Monthly Archives: April 2013

Great Leadership in times of Crisis

What does it take to be a great leader in times of crisis? Can Alan Mulally be the leader we should look at to see if there is a particular characteristic or set of attributes that separates him from most? Can we learn from the story of how he turned around Ford?

I attended the Michigan HR Day on Wednesday April 24 and had the opportunity to hear Bryce G. Hoffman present his new book “American Icon: Alan Mulally and the Fight to Save Ford Motor Company“. I have not finished reading the book yet, but Hoffman included a quote from Mulally in his presentation that made me think about the topic of Leadership and which might be the key attributes a leader needs to have to succeed in turning around a company.

“You’ve got to trust the process. You need to trust and nurture your emotional resilience,” he said. “Do you have a point of view about the future? Check. Is it still the right vision today? Check. Do you have a comprehensive plan to deliver that? Check. If you get skilled and motivated people working together through this process, you’re going to figure it out. But you’ve got to trust it.” The leader’s job is to remind people of that vision, make sure they stick to the process, and keep them working together. “Working together always works. It always works,” Mulally stressed. “Everybody has to be on the team. They have to be interdependent with each other.”

The bold type is mine and it is to stress the importance of interdependence and really “being” a team.

Alan Mulally became CEO of Ford in 2006, when “it was about to post a loss of nearly $6 billion for the third quarter alone – the company’s worst quarterly result in more than fourteen years”. What a challenge! And not only was he able to do it but, “In less than three years, (…) Ford would wow Wall Street with quarter after quarter of profits at a time when most companies were still reeling from the worst economic crisis since the Great Depression.”

What I like about the quote is the emphasis in the need for interdependence. You cannot succeed if you work in silos or if each person has their own agenda. It just doesn’t work unless you are able to develop an environment in which every single employee understands what is going on, where we are headed, and what we need to do to get there. Just as Mulally says in his quote, you need a team of people with the right skills working together towards a common goal.

From what I have read so far, American Icon provides multiple examples of great and not so good leadership. Power struggles, individual agendas, etc. are present in the book as well. I believe that one way of learning to identify what we need to look for when hiring for leadership positions or assessing our leaders’ development needs is to read case studies like this one, where we will be able to see if we can apply the learnings to our own organizations. We need to remember though the uniqueness of our own organizations and that what works in one might be the worst option for another.

American Icon is fascinating. It’s one of those books that you can just not stop reading.

Human Resources, How can we add value?

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HR is frequently viewed as a function that is needed but in very few occasions are we considered as really adding value to the organization. By looking at the organization from the perspective of nature, can we become a motor for change to help it prepare for the future? Can we use this to demonstrate the value we bring?

It is unfortunately true that HR is viewed as a necessary evil in many organizations. It is also true that many times, as HR professionals, we fail in being able to articulate how we can deliver value and impact the bottom line. We are viewed, and in many cases we consider ourselves, as a function that is there to make sure there is adherence to laws and regulations and to hire or fire people when needed. We are frequently considered overhead or even a burden.

One way we can change this perception is by driving change and helping the organization prepare for future challenges. We need to understand first what changes the organization will face and the only way to do this is by knowing the business intimately and understanding the strategic direction the organization is seeking. But this is not enough.

Lets look at the organization from a different perspective. Giles Hutchins in his book “The Nature of Business” shares the view that if we look at nature to understand its patterns it might

“provide insight into how best to future-proof business for the unpredictability ahead”.

Wouldn’t it be wonderful if we could use this understanding of nature and apply it to the organizations we work in and show how we can add value by developing our HR programs and strategies in accordance to these principles?

What Hutchins proposes is for us to look at the organization based on the Principles of Nature he quotes from Fritjof Capra‘s book “The Hidden Connections: A Science for Sustainable Living“. These principles are:

Networks
Cycles
Solar Energy
Partnership
Diversity
Dynamic Balance

Lets look at each one of these principles from the perspective of understanding an organization. We know there are networks of relationships and many times we refer to them as the formal and informal relationships that occur within the organization. But what about really understanding where the “boundaries of identity and interaction” are? A thorough understanding of these networks will enable us to develop more effective ways to communicate within the organization as well as determining where there are barriers to collaboration.

Cycles are also present within organizations. If we take the time to look at the past and correlate the ups and downs, the expansions and contractions, with the impact on employee morale, retention or loss of talent, etc. we can anticipate what the impact can be if we know we are headed in a certain direction. We can learn from the way the organization moves through these cycles and then decide how we can support it to avoid past pitfalls.

Solar energy is a little more tricky, although if we draw a parallel between how it is the fuel that allows life of all living organisms, we can say that employee engagement is the fuel that enables companies to succeed. It is proven that increased levels of engagement have a considerable impact on the bottom line and we need to make sure we focus on this if we want to add value.

Partnership is the principle of cooperation. Is this a way of life within our organization or do we work in silos, worried about the results of our individual objectives? Are the programs and systems we have in place for measuring performance, establishing goals, etc. fostering collaboration and cooperation? We need to understand the impact of the programs we put in place so that we can re-design them to enable an environment that is conducive to cooperation.

by Jurgen Appelo

Nature clearly shows us that the greater the biodiversity the more resilient the ecosystems are. The same is true within organizations. When we talk about diversity we sometimes fail to grasp the true meaning. We need to foster an organization that is diverse, not only in race or origin, but diversity of thought. Do we let managers hire people that are like them, because they are easier to understand, or do we promote positive change by creating an environment where different is great?

Finally we have dynamic balance. Nature shows us that “no single variable is maximized, all variables fluctuate in concert around a collective optimum”. Do we really take the time to understand each piece of the network, each part of the organization? Do we take them all into account when we are thinking of our HR strategy? We normally focus only on the things that are deemed the most important (our high potential employees, our executives and leaders) and we forget that, if we truly want to drive results we need to maintain the dynamic balance that allows everyone to flourish.

So we need to devote time to understand our organization and what the reality is based on the principles of nature. That will enable us to drive positive change as it will provide an intimate knowledge of the key areas we need to focus on. By driving change from the perspective of the organization as a living organism we will prepare it for the future that lies ahead and the value HR brings will be clear.

Why do HR Strategies Fail?

We put a lot of effort in designing what is supposed to be a great HR Strategy. A couple of years later we look back and have not achieved what we envisioned. What went wrong?

It is very frequent that we find ourselves implementing a great program (a new Talent Management process, a better Leadership Development program, an on-line Performance Appraisal system, etc.), we invest time and effort, and frequently a lot of money, and a few years later we find that we need to change it because it doesn’t work. Then we start looking for the next best program, we convince the organization that it is the perfect solution, we roll it out and a couple of years later we are again thinking of the next best thing. Where are we failing?

If we want to prove to the business that Human Resources can add value to the bottom line, we need to define a robust strategy that will strengthen the organization and help develop the engagement and talent that we will need to deliver the business strategy. Easy to say … but not so easy to do!

Gary Hamel: Open source is one of the greatest management innovations of the 21st century

By opensourceway

In my post “We need an HR Strategy – What about the Business Strategy?” I touched on the point that it was necessary to have all functions represented when defining the business strategy, including HR. If we are at the table with the business, we understand where the company is headed, what the challenges are and what will be required in order to achieve the business strategy, then we can start to work on our own strategy.

Are we growing? If so, how? Is it through mergers or acquisitions or is it through the introduction of new products or technologies? Is there a change in the business that will require different skill sets than what we have today? Are there economic threats that we need to prepare for? There is no specific set of questions, the only way to know what the gaps are is to be immersed in the business, know it in detail and work with your leaders to figure out the human aspects of what will be needed to sustain it.

We have to be careful not to fall into the trap of stating the HR Strategy as what it should not be. James W. Walker in his book Human Resource Strategy states the following:

“Some company statements of human resource issues are so broad that they could apply to any company and imply directional plans, challenges, or goals rather than the business-related issues. For example:

More effective utilization of our human resources

A more risk-oriented, high-performance organization

Managing a more diverse work force

Skills obsolescence”

He goes on to say that many times we define our “strategy” more like assumptions, and therefore miss the point which is to focus clearly on the issues that matter the most, the ones that will help drive the business strategy.

In his book “The Nature of Business“, Giles Hutchins looks at the business of the future in the following terms:

“What could a firm of the future’s business vision look like? It could consist of the following aspects:

Strategic objectives where value and values are understood and interrelated.

Organizational culture rooted in well-being, diversity and clarity of purpose. One where individual and collective potential is encouraged through empowerment, local ownership and shared responsibility.

A business ecosystem where there is a sense of belonging to a community of stakeholders, each having clearly understood win-win synergistic relations within the diverse ecosystem.

Nature-inspired people, processes, products and places (infrastructure).

Reaching to attain positive holistic value (social, environmental and economic) for all stakeholders.”

I am not saying that all companies can relate to these, although more and more many organizations are including some of these aspects into their business strategy. If Human Resources is an active participant in the design of the business strategy, then we will be able to not only influence our leaders to think about these issues, but certainly it will be much easier to identify the components of our HR Strategy that will drive business results.

If you look at the list proposed by Hutchins, you can see that all of those are things that will help drive employee engagement. If we can develop the organization to think and act in those terms the only natural result will be a motivated and engaged workforce that will strive to achieve. And this can only deliver positive bottom line results.

So the key factor in ensuring that we develop a great HR Strategy is to carefully analyze the business strategy and extrapolate all the people aspects that we can influence. Then we need to assess where we are today and figure out the gaps. Only then are we in a good position to start defining what we will do to help drive the business.

We need an HR Strategy – What about the Business Strategy?

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We all know that in order for the HR Strategy to be successful it is key that it is aligned with the Business Strategy. Now, what about the Business Strategy … How can we, from Human Resources, help in the process of defining the business strategy to make sure it is successful as well?

Have you found yourself in a situation where the Business Strategy was defined in a vacuum? A group of very senior leaders get together and decide “this is what our Company should look like by 2020 or 2025, or whatever. It might also be that they contract some very expensive consultants to help them with the process and bring in a key note speaker to talk about trends and predictions, how the industry is changing and what to expect regarding economic indicators, etc.

I am not saying that this is not a good process, it is … but it is not enough. The issue is that these leaders tend to be far removed from the people who are actually in close contact with customers, the people who know what is required in order to close a sale, in order to remain competitive. Their views tend to be tainted with the input received from a few of the people that surround them. The problem here, I might add, is that these people normally say what they think the leader wants to hear so, in many cases, leaders are oblivious to what is really going on.

What do we need to develop a great Strategy?

For me it is when you combine a good view of what trends and market dynamics are showing, with the values and vision of the company and you mix it with what the customer facing employees, your R&D team and operations people know about what is going on and what might be possible. I know, you will probably say that I forgot about “Shareholder Value”, we can’t forget our Shareholders. Although I agree that the people that invest in our company are very important, I find that when you give them prevalence you end up missing the opportunity to deliver even more value. I find that cutting costs and showing better short-term profits is a short-sighted way of defining your future. The value will come, if you work on your Strategy well.

As Giles Hutchins‘ states in The Nature of Business:

“The firm of the past is resolute in its goal – ‘to maximize shareholder return’. Over the last few decades, shareholders (and the investment market) have in the main become more interested in short-term returns. The goal of the firm of the past has thus increasingly become one of short-term profit, utilizing two main levers: cost reduction (bottom-line management) and value enhancement (top line growth).”

This is definitely not the way to define a long-term strategy and unless we want to be a “firm of the past” we need to change our approach.

My preferred method for working on the Business Strategy is to involve an eclectic group of people, from all geographies, functions and levels (yes … HR as well!). Get a group of people from Senior Leadership levels, Mid Level Management and Individual Contributors from every functional area in the same room and create the right environment for open interaction.

According to Steven Johnson in his TED video “Where ideas come from“, you get the most out of people when the environment is like a fluid network or a coffee house.

Everyone has the right to talk and express their ideas and the open and unstructured exchange will enable a better understanding of where we are, what we can do, and where we can go. Although we need to provide structure to achieve the goal of defining the strategy, ensuring that there are many opportunities for participants to interact fluidly is essential.

Giles Hutchins included the following quote in his book:

“Popular wisdom holds that the fittest survive, the strongest, leanest, largest, perhaps meanest – whatever beats the competition. But in healthy, thriving natural systems it is actually the ‘fitting-est’ who thrive. Fitting-est implies an energetic and material engagement with place, and an interdependent relationship to it.’ – Cradle to Cradle : Re-making the Way We Make Things, Michael Braungart and William McDonough.

It brings to the forefront the issues of engagement and interdependence, which are essential to developing a successful strategy. We need to ensure we engage employees from all over our organization and truly consider their opinions, and embrace the fact that to be sustainable we need to be interdependent. By involving all areas and levels of the organization in this process, we not only ensure that we have all the information we need. If we handle the process well, the participants will help drive the strategy because they own it and they will be able to translate the strategy into their everyday work helping the organization understand where “we” are headed and why.

This is also a way to nurture the organization or, as my husband Herminio puts it, “pastoral leadership”. If you take care of each employee, you provide them with an environment that fosters their growth and encourages empowerment and engagement, the result can only be one … success.

My HR Post

A Holistic View of Strategic HR