metrics include “pay in terms of average pay of employees, distribution across levels, cost as a percentage of operating expense, or other macro measures.”10 As for rewarding employees, consider creating a direct relationship with performance reviews and salary increases. The key here is to avoid “gaming” by managers, who are attempting to be “fair” to all of their staff. If you truly want to reward the stars, the processes need to be separated with reviews occurring prior to any budget announcement. Once reviews are taken seriously within the organization, then they can be used to manage employee development initiatives.
Develop: Development is perhaps the most difficult to gauge in the human supply chain, yet far too important to ignore. The challenge with comprehensive training and development is in converting all initiatives, from executive coaching to formal training seminars, into measurable performance results. While a seminar may be easy to track in terms of costs and results, coaching is often intangible unless translated into clear performance objectives. Moreover, the distinction between training and rewards can often fade when “training trips” act as thinly veiled rewards for performance. Regardless, personal development and learning initiatives are crucial in realizing the full potential of people and translating talent into value. Some metrics include the skills attained and used within a set time period, as well as the cost of development initiatives as a percentage of the total operating costs.
Retain: Keeping talent within an organization will always be an important activity. After an organization has spent a considerable amount of time and resources attracting, acquiring, rewarding and developing a workforce, the cost of losing people is high. Yet, at the same time, retention is not about merely keeping positions filled. Rather, the focus should be cultivating and challenging those who truly make a difference in the workplace. For example, voluntary turnover often correlates with the maintenance and development quadrants, while involuntary turnover is typically an outcome of poor hiring practices. Through a combination of quantitative and qualitative approaches, HR may be able to minimize or maximize these factors in order to build a human capital supply chain that outperforms the field.
…Or Destroyed in the Process
If HR cannot – or will not – step to the plate and become a strategic partner with finance, marketing, etc., then perhaps an entirely new organizational framework is eminent. Consider this hypothetical: I am a CEO who realizes that people are the greatest asset to my company. HR, as a department, is not getting the job done managing the human supply chain so that human capital grows, stays and is accessible. Instead of tinkering with the old system, I decide to create an entirely new strategically-oriented position, Chief People Officer (CPO), and divide the remaining managerial HR duties among other departments.
Compensation and benefits would be handled by accounting and finance. The legal department could takeover workers’ compensation and risk management. And each department could handle its own acquisition and recruiting under the leadership of the new CPO. Then the CPO, with a broad mandate, would be able to focus on the bigger human capital issues such as succession planning, leadership initiatives and other organizational design issues.
In fact, the winds of change may already be here. Recent data shows HR outsourcing to be an increasingly growing industry. At the end of 2000, the HR outsourcing industry had revenues of $21.7 billion, accounting for more than 8% of total HR spending.11 These numbers have only increased in the last three years.
At present, BP and Exult maintain the largest HR outsourcing relationship – a $600 million, 7-year contract starting in 2000 – in which Exult assumed all administrative duties related to compensation, benefits, pay roll, organizational development, performance management, employee development, training, recruitment and relocation. That left BP responsible for HR policy and strategy. While BP’s financials remain undisclosed, Exult claims to save its clients between 10% and 20% per year.12
Time will tell as to whether large-scale outsourcing is effective in the long run, but HR professionals better take note. If the status quo remains, HR departments may wake up one day to find that they are obsolete.
Footnotes
1 Becker, Brian and Mark Huselid. “Measuring HR?” HR Magazine, (December 2003), p. 58.
2 Grossman, Robert J. “Measuring Up: HR Prove Its Worth,” HR Magazine, (January 2000), p. 31.
3 Wintermantel, Richard E. and Karen L. Mattimore. “In the Changing World of Human Resources: Matching Measures to Mission,” Human Resource Management, vol. 36, no. 3, (Fall 1997), p. 340.
4 Fitz-enz, Jac. The ROI of Human Capital: Measuring the Economic Value of Employee Performance. New York: AMACOM, 2000, p. 26.
Wintermantel, 338-9.
5 Wang, Greg C., Zhengxia Dou and Ning Li. “A Systems Approach to Measuring Return on Investment for HRD Interventions,” Human Resource Development Quarterly, vol. 13, no. 2, (Summer 2002), pp. 212-14.
6 Grossman, 32.
7 Fitz-enz, 47.
8 Based on Fitz-enz, 109.
9 Fitz-enz, 112.
10 Adler, Paul S. “Making the HR Outsourcing Decision,” MIT Sloan Management Review, vol. 45, no. 1, (Fall 2003), pp. 53-61.
Ibid.
January 2004
by Rob Mason of FutureSense, Inc.
With the dawn of any new year, reappraisals of the past and forecasts for the future become something of a cottage industry for us business pundits. We like to think big, and the beginning of a new year always seems ripe for bold proclamations and new mandates. At the risk of falling prey to this institutional norm, I am going discuss the current state of affairs in the human resource business.
WARNING: my message is not new. In fact, it is the same message FutureSense has put forth from its beginning: we will empower HR, or destroy it in the process.
While this FutureSense-ism may be bold, we know that we are not alone in our sentiments. Leaders of the field, such as Dave Ulrich and Jac Fitz-enz, have written extensively for years on the need for HR to think more strategically; to stand shoulder to shoulder with senior management and provide organizational expertise in order to maximize intellectual capital. Yet, in many firms throughout many industries, the status quo remains. Efficiency and cost reduction continue to be the primary measure of HR performance, which “ultimately results in HR being managed like a commodity – rather than a strategic asset.”1 Enlightened executive teams have come to recognize HR’s potential, but few have actually realized that potential.
Given this reality, this article will explore HR Metrics and the “Return on Investment” (ROI) of Human Capital as a means to empower the field. The time has come for HR to stand on its own two feet or face being obsolete.
HR Metrics
Having used metrics since the 1970s, most HR professionals have gotten a handle on the basics such as vacancy and turnover rates. These quantitative measures provide a benchmark so HR knows where it stands in terms of its own historical record as well as how it compares externally to its peers.
These common functional metrics do have their place in the arsenal of HR tools. For example, if management claims HR is taking too long to recruit key positions, HR’s defense will be severely limited without a “time to fill” metric demonstrating that its record is above the mean. Better data fosters increased credibility within any organization since “metrics are a tangible way of demonstrating the value of HR to non-HR people.” 2
However, efficiency metrics and benchmarking are not enough to truly demonstrate HR’s value. Ultimately, the future of HR will depend on its ability to become accountable for delivering results that are integrated with the overall business strategy. The key word is integrated for if HR is to survive as an integral part of business, the industry must develop strategies and design systems – directly linked to the strategic direction of the business – that allow the organization to realize the value of its people.3
People are an organization’s greatest asset, providing the intellectual capital that drives differentiation and value-added services. Put more simply, an organization’s success largely depends on human application to transform inert buildings and equipment into value.4 Given the nature of HR as the “people department,” the field is in a position to rise above its current administrative existence and make better use of its resources. While the operational basics (i.e. benefits administration, entry level hiring, basic skills training, etc.) are a necessity not to be overlooked, HR ought to focus on creating winning strategies so that “intellectual capital grows, stays and is accessible.”5 These factors should be the measures of success, and the ROI of human capital is the means to that end.
Return on Investment of Human Capital
The ROI of human capital is a developing science with the goal of measuring and evaluating an organization’s entire portfolio of human capital investment. In terms of HR, ROI can be defined as “any economic returns, monetary and non-monetary, that are accrued through investing.”6 Human Capital ROI can be measured in two ways:
1. Quantitative Data: Accession rates, turnover rates, employees per HR staff, etc.
2. Qualitative Data: Customer satisfaction surveys, 360-degree review, focus groups, etc.
A quantitative approach tells us what happened, while a qualitative assessment explains why something happened. Together these two types of data offer insights into the drivers or causes of a particular outcome. Yet, it is important to bear in mind that success in this kind of analysis greatly depends on a balanced approach and grounding in commonsense. Focusing on hard data alone often can get HR into more trouble than if metrics were avoided all together. For example, reducing turnover is not intrinsically good or bad since an HR specialist can reduce the metric by hiring people that never leave – failing to take into account if the new hires actually add value to the organization. Numbers do not always tell the whole story, and all should be wary of “measures myopia.”7 Moreover, it is not always possible to pinpoint causation. High voluntary turnover and low morale are likely to be directly related, but their relationship can also be coincidental.8 Greater in-depth analysis should always follow the discovery of parallel movement among various metrics.
Below is a sample scorecard, or matrix, that integrates various ROI metrics in order to gain a comprehensive view of an organization’s ability to utilize its human capital. This scorecard focuses on recent or current events; so future planning is not included – albeit, once finished, the scorecard should serve as a guide for planning. The scorecard comprises of four quadrants of the human capital supply chain within an organization.
Human Capital Scorecard Example
Acquire
Time to Hire
Accession Rate
New Hires per Recruiting FTE
# of “Call Me” Resumes on File
Maintain
Avg. Pay per FTE
Avg. Benefits per FTE
Total Injuries per 1,000 Employees
Performance Reviews Tied to Salary Increases
Develop
Training as % of Operating Cost
Leadership/Professional Development Initiatives
Skills Attained and Used within 6 months
360-degree reviews
Retain
Turnover Rate
Avg. Retention of New Hires
Avg. Length of Service for Those Terminated
Succession of New Hires
Acquire: Why are people applying to your organization? What do applicants experience in the job selection process? Why do they walk away from your offers? Organizations often fail to ask themselves these fundamental questions as they focus on putting warm bodies in their seats. The hiring process has two components: attraction and acquisition. Attraction focuses on the more intangible and human aspects. Attraction has everything to do with an organization’s culture, and the pipeline of talent waiting to be tapped. Does your organization have “call me” resumes on file of people just waiting for a position to become available? Or, would one of your employees refer a friend to an open position? These are two quantifiable metrics that reflect your ability to attract new talent.
After an organization has attracted an applicant pool, the next step in the hiring process is to acquire the best candidates. Overall, the focus in this area should be factors such as cost, time, quantity and quality. Once you have developed a pipeline of talent, you need to efficiently select and process those who will truly add value to the organization. While the interviews and paperwork take time to carry out, the acquisition process should not months to complete.
Maintain: This quadrant focuses on a broad range of activities focused primarily on paying salaries and providing benefits, while also rewarding the most deserving. Any asset needs to be maintained in order to retain its value, and human capital is no different. There are numerous administrative and tactical tasks associated with maintaining your human capital; some metrics include “pay in terms of average pay of employees, distribution across levels, cost as a percentage of operating expense, or other macro measures.”10 As for rewarding employees, consider creating a direct relationship with performance reviews and salary increases. The key here is to avoid “gaming” by managers, who are attempting to be “fair” to all of their staff. If you truly want to reward the stars, the processes need to be separated with reviews occurring prior to any budget announcement. Once reviews are taken seriously within the organization, then they can be used to manage employee development initiatives.
Develop: Development is perhaps the most difficult to gauge in the human supply chain, yet far too important to ignore. The challenge with comprehensive training and development is in converting all initiatives, from executive coaching to formal training seminars, into measurable performance results. While a seminar may be easy to track in terms of costs and results, coaching is often intangible unless translated into clear performance objectives. Moreover, the distinction between training and rewards can often fade when “training trips” act as thinly veiled rewards for performance. Regardless, personal development and learning initiatives are crucial in realizing the full potential of people and translating talent into value. Some metrics include the skills attained and used within a set time period, as well as the cost of development initiatives as a percentage of the total operating costs.
Retain: Keeping talent within an organization will always be an important activity. After an organization has spent a considerable amount of time and resources attracting, acquiring, rewarding and developing a workforce, the cost of losing people is high. Yet, at the same time, retention is not about merely keeping positions filled. Rather, the focus should be cultivating and challenging those who truly make a difference in the workplace. For example, voluntary turnover often correlates with the maintenance and development quadrants, while involuntary turnover is typically an outcome of poor hiring practices. Through a combination of quantitative and qualitative approaches, HR may be able to minimize or maximize these factors in order to build a human capital supply chain that outperforms the field.
…Or Destroyed in the Process
If HR cannot – or will not – step to the plate and become a strategic partner with finance, marketing, etc., then perhaps an entirely new organizational framework is eminent. Consider this hypothetical: I am a CEO who realizes that people are the greatest asset to my company. HR, as a department, is not getting the job done managing the human supply chain so that human capital grows, stays and is accessible. Instead of tinkering with the old system, I decide to create an entirely new strategically-oriented position, Chief People Officer (CPO), and divide the remaining managerial HR duties among other departments.
Compensation and benefits would be handled by accounting and finance. The legal department could takeover workers’ compensation and risk management. And each department could handle its own acquisition and recruiting under the leadership of the new CPO. Then the CPO, with a broad mandate, would be able to focus on the bigger human capital issues such as succession planning, leadership initiatives and other organizational design issues.
In fact, the winds of change may already be here. Recent data shows HR outsourcing to be an increasingly growing industry. At the end of 2000, the HR outsourcing industry had revenues of $21.7 billion, accounting for more than 8% of total HR spending.11 These numbers have only increased in the last three years.
At present, BP and Exult maintain the largest HR outsourcing relationship – a $600 million, 7-year contract starting in 2000 – in which Exult assumed all administrative duties related to compensation, benefits, pay roll, organizational development, performance management, employee development, training, recruitment and relocation. That left BP responsible for HR policy and strategy. While BP’s financials remain undisclosed, Exult claims to save its clients between 10% and 20% per year.12
Time will tell as to whether large-scale outsourcing is effective in the long run, but HR professionals better take note. If the status quo remains, HR departments may wake up one day to find that they are obsolete.
Footnotes
1 Becker, Brian and Mark Huselid. “Measuring HR?” HR Magazine, (December 2003), p. 58.
2 Grossman, Robert J. “Measuring Up: HR Prove Its Worth,” HR Magazine, (January 2000), p. 31.
3 Wintermantel, Richard E. and Karen L. Mattimore. “In the Changing World of Human Resources: Matching Measures to Mission,” Human Resource Management, vol. 36, no. 3, (Fall 1997), p. 340.
4 Fitz-enz, Jac. The ROI of Human Capital: Measuring the Economic Value of Employee Performance. New York: AMACOM, 2000, p. 26.
Wintermantel, 338-9.
5 Wang, Greg C., Zhengxia Dou and Ning Li. “A Systems Approach to Measuring Return on Investment for HRD Interventions,” Human Resource Development Quarterly, vol. 13, no. 2, (Summer 2002), pp. 212-14.
6 Grossman, 32.
7 Fitz-enz, 47.
8 Based on Fitz-enz, 109.
9 Fitz-enz, 112.
10 Adler, Paul S. “Making the HR Outsourcing Decision,” MIT Sloan Management Review, vol. 45, no. 1, (Fall 2003), pp. 53-61.
Ibid.
People
"The business of valuing, motivating, and rewarding people is more an artistic exercise than a scientific process. It is based on individual performance, yes, but that performance is scored against profit expectations, managerial ambitions, and the unique culture of each organization."
People: The Forgotten Frontier
May 2002
by Karen Sella of FutureSense, Inc.
"All organizations now say routinely that people are our greatest asset. Yet few practice what they preach, let alone truly believe it."
-Peter Drucker
People are still the forgotten frontier of the workplace. As Drucker so aptly noted, organizations routinely say that people are our greatest asset. Yet few practice what they preach, let alone truly believe it. Despite the heightened awareness prompted by the tragedy of September 11th, this still rings true.
The business of valuing, motivating, and rewarding people is more an artistic exercise than a scientific process. It is based on individual performance, yes, but that performance is scored against profit expectations, managerial ambitions, and the unique culture of each organization. Actual performance is often subjugated to the business agenda, and both individual potential and corporate profits suffer in the process.
This paradox between potential and profit is intriguing. The link between HR and the bottom line is still one of the most overlooked roads to profit in American business. Human Asset Management—the managers’ greatest challenge to contribute strategically to the success of the organization by truly understanding and appropriately leveraging the relationship between the human factor and the bottom line—may appear to be old news. However, when it comes to today’s Human Asset Management, managers and entire HR departments are still failing.
Individual performance is not improving bottom line performance in most organizations and the reason is a lack of systemic thinking in business. While managers are moaning about under productive people, and HR departments are going out of business, they’re missing the connections among four key dimensions of people at work: the where, who, how, and why of environment, culture, development, and rewards. All four must be addressed to produce performance and profit results.
Environment
Environment is the "where", the infrastructure, framework, or social architecture that attracts people into organizations. It is the organic core that supports work.
Unfortunately, most work environments are not designed to motivate performance. Environments are created to set up a comfort zone that acts like a magnet to drag people to work, and that is just what they do. They drag people to work with predictable negative effects on productivity and profit.
The result is that people do not fundamentally enjoy what they do. They regard it as a necessary evil.
In fact, not creating attractive working environments has had some nasty consequences, including the fact that voluntary and involuntary turnover rates have increased 50% since 1994. The cost of turnover is 1.5 x salary and benefits for exempt employees, and .75 x salary and benefits for non-exempt employees.—and that does not include lost opportunity costs.
Culture
Culture is very simply defined as "how" people interact at work. How they support their organization and its mission, how they regard each other, how they work together toward common goals, and how they treat their customers. Culture is like oxygen—necessary for the life of the organization and largely invisible until it’s forced into closed systems or mixed with other elements.
Think about culture in terms of mergers and acquisitions. We know that about 70% of all M&A activities fail to deliver the financial goods to the bottom line. We also know that roughly the same percentage of all change management efforts fail to deliver as advertised. In this age of new economics, we commonly see a pattern of growth and expansion followed by merger or acquisition followed by divestiture or shrinkage for economies of scale to deliver on the projected profitability culminating in carefully crafted statements from the public relations department as to why profits are below projections. The explanations given frequently fail to acknowledge a fundamental lack of cultural differences that contributed to the downfall.
Because organizations don’t factor in culture ex ante—before the fact, the different organizational cultures mixed together often react with volatility. Without a thorough understanding of the cultural groups preceding the merger or acquisition, organizations become cultural reactors destined for failure. In short, despite remarkable lip service to the contrary, organizations forget about the people.
The consequence of this kind of dissembling, of not dealing with cultural issues of respect, trust and loyalty, is that it doesn’t take long for employees to adopt a "me, first" mentality. Why go the extra distance to serve a customer with a problem? Why be innovative? Why be loyal and stick around? Why be productive?
Merger or not, disillusionment with the direction their company is going also plays a big role in retention and turnover. This is especially true in high tech companies, where visionaries and strategists have to be at the top of their game to keep up with the blistering pace of the industry. If people perceive that vision or strategy to be flawed, or performance of the company is down based on competitive market growth or lack of acceptance in the marketplace, people start looking for their next possible "big win" opportunity. Strong leadership can hold things together for a while, but most talented people are smart, and recognize when it’s time to move on … before they fall into the yawning gap between promise and performance.
Development
The third workplace dimension is development – the "what" of the workplace. Corporations today are spending some $60 billion annually on training and development. Our contention is that 80% of that is wasted because, from the developmental point of view, most organizations provide entertainment, not education.
One-day courses, one-week courses, just don’t work, because education without repetition is pure entertainment. Thirty days after the event, the material is out of sight and out of mind … particularly around issues of leadership, managerial training, coaching, and all of the "people" areas.
Development in core competencies sticks a little longer, because people have a chance to actually use the knowledge. In its essence, development is hope. It is belief in individual potential. It is a map and tools to create the future, individually and collectively. It requires spending time figuring out what makes people work … their motivational profiles … how to make them assets to be invested in, not resources to be depleted.
Because development is all about improving business performance through people, a true development organization will repeat, and continue to repeat, developmental information over and over again. And, by providing information, learning, and training with appropriate measurement against goals, organizations can assess the return on their "assets"—their investment in people—and drop it to the bottom line.
Motivation
The fourth and final workplace dimension is the "why" of motivation. Motivation is particularly interesting to look at right now because we’re seeing a complete bifurcation of the 20-something Generation X’ers from the 40-something Lifers. That bifurcation tells us that we can’t continue to use the traditional model of compensation plans, performance reviews, and merit increases. That model doesn’t work anymore because the motivational profiles of people are getting more individualized, and for the first time since boys left the farms for the factories, we are seeing a complete separation of interests and motivations between successive generations.
The 40-something generation looked at their exhausted – and largely absent – Eisenhower era fathers and thought, "Not me! No way! I’m going to have it all!" But having it all meant working 60-70 hour weeks juggling career, marriage, mortgage, middle age, and the looming specter of retirement with no savings. The 40-somethings are sitting in our cubicles, shoulders slumped, feeling like the Energizer Bunny™…still going and going…and having to go on for another 20 years.
Then the Generation X’ers come along and start looking for something interesting to do, and some motivation to do it with. They see the 40-somethings, and think, "No way! Never! I don’t want that type of a career path!" Generation X’ers have a different work style. Nine to five? Probably not. It’s more like, "I’ll work when I need to work. If I need to get up at 2:00 in the morning, and work 30 hours straight, I’ll do it." And they can do it, because this generation is technologically empowered. They are creative. And they know that the best way to see the future is to invent it themselves.
Their motivational profiles are unique, yet most organizations are rewarding them with the same old worn-out methods. Our compensation planners continue to develop merit increase guide charts, which say, "We’ll rate your performance on a scale of one to five … and then we’ll figure out the position that you’ll have within your salary range, and then we’ll make sure that you’re progressing at a specific rate depending upon your performance." The essence of this approach is differentiating amongst shades of gray. We say we pay for performance—and the difference between a good and a great performer may be, after taxes, a six-pack of their favorite beverage!
Summary
To work, the workplace has to optimize and synthesize environment, culture, development, and motivation. If organizations want to create the right workplace for people, they have to create the right mixture of the four dimensions. If they exclude any one of the four, they will not succeed with their people, not in today’s world, and most assuredly not in tomorrow’s.
People are the forgotten frontier in American business. They have been for the last 100 years, and they will be for the next 100 years unless organizations develop the workplace for the people who inhabit it. People want to work in a culture where they are self-empowered and participative—where they are valued as assets in an environment that supports their work and their potential. Ultimately, to deliver on the promise of "people as our greatest asset", organizations need to deliver on the knowledge that people want to do work that is authentic and meaningful. Organizations need to create work environments that connect people to the company—its strategy, mission, vision, and values—so that they feel motivated to do their best work.
May 2002
by Karen Sella of FutureSense, Inc.
"All organizations now say routinely that people are our greatest asset. Yet few practice what they preach, let alone truly believe it."
-Peter Drucker
People are still the forgotten frontier of the workplace. As Drucker so aptly noted, organizations routinely say that people are our greatest asset. Yet few practice what they preach, let alone truly believe it. Despite the heightened awareness prompted by the tragedy of September 11th, this still rings true.
The business of valuing, motivating, and rewarding people is more an artistic exercise than a scientific process. It is based on individual performance, yes, but that performance is scored against profit expectations, managerial ambitions, and the unique culture of each organization. Actual performance is often subjugated to the business agenda, and both individual potential and corporate profits suffer in the process.
This paradox between potential and profit is intriguing. The link between HR and the bottom line is still one of the most overlooked roads to profit in American business. Human Asset Management—the managers’ greatest challenge to contribute strategically to the success of the organization by truly understanding and appropriately leveraging the relationship between the human factor and the bottom line—may appear to be old news. However, when it comes to today’s Human Asset Management, managers and entire HR departments are still failing.
Individual performance is not improving bottom line performance in most organizations and the reason is a lack of systemic thinking in business. While managers are moaning about under productive people, and HR departments are going out of business, they’re missing the connections among four key dimensions of people at work: the where, who, how, and why of environment, culture, development, and rewards. All four must be addressed to produce performance and profit results.
Environment
Environment is the "where", the infrastructure, framework, or social architecture that attracts people into organizations. It is the organic core that supports work.
Unfortunately, most work environments are not designed to motivate performance. Environments are created to set up a comfort zone that acts like a magnet to drag people to work, and that is just what they do. They drag people to work with predictable negative effects on productivity and profit.
The result is that people do not fundamentally enjoy what they do. They regard it as a necessary evil.
In fact, not creating attractive working environments has had some nasty consequences, including the fact that voluntary and involuntary turnover rates have increased 50% since 1994. The cost of turnover is 1.5 x salary and benefits for exempt employees, and .75 x salary and benefits for non-exempt employees.—and that does not include lost opportunity costs.
Culture
Culture is very simply defined as "how" people interact at work. How they support their organization and its mission, how they regard each other, how they work together toward common goals, and how they treat their customers. Culture is like oxygen—necessary for the life of the organization and largely invisible until it’s forced into closed systems or mixed with other elements.
Think about culture in terms of mergers and acquisitions. We know that about 70% of all M&A activities fail to deliver the financial goods to the bottom line. We also know that roughly the same percentage of all change management efforts fail to deliver as advertised. In this age of new economics, we commonly see a pattern of growth and expansion followed by merger or acquisition followed by divestiture or shrinkage for economies of scale to deliver on the projected profitability culminating in carefully crafted statements from the public relations department as to why profits are below projections. The explanations given frequently fail to acknowledge a fundamental lack of cultural differences that contributed to the downfall.
Because organizations don’t factor in culture ex ante—before the fact, the different organizational cultures mixed together often react with volatility. Without a thorough understanding of the cultural groups preceding the merger or acquisition, organizations become cultural reactors destined for failure. In short, despite remarkable lip service to the contrary, organizations forget about the people.
The consequence of this kind of dissembling, of not dealing with cultural issues of respect, trust and loyalty, is that it doesn’t take long for employees to adopt a "me, first" mentality. Why go the extra distance to serve a customer with a problem? Why be innovative? Why be loyal and stick around? Why be productive?
Merger or not, disillusionment with the direction their company is going also plays a big role in retention and turnover. This is especially true in high tech companies, where visionaries and strategists have to be at the top of their game to keep up with the blistering pace of the industry. If people perceive that vision or strategy to be flawed, or performance of the company is down based on competitive market growth or lack of acceptance in the marketplace, people start looking for their next possible "big win" opportunity. Strong leadership can hold things together for a while, but most talented people are smart, and recognize when it’s time to move on … before they fall into the yawning gap between promise and performance.
Development
The third workplace dimension is development – the "what" of the workplace. Corporations today are spending some $60 billion annually on training and development. Our contention is that 80% of that is wasted because, from the developmental point of view, most organizations provide entertainment, not education.
One-day courses, one-week courses, just don’t work, because education without repetition is pure entertainment. Thirty days after the event, the material is out of sight and out of mind … particularly around issues of leadership, managerial training, coaching, and all of the "people" areas.
Development in core competencies sticks a little longer, because people have a chance to actually use the knowledge. In its essence, development is hope. It is belief in individual potential. It is a map and tools to create the future, individually and collectively. It requires spending time figuring out what makes people work … their motivational profiles … how to make them assets to be invested in, not resources to be depleted.
Because development is all about improving business performance through people, a true development organization will repeat, and continue to repeat, developmental information over and over again. And, by providing information, learning, and training with appropriate measurement against goals, organizations can assess the return on their "assets"—their investment in people—and drop it to the bottom line.
Motivation
The fourth and final workplace dimension is the "why" of motivation. Motivation is particularly interesting to look at right now because we’re seeing a complete bifurcation of the 20-something Generation X’ers from the 40-something Lifers. That bifurcation tells us that we can’t continue to use the traditional model of compensation plans, performance reviews, and merit increases. That model doesn’t work anymore because the motivational profiles of people are getting more individualized, and for the first time since boys left the farms for the factories, we are seeing a complete separation of interests and motivations between successive generations.
The 40-something generation looked at their exhausted – and largely absent – Eisenhower era fathers and thought, "Not me! No way! I’m going to have it all!" But having it all meant working 60-70 hour weeks juggling career, marriage, mortgage, middle age, and the looming specter of retirement with no savings. The 40-somethings are sitting in our cubicles, shoulders slumped, feeling like the Energizer Bunny™…still going and going…and having to go on for another 20 years.
Then the Generation X’ers come along and start looking for something interesting to do, and some motivation to do it with. They see the 40-somethings, and think, "No way! Never! I don’t want that type of a career path!" Generation X’ers have a different work style. Nine to five? Probably not. It’s more like, "I’ll work when I need to work. If I need to get up at 2:00 in the morning, and work 30 hours straight, I’ll do it." And they can do it, because this generation is technologically empowered. They are creative. And they know that the best way to see the future is to invent it themselves.
Their motivational profiles are unique, yet most organizations are rewarding them with the same old worn-out methods. Our compensation planners continue to develop merit increase guide charts, which say, "We’ll rate your performance on a scale of one to five … and then we’ll figure out the position that you’ll have within your salary range, and then we’ll make sure that you’re progressing at a specific rate depending upon your performance." The essence of this approach is differentiating amongst shades of gray. We say we pay for performance—and the difference between a good and a great performer may be, after taxes, a six-pack of their favorite beverage!
Summary
To work, the workplace has to optimize and synthesize environment, culture, development, and motivation. If organizations want to create the right workplace for people, they have to create the right mixture of the four dimensions. If they exclude any one of the four, they will not succeed with their people, not in today’s world, and most assuredly not in tomorrow’s.
People are the forgotten frontier in American business. They have been for the last 100 years, and they will be for the next 100 years unless organizations develop the workplace for the people who inhabit it. People want to work in a culture where they are self-empowered and participative—where they are valued as assets in an environment that supports their work and their potential. Ultimately, to deliver on the promise of "people as our greatest asset", organizations need to deliver on the knowledge that people want to do work that is authentic and meaningful. Organizations need to create work environments that connect people to the company—its strategy, mission, vision, and values—so that they feel motivated to do their best work.
Good Santa ... Bad Santa
"... how much good or harm is done through the messages received, the actions taken and the actual culture enacted?"
Good Santa...Bad Santa
Holiday Cheer without Holiday Hypocrisy
December 2003
An Opinion by Jim Finkelstein of FutureSense, Inc.
It is that mythical time of the year where businesses start trying to spread holiday cheer. Offices are decorated, cookies and candies abound, and people are figuring out which holiday luncheon to attend. Corporate executives walk the halls spreading good wishes, and yes, the holiday attire invades the dress codes.
In many cases, this is a pretty picture replete with one-time bonuses and upbeat messages to kick off the New Year like no other! In other cases, this is another wonderful example of corporate hype as organizations contemplate continued “rightsizing” and try to gloss over the ills of the previous year with insulting bonuses.
It is a question of “Good Santa…Bad Santa” and how much good or harm is done through the messages received, the actions taken and the actual culture enacted. Unfortunately, organizations often enact holiday hypocrisy, placing an undue emphasis on “goodness” during this time of the year despite negative actions taken throughout the rest of the year.
Let us consider the positives and negatives of actions taken during the holiday season:
Good Santa or Bad Santa
1. The Christmas Bonus – Good or Bad.
Many organizations use this as a time to issue a “Christmas” bonus and thank employees for their excellent service, productivity and results during the year. For organizations that have had consistent results, this type of bonus can be effective – particularly if the bonus is meaningful. Our rule – if it is less than 10% of salary, you don’t change focus or behavior – so only expect a thank you (maybe). On the other hand, a bonus given this time of year when layoffs have been rampant and corporate executives’ excesses have been exposed can be treated as a slap in the face and regarded as a lame attempt to regain the trust and confidence of employees. Let’s face it – employees are not stupid. They can pierce the transparent veil as well as customers and shareholders.
2. The Party – Good or Bad.
A gathering of the clan is a good idea…provided that the clan knows how to behave, is grounded in the appropriate values – and the company is responsible with its creation of the party environment. On the other hand, once alcohol is introduced into the scenario, all bets are off and we can envision, “Employees Gone Wild” as the next DVD phenomena. In a culture where the values are conflicted (i.e. the perceived culture and the real culture are like night and day), the risk of parties gone bad is much higher.
3. The Thank You for a Job Well Done – Good or Bad.
One of our clients’ CEO’s used to ritualistically go on the shop floor and shake the hands of each employee (over 1000 in multiple locations) during the holiday period and thank them for their contributions. The fact that this CEO thought enough of the people that worked for the company was well received. And, a check was not part of the thank you! When expressed with sincerity and consistency throughout the year, a thank you can often be the best reward for work well done. On the other hand, when the messages given during the year are demeaning, when employees are inappropriately chastised for their efforts, the thank you is greeted with a “PC” smile and a sneer when the message deliverer has left. In fact, this gratuitous attempt to win the respect of employees can lead to high turnover as soon as the New Year comes.
4. The Next Year “Go Team” Speech – Good or Bad.
Whether the outcome has been good or bad during the year, executives often use the holiday season to rally their troops for the following year. These messages, when properly and truthfully delivered, can be an excellent way to leverage positive results, generate excitement, and boost morale. They can serve to help people recognize the gifts each individual brings to the collective of an organization. On the other hand, these speeches, when they do not speak the truth, often plant the seeds of discontent and can be perceived as yet another part of corporate hype – which is rejected ultimately by employees and perhaps even customers and other stakeholders as well. Again, the smiles in the audience are only masking the under-the-breath comments of “are you kidding?”
Pick the Right Lambs To Follow
As we have suggested in previous thought pieces, there is no single answer to effective morale building, no “best practice” that fits all. Each company is unique in the evolution of its culture, its relationship with its employees and the methodologies that it employs to win the game. But if you are compelled to follow the practices of others and prefer to flock like sheep (or should we say lambs), you better pick the right ones to follow! Think through the ramifications of your actions – are you a Good Santa or a Bad Santa – and adjust accordingly. At this time of the year, truthful conversations and actions are particularly appreciated!
Holiday Cheer without Holiday Hypocrisy
December 2003
An Opinion by Jim Finkelstein of FutureSense, Inc.
It is that mythical time of the year where businesses start trying to spread holiday cheer. Offices are decorated, cookies and candies abound, and people are figuring out which holiday luncheon to attend. Corporate executives walk the halls spreading good wishes, and yes, the holiday attire invades the dress codes.
In many cases, this is a pretty picture replete with one-time bonuses and upbeat messages to kick off the New Year like no other! In other cases, this is another wonderful example of corporate hype as organizations contemplate continued “rightsizing” and try to gloss over the ills of the previous year with insulting bonuses.
It is a question of “Good Santa…Bad Santa” and how much good or harm is done through the messages received, the actions taken and the actual culture enacted. Unfortunately, organizations often enact holiday hypocrisy, placing an undue emphasis on “goodness” during this time of the year despite negative actions taken throughout the rest of the year.
Let us consider the positives and negatives of actions taken during the holiday season:
Good Santa or Bad Santa
1. The Christmas Bonus – Good or Bad.
Many organizations use this as a time to issue a “Christmas” bonus and thank employees for their excellent service, productivity and results during the year. For organizations that have had consistent results, this type of bonus can be effective – particularly if the bonus is meaningful. Our rule – if it is less than 10% of salary, you don’t change focus or behavior – so only expect a thank you (maybe). On the other hand, a bonus given this time of year when layoffs have been rampant and corporate executives’ excesses have been exposed can be treated as a slap in the face and regarded as a lame attempt to regain the trust and confidence of employees. Let’s face it – employees are not stupid. They can pierce the transparent veil as well as customers and shareholders.
2. The Party – Good or Bad.
A gathering of the clan is a good idea…provided that the clan knows how to behave, is grounded in the appropriate values – and the company is responsible with its creation of the party environment. On the other hand, once alcohol is introduced into the scenario, all bets are off and we can envision, “Employees Gone Wild” as the next DVD phenomena. In a culture where the values are conflicted (i.e. the perceived culture and the real culture are like night and day), the risk of parties gone bad is much higher.
3. The Thank You for a Job Well Done – Good or Bad.
One of our clients’ CEO’s used to ritualistically go on the shop floor and shake the hands of each employee (over 1000 in multiple locations) during the holiday period and thank them for their contributions. The fact that this CEO thought enough of the people that worked for the company was well received. And, a check was not part of the thank you! When expressed with sincerity and consistency throughout the year, a thank you can often be the best reward for work well done. On the other hand, when the messages given during the year are demeaning, when employees are inappropriately chastised for their efforts, the thank you is greeted with a “PC” smile and a sneer when the message deliverer has left. In fact, this gratuitous attempt to win the respect of employees can lead to high turnover as soon as the New Year comes.
4. The Next Year “Go Team” Speech – Good or Bad.
Whether the outcome has been good or bad during the year, executives often use the holiday season to rally their troops for the following year. These messages, when properly and truthfully delivered, can be an excellent way to leverage positive results, generate excitement, and boost morale. They can serve to help people recognize the gifts each individual brings to the collective of an organization. On the other hand, these speeches, when they do not speak the truth, often plant the seeds of discontent and can be perceived as yet another part of corporate hype – which is rejected ultimately by employees and perhaps even customers and other stakeholders as well. Again, the smiles in the audience are only masking the under-the-breath comments of “are you kidding?”
Pick the Right Lambs To Follow
As we have suggested in previous thought pieces, there is no single answer to effective morale building, no “best practice” that fits all. Each company is unique in the evolution of its culture, its relationship with its employees and the methodologies that it employs to win the game. But if you are compelled to follow the practices of others and prefer to flock like sheep (or should we say lambs), you better pick the right ones to follow! Think through the ramifications of your actions – are you a Good Santa or a Bad Santa – and adjust accordingly. At this time of the year, truthful conversations and actions are particularly appreciated!
Contact Us
Speed of Thought, Speed of Action, Speed of Results
| General | Bay Area | Orange County | San Diego |
|---|---|---|---|
|
FutureSense, Inc. contact@futuresense.com 369-B Third Street, #181 San Rafael, Ca, 94901-3581 415.453.1514 (office) 415.532.1305 (fax) |
Jim Finkelstein President & CEO jim@futuresense.com 415.302.5805 (direct) Mary Gavin Director, Communications spriter1@aol.com 707.833.4519 (direct) |
Margaret Walker Managing Consultant, Org. Dev. margaret@futuresense.com 949.230.6311 (direct) |
Matt Finkelstein Consultant matt@futuresense.com 415.999.4419 (direct) Kyle Jaimerena Consultant kyle@futuresense.com 949.584.9965 (direct) |
About Us
Speed of Thought, Speed of Action, Speed of Results
We are committed to change: to change the way people think about management and how organizations work; and, to help business leaders affect change in their organizations. Put simply: We will change the way you do business.
You and your company are unique. How we work with you will depend on your business strategy, organizational culture, available resources, and desired outcomes.
We manage projects through an iterative process of discovery, design, and delivery. You are the experts on your business, and our first step is always to develop an understanding of your perspective. Then, we work with you to design and deliver practical solutions that will meet your specific needs.
We take the time to get to know you and your business—and we expect you’ll want to get to know us before trusting us to work with your company.
Dan Parry
Consultant
312-771-0155
dparry@futuresense.com
Prior to joining FutureSense, Dan Parry worked as an analyst for a leading strategy consulting firm in the healthcare industry. From supporting multi-billion dollar corporations to advising start-ups, his projects focused on corporate strategy, sales effectiveness, top-line growth, marketing support and building data models.
Dan has effectively transferred these skills to FutureSense where he assists clients in the areas of compensation, organizational design and succession planning. In the future, Dan hopes to team with more organizations to build custom tools and models that better serve a company’s unique mission, values and goals.
Dan graduated cum laude from the University of Pennsylvania with a B.A. in Economics and a minor in History.
Dan has effectively transferred these skills to FutureSense where he assists clients in the areas of compensation, organizational design and succession planning. In the future, Dan hopes to team with more organizations to build custom tools and models that better serve a company’s unique mission, values and goals.
Dan graduated cum laude from the University of Pennsylvania with a B.A. in Economics and a minor in History.
Jim Finkelstein
President and CEO
415-453-1514
jim@futuresense.com
Jim is a student and leader of people in business. With 30+ years of consulting and corporate experience, he understands the convergence of environment, culture, development and rewards in order to improve business performance through people. He has specialized in business and people strategy, motivation and reward, and organizational assessment, development, communications and transformation. He has applied his competencies in all areas that impact people at work – from why they show up to why they stay. He has worked for diverse industries – from health care to high tech. He has built programs and provided services to Boards of Directors, senior executives, management and employees.
He received his MBA in Organization Behavior and Development from the Wharton School of the University of Pennsylvania (1976) and a BA in Psychology and Economics from Trinity College in Hartford, Connecticut (1974).
He notes, “Throughout my career, I have been called everything from a visionary to a contrarian. I continue to believe that businesses and organizations need to think ‘off the edge of the paper’ in order to assure themselves of the most favorable solutions and outcomes. I also believe that determining the unique right practices for each situation is preferred to “flocking like sheep to the slaughter” by following perceived best practices. What works for one organization may not work for another!”
Jim’s experience has included being a Partner in a Big Five firm, a CEO of a professional services firm, a corporate executive for Fortune 500 companies, and an entrepreneur with his current company, FutureSense®, Inc. He has experienced business from every possible angle and through every possible change. He is a co-author of FUSE: Igniting the Full Power of the Creative Economy (see www.futuresense.com/FUSE), published in December 2008.
Jim started his career as a summer Camp Counselor and Unit Leader at YMCA Camp Becket in Becket, Massachusetts where he truly learned how to realize the value of people. Involved with the YMCA since he was 11, he served on Boards of Directors for various Y’s for over 30 years, including the YMCA of San Francisco, where he held the role of Chairman of the Board. His wife Lynn and sons Matt and Brett also share Jim’s passion for community involvement through their collective work with Guide Dogs for the Blind, the Marin Humane Society, San Diego Roots, the Crossroads Program and through their commitment to local soccer clubs and programs.
Jim has been a soccer and basketball coach and team manager for over 15 years and is a very active soccer referee for adult, high school and youth matches. He has been inspired by the quote of Edward Everett Hale since his youth—“I am only one, but still I am one. I cannot do everything, but still I can do something; and because I cannot do everything I will not refuse to do the something I can do.”
Creating Succession Plans
> How do we continue our legacy?
> How do we measure our internal bench strength?
> Are we cultivating future leaders?
Succession Challenges
Business has been good and you feel confident with your current management team. However, your managers are not getting any younger. You may be aware of a few potential stars below the top level execs, but you don’t have a clear idea of your overall bench strength. Even more troubling, you have no contingency plan for CEO succession if the unexpected were to happen.
How We Can Help
Fundamentally, succession planning is about creating a clear line of succession to top positions with multiple potential successors. Yet, succession planning encompasses much more in relation to the overall health of your organization: retention, engagement, risk management and efficiency. We can help you create viable, visible succession paths to develop, challenge and retain the people you need.
Business has been good and you feel confident with your current management team. However, your managers are not getting any younger. You may be aware of a few potential stars below the top level execs, but you don’t have a clear idea of your overall bench strength. Even more troubling, you have no contingency plan for CEO succession if the unexpected were to happen.
How We Can Help
Fundamentally, succession planning is about creating a clear line of succession to top positions with multiple potential successors. Yet, succession planning encompasses much more in relation to the overall health of your organization: retention, engagement, risk management and efficiency. We can help you create viable, visible succession paths to develop, challenge and retain the people you need.
Rob Mason
Manager
415-686-1222
rob@futuresense.com
Prior to joining FutureSense, Rob Mason worked as an editor-analyst for a World Bank-International Coffee Organization project, where he was part of a team developing a study – to aid poor rural farmers throughout the world – on the European market for sustainable coffee. The project allowed Rob to pursue his passion for sustainability and participate at the front line of rural economic development.
Rob now specializes in working with a diverse clientele in healthcare, real estate and manufacturing. Collaborating with top executives, he designs organizational change efforts and develops succession strategies to drive long-term performance. Rob also assists organizations in aligning their compensation plans with the cultural values of their employees to effectively motivate, engage and retain.
Rob graduated magna cum laude from the University of Pennsylvania where he received a B.A. in International Relations and History, as well as the James Markley Distinguished Service Award.
Rob now specializes in working with a diverse clientele in healthcare, real estate and manufacturing. Collaborating with top executives, he designs organizational change efforts and develops succession strategies to drive long-term performance. Rob also assists organizations in aligning their compensation plans with the cultural values of their employees to effectively motivate, engage and retain.
Rob graduated magna cum laude from the University of Pennsylvania where he received a B.A. in International Relations and History, as well as the James Markley Distinguished Service Award.
Communications Consulting
How do you execute and fuel commitment for change?
How do you motivate participation?
How do you inspire understanding of new strategies?
At FutureSense, our goal is to engage people to speed results, whether we’ve been hired to do organizational development, compensation or strategic planning work. We know that a program is only as good as its communication. If the audience doesn’t get it, it’s a waste of time and resources. Combining experienced communications strategy with novel media 2.0 techniques, we engage and motivate key audiences – employees, customers, regulators, shareholders.
Although we cover the spectrum of organizational communications, we have special expertise in employee engagement, employee and stakeholder communications, cultural transformation and change management, and generational issues and the 21st century work place. We have an especially keen interest in communications that help Millennials onboard, as well as those spreading the word about business sustainability.
We do communications assessments, looking at marketing, HR and PR campaigns. We also collaborate on positioning and branding strategies for media, employee and customer campaigns, and advise on communications staffing and strategies, as well as crisis communications.
Our Approach
Brainstorming and strategy sessions, without consideration of implementation, are just interesting conversations. We like working in that space where the rubber meets the road – to systematically address an issue, break it down and come up with a solution that can be implemented by engaging the people it affects.
Once a new strategic direction is set or a new incentive plan is designed, we can help you communicate and engage. Quite simply, communication is execution.
Organization Design And Structure
Is your organization capable of executing intended strategy?
Is organizational performance aligned with purpose?
Organization design is the formal, guided process for integrating people, information and technology in an organization.
Our Approach
The goal of organization strategy and design is to match form (i.e. structure and roles) with an organization’s purpose (i.e. mission, vision and values) so as to maximize and align people’s collective efforts. By recognizing design as a powerful and proactive management lever – rather than an inevitable outcome of corporate evolution – leaders can maximize productivity across every level of an organization. Our innovative processes can help you analyze span of control, define roles and responsibilities, and ensure proper accountability.
We also view the world holistically – integrating multiple components in our work. When FutureSense does organization strategy and design, we go beyond boxes and lines to address a broad array of issues (examples shown below):
Defining support infrastructure – what do we need to be successful?
- Geographic level
- Market level
- Project level
- Home office level
Compensation Consulting
Why do your people show up at work?
What turns them on or off?
Is the investment in your people really improving results?
All businesses - whether traditional companies, cool millennial businesses, entrepreneurial organizations, professional firms, service-based businesses or sales-oriented cultures – often forget to build or refresh the basic infrastructure of their compensation programs on a regular basis. This is borne sometimes out of neglect, time constraints, other priorities or lack of desire to even have an infrastructure in the first place!
Some of the unique themes we have observed and experienced include:
- We pay our people what we need to in order to get them on board… and we pay them really well.
- Our reward program is oriented towards long-term equity, so the rest of it really doesn’t matter.
- We are an employee-owned company and treat all of our people fairly equally.
- We are a sales culture – and pay our people when the revenue is produced… pennies raining down on their desk.
- We are entrepreneurs… we are flexible and adaptable to market conditions…
- We have a salary structure and a pay-for-performance merit increase program… We adjust everything once a year. But we really haven’t changed our approach to compensation in a decade.
No matter the theme (all of the above are laudable), there is a basic need in business to ensure that the compensation programs are not only competitive, but also fair. Once we take our eye off of both the balls of the external forces in the market and the internal relationships, we stand the risk that while we might please some employees, we may alienate others. And, we may create risk of turnover and the loss of talent, intellectual capital and institutional knowledge.
At FutureSense, we believe that fundamentals of good compensation design include review of:
- Business strategy. The overarching strategies that are driving your business plans. How can we respond to challenging economic times and to your fluid shifts in strategy to respond to local, market, and world conditions?
- Compensation philosophy. The driving themes that guide the development of your programs. What is the mix of compensation elements in your company?
- Organization design. Roles, responsibilities, relationships and results that define the value of a position. How do you optimally structure your business?
- Salary management. Building the boundaries of competitive levels of pay (your salary structure). What you are willing and able to pay your positions. What is competitive and equitable?
- Performance management. Expectations and personal development. What is in it for your people? How can they grow and become better and more valuable? How are you communicating their personal challenge to them – does it engage and motive? Or is it a once a year exercise in
- Incentive opportunities. Changing behavior and driving action and results. What floats their boat and melts their butter? How do we find the balance between short-term and long-term results?
- Benefits. Meeting the health, welfare and capital accumulation (aka retirement) needs of employees. What connects with your people?
- Communications. What messages are being sent to your people by the design of our programs? Is it consistent with your mission, vision and values?
We take a holistic and strategic view when we discover what’s working and what’s not, when we design new or revised programs and when we deliver and implement new or revised compensation programs to our clients. We want to ensure that all components are considered with appropriate weight and context to help attract, develop, engage, motivate and retain human capital.
Client List
Speed of Thought, Speed of Action, Speed of Results
We are pleased to have provided organization development, compensation and/or communications services to the following clients from 2007 to now:
California Association of Community Managers (Laguna Hills, CA)
California Children’s Hospital Association (Sacramento, CA)
Child Abuse Prevention Center (Orange, CA)
Children’s Hospital and Research Center at Oakland (Oakland, CA)
Community Hospital of Long Beach (Long Beach, CA)
Community Memorial Health System (Ventura, CA)
Hospital Association of Southern California (Los Angeles, CA)
Hunter Industries (San Diego, CA)
Independent Electric Supply (San Carlos, CA)
Jamboree Housing Corporation (Irvine, CA)
Jewish Home of San Francisco (San Francisco, CA)
La Clinica de la Raza (Oakland, CA)
Long Beach Memorial Hospital (Long Beach, CA)
MedicAlert Foundation (Turlock, CA)
MemorialCare Health System (Long Beach, CA)
Newland Communities (San Diego, CA)
Palomar Pomerado Health System (Escondido, CA)
Pathways Home Health & Hospice (Sunnyvale, CA)
Peak Performance (Northridge, CA)
Physician Health Partners (Denver, CO)
Redlands Community Hospital (Redlands, CA)
San Antonio Community Hospital (Upland, CA)
Santa Clara Family Health Plan (Santa Clara, CA)
Smith Kettlewell Eye Research Institute (San Francisco, CA)
St. Joseph Health System (Santa Rosa, CA)
Sullivan, Cotter and Associates (Detroit, MI)
The Woodlands Development Company (The Woodlands, TX)
Tulare District Hospital System (Tulare, CA)
University of California, Irvine (Irvine, CA)
Vurv Technology (Jacksonville, FL)
Wellspring Partners (Chicago, IL)
Leadership Development and Assessment
What are the unique strengths of your employees?
How do you maximize specific skills and abilities?
At FutureSense, we realize the value of people. This double entendre exemplifies our belief that people, when well led and motivated can accomplish incredible bottom line results – the financial sense of realization. Further we believe that people are inherently good and can add value to others around them in their business and in their community – the social sense of realization.
We help our clients realize the value of their people through leadership assessment and coaching. Leadership assessment is matching an employee or candidate’s potential with a unique career direction in an organization and making it work!
Our Approach
Through the use of proven resources and tools, such as (but not limited to) Harrison Assessments™ or Profiles International, we can help you assess your people by identifying each individual’s knowledge, skills, abilities and attitudes. Assessment methods may include structured interviews, surveys, focus groups, environmental scans, personality inventories, 360-degree feedback, and performance reviews.
Once the assessments have been completed, we will work with you to develop a complete understanding of your current leadership needs and capabilities using methods aligned with your company culture. We will help you identify your current and future talent – identifying the gaps between demand and supply – so as to increase productivity, reduce turnover, and build more effective management teams.
Then, we provide individual coaching assistance, as required, to help leaders maximize their assets and minimize their liabilities. FutureSense coaches are practical, business-focused, and directive. We subscribe to the coaching theory of John Wooden when he says, “Don't measure yourself by what you have accomplished, but by what you should have accomplished with your ability.”
Organizational Change
> How do you generate momentum for change?
> How do you sustain that momentum?
Organizational change is the process of systematically planning and coping with change in an organization.
Mergers, consolidations, restructuring, and rapid growth will always be a part of business. Out of necessity or opportunity, organizations must continually adapt to succeed in ever-shifting business environments.
Our Approach
Whether your change is a fundamental or a radical reorientation in the way your organization operates, we can help you manage the transformation by analyzing your organization design, assessing your people and communicating the change efforts.
Mergers, consolidations, restructuring, and rapid growth will always be a part of business. Out of necessity or opportunity, organizations must continually adapt to succeed in ever-shifting business environments.
Our Approach
Whether your change is a fundamental or a radical reorientation in the way your organization operates, we can help you manage the transformation by analyzing your organization design, assessing your people and communicating the change efforts.
Planning And Succession
Do you have the right people to support your goals?
Do you have tomorrow's leaders?
Succession planning is a dynamic process designed to ensure the continued effective performance of an organization.
Our Approach
More than just making provisions for replacement, succession planning must be considered in a broader sense – to plan for the intellectual capital needs of an organization's future and to move thinking about succession from periodic, fitful efforts to real-time. Every management decision should be accompanied by consideration of its impact on employee development.
We can help you get the right number of people with the right skills, experiences and competencies in the right jobs at the right time.
Incentive Compensation Consulting
How do you incentivize without breaking the bank?
What forms of incentives really work?
Incentive compensation design is about building programs that appropriately link executive success with that of your stakeholders – customers, shareholders, employees. Our talent is simplifying complex and sticky compensation issues by designing programs that make sense, then articulating that plan so executives truly understand it and perform to or above expectations.
Our Approach
Any incentive compensation program needs to reflect your business: the industry, the locale, the model, etc. However, today’s business leaders often do not have the time for lengthy assessment processes and dense “business school” styled reports. We are valuable to our clients due to our ability to quickly assess the landscape, design an effective compensation plan, and implement that program so that people are truly engaged.
Sustaining Growth & Success
> What do we do for an encore?
> How do we cope with growing pains?
Organizational Challenges
Either through acquisition or organic growth, your company has grown exponentially in a short time period. Business prospects look good and your company stands poised to become a leader in the industry. Yet, you continually lie awake at night unable to sleep. On paper, it all makes sense. But, change has created internal disruption and confusion. You have an organizational chart, but roles remain unclear. There are redundancies in some parts of the organization, and sizable gaps in others. Moreover, your salary structure and incentive plan have become obsolete given the new size of your company. Change has become unbearable. You need help and you need it fast.
How We Can Help
As experts in organization development and compensation, we can help. In these situations, speed is the key. Our uniqueness is our ability to quickly untangle complex organizational issues and effectively implement the appropriate solutions. More specifically, we can help you with issues related to structure, roles, people, culture, and incentives.
Either through acquisition or organic growth, your company has grown exponentially in a short time period. Business prospects look good and your company stands poised to become a leader in the industry. Yet, you continually lie awake at night unable to sleep. On paper, it all makes sense. But, change has created internal disruption and confusion. You have an organizational chart, but roles remain unclear. There are redundancies in some parts of the organization, and sizable gaps in others. Moreover, your salary structure and incentive plan have become obsolete given the new size of your company. Change has become unbearable. You need help and you need it fast.
How We Can Help
As experts in organization development and compensation, we can help. In these situations, speed is the key. Our uniqueness is our ability to quickly untangle complex organizational issues and effectively implement the appropriate solutions. More specifically, we can help you with issues related to structure, roles, people, culture, and incentives.
Organization Development Consulting
Where do you want to go as a company, and do you have the right people to get there?
Do you have the right structure, defined roles and bench strength to develop and sustain your business?
Whether you are experiencing growth, reduction or just the need for better organizational alignment, organization development is about the long-term future of your company. Traditional organizational development firms typically focus on the organizational perspective only. We see this approach as designing in a vacuum. Developing “boxes and lines” alone is not a strategy.
Our Approach
What sets FutureSense apart is our ability to see the whole picture – your business, your finances, and your people – and to act as guides in the process.
First, we try to understand where you are going:
Then, we work to understand the organizational context for all of your people development decisions:
And, finally we establish the direction for development initiatives consistent with your business strategy and an organizational framework. These initiatives include:
- Organization strategy and design
- Succession planning
- Leadership assessment and coaching
- Training and development
- Human resource interventions and investigations
Salary Management
> Are you competitive in the marketplace?
> Is your pay philosophy congruent with your mission, vision and values?
Any organization needs a foundation – that is a sturdy basis on which a structure can grow and thrive. In business, salaries are that foundation.
Our Approach
We can help you develop or refine your company’s salary structure including ranges, grades, and hierarchy. Moreover, we can benchmark your organization against your peers to insure that you are competitive in the marketplace.
Our Approach
We can help you develop or refine your company’s salary structure including ranges, grades, and hierarchy. Moreover, we can benchmark your organization against your peers to insure that you are competitive in the marketplace.
Our Counsel
Speed of Thought, Speed of Action, Speed of Results
Compensation Programs
> Motivating people so that they truly show up
> Aligning business owners and staff
> Rewarding high performers
Organization Development
> Strategic design to increase organizational effectiveness
> Organizational change necessary to match strategic change
> Motivating people so that they truly show up
> Aligning business owners and staff
> Rewarding high performers
Organization Development
> Strategic design to increase organizational effectiveness
> Organizational change necessary to match strategic change
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White Papers
As leaders in thought capital, FutureSense offers a wide range of articles and publications to inspire, question, evaluate, and discuss. We offer these free of charge to the public, but would like to know who is reading our materials :). Please register or login below before viewing. Thanks!
- Pay Me Now, or Pay Me Later: The Truth behind Deferred Compensation
- Kolbe System...enhanced individual and company performance
- Beyond the Corporate Looking Glass: Understanding Corporate Culture
- To be or to be obsolete…the future of HR?
- Good Santa...Bad Santa. Holiday Cheer without Holiday Hypocrisy
- Corporate Culture: Power to Greatness
- Conformance Management: All Act, No Action
- Flocking Like Sheep: The Culture & Culpability of Corporate Hype
- Co-Dependence at the Helm
- It’s a Question of Leadership
- People: The Forgotten Frontier
- Retaining Top Talent and Creating a Strategic Succession Plan
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Rewards and Motivation
How do we energize and engage?
How can we maximize individual and company-wide performance?
So why do people show up at work? Why do they stay? And, what motivates them? These are questions that need to be answered before the design of compensation programs begins. In short, this is the quest to answer the question that every employee should be able to answer: “What melts my butter?”
Holistically, in order to design effective reward and motivation programs (aka compensation and benefits to some) FutureSense studies individual motivation profiles and cultural norms for our clients. We subscribe to the collective wisdom of many cultural researchers including Clare Graves and Don Beck (Spiral Dynamics – see www.spiraldynamics.net), and Paul Ray and Sherry Ruth Anderson (Cultural Creatives – see www.culturalcreatives.org). We seek to understand the Cultural DNA of an organization instead of just imposi¬ng “best practice” compensation techniques on their environment. We design programs that work.
We look for the intersection of the corporate systems of environment, culture, development and rewards. We design reward programs that motivate, that energize and that help an organization produce desired results, change behavior and move onward and upward on the steps of success.
Our Approach
Our process consists of three steps:
- Discovery. We learn as much as we can about the organization’s business strategy, operating plans, environment and culture, existing reward and motivation programs, people development philosophy and communications. We collect data, we read documents, and we learn from people in the organization through surveys, interviews and focus groups. An intimate understanding of the organization is an important product of this step.
- Design. We use our discovery research to inform our design – whether it is in the areas of compensation (base salary, short and long-term incentives, salary increase (i.e. pay for performance and/or pay for potential), performance management, sales compensation), benefits, or other innovative programs to motivate performance, change behavior and produce results.
- Delivery. We assist in the implementation and communication of the programs we design to ensure that they are understood and are producing the desired results.
Your Challenges
Speed of Thought, Speed of Action, Speed of Results
Every organization experiences a unique set of challenges that stymies growth and productivity. What are your challenges?
Motivational Challenges
> How do we energize and engage?
> How can we maximize individual and company-wide performance?
Organizational Challenges
> What do we do for an encore?
> How do we cope with growing pains?
Succession Challenges
> How do we continue our legacy?
> How do we measure our internal bench strength?
> Are we cultivating future leaders?
Motivational Challenges
> How do we energize and engage?
> How can we maximize individual and company-wide performance?
Organizational Challenges
> What do we do for an encore?
> How do we cope with growing pains?
Succession Challenges
> How do we continue our legacy?
> How do we measure our internal bench strength?
> Are we cultivating future leaders?