Welcome to Management Culture...

A random walk through management theory with the occasional intercultural critique.






Thursday, February 26, 2015

Why Diversity Matters

McKinsey (a consultancy) has produced a report, “Diversity Matters” (McKinsey Quarterly Feb 2015), which “examined proprietary data sets for 366 public companies across a range of industries in Canada, Latin America, the United Kingdom, and the United States.” The report compared financial results (such as total revenues, earnings before interest and taxes, and returns on equity for the years 2010 to 2013 and the composition of top management and boards (gender information, ethnicity, race, or both).

Here are the findings which highlight why diversity matters (along with further considerations ‘et alors’):

Why Diversity Matters

Some of the key findings per the McKinsey report (verbatim):

·         Companies in the top quartile for racial and ethnic diversity are 35 percent more likely to have financial returns above their respective national industry medians.
·         Companies in the top quartile for gender diversity are 15 percent more likely to have financial returns above their respective national industry medians.
·         Companies in the bottom quartile both for gender and for ethnicity and race are statistically less likely to achieve above-average financial returns than the average companies in the data set (that is, bottom-quartile companies are lagging rather than merely not leading).

The report further states that “the case for greater diversity becomes more compelling. We live in a deeply connected and global world. It should come as no surprise that more diverse companies and institutions are achieving better performance. […] That’s particularly true for their talent pipelines: attracting, developing, mentoring, sponsoring, and retaining the next generations of global leaders at all levels of organizations. Given the higher returns that diversity is expected to bring, we believe it is better to invest now, since winners will pull further ahead and laggards will fall further behind.”

Et alors

The insight is pertinent and the news is relevant, but the message is not new. Not least since this latest McKinsey report is a follow-up from the one they published in 2010 with similar results. Many large corporations have been attempting to increase diversity and inclusion for the last decade, but with limited results: they are trying to ‘win’ but ending up as ‘laggards…’ There are a number of reasons why diversity ‘initiatives’ may not work (lack of accountability, not ‘walking the talk’, having recruitment but not retention targets, etc.), so what can be done now that’s new; what’s the solution?

There was a very interesting interview with Renee James, the president of Intel Corporation, in the Economic Times of India, “Corporate Dossier” (Feb 13-19, 2015) where she highlighted their recent initiative to ‘walk the talk’ by dedicating $300 million to increasing workforce diversity. Part of a two step plan (1/ do the same as before but better; and 2/ ‘go public’ with the initiatives), she highlighted one of the key issues why diversity initiatives did not appear to work in the last decade: ‘micro inequity sensitivity.’ At the ‘macro’ level, companies and their staff are making broad gestures towards diversity; however at the micro level diversity becomes a ‘good cause’ but ‘someone else’s problem’. At the micro level, no one is accountable for their actions. This may not be malicious and/or ‘anti-diversity’ behavior – many staff will at once and the same time subscribe to the macro initiatives but sub-consciously still exhibit micro inequality when it comes to matters such as talent development.

An example might be if there are two candidates for a post, one of whom is ‘diverse’. In line with macro diversity initiatives, the senior manager will be glad to see a diverse candidate but then ignores that diversity: ‘there is no difference between these two candidates except for their experience and qualifications…’ But then the micro inequality starts to take effect when the senior manager selects only according to these criteria. Let’s say the candidates are equally competent but the ‘diverse’ candidate is female (whose experience was interrupted with a few years maternity leave) and is a graduate from a ‘foreign’ university which the senior manager is not familiar with; whereas the other candidate is male (with no interruptions to work experience) and is a graduate from a ‘local’ university which the senior manager is very familiar with. Who is going to get the job? There is therefore the need to highlight ‘micro inequality sensitivity’ principally amongst senior executives… Hence Intel’s initiatives to ‘go public’ (thereby increasing accountability at both the macro and micro levels) and directing funding to continue to ‘find out what is really going on’ when it comes to diversity…



Thursday, February 12, 2015

Leaders at all Levels

Based on their 2014 ‘global survey’ Deloitte (a consulting firm) concludes that ‘leadership’ is viewed as the highest priority issue amongst all executives, yet ‘most companies feel they are not meeting the challenge’ to develop leaders. This in “Leaders at all Levels: closing the gap between hype and readiness,” March 2014, A. Canwell, V. Dongrie, N. Neveras & H. Stockton. The report goes on to say that companies are ‘not equipping the leaders they are building with the critical capabilities and skills they need to succeed.’ With the environment demanding leadership agility, Deloitte’s research shows that particular leadership skills are in ‘high demand’.
Here’s the key leadership skills needed to succeed along with further considerations (‘et alors’):
Leaders at all Levels
‘21st Century’ leadership skills that a company might look to develop in today’s market environment which ‘places a premium on speed, flexibility and the ability to lead in uncertain situations’ are:
·         Business acumen: Understanding the core business well

·         Collaboration: Having the ability to build cross-functional teams

·         Global cultural agility: Managing diversity and inclusion

·         Creativity: Driving innovation and entrepreneurship

·         Customer-centricity: Enhancing effective customer relationships

·         Influence and inspiration: Setting direction and driving employees to achieve business goals

·         Building teams and talent: Developing people and creating effective teams
Et alors
Many management writers have asserted that too many companies focus on the first point at the detriment to the rest. Such companies are likely to be organizations where even the word ‘leadership’ is rarely used or perhaps only assigned to those at the very top. Companies whose focus is management (rather than leadership) are likely to overlook the importance of engaging staff with such things as ‘inspiration’ and ‘talent development.’ Low staff engagement equals low performance; hence the assertion from Deloitte that developing leaders at all levels is of paramount importance for the company to succeed in the 21st Century.
The report also mentions that instead of one ‘type’ of leader, a company might think to develop different types of leaders for different challenges. One company needed four leadership types: entrepreneurs to start up business; ‘scale leaders’ to build up business; efficiency leaders who reduce costs; and ‘fix-it’ leaders who ‘turn businesses around’. (It’s arguable that the fourth type is not needed if you get the first three correct…) Once leadership development is manifest at all levels in the organization, this is a further step the organization can put in place to not only engage staff but to become highly competitive. ‘Management’ companies beware!


Thursday, January 29, 2015

The Disciplined Pursuit of Less

Now that the year has started and corporate objectives have been clarified, it’s time to think about your own objectives! Whilst awaiting the bonus payments many an executive might be mulling over their career perspectives. In the “The Disciplined Pursuit of Less” (HBR, August 2012) author Greg McKeown gives some good insight as to how to avoid the “undisciplined pursuit of more” and proposes that previous success can actually act as a catalyst for future failure:

·         Phase 1: When we really have clarity of purpose, it leads to success.

·         Phase 2: When we have success, it leads to more options and opportunities.

·         Phase 3: When we have increased options and opportunities, it leads to diffused efforts.

·         Phase 4: Diffused efforts undermine the very clarity that led to our success in the first place.

He calls this the ‘clarity paradox.’ Here’s how to avoid it along with further considerations (‘et alors'):

The Disciplined Pursuit of Less 

Here are the 3 ways to avoid the ‘clarity paradox’:

Use more extreme criteria

If we look for “a good opportunity,” then we will find lots of ideas for us to think about. Instead, we can conduct an advanced “search” and ask three questions: “what am I deeply passionate about?”, “what taps my talent?” and “what meets a significant need in the world?” Evidently, there won’t be as many ‘search results’ to view, but that is the point: rather than a multitude of “good” things to do, we are looking for our absolute highest point of contribution…

Ask "what is essential?"

… And eliminate the rest! There are 2 key steps:  1/ Conducting a life audit. Consider which ideas from the past are important and pursue only those; otherwise “throw out the rest!” and 2/ Eliminating an old activity before you add a new one. This rule ensures that you don’t add an activity that is less valuable than something you are already doing…

Beware of the endowment effect

This refers to our tendency to value an item more once we own it. (Think of how something that you haven’t used in years seems to increase in value the moment you think about giving it away…) Instead of asking “how much do I value this item?” we should ask “if I did not own this item, how much would I pay to obtain it?” The same goes for career opportunities: we shouldn’t ask, “how much do I value this opportunity?” but “if I did not have this opportunity, how much would I be willing to sacrifice in order to obtain it?”

Et Alors

As the author says “if success is a catalyst for failure because it leads to the ‘undisciplined pursuit of more,’ then one simple antidote is the disciplined pursuit of less. Not just haphazardly saying no, but purposefully, deliberately, and strategically eliminating the nonessentials. Not just once a year as part of a planning meeting, but constantly reducing, focusing and simplifying. Not just getting rid of the obvious time wasters, but being willing to cut out really terrific opportunities as well. Few appear to have the courage to live this principle, which may be why it differentiates successful people and organizations from the very successful ones…” Food for thought as you consider ‘what next...?’



Thursday, January 15, 2015

What Really Matters in Leadership


Claudio Feser, Fernanda Mayol, and Ramesh Srinivasan conclude in “Decoding leadership: What really matters” (McKinsey Quarterly, January 2015) that there are 4 leadership behaviors that are important to the success of organizations. They surveyed 189,000 people in 81 diverse organizations around the world to assess how frequently 20 kinds of leadership behavior were applied within their organizations. The sample was then divided into organizations whose leadership performance was strong (top quartile) and those that were weak (bottom quartile). The findings were that “leaders in organizations with high-quality leadership teams typically displayed 4 of the 20 possible types of behavior; and these 4 explained 89 percent of the variance between strong and weak organizations in terms of leadership effectiveness.”

Here are the 4 leadership behaviors that really matter (along with further considerations “et alors”):

What Really Matters in Leadership

Per McKinsey, verbatim:

Solving Problems Effectively

The process that precedes decision making is problem solving, when information is gathered, analyzed, and considered. This is deceptively difficult to get right, yet it is a key input into decision making for major issues (such as M&A) as well as daily ones (such as how to handle a team.

Operating With a Strong Results Orientation

Leadership is about not only developing and communicating a vision and setting objectives but also following through to achieve results. Leaders with a strong results orientation tend to emphasize the importance of efficiency and productivity and to prioritize the highest-value work.

Seeking Different Perspectives

This trait is conspicuous in managers who monitor trends affecting organizations, grasp changes in the environment, encourage employees to contribute ideas that could improve performance, accurately differentiate between important and unimportant issues, and give the appropriate weight to stakeholder concerns. Leaders who do well on this dimension typically base their decisions on sound analysis and avoid the many biases to which decisions are prone.

Supporting Others 

Leaders who are supportive understand and sense how other people feel. By showing authenticity and a sincere interest in those around them, they build trust and inspire and help colleagues to overcome challenges. They intervene in group work to promote organizational efficiency, allaying unwarranted fears about external threats and preventing the energy of employees from dissipating into internal conflict.

Et alors

It is interesting that the first point relates specifically to ‘solving problems effectively’ rather than ‘decision making’ (1 of the other 20 leadership behaviors). Getting the right information at the right time in order to (then) make the right decision is evidently a critical leadership behavior that yields high dividends. It is also inextricably linked to ‘seeking different perspectives’…

A frequently observed analytical profile of leaders usually highlights great potential (learning agility, motivation, vision, change management etc) but inability to deliver because they cannot follow through on execution. All too often junior to mid-level leaders see themselves as the ‘creators’ but leave it to management and staff to execute.  To be a good leader you need to both start and finish...

‘Seeking different perspectives’ could be replaced by ‘diversity of thinking.’ Nothing will derail the effectiveness of leadership in the corporate world as much as ‘group think’ where everyone arrives at the same conclusion based on the same (limited) inputs. Looking ‘outside-in’ and encouraging diverse inputs are the keys to leadership effectiveness.

Being supportive can mean focusing as much on ‘feeling’ as ‘thinking’. Not all engagements are ‘rational’ in the sense that it is exclusively logic and analysis. If your leadership is to be effective there also needs to be a balanced consideration as to what people might feel – otherwise you can try and lead as much as you want but people might not always follow…



Thursday, December 18, 2014

Indian Leadership

India is not a country - it is a continent; and India’s corporate cultures are as diverse as its 1.2bn people, so to talk about ‘Indian Leadership’ in the corporate environment might run the risk of being so general as to not even be typical.  It was therefore with delight that I came across Pillai and Sivanandhan’s book, “Chanakya’s 7 Secrets of Leadership” (Jaico, 2014) which looks at Indian leadership from a different perspective: here ‘Indian Leadership’ is an ancient model of Indian Leadership which is then applied today in the corporate environment (Indian or otherwise).

Here’s a summary of ‘Indian Leadership’ followed by further considerations (‘et alors’):

Indian Leadership

In the 4th century BC, Chanakya’s teachings were documented in the Arthashastra. One of the teachings therein is the seven pillars, (or ‘secrets of leadership’). Book 6, Chapter 1, Verse 3 of the Arthashastra states the qualities of a ‘Swami’ (Leader) are:

Intelligent and dynamic

Intelligence must be applied through research, study and analysis in the pursuit of ‘solutions.’ The ‘dynamic’ of a leader comes from being able to implement the solutions! Some people never start; others start but do not finish; whereas leaders start and make sure they finish. 

Associates with elders

This means learning from those who are more mature and experienced than you are. Some people learn from their mistakes; others never learn from their mistakes; whereas leaders learn from others’ mistakes. To keep learning is a great quality of a leader.

Truthful in speech

Speaking the truth is important, but before that a leader has to “understand the truth.” Intuitive leadership is the highest form of leadership. Intuition comes from insights which come from maturity which comes from understanding the truth.

Does not break promises

It is not just the promise you made to others that you have to keep; instead it is the oath “you made at the start of the journey” that you have to keep. Leadership is all about delivering what you promised – to put it in modern terms, the leader has to “walk the talk.”

Grateful

Gratefulness means humility. A man once asked his guru how to develop humility: “help someone lower than you” was the reply. However, having done so many times and returning to the guru asking if he was now humble, the guru eventually replied “only when you can no longer find someone lower…”

Desirous of training

Both being trained and training others. To avoid complacency, don’t just learn; rather unlearn, relearn and continuously learn! Great leaders build good training programs in which they are involved themselves, thereby sharing their knowledge and wisdom. 

Easily approachable

A leader makes himself available when the followers require him, not just when he requires them. Followers look to their leader for hope and need a “father, mother, friend, philosopher and guide.” A leader is like a “ready and available resource for any problem in an organization.”

Et alors

These ‘ancient’ teachings strike me more of a guide as to how a leader should ‘behave’ rather than what a leader should ‘do.’ In a sense, it is relating to ‘how to be’ rather than ‘what to do’ even though the prescriptions relate to actions. Whatever the perspective, these behaviors of a leader might be applicable anywhere, not just in corporate India. As for applying these ‘secrets’ locally, that is where an understanding of the local culture is paramount; and for Indian culture – that may well be the subject of a future article…

Thursday, December 4, 2014

Female Quotas

In “A Nordic Mystery” (Schumpeter, 15.11.14), The Economist picked up on the first “substantial study of Norwegian reforms” principally relating to the introduction of board membership quotas. Since 2003 the board of directors of public companies in Norway must comprise a minimum of 40% women and a minimum of 40% men; moreover any companies that do not comply are simply delisted. Throughout the world, the ‘Norwegian’ model has been heralded as a success (cf. my article of last year diversity quotas) and as an example for others to follow in terms of managing quotas; however has it really worked?
There are now more women on the boards of public companies; however companies “fled the stock market as the quotas were phased in: Norway’s stock of listed firms fell from 563 in 2003 to 179 in 2008.” Furthermore, only 6% of listed firms had a female chief executive in 2013 (cf. 2% in 2001, but cf. 5% of USA Fortune 500 companies today). Besides quotas at the ‘top’ of the corporate environment, the Norwegian society affords both generous social policies and an egalitarian culture that facilitates equality at the ‘bottom.’ The challenge remains in the ‘middle’ and in particular for women leaders: “visit a typical Nordic company… and you will notice the senior managers are still mostly men.”
The study (by Univ. of Chicago Booth business school) concluded that “there is no evidence that these gains at the top trickled down.” They have not improved the career prospects of highly qualified women below board level; not helped close the gender pay gap; and not encouraged younger women to go to business school. Why? It appears that at the ‘top’ the quotas are “too prescriptive” for only a select group in a select role which does not strengthen the career ladder for women as a whole; whereas at the ‘bottom’ ‘female-friendly’ social policies “makes life easier for women but does not encourage them to aim higher.”
Evidently there is a dynamic in play that needs to be strengthened. Here’s how:
Female Quotas 
The quotas were put in place to redress the balance of women in business. 60% of graduates in Scandinavia are female: the principle is not just to ensure the balance at the top, but at everylevel in the corporate environment. Schumpeter proposes two key ways to strengthen the female quota dynamic:
Leadership Pipeline
If the target is to have 40% female senior leaders, then the leadership pipeline might need to start with 60% female junior leaders. Companies should “include plenty of women among the high-flyers selected for challenging assignments.”
Senior leaders “should take their role as mentors seriously.” Mentoring is vital for leadership development especially when female leaders have to navigate difficult-to-see, negative cultural forces.
Making a Balanced Environment
“Employers should encourage, not penalize, fathers who take parenting breaks, and let them work flexible hours so they can do the school run.”
“Selection committees should stop putting so much emphasis on continuity of service, and penalizing women who take career breaks to care for young children.”
Et alors
Interesting points, but it might be possible to go further already. Within the context of considering female quotas to be a temporary measure to redress the balance, why not have quotas at every level in the corporate hierarchy to strengthen the career ladder? These quotas could be removed once full equity has been achieved; but without which there is likely to be a ‘whole in the middle’ for a while to come. If the female career ladder is not strong enough then the companies might resort to looking to recruit externally to achieve the ‘top’ quotas: this potentially then worsens the situation by demotivating and discouraging internal candidates in the ‘middle’ levels. It may even lead to reduced retention of female talent as they either retreat from the ‘tournament;’ or, to ‘win the tournament,’ they start to change companies themselves.
Regarding absences, it also might be possible to go further. When women have a child, some cultural norms tend to frame the question as ‘child or career’; whereas when men have a child, the same cultural norms do not present the same question: the man may assume there is noquestion and/or a child and a career can both be achieved without any detriment to either. There is a twofold approach to solving this which builds on Schumpeter’s suggestions: 1/ make sure parental absence for either parent is not detrimental to their career, not only avoiding the penalization of absences in career planning but actually promoting, encouraging and rewarding absences; and 2/ more specifically to men – make paternity leave mandatory – this is assuming the first point is fully addressed and might also change the cultural norms…
There is also a possible further key issue to address. How to break the indifference of men who currently hold the senior leadership positions? This is potentially one of the biggest barriers to the promotion of any type of diversity. The male senior managers might not be against diversity per se, but it’s just not on their agenda. Further, if they do stop to think about diversity, then they might suggest that some women will ascend the career ladder if they are ‘good enough’ – a genuine (albeit misguided) belief that there are no barriers and there is equal opportunity… To take male business leaders ‘beyond’ this, female quotas need to be ‘sold’ (and not just ‘imposed’). The benefits of diversity (and the need for quotas) should to be ‘marketed’ so that the current senior leaders know ‘what’s in it for them.’ When the male senior managers themselves start to actively promote diversity, the male-female balance in the workplace might start to be fully redressed!

Thursday, November 20, 2014

What do people want from their leaders?

Moving into new media, the Harvard Business Review now produces ‘video insights’ (available direct on www.hbr.org or as podcasts) which, amongst other things, includes “Management Tips.” On the 18th November I viewed “What do people want from their leaders?” by Gareth Jones of the London Business School. His principle concern was that there is very little trust in the capitalist system right now (think of the publics’ opinion of bankers) and this might further extend to business leaders. In order to promote trust in leadership, we should no longer ask the question ‘what makes a good leader;’ rather start with the question ‘what do the followers want from a leader…?’ 
Here’s what people want from their leaders followed by further considerations (“et alors”)
What do people want from their leaders?
In the context of the definition that ‘effective’ leadership excites people to exceptional performance; and having conducted 1000 interviews, Jones concludes that there are four key things that followers are looking for in their leaders:
Community
Followers want to feel part of something, be it a team, a department, a business or a project.
Authenticity
Followers want to be led by someone who is authentic – a real person they can trust.
Significance
Followers want leaders who appreciate their contribution – feedback is sought.
Excitement
Followers want a leader who can transform (make changes) and enrich (add value).
Et alors
It could not be simpler! Make everyone feel part of a team and lead with vision to engage everyone behind a single goal or objective. Work on your self-awareness and be authentic (not whom you think you should be, but who you really are). Give feedback well (both constructive and positive) and then energize people with your enthusiasm (and ability) to make changes and increase value. Its simplicity belies the fact that it appears to be very culturally specific. This might apply to Anglo-Saxon followers (but I’m not sure as the sample profiles were not given); however it might not apply to other cultures.
Some cultures already have a very strong sense of community in everything and anything they do without leaders having to highlight it for them; followers may prefer their leaders to focus on other aspects. Some cultures don’t necessarily want their leaders to be ‘authentic’ personas – instead they might prefer someone who maintains a formal distance that (as such in that culture) strengthens the leader’s power. Some cultures might prefer their leaders to maintain the status-quo and (whilst not destroy value, at least) maintain value. Apparently, in most cultures, people are always searching for feedback; however the way in which it is done is very important and culturally specific. In short, as a leader, focus on your followers and ask them what they want, but don’t expect the response to be uniformly consistent across cultures!