People development practices and organizational outcomes

Management's Role In Bringing About Best Practice Approaches To People Development

Humans are our greatest asset, but a constant challenge is to recognize that fact within an organization and to bring about best practices methods of achieving the greatest contribution from the human assets.

This paper will examine the methods by which the most can be taken from human assets and the ways in which people development can peak.

Management style and thought is, contrary to popular belief, one of man's oldest areas of study. One of the earliest recorded examples is Confucius himself who in 500 B.C. attempted to persuade the feudal kingdoms of ancient China that a successful and powerful leader had to be humane, benevolent and just. Needless to say, it took his ideas a significant amount of time to catch on.

But Confucius was in this respect, as in most respects, phenomenally ahead of his time. He realized that a leader could lead with an iron fist and guide with fear and cruelty, but such a reign would be limited in its duration, its reach, its influence and its historical value and precedent.

Confucius was after the "great man" concept of leadership. And today, his vision has been applied and reduced to any number of management style theories that seek to employ best practices to squeeze every last ounce of the power of "people" out of an organization. Management strategizing has gone from praising and prizing technology and capital investment in the late 1980s and early 1990s to concentrating on acquiring and cultivating - and most importantly, keeping - quality human capital.

Companies and organizations in general are beginning to realize the power of human capital far transcends any technological or infrastructure improvements on a similar scale. That is why government organization, for-profit corporations, not-for-profit groups, small businesses and even universities are employing management consultants to help them help their own human capital recognize their potential in the workplace.

Hiring

The first recognized technique of getting the most out of every individual in the workplace is through hiring. Probably the most cutting edge thinking and analysis in current academic and management circles on hiring is contributed by Jim Collins in his book, "Good to Great." Collins notes that the first step to building a successful enterprise is actually people development:

The executives who ignited the transformations from good to great did not first figure out where to drive the bus and then get people to take it there. No they first got the right people on the bus (and the wrong people off the bus) and then figured out where to drive it. They said, in essence, "Look, I don't really know where we should take the bus. But I know this much: If we get the right people on the bus, the right people in the right seats, and the wrong people off the bus, then we'll figure out how to take it someplace great."

And singly, this is one of the most powerful statements regarding people development. People truly are an organization's greatest asset as, if they join because of where this hypothetical bus is going, "what happens if you get ten miles down the road and you need to change direction? You've got a problem. But if people are on the bus because of who else is on the bus, then it's much easier to change direction: 'Hey, I got on this bus because of who else is on it; if we need to change direction to be more successful, fine with me."

The idea behind getting the right people on the bus and wrong people off the bus is an acknowledgement that even the organization's goals and missions are subservient to the quality of its people. It also recognizes a very important concept in people development: People are motivated often by other people and not by their goals. Confucius' comments also would link directly to Collins' assertions: The leader of the group, the bus driver if you will, must present a management strategy that is attractive to the riders - a management strategy that will attract the right people to the bus and get rid of the wrong people.

People are an organization's greatest asset when they are self-motivated: "The right people don't need to be tightly managed or fired up; they will be self-motivated by the inner drive to produce the best results and to be part of creating something great... If you have the wrong people, it doesn't matter whether you discover the right direction; you still won't have a great company. Great vision without great people is irrelevant."

Wells Fargo and Bank of America took vastly different approaches to hiring. According to Collins' case study, Wells Fargo performed amazingly well for a string of fifteen years beginning in 1983. However, according to Collins, the reason for this string of success stemmed from the company's hiring strategies dating back to the 1970s. Chief Executive Officer, Dick Cooley, assembled an amazingly talented management team in the early 1970s (the most talented team, according to investor Warren Buffet) and allowed them great leeway and incentive to lead Wells Fargo passionately and successfully.

Cooley knew the banking industry would change, but he had no idea how exactly it would change. So, instead of developing a concrete strategy to deal with the impending change, Cooley simply began to hire a talented pool of leaders for his company. In fact, he began to hire leaders without even a specific job description or title in mind.

Wells Fargo basically began hiring talented leaders left and right, "injecting an endless stream of talent" directly into the veins of the company. Cooley's theory was simple: "That's how you build the future... If I'm not smart enough to see the changes that are coming, they will. And they'll be flexible enough to deal with them."

Again, a plain ringing endorsement for people development. Here, a major corporation hired individuals at what must have been relatively high salaries to tackle a job that the company could not even define. These leaders were allowed to develop and, when change arose, they were responsible to take that change by the horns and serve the company to the best of their talents.

And the strategy worked out. Deregulation hit banking and changed the entire business, and during a period when Wells Fargo's peers fell 59% behind the general stock market, Wells Fargo outperformed the market by over three times.: "Wells Fargo's approach was simple: You get the best people, you build them into the best managers in the industry, and you accept the fact that some of them will be recruited to become CEOs of other companies."

Wells Fargo took people development to the next level in its approach. Surely, the company realized that people were its greatest asset. Interestingly, it did not base its success formula on retention, either. Wells Fargo realized that its executives would leave at some point. But, rather than allow that to deter them from hiring the best, they hired the best anyway, knowing that they would only have their services for a limited but important period of transition.

Bank of America, on the other hand, took a very different approach, according to Collins:

While Dick Cooley systematically recruited the best people he could get his hands on, Bank of America, according to the book, Breaking the Bank, followed something called the "weak generals, strong lieutenants" model. If you pick strong generals for key positions, their competitors will leave. But if you pick weak generals - placeholders, rather than highly capable executives - then the strong lieutenants are more likely to stick around. The weak generals model produced a climate very different at Bank of America than the one at Wells Fargo. Whereas the Wells Fargo crew acted as a strong team of equal partners, ferociously debating eyeball-to-eyeball in search of the best answers, the Bank of America weak generals would wait for directions from above. Sam Armacost, who inherited the weak generals model, described the management climate: "I came away quite distressed from my first couple of management meetings. Not only could I get conflict, I couldn't even get comment. They were all waiting to see which way the wind blew."

Sure enough, by not investing enough in people development, and not realizing that strong people could be its greatest asset, Bank of America lost $1 billion during the middle 1980s.

Bank of America finally understood the folly of its ways and began to recruit top executives from - you guessed it - Wells Fargo. But it was too little too late: Wells Fargo continued to excel but Bank of America struggled to get out of its hole.

This case study illustrates that the power of people development. And hiring is the single most important step in recognizing people as an organization's greatest asset. And this does not mean a genius with a thousand helpers: Confucius, for instance, did not believe even in the idea of a single benevolent leader. He too felt that the single genius must be surrounded by motivated leaders who were willing to question and lead in their own right.

Collins suggests, instead, what he calls Level 5+ management in which an organization gets the right people on the bus and builds a superior executive team. And once that team is in place, Collins continues, the organization works on finding out the best path to greatness.

In support of his assertion, Collins notes the Teledyne Corporation case study. The corporation had a great leader with a thousand helpers and succeeded quite nicely. However, after its leader, Henry Singleton, left, the company's performance plummeted. Essentially, no pieces were in place to replace the genius.

With Level 5+ leadership, however, any of the lieutenants is fully capable and motivated to take over for the genius leader if and when she departs. This is a more forward thinking people development strategy: train and prepare everyone in management to recognize human talent, hire correctly, and be prepared to take over higher leadership positions.

The problem with this strategy is, of course, a fierce competition within the organization with regard to leadership positions, as all leaders are qualified and talented enough to move up the management ladders. However, if the right people are on the bus in the first place, this competition will only serve to benefit the company, as all leaders are secure in the fact that they can lead in other organizations as well.

Essentially, management consultants and academics alike are quick to note that people are not an organization's greatest asset: the right people are an organization's greatest asset. And that is why hiring does not have to be constrained to people within a particular industry, or people who have extensive experience in a certain field.

Rather, the primary challenge in hiring is to find people who are motivated to complete any task, to take on any challenge, and who show up with personal drive and a corresponding appreciation for human capital themselves.

At the same time, the successful enterprises may also demonstrate an understanding of the value of human capital, the immediacy of people development and the asset that is a strong group of talented individuals by getting the wrong people off the bus.

Getting people off the bus requires tougher decisions and harsher situations than getting people on the bus, of course. But by not making these decisions, organizations will not be letting their good people recognize their own value and their own abilities and talents.

As Collins writes, to let people languish for months or years, stealing precious time in their lives that they could use to move on to something else, when in the end they aren't going to make it anyway - that would be ruthless. To deal with it right up front and let people get on with their lives - that is rigorous... To be rigorous in people decisions means first becoming rigorous about top management people decisions. Indeed, I fear that people might use "first who rigor" as an excuse for mindlessly chopping out people to improve performance. "It's hard to do, but we've got to be rigorous," I can hear them say. And I cringe. For not only will a lot of hardworking, good people get hurt in the process, but the evidence suggests that such tactics are contrary to producing sustained great results. The good-to-great companies rarely used head-count lopping as a tactic and almost never used it as a primary strategy."

The key, then, is to hire the correct people, allow them use their creativity, and to kick the wrong people off the bus, regardless of the short-term cost, as the wrong people on the bus will hinder the right people's ability to do their jobs well. However, indiscriminately kicking people off the bus also is not beneficial, and does not make sense from a people development perspective.

Effective Management Of Human Resources

Once the correct people are on the bus, the next challenging people development issue is to effectively ensure that they are able to contribute to the best of their abilities. "Effective management of the human resource of the organization constitutes the foundation for an organization's long-term, sustained success."

And that is where motivation comes into play, according to theorist, Frederick Herzberg:

One notes the title of Herzberg's 1968 article in the Harvard Business Review with some amusement One more time: How do you motivate employees. This article appeared some 9 years after his seminal book and it was clear that he was becoming somewhat annoyed with those who had not taken his insights on board.

He distinguishes between Hygiene factors - those that will not increase motivation as such but will certainly decrease it if standards are not right - and Motivating factors.

Hygiene factors include working conditions, salary, job security and company policies. Get these wrong and motivation will decline but add to them over a certain standard and there will be no more effect on motivation.

Motivation, says Herzberg, derives from people having a sense of achievement, recognition, responsibility and opportunities for personal growth.

He criticises management for ignoring the motivational factors and trying to motivate through things like money and benefits - expensive and not successful. He is also famous for his acronym KITA, which has been politely translated as a kick in the pants! He says that KITA does not produce motivation but only movement."

Interestingly, managers are finding that, with the right people on the bus, monetary incentives are truly not the most efficient way to motivate good employees to contribute to their utmost.

Rather, the proper way to motivate and lead and squeeze people development and human capital assets out of colleagues and subordinates is to treat people equally: For instance, take the following example:

Max is Julie's prize teddy bear. He has his own wardrobe in her closet, his own place at the kitchen table and a favorite chair for watching TV. Julie even buys Max a seat when they fly. So if Julie asks for a day off because Max needs her, would you let her take it?

Before you answer, consider some other situations. What if Max were her golden retriever? What if Julie is a Meals on Wheels volunteer and Max is a housebound elderly man? Would you give Julie the time if Max were her five-year-old nephew? Her grandfather? Her boyfriend? Her 10-year-old son?

These situations are at the center of workplace skirmishes that threaten to erupt into full-scale warfare because most employers will give Julie the time only if Max is her son, and employees without children resent that. "Our company says it wants to help balance the demands of work and personal life," John says, "but they seem to think that personal life is the same as children. I'm tired of watching parents walk out of here at 5 p.m. To pick up their kids while the rest of us stay here and work. It isn't fair."

And indeed, the authors here have hit upon the greatest challenge in managing a quality workforce. Recognizing humans as a great asset means treating them fairly - and if not fairly, at least equally:

Take Action

Flexibility is flexibility. Let's assume you're managing exempt employees. If you're a cool boss who allows employees to slip out early or come in late occasionally, give everyone the same flexibility. Resist the temptation to ask what they'll be doing. If you give people time to deal with their personal lives, it doesn't matter whether they spend that time taking their kids to a soccer game, volunteering in a homeless shelter or going to an antique show; it's their business, not yours. Measure whether work is completed on time and done well; don't log every time Jane comes in late or leaves early.

Give people maneuvering room. Even if you're a cool boss, it's tougher to give people in nonexempt jobs the flexibility to just cut out early. Often the work they do can be performed only on site (and not at home, for example), and you also must contend with overtime law. Still, we're talking about a job, not a prison camp. If your company policies allow it, let people use vacation or personal leave time in small increments (such as a half-day at a time) provided they request the time in advance so you can plan. Track the hours used.

Accept that there will be emergencies. Crises happen in everyone's life; treat them all equally. Don't reassure parents that "everything will be fine here, just go" and then make it tough for others to get away.

Don't make assumptions. Don't assume that employees without children are more willing to travel, or that parents can't stay late. Make decisions based on who's best suited to the job.

Monitor work hours. No one's asking you to track every hour exempt employees are at work, but watch general trends. Employees might leave at different times for many reasons. But if those leaving on time or early are always the same people, it's time to step in and coach them about sharing the burden.

Hold employees equally accountable. Once deadlines are determined, decide the consequences for not meeting them and hold everyone to the same standard. Don't cut parents extra slack."

Collins and Confucius both would approve of this manner of dealing with different people / human capital situations. Benevolence must be tempered with fairness, or some human assets will be valued to a higher degree than other human assets, and the result will only be dissatisfaction and chaos.

In order to get the most out of every individual, leaders must be fair and treat individuals equally.

Hands-On vs. Laissez Faire Leadership

Another constant struggle in trying to get the most out of human assets is whether to manage closely, or allow subordinates their room for creativity and their room to fail early and often.