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By Rob Andrews with italicized content from Julia Lee Cunningham, Laura Sonday, and Sue Ashford’s Harvard Business Review article published on September 5, 2022
Studies have shown that high potential employees often contribute 5 – 15X more to the bottom line than an average employee. Just one high potential employee can be the catalyst that takes an organization of 10,000 employees from worst to first. In today’s blog, we explore the conundrum around identifying and developing high potential employees and why it could make all the difference in your organization.
Two cases in point: In 1988 and 1989, I promoted two individuals to senior level positions while running 516 convenience stores for NCS, the third largest C-Store operator in the world at the time. One went on to become an extraordinarily effective SVP of Stores, and the other became the most effective and successful division president in the company’s 36-year history. These two individuals made the company tens of millions of incremental profit dollars. Here’s the punch line: Both people had been and would have continued to be overlooked for three reasons:
They didn’t fit the NCS “corporate mold.” They were not self-promoters, and there was no mechanism that enabled them to self-select into a leadership development plan. I often ask my colleagues and clients: How do you ensure that you don’t overlook the best talent in your organization? Most don’t have a clear answer. There is no psychometric assessment that predicts potential. There is no silver bullet. The answer starts with eliminating limiting beliefs regarding pedigrees and overly restrictive profiles, in addition to making it much easier for employees to identify as potential leaders and begin the journey.
According to Cunningham, Sonday and Ashford, identifying as a potential leader is a critical first step on the path towards becoming one. And yet, many people are uncomfortable identifying as leaders. What drives this reluctance? When it comes to leading, self-identity matters. Research has shown that seeing one’s self as a leader is an important first step on the path toward becoming one — and reluctance to identify as a leader can keep capable people from taking on leadership responsibilities. So, why are people so often uncomfortable with thinking of themselves as leaders?
While there are no doubt many factors at play, prior research has shown that reputational concerns can play a major role in deterring people from proactively pursuing their goals at work. As such, they were interested in whether perceived risk to people’s reputations could similarly impact their sense of identity as leaders, and in turn make them less likely to lead. To explore this question, they conducted a series of studies with more than 1,700 participants including full-time employees, MBA students, and U.S. Airforce cadets, and we consistently found that the more people worried about the reputational risks of being a leader, the less likely they were to identify as one. Specifically, they identified three common reputational fears that hold people back from seeing themselves as leaders:
Fear of seeming domineering
Many of the participants in the study expressed concern about being seen as bossy, autocratic, or domineering if they were to take on a leadership role. As one interviewee put it, “I wouldn’t want to seem pushy, or that I take advantage of weak [people]. I wouldn’t want to seem cold.” Interestingly, while much has been written on the use of pejorative words like “bossy” to describe female leaders, we found that in our studies, men and women were both afraid of coming across in this manner.
Fear of seeming different
The second common concern was that acting as a leader would result in being singled out and receiving too much attention for being different from others — even if that attention was positive. One participant explained, “I don’t want to be looked up to or idolized. I am comfortable leading, but at the same time I want to be on the same level as everyone else.” Many people worry that if they become leaders, they will have to sacrifice their sense of belonging within the group.
Fear of seeming unqualified
Regardless of whether they saw themselves as qualified, many of their participants said that they were afraid that others would view them as unfit for leadership. As one shared, “I know people often associate men with leadership roles, so that makes me somewhat uncomfortable. I worry that if I try to pursue leadership in my field, people will not take me seriously.”
To be sure, there are very real experiences that often inform these fears, especially for underrepresented groups such as women and people of color. But whether these fears are justified or not, it’s important to understand their impact on how we view ourselves. And across the studies, they found that people who reported higher levels of fear around these reputational risks were less likely to see themselves as leaders. As a result, they were less likely to act as leaders, and therefore less likely to be seen as leaders by their supervisors.
Managers can also take steps to explicitly address employees’ reputational concerns. It is understandable that people wouldn’t want to align themselves with an identity that’s stereotypically associated with being domineering, different, or unqualified. Organizations must demonstrate through both words and actions that anyone can be a leader, and that taking on leadership roles will be viewed positively.
Cunningham, Sonday and Ashford’s research is certainly noteworthy. It has also been my experience that exposing new hires to leadership development opportunities early on in their careers can have an enormous impact on an organization’s ability to “grow its own” and develop deep bench strength. Early in my tenure as a retail division head, we designed a leadership development program, and every new hire had the opportunity to opt-in. I have seen similar techniques work for several of the peak performing organizations we’ve studied. The key is to expose new hires to leadership opportunities from the beginning. In doing so, you can:
There is no one right way to identify, engage, and develop high potential employees. You can hire a great human capital consultant to assist you in designing a program that’s right for you. The one constant is the importance of having such a program. Without it, you’re destined to have high potential talent fall through the cracks, costing your organization immeasurable momentum and profitability. I sincerely hope this piece is helpful.
Warmest Regards,
Rob
By Rob Andrews
The number of organizations with strong, healthy peak performance cultures I’ve seen deteriorate over the four decades I’ve been paying attention is staggering. The first exceptional culture I saw disintegrate before my very eyes was the Safeway Houston Division for which I managed one of its highest volume stores. For eight years, at age 24, I had been a part of an organization which had grown from 3 stores to 91 and from less than one percent of its market to a commanding 23%. We were the best in town, and everyone knew it. We had the best store conditions, the best customer experience, the best employees, and the best profits. We also had a leader named Don Gates, who had built a culture of peak performance.
I am quite certain that Gates, our Retail Operations Director, never heard or thought about that term, as it didn’t exist in those days. I am also certain he didn’t learn about it in business school because he had a high school education and spent ten years as a produce department manager. He certainly was not out of central casting. What he did know was how to build a unified leadership team that extended all the way to individual department heads. We were perfectly aligned. We knew our purpose, even though we didn’t call it that. Gates treated us like adults, with dignity and respect. He smiled and was friendly with everyone he met. He was also tough as nails and had very high standards. Even though he demanded exceptional performance, we weren’t afraid of him. We just didn’t want to let him down.
In February of 1978, Gates was promoted to Division President in Butte, Montana. He set records for sales and profits in Butte, and repeated his performance in the Kansas City, West Coast, Eastern and Phoenix divisions. Unfortunately, the man who replaced Gates did not get it. Inside of a year, he lost 44 store managers and four out of eight district managers. The culture Gates built over eight years came tumbling down and it started almost immediately. The new man was all business and all numbers. He never smiled when we walked through a store and only spoke to the store manager. In a flash, he took away all the autonomy we enjoyed under Gates. He treated us like children. No longer was it about pleasing Mrs. Jones, it was about pleasing him. We lost our purpose, our dignity, our pride, our will to win and our market share. What confused me then and baffles me now, is how or why none of the executives above this man noticed what was going on and took action to correct it.
Over many years, I’ve seen the exact same movie as Randalls, Dominic’s and Genuardi’s disintegrated after being sold, Home Depot declined after Bob Nardelli took over, Continental Airlines tanked after Gordon Bethune left, Save A Lot Food Stores declined after Eric Claus left, Apple declined after Steve Jobs left, and the list goes on. Of course, cultures can be restored, as Lou Gerstner rebuilt IBM, Julie Sweet rebuilt Accenture, Lynsi Snyder rebuilt In-N-Out Burger and Charles Butt rebuilt H-E-B. Culture starts at the top. One of the complicating factors is that there are subcultures within organizations that can be failing under an ineffective leader while the whole is still relatively healthy.
Cultures are incredibly perishable and even the healthiest need to be monitored, adjusted, and nurtured. The analogy between cultural health and physical health is still the best one I can think of. Analogous to physical health, there are definite indicators of optimal cultural health and they are measurable. In January of 2019, I finally came to realize that self-diagnosis was an exercise in futility and hired an outside consultant to do for my own firm what we do for our clients. It was a humbling yet profoundly valuable experience to discover toxicity within that had to be cut out. My experience in working within client systems for many years is that there are usually a few folks that are holding the entire organization back. In most cases, this unproductive behavior goes unnoticed or unaddressed by superiors. It has also been my experience that some of these people are not bad apples they just have not been given the proper coaching and/or mentoring. I can think of dozens of executives off the top of my head that were practicing bad behavior and simply didn’t realize it. Many of these went on to become peak performing leaders once someone who cared enough about them told them the kind truth and held them accountable.
When examining leadership teams, I look for healthy respect among members, diversity of thought, debate around tough issues, careful listening, courtesy among participants, shared vision, clear responsibilities, clarity around objectives and key results, open mindedness, effective decision making and genuine concern for all stakeholders. When looking for leadership effectiveness, I go to the front lines to see if what I observe on the shop floor aligns with what I observed in the boardroom. Signs that leadership needs attention are listlessness, disrespect, disengagement, long faces, no real debate, group think, talking over one another, dominant players, obvious favorites, no clear purpose, fuzzy values, lack of clarity, defensiveness, and lack of alignment on the frontlines.
Indicators of cultural health around communications, hiring, purpose, customer experience, cost leadership, clarity and innovation are also evident if you know what you’re looking for and what diagnostic tools to use. We’ll get into those in subsequent posts. For now, ask yourself, your board, your leadership team, your frontline workers, your shareholders, and your customers: “How healthy is our culture”? Remember that a healthy culture can deteriorate quickly unless it is monitored and nurtured. Every elite athletic team has a gaggle of professionals constantly monitoring its readiness to compete. Peak performing organizations are no different.
The purpose of all these blog posts is to share what we’re learning about building cultures of peak performance. In future posts, we’ll dig further into how rule breakers of every variety are building companies that dominate their sectors. These are organizations that practice the nine principles we’ve observed in organizations that outperform their peers: Unified Leadership, Disciplined Hiring, Leading with Purpose, Stakeholder Engagement, Cost Leadership, Measuring Everything that Matters, Customer Experience, Clarity in Everything and Staying Ahead of the Curve. If you’d like to talk about how we can help your organization, or if you’d like a thought partner, please give us a call.
Warmest Regards,
Rob
By Rob Andrews with contributions from Bob Aylward, former CEO of Quiddity Engineering
Eleven years ago, I concluded that there are nine principles at work in organizations that perform at the very top of their sectors. One of these nine is cost leadership. Peak performers eliminate as much cost as possible without affecting the customer and employee experiences. Southwest Airlines, FedEx, Quiddity Engineering, H-E-B, QuikTrip, Mustang Engineering, and Nordstrom are extremely proficient at removing costs from the supply chain, reducing building costs, and limiting employee turnover, to name just a few categories. True cost leadership requires a growth mindset and a process driven by purpose, mission, vision, values, and strategy.
One CEO, who we placed in January of 2015, has taught us many things over the years and continues to be instrumental in augmenting our leadership architecture. We spent a couple of hours together a few weeks ago, and one of his statements keeps ringing in my ears. He said, “If you want to make more money, stop losing money.” I heard that and said to myself, “now there is a blinding flash of the obvious!” The more I thought about it and the more he talked, the more it occurred to me that his words are quite profound.
Bob went on to say that when he assumed the reigns of his $58 million, 465 employee civil engineering firm, which was delivering 18% EBITDA, he discovered a myriad of practices that were deeply ingrained in the company’s culture and that of its industry, which represented significant costs for which there was zero return on investment. One such set of practices was the enormous amount of money the firm spent on industry-related functions. I remember performing the organizational review before we conducted the search that produced Bob as its top candidate and exploring the question of whether the new CEO needed to be an engineer. The knee-jerk reaction from the board, all of whom were engineers, was “Of course they have to be an engineer, we’re an engineering company!”
It is important that you understand the context here. We routinely perform a careful needs analysis while conducting any C-level search, to ensure we are doing everything in our power to facilitate a match that is going to work well for both our client company and the successful candidate. In this case, we had been retained to conduct a broader scope organizational health index (OHI) designed to measure our client organization’s effectiveness, including its collective mindset, leadership effectiveness, and cultural health and climate. We’ve been assisting clients in building powerful cultures for 11 years with exceptional results.
Our traditional model, which has since been greatly enhanced by technology, involved administering questionnaires, surveys, and one-on-one interviews. During the questionnaire phase, the results of which are always kept confidential to ensure anonymity, it became clear that the organization was ready to follow a consummate leader who would unite the organization around a clear vision and strategy. The organization needed clearly defined goals, people systems, organizational infrastructure, and communications to build a sustainable, high-performance culture capable of attracting and retaining top talent and maximizing shareholder value. During the one-on-one interviews, six of twenty-six survey participants, all of whom were shareholders, unequivocally stated that the new CEO did not have to be an engineer.
Because Bob was not a civil engineer and also very new to the Houston area, he approached his new CEO post through a “new pair of lenses.” Having determined that the ideal CEO needed to bring vision and strategy, people systems, organizational infrastructure, and communications to build culture, we knew from his assessments that he would start with a clean sheet of paper and make no assumptions. We also knew that he was a naturally inquisitive leader who really enjoyed learning new things. We knew that, while he is the farthest thing from a micromanager and would not live down in the weeds, he would develop a clear understanding of his company’s business model and how it makes money.
Bob Aylward tripled Quiddity’s revenues and EBITDA over eight years, and he built a culture that is so rock solid that the firm now has a waiting list of civil engineers who want to work for them. Bob operated with a high-performance mindset that led to unprecedented performance in the civil engineering sector. We know from a forensic examination of Bob’s candidate dossier, which included his 22-page self-assessment, psychometric profile, and 360-degree reference audits, he brought a well-stocked tool bag perfectly suited for the scorecard we had developed. In addition to the right mindset, he brought the ability to unify his leadership team, a disciplined approach to human capital, systems to measure everything that matters, and a relentless commitment to a highly differentiated customer experience.
Elements of Bob’s mindset that didn’t surprise us included his personal commitment to never waste an opportunity to influence the way people think, ask probing questions that move the organization toward greatness, help his subordinates shape their own leadership framework. Bob says that you can think of this framework as a philosophy driven by guiding principles. Principles, not rules and rigid policies, help focus leaders on the right priorities and overcome challenges in such a manner that ensures a positive trajectory and a track record of success.
Bob’s realization that leading an organization of any size is an awesome and sobering responsibility is just one principle by which he lives. Bob always felt a strong sense of duty to his employees to do whatever he could to make his company as successful as he could, and to provide economic security, psychological safety, and career opportunities for them all. Bob’s philosophy did not materialize all at once. It was refined over 25 years by talking with mentors, coaches, and other leaders, reading books, listening to podcasts, and of course, trial and error. Readers of this blog will hear more about Bob in the future. We’re excited to bring Bob back to Houston next spring to speak to our leadership breakfast group and celebrate his new book. Stay tuned for more!
Warmest Regards,
Rob
By Rob Andrews with italicized content from Gallup’s State of the Global Workplace: 2023 Report
Gallup’s 2023 report featuring annual findings from the world’s largest ongoing study of the employee experience is rife with actionable data for leaders who are serious about building peak performance cultures. According to this year’s numbers, Gallup estimates that low employee engagement comes with a cost of $8.8 trillion (9% of global GDP) to global businesses. So, what can leaders do today to potentially save the world? Gallup has one clear answer: Change the way your people are managed.
This report has something in it for everyone. If you want to drastically increase your net profits, save the environment, combat global warming, increase shareholder value, or save the entire world, read this report carefully. A 9% improvement in global gross domestic product is enough to make the difference between success and failure for humanity. Poor management leads to lost customers and lost profits, but also leads to miserable lives. Gallup’s research into wellbeing at work finds that having a job you hate is worse than being unemployed – and those negative emotions end up at home, impacting relationships with family. If you’re not thriving at work, you’re unlikely to be thriving at life.
As the purpose driven founder of a professional services firm dedicated to enhancing the lives and effectiveness of our associates, clients and stakeholders, this report has profound meaning. It is the state of the global workplace that has driven us to adopt a radically different approach to executive search, in an industry that hasn’t innovated in 100 years. It is the state of the global workplace that has driven us to invest thousands of man-hours and hundreds of thousands of dollars into a study and corresponding leadership architecture based on the highest performing leaders on earth, each of whom has built a highly engaged workforce. It is also what has driven me back to graduate school, to pursue a second master’s degree in human dimensions of organizations at The University of Texas at Austin.
Jon Clifton, CEO of Gallup, explains where leaders should start:
Focus on Your Most Winnable Employees – Neary six in 10 employees are quietly quitting, but they are likely to become engaged with a few changes to your workplace.
Give Them a Better Manager – In the past three years, Gallup has used our best science to train over 14,000 managers to be effective coaches. Nice to 18 months later, their team’s engagement ranged from 8 to 18% higher.
By switching to proven, science-based management, organizations could change the course of the economy – and world history. It’s that important.
It has long been my hypothesis that workforce disengagement is a leadership problem, not a workforce problem. I often hear well-intended leaders disparage Gen Zers and millennials as being lazy, disinterested, and unproductive. Plainly stated, that has not been my experience. We have an incredibly diverse workforce, with employees that range in age from 22 to 72. 25% of our workforce is under 25 and are among the smartest, most engaged, most creative, and most productive workers with whom I have ever had the pleasure to interact. Mind you, our 55+ employees are also incredibly engaged and productive. It is the combination of multiple generations united under a common purpose, mission, and vision that makes it all work.
We chose to become one of Gallup’s first affiliates when we became convinced that their scientific approach to leadership would add significant value. Gallup research indicates that worker stress remained at a historic high – even as other negative emotions related to the COVID-19 pandemic subsided. As organizational leaders endeavor to navigate an uncertain economic outlook, their employees’ stress is impacting productivity and performance. Addressing these wellbeing concerns and improving engagement should be top priorities for the world’s political and business leaders who seek to make the most of the recovery.
One of the biggest benefits we’ve realized from our affiliation with Gallup has been the effective use of the CliftonStrengths assessment and coaching. Since Liz Townsend, our Senior Partner in charge of our Leadership Advisory, Coaching, and Culture Shaping practice received her certification, we’ve been able to craft career tracks for every employee, based largely on their strengths assessment and career aspirations. For years, we’ve wanted to provide clear career tracks but didn’t see a clear path to provide them. Unlike attitudinal attributes that change over time, innate strengths remain virtually unchanged, and understanding them is incredibly valuable in crafting medium- and long-term career paths.
As a decades-long student of psychometric assessments, I find my own assessment and the coaching that Liz has added to be nothing short of game changing. Understanding my innate strengths in the order of 1 to 34 gives me a clear understanding of who I am, where I naturally excel, and where my shortcomings reside. In addition, understanding that every major strength also brings along significant blind spots was another eyeopener for most of us. 31 million people have taken CliftonStrengths to thrive at work and outside of work. Our experience is that the assessment and related coaching has already dramatically improved our overall cultural climate and health.
Gallup’s regional analysis of the United States and Canada reveals that this region has the highest percentage of daily stress, the second highest percentage of employees who say that now is a good time to find a new job, and the highest percentage of female employees who experience high daily stress. Only 31% report that they are engaged, while 52% are quietly quitting and 17% are loudly quitting. Daily negative emotions within the region include stress at 52% and anger at 18%. 71% say that now is a good time to find a job, and 47% say that they intend to leave their job at their earliest opportunity.
“Quiet quitting” employees know what they would change about their workplace. In this report, we asked respondents: What would you change about your workplace to make it better?
Eighty-five percent of the responses offered by those considered to be quiet quitting — which comprises the majority of employees — were related to engagement or culture, pay and benefits, or wellbeing-work/life balance.
| Engagement or Culture (41%) | Pay and Benefits (28%) | Wellbeing (16%) |
| For everyone to get recognized for their contributions | Increase my salary because I work hard but the pay is not enough | Communicating shifts well in advance would allow me to better organize my free time |
| I would like it if the managers were more approachable, and we could talk openly | I would pay employees on time | Less overtime |
| They should grant more autonomy in the work to stimulate everyone’s creativity | Salaries must be proportional to qualifications and merit | We don’t have a place to relax or to get together with colleagues for a coffee break |
| I would like to learn more things, but the work I do is quite repetitive | I would like a monthly gas voucher for transport costs | I would like to have longer breaks so I can eat without rushing |
| I just wish they respected me more | A really good cafeteria/canteen available to all | Set up a health clinic |
| Giving everyone a fair chance in getting promoted | Fully subsidized childcare | I want to have a break at work, it’s hard without a rest |
| Clearer goals and stronger guidance | They should give rewards to employees for the excellent results achieved by the company | Taking workers’ health and life seriously |
Our experience over many years suggests that you don’t have to “boil the ocean” to move the needle and make significant advances. In our firm, we use a number of a vast array of resources we’ve collected. For your convenience, I have attached a resource guide, on which we regularly rely. We sincerely hope this piece has been helpful. Give us a shout, and let’s have a conversation around being thought partners.
Warmest Regards,
Rob
By Rob Andrews with italicized content from the book The Fearless Organization by Dr. Amy C. Edmondson
Safe and Sound
Jim Hackett, arguably the best CEO Anadarko has ever had, told me that every time he started working with a new team, he made sure there was at least one person in the group who would disagree with him.
Speaking up is easier said than done. There’s no switch to flip that will instantaneously turn an organization accustomed to silence and fear into one where people speak candidly. Instead, creating a psychologically safe workplace requires a lot of effort to alter systems, structures, and processes. Ultimately, it means that deep-seated, entrenched organizational norms and attitudes must change.
And it begins with what can be called “stage setting.” Let’s look at how Anglo American, one of the world’s largest mines, headquartered in South Africa, prepared for, and then institutionalized speaking up.
When Cynthia Carroll was appointed in 2007, with much fanfare, as the first female CEO of an international mining company, she was appalled by the number of worker fatalities occurring in the company –– nearly 200 in the five years prior to her arrival.
Realizing that she was “in an unprecedented position to influence change” as both an American/outsider in a foreign country and as a woman where “until very recently women hadn’t been allowed to visit underground at mines in South Africa, let alone work there,” she immediately used her position to speak up and demand a policy of zero fatalities or serious injuries.
An Unprecedented Move
Carroll’s response to the resistance could not have been more unambiguous. She shut down one of the most problematic and dangerous mines. Even more shocking, Carroll insisted that before the mine could restart, she wanted to find out what the workers were thinking, and she intended to get input from every single worker about how to improve safety. This, she knew, was a direct challenge to Anglo American’s strict hierarchical culture and rigid, top-down management style, which had begun with the mine’s founding in 1917 and was further strengthened by South Africa’s apartheid history.
How to Set the Stage for Psychological Safety
Whenever you are trying to get people on the same page, with common goals and a shared appreciation for what they’re up against, you’re setting the stage for psychological safety. The most important skill to master is that of framing the work. Framing the work includes reframing failure and clarifying the need for voice.
Reframing failure starts with understanding a basic typology of failure types. Failure archetypes include preventable failures (never good news), complex failures (still not good news) and intelligent failures (not fun but must be considered good news because of the value they bring). Preventable failures are deviations from recommended procedures that produce bad outcomes. If someone fails to don safety glasses in a factory and suffers an eye injury, this is a preventable failure. Complex failures occur in familiar contexts when a confluence of factors come together in a way that may never have occurred before; consider the severe flooding of the Wall Street subway station in New York City during Superstorm Sandy in 2012. With vigilance, complex failures can sometimes, but not always, be avoided. Neither preventable nor complex failures are worthy of celebration.
In contrast, intelligent failures, as the term implies, must be celebrated to encourage more of them. They are the result of a thoughtful foray into new territory.
Clarifying the need for voice. Framing the work also involves calling attention to other ways, beyond failure’s prevalence, in which tasks and environments differ. Three especially important dimensions are uncertainty, interdependence and what’s at stake. Emphasizing uncertainty reminds people that they need to be curious and alert to pick up early indicators of change in, say, customer preferences in a new market, a patient’s reaction to a drug, or new technologies on the horizon.
Emphasizing interdependence lets people know that they’re responsible for understanding how their tasks interact with other people’s tasks. Finally, clarifying the stakes is important whether the stakes are high or low. Reminding people that human life is on the line –– say, in a hospital, a mine or at NASA –– helps put interpersonal risk in perspective. People are more likely to speak up –– thereby overcoming the inherent asymmetry of voice and silence –– if leaders frame its importance.
How to Invite Participation So People Respond
The second essential activity in the leaders’ tool kit is inviting participation in a way that people find compelling and genuine. The goal is to lower what is usually a too-high bar for what’s considered appropriate participation. The invitation to participate must be crystal clear if people are going to choose to engage rather than to play it safe. Two essential behaviors that signal an invitation is genuine are adopting a mindset of situational humility and engaging in proactive inquiry.
Situational humility. The bottom line is that no one wants to take the interpersonal risk of imposing ideas when the boss appears to think he or she knows everything. A learning mind-set, which blends humility and curiosity, mitigates this risk. A learning mindset recognizes that there is always more to learn.
Keep in mind that confidence and humility are not opposites. Confidence in one’s abilities and knowledge, when warranted, is far preferable to false modesty. But humility is not modesty, false or otherwise. Humility is the simple recognition that you don’t have all the answers, and you certainly don’t have a crystal ball.
Proactive inquiry. The second tool for inviting participation is inquiry. Inquiry is purposeful probing to learn more about an issue, situation, or person. The foundational skill lies in cultivating genuine interest in others’ responses.
Genuine questions convey respect for the other person –– a vital aspect of psychological safety. Contrary to what many may believe, asking questions tends to make the leader seem not weak but thoughtful and wise.
How to Respond Productively to Voice –– No Matter Its Quality
To reinforce a climate of psychological safety, it’s imperative that leaders –– at all levels –– respond productively to the risks people take. Productive responses are characterized by three elements: expressions of appreciation, destigmatizing failure and sanctioning clear violations.
Express appreciation. Imagine if Christina, the NICU nurse discussed at the beginning of this summary, had spoken up to Dr. Drake. Her quiet fear was that he would have berated or belittled her. But what if he had said, “Thank you so much for bringing that up”? Her feeling of psychological safety would have gone up a notch. This is an example of an appreciative response. It does not matter whether the doctor believes the nurse’s suggestion or question is good or bad. Either way, his initial response must be one of appreciation. Then he can educate –– that is, give feedback or explain clinical subtleties. But to ensure that staff keep speaking up to keep patients safe from unexpected lapses in attention or judgment, the courage it takes to speak up must receive the mini reward of thanks.
Destigmatize failure. Leaders who respond to all failures in the same way will not create a healthy environment for learning. When a failure occurs because someone violated a rule or value that matters in the organization, this is very different than when a thoughtful hypothesis in the lab turns out to be wrong.
A productive response to intelligent failure can mean celebrating the news. Some years ago, the chief scientific officer at Eli Lilly introduced “failure parties” to honor intelligent, high-quality scientific experiments that failed to achieve the desired results.
Sanction clear violations. Firing can sometimes be an appropriate and productive response –– to a blameworthy act. But won’t this kill the psychological safety? No. Most people are thoughtful enough to recognize (and appreciate) that when people violate rules or repeatedly take risky shortcuts, they are putting themselves, their colleagues, and their organization at risk. In short, psychological safety is reinforced rather than harmed by fair, thoughtful responses to potentially dangerous, harmful, or sloppy behavior.
Leadership is a vital force in making it possible for people and organizations to overcome the inherent barriers to voice and engagement. We must be realistic about the fact that “driving fear out” of any organization, as W. Edwards Deming (the father of total quality management who helped transform manufacturing practices around the world) put it, will be a journey.
I sincerely hope this summary of Amy Edmondson’s book has been as helpful to you as it has been to me. Creating psychological safety in your workplace will make your world a better place and pay huge dividends. Give us a call, and let’s talk about how one of our signature retreats can help your company.
Warmest Regards,
Rob
By Rob Andrews with italicized content from the book The Fearless Organization by Dr. Amy C. Edmondson
On my sixteenth birthday, I went to work for Safeway Stores Inc. It was a brand-new division with only three open stores. Eight years later, our eighty-five Houston and Austin area stores had a commanding market share and ran like a finely tuned Swiss watch. We were one of the most successful divisions in the company’s sixty-three-year history. One year later, we had lost forty of eighty-five store managers and four of eight district managers, and the division was losing market share almost as fast as it had been gained. What happened? There was a change in senior management and the loss of psychological safety in our workplace. Don Gates, our Retail Operations Manager before his promotion to Division President, trained us to speak our minds. He often said, “If we always agree, one of us isn’t necessary.” It was a case study in workplace psychological safety.
Amy C. Edmondson is the Novartis Professor of Leadership and Management at Harvard Business School, whose research focuses on psychological safety and teams within and between organizations. Edmonson says, “I am particularly interested in how leaders enable the learning and collaboration that are vital to performance in a dynamic environment.” Her book provides important insight and practical advice for organizations who are serious about peak performance in the modern economy.
Organizations falter when people are afraid to speak up. Bosses who rule with fear and build cultures devoid of healthy debate stifle discretionary effort, collaboration, innovation, and overall performance. Neuroscience research clearly demonstrates that fear consumes phycological resources, diverting them from regions of the brain that enable working memory, information processing, analytical thinking, creative insight, and problem solving. Psychologically safe environments are those in which colleagues trust and respect one another, are not afraid to make mistakes, ask for help, admit when they are stuck, and are comfortable challenging the status quo. In short, psychological safety is essential to unleashing talent and driving value.
Psychological safety is not a “nice to have”, it is literally the price of admission in today’s workplace. Employee input provides vital data on what’s really going on in the marketplace and in the company. Psychological safety is a vital leadership responsibility. It can make or break an employee’s ability to contribute, to grow and learn, and to collaborate. Here are the highlights of twenty years of rigorous studies:
Psychological Safety
People often hold back even when they believe that what they have to say could be important for the organization, for the customer or for themselves. The two most frequently mentioned reasons for remaining silent were fear of being labeled negatively and fear of damaging work relationships. Workers are not only failing to speak up with potentially threatening or embarrassing content, but they are also withholding ideas for improvement.
Psychological safety can exist at work and, when it does, people do in fact speak up, offer ideas, report errors, and exhibit a great deal more “learning behavior.” This means that voice is mission critical. And so, psychological safety is intimately tied to freeing people up to pursue excellence. A multi-year study of teams at Google, code-named Project Aristotle, found that psychological safety was the critical factor explaining why some teams outperformed others.
The Fearless Workplace
A growing number of organizations are making the fearless workplace an aspiration. Leaders of these organizations recognize that psychological safety is mission critical when knowledge is a crucial source of value. When people speak up, ask questions, debate vigorously, and commit themselves to continuous learning and improvement, good things happen. Workplaces where employees know that their input is valued create new possibilities for authentic engagement and stellar performance.
Making Candor Real
If you were over the age of three in 1995, chances are you were aware –– or would soon become aware of a movie called Toy Story, the first computer animated feature film released by a company named Pixar. That year, Toy Story would become the highest grossing film and Pixar the largest initial public offering. The rest, as they say, is history. Pixar Animation Studios has since produced 19 feature films, all of which have been commercial and critical triumphs. This is a remarkable statement in an industry where hits are prized but rare, and a series of hits without fail from a single company is all but unheard of. How do they do it? Through leadership that creates the conditions where both creativity and criticism can flourish. Pixar co-founder Ed Catmull credits the studio’s success, in part, to candor.
Catmull encourages candor by looking for ways to institutionalize it in the organization –– most notably in what Pixar calls its “Braintrust.” A small group that meets every few months or so to assess a movie in process, provide candid feedback to the director and help solve creative problems, the Braintrust was launched in 1999, when Pixar was rushing to save Toy Story 2, which had gone off the rails. The Braintrust’s recipe is simple: A group of directors and storytellers watches an early run of the movie together, eats lunch together and then provides feedback to the director about what they think worked and what did not. But the recipe’s key ingredient is candor. And candor, though simple, is never easy. As Catmull candidly admits, “… early on, all of our movies suck.” In other words, it would have been easy to make Toy Story a movie about the secret life of toys that was sappy and boring. But the creative process, innately iterative, relies on feedback that is truly honest.
Pixar’s Braintrust has rules. First, feedback must be constructive –– and about the project, not the person. The filmmaker cannot be defensive or take criticism personally and must be ready to hear the truth. Second, the comments are suggestions, not prescriptions. There are no mandates, top-down or otherwise; the director is ultimately the one responsible for the movie and can take or leave solutions offered. Third, candid feedback is not a “gotcha” but must come from a place of empathy. Braintrusts; groups of people with a shared agenda who offer candid feedback to their peers –– are subject to individual personalities and chemistries. In other words, they can easily go off the rails if the process isn’t well led. To be effective, managers must monitor dynamics continually over time. It helps enormously if people respect each other’s expertise and trust each other’s opinions.
As I read the first part of Edmondson’s book, I couldn’t help but chuckle as I reflected on my earliest days with Safeway. It was like the Wild West back then. We were opening new stores like popcorn, and few of us had any relevant experience. It was messy, and we made a ton of mistakes. Yet, Don Gates gave us purpose, treated us like adults, painted a crystal-clear picture of what he expected of us, and continually reminded us that, while he was in charge, he didn’t have all the answers. He asked questions of everyone: managers, food clerks, meat cutters, produce clerks, bakers, and customers. He always sought candid feedback and adjusted based on the feedback he received. I once heard him tell a new dairy clerk how he used feedback from employees and customers the same way a commercial airline captain uses an autopilot system to stay on the beam and on course. Those first eight years were some of the most rewarding of my very long career, and it was largely due to the psychological safety we enjoyed. Stay tuned for Part 2 next week.
Warmest Regards,
Rob
By Rob Andrews
This week’s post is in response to one of my clients who asked me to write a piece on my personal history and views on the art, science, and practice of retained executive search consulting. Writing a 275-page book on the subject was a lot of work but not difficult. A three-page blog post is much more daunting so here is my best shot.
I went to work in search at age 24 on March 3, 1979, for a man named Larry Gladstone. Larry was a 47-year-old Harvard MBA with tremendous passion for the profession. He said that, done properly, it was the most influential form of management consulting on earth. Larry became my mentor, and we remained close friends until he passed away in 2011. He took the practice of search very seriously and was a tough task master. He made me record all my calls so he could play them back and critique my approach. He had me write all my own letters and then marked them up with a red pen and had me rewrite them until they were perfect. He made me call on new clients and set appointments. Then he went with me so he could critique my client interaction. At times Larry pushed me so hard I wanted to quit. However, 42 years later, I am deeply grateful to a man who cared enough about me to teach me a profession that has become my greatest passion.
In my view, retained search is both art and science. I consider myself a purist, which means I believe that retained search was intended by its founders to be practiced as a specialized form of management consulting, and not a transactional exercise of filling seats in a vacuum. The most effective search consultants are very much like primary care physicians. The best of both are great diagnosticians and take care to make recommendations that support their client’s objectives. They are highly skilled and work relentlessly to become better at their craft.
Both consistently demonstrate an unequivocal commitment to do the right thing by the people they advise. Doing the right thing requires diagnostic excellence and acting in the best interest of all stakeholders involved. The highest compliment my firm has ever been paid came from an investment banker who has referred a constant stream of clients to us for 19 years. He said, “The reason I keep sending people over there is that I am supremely confident that regardless of who does the search, they’re going to go through a query, a line of questioning and a process that is going to extract from the client exactly what they’re trying to accomplish and then who and what they need to get there”. Here are additional attributes common to high quality search consultants:
Compassion: Great search consultants care deeply about their clients and work hard to understand their real needs. That often takes patience, skill and listening between the lines. The best consultants also endeavor to do everything in their power to protect candidates from entering employment situations that are predestined to fail. Search practitioners have the responsibility to facilitate matches that work and last, and to refrain from “selling clients and candidates into situations that are less than ideal”.
Broad Perspective: Great search consultants have knowledge and perspective around the issues their clients face. Retained search consulting can be broadly defined as helping clients with complex issues to clarify needs, identify opportunities, solve problems, and offer options and solutions that have the potential to deliver breakthrough results. Sure, finding candidates is part of the puzzle, but that is the easy part. The hard work is in discovery, vetting, assessing, presenting, negotiating, and facilitating.
Needs Analysis: Great search consultants make no assumptions. They employ a well-defined discovery process that sets the stage for a successful search. In complex searches, all relevant stakeholders should be engaged in a comprehensive query involving questionnaires and interviews. The output flows into a search specification, roadmap and assessments that will clarify company culture, values, mission, valued behaviors, political environment, leadership attributes, management abilities, interpersonal skills, specific performance expectations, and other critical success factors.
Search Strategy: The best insists on developing a comprehensive search strategy developed in concert with the client; they keep key stakeholders abreast throughout the entire process. Typically, consultants target individuals who are obvious candidates, those who are second in command, as well as providers and consultants to the space, to identify candidates who may be hidden and or unknown to the search community and bring the best possible talent to the table.
Opportunity Positioning: Establish a clear and compelling statement. Why successful, high performing A Players would consider a change. There must be a story to tell and a compelling argument that would cause a reasonable human being to make the move they are suggesting. This is a part of the Search Specification and integral to good telephone, email, and face to face marketing of the opportunity by a search consultant.
Company Positioning: All organizations have an employment brand. As a part of the Search Specification, the company positioning should include the most salient and current elements of the company’s story, mission, and objectives, as well as why the company is a great place to work. This should be a current and compelling description, not just cut and pasted off the company’s website.
Position Description: As a part of the Search Specification, the position or job description is the least complicated part of the process. This information is all you usually read – a necessity for sure – but this description alone is inadequate as a comprehensive search specification.
Performance Expectations: Focus on the doing, not just the having. Defining success, and a focus on four or five key deliverables complete with specifics and timetables can do wonders to narrow the laser when zeroing in on the very best candidates for your specific leadership role. This is included in the Search Speciation.
Candidate Assessment: Assess FIT in and for a specific client, opportunity, culture and set of performance expectations. The consultant should articulate specifically what will be done to assess and ensure fitness. Cultural alignment and an ability to deliver on specific performance objectives are non-negotiable.
References: Most references, which are performed on one candidate, just in advance of an offer are utterly worthless. Great search consultants conduct serious due diligence before presenting finalist candidates. Reference audits can be designed to screen out B and C players and reveal each finalist A player’s strengths and weaknesses. These audits should be conducted as part of discovery to fine tune the elements of fit; and to provide clients with a meaningful management tool to assist in onboarding.
Candidate Sourcing: The best knows how to dig deep. They conduct fresh, original, and targeted research for each assignment including in-depth direct sourcing of target companies, as well as organizational charts/mapping of competitive entities. This is an out of the ordinary approach to sourcing fresh candidates. Not depending on a Rolodex or database and missing potential prospects is a hallmark of great consultants.
Initial Candidate Contact, Recruiting & Candidate Development: They work the list in its entirety, uncovering, and exploring every possible lead. Senior consultants should make all initial contacts and develop relationships with candidates destined to make the final cut. The best resists the temptation to delegate these critical phone calls to junior level consultants or researchers. Partner level execution makes a big difference.
Screen for High Performing “A” Players: When a candidate appears qualified and interested in the opportunity, the best have a very direct conversation to set expectations and screen out B and C players, as well as those who might have disingenuous intentions. Each interested and qualified candidate is advised that they will go through a rigorous assessment process that will culminate with candidate arranged reference assessments and a thorough background check.
While there is more to a high-quality search than the components above, these are the must haves in order to ensure a good outcome. The importance of a rigorous process cannot be understated. The executive hiring process globally is largely broken and the “stick rate” at the two-year mark is dismal. Our research indicates that the failure rate among executive hires is almost 50%, and some sources say it is even higher.
According to some studies, up to a third of U.S. CEOs last less than two years, with top executive failure rates as high as 75 percent and rarely less than 30 percent. According to the Harvard Business Review, two out of five new CEOs fail in their first 18 months on the job. Further research shows the same pattern globally. CEOs and senior executives are routinely hired based on their drive, IQ, and resume. They’re fired for lack of emotional intelligence, poor people decisions, cluelessness and being totally out of touch with their workforces and customers. Excerpts from the Chief Executive Magazine article titled “What Causes CEO Failure”.
The purpose of all these blog posts is to share what we’re learning about building cultures of peak performance. In future posts, we’ll dig further into how rule breakers of every variety are building companies that dominate their sectors. These are organizations that practice the nine principles we’ve observed in organizations that outperform their peers: Unified Leadership, Disciplined Hiring, Leading with Purpose, Stakeholder Engagement, Cost Leadership, Measuring Everything that Matters, Customer Experience, Clarity in Everything and Staying Ahead of the Curve. If you’d like to talk about how we can help your organization, or if you’d like a thought partner, please give us a call.
Warmest Regards,
Rob
By Rob Andrews with italicized content from the book Your Hidden Superpowers by Becca North, Ph.D.
Dr. Becca North is a researcher, author, and professor who teaches the opening course at The University of Texas at Austin’s MA in Human Dimensions of Organizations program, in which I will be a student over the next 17 months. Wanting to prepare, I purchased North’s book with the intention of skimming it to get a feel for what her course might be like. After reading a dozen pages or so, I couldn’t put it down. North’s research delves into the way most of us feel about failure and how changing our attitudes and views can literally and profoundly improve our personal and professional lives. It will have a lasting effect on me, and I hope it will for you.
North’s book, which integrates science and storytelling, suggests that the way we view failure affects how we live, lead, decide, innovate, connect, and dare. In short, how we perceive failure matters a great deal. She asks: What is your relationship with failure? If it were a person, how would you describe your feelings toward it? How would you feel if it asked to stop by your house? If you saw it in the aisle at the grocery store, what would you do? We tend to think of failure as bad, completely bad, like an enemy. We tend to want it out of our lives, never to show its face. At the very least, we want it around as little as possible.
This way of thinking makes a lot of sense given that failure has a readily apparent dark side. It’s painful and embarrassing. Oftentimes it’s humiliating. And it’s scary. Failure can be threatening not only because of its immediate consequences but also because we fear it might signal even worse consequences in the future. If you perform poorly on a test in college, you might worry it means you will be a failure in the real world. If you get fired from a job or passed over for a promotion, you might be afraid that you will never achieve your professional goals in the future. The view that failure is inherently bad does reflect part of the truth of failure. But it also hides part of the truth – a very big and important part. Failure has a powerful light side, but it gets overlooked, obscured, and oftentimes completely hidden.
Failure, in fact, does have a very potent bright side. There is a definite positive relationship between short-term failure and long-term success. Once we reframe our thinking, we can see that the pathway to success is literally failure. There are real benefits to failure and recognizing them as such will allow us to live, lead, decide, innovate, connect, and dare more often and more effectively. As mentioned above, Becca does not deny failure’s dark side. However, she stresses: Counterintuitively, acknowledging failure’s downside can help us extract failure’s benefits, whereas refusing to acknowledge it blocks us from the benefits.
Feeling pain after a failure is universal; even people we might assume would not hurt after failure, like those who report not caring about what others think of them or extremely accomplished public figures, all feel pain when they fail. But failure creates tinder – raw material for something better- but if we don’t convert the tinder, it becomes waste. The poet Ralph Waldo Emerson wrote that if a person “harvests his losses, then he turns the dust of his shoes into gems.”
Dozens of examples are cited in the book. For example, in 2010, Becca interviewed Dr. James McPherson, Professor Emeritus of American History at Princeton and an expert on the Civil War. Her objectives included discovering the role failure played in Abraham Lincoln’s ultimate success.
Although Lincoln’s many failures are well documented, most of us cannot imagine the hurt he experienced during and immediately after each one. Imagine being Lincoln’s close friend in 1859. Over ten-plus years, he ran for major political office three times and lost every time. Imagine now that your good friend Abraham tells you he is running for president. When I asked Dr. McPherson what he thought Lincoln considered his biggest and most painful failure, he said losing the election for U.S. Senate in 1854. Lincoln ultimately withdrew late in the race, with a plurality of votes that fell just short of a majority, to redirect his support to anti-slavery candidate Lyman Trumbull. Lincoln put his passion for seeing slavery abolished above his personal ambition, but that did not make it hurt any less.
Dr. McPherson said: Still, Lincoln’s failure provided opportunities. Even though he lost in ’54, and I think the loss hurt, I think it was the steppingstone toward bigger things for him. In the short term, the loss enabled him to build a stronger following. By giving up his own ambition in 1854, he created a feeling among Illinois Republicans that they owed him. He had put his own personal ambitions aside to ensure the success of a political party not yet in existence. When 1858 rolled around, Lincoln was the Illinois Republican party’s choice for senator. They backed him unanimously, but he still lost!
The campaigning he did that year, though, created the biggest opportunity of all, to prove himself on the national stage. Lincoln’s performance in debates against his senate opponent, Stephen Douglas, widely regarded as the most prominent politician in the country, and his subsequent performance during a lecture on politics at Cooper Union, a New York College at the invitation of a Republican club in New York City, changed the way Lincoln saw himself. The Cooper Union speech and his subsequent New England speaking tour were widely praised and made him widely known and admired in the northeast for the first time. Had you been a close friend of Lincoln’s in those days, you would have witnessed firsthand how Lincoln’s string of devastating individual failures set him up for his ultimate successes.
Becca’s cutting-edge research addresses a new line of questioning about responding to failure: How can we grow from failure? In other words, how can we respond (rather than react) to failure in a way that allows us not just to bounce back from it, but to grow? The answer is surprising, counterintuitive, and conventional wisdom denying; it shatters current assumptions we have about responding well to failure. The hidden magic revealed in Becca’s masterpiece envisions how changing the way we think about failure can change the way we lead our lives. It also imagines the impact that such a shift in how we live would have on us as individuals and as a society.
I am wildly excited to be a student of Becca’s, in the most innovative human capital related graduate program in the U.S., as I believe it will help put a fine point on our research and architecture around building peak performance cultures. I look forward to sharing with our audience what I discover along the way. I hope this short essay on Becca North’s groundbreaking research makes a difference in your life. Give us a call, and let’s talk about how we can be thought partners in elevating your talent, leadership, culture, and performance.
Warmest Regards,
Rob
By Rob Andrews with italicized content from Netflix
To avoid the rigidity of over-specialization and avoid the chaos of growth while retaining freedom, we work to have as simple a business as we can given our growth ambitions and to keep employee excellence rising. We work to have a company of self-disciplined people who discover and fix issues without being told to do so.
We are dedicated to increasing employee freedom to fight the python of process. Some examples of how we operate with unusual amounts of freedom are:
You might think that such freedom would lead to chaos. But we also don’t have a clothing policy, yet no one has come to work naked. The lesson is you don’t need policies for everything. Most people understand the benefits of wearing clothes at work.
There are a few important exceptions to our anti-rules pro-freedom philosophy. We are strict about ethical issues and safety issues. Harassment of employees or trading on insider information are zero tolerance issues, for example. Some information security issues, such as keeping our members’ payment information safe, have strict controls around access. Transferring large amounts of cash from our company bank accounts has strict controls. But these are edge cases.
In general, freedom and rapid recovery is better than trying to prevent error. We are in a creative business, not a safety-critical business. Our big threat over time is lack of innovation, so we should be relatively error tolerant. Rapid recovery is possible if people have great judgment. The seduction is that error prevention just sounds so good, even if it is often ineffective. We are always on guard if too much error prevention hinders inventive, creative work.
On rare occasion, freedom is abused. We had one senior employee who organized kickbacks on IT contracts for example. But those are the exceptions, and we avoid over-correcting. Just because a few people abuse freedom doesn’t mean that our employees are not worthy of great trust.
Some processes are about increased productivity, rather than error avoidance, and we like process that helps us get more done. One such process we do well is effective scheduled meetings. We have a regular cadence of many types of meetings; we start and end on time and have well-prepared agendas. We use these meetings to learn from each other and get more done, rather than to prevent errors or approve decisions.
Informed Captains
For every significant decision there is a responsible captain of the ship who makes a judgment call after sharing and digesting others’ views. We avoid committees making decisions, because that would slow us down and diffuse responsibility and accountability. We farm for dissent; dissent is not natural or easy, which is why we make a concerted effort to stimulate it. Many times, groups will meet about topics and debate them, but then afterwards someone needs to make a decision and be that “captain”. Small decisions may be shared just by email, larger ones will merit a memo with discussion of the various positions, and why the captain made such a decision. The bigger a decision, the more extensive the dissent/assent gathering should be, usually in an open shared document. We are clear, however, that decisions are not made by a majority or committee vote. We don’t wait for consensus, nor do we drive to rapid, uninformed decision making. When the captain of any particular decision is reasonably confident of the right bet for us to take, they decide and we take that bet. Afterwards, as the impact becomes clearer, we reflect on the decision, and see if we could do even better in the future.
Disagree Openly
If you disagree on a material issue, it is your responsibility to explain why you disagree, ideally in both discussion and in writing. The back and forth of discussion can clarify the different views, and concise writing of the core issues helps people reflect on what is the wise course, as well as making it easy to share your views widely. The informed captain on that decision has the responsibility to welcome, understand, and consider your opinions, but may not agree. Once the captain makes a decision, we expect everyone to help make it as successful as possible. Later, if significant new information becomes available, it is fine to ask the captain to revisit the topic. Silent disagreement is unacceptable and unproductive.
Context Not Control
We want employees to be great independent decision makers, and to only consult their manager when they are unsure of the right decision. The leader’s job at every level is to set clear context so that others have the right information to make generally great decisions.
We don’t buy into the lore of CEOs, or other senior leaders, who are so involved in the details that their product or service becomes amazing. The legend of Steve Jobs was that his micromanagement made the iPhone a great product. Others take it to new extremes, proudly calling themselves nano-managers. The heads of major networks and studios sometimes make many decisions in the creative process of their content. We do not emulate these top-down models because we believe we are most effective and innovative when employees throughout the company make and own decisions.
We strive to develop good decision-making muscle everywhere in our company. We pride ourselves on how few, not how many, decisions senior management makes. We don’t want hands-off management, though. Each leader’s role is to teach, to set context, and to be highly informed of what is happening. The only way to figure out how the context setting needs to improve is to explore a sample of the details. But unlike the micro-manager, the goal of knowing those details is not to change certain small decisions, but to learn how to adjust context so more decisions are made well.
There are some minor exceptions to “context not control,” such as an urgent situation in which there is no time to think about proper context and principles, or when a new team member hasn’t yet absorbed enough context to be confident, or when it’s recognized that the wrong person is in a decision-making role (temporarily, no doubt).
We tell people not to seek to please their boss. Instead, seek to serve the business. It’s OK to disagree with your manager. It’s never OK to hide anything. It’s OK to say to your manager, “I know you disagree, but I’m going to do X because I think it is a better solution. Let me know if you want to specifically override my decision.” What we don’t want is people guessing what their manager would do or want, and then executing on that guess.
Highly Aligned, Loosely Coupled
As companies grow, they often become highly centralized and inflexible. Symptoms include:
We avoid this by being highly aligned and loosely coupled. We spend lots of time debating strategy together, and then trust each other to execute on tactics without prior approvals. Often, two groups working on the same goals won’t know of, or have approval over, their peer activities. If, later, the activities don’t seem right, we have a candid discussion. We may find that the strategy was too vague or the tactics were not aligned with the agreed strategy. And we discuss generally how we can do better in the future.
The success of a “Highly Aligned, Loosely Coupled” work environment is dependent upon the collaborative efforts of high performance individuals and effective context. Ultimately, the end goal is to grow the business for bigger impact while increasing flexibility and agility. We seek to be big, fast and nimble.
Seeking Excellence
New employees often comment in their first few months that they are surprised at how accurate this culture description is to the actual culture they experience. Around the world, we live and create our culture together. In fact, hundreds of our global employees contributed to this document.
We do not seek to preserve our culture — we seek to improve it. Every person who joins us helps to shape and evolve the culture further. We find new ways to accomplish more together. Every few years we can feel a real difference in how much more effectively we are operating than in the past. We are learning faster than ever because we have more dedicated people with diverse perspectives trying to find better ways for our talented team to work together more cohesively, nimbly, and effectively.
I hope Parts 1-3 of this material have been enlightening. Give us a call, and let’s talk about your organization’s rise to the top of its sector.
Warmest Regards,
Rob
By Rob Andrews with italicized content from Netflix
Dream Team
A dream team is one in which all your colleagues are extraordinary at what they do and are highly effective collaborators. The value and satisfaction of being on a dream team is tremendous. Our version of the great workplace is not sushi lunches, great gyms, fancy offices, or frequent parties. Our version of the great workplace is a dream team in pursuit of ambitious common goals, for which we spend heavily. It is on such a team that you learn the most, perform your best work, improve the fastest, and have the most fun.
To have an entire company comprise the dream team (rather than just a few small groups) is challenging. Unquestionably, we have to hire well. We also have to foster collaboration, embrace a diversity of viewpoints, support information sharing, and discourage politics. The unusual part is that we give adequate performers a generous severance package so that we can find a star for that position. If you think of a professional sports team, it is up to the coach to ensure that every player on the field is amazing at their position and plays very effectively with the others. We model ourselves on being a team, not a family. A family is about unconditional love, despite, say, your siblings’ bad behavior. A dream team is about pushing yourself to be the best teammate you can be, caring intensely about your teammates, and knowing that you may not be on the team forever.
We have no bell curves or rankings or quotas such as “cut the bottom 10% every year.” That would be detrimental to fostering collaboration, and is a simplistic, rules-based approach we would never support. We focus on managers’ judgment through the “keeper test” for each of their people: if one of the members of the team was thinking of leaving for another firm, would the manager try hard to keep them from leaving? Those who do not pass the keeper test (i.e. their manager would not fight to keep them) are promptly and respectfully given a generous severance package so we can find someone for that position that makes us an even better dream team. Getting cut from our team is very disappointing, but there is no shame. Being on a dream team can be the thrill of a professional lifetime.
Given our dream team orientation, it is very important that managers communicate frequently with each of their team members about where they stand so surprises are rare. Also, it is safe for any employee at any time to check in with their manager by asking, “How hard would you work to change my mind if I were thinking of leaving?” In the tension between honesty and kindness, we lean into honesty. No matter how honest, though, we treat people with respect.
One might assume that with dream team focus, people are afraid of making mistakes. In fact, it’s the opposite. We try all kinds of things and make plenty of mistakes as we search for improvement. The keeper test is applied as a judgment of someone’s overall expected contribution.
Within a dream team, collaboration and trust work well because your colleagues are both exceptionally skilled at what they do, and at working well with others. In describing selflessness, we say “You make time to help colleagues. You share information openly and proactively.” We want new colleagues to feel very welcome and get all the support they need to be effective.
People like loyalty, and it is great as a stabilizer. Employees with a strong track record at Netflix get leeway if their performance takes a temporary dip. Similarly, we ask employees to stick with Netflix through any short-term dips. But unconditional allegiance to a stagnant firm, or to a merely-adequately-performing employee, is not what we are about.
On a dream team, there are no “brilliant jerks.” The cost to teamwork is just too high. Our view is that brilliant people are also capable of decent human interactions, and we insist upon that. When highly capable people work together in a collaborative context, they inspire each other to be more creative, more productive, and ultimately more successful as a team than they could be as a collection of individuals.
Succeeding on a dream team is about being effective, not about working hard. Sustained “B” performance, despite an “A” for effort, gets a respectful severance package. Sustained “A” performance, even with a modest level of effort, gets rewarded. Of course, to be great, most of us have to put in considerable effort, but hard work and long hours is not how we measure or talk about a person’s contribution.
Being on a dream team is not right for everyone, and that is OK. Many people value job security very highly, and would prefer to work at companies whose orientation is more about stability, seniority, and working around inconsistent employee effectiveness. Our model works best for people who highly value consistent excellence in their colleagues.
To help us attract and retain stunning colleagues, we pay employees at the top of their personal market. We make a good-faith estimate of the highest compensation each employee could make at peer firms, and pay them that maximum. Typically, we calibrate to market once a year. We do not think of these as “raises” and there is no raise pool to divide up. The market for talent is what it is. We avoid the model of “2% raise for adequate, 4% raise for great”. Some employees’ market value will rapidly rise (due both to their performance and to a shortage of talent in their areas), while other employees may be flat year-to-year, despite doing great work. At all times, we aim to pay all of our people at the top of their personal market.
Note that if our company experienced financial difficulty, we wouldn’t ask our employees to accept less pay. A sports team with a losing record still pays top of personal market for the players they hope will get them back into a winning position. On the other hand, if the company does well, our broadly distributed stock options become quite valuable.
Ultimately, your economic security is based on your skills and reputation, not on your seniority at one company. At Netflix, you learn a lot working on hard problems with amazing colleagues, and what you learn increases your market value. Knowing that other companies would quickly hire you if you left Netflix is comforting. We see occasional outside interviewing as healthy, and encourage employees to talk with their managers about what they learn in the process.
While our teammates are fantastic, and we work together very well, we know we can always do better. We strive to have calm confidence, and yet yearn to improve. We suck compared to how great we want to become.
Freedom and Responsibility
There are companies where people ignore trash on the floor in the office, leaving it for someone else to pick it up, and there are companies where people in the office lean down to pick up the trash they see, as they would at home. We try hard to be the latter, a company where everyone feels a sense of responsibility to do the right thing to help the company at every juncture. Picking up the trash is the metaphor for taking care of problems, small and large, and never thinking “that’s not my job.” We don’t have rules about picking up the real or metaphoric trash. We try to create a sense of ownership so that this behavior comes naturally.
Our goal is to inspire people more than manage them. We trust our teams to do what they think is best for Netflix — giving them lots of freedom, power, and information in support of their decisions. In turn, this generates a sense of responsibility and self-discipline that drives us to do great work that benefits the company.
We believe that people thrive on being trusted, on freedom, and on being able to make a difference. So, we foster freedom and empowerment wherever we can.
In many organizations, there is an unhealthy emphasis on process and not much freedom. These organizations didn’t start that way, but the python of process squeezed harder every time something went wrong. Specifically, many organizations have freedom and responsibility when they are small. Everyone knows each other, and everyone picks up the trash. As they grow, however, the business gets more complex, and sometimes the average talent and passion level goes down. As the informal, smooth-running organization starts to break down, pockets of chaos emerge, and the general outcry is to “grow up” and add traditional management and process to reduce the chaos. As rules and procedures proliferate, the value system evolves into rule following (i.e. that is how you get rewarded). If this standard management approach is done well, then the company becomes very efficient at its business model — the system is dummy-proofed, and creative thinkers are told to stop questioning the status quo. This kind of organization is very specialized and well adapted to its business model. Eventually, however, over 10 to 100 years, the business model inevitably has to change, and most of these companies are unable to adapt.
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Warmest Regards,
Rob
