Jeffrey Saltzman's Blog

Enhancing Organizational Performance

The Center of the Organization

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I asked a physicist friend of mine a question. Since the prevailing wisdom is that the universe started with a singularity, is it possible to look at the current shape of the universe and to trace back to that point of origin, in effect to find the center of the universe? He answered me without hesitation that is was a nonsensical question. The current shape of the universe is unknown and the singularity actually created space/time, it did not expand into it. We then engaged in the kind of discussion that makes my head swim.  

Is it possible to find the center of an organization or is that a nonsensical question as well? It is very common within organizations to have the various silos view themselves as the center of the organization. Manufacturing/Operations will feel that without us the organization has nothing, no products we are the center. Sales retort that without us you would have no need to manufacture anything, we are the heart of this organization. R&D and Engineering are designing new products and throwing them over the fence almost daring Manufacturing to be able to produce the product and Sales to able to sell it, without us they proclaim you would have nothing to sell and nothing to manufacture. Management feels that without them overseeing the operations, demanding advances and pushing the organization nothing would happen, they feel they must be the center of the organization. Each of these functions can be duplicated across product lines creating even more silos.

A comparison to the human body might be apropos. The body while evolving some duplicative functions to help ensure survival and having tremendous healing power over time has a large number of critical components, the failure of any one of which  would result in death. The heart or the brain thinking that they were the center of the body’s universe without realizing the true interdependence might be very surprised to find that they could not go on without the other components.

Unfortunately many organizations find themselves in the middle of “turf” wars with various management teams trying to consolidate their power base and looking only inward, inside their own organizations, thinking about what can they do make their part, their silo the strongest possible sometimes at the expense of the other components. Senior management often times does their organizations no favor, creating reward systems and setting goals that reinforces that kind of narrow thinking rather then broader thinking on the part of their executives.

You get what you reward. CEO’s need to ask themselves what are they rewarding, what behaviors are they getting from those rewards, what behaviors do they need to have prevalent throughout the entire organization for the organization to be successful and then how do we set up reward systems that will accomplish that? How can we reinforce the kind of behavior that should be prevalent in the organization? How can the silos be broken down to serve the best interests of the organization as a whole? At the same time organizations need to be careful that they are not substituting unique one-off kind of rewards for not delivering the kind of motivational working environment that will obtain the best out of people day in and day out. First and foremost an environment needs to be created, provided, that allows and motivates people to perform to their full potential. Some organizations will back away from creating this environment because it can be more expensive to give people what they need to perform their jobs day in and day out adequately than it is to provide unique one-time rewards and to view those as motivational – as a substitution for what really should be done.

I am reminded of an organizational myth that seems to continually raise its head – that pay is not really motivational and what you need to do is to find what really motivates people and then pay is really not that important. (This is simply wishful thinking on the part of people who are tasked with keeping expenses associated with pay low). Pay is very motivational and will show up as a key driver of a whole host of organizational outcomes when it is deemed to be low. Pay will drop out as an organizational driver when people feel they are paid fairly. In other words once you meet my needs I stop worrying about it, but until then it will be key.

An associated myth is that people never rate their pay positively – it will be rated poorly so as to give employees perceived leverage in their struggle to get more pay. The norm on pay is somewhat lower then the norm on other items, however pay will be rated favorably when it is favorable. One retail organization was benchmark on pay in the top few percent of all organizations. A large portion of their population could be described as low skilled, the kind of workforce generally paid minimum wage. Yet their ratings of pay were very positive. They were benchmarked by another client who also had a large population of low skilled employees. They were hoping to find the magical elixir that this organization had found and importantly determine if it could be bottled and transferred to their organization. The magical elixir ended up being something quite simple. This organization paid their people 25% over market for comparable jobs and had a number of associated reward systems that all employees enjoyed. They received a better score on pay then others because they paid more.   

The story of how rewards have been used throughout history to control the “masses” is a fascinating one. One that often times played off of people’s innate tendencies, fears and weaknesses and one that has all sorts of conspiracy theories associated with it.   

I can remember one client, a well known hospital, which wanted to give out lottery tickets, one to each person who completed an employee survey. They wanted to award very substantial prizes, a new refrigerator, a vacation in the Caribbean etc., in order to motivate people to complete the survey. (Hospital populations are notoriously difficult to get them to complete an employee survey, with response rates averaging about ½ what you see elsewhere).  I counseled against it. In this case you were creating a special reward for what people, with the right environment surrounding them, should be expected to do as part of their normal job – that is giving management feedback on the performance of the organization so as to allow it to improve; a goal which is in everyone’s best interest. 

Another organization in attempting to create a “new” environment where silos were broken down changed their definition of “high potential” employees. High potential managers traditionally were those that could “hit their numbers”, often times completely to the exclusion of that was going on in other parts of the organization and often times without regard to what was being done to the people in the trenches actually responsible for making those numbers happen. Managers would move around a lot and it was not uncommon for an organization to hit their numbers several years in a row and then to have a new manager come in only to find the organization in need of a complete overhaul, with demoralized burnt out employees and processes that were propped up by a host of band aid like fixes. This organization wanted to change the paradigm.  They changed their definition of high potential to be those that not only could run their own organizations well, but could reach out to other parts of the organization and bring them along. Who would you want as your next CEO, someone who was inwardly focused, self absorbed, or someone who can reach out to others within the organization and help them to accomplish their goals as well?

Another organization created rewards and recognition programs that were more heavily weighted towards group performance rather then individual silo performance, all the while fretting that they were diluting the sense of accountability they had worked to install within the silos. All of these approaches are of course a balance between local accountability and a group focus.

Silo thinking is not limited to the corporate world of course. It raises its head anytime you have humans interacting with other humans. From a broader perspective I can’t help but think about China which just launched a missile blowing out of the sky one of their weather satellites near the end of its life span. The rationale for this was multifold from the various analyses that I have read. But many countries are up in arms, not because of the new military capability that this represents for China but because of the hazards this has created for everyone else’s satellites in orbit. It is estimated that there are now 300,000 small bullets, the remnants of the weather satellite, orbiting the earth, any one of which now has the ability to destroy inadvertently other country’s satellites including communication systems now critical to the world’s economies. It would be ironic if with silo thinking the Chinese upon destroying the weather satellite have created conditions whereby satellites vital to their own economic success were destroyed.

Each country, each person, each organizational silo thinking that they are the center of the universe without realizing the true interdependencies and collaboration opportunities that exist, or without organizations creating conditions for those collaboration opportunities and interdependencies to be enhanced and benefited from, creates conditions that can result in unforeseen negative circumstances not just for themselves but for everyone. Let’s hope that the new Chinese space junk does not drive home this point.

As I finish writing this piece, I can hear the center of my universe, my family, calling me to dinner. (I hope we are not having singularity tonight).

Written by Jeffrey M. Saltzman

November 13, 2009 at 7:47 am

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