This text is reproduced solely
for the limited academic use of students in MBA 665.
Managers can break
through the barriers that keep their performance expectations too low.
One of the most dramatic, large-scale productivity
improvements I am familiar with occurred in a regulated
public utility — an industry not noted for such performance
breakthroughs. In the early 1960s, this company’s productivity was about aver-age among 20 similar companies in North America,
as both work load and work force were rapidly rising. In 1966, the trend
shifted: the work load continued to rise, but the number of employees began to
drop. By 1968, the company’s productivity ranked among the best in its
industry. The difference between average and best performance was worth
savings of more than $40 million a year — well over one-third of its net income
at that time.
What produced this gain?
Neither new technology nor labor-saving machinery was a significant factor. No significant change in management took place.
The company was not reorganized. Nor were programs
incorporating management by objectives,
organizational development, mathematical modeling, or management information
systems responsible for the shift. The key to the turnaround was a decision by
the principal operating officer (with backing from the chief executive)
that the company must and could make
substantial productivity gains. Naturally, many supportive programs and
activities were necessary to translate this
determination into results. These activities, however, would have
produced little if a clear demand for improved performance had not been placed on the company’s management team.
Most organizations have the potential for as great — or
greater — gains. Very few, however, ever realize them. Few managers possess the capacity — or feel compelled — to establish high
performance-improvement expectations
in ways that elicit results. Indeed, the
capacity for such demand making could be the most universally
underdeveloped management skill.
Pushing for major gains can appear very risky to managers,
and these perceived risks exert tremendous inhibition on performance
expectations. If the newly installed manager asserts that significant gains are
possible, he may threaten his predecessor and current boss — and thus arouse
their antagonism — by implying that they had settled for less.
Even if he has been in the job for a while, he subjects
himself to the same estrangement. Great demands increase the risk of resistance
from subordinates and of the
embarrassment of failing to reach ambitious goals. Managers who set unusually
high demands may be challenged by others. They must therefore be sure of
their facts and clear about
directions. The struggle to upgrade performance may expose their
uncertainties, weaknesses, and
inadequate knowledge. More modest expectations
reduce all these risks.
In addition, establishing well-defined and unequivocal
expectations for superior performance creates
the worry that the failure of subordinates to produce will require drastic action. Musing out loud about a long-needed
productivity improvement effort, the vice president of a manufacturing operation asked, “What would happen if we set specific targets and my people didn’t meet them? I’d have to do something – maybe let some of them go. Then I’d
have to bring in people I trusted even less.” Before even determining whether he could create an effective strategy, this man was paralyzed by
the anticipated consequences of
failure.
The fear of rejection is also a powerful motivator. Asking
subordinates to do much more than they assert they can do runs the
risk, at least in a manager’s mind, of
earning their resentment, if not their dislike. Many managers have been only
too eager to adopt the model of the manager portrayed by the human relations
movements of the 1950s and 1960s – the
loving, understanding, and supportive
father figure. The model of the stern, demanding manager was portrayed as a
villain.
Although many exponents of human relations did emphasize the importance of high expectations and tough goals, managers frequently overlooked
those parts of the message. They saw that high expectations for performance could lead to psychological
rejection by subordinates. The prevailing opinion was that by adopting the right techniques, managers could avoid confronting subordinates on performance expectations and asking them to pro-duce much more than the managers estimated they were likely to give anyhow.
Are managers conscious of the discrepancy between the performance they are requiring and what might be possible? To an extent, they are. Most sense that their organizations could achieve more, but their vision is obstructed. To avoid the
uneasiness and guilt brought on by too clear a vision of performance gaps, managers unconsciously employ a variety
of psychological mechanisms for obstructing the truth.
Evasion through rationalization. Managers may escape having to demand better
performance by convincing themselves
that they have done all they can to
establish expectations. For instance, they may claim that everyone already knows what must be accomplished. When asked whether they have made the goals clear to their people, these
managers respond with a variation of “If
they don’t know what the goals of this outfit are by now, they don’t belong in
their jobs.”
Sincere in their belief that their subordinates are doing their best, managers frequently look for
sub-standard performance elsewhere. Do the following statements sound familiar?
·
“We can reduce back orders, but you’re going to
have to pay for plenty of overtime.”
· “If you want us to cut inventories any further, be
prepared for delayed shipments.”
· “Ever since they trimmed our maintenance bud-get,
we haven’t been able to keep this plant operating properly.”
Performance improvements always seem to call for an
expansion of resources or an increase in authority. Overlooking the possibility
of obtaining greater yields from available resources, managers often fail to
impose greater demands and expectations on their employees. And when managers
do try to demand more, their
subordinates are quick to point out
that they are doing all that can be done. Thus all levels of management may
share the illusion of operating at the outer limit when, in fact, they are far
from it.
To avoid having to impose new requirements on subordinates,
a manager may decide to take on the job herself. She reassures herself that her
people are already overloaded or that they lack some qualification that she possesses.
At the other extreme is the manager who covers up his reluctance to make
demands with toughness, gruffness, or arbitrariness. He may threaten or needle
subordinates without actually specifying requirements and deadlines for
results. In the folklore of management, such toughness of manner is equated
with a preoccupation with achievement.
Reliance on procedures. Managers can avoid the necessity
of demand making by putting their chips
on a variety of management programs,
procedures, and innovations that they
hope will produce better results. But while such mechanisms may help an
organization respond to demands, they are no substitute for good management.
For example, a manager may try an incentive system aimed
at seducing subordinates into better performance through the promise of “goodies.” Many top officers are
perpetually preoccupied with new kinds of salary, profit-sharing, and
stock-option plans and with promotions, titles, and other so-called incentives.
Management assumes that if the right
carrots are held out, managers and employees will run like rabbits.
Infusions of new managerial technology also may appear to
be the key to performance improvements.
Management will install information systems, mathematical planning models,
industrial engineering studies, training programs, or any of dozens of other programs offered by technical staff or
outside consultants. Top management may even reorganize the
company — or parts of it. Perhaps convinced of the magic in their medicines, even the best-trained staff technicians
and management consultants become the unwitting coconspirators of managers who
fail to establish higher performance requirements for subordinates. In one
well-known international company, an
internal consulting group put together a mathematical planning model to maximize corporate
profits in interdivisional negotiations. But the president used a flimsy excuse to escape from the struggle of
requiring his division heads to operate within the framework of the models.
Attacks that skirt the target. A manager may set tough goals and insist they be
achieved — and yet fail to produce a sense of accountability in subordinates. For example, managers often define even significant goals in vague or general terms that make
accountability impossible. The R&D director is told that she “must get more
new products out this year”; the personnel director hears that “turnover must
be reduced”; management at a transportation company insists that “safety is our
number one objective.” When reporting time comes, who can say whether these
objectives have been met?
Similarly, a manager may establish goals but
insist that subordinates can’t be held accountable because they lack
the authority to get the job done. The case of a petrochemical plant whose
product quality was well below par illustrates this point. Quality
depended on how well a number of
interdependent departments processed components. Top management charged
department heads to improve operations and monitored these activities, but it
failed to hold any individuals
responsible for the quality of the end
product on the grounds that none of
them was in sufficient control of all
the factors. The quality improvements failed to meet expectations.
Sometimes, when pressed by superiors, a manager will establish expectations in a way that tells
subordinates that he is merely following instructions from above. In fact, he
unconsciously hopes that his subordinates’ performance will fall short, "proving,” as he has asserted all along, that
the new stretch goals cannot be
attained.
Ironically, management-by-objectives programs often
create heavy paper snowstorms in which managers can escape from demand making.
In many MBO programs, as lists of goals get longer and documents get thicker,
the focus becomes diffused, bulk is confused with quality, and energy is spent
on the mechanics rather than on results. A manager challenged on the
performance of her group can safely point to the packet of papers and assert, “My
managers have spent many hours developing their goals for the year.”
The avoidance mechanisms just described act as
powerful deterrents to dramatic performance improvement — but they do not have to. There are ways to accelerate progress.
If management is willing to invest time and energy, there
is a way it can expect more and get more. I have seen the process work in a
variety of organizations: in a
refinery that expanded its output while reducing its force by half; in a large, urban teaching hospital that shifted its mission and direction
radically; in a poorly maintained detergent and food-stuffs plant that became
more competitive without more investment; and in school systems where determined
leaders generated innovation despite the inertia of tradition.
The essence of the five-step strategy outlined here
is to make a successful initial attempt at up-grading expectations and
obtaining a response and then to use this achievement as the foundation for
increasingly ambitious steps. A series of demands, initially limited, then more
ambitious — each sup-ported by
careful plans, controls, and persistence — makes success more likely than does a big plunge involving demands for
sweeping changes.
Select the goal. Start with an urgent problem. Are
the costs of one department too high? Is a budget being seriously overrun? Is a
quality specification being consistently missed? Is there a shortfall in
meeting a sales quota? Beginning with problems like these is essential to
generating the feeling that achievement of the goal is imperative, not merely
desirable.
As you select the goal, assemble the information needed to frame the performance demand. You need
this information not only to define the need and specify the target but also to
convince people why performance improvement is essential.
It is also a good idea
to sound out your subordinates on the opportunities for improvement; their responses
will give you a sense of their readiness. To illustrate, the management at a
newspaper publishing plant tried to launch a comprehensive improvement
effort. The needs were so great and resistance by managers at lower levels so
strong that very little was accomplished. Interviews with the composing room
supervisors, however, revealed that they shared upper management’s distress
over the number of typographical errors in news and advertising matter. This
information made it possible to design an initial project mobilizing supporters
of change.
The more participation by subordinates in deter-mining
goals, the better. Managers should
not, however, permit their dedication to the participatory process to mean abdication of their own responsibilities.
Specify the minimum
expectation of results. Broad,
far-reaching, or amorphous goals should be narrowed to one or two specific,
measurable ones. A manager may protest with “I have too many things that have
to get done to concentrate on only one or two of them.” But the fragmentation
of a manager’s attention in trying to push them all ahead can keep her
perpetually trapped in the same defense mechanisms from which she is trying to
escape. Whether the first-step goal is a modest advance or a bold one, it must
focus the energy of the organization on one or two sharply defined targets.
For example, one company, in treading a path between
mass production and tailored engineering, was losing money because it could not
clarify its proper place in the market and develop the appropriate products.
Top management spent hundreds of hours conferring and making studies to define
the business, the product line, and the pricing strategy. This produced more
frustration than progress.
The undertaking was transformed, however, when the president asked the executives to select from
a dozen new products the one they
agreed would most likely be profitable and conform to their vision of
the business. He directed them to
sketch out a market plan and pricing
policy for this product. They were to
draw from this effort some generalizations that could be applied to policy
determination. The president was
convinced that the group could produce the result in a short time. And he
was confident that the initial step
would provide insights into the next steps to clarify the company’s direction.
Communicate your expectations
clearly. Share with the persons
responsible, both orally and in writing, the determination of the goal, the
locus of responsibility, the timetable, and the constraints. Make clear that
you are not asking for permission to
set the goal, not securing their advice on whether the goal is attainable, and not implying that if
they do not meet the target, you will nevertheless appreciate their efforts.
Make sure they understand that this is not a goal that should be achieved; it is one that must be achieved.
Monitor the project, but
delegate responsibility. Work-planning
disciplines are essential to preventing
these projects from fading into the ether. Trying to keep the goals, commitments, and plans only in your mind is sure to
undermine the project; rather, have the manager responsible for each goal or
sub-goal provide you with a written work plan of steps to be taken to reach the
goal. This plan should also specify how progress will be measured and how it
will be reported to you.
Moreover, assign responsibility for achieving each goal to
one person, even though the contributions of
many may be essential for success. Consider the case of a company whose
technically complex new product was failing to perform as promised. The president
talked about the problem with her marketing, engineering, and manufacturing
vice presidents; each claimed that his function was doing its job and that the
problems originated else-where. After spending much more time than usual with her subordinates, the president was still able
to effect only a slight improvement.
The turnaround came when she told her department
heads that it was unwise for her to get involved in trying to solve the
problem. That was their
job. She gave them full
responsibility for reducing the frequency of unacceptable products to a target
level within three months. She assigned to one executive the responsibility for
shaping an integrated plan and for
making certain it was adequate to achieve the result. In addition, the president requested that each of the other managers pro-duce a plan specifying his or her own functions,
contributions, and timetable. After many months of struggling for a solution,
the company for the first time pinpointed a goal to be achieved, established
responsibilities for achievement, and introduced work-planning disciplines to
manage the process in an orderly way.
When responsibility for results is not explicitly
assigned, subordinates tend to “delegate” it up-ward, especially if the boss
tries to play a helpful role in the project. Top management must ensure that
project members clearly understand their responsibility and must not permit
them to turn offers of help and support into opportunities to pass the buck.
Expand
and extend the process. Once some success has been achieved on a first set of demands, it should be
possible to repeat the process on new goals
or on an extension of the first. This will lead to further expansion.
Consider the efforts of
a large railway express terminal that handled tens of thousands of
shipments daily. It was performing very poorly on many counts: costs were high,
productivity was low, and delivery deadlines were often missed. Studies had identified the potential for saving hundreds of
thou-sands of dollars, but those savings were illusive. Then the head of
the terminal and his boss ceased talking
about what was going wrong and all the improvements that were needed.
Instead, they identified the most crucial short-term goals.
From these few they selected one: getting all of one category of shipments out on time each day.
It was not an easy goal, but it was clear and understandable; it could be
sharply defined and measured, and
action steps could be quickly identified. Meeting that target was the all-important first success that launched
the terminal on an ambitious improvement program. Once the first traffic category was under control, top management planned a series of
slightly more ambitious improvement pro-grams.
Gradually, the terminal’s managers gained confidence in asking for more, and
their staffs gained confidence that
they could respond. Eventually, many of the sizable savings promised in the earlier studies were realized.
While moving ahead through successive sets of demands, top
management has some essential work to do on
the psychological front as well. The methods
and procedures for negotiating goals with subordinates are well known;
almost overlooked but more significant are
the often unconscious negotiations
that managers carry on with themselves. They frequently bargain themselves down to comfortable
expectation levels long before they con-front subordinates. They must learn to
share the risk taking that they want their
subordinates to assume. They may have to live with the “testing” subordinates subject them to, and they may need to
engage in consciousness-raising to make sure
they do not slip into rationalizations for failing to see that their
directives are carried out.
Managers
often unintentionally ensure that they will share in the glory of their subordinates’
successes but that lower levels will
take the blame for failures. For
example, a plant manager had been
pressuring the head of maintenance to realign the responsibilities of supervisors and workers as a way to increase efficiency. The step would make a number of persons redundant. Low-level managers and supervisors resisted the move, warning of various disasters that would befall the plant.
The deadlock was broken only when the plant manager – through transfers, early retirements,
and a very modest layoff – reduced the
maintenance force to the level needed
after the proposed reorganization. Once the most painful step had been taken,
maintenance management quickly installed the new structure. Instead of
insisting self-righteously that the
key to action was overcoming the resistance
of maintenance management, the plant manager assumed the risk and reduced the staff.
When managers expect better results, subordinates may express their own lack of self-confidence in the
form of tests. For example, they may continue to do exactly what they have been doing, suggesting that they heard the boss’s words but disbelieve the
message. Or they may imply that “it can’t be done.” Some subordinates
may advise managers that for their own good – considering the high
risks involved – they should lower
their sights. They may even withdraw their affection and approval from their
managers.
Such testing is usually an expression of subordinates’
anxiety over whether they can actually achieve the goal; it is a way to seek
reassurance from the boss. If the boss is as anxious as they are, he will be
upset by the testing and may react against
what he perceives as defiance. If he has self-confidence, he will accept the testing for what it is and try to help
his subordinates deal with the problem — without lowering his expectations.
In breaking out of productiveness-limiting traps,
consciousness-raising may be needed to help managers assess more objectively
their approach to establishing demands. Consultants — inside or out-side — can
help managers gain the necessary perspective. Or several managers who are
working through the same process may join forces, since each can be more detached
about the others’ behavior than about his or her own. They may meet periodically
to probe such questions as: Have you adequately assessed the potential for
progress? Have you made the performance requirements clear to your associates? Are these goals ambitious enough?
Are you providing your subordinates with enough help? Are you sharing the risks
with them? How well are you standing up to testing? Have you de-fined goals
that at least some of your subordinates can see as exciting and achievable?
Perhaps the most important function of consciousness-raising
has to do with getting started. It is very difficult to alter the pattern of
relationships between superiors and subordinates, especially if they have been
working together for a long time.
You cannot take the first step without worrying that your
people may say (or think), “Oh, come off it. We know who you are!”
The strategy for demanding better performance —
and getting it — begins with a focus on one or two vital goals. Management
assesses readiness and then defines the goal. The organization receives clearly
stated demands and unequivocally stated expectations. Management assigns the
responsibility for results to individuals, and work-planning discipline
provides the means for self-control and assessment of progress. Management
keeps wired in, tenaciously pushing the project forward. Early successes
provide the reinforcement to shoot for more ambitious targets, which may be extensions of the first goal or additional
goals.
There is no limit to the pace or scope of expansion. As
this process expands, a shift in management
style and organizational dynamics gradually takes place: sophisticated
planning techniques, job redesign, closer line and staff collaboration, and
other advances will come about naturally.
With clearly conveyed, “nonnegotiable” expectations and a step-by-step expansion strategy, you
may find that the anticipated
difficulties and dangers never materialize. If your subordinates are
like most, they will respond to the higher demands. They will be able to accomplish what is expected — or most of
it. And despite a bit of testing or hazing, most of them will enjoy working in
a more results-oriented environment. Thus you will be creating greater job
satisfaction and mutual respect, better relationships among levels, and a multiplied
return on the organization’s human and material resources.
In company after company, I have asked managers to estimate how much more their organizations would produce if overlapping functions were
eliminated, if units began to work more in sync with each
other, if people worked more closely to their real potential, and if they dissipated less energy in
political hassles, self-aggrandizing
behavior, useless meetings, and projects that go nowhere. Not surprisingly,
almost everyone has selected the “25 to 50%” and the “over 50%” categories.
With all this latent potential evident, why hasn’t there been more progress toward meeting the global competitive
challenge? I am as convinced as I was 17 years ago that the principal reason is that “few
managers possess the capacity – or feel compelled – to establish high
performance-improvement expectations in ways that elicit results.” This
capacity continues to be the most universally underdeveloped managerial skill.
There is no doubt that companies today are more
impressed with the need for performance improvement than they were in 1974.
They are making vast investments in new
tools, new plants, and new technology. They have cranked up massive programs
in continuous improvement, customer service, total quality, and culture change
that dwarf the efforts of the 1960s and
1970s. Senior executives, corporate staff groups, university professors, and
consulting firms have thrown themselves into the battle. The Malcolm Baldrige National Quality Award furnishes a national rallying point.
If these programs were put under the spotlight, however, they would be discovered to serve
frequently as convenient escape mechanisms for managers avoiding the
struggle of radically upgrading their organizations’ performance.
Ironically, the “thinkers” who have invented the
latest organizational effectiveness strategies unwittingly provide new busywork escapes. By putting so much emphasis on process and techniques, they have
slighted the importance of results. Thousands of employees are trained in seven-step problem solving and statistical quality control; thousands of
managers are “empowered”; and thousands of creative reward and communications
systems are in place. In the absence
of compelling requirements for measurable
improvement, however, little improvement occurs.
For example, teams of consultants and social scientists
set up more than 40
different programs in a large international corporation in an effort to
make it a “total quality company.” In
publicizing this under-taking, the company proudly asserted that it did not
expect significant results until the fourth year.
Companies will never achieve competitive performance
levels as long as their executives believe that the right training and development activities, applied with enough diligence, will eventually be rewarded
with the right bottom-line results.
That is a siren song for all those managers who don’t have the stomach
for the necessary personal struggle.
No combination of programs and training can inject the required experience,
skill, and confidence.
Contrary to the mythology, setting high-performance
imperatives does not conflict with empowering people. Empowerment comes as people rise to the challenge
of tough demands and, through effort, meet them. Listen to two Motorola employees describe their experience on a project to turn out a product
for Nippon Telephone and Telegraph:
“The customer came and told us that nothing except absolute excellence would be accepted. The
team was really turned on by the challenge of doing some-thing that was considered impossible.”
“People were challenged every day. There was a
strong drive to succeed in this program. It was the most exciting time of my
life.”
Those are empowered people.
To
create this kind of environment, managers have to personally experiment with
demand making on some urgently needed
improvement, like accelerating the development of new products, making
far-reaching gains in quality, or improving customer relationships. Demand making
can enliven organizations with the challenge
of tough goals and the gratification that comes with success. Without
an ever-sharpening demand framework, improvement programs and activities are merely diversions from the real work
of making our corporations more competitive worldwide.
Robert H. Schaffer
[1] Since 1960,
Robert H. Schaffer has headed a Stamford, Connecticut, management consulting
firm that bears his name. Through the Association of Management Consultants, he also trains consultants. In 1988, Harper Business Books published his book The Breakthrough Strategy: Using Short-Term
Successes to Build the High-Performance Organization. For the reissuance of this article, which originally appeared in HBR
November-December 1974, he has written a retrospective commentary.