Does your organisation trust you?

fear-441402_640Wow, that’s a big hairy question! Let me use an old case study by Peter Scholtes to explain:

In the mid 1980s the management of an American company (The Falk Corporation) were working to understand the philosophy of W. Edwards Deming. They began to explore his 8th (out of 14) Management Point:Drive out fear, so that everyone may work effectively for the company.”

The company had a long history of adversarial relationships between management and employees. Whilst trying to grapple with this fear point they decided to consider its inverse, which they concluded was trust.

They then began to explore the issue of trust.

  • Do we trust our employees?
  • Are our employees trustworthy?
  • How can we develop and maintain an organisational environment that values mutual trust and respect?

They developed two lists of characteristics to describe a trustworthy employee and its converse. These lists looked remarkably similar to Douglas McGregor’s famous 1960s descriptions of Theory X and Theory Y assumptions about people.

They then came up with an estimate of how many of their employees resembled the trustworthy list and how many the untrustworthy. They concluded that at least 95% of their people were trustworthy.

They stood back and realised that their policies, practises and procedures were written for the 5% and were not compatible with Deming’s Point 8 of driving out fear.

They undertook to rewrite their policies with trust in mind.

Here is a wonderful example of one of their ‘before’ and ‘after’ policies’

Bereavement Leave (the old policy)

All employees shall receive time off with pay up to a maximum of three (3) days for working time lost if there is a death in the immediate family.

These days must be within a seven-calendar-day period, the first day of which would be the initial bereavement day paid. However, one of the days must be the day of the funeral. If the funeral falls on a non-scheduled workday (Saturday, Sunday, holiday, during a plant shutdown, or during a period of disability), no loss of pay is involved, therefore bereavement pay will not be made for such days.

Pay will be for eight (8) hours at the employee’s day rate plus average premium for the three (3) months prior to the month in which the time off occurred.

A part-time employee’s pay will be based on average hours worked in the previous month and will be at the employee’s day rate plus average premium.

An employee’s immediate family will be considered…spouse, child, stepchild, mother, father, sister, brother, stepparents, grandparents, and grandchildren of the employee; son-in-law and daughter-in-law; mother, father, sister, brother, and grandparents of the spouse.

Payment will be made by the company upon request by the employee to the personnel department.

The personnel department may require verification of death and relationship of the employee.

Bereavement Leave (the new policy)

If you require time off due to the death of a friend or family member, make arrangements with your supervisor.

The usage result? Bereavement leave usage under the new policy was only 47% of the days used under the old policy.

To be clear, the usage result wasn’t the purpose of the change, but it was a healthy side effect for the organisation – a win/win.

Conversely, if they had focused on a numeric KPI target to reduce bereavement leave usage, they would likely never have achieved such a major change, any improvement would have been unlikely to have lasted…and, in the long run, it may very well have become worse! This is because they wouldn’t have understood the cause. This links back to my earlier post on the folly of managing by results.

What about the link between trust and transparency?

Borrowing from a Hakan Forss post entitled: There is a reason why thieves and crooks prefer to operate at night

“There are organisations that have thrown away their control systems for controlling things like travel expenses. They at the same time made everyone’s travel expenses public. You may suspect that this led to higher travel expenses as everyone would travel in first class and stay at the most expensive hotels. But no, the results are the opposite.

Travel expenses often go down or stay the same. When everyone can see what everyone else is spending there is less room for the thief and crook behavior, because everyone can see it.”

He then goes on to deal with the issue of the potentially untrustworthy 5%:

“… but what if people are not making the right decisions. What if everyone travels first class and are spending like drunken sailors…then you as the leader have to lead by example. Show the organisation’s values, show the wanted direction. Don’t blame the people. Don’t create a control system. Show the direction and lead by example.”

We won’t change the reality that there is likely to always be one ‘black spot on a white page’ but, rather than designing a straight jacket for everyone, a better approach is for management to properly handle the 5%. Indeed, if we combined transparency with a clear organisational purpose and the sharing of the organisation’s success (I don’t mean incentives!) then policies will likely be self-policed by the group.

I like the concluding quote:

“Transparency is the new control system” (Jeremy Hope)

Now, to relate this back to a typical modern day organisation: I consider myself trustworthy, that I know to do the right thing but I also know that an untrusting (bureaucratic and controlling) environment seriously annoys me and may cause me to react accordingly.

Take expenses as an easy example:

  • If I am staying away from home and am trusted, I might have a nice meal out one night. I will then have a lesser meal the next night to compensate and keep my costs in balance. I accept that I need receipts and that someone could ask me about this, but I am comfortable that I have a reasoned response for my actions;
  • If management impose a controlling policy on me which prevents me making reasonable choices for myself (as in the above) and, instead, dictates a complicated and exacting policy along the lines of a daily limit of, say, $60 for breakfast, diner and drinks….then I might very well be tempted to ‘use all of my allowance every day’ as a reaction to the lack of trust being shown in me…even though I never used to get close to spending this much!

Whilst expenses are an easy example to demonstrate the trust and transparency point, I am sure many of you will have your own personal stories to tell about organisations you have worked in, their business policies and the effects.

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DUMB

smartWe are all taught at an early age in our careers (i.e. ‘Management for dummies’) that we should cascade down S.M.A.R.T objectives. You will come across it as an idea that is so deeply rooted that it has been co-opted as ‘common sense’.

Sounds so good, it must be right, right?

Let’s just remind ourselves what SMART stands for:

  • Specific
  • Measurable
  • Achievable
  • Realistic
  • Time bound

Let’s then also remind ourselves about the definition of a system (taken from my earlier ‘Harmony or cacophony’ post):

“A system is a network of interdependent components that work together to try to accomplish the aim [purpose] of the system.” (W. Edwards Deming)

The cascaded objectives technique (known as Management by Objectives, or M.B.O) is used by ‘Command-and-control’ organisations in the mistaken belief that, if we all achieve our cascaded personal objectives, these will then all roll up to achieve the overall goal (whatever that actually is).

This misunderstands:

  • the over-riding need for all the parts (components) of a system to fit together; and
  • the damage caused by attempting to optimise the components…because this will harm the whole system.

A simple illustrative example (taken from Peter Scholtes’ superb book called ‘The Leaders Handbook’):

Let’s say that we run a delivery company – our system. Fred, Amy and Dave are our drivers – our people components. If we provide them each with SMART personal objectives cascaded down (and offer performance-based pay), we might assume that they will all be ‘motivated’ to achieve them and therefore, taken together, the purpose of the whole will be achieved. Sounds great – I’ll have some of that!

…but what should we expect?

  • Each driver might compete with the others to get the best, most reliable, largest-capacity truck;
  • Each driver might compete for the easiest delivery assignments;
  • Drivers might engage in ‘creative accounting’: such as trying to get one delivery counted as two; or unloading a delivery somewhere nearby where it can be made after hours so that they can go back to the warehouse to get more jobs;
  • If we have created a competition out of it (say, the getting of a desirable award) then we can expect to see little driver co-operation, more resentment and perhaps even subtle sabotage.

The above shows that the sum of the outcomes will not add up to what we intended for the whole system…and, in fact, will have caused much unmeasured (and likely immeasurable) damage!

This is a good point to bring out Eli Goldratt’s classic quote:

“Tell me how you will measure me and I will tell [show*] you how I will behave.”

* I prefer to use the word ‘show’ since most people won’t tell you! They know their actions aren’t good for the overall system (they aren’t stupid) and so don’t like telling you what daft practices the management system has ended up creating.

A critique of S.M.A.R.T:

“SMART doesn’t tell us how to determine what to measure, and it assumes knowledge – otherwise how do we know what is ‘achievable’ and ‘realistic’? It is only likely to promote the use of arbitrary measures that will sub-optimise the system.” (John Seddon)

If an individual (or ‘team’) is given a truly SMART objective then, by definition, it would have to have been set so that they could achieve it on their own….otherwise it would be unrealistic.

Therefore any interdependencies it has with the rest of the organisational system would have to have been removed…which, clearly, given the definition of a system means one of the following:

  • if all interdependencies had been successfully removed…then meeting the resultant SMART objective will be:
    • a very insignificant (and very possibly meaningless) achievement for the system; and/or
    • sub-optimal to the system (i.e. work against the good of the whole)

OR

  • if (most likely) it was in fact not possible to truly remove the interdependencies…despite what delicate and time consuming ‘word smith-ing’ was arrived at…then:
    • it will be a lottery (not really under the person’s control) as to whether it can be achieved; and/or
    • it will ‘clash’ with other components (and their supposedly SMART objectives) within the system

So where did the post title ‘D.U.M.B’ come from? Here’s a thought provoking quote from John Seddon:

“We should not allow a plausible acronym to fool us into believing that there is, within it, a reliable method.”

Consider     

  • SMART: Specific, Measurable, Achievable, Realistic, Time-bound

With

  • DUMB: Distorting, Undermining, Management-inspired, Blocking improvement

Does the fact that the acronym and its components ‘match’ make it any more worthy?

Cascaded personal objectives will either be ineffective, detrimental to the whole system or a lottery (outside of the person’s control) as to whether they can be achieved.

We need to move away from cascaded personal objectives and, instead:

  • see each horizontal value stream as a system, with customers and a related purpose;
  • provide those working within these systems with visible measures of the capability of the system as against its purpose; and
  • desist from attempting to judge individuals ‘performance’ and thereby allow and foster collaboration and a group desire to improve the system as a whole.