Taking It to the Top: Seven
Ways Top-Performing
Companies Get Ahead of the
Pack…and Stay There
Becoming a top performer means a) adopting proven leader
behaviors and
b) creating the right organizational structure and
systems.
Here are some simple steps for achieving both.
By Richard Lepsinger Reprinted with permission.
All leaders want to be part of a
top-performing company. All employees do, too. And partners and customers seek
out businesses that are at the top of their game, as well. It’s natural to want
to spend our working hours engaged with dynamic organizations that flourish,
not struggling ones that flounder. But have you ever wondered what makes a company a top performer? I have—and when my
company did a research study on a related subject, we discovered some
surprising answers.
Our research on how top-performing
companies prepare for and manage change and what they do to ensure they are
able to execute plans and strategies effectively reveals some interesting
similarities and differences between the most and least successful companies.
First, the similarities between the
two groups are striking. Companies in both categories can point to visions that
employees believe are clear and strategies that are perceived to be
realistic. They have employees who
understand that the “customer is king” and who are engaged and have the skills
required to do their jobs.
What, then, differentiates the very
best companies from those that are less successful? Top-performing companies are characterized by cultures that
are flexible, adaptive, participative, and innovative—and they
operationalize these cultural attributes through leader behavior and
organizational structure and systems.
Leader Behavior:
Four Ways to Lead Your Company into “Top-Performer” Territory
Leaders in top-performing companies
are capable in four areas—managing paradoxes, leading change,
participative leadership, and leading by example.
If you’re a leader, you need to
ensure that you’re comfortable in all four areas. If you’re a CEO, make sure
all your leaders meet the following criteria:
• Get comfortable with managing paradoxes. Leaders in top-performing companies are better at
finding the right balance between what appears to be mutually exclusive
outcomes: achieving short- and long-term goals, establishing control and
providing autonomy, ensuring stability and managing change, and keeping costs
low and quality high while growing the business. They are also better able to
manage the sometimes contradictory needs of customers, employees, and
stockholders/owners.
• Understand (and use) the five magic keys to managing
change. OnPoint’s research identifies five
behaviors that enhance the ability to lead and manage change effectively:
Be forthright about the change and its impact. Sixty-four percent of the 655 participants in
OnPoint’s survey said that open and honest communication from leaders, even
when they don’t have all the answers, would make change easier. People want
leaders to be accessible and to engage in “change talk.” What is change talk?
It’s an open discussion of the pros and cons of making the change or
maintaining the status quo, and of the behaviors required to support the change
and boost people’s confidence in their ability to transition successfully to
the new way of doing things.
Model behaviors that support the change. It is not enough to just say the right
thing or even enthusiastically communicate the benefits and the business case
for the change. Employees want to see those words backed up with behavior. That
is how they judge how effectively someone is leading and managing a change.
Set realistic objectives and milestones. As employees reach realistic goals and milestones,
they become more positive about the change and will see its benefits. Targeting
unattainable goals will frustrate and demoralize employees during the first few
critical months, and the time and energy you’ve spent preparing for the change
will have been a waste.
Don’t underestimate the resources required. The over commitment of existing resources
or underestimating what it takes to accomplish objectives is a primary cause of
change initiatives’ failing to meet their intended outcomes. Keep in mind that
your employees have commitments to annual performance goals in addition to the
work they need to do to make the change a success.
Maintain enthusiasm and excitement among your employees. During the first month of a change, managers meet
with employees to get their support. After the first month, though, those
managers return to their day-to-day jobs, and employees can lose focus. Leaders
need to model behaviors that support the change for the duration of the initiative, not just at the kickoff.
• Involve team members in the decisions that affect them. Participative leadership matters. In 2006
the NBA introduced a new basketball and never asked the players for input while
it was in development. As a result, the players refused to use a new ball they
felt was difficult to handle. Involving the players early on would have
increased the quality of the ball and the acceptance of the “new
ball” decision.
Employees should be involved in critical decisions that
affect them, and they should be able to freely share their thoughts and
concerns. It gives employees a sense of ownership and nothing truly great can
occur in the absence of that.
• Lead by example. Leaders in top-performing companies understand that people will not trust or
follow them if they are not willing to live by the same values and support the
same priorities they require of others. Take, for example, two contrasting
approaches to the “leadership by example” factor: Donald Carty, former president
of American Airlines who offered gigantic “stay bonuses” to senior executives
after asking employees to take significant pay and benefits cuts, and Carlos
Ghosn, CEO of Nissan, who, when he took over the floundering company in 1999,
pledged to step down if Nissan failed to show a profit in 2000. Carty lost
credibility and had to step down, while Ghosn is celebrated as a “master of
execution” and a “turnaround artist.”
Structure and
Systems: Three Ways to Change Yours for the Better
Of course, having the best leaders
in the world won’t matter if your organization isn’t set up in a way that
allows them to use their skills. As our research revealed, your corporate
structure and operational systems are just as important as your leader’s
behavior.
Here are some
goals to shoot for:
• Strike a proper balance of centralized and
decentralized responsibility and
ensure that people at all levels have the freedom to take action to achieve
results. This improves responsiveness and allows issues to be
managed right where they happen.
When Mark Hurd took over as CEO of Hewlett-Packard, he
understood that the key to success was to make the Compaq acquisition work. He
did just that when he reorganized the company into three divisions, with each
division having its own sales force, making the heads of the divisions
responsible for sales. He also reorganized the IT function. Instead of having
eighty-five data centers, he centralized them into three. Essentially, he
decentralized the sales force and centralized the IT function of the company.
This is the opposite of the way the company was organized before, and it
ensured the organizational structure would be better aligned with the business
strategy. One measure of HP’s success is that operating profit increased during
2006 by 31 percent.
• Excel at coordinating decisions and actions across
organizational boundaries. In 2006 Ford demonstrated how difficult this is. When the company decided to
update the Ford Focus the North American operation wanted to simply refresh the
existing model, while the European operation wanted to develop a new version of
the model. The two groups couldn’t come to an agreement, so they each did what
they wanted to do. The North American group updated the existing model, and the
European group developed a new model. As a result, Ford couldn’t share parts or
take advantage of economies of scale and it cost the company money.
• Ensure that systems are aligned with strategic
initiatives. For example,
if your strategy calls for “innovation,” does the organization have systems in
place to facilitate organizational learning and creative thinking? To encourage
innovation, a company needs a mechanism to screen and fund these ideas.
Individuals shouldn’t have to struggle to find support and
resources to help develop their ideas. People frequently cite the efforts of
Art Fry and Spencer Silver, the 3M employees who invented Post-Its, as a shining
success story of personal initiative and perseverance. We would ask, “Why did
those guys have to work so hard? Wouldn’t it have been better for everyone if a
support system had been in place?”
The bottom line? Being a
top-performing company is a rigorous challenge—one not for the faint of
heart. Indeed, recent events at Dell, Motorola, and Chrysler illustrate how
difficult it is to execute effectively and maintain top performance year after
year. Still, the results are worth the effort.
Becoming a top performer requires
constant attention to the differentiating factors discussed above and a
willingness to review and continuously improve products, services, and the
business model itself. But the alternative is settling for mediocrity, and in a
global economy mediocrity is the kiss of death. After you claw your way to the
head of the pack, and after you realize how much fun you and your employees are
having, you’ll be glad you didn’t settle.
# # #
About
OnPoint Consulting:
OnPoint Consulting is
an organizational and leadership consulting firm that specializes in helping
companies close the gap between the creation and communication of their vision
and strategy and the achievement of their business objectives.
OnPoint combines
practical, research-based tools and models, state-of-the-art business
simulations, action learning, and in-depth experience across industries to
deliver high-quality and high-impact leadership and organizational development
initiatives. OnPoint’s solutions are designed to reflect each client’s
organizational culture and business environment.
OnPoint’s
organizational assessments provide practical, actionable data to help drive
execution and enhance organizational performance. The firm provides value-added
analysis and interpretation, along with customized approaches to help its
clients translate issues into action.
For more information, please visit http://www.onpointconsultingllc.com
