SMO 500 Reflection Post #5 The Psychological Contract, Microsoft and Mutual Investment

Companies get the most of their employees and employees thrive when their is a mutual investment by both parties. There must be an equal trade-off between what the company is asking from the employee and what the employer is willing to give in exchange for the best the employee has to offer.

The surprising conclusion that one can draw from the cases is that an employer does not need to demand the employee give everything that they can. All the employer must do is ensure that an employee feels challenged by a lofty enough goal and that they are paid well enough (not exorbitantly well) and the employees internal drive and motivation will be whatever it is the employer needs it to be.

Allow Employees to Change the World

At Microsoft this meant that employees were given the freedom to create what they needed in order to help the company achieve it's lofty vision, and the employees quickly realized that to achieve this they would have to work long hours, expect a great deal from themselves, and that this would mean working at a fast pace with a heavy workload. It wasn't until employees began to see themselves as not essential to achieving the Microsoft vision, or once they stopped believing in the Microsoft vision that they began to look elsewhere for work or suffer from burnout. The Microsoft case teaches us that if one hires the right people, people that are up for the challenge, intelligent and creative, and gives them an immense goal that matches their immense ambition, then one can expect them to give greatness.

There are much more intricate details at play in the Microsoft case, especially as one considers the HR sub-functions of selection, training, socializing and retention, but the real take-away from this case is that if an employer wants greatness from it's people then it must always behave as if greatness is immense and achievable.

This conclusion is echoed, although it is a little more toned down, in the Tsui and Wu article which critiques any employment relationship that doesn't operate as a mutual investment between employee and employer. Mutual loyalty, as cited in the article, produces the best and most productive employees. By connecting the conclusions of the Tsui and Wu article with the cases previously studied in this course it is easy to conclude that when an employee believes they are working towards something important within a company that is allowing them to contribute meaningfully to the success of the company then, and only then, is the psychological contract complete.

They need a goal that speaks to them that they
can be essential to helping achieve. 

Not all industries and all sectors will be able to tap into the ambition and drive that fuel every individual to strive towards greatness, but every company should try. Westjet was able to spark a believe that they were changing air travel, Microsoft was able to push employees to want to change the world and bring a PC to every home, and as a school leader I am going to work every day to show my colleagues the virtue of their ambition and the loftiness of their goals shaping the future of individual students.

Leaders are Created by Organizations: SMO 500 Reflection #4

Although this week's material did not contain very many new ideas when compared to the first three weeks of classes it did continue to reinforce some important themes of this course. Psychological ownership in a company was identified in week one, and that idea comes across strongly this week.

Taken from: Brains, Heart and Courage: Keys to Empowerment
and Self-directed Leadership by Pamela R. Johnson

At Blinds to Go the Senior Executives Stephen Schiller and Nkere Udofia, were managing their leaders in such a way that destroyed the potential for psychological ownership in the company. Robert Delgadillo, a director at Blinds to Go, is able to describe how this was accomplished, "Udofia and Stephen still get involved in any important decision.... you've got to place your trust in them and leave your egos at the door." Time and time again in this case there were examples of capable intelligent adults not be trusted to make decisions. Blinds to Go would hire leaders, and then they would not trust them to make leadership decisions and act as leaders. When people, especially people in leadership positions, but also in positions all the way down to front-line service or labour, are not given the opportunity to act in the best interest of the company, or experience success based on their ideas, then they do not take pride in their companies accomplishments. They will show up and work, clock-out, and out their "job" out of their minds. This is fine in some situations, indeed there are probably hundreds of organizations that are successful because they hire people to do their job and get paid and that's it, but if the goal is to get the most out of every individual, then this is a foolish strategy. 

If leaders are simply showing up and doing their jobs then
the organization is missing out on their full potential.

Udofia and Schiller were driven by a strategy, they were focused on long-term sustainability, and they were attempting to build a culture that would enable them to execute their strategy, so where did they go wrong? They went wrong by not aligning all of their HR practices with their strategy. Specifically their ability to select the right leaders for their particular culture was all wrong, and their process of motivating and socializing those selected for leadership compounded this problem.  Udofia and Schiller should have realized that they were part of the problem and delegated the selection and socialization of managers to someone else. Udofia and Schiller should not have hired for experience and then socialized their new leaders to "check their ego at the door." Udofia and Schiller should have hired new MBA grads that would be excited to roll up their sleeves, understand this unique business and then lead through the decisions and directives of Udofia and Schiler. 

Blinds to Go is a perfect example of how unaligned HR subfunctions can completely subvert the execution of strategy.

Witness, the laziest transition in writing.

In the Joseph Bower article Solve the Succession Crisis by Growing Inside-Outside Leaders there are two big ideas that have already impacted, and will continue to impact, my personal management approach. One of these big ideas, asked in the section "Now that you're on the job," is "Do you help others? Are you developing their talent? What do you do for your peers? Are you just their in-house competitor?" I was struck by these questions because I often think that I am helping others in my organization, but I know that I am competing far too often. Since reading this article I have started to talk to people about their leadership potential, and ask them specifically, if they need help moving up in the organization. I have become increasingly aware of the schoolboards plans and initiatives for creating and fostering leaders and the culture of schools to often discourage the ambitions of potential leaders. This awareness has already changed how I talk to people about advancement, the openness that I use in looking at my own practices, and it will continue to shape my role in helping develop my own leadership potential, by helping others. 

This course is allowing me to look past the cliche of "helping others"
and seeing it as a best practice utilized by effective leaders. Also, "I'm Batman."

One of the ideas, expressed by Bower, that is critical for my own career goals and my personal management style is the difference between being an inside-outside leader and an inside-inside leader. In our organization their is a powerful and important central office. Many people want to work at this central office in order to become leaders, but then they will become indoctrinated by the long-standing cultural practices of central-office. I was turned on by the idea of, maintaining enough detachment from local traditions, but still knowing the traditions and the people of the company well enough to know what needs to change. The framework of local leaders, principals and assistant principals, that periodically change schools is a perfect example of this idea at work. They know the people, the organization, and the culture, but they are detached enough from that particular school, that they are able to see where change needs to occur. 

On SCA SMO 500 Reflection Post #3

I would like to open this week by stating the goal of these reflections:
I am to record the lessons I have gleaned on "how managers and organizational leaders can best create (or avoid failing to create) value." I tend to stray from the goal, so here it is front and centre.

One of the better google image search results for search terms: leaders managers create value

The big value creating or negating lessons that can be drawn from this weeks material can be summed up in three statements. First of all, short term gains are no substitute for sustainable competitive advantage. Secondly, H.R. sub-functions, when properly aligned with a companies strategy, are powerful tools for creating and maintaining the desired culture within a firm. Finally, leadership shapes culture, and this can be for good or ill. Not only would I like to focus on and apply that last idea to my own profession and my personal management style, I will also be attempting to express my understanding of some more nuanced details of the broad lessons stated above. How does a "just culture" for instance fit into the HR sub-functions? Likewise, how do the short-term gains and even shorter collapse of Enron help to prove the sustainable competitive advantage framework outlined by Charles O'Reilly III in week one.

Let's start there shall we. The most interesting discussion, and the most thought provoking arguments come out of the interplay between proponents of a win for winning's sake attitude and the less and more tempered view that a company ought to somehow be improving the world. The difference is between short term profit and sustainability. So what leads to sustainable competitive advantage?

Metpahor

One theme that is coming out of this course and several sources is that in order to get the most out of the people that are working in an organization is to hire intelligent adults, treat them as intelligent adults, and they will act as intelligent adults (O'Reilley). One approach that compliments this idea is to do away with a detailed and overt "rule book" for employees to follow. A rule book damages in two ways, it stifles the creativity that is needed for dealing with exceptions that are unpredictable, and the rule book treats intelligent adults as children that need to have their behaviour and actions managed.

How Necessary is the Rule Book?

I bring up this notion of the rule book because it leads to the conclusion I arrived at after a very interesting discussion in class. When talking about competition many of the students pointed to the argument that in highly competitive financial industries the employees are often driven by bonuses. This notion can be equated to a model for Enron in the post-Kinder Era: a highly competitive culture that is financially motivated and driven by large individual bonuses. One of the conclusions that classmates seemed to point to again and again, and one that has probably come out of other studies of the Enron corruption and collapse case, is that industries that meet and assume the Enron model, even to a small degree, need more rules to regulate behaviour.

Here, then is the interesting paradox. If an individualistic, financially motivated, and highly competitive culture needs a rule book to govern behaviour, but a rule book stifles an organizations ability to create a sustainable competitive advantage, then what, if any, conclusions can be made? I shouldn't have called this a paradox because the answer is actually quite clear. When intelligent adults are asked to compete with one another for money they become unintelligent children that need to be governed. The implications for this argument are vast. Either the system must change or intense regulation is necessary. The rule book of regulation, however, is not conducive to creating sustainable competitive advantage.

"They are no longer adults"... and other conclusions I may regret later in my career. 

I will spare you the rant concerning our need to move away from profit motive as the most powerful driving force of our economic system and instead point to the possible ideals that have been expressed on at least two occasions in this course. Westjet was not trying to make short-term profit, they were trying to "change air travel forever." It also came up at another occasion (I can't find the source right now, hopefully before final submission) of a top CEO talking about having enormous ideals and goals like improving the world. If companies are meeting these goals then profits will come, but without movement towards sustainable competitive advantage through a strategy that aligns all HR sub-functions and tools of cultural creation and maintenance to unleash the talent of all people in an organization then a company will be doomed to mediocrity or simply short-term profit.

Other lessons from the Enron case around HR sub-functions like employee selection based on culture fit, purposeful assessment and reward systems to reinforce culture, socialization to promote and maintain a given culture, and the importance of leadership role-modelling and storytelling by leaders are more appropriately discussed in the successful case of West-Jet. Enron simply proves that the power of culture and synchronized HR sub-functions can be a value-neutral force. Strategy determines value, whereas culture and synchronized human resource approaches can be used to achieve any lofty or base strategy.

I am reluctant to continue with this review because I think my best ideas have already been explored, but there is at least one more idea that deserves to be reviewed.

While I found a great deal of the Allina case difficult to read due to the lens of cynicism that I was wearing while reading a case written by employees of a firm that they are "Exploring." I did take interest in the notion of a just culture that Allina adopted.

A Blameless culture acknowledges that to err is human. 

If a company wants employees to take risks, a necessary ingredient in maintaining and creating a sustainable competitive advantage, then it must accept that sometimes mistakes will be made. The Allina case was not advocating a medical services corporation adopt high-risk behaviour. Their justification for adopting a blameless culture is unique to their field. Both approaches, however, do operate under the assumption that intelligent adults are real human beings, and that once the psychology of human beings, their fears, their limits, and their capabilities are taken into account then a just culture is really the only sensible approach to handling mistakes when they occur.

My final thought, that I intend to include in my personal management approach, is that once again Enron and Allina both prove that leadership shapes culture. From a CEO publishing their weaknesses, to a COO acting like he's the Wolf on Wall Street by bragging in the boardroom and telling outlandish stories of wealth creation and crushing the enemy, the leader matters. Culture can often survive inconsequential or mediocre leadership, but strong leaders can circumvent systems, change and shape culture, or even help prop up or bring down companies.