Management's role in people development and organizational performance

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.

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.

The answer to that question is, delegate:

If you want to be a successful manager, you'll have to give up the notion that you can do everything yourself. As obvious as that may seem, learning to properly delegate responsibility may be the toughest part of your job.

But it's well worth learning and doing. Managers who delegate intelligently and follow up consistently are able to accomplish infinitely more than those who hoard tasks their subordinates should be doing.

The key duties of a manager are to plan, organize, coordinate, set goals, establish priorities and think creatively. By delegating appropriate tasks to subordinates, a manager saves his time for these important tasks while saving his organization money by completing a job with a lower-paid employee. Additionally, delegation enriches the jobs below by providing challenge, authority and variety.

Human worth is not realized when it is not allowed to run free and create and question. The right people on the bus can only direct the bus driver and reach a productive end if they are allowed input and the room to fail.

And this can only be done through delegation. If the "genius leader" takes on all the decision-making responsibilities herself, she will not be realizing the great asset of human capital she has worked so hard to attract to her bus.

Also, "As an element in training, delegation enables subordinates to demonstrate their competence, win greater recognition and gain confidence. Rather than simply taking orders, subordinates learn by thinking through a problem, establishing a plan and then performing the task. When a manager develops a staff that demonstrates competence, his reputation grows. Talented staffers seek jobs in his or her department. Morale, respect and trust grow within a department as more gets done. Recognition follows and top management can see that with the staff fully trained, the manager is ready for promotion."

Delegation, then, allows human capital recognition from 360 degrees. Recognition of course, stems from subordinates for allowing responsibility to flow downwards, and recognition will eventually flow from upper management for creating an autonomous and highly successful unit within a larger organization.

There are many reasons managers do not like to delegate, and most of those stem from not having the correct people on the bus. Managers who do not delegate fear their own leadership roles eroding, perhaps because of the quality of the human capital working for them, but the "weak generals" for whom they themselves work.

In such a situation, the strong lieutenant can lose power or even his job if his unit becomes highly autonomous and leaders emerge from his unit.

But, given the right people on the bus again, this problem is alleviated significantly.

Conclusion

As this paper develops, hiring is the most important way to recognize the great asset that is human input. Through the correct process of getting the right people on the bus, people development will exceed expectations and an organization will get the most out of its human assets.

Without the correct hiring, an organization will flounder even if it has a viable vision and goals. This is because changing times will undoubtedly affect the organization and without the right people for the job, the organization will not be able to cope or redirect itself.

That is why people development experts insist that the goals of an organization should often but subordinated to the people in that organization. People are not necessarily motivated by goals; they are motivated by the other people with whom they work.

Also stemming from the correct hiring procedures is a forward-thinking aura that will propel an organization forward as it did in the Wells Fargo case study. Simply selecting a great leader and surrounding her with followers or yes-men will not do the job at all.

Once the right people are in place, these human capital resources must be managed effectively or their value diminishes strongly and quickly. That is why employees and subordinates must be treated fairly and equally: Praising and valuing one person's services over another's will lead to chaos and reverse people development.

Also, once the right people are on the bus and effective management of the human assets is introduced into the organization, then the human capital must be allowed to run free, make its own decisions, and fail early and often.

Only by following this path will an organization be able to squeeze the most out of its human capital, and will people development be achieved to a scale that recognizes that humans are our greatest asset.