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New Leadership for the Millennium

There is no hidden, unseen “they” in corporations, plotting to undermine and subvert every well-intentioned effort, yet that pronoun is used more than any other. “They” won’t let me do it. “They” don’t have a clue. “They” are the ones at fault. I once conducted a strategy session for the top officers of National Westminster Bank in New York City. At one point, discussing a particularly innovative new idea, the consensus among the group was “they would never allow it.” Was it the CEO? No, he was very supportive. Was it the government? No, it wasn’t a regulatory matter. Was it the employees? No, they would probably welcome it.

“I’ve got news for you,” I explained, “YOU ARE ‘THEY!’ ” Even top people resort to the omnipresent “they” to excuse inaction, indecisiveness and sloth.

There are great companies and organizations which believe the opposite, of course. They believe that the executives are there to make sometimes difficult calls but that, even in areas of ambiguity, there are ethical compasses and moral rudders. George Merck, the iconographic figure in Merck & Company’s corporate history, said once that if you do good, good will follow. That is, if the company does what’s right for the physician and the patient, there’s no reason to think that those criteria won’t provide for a decent return for the shareholders. George Merck’s words are included in Merck’s annual report, his intent is included in the research and production of profound products for human health, and his spirit is included in one of the most dramatic examples of annual compound profit growth of any business on the planet.

There is no “they.” There are no people with green eye shades and sleeve protectors locked away in a dusty room controlling everyone’s fate. Not even in the law schools.

Earlier this year I worked with a huge and prosperous diversified financial services firm. The CEO, reasonably enough, expected that his top management should be able to translate the corporate strategy into operating realities for their troops. When that translation seemed to be garbled, he ordered up a group of 20-person sessions for his entire senior team of over 100, to help create alignment and a uniform technique. I facilitated every one of those sessions, and we didn’t exactly break the land speed record for gaining accountability. Almost everyone felt that it was the CEO’s problem along with his four top reports, and they weren’t providing enough detail, they were not presenting a uniform message, they were not a solid team, and they would have to fix it.

With one group-all talented, intelligent people in a successful business-I ventured down a different path. I said, “Forget strategy. What if you decided to implement a common e-mail system (the absence of which created chronic communications problems)? Assuming for the moment that all 22 of you agreed 100% on both the objective and the alternative, how would the system be implemented and how long would it take?”

The group started to debate which of them or their colleagues would make the call, who would have to be involved, how budget might be obtained and so on. Finally, there was a lull. “Well?” I asked, “who’s got the ball on this?” They stared at the ceiling then stared at their fingernails. “Come on,” I insisted, “who’s in charge here?”

“It would seem,” offered one senior vice president after what appeared to be agonizing internal debate, “that the CEO would have to make that call.”

“The CEO?!” I shouted incredulously. “Do you mean that the CEO has to make the decision on e-mail and no one in this room can do that? He’s sitting downstairs in his office expecting you to make those calls. That’s why nothing’s getting done in terms of new initiatives, strategic or otherwise!” Everyone agreed it was a good time to take a break.

Not too long ago I stayed in a Hyatt Hotel which had a guest services “hot line.” A card near the telephone proclaimed:

 

Hyatt Hotline No problem too big or too small! Call the Hyatt Hotline: For instant response dial extension 21.

I did not have a room service menu. I immediately realized that this was a job for the Hyatt Hotline. I dialed extension 21.

“Hyatt Hotline. How may I help you?”

“This is Alan Weiss, room 732. I don’t have a room service menu.”

“I’m sorry, but we don’t handle that. Try banquets, extension 19. Thanks for calling the Hotline.”

As the line went dead I was busy trying to figure out what level of emergency would merit the attention of the Hyatt Hotline. Perhaps nuclear war?

The prevailing attitude of the Hyatt Hotline was not one of service and “no problem too big or too small,” but rather TNMJ: That’s Not My Job. TNMJ has become the scourge of American organizations and it has sapped the vitality out of most of them.

The Ritz-Carlton chain provides up to $2,500 to be approved by any employee to resolve a guest’s problem on the spot. A luggage handler, reservations agent or restaurant worker can thereby immediately offer something to assuage an outraged guest. There is no need to get approval or to involve management in the vast majority of instances. In response to complaints about excess noise, a poor meal, a prolonged wait for a car and other hotel nemeses, guests are extended an upgraded room, free meal, complimentary parking or whatever it takes, and it usually takes considerably less than $2,500.

Do some employees offer a benefit of, say $1,000, when $500 would have satisfied the guest? Probably, but so what? The benefit of solving a guest’s legitimate problem on the spot is a huge cost-saver, as well as a customer-pleaser. When resolutions have to escalate to higher management levels, two complicating factors immediately pertain: First, there is a longer wait for resolution and the commensurate increased frustration and anger. Second, a much higher satisfaction threshold is established when the guest is dealing with hotel management.

Ritz-Carlton’s policy is really a highly pragmatic and cost-efficient business tactic. It resolves the problem more quickly, provides for guest satisfaction on the spot before the issue can fester, and saves money by preventing higher salary levels from having to enter the fray. Most superb service approaches entail these two inescapable elements:

1. They empower people at the point of service.
2. They are reinforced because they actually save money daily.

Tougher than rocket science: executive attention

In a famous case some years ago, AT&T decided to launch a customer service effort, and instructed its directory assistance operators to be polite, helpful and solicitous to callers. They emphasized this with reinforcement from supervisory personnel and distributed literature. But how did AT&T measure directory assistance performance? You guessed it-by the number of calls handled per hour. Civility takes much longer than abruptness, and the operators soon learned that courtesy wasn’t going to help their job security.

The acceptance of mediocre performance isn’t always a personal, deliberate choice. Sometimes it is systemically mandated.

The psychologists call this phenomenon “cognitive dissonance.” It means telling me to expect one thing while I’m actually experiencing something quite different. It results in unbreakable paradoxes, which probably began with the classic, ancient admonition:

 

To all employees: The beatings will stop as soon as morale improves. Thank you for your help in this matter.

Service excellence isn’t rocket science, but it does require the worst kind of hard, corporate work: executive attention. A bank CEO told me that his overarching priority was to improve shareholder value. “But I can’t expect my employees to carry this abstract notion around with them every day. So I have to focus on the alignment of their daily goals with my longer-term objectives.” He did this by recognizing and rewarding those pursuits which reinforced improvement in shareholder value. For example, he found that rolling-over IRA accounts, providing auto loans, and establishing home equity lines of credit were both highly profitable actions and immensely gratifying to the local branch managers, who were providing short-term, tangible help to customers they saw on a daily basis. The CEO provided strong reward and high recognition for growth in those areas. That short-term, pragmatic help to the customer was reflected, however, in long-term, high-value benefit to the bank and its stock in a variety of ways:

• customer loyalty in the face of pervasive mail inducements from competitors
• the “benefit of the doubt” when unavoidable long lines were encountered in the bank
• unsolicited referrals from customers and resultant new business
• the ability to provide competitive but not the best interest rates available
• long-term investments on deposit
• loyalty which extended to children as they reached maturity
• inherent trust in the continual product and service offering that the bank marketed, creating an “easy sell”

“My job is to ensure that every employee, right down to the receptionists, are doing jobs that totally support our corporate direction. If I’m not doing that, who will?”

Good question.

The reward systems (or lack of them) in organizational life often undercut improvements in performance. If there is no reward and no penalty, then any response is an equal response. In consulting, we call these “undifferentiated responses” or “low quality responses” because any response-any alternative-is as good as another. If you take your Toyota in for service, the service manager, technicians and even cashiers are attentive, polite, crisp and professional. They never miss a request and they’ll carefully explain all of the work they intend to do. They deliver the vehicle when they promise. These are high quality, differentiated responses. That’s because Toyota constantly monitors their service through direct appeals to the customer, and will reward or punish its dealers commensurately. There is a direct feedback loop and consequences right down the line.

If you want to experience one of the finest examples of focused, no-nonsense customer service, simply send your priority parcels by FedEx. You can call their 800 line, use the internet, or use software they’ll provide for your computer and modem. They will pick up at your door and deliver to your door. The couriers will provide you with shortcuts and even re-write the air bill if it’s not completed correctly. You can track any package, any time, anywhere.

I was speaking once at the Woodlands Resort in Houston, when the client informed me that my books had not arrived, which were to be a gift for every participant. The hotel meetings manager loftily assured me that my FedEx boxes had not been received, and that she had personally “exhaustively searched” for them. I called FedEx, at 8 am on a Sunday morning, and found within 60 seconds that the books had, indeed, been delivered the day prior, and who had signed for them. Confronted with this instant information, the meetings manager sheepishly retrieved the books from an assistant’s locked office, where she obviously had not bothered to exhaustively search.

The practical business value of explicit standards:
Absolutely, guaranteed to get there the next day, usually

I’ve cited FedEx as one of my favorite examples of an organization that despises mediocrity. Like all outstanding organizations, they’re not that good because they’re perfect, but because they recognize their own deviations from standards.

I was called one evening by a FedEx manager who apologized for the fact that my letter had missed their plane because it had been inadvertently left in the van and only discovered in a later check. “We have two options,” she explained, “we can send it on the first flight tomorrow, meaning it will get there a day late, and we’ll only charge you for second-day service, or we can put it on a commercial jet tonight at extra expense, which we’ll absorb. Which do you prefer?”

“I’m sorry,” I said, “but don’t you talk somewhere about absolutely, guaranteed, positively, get there the next…”

She cut me off. “Of course. We’ll send it out tonight on the commercial flight. Thanks for your business.”

FedEx people are rewarded for getting packages where they’re supposed to go within the time frames established for getting them there. They brook no interference with getting this accomplished. Airborne Express constantly leaves my packages at a neighbor’s house a quarter mile away. FedEx never misses putting them on the same spot on my doorstep.

One of the great (perhaps apocryphal, but perception is reality within organizations) stories from FedEx’s earlier years is that of one of their 727 cargo jets suffering a flamed-out engine en route to the Memphis hub (the 727 has three engines, so there was no imminent danger). The three-person crew had every right to land the plane immediately and get the engine repaired. But they carried only packages, no passengers, and they were quickly able to restart the engine, arriving on schedule in Memphis without further incident.

Asked why they hadn’t made an emergency landing, the captain was phlegmatic. “Our job was to get the packages to Memphis. So that’s what we did.”

In still another famous FedEx story, a truck driver arrived at one of the company’s pick-up boxes, only to find that he had been give the wrong key and couldn’t open the box to get at the parcels. He could have skipped that stop, or called his supervisor and made it into someone else’s problem (and almost ensuring that the packages would not be delivered the next day), but instead he focused on the organization’s credo and acted within its value system. Somehow, he prised the entire delivery box off its base and loaded it into his truck.

When he arrived back at his distribution station, a team of employees, alerted to the problem by phone, immediately fell upon the box with levers and hammers. They had it opened shortly thereafter, and every package made its intended flight. The driver became a local hero.

I had told that FedEx story during a speech I was making to executives in the service industry. During a break, a few of them had gathered nearby to discuss my story. They concluded that, had that situation occurred involving the U.S. mails, there would be no way that the postal service driver would have done anything other than skip that stop and report the problem later.

“But what if, somehow, the FedEx driver, with his value system, his innovation, and his determination, were the guy in the mail truck? What would be the outcome then?” asked one of the group.

After a few seconds, another responded, “He would have gotten back to his post office at which time he would have been hauled before the postmaster for destroying government property. He probably would have been suspended, and his union would have to defend him.”

“I’m betting,” said another, “that even his colleagues would not have been sympathetic. There’s no value in ‘going the extra nine yards’ at the post office.”

The final word came from the other member of the group. “He probably would have been investigated by the postal inspectors and prosecuted for a felony.” Everyone nodded their heads and went off to get coffee.

The exemplar mentality is carried over to a company’s public image, its “tag lines” in advertising, its self-proclaimed distinguishing characteristics. For years and years Mercedes advertised itself as “engineered like no other car in the world.” A mechanical problem was treated by Mercedes technicians as a personal affront to their integrity. DuraCell Batteries promoted themselves as durable and powerful. When some of their batteries literally decomposed on my shelf in storage, two of their research people communicated with me about the problem. This was serious business to them. The etiology of excellence or lack thereof is found in both individual and organizational exemplars, be it personal actions or company pride. We’ve all heard about the legendary Frito-Lay route salesman who abandoned his disabled truck to continue his rural deliveries on a bicycle, so that no store would be without the product. Excellence and mediocrity are antipodal.

 

Only the Mediocre Are Always at their Best

That observation was made by Jean Giraudoux. I find it to be unassailable. If we were raising mediocrity to new heights, at least we’d be making some progress. But we’ve managed to give even mediocrity a bad name. For example:

• Sometime past midnight on the day that most of the nation adjusts to day-light savings time, every Amtrak train underway in the nation stops, dead on the tracks, for one hour. This is Amtrak’s way of adjusting its route schedules, since if the trains merely proceeded as if nothing were happening, they would all arrive an hour early. Amtrak can’t deal with a train that’s an hour early, despite the fact it can easily handle trains that are six hours late. So management’s answer is to just suspend time for a while, and the trains, like stunned reptiles caught out in the cold, hug the rails until they’re warmed by the rising sun. The airlines, of course, operating tens of thousands of flights across international time zones every day of the year, have no such problem. (Of course, they could always circle for that hour, or land at some remote airfield, which will probably happen if Amtrak executives ever get their hands on Delta or United.)In a country that can put men on the moon, explore the ocean depths and in-vent hair-in-a-can, how is it that we have a railroad system of a magnitude inferior to Albania’s? We haven’t chosen to apply tough standards, have become inured to the existing poor ones, and sit home and wonder why so many people commute by pollu-tion-spewing automobiles. Meanwhile, Amtrak will digest more of its hundreds of millions in taxpayer subsidies as you read this page.
• Called by a senior vice president to investigate what he claimed were falsified expense reports in his human resource group, I was asked to determine what cul-tural factors were responsible for such wide-scale cheating. After a morning’s inter-viewing, I had the answer. The senior vice president was known to take his first-class air tickets-a perquisite which was appropriate for his level in that company-and cash them in, keeping the difference while he actually flew coach. That difference can be huge. His people, taking his lead, would turn in expense reports for lunches with each other claiming entertainment of a customer, include receipts for materials which were really for private use, and generally abuse the system, albeit at far lesser amounts than his own scam.When I told my client that the problem was remedial and highly personal-the standard he was setting was merely being tightly embraced-he ended our relation-ship. It was far easier to throw me out than to change the standard, since the stan-dard was a considerable source of extra income for him.
• Adelphi University is a Long Island institution of some 4,300 students. Its former president, Dr. Peter Diamandopoulos, received a salary and benefits package of $837,000 in 1994-95 and he lived in a Manhattan apartment valued at well over a million dollars, provided by the largesse of the Adelphi Board of Trustees. At this writing, Adelphi has been through more than a year of turmoil and chaos, focusing on Dr. Diamandopoulos’s autocratic style, his cozy relationship with the trustees, an enrollment drop of 40 percent since his arrival, the second largest tuition on Long Island, and plummeting rankings in Barron’s and other college guides.The trajectory of the school has not exactly been vertical. In an unprecedented move for a university of this size, the New York Board of Regents invoked its power to remove trustees and sacked 18 of the 19 Adelphi trustees (one was brand new to the job and deemed faultless). The Board of Regents had found that at least two of the trustees had been doing private business with the school which directly profited them and their businesses. The fired trustees immediately hired a lawyer and sued for reinstatement, but within days dropped their plans, formally resigned, and went about other business.The trustees had been acolytes, carrying the trailing robes of the president and attending to his needs, rather than representing the best interests of the institution and its customers-the students. The Regent’s attention was hooked by a combination of student and faculty protest which reached a level that was impossible to ignore. Those two interested parties had had it with poor service and scant responsiveness. To quote Peter Finch in his tour de force in the movie Network, “I’m mad as hell, and I’m not going to take it anymore!” Let that be our marching cry.Of course, that marching cry isn’t always heard by the power elites. In December of 1998, Dr. Diamandopoulos was hired at an undisclosed salary to be a special assistant to John Silber, president of Boston University. Dr. Diamandopoulos will work on “special projects” directly for the president. Historical footnote: Dr. Silber was one the trustees cashiered by the New York regents, and had served as the head of the compensation committee at Adelphi. During that tenure he rigorously defended the salary the trustees were lavishing on Dr. Diamandopoulos. Historical footnote: Drs. Silber and Diamandopoulos had an informal rivalry going as to who would be the highest paid university president. Both of their base salaries were well above $500,000, and it’s obvious that the higher the level is raised overall, the better bargaining position any one president is in.

  The press has long commented on “interlocking” directorships, where two CEOs are actually allowed to serve as chairs on each other’s compensation committees, but we rarely can view so egregious an exercise of that abuse as in this lovely case from academe, even though only one served officially in that role. Not only is the situation unethical, but no one has raised any concerns about Silber’s role in his long-time friend Diamandopoulos’s riches, his being fired by the Regents of the State of New York, and his acquiring his friend’s talents for his current school. Alas, it’s now something for the students, faculty, and alumni of BU to worry about.

  Like the students and faculty at Adelphi, we have to make our unhappiness manifest in some way that causes pain to those who can change the system. A reservations agent might not care if you berate him or her for constantly putting you on lengthy phone holds, but the supervisor might if such complaints must be recorded, and I guarantee you that the general manager will if that person’s time is consumed with such elementary service problems. Enduring poor service is no different from providing wine for an alcoholic-we’re enablers to destructive behavior. Destroying one’s liver and poisoning the internal organs of an organization are analogous pursuits. Both are the detritus of apathy.

• A few years ago, the Digital Equipment Company lost $2.1 billion. That’s not easy to do, even if you’re trying, which Digital clearly wasn’t. During that same period, the DEC board granted pay increases of 70% to its five top officers. (Imagine what they might’ve earned if they had made money?) Where was the Board? What were they thinking? Were they sentient?
• In San Francisco, the symphony voted during 1997 to return to work for the current season with a salary structure beginning at $75,920 and rising to $83,200 before overtime pay. They have bargained down to a maximum of four performances and four rehearsals a week, with ten weeks vacation. The union barely ratified the terms, 54 to 41. At the current trend of productivity for the symphony, The Wall Street Journal has concluded that miming rather than actually playing an instrument can’t be considered too remote a union demand.

Empowering employees does not mean disempowering management — this is not a zero-sum game

The absence of money is a demotivator. People will focus on perceived injustices–often over relatively trivial amounts–at the expense of their work and accountabilities. But the converse is not true, in that the presence of money is not a motivator. Even more importantly, the addition of money is not a sufficient mechanism to overcome unhappiness about other aspects of the job. If financial enhancement were such an alchemist’s stone for morale, no one would be upset by unsafe working conditions, sexual harassment, excessive travel, poor leadership, management vacillation or downsizing. But, the last time I asked, they certainly were.

That’s why the values and leadership behind those values at Ritz-Carlton in the example cited above are so important. If you walk into an employee-only area at any Ritz-Carlton around the world, you’ll find the organization’s vision and values prominently displayed for every employee to see. Somewhere it will state, “We are ladies and gentlemen serving ladies and gentlemen.” That’s a tough and lofty goal in a day when one can observe guests with Tee-shirts and torn shorts sitting in the Ritz concierge floor lounge in downtown Atlanta. Yet it’s a goal that the organization successfully meets every day. I’ve never encountered a Ritz employee who could not or would not help me with a problem, and have found only one rude Ritz employee in close to a hundred visits. I’d gladly accept that success rate in every business I patronize.

In most organizations, however, employees are powerless and the organization conspires to keep them that way. If Ritz-Carlton can hire, educate and reinforce people with the behaviors required, why can’t every organization? It’s because of a disdain for excellence, caused by a fear that employee empowerment requires management disempowerment. Power, some think, is a zero-sum game, and if I give any to you, then I’ll lose some of mine. Welcome back to the school yard, but that’s where management often is today, trying to keep control of the only ball in the place.

Traditionally, American management has derived its power from the control of two resources: people and information. Thus, “head count” and exclusive meetings were key purveyors of power. The more people I control and the more I am uniquely able to disperse information–and withhold it–the more I am needed and the more I am heeded. That’s why we once had the proliferation of management layers, with each strata formed in an attempt to create its own corral of people and its own maze of hidden information. Ironically, that’s also why a training industry in “delegation skills,” management “grids” and “situational leadership” elements sprouted. It was as if managers were simply dying to share power with subordinates, but just didn’t have the tools! In fact, they didn’t have any intention of sharing power, so they gladly took the courses offered up by an out-of-touch human resources department and then went right back to hoarding their secret decoder rings. It wasn’t that managers didn’t know how to delegate, but that their power base was derived specifically from not delegating. As in most human development, skill sets are usually a secondary consideration to behavioral reinforcers.

Two events finally ended that reign. The advent of the computer created instant access to information for most of the organization and the frenzied search for profit in corporate downsizing meant that smaller staffs were better staffs. With neither people nor information proprietarily theirs, managers found themselves dangerously exposed. The modern manger serves as a team leader, leveraging the results of the team, working through others, and ensuring that resources are optimally distributed and shared. Yet those are skills never required or developed in the previous dynamic of fiefdoms and secrecy. Some managers had the tools (and/or the help) to make the leap. Most remain on the wrong side of the chasm.

Reluctance to empower people creates a closed loop system in which management is overwhelmed with working not to empower people and consumed with resultant tasks. No one else gets developed in this system, so job satisfaction, job expansion, careers and aspirations can’t be advanced. This results in at best diffident and, at worst, apathetic employees who perform poorly. Such employees are the last people in the world whom management would want to empower, so the circle is complete. “How can we empower people who are clearly not interested in the work? It would be a calamity. These people simply want a paycheck and to be left alone.” Ah, and who created them?

People who tell you “It’s not my job” are stuck in this closed loop system. Why should I go to extra lengths when there is no gratification, there is no support and there is great risk?

When my son was being graduated from the University of Miami, I arrived at the airport in Providence in the morning with my wife, daughter, mother-in-law and tickets, well in advance of our flight. We would be arriving at 3 p.m., comfortably prior to his 7 p.m. commencement. We checked-in at USAirways, waited near the gate, and rested in the calm that good planning provides. At boarding time, we were informed that a mechanical malfunction had cancelled the flight altogether. All passengers were directed back to the lobby ticket counter for rebooking, I could foresee the madhouse there and, in looking through my Official Airline Guide, I could also see that there were no other combinations of USAirways fights that could get us to Miami on time for graduation.

I approached the gate agent who had made the cancellation announcement, and explained the predicament. In a few minutes she verified on her computer that I was right about the lack of remaining connections. Then she said something that bought USAirways all the benefit of the doubt it will ever need for the rest of my airborne days.

“I can get you there on a non-stop American flight out of Boston, if you’re willing to drive up there,” she explained.

“But these are free USAirways tickets from your frequent flyer program,” I pointed out.

“No problem,” she said, reaching for forms, “we’ll simply buy the seats on American.”

And she did. She directed us to the American desk on the way out to get the new tickets, we dashed to Boston, and reached graduation 30 minutes prior to its start. That gate agent didn’t direct us back to the ticket counter, didn’t tell us that free tickets had lowest priority, and didn’t try to pass us off to someone else. She created a sterling moment for her company because:

• She knew she was responsible for passenger satisfaction–an outcome–and not merely boarding aircraft–a task.
• She had the ability and initiative to recognize a customer need and to provide an innovative solution.
• She had the tools at her disposal to take action.
• She had the absolute support of management for her judgment and actions within her sphere of accountability.

Requisites for accountability: I could, I would, I should, but will I?

The need in any organization to create accountability and empowerment throughout the enterprise requires the dynamic seen illustration to the right.

Every employee requires an awareness of the environment. How many times have you waited while two salespeople finished a conversation between the two of them, or been delayed while an employee finished a personal phone call? In restaurants, I’ve offered to buy a stunned manager a drink on the assumption that the gesture might at least bring a waiter to the table to take the order. That awareness has to include the nature of the probable help that customers will require. The values of the enterprise must be clear to everyone. The values include two components:

First, there is the raison d’être. We are here for this purpose (to provide travel comfort, to provide the best food flavorings, to provide family entertainment, etc.). Organizations do not exist simply to make money, although that is almost always a mandatory outcome. But if the bottom line ruled supreme, then any enterprise would enter any field, so long as there were money to be made. Sony would buy a profitable ice-cream venture, and American Airlines would have a profitable landscaping subsidiary. Such diversification is rarely the reality, and is almost never successful. Those values are best expressed as outcomes, such as improved health, comfort, financial return, security, reliability and the like.

Second, the infrastructure values provide for the constant reinforcement of desired actions (application of the skills). Employees have to believe that they will be supported when they make an error, try a new course of action and engage in prudent risk. They also have to be free from retribution and repercussion if they venture new ideas, identify poor practices and criticize inappropriate decisions.

Finally, skills are required to enable employees to take necessary actions. I can’t perform without the tools, no matter how much I may see the need and feel the urge. I can’t repair an engine without a tool kit, and I can’t resolve a customer complaint without interpersonal skills.

The combination of these three elements creates the behavioral attributes required to do the right thing every time. The absence of any one is fatal. At position #1 in the graphic, I know what I’m supposed to do and I see the need to do it. But I lack the skills. Call this the “should do” position. I’d do it if I knew how.

At position #2 we have the “could do” circumstance. I have an awareness of a particular incident (an inferior meal was served, we caused a customer to miss a flight, the product failed far short of its expected lifetime) and I have the skills to do something about it (provide a refund, offer a substitute, reduce the price), but the value system has not been compromised. Either I don’t feel that the situation is sufficiently out of the ordinary, or I know that the organization won’t support any remedial action I attempt. Therefore, while I understand your issue (the car was supposed to be ready today) and I have the ability to ameliorate the situation (provide a loaner for a day) I either don’t believe it’s a serious transgression (we’re always a day or two late, and we’ve been told to fend people off) or I know there will be a price to pay (if I provide a loaner the paperwork will take 45 minutes of my time and they’ll charge the cost against my department’s expenses). No matter which cause, the effect on the customer is the same: TNMJ. (“I’m sorry the car isn’t ready. You’ll just have to check with someone here tomorrow.”)

Position #3 is “would do,” in that I have the correct value system in place and the skills to take appropriate action. But I don’t know that anything is wrong. Either no one has told me, or I’m blissfully unaware of the surroundings. I may be effectively isolated by my staff (“Sorry, but Ms. Martin does not receive direct calls from customers. Call our toll-free hot-line.”), or I may simply not notice (the maitre d’ studiously ignores the patron complaining to the waiter about an incorrect entree). In any case, nothing is done.

Only position #4 constitutes “will do.” I’m equipped, I’m confident of organizational support, I’m aware and I know what’s right and what’s wrong. Those don’t seem like complex requirements. They’re not. But they’re quite rare. Telling someone why something can’t be done has become a neologism for service. “I know you were expecting the computer to be repaired by today, and I can empathize with your frustration. But we’re severely backed-up because of the recall, and you’re not alone in experiencing the problem.”

Thanks, I feel much better, and I’ll be sure not to buy your product and patronize your store again. Empathize with that.

Real power as a positive attribute, artificial power as anathema

There is a grand myth extant in organizational life that “power corrupts,” a vestige of an overzealous reading of Edmund Burke 200 years ago. Actually, the opposite position is true in business: powerlessness corrupts.

When employees are truly powerless–that is, they cannot make decisions which influence the outcome of their work–they will create artificial power. Psychologically, most people can’t remain healthy if they are engaged in a job which they routinely cannot influence. This is a sometimes desperate and always encumbering attempt to control their environment and bring some influence to their work lives. What we encounter as customers are ridiculous policies, rude comments, harsh treatment and deliberate sabotage. That’s because employees who feel powerless create artificial power, which we generally refer to as “bureaucracy.” Bureaucracy is the triumph of means over ends. The application of immediate, albeit false, power is more gratifying to the employee than the outcome of the job and the customer’s well being. I discussed earlier the importance of job gratification to employee morale and performance. In the case of powerlessness, employees create their own gratification which is contrary to the actual job output desiredby both the organization and the customer.

Several years ago I had taken a commuter airline out of Boston to Quebec late one February night. There were only two passengers aboard the 19-seat aircraft. When we arrived at about 11 p.m. in Quebec, the airport was deserted, and it was freezing, inside and out. The commuter plane agent told us to wait at a desk for the immigration agent.

After about 10 minutes of waiting in the cold, we were greeted by the immigration agent, who carefully placed his books, stampers, pens, and forms on the table. Then he turned to me and said, “Next!” He took a moment, stamped my customs declaration, then turned to the other passenger (and the only other person in line with me) and said, “Next!”

After the other passenger’s customs forms were duly stamped, the woman from the airline escorted us about 35 feet to another station, and said, “Wait here for the customs agent.” In about five minutes (Who can make this stuff up?) the exact same guy walks out, but now he’s the customs agent. And he turns to me and says, “Next!”

I asked him if we were in a Fellini movie. I told him that, since I had seen him only minutes before, he could have stamped and kept my forms, preventing an even longer wait in a freezing airport. He raised a finger into the air and intoned, “This is the procedure!” (The other passenger told him that he had left his forms with the first guy…)

If people do not have real power, they will make it up. The process of empowerment merely serves to ensure that people focus on real power and its subsequent productivity, not artificial power and its natural bureaucratic morass. Empowered people are healthier, as well, because there is less stress in their work and lives.

There are two conditions which can create high stress levels at work. One is the uncertainty surrounding what might happen the next day. The other is an inability to do anything about one’s work.

Where do we see such behaviors? I believe you can probably relate to the following:

• airline ticket counters during bad weather or cancellations the department of motor vehicles with long lines and surly clerks
• organizations in which senior management is under fire (Exxon, Texaco, Apple, TWA, Digital Equipment)
• immigration and passport offices
• luggage service supervisors at airports
• toll collectors on roadways
• organizations prone to downsize to resolve financial problems (AT&T, GE’s Aircraft Engine Division, Sunbeam, Scott Paper)
• utility customer service operators
• organizations which bring in “turnaround specialists” known for radical cost cutting (such as Al Dunlop)
• post office employees, especially those working inside
• stock brokers, traders and attendant financial industry employees

It’s no accident that some of these people are in government jobs and/or in what once were regulated environments. When the emphasis is on following orders and not on personal accountability, we find artificial power. The department of motor vehicles in most states has a surfeit of people who do not see their jobs as trying to help the customer. They aren’t rewarded for it, aren’t evaluated by it, and don’t have role models supporting it. Hence, the telephone contacts, hours of operation, forms to be completed and all the other customer interventions are designed for the staff, not the customer.

Ironically, utility customer service line response becomes worse when there is a major problem such as storm damage or lines down, because operators are besieged with identical calls and have no alternatives but to take down information and promise vague responses of service. Travel the New Jersey turnpike and you will find some of the rudest working people in the world collecting tolls. Not only will you rarely hear a “thank you,” but give someone a ten dollar bill for a sixty-five cent toll and they’ll actually abuse you, as if you’re part of a plot to make them miserable. (Actually you are, but not of your making.) Many years ago, the toll collectors successfully lobbied to ban pennies from motorists, ostensibly because they caused too many problems but actually because the customers found them a quite effective means of retaliation against the rude behavior. (If you don’t like to make change for ten dollars, think about counting 65 pennies.)

The nastiest, vilest public behavior I’ve seen in visiting 50 countries and traveling over 2.5 million air miles, is at United States immigration and naturalization sites. People who speak little or no English arriving from other lands are treated, by and large, with contempt and suspicion. Whereby overseas you can almost always find someone who speaks some English–and usually you will encounter fluent English–in the U.S. there are rarely officials who speak any other language at all. These employees are trapped in a deadly dull, hierarchical control system with no recourse other than self-abasement or humiliation of the public, so they choose the latter.

An insurance company called The Hartford made an effective marketing offer to me not long ago, trying to solicit my auto insurance. My family owned four relatively new cars and has a positive claims history, so I imagine I’m an attractive potential customer. I responded to the solicitation and completed an application by mail.

Two weeks later I received a phone call from a woman who was as disempowered as they come. She might as well have been rowing a Roman trireme to the beat of a drum. Here’s the conversation:

“Dr. Weiss, I have to go over the information on this application. First, please give me the correct spelling of your name.”

(After I did so…) “Please verify your address.”

“Wait a minute. That form was six pages long. Are you going to ask me to give you every piece of information all over again on the phone?”

“Yes. It takes about 15 minutes.”

“Why do you need this?”

“It’s our procedure.”

“I don’t understand why you have to hear everything I recorded, then confirmed with my signature.”

“Because we must do this.”

“What if I don’t choose to? Would your claim service involve the same bureaucracy?”

“Sir, this is what I have to do.”

“I’ll tell you what. Let me speak to your manager.”

“That’s impossible. There are no managers at this location.”

“How do I reach the vice president whose name was on the original letter to me, Cynthia Thomas?”

“Ms. Thomas does not talk to customers.”

“Where can I reach her?”

“We never reveal an individual’s location.”

Well, a call to the corporate switchboard in Hartford got me Ms. Thomas’s address, phone number and mail drop. I wrote her to explain how her innovative marketing effort went for naught in the actual acquisition of a customer. Unsurprisingly, she never wrote back. If my phone companion’s manner was tolerated by the organization, then leadership is always to blame.

There is only one answer to “Who’s in charge here?” It’s the people making the big bucks in the large offices with the covered parking spaces. They are the ones responsible for high standards and low, empowerment and disempowerment, action and bureaucracy. And contrary to what the protectors and screeners, the gate-keepers and filters would have you believe, you can always find out where they live within the organization.

All of this, of course, is a miserable failure in leadership. The modern, powerless organization is led poorly, and in a contrary manner to what we know about productivity and performance today. Modern leadership is solipsist, creating its own artificial reality. If you don’t view the organization from the customer’s vantage point, you never really know how it functions.

The failure is in the leaders, not the led. As managers vie for power using old standards of head count and information, or as they blunder around aimlessly in front of teams they don’t know how to lead, employees are left to their own devices. In those organizations that deny them power, they will create their own, and the latter is invariably toxic to the customer and the ultimate goals of the business (selling product or providing service, and retaining customers). In the government, the customers generally have no opportunity to take their business elsewhere, so the bureaucracy intensifies. In regulated industries that was also true, but with deregulation in full bloom, there is ongoing trauma. Electric, gas and telephone utilities suddenly find themselves in a competitive environment which is the equivalent of having been deposited on Neptune with an hour’s worth of survival gear. Hospitals and the health care industry are in the same situation.

It’s amazing what competition can do to moribund leadership. Once upon a time, AT&T had no marketing department and the customer gratefully grasped whatever phone service was provided. Today, that customer has a plethora of services, with payment plans and equipment choices that continue to proliferate. You can fly from Providence to Miami on Southwest Air for about $150 currently, and while Northeast Utilities can’t get out from under its own mismanagement of its nuclear operation, other New England utilities are about to offer competitive services across state lines.

Leadership at every level

Raising the bar of performance, standards, and results requires everyone to play a leadership role. There are at least five different aspects of leadership power. Note that these are not “personality profiles” or “quadrants” that befit personality types. These are objective organizational positions and dynamics from which leadership leverage can be exerted.

• The power to reward.
  Rewards are not purely financial. While the absence of money is, indeed, a demotivator, its presence is not necessarily a motivator. Nonetheless, reward of both financial and non-financial benefits are one of the keys to power and leadership.Non-financial rewards can include the following:
  • Recognition by respected sources
  • Ability to take greater latitude of action (empowerment)
  • Discretionary time off
  • Increased interaction with customers
  • Participation in higher level decision making or strategy
  • Management of other people
  • Project management
  • Collaboration with vendors
  • Management and coordination of consultants
  • Hiring responsibility
  • Team leadership
  • Public spokesperson for the organization
  • Serving non-profits or community on behalf of the company
  • Internal education and development
  • External education and development
  • Varied job assignments
  • Overseas work
  • Increased (or decreased) travel
  • Budgeting accountability
  • Self-evaluation of performance
  • Paid time on personal projects
  • Sabbaticals
  • Job-sharing
  • Tele-commuting and work at home

  If you examine the above list, which could easily be two or three times longer, you can see that even first-line supervisors possess some discretionary power in many of these areas. Simple inclusion is often a very powerful leadership technique, and this can be accomplished at virtually any level. Asking people their opinion has always had a salutary effect on their feelings of worth and involvement.

• The Power to Punish.
  This is the natural converse of #1 above. “Punishment” or providing penalties, is one of the most tangible and feared positions of leadership power (yes, fear is a motivator). However, this power base is best used with a soft glove if the end objective is to help people to become more productive and to respect their leadership.If John has been attending one of Mary’s meetings every Friday at 9 am for six months on time, and suddenly arrives 20 minutes late for three Fridays in a row, Mary has two basic options.Option One:

  “John, I’ve now watched you walk in here 20 minutes late for three weeks running and I’m fed up with it. You’re not a team player. You have a lousy attitude, and you clearly don’t respect me or the other team members. Now plan to get here on time next week or else, and don’t think that I won’t take this into account during your performance review.”

  “Mary, how dare you speak to me that way. I’m the one who volunteers first when you need overtime. I’m the one who leads the United Way campaign in this department. I personally helped you with the Scott Report over a weekend when no one else was willing to do it. You’re the one with the lousy attitude if you can’t take the time to even ask me about the lateness–which only occurred twice for maybe ten minutes of a boring meeting anyway!”

  Option Two:

  “John, it seems to me that you’ve been late now for three weeks to our meeting. That’s not like you. Am I right about that?”

  “Yes, unfortunately, I’ve been a little late recently.”

  “Why is that?”

  “It’s the traffic.”

  “But the traffic hasn’t changed, and you’ve never been late before. Has something else changed?”

  “Well, my wife has changed jobs, and now on Friday I have to deliver my kids to child care. It’s an extra 15 minutes, and I get there as soon as the doors open, but it’s the best I can do. My wife has to be at work early on Fridays.”

  “All right. Why don’t you think over our options, talk to some of your colleagues who have dealt with similar situations, and get back to me on how we can resolve this, okay?”

  Mary’s power to punish is no less real in option two, but her outcome will be qualitatively much higher because she:

  • Focused on observed behavior and didn’t make emotional leaps
  • Obtained agreement from the performer about the problem
  • Found the cause (not the blame)
  • Involved the performer in developing a solution
  • Made it clear the issue had to be resolved

  The power to punish is best used lightly, tangentially, and infrequently. In those cases, it’s highly effective. But if you’re whacking everyone every day, after a while people get used to the pain and figure that they might as well get away with something “good” if they’re going to get whacked anyway.

• The power of position.
  Hierarchical position has traditionally been the most important source of power, and is increasingly becoming the least important, although it is still not to be ignored. As people in the military are fond of saying when they salute an officer they believe to be incompetent, “I’m saluting to show my respect for the office, not my respect for the person.”Hierarchies have been flattened. Cost considerations have finally eliminated the rank upon rank of managers whose sole duty is to manage other managers. Executives have been urged to get closer to the customer and the work itself. A more informal office environment, replete with “dress down days” and casual atmosphere, along with a movement away from offices to cubicles for all ranks, and a first-name preference for everyone, regardless of status, has reduced the cachet and status of many high level positions. In addition, many titles are essentially meaningless, having either been created as a sop in lieu of promotion (in banks, everyone is at least a vice president) or as a concession to political correctness (“Vice president of new ideas” is a nice touch, but what the hell does it mean operationally?).Nevertheless, a clearly perceived executive vice president, general manager, or comptroller is going to strike fear in the hearts of the laggard and the slothful. The advantage of hierarchical or positional power is that it is constant: You know where those leaders live, how to reach them, and what to expect.Positional power can be hollow, however. At one southern New Jersey power company project, I heard my escort say, “Now we’re going to be delayed.” When I asked what caused his conclusion, he pointed to a group of people studying an excavation.

  “The people with the white hard hats are the site workers,” he explained, “and the ones with the yellow hard hats are the site supervisors. The orange hard hats are from home office management. But the two guys without any hard-hats at all, well, they have to be corporate executives and they inevitably ball everything up.” I’m from the home office, and I’m here to help you…

  Lack of credibility undermines positional power. In these cynical days, merely arriving at a certain position does not vest one with credibility or power as it did years ago. Too many workers have watched the conservative, non-risk taking, “don’t rock the boat,” play office politics type of individuals inexplicably ascend the corporate ladder. The new title doesn’t change their perception in the eyes of colleagues. In 1998 you could have gone right to the top, President of the United States, to view a leader undone in large part by actions which followers found reprehensible. If that can happen to the highest title in the land, it can happen to anyone.

  People who depend solely on positional power are seldom effective leaders.

• The power of expertise.
  There are many who derive power from their smarts, experience, knowledge, or some combination thereof. This is independent of their official corporate position. On plant floors, it’s not uncommon to hear “Get George” when a given piece of equipment is down and no amount of reading of the manual or trial and error will get it going again. However, George knows what to listen for, or was there when it happened in the past, or can quickly diagnose what’s likely and what’s not.Similarly, even in service environments, we now hear, “This is a tough meeting. Get Joyce to facilitate it.” Joyce may or may not be normally included in this group, may or may not be of their level. But what she is as a facilitator is the only quality that’s important. This kind of demand creates an informal leadership power, because people will defer to that expertise and will be hesitant to move forward without it.The power of expertise is an ideal vehicle for people who do not possess the other dynamics listed to influence organizational life far beyond what is possible for co-workers. People at all levels seek them out. Decisions are often delayed until their input is secured. They are named as unofficial advisors or as formalized task force leaders. Other leaders seek them out for their “team.” They can often write their own ticket in terms of the recognition factors noted above.The trouble with the power of expertise is that it is normally relegated to one perceived area, meaning that as much as the bearer is in demand in that area, they go unthought of in other areas. Expertise is limited. I once consulted at a poultry hatchery owned by the animal health division of Merck. Having listened to a focus group that morning, I remarked to the afternoon’s focus group that their concerns were very similar to their colleagues’ earlier in the day. The afternoon group was outraged.

  “Our concerns are of an entirely different nature,” stressed one of the supervisors.

  “But the morning group talked about egg fertilization problems, and so are you,” I pointed out.

  “Yes,” he said, “but those were chicken people, and we are turkey people. There is a world of difference.”

  Apparently so.

  The power of expertise is earned, not readily claimed, and is inherently rather narrowly focused. However, it is one of the truly informal dynamics of leadership in any organization. The other powerful informal leadership is our final type.

• Referent leadership.
  This is the most powerful of all the leadership types, because it is the most natural to follow effortlessly. Referent leaders are those others look to because they believe in them. It may be charismatic. It may simply be someone who has never lied and faithfully held up his or her end of the bargain every time. It might be someone who is known for accepting failure personally but sharing victories with the staff.Referent leaders can be at any level, in any job. They can be CEOs–I would think that there are quite a few of them in successful companies–and they can be rank and file workers. More normally, they are spread through the ranks of middle management.These are the true exemplars, the people whom followers will unabashedly tell you that they would like to emulate. Referent leaders get that way over time. They demonstrate their values, perform consistently, and develop a repute. Their characteristics usually include:
  • Support of subordinates
  • Intolerance for poor quality
  • Lack of political orientation
  • High regard for competence
  • Admission of error and failure
  • Standing up for values and beliefs
  • Outspokenness and candor
  • High ethics and integrity
  • Calm and effective in crises
  • Shared victories and a sense of fair play

Here is how the five types of leadership power sources compare against some standard variables:

Power Source	Commitment	Compliance	Resistance
Reward	possible	likely	possible
Punishment	unlikely	likely	possible
Positional	unlikely	possible	likely
Expert	likely	likely	possible
Referent	likely	likely	unlikely

As you can see, referent power is the most likely to consistently achieve commitment and avoid resistance. Many leaders state that they would prefer to have referent power, yet they continue to adjust their behaviors to punishment or position.

Solutions: Leadership that provides real power and rewards its use

Many of our organizations, public and private, are simply dead from the neck up. Their constituent parts are left to fend for themselves without common leadership, and they create their own rules, often at odds with each other. “That’s not my job” becomes the corporate mantra until, ultimately, no one can determine whose job it is. But there are explicit and clear approaches to create leadership accountability.

1. Create the playing field.
   Empowerment is not abdication. In fact, effective empowerment requires that the boundaries be established and agreed upon. The playing field could be six-sided or eight-sided, as large as a football field or as small as a tennis court. If the boundaries aren’t established (or if they’re only the size of a postage stamp) then empowerment isn’t possible. Only by knowing my limits can I have complete freedom within them. And only by establishing limits can leadership indicate that, while I can call my own “plays” (make my own decisions) on the field, if any of those plays come close to being out of bounds, then I have to inform leadership first.Conversely, the employee is able to open negotiations to enlarge a boundary (I need an increase in my grant-of-authority to successfully resolve these customer issues) and to engage in an objective discussions with leadership only when boundaries are clear to begin with. It’s far better to continually debate the boundary locations than to have them abrogated daily because of their ambiguity. Imagine the hostilities in a football game if no one were sure which lines represented the out-of-bounds or the scoring areas.
2. Provide the skills.
   Empowerment doesn’t result from a kneel and a sword’s touch to the shoulder. I have to possess the skills to do the job required. This is the “can do” aspect of the work.Performance expert Bob Mager has long asked an endearing question: “Could he do it if his life depended on it?” If the answer is “no,” then, presumably you have a skill problem. If the answer is “yes,” then you have an attitude problem.If you are empowering me in a customer service job, I will probably require skills in questioning, conflict resolution, time management and negotiating compromises, among other things. If you are empowering me as a team leader, I might require skills in delegation, running meetings, presentations and report writing. If you empower me without providing the requisite skills you are merely giving me a car without the keys.There is a terrific organization known as “Strive” which provides intensive training to the chronically unemployed. Unlike so many approaches which deal with “soft” skills, such as attitude and confidence, Strive’s tremendous success rate is largely based upon specific skill transfer, right down to how to shake hands, how to smile during a job interview, how to fill out an application and so forth. In the private sector, Motorola has popularized the internal “university” which provides continually updated skills and competencies to employees at all levels.

   At Avon, each employee in the information systems department receives 16-20 days of development per year at a cost of $15,000 per person. Its training budget increased by 20% in 1996 over the prior year, and each computer staffer in the company has an individualized development plan.

3. Reinforce the proper behaviors.
   Not everyone can be or wants to be empowered. Even with the proper skill set, I need to sustain the required behaviors. This is the “want to do” aspect of the work.In the customer service work mentioned above, I’ll need patience, calmness, attention to detail and low assertiveness (with the customer). In the team leader position, I’ll probably require higher assertiveness, high persuasiveness, an urgency for results and strong attention to detail. In the ideal world, you can choose someone with those behavioral sets for the position. In the real world, you’ll have to make compromises and provide feedback and reinforcement to modify behaviors.Behaviors are modifiable only within finite limits. It’s unlikely that a person who is low in assertiveness, low in persuasiveness and low in urgency for action will perform well in a highly pressurized sales job. Similarly, it’s unlikely that a highly aggressive, highly interactive, low patience individual will perform well in a counseling job. The behaviors should be within shouting distance of the job requirements if empowerment is to be effective. (Which is why blindly promoting the best salesperson to the sales manager position is the height of folly. Think about it: Virtually none of the great sports coaches and managers were star ballplayers themselves. That’s no accident. The behavioral demands on the field and on the sidelines are quite different.)If you don’t attend to the appropriate behaviors, you’ve given someone a car and the means to drive it without an understanding of the rules of the road.
4. Provide for structural support.
   Finally, empowerment requires that the systems, procedures and culture of the organization support it. If I’m “empowered,” but need four approvals, three days and two follow-ups to produce a desired result, then the empowerment is a sham. Even worse, if I’m negotiating internally with a person at a higher level, we reach agreement, and that person says, “Fine I’ll just check with your boss,” I’m not empowered.The provision of lap-top computers, work-from-home, 24-hour voice mail and other technological aids represents structural support for greater empowerment and independence. Ingram is a book wholesaler. Any person you get on the line can help you with even the most complex of transactions and ordering procedures. Amica insurance, one of the top-rated organizations of its kind in the country, operates without so much as a single agent. Any Amica representative can handle virtually any kind of inquiry or need in his or her specialty. They have access to the information required, the support to make use of it intelligently, and the equipment and resources to make rapid, intelligent decisions for customers. Such support removes expense from the operation, as well.Ironically, leadership sometimes goes to great lengths to provide a car, driving instructions, and thorough aptitude testing, then leaves roadblocks in the highway.