A lack of confidence in your management team can lead to isolated and poor decision-making that can have long-term consequences on your company, not to mention the health of a team. For those preparing for what they do know (and don’t know) about their prospects in 2011, management readiness will be a key success factor.

If your management team is not ready, it will need more than a superficial look to figure out why. You may have the right people, but not getting the best out of them. In the context of preparedness, here are some things to consider:

1. Have you identified the key attributes needed to move your business forward?
2. Do you have the right inventory of existing skills to match your business requirements?
3. What organizational elements stand in the way of building an effective management team (processes, policies, cultural elements, etc)?
4. What does your organization embrace (status quo or original thinking)?
5. What knowledge needs to be shared and by whom?
6. Does your training get your managers through the day or through their career?

We tend to put managers through rote activities and assume they know what they are doing and why. I’ve seen managers obsess over a $5 discrepancy on a P&L that won’t move the $10M needle, but they did it because they were asked to find discrepancies. The result was wasted time and effort; they missed the bigger opportunity to evaluate emerging fiscal trends and its impact on their market. Unfortunately, they didn’t know to look for the trends and when asked, they couldn’t explain it. So ask yourself, are you doling out tasks without deepening skills and responsibility?

Managers are not often empowered (not a newsmaker, I know). The decision-making hierarchy is generally well-defined and it silently communicates to your staff: stop thinking, we’ll do that for you. Analyze your approval and workflow processes and your personal practices, it is likely that there are things in place which add complexity but not value, so remove or simplify them. This pushes responsibility down and creates an environment which lets your staff do the thinking. If they make a small mistake or two along the way, that’s okay too. Empowerment is often seen as losing decision quality and creating chaos, and yet when done well, it increases morale and corporate performance.

Go beyond training managers for the basics of their job. Broaden their thinking—give managers context to the larger implications of their role, including the financial, operational, customer and legal aspects. In this case, there’s a need for formal training but there’s also a need for leaders to proactively communicate and share their knowledge. It sounds simple but not all bosses offer the context, knowledge or resources that will empower their staff and improve their effectiveness. 

When you give managers greater freedom and responsibility as well as the context and tools to be more effective, they are more inclined to embrace their role and their growth and contribute in new and positive ways. Who wouldn’t want that?

• Good leaders set the example for leadership and culture. It took GM two years to change a culture that lasted for decades.
• Every crisis eventually ends. Good leaders find a way to reinvent themselves.  MySpace found a way to turn a declining business into a new niche.
• Bad days don’t mean you still can’t have a positive view of the future. Mark Zuckerberg continues to change the game despite bad decisions, bad press and a loss of trust.
• Good leaders remove filters, listen to their customers and employees and act decisively. Ford took the Fiesta on the road six months before its launch and used consumer feedback to make changes before it officially entered the market.
• Good leaders find a way to fill an existing need with relevance. Groupon.
• Good leaders exploit existing technology in new ways. Foursquare.
• Good leaders stay true to who they are. Southwest Airlines has sidestepped the old airline practices, maintaining the lowest costs and the high service levels.

The past few years have been tough and we can blame companies for bad leadership and bad management and the blame wouldn’t be misplaced. Thankfully, there are leaders who remind us that great things can happen during tough times.

One common thread is the recession. The blogs represent elements of what put us here in the first place (corporate culture and practice) and elements of survival/success in our current space (social media, productivity, sales strategy and work overload). Despite leading indicators such as the stock market, there are lagging indicators such as unemployment which offer conflicting messages on the reality of the market. Regardless of that, business goes on and companies are looking for the right ways to do business, improve performance and results and create barriers to failure by building a culture that employees can embrace.

If you dig deeper into the theme, it is also about the need for strong management capabilities and leadership during this time and going forward. There are a lot of unknowns and predicting the future isn’t easy right now–so managing through change may be a daily occurrence. If you approach the challenges with open communication, transparency, clear goals and increased involvement in decisions regarding change, you will benefit from commitment with a clear vision. As such, managing change may be one of the most important leadership qualifiers for businesses today.

As I look back at my work experience and that of others, I have found that the most successful leaders easily align their people to the business objectives and they do this by (in no particular order):

• Clearly expressing the business goals
• Communicating a simple roadmap to achieve the goals
• Providing transparency
• Genuine passion for their work
• Genuine compassion for their employees
• An inherent understanding—and practice—that customer satisfaction and fiscal performance is directly tied to employee satisfaction and employee performance
• Promoting innovation through trust and empowerment
• Enabling the success of others—creating leaders; building knowledge, skills, empowerment
• Accountable to the plan
• Rewards and recognizes the right things
• Creating an environment of mutual respect, communication and strong cultural values

Long ago I had a regional director who used to recognize the individual achievements of his sales team (tied to quotas)—well over 100 people, consisting of sales reps, administrative staff and his management team. He wrote in a green pen and he sent out individual notes each month to the achievers. It wasn’t just about getting the note, per se, it was the fact that the notes were personalized. We all knew what we had to do to get the notes (hit the number) but we also knew that we weren’t a face in the crowd. Perhaps more importantly, he was focused on the success of others in tangible ways, not just notes, and he was consistently rewarded for it through the results of the region.

We can all find instances of leadership failure in the past few years, much of it has been well publicized. But at the end of the day, it’s easy to take shortcuts on leadership due to increased priorities and responsibilities, less time, fewer resources, etc. What are you doing to create satisfaction for your two most valuable assets (your customers and your employees)? Are you taking care of your people so they in turn, will take care of the business?

Clearly, you can’t stop selling. But there is a difference between telling people to go out and sell, and engaging in dialogue to understand how to sell effectively in a down market. The inspiration, from an employee’s perspective comes from participating in the process—what are you doing to understand the current reality, what questions do you ask, how do you participate, what solutions do you offer that are unique and untested? The process is a means to close the gap between the perceptions that their leadership is unaware or unwilling to understand the current economic climate and the barriers to selling.

The process is also about driving new and inspired behavior. Not everyone knows how to sell in a down economy and some people have never been through it. That said, inspiring people who are driven by recognition, reward and accomplishment is a difficult task right now. Inspiration is a mechanism for changing behavior, for changing thinking, for moving people to try new things by seeing unrealized opportunity rather than obstacles. That may sound lofty, but this is a good time to set new standards for how to sell, where to sell and how to build disruptive solutions (disruptive to your competitors…).

A great moment in my early management career was sitting down with my new team and talking about opportunity. The conversation moved in that direction when we were discussing industry solutions and someone actually said “we have nothing more to sell.” No exaggeration and clearly not what any sales manager wants to hear for soooo many reasons. After my initial shock, I simply asked the question—what would you sell if you could—where do you see the opportunities? Thankfully that opened the floodgates to new ideas and while there was some pushback—”we can’t do that because…”, a simple response of “let me figure out how to remove the obstacles, let’s talk about what business is out there” moved us down the right path. It changed behavior and thinking.

In reality, inspiring your employees is more about your own self-awareness as a leader and the time you take to lead. When the pressure is on or we’re doing more with less, it is easy to lose sight of what motivates a staff or to hope they will motivate themselves. Inspiring employees starts with engaged leadership.  As a leader, what are you inspiring your employees to do—their job or to move from good to great in their job? And how you are helping to move them in that direction?

I started writing this post in early August and prior to finishing it, I ran across a great article by Rosabeth Moss Kanter in Harvard Business School’s weekly newsletter. The topic for her article is  The Strategic Value of Values: A New Guidance System.  In her article she spells out what it takes for companies to ensure that the values (in both word and action) are transmitted throughout the organization and to the external market. She calls these companies “Vanguard companies” who use their value system as a “strategic guidance system”.

Perhaps because we’ve seen the impact when companies falter with their value system, one of the most positive outcomes is what she calls “Public accountability via end-to-end responsibility”. What is emerging in the new normal are businesses that are equally cognizant of their public responsibility as opposed to a singular view of shareholder or fiscal responsibility. This becomes a distinct advantage for businesses, not just an act of societal responsibility. These companies are directly addressing the emerging demands of the new normal, responding to everything from eco-friendly requirements to talent management to visible corporate standards, etc.

Beyond the realm of public responsibility, values-driven leadership is re-emerging to be the guidepost for companies and employees. It not only serves as a competitive advantage to the external market but as a means to attract top talent who also demand more in the “new normal”.  Top talent wants companies whose decisions and actions are shaped by an accountable value system and whose values are compatible with their own. It assists in retention, job security and building longer-term intellectual capital within an organization.

Interestingly, she also talks about the pitfalls of emerging as a value-oriented company and leader. The challenge is whether or not companies can live up to the expectations that both the external and internal markets demand—and its impact to the business. You can lose focus on the core business and fiscal responsibility or you can fail to meet the heightened demands of the public or your employees.

Somewhere in between the old ways and the new is a viable answer in the new normal. Companies will need to determine how to best address this in their specific marketplace. The good news is that despite the prevalence of media on what’s gone wrong, there are many businesses who already have a strong foundation in values-based leadership—in both corporate guidance and employee actions. These are companies who don’t see leadership “as the new thing” but a continuation of old habits and will likely lead the way in the future.

First of all, the seven aspects of their culture are:

• Values are what we value
• High performance
• Freedom and responsibility
• Context, not control
• Highly aligned, loosely coupled
• Pay top of market
• Promotions and Development

Under the Freedom and Responsibility section, Netflix contradicts corporate tendencies because they work to increase employee freedom as they grow rather than limit it. In creating such a work environment, they are able to attract creative and innovative people and reap the rewards with sustainable business results. I talked with someone today whose company transitioned from start up to high growth to publicly traded. Their goal was to maintain the entrepreneurial spirit despite their growth and they are also reaping the rewards of a culture that favors freedom, good judgment and calculated risk taking (“we’d rather you take a risk and make a mistake than do nothing at all…”). This particular company grew from $500M to $1.1B in five years so the formula clearly works for them.

What Netflix points out in its employee guide is that most companies tend to increase controls to reduce risk and errors as they grow. The increased constraints diminish innovation, risk taking and inside talent and they are less likely to quickly adapt or respond to fluid market conditions. Their point is that with the right people, the emphasis is less on new processes and more on the quality of talent pool. Is there any governance around this? Yes. Netflix has two rules: prevent irrecoverable disaster and adhere to moral, ethical and legal issues.

Since this guide was published the greatest amount of buzz concerns their vacation policy and tracking—they have none. They quoted an employee (from 2004) who said “There is no clothing policy at Netflix, but no one has come to work naked lately.” While I can appreciate the humor in the statement, the “no vacation policy” is a reinforcement of the culture they created. The message is: Netflix expects to hire the best, compensate accordingly and get results. They trust that you will use the same level of judgment and act in their best interest as well.

Here some other highlights (because there are about 50 more slides to go!):

• The best managers figure out how to get the best from people by establishing context, not controlling the people or outcomes
• When employees fail, managers should start by asking themselves what they could have done better to set the right context, insight and guidance
• “Highly aligned, loosely coupled” means group interactions are focused on strategy and goals. Groups will move faster to tactical development and execution in a climate of trust (to get the work done) vs. audit.
• Pay accordingly. Their “goal is to keep each employee at the top of market for that person”.
• It’s okay for employees to test the job market and validate their worth—with the caveat that you talk to your manager about what you find so a salary discussion is transparent, honest and fact based.
• You can move from “the minors to the majors” but you have to be a superstar. Opportunity, the competing pool of superstars and timing will play a role in advancement.
• Personal development is a personal responsibility not a corporate responsibility.

Can you install Netflix’s culture into your organization? Maybe not. I think what makes Netflix unique is the practical application of their culture–starting at the top and reinforced throughout the company. It is based on reciprocity and respect for strong individual talent and results. While you can’t remove corporate policy or tell employees to enjoy that year long vacation, the heart of their culture can be incorporated into your own leadership style quite effectively and easily.

When you review corporate history in the last eighteen months, there was a clear disconnect between the stated and applied culture and values in some companies. It is the conflict between who they want to be or who they want us to think they are—and the practical outcome of neither. For Netflix, the results are obvious: they are on track for strong revenue delivery in 2009; they have a strong twelve month stock performance, consistent revenue growth from 2006-2008, a 26% increase in subscribers (Q2 09 vs. Q2 08) and a 21% growth in revenue (Q2 09 vs. Q2 08).

Netflix shared its 128-page internal guide on Slideshare titled “Reference Guide on our Freedom & Responsibility Culture” which is seemingly a working contradiction in both philosophy and action. I say this because it places a lot of emphasis on the expected “behavior and skills” of their salaried employees. They define nine core values, moving beyond the superficial descriptors of judgment, communication,  impact, curiosity, innovation, courage, passion, honesty, selflessness. Below is a snapshot of their internal guide and some points that I think are pretty compelling for executing to core values and creating a viable company culture.

Slide 21:

Values reinforced in hiring, in 360 reviews, at comp review, in exits and in promotions.

This is probably the most critical point in the whole presentation because it is about compliance to their values (which includes behavior). Adherence to the values becomes a common message throughout the 128 slides. When they review someone on the value of Honesty—it is not just about being truthful, it is about candor and directness. This is a culture that wants people to challenge the system through innovation, inquiry and alternatives—not status quo. I think that is pretty bold and impressive!

Slide 29:

The “Keeper Test” Managers Use

Which of my people, if they told me they were leaving in two months for a similar job at a peer company, would I fight hard to keep at Netflix?

The other people should get a generous severance now so we can open a slot to try to find a star for that role.

This is a great litmus test about the value of contributors, employee advocacy, effective performance and honesty. Coupled with slide thirty, they encourage their employees to solicit this feedback as well: If I told you I was leaving, would you fight hard for me to stay? This places the responsibility of performance and behavior on the employee not just the manager. If done right, this fosters meaningful dialogue about performance and results and can also improve retention.

Slide 32:

Loyalty is good

Loyalty is good as a stabilizer

People who have been stars for us and hit a bad patch, get a near term pass because we think they will become stars for us again

We want the same: If Netflix hits a temporary bad patch, we want people to stick with us

But unlimited loyalty to a shrinking firm, or to an ineffective employee, is not what we are about

This is a pretty direct statement and a reinforcement of what is expected, tolerated, and reciprocated. It also takes into consideration that there can be ebbs and flows to performance for companies and individuals—but a consistent work history of ineffectiveness is not accepted.

Slide 34:

Brilliant Jerks

Some companies tolerate them

For us, the cost to teamwork is too high

Diverse styles are fine, as long as the person embodies the 9 values

What more can I say? If you have worked with a jerk, you know how disruptive they can be—no matter how brilliant. They can undermine teams and results and morale. As noted above, the cost to teamwork is too high.

Slide 35:

Why are we so manic on high performance?

In procedural work, the best are 2X better than the average

In creative work, the best are 10X better than the average, so huge premium on creating effective teams of the best

High performing teams are strength based teams and Netflix places a high value on individual skills in a collective, team environment.

While all of this may seem warm and fuzzy, it isn’t. It is a strong example of employee communication but it is also a data driven, highly accountable framework for culture. The difference is that what they value is written in common terms that people understand and is, in general, contrary to a lot of corporate cultures. There is a strong undercurrent of accountability but it leads with the value of the individual, teamwork and sound judgment. 

Stay tuned for part two which focused on the seven aspects of Netflix’s culture.

While I will one day write a full post on this, I have had several folks come to me with stories they titled “creepy things my manager said to me.” It’s now a standing joke and yet disturbing at the same time. Testing some assumptions, I determined that these “creepy” managers are Gen X (meaning likely in their second or third management role).  I’m not saying there is a generational factor regarding the quality of the managers but it does beg the question, has enough emphasis been placed on management development? In times when business is robust, do we look at management as a throw away category; that a poor manager can either be tolerated or replaced? As such training, have development and proper vetting during the hiring process become less important?

I was recently talking to someone who was telling me about a prior boss who in less than nine months had injected a significant amount of dysfunction, decreased morale, confusion and ineffectiveness into the division.  The new boss is now on clean-up duty and it seems the amount of damage is extensive for his predecessor’s short tenure. Employees are updating their resume and waiting for the recession to pass.  Morale is down, productivity is down, etc. The prior boss would be described as indecisive, lacking focus, “flavor of the hour” approach (meaning constant change with no clear vision or rationale), speaking without thinking (to all levels of employee rank), lacking strategic and tactical capabilities. This isn’t a frontline manager who is learning the ropes. This is an ineffective leader who wreaked a lot of havoc on an organization in a short period of time.

While anecdotal, I have found others who have experienced or observed these types of management attributes. I grew up in a business environment that embraced training and development—specifically management training. Management wasn’t a right, it was a privilege. If you wanted that job, you needed to demonstrate a work history of leadership and the strong management attributes long before you applied for your first management position.

Conversely, I had a discussion with a company who was hiring a frontline sales position. A large percentage of the hiring criteria was on the candidate’s management potential—could he or she take on the manager’s role in the next 12 to 18 months? There were three layers to the interview process with the expectations ratcheting up at each level: could he or she take on their boss’ boss’s role in a window of 3-5 years? The point being, they were hiring with the end in mind. I applaud the strategy. It was clear that this company valued specific skills and intellectual capabilities and they were not going to sacrifice that potential in their hiring decisions.

You may argue that there are a lot of great managers out there, and I wouldn’t disagree. But the depth and quality of the management bench is critical to the future of a company.   That’s where the next generation of leaders comes from. I’ll open this up for discussion, what other contributing elements do you see besides training and hiring? (I believe there are many…) What are you doing differently to ensure quality hires?

Here’s a story that came to my attention and spells out the point (perhaps overly so): Company A (I know, still no creative juices when it comes to these names) recently re-categorized its customers and changed their pricing (up, not down), this is often a hard sell on a good day. Their increased cost of doing business is attributed more to them, and they are more commodity than value, so it’s going be a bad day. Coupled with the fact that their next strategic program might look like a most favored nation initiative—with planned obsolescence attached to other customers (presently unknown to them), it’s going to be a big hairy day. Their communication strategy is limited face-to-face discussion and the US Mail (without proof of delivery). If that communication is misunderstood or overlooked, it is going to make the big hairy day look like the better day. And last but not least, there is a product launch and product changes to introduce.  As we know with launches, there will be intense focus on the pipeline and revenues for those new products. (Arguably, the execution is equally at issue). All these things are important, but which is the greater priority?

In this example, the reality is that all these priorities primarily hit one area of the business—sales. When you have more than one strategic program that will directly affect your customers, you will likely halt selling for successive periods of time. Yes, sometimes selling gets halted or is less productive, even with the best laid plans. A couple things happen when you do this: First, your competitors start salivating because they can swoop in and sell while you are explaining, implementing, defending the plan. Second of all, if your strategic plans are more about you and less about the customer, then your customers start talking with your competitors. Too much change can be disruptive, no matter how great your ideas are.

The same disruption applies to the rest of organization, even if you stretch out the execution over multiple quarters. If your programs consecutively halt your operation, slow it down and decrease productivity, 2-3 times per year…it might be too many.

Once upon a time, I was reviewing objectives that were to be sent down through company ranks to one functional area; it was a spreadsheet with 2-3 worksheets, multiple columns and rows, lots of rows.  You almost needed a pivot table to summarize what you had to do. Okay, I admit that’s a slight exaggeration, but still…that’s over complicated. When the instructions become the fourth worksheet, it’s over complicated.  The best way to keep your organization focused on the priorities is keep it simple, focused but effective.

I think sometimes if we don’t get feedback, we have a false sense of what can be accomplished. Keep a pulse on your organization. Change, especially game-changing change will redirect attention for a brief period of time. That is to be expected. It requires solid communication and feedback from all levels of your company in order to deliberately plan and deliver. It can get eerily quiet on the frontline when all signs point to overload, but don’t interpret this as acceptance. It might mean you weren’t listening, so they stopped talking.

Staging the execution of multiple priorities throughout the year doesn’t make things more effective. It just means your organization may be in a stop/start mode, for consecutive periods of time.  Priorities, even those that propel a company forward can become competing priorities. In theory, there is alignment; in the execution, there is chaos.