Quiz 2

FIRST BREAK ALL

THE RULES WHAT THE WORLD'S GREATEST

MANAGERS DO DIFFERENTLY

BASED ON IN-DEPTH INTERVIEWS BY THE GALLUP

ORGANIZATION OF OVER 80,000 MANAGERS IN

OVER 400 COMPANIES-THE LARGEST STUDY

OF ITS KIND EVER UNDERTAKEN

MARCUS BUCKINGHAM

& CURT COFFMAN

U.S. $27.00 Can. $42.00

The greatest managers in the world seem to

have little in common. They differ in sex, age,

and race. They employ vastly different styles

and focus on different goals. Yet despite their dif ferences, great managers share one common trait:

They do not hesitate to break virtually every rule

held sacred by conventional wisdom. They do not

believe that, with enough training, a person can

achieve anything he sets his mind to. They do not

try to help people overcome their weaknesses. They

consistently disregard the golden rule. And, yes, they

even play favorites. This amazing book explains why.

Marcus Buckingham and Curt Coffman of the

Gallup Organization present the remarkable find

ings of their massive in-depth study of great man

agers across a wide variety of situations. Some were

in leadership positions. Others were front-line

supervisors. Some were in Fortune 500 companies;

others were key players in small, entrepreneurial

companies. Whatever their situations, the managers

who ultimately became the focus of Gallup's

research were invariably those who excelled at

turning each employee's talent into performance.

In today's tight labor markets, companies com

pete to find and keep the best employees, using pay,

benefits, promotions, and training. But these well-

intentioned efforts often miss the mark. The front

line manager is the key to attracting and retaining

talented employees. No matter how generous its

pay or how renowned its training, the company that

lacks great front-line managers will suffer.

Buckingham and Coffman explain how the best

managers select an employee for talent rather than

for skills or experience; how they set expectations

for him or her—they define the right outcomes

rather than the right steps; how they motivate peo

ple—they build on each person's unique strengths rather than trying to fix his weaknesses; and,

finally, how great managers develop people—they find the right fit for each person, not the next rung

on the ladder. And perhaps most important, this

research—which initially generated thousands of

(continued on back flap)

"Outofhundredsofbooks aboutimproving organizational performance, here isone that isbasedon extensive empirical evidence and a bookthat focuses on specific actions managers can take to make their organiza tions better today! In a world in which managing people provides the differentiating advantage, First, Break All the Rules is a must-read."

—Jeffrey Pfeffer, Professor, Stanford Business School and author of The Human Equation: Building Profits byPutting People First

"This bookchallenges basic beliefs of great management withpowerful evidence and a compelling argument. First, Break All the Rules is essen tial reading."

—Bradbury H. Anderson, President and COO, Best Buy

"This is it! With compelling insight backed by powerful Gallup data, Buckingham and Coffman have built the unshakable foundation of ef fective management. For the first time,a clearpathway hasbeen identi fied for creating engaged employees and high-performance work units. It has changed the way I approach developing managers. First, Break All the Rules is a critical resource forevery front-line supervisor, middle manager, and institutional leader."

—Michael W. Morrison, Dean, University of Toyota

"First, Break All the Rules is nothing short of revolutionary in its con cepts and ideas. It explains why so many traditional notions and prac tices are counterproductive in business today. Equally important, the bookpresents a simpler, truer modelcomplete withspecific actions that have allowed our organization to achieve significant improvements in productivity, employee engagement, customer satisfaction, and profit."

—Kevin Cuthbert, Vice President, Human Resources, Swissotel

"Finally, somethingdefinitive about what makes for a great workplace." —Harriet Johnson Brackey, Miami Herald

"Withinthe last several years, systems and the Internet have assumed a preeminent role in management thinking, to the detriment of the role of people in the workplace. Buckingham and Coffman prove just how crucial good people—and specifically great managers—are to the suc cessof anyorganization."

—Bernie Marcus, former Chairman and CEO, Home Depot

"The rational, measurement-based approach, for which Gallup has so long been famous, has increased the tangibility of our intangible assets, as well as our ability to manage them. First, Break All the Rules shows us how."

—David P. Norton, President, The Balanced Scorecard Collaborative, Inc.; coauthor of The Balanced Scorecard

"As the authors put it, 'a great deal of the value of a company lies be tween the ears of its employees.' The key to success is growing that value by listening to and understanding what lies in their hearts— Mssrs. Buckingham and Coffman have found a direct way to measure and make that critical connection. At Carlson Companies, their skills are helping us become the trulycaring company that will succeedin the marketplace of the future."

—Marilyn Carlson Nelson, Presidentand CEO, CarlsonCompanies

First, Break

All the Rules What the World's Greatest Managers Do Differently

Marcus Buckingham and Curt Coffman

Simon & Schuster

± SIMON & SCHUSTER

Rockefeller Center

1230 Avenue of the Americas New York, NY 10020

Copyright © 1999 by The Gallup Organization Allrights reserved,

including the rightof reproduction in wholeor in partin any form.

Simon & Schuster andcolophon areregistered trademarks of Simon & Schuster Inc.

Designedby Pagesetters

Manufactured in the United States of America

35 37 39 40 38 36 34

Library of Congress Cataloging-in-Publication Data Buckingham, Marcus.

First, breakall the rules: whatthe world s greatest managers do differently / Marcus Buckingham andCurt Coffman.

p. cm.

1. Executive ability. 2. Management. 3. Executives—Attitudes. 4. Employees—Attitudes. 5. Employerattitudesurveys.

6. Employee attitude surveys. I. Coffman, Curt. II. Tide. III. Tide:What the world's greatest managers do differendy.

HD38.2.B83 1999

658.4'09—dc21 99-19452

CIP

ISBN 0-684-85286-1

To Janie, whofoundwhat was always there

Contents

Introduction: BreakingAll the Rules 11

Chapter 1: The Measuring Stick

A Disaster Off the Scilly Isles 21 "What do we know to be important but are unable to measure?"

The Measuring Stick 25 "How can you measure humancapital?"

Putting the Twelve to the Test 30 "Does the measuring stick link to business outcomes?"

A Case in Point 37

"What do these discoveries meanfor oneparticular company?"

Mountain Climbing 42 "Why is there an order to the twelve questions?"

Chapter 2: The Wisdom ofGreat Managers

Words from the Wise 53

"Whom did Gallup interview?"

What Great Managers Know 56 "What is the revolutionary insight shared by allgreat managers?"

What Great Managers Do 58 "What are thefour basic roles ofa great manager?"

The Four Keys 66 "How do great managers play these roles?"

Chapter 3: The First Key: Select for Talent

Talent: How Great Managers Define It 71 "Why does everyrole, performed at excellence, require talent?"

8 Contents

The Right Stuff 72 "Why is talent more important than experience, brainpower, and willpower?"

The Decade of the Brain 79 "How much ofa person can the manager change?"

Skills, Knowledge, and Talents 83 "What isthe difference among the three?"

The World According to Talent 93 "Which mythscan we nowdispel?"

Talent: How Great Managers Find It 99 "Why are great managers sogood at selectingfor talent?"

A Word from the Coach 105 "John Wooden, on the importance oftalent"

Chapter 4: The Second Key: Define the Right Outcomes

Managing by Remote Control 109 "Why is it so hard to manage people well?"

Temptations 112 "Why do so manymanagers tryto control their people?"

Rules ofThumb 121 "When and howdo great managers rely on steps?"

What Do You Get Paid to Do? 133 "How do you know ifthe outcomes are right?"

Chapter 5: The Third Key: Focus on Strengths

Let Them Become More of WhoTheyAlready Are 141 "How do great managers release each person's potential?"

Tales ofTransformation 144

"Why is it so tempting to try tofix people?"

Casting Is Everything 148 "How do great managers cultivate excellent performance so consistently?"

Manage by Exception 151 "Why do great managers break the Golden Rule?"

Spend the Most Time with Your Best People 153 "Why do great managers playfavorites?"

Contents 9

How to Manage Around a Weakness 164 "How do great managers turn a harmful weakness into an irrelevant nontalent?"

Chapter 6: The Fourth Key: Find the Right Fit

The Blind, Breathless Climb 177 "What's wrong with the oldcareer path?"

One Rung Doesn't Necessarily Lead to Another 182 "Why do we keep promoting people to their level of incompetence?"

Create Heroes in Every Role 184 "How to solve the shortage ofrespect"

Three Stories and a New Career 193 "What is theforce driving the New Career?"

TheArt of Tough Love 206 "How do great managers terminate someone and still keep the relationship intact?"

Chapter 7: Turning the Keys: A Practical Guide

The Artof Interviewing for Talent 215 "Which are the right questions to ask?"

Performance Management 222 "How do great managers turn the last three Keys every day, with every employee?"

Keys of Your Own 230 "Can an employee turn these Keys?"

Master Keys 235 "What can the company do to create afriendly climate for great managers?"

Gathering Force 239

Appendices:

APPENDIX A: The Gallup Path to Business Performance 245 "What is the path to sustained increase in shareholder value?"

10 Contents

APPENDIX B: What the Great Managers Said 249 "What did great managers say to the three questions quoted in chapter2?"

APPENDIX C: A Selection ofTalents 251 "Which talents are found most frequently across all roles?"

APPENDIX D: Finding the Twelve Questions 253 "How did Gallup find the twelve questions?"

APPENDIX E: The Meta-analysis 255 "What are the details ofthe meta-analysis?"

Acknowledgments 269

INTRODUCTION

Breaking All the Rules

The greatest managers inthe world do not have much incommon. They are of different sexes, races, and ages. They employ vastly different styles and focus ondifferent goals. But despite their differences, these great managers do share one thing: Before they do anything else, they first breakallthe rules ofconventional wisdom. Theydo not believe that a person can achieve anything he sets his mind to. They do not try to help aperson overcome his weaknesses. They consistently disregard the Golden Rule. And, yes, theyevenplay favorites.

Great managers are revolutionaries, although few would use that word to describe themselves. This book will take you inside the minds of these managers to explain why they have toppled conventional wis domand reveal the newtruths theyhave forged in its place.

We arenotencouraging you to replace your natural managerial style with a standardized version of theirs—as you will see, great managers do not share a "standardized style." Rather, our purpose is to help you capitalize onyour own style, by showing you how toincorporate the rev olutionary insights shared bygreat managers everywhere.

This book is the product of two mammoth research studies under taken by the Gallup Organization over the last twenty-five years. The first concentrated on employees, asking, "What do the most talented employees need from their workplace?" Gallup surveyed over a million employees from a broad range ofcompanies, industries, and countries. We asked them questions on all aspects of their working life, then dug deep into their answers to discover the most important needs de manded by the mostproductive employees.

Our research yielded many discoveries, but the most powerful was this: Talented employees needgreat managers. The talented employee may join a company because ofits charismatic leaders, its generous ben efits, and itsworld-class training programs, but how long that employee

12 Introduction

stays and how productive he is while he is there is determined by his re lationship with his immediate supervisor.

This simple discovery led us to the second research effort: "How do the worlds greatest managers find, focus, and keep talented employ ees?" To answer this question we went to the source—large companies and small companies, privately held companies, publicly traded compa nies, and public sector organizations—and interviewed a cross section oftheir managers, from the excellent to the average. How did we know who was excellent and who was average? We asked each company to provide us with performance measures. Measures like sales, profit, cus tomer satisfaction scores, employee turnover figures, employee opinion data, and 360-degree surveys were all used to distill the best managers from the rest. During the last twenty-five years the Gallup Organization has conducted, tape-recorded, and transcribed one-and-a-half-hour in terviews with over eighty thousand managers.

Some of these managers were in leadership positions. Some were midlevel managers. Some were front-line supervisors. But all of them had one ormore employees reporting to them. We focused our analysis on those managers who excelled atturning the talent oftheir employees into performance. Despite their obvious differences instyle, we wanted todiscover what, ifanything, these great managers had incommon.

Their ideas are plain and direct, but they are not necessarily simple to implement. Conventional wisdom is conventional for a reason: It is easier. It is easier to believe that each employee possesses unlimited potential. It is easier to imagine that the best way to help an employee is by fixing his weaknesses. It is easier to"do unto others as you would be done unto." It is easier to treat everyone the same and so avoid charges offavoritism. Conventional wisdom is comfortingly, seductively easy.

The revolutionary wisdom ofgreat managers isn't. Their path is much more exacting. It demands discipline, focus, trust, and, perhaps most important, a willingness to individualize. In this book, great managers present no sweeping new theories, noprefabricated formulae. All they can offeryouare insights into the nature of talent and into their secrets for turning talent into lasting performance. The real challenge lies in how you incorporate these insights into your style, one employee at a time, everyday.

Introduction 13

This book gives voice to one million employees and eighty thousand managers. While these interviews ground the book in the real world, their sheer number can be overwhelming. It is hard to imagine what one talented employee orone great manager sounds like. The following excerpt, from a single interview, captures something of both the tone and the content of our in-depth interviews.

As with all the managers wequote, we have changed his name to pre serve his anonymity. We will call him Michael. Michael runs a fine- dining restaurant owned by a large hospitality company in the Pacific Northwest. Since Gallup first met Michael fifteen years ago, his restau rant has been in the company's top 10 percent on sales, profit, growth, retention, and customer satisfaction. From the perspective of his com pany, his customers, and his employees, Michael isa great manager.

Throughout the book you will hear Michael's comments echoed by other managers and employees. But rather than pointing out these echoes, we ask you to make the connections for yourself as you move through the chapters. For the moment we will simply letMichael speak for himself.

Gallup: Canyou tellusabout your bestteam ever? Michael: You mean my whole team? I have at least thirty people

working here. Gallup: Justtellusabout the core ofthe team. Michael: I suppose my best team ever was my wait staff team a few

years ago. There were four ofthem. Brad was about thirty-five, apro fessional waiter. Took greatpridein beingthe bestwaiterin town. He was brilliant at anticipating. Customers never hadto ask for anything. The moment the thought entered theirmind that they needed more water, or a dessert menu, Bradwasthere at their shoulder, handing it to them.

Then there was Gary. Gary was an innocent. Not naive, just an in nocent. He instinctively thought theworld was a friendly place, sohe was always!smiling, cheerful. I don't mean that he wasn't professional, 'cause hewas. Always came inlooking neat, wearing a freshly pressed shirt. But it was his attitude that so impressed me. Everyone liked to be around Gary.

Susan was our greeter. She was lively, energetic, presentedherself very well. When she first joined us, I guessed that she might lack a lit tle commonsense, but I was wrong. She handled the customersper-

14 Introduction

fectly On busy nights she would tell them pleasantly but firmly that last-minute reservations couldn't be accepted. During lunch some customers just want to get their order, pay, and leave. Susan would figure this out and lettheir server know that, with this particular cus tomer, speed was of the essence. She paid attention, and she made good decisions.

Emma was the unspoken team builder in the crew. Quieter, more responsible, more aware ofeveryone else, she would get theteam to gether before a busy Saturday night and just talk everyone through the need toput on agood show, to bealert, tohelp each other get out of the weeds.

These four were the backbone ofmy best team ever. I didn't really need to interfere. They ran the show themselves. They would train new hires, set the right example, and even eject people who didn't fit. For a good three years theywere the restaurant.

Gallup: Where are they now? Michael: Susan, Emma, and Gary all graduated and moved backeast.

Brad is still with me.

Gallup: Doyou have a secret to building great teams? Michael: No, I don't think there is a secret. I think the best a man

ager can do is to make each person comfortable with who they are. Look, we all have insecurities. Wouldn't it be great if, at work, we didn't have to confront our insecurities all the time? I didn't try to fix Brad, Susan, Gary, and Emma. I didn't try to make them clones of each other. I tried tocreate anenvironment where they were encour aged to be more of who they already were. As long as they didn't stomp on each other and as long as they satisfied the customers, I didn't care that theywereallsodifferent.

Gallup: Howdidyou get to know thesepeople sowell? Michael: I spent a lot of time with them. I listened. I took them out

for dinner, had a couple ofdrinks with them. Had them over to my place for holidays. But mostly I was just interested inwho they were.

Gallup: What doyou think ofthe statement "Familiarity breeds con tempt?"

Michael: It's wrong. Howcan you manage people if you don't know them, their style, their motivation, their personal situation? I don't think you can.

Introduction 15

Gallup: Do you think a manager should treat everyone thesame? Michael: Of course not.

Gallup: Why? Michael: Because everyone is different. I was telling you about Gary

before, how great an employee he was. But I fired him twice. Acou ple oftimes his joking around went too far, and he really jerked my chain. I really liked him, butI had tofire him. Our relationship would have been ruinedif I hadn't put my foot down and said, "Don'tcome in on Monday." After each time, he learned a little bit more about himself and his values, so I hired him back both times. I think he's a better person because ofwhat I did.

My firm hand worked with Gary. It wouldn't have worked at all with Brad. If I even raised my voice with Brad, I would get the exact opposite reaction from the one I wanted. He would becrushed. He'd shut down. So when I disagree with him, I have to talk quietly and reason everything through with him quite carefully.

Gallup: Isn't it unfair to treat people differendy? Michael: I don't think so. I think people want to feel understood.

Treating them differently is part of helping them feel unique. If I know that oneof my people is the primary breadwinner, then as long as they perform, I will be more likely to give him better hours than someone who is a student. The student might be a little annoyed, but when I explain the situation to him, he usually calms down. Besides, he now knows that I will be paying attention to his personal situation when he needs a special favor. That's always a good message to send.

Gallup: Other than Gary, have you ever fired anyone? Michael: Unfortunately, I have. Like most managers, sometimes I

don'tpick the right people andthings startto fall apart. Gallup: What isyour approach to firing an employee? Michael: Do it fast, the faster the better. If someone is consistently

underperforming, you might think you are doing them a favor by waiting. You aren't. You're actually making matters worse.

Gallup: You've been managing now for fifteen years. If you were going to give any advice to a new manager, what would it be?

Michael: I amnot an expert at this, you know. I'm still learning. Gallup: That's fine. Just tell us a couple of the ideas that have helped

you over the years.

16 Introduction

Michael: Well... I suppose the first would be, pick the right people. If you do, it makes everything else so much easier.

And once you've picked them, trust them. Everyone here knows that the till is open. If they want toborrow $2 for cigarettes or $200 for rent, they can. Just put an IOU in the till and pay it back. Ifyou expect the best ofpeople, they'll give you the best. I've rarely been let down. And when someone has let me down, I don't think it is right to punish those who haven't by creating some new rule orpolicy.

Another thing would be, don't overpromote people. Pay them well for what they do, and make it rewarding, in every way, for them to keep doing what they are doing. Brad is a great waiter, buthe would make a terrible manager. He loves to perform for an audience he re spects. He respects the customers. He is less respectful of some of the new employees. As a manager, these employees would be his au dience.

And especially important: Never pass the buck. Never say, "I think this is acrazy idea, but corporate insists." Passing the buck may make your little world easy, but the organism as a whole, sorry, the or ganization as a whole, will be weakened. So in the long run, you are actually making yourlifeworse. Evenworse are thosewhofindthem selves always promising things that don't come to pass. Since you never know what corporate might spring onyou next, I recommend living by this simple rule: Make very few promises to your people, and keep them all.

That's it. That's mylist. Gallup: Isthere anything else that you would like totell us about your

experiences as a manager? Michael: Maybe just this: Amanager has got to remember that he is

onstage every day. His people are watching him. Everything he does, everything he says, and the way he says it, sends offclues to his em ployees. These clues affect performance. So never forget you are on that stage.

So that's Michael. Or, at least, that's an exceipt from Michael. During our research we heard from thousands of managers like Michael and from hundreds of thousands of employees who worked for managers like Michael. Some of Michael's opinions are commonly held—never pass the buck, make few promises and keep them all. But the majority

Introduction 17

of his testament is revolutionary—his desire to help all employees be come more ofwho they already are; his willingness to treat each person differently; his desire to become close friends with his employees; his acceptance that he cannot change people, that all he can do is facilitate; his trusting nature. Michael, like all great managers, breaks the rules of conventional wisdom.

Like you, we know that change is a fact ofmodern life. We know that thebusiness climate is inpermanent flux and that different approaches to managing people wax and wane. However, in listening to managers like Michael and the employees they manage, we were searching for that which does not change. What will talented employees always need? What will great managers always do to turn talent into perfor mance? What are theenduring secrets tofinding, focusing, and keeping talented employees? What are theconstants? These were ourquestions. Onthe following pages we present ourdiscoveries.

CHAPTER 1

The Measuring Stick

• A Disaster OfTthe Scilly Isles

• The Measuring Stick

• Putting the Twelve to the Test

• A Case in Point

• Mountain Climbing

A Disaster Offthe Scilly Isles "What do we know to be important butare unable to measure?"

In the dense fog of a dark night in October 1707, Great Britain lost nearly an entire fleet ofships. There was no pitched battle at sea. The admiral, Clowdisley Shovell, simply miscalculated his position in the Atlantic and his flagship smashed into the rocks ofthe Scilly Isles, a tail of islands offthe southwest coast of England. The rest of the fleet, fol lowing blindly behind, went aground and piled onto the rocks, one after another. Fourwarships andtwo thousand lives were lost.

For such a proud nation of seafarers, this tragic loss was distincdy embarrassing. But tobe fair tothememory ofClowdisley Shovell, itwas not altogether surprising. The concept of latitude and longitude had beenaround since the first century B.C. But by1700 westill hadn't man aged to devise an accurate way to measure longitude—nobody ever knew for sure how far eastor west theyhad traveled. Professional sea men like Clowdisley Shovell had to estimate their progress either by guessing their average speed or by dropping a log over the side ofthe boat and timing how long it took to float from bow to stern. Forced to rely on such crude measurements, the admiral can be forgiven his mas sive misjudgment.

Whatcausedthe disaster was not the admiral's ignorance, but his in ability to measure something that he already knew to be critically im portant—in this case longitude.

Asimilar drama isplaying outin todays business world: many compa nies know that their ability to find and keep talented employees isvital to their sustained success, but theyhave noway ofknowing whether or not they are effective at doingthis.

In their book The Service Profit Chain, James Heskett, W. Earl Sasser, and Leonard Schlesinger make the case that no matter what your business, the only way to generate enduring profits is to begin by building the kind ofwork environment that attracts, focuses, andkeeps talented employees. It is a convincing case. But the manager on the street probably didn'tneed convincing. Over the lasttwenty years most managers have come to realize their competitiveness depends upon

22 THE MEASURING STICK

being able to find and keep top talent in every role. This is why, in tight labor markets, companies seem prepared to go to almost any lengths to prevent employees' eyes from wandering. Ifyou work for GE, you may be one ofthe twenty-three thousand employees who are now granted stock options inthecompany. Employees ofAlliedSignal and Starbucks can make use ofthe company concierge service when they forget that their mothers need flowers and their dachshunds need walking. And at Eddie Bauer, in-chair massages are available for all those aching backs hunched over computer terminals.

But do any ofthese caring carrots really work? Do they really attract and keep only the most productive employees? Or are they simply a catch-all, netting both productive employees and ROAD warriors—the army's pithy phrase for those sleepy folk who are happy to "retire onac tiveduty"?

The truth is, no one really knows. Why? Because even though every great manager and every great company realizes how important it is, they still haven't devised an accurate way to measure a manager's or a company's ability to find, focus, and keep talented people. The few mea surements that are available—such as employee retention figures or number ofdays to fill openings orlengthy employee opinion surveys— lack precision. They are the modern-day equivalent ofdropping a log over the side of the boat.

Companies and managers know they need help. What they are asking for isa simple and accurate measuring stick thatcan tell them how well one company or one manager is doing as compared with others, in terms of finding and keeping talented people. Without this measuring stick, many companies and many managers know they may find them selves high and dry—sure ofwhere they want togo but lacking the right people to get there.

And now there is a powerful new faction on the scene, demanding this simple measuring stick: institutional investors.

Institutional investors—like the Council of Institutional Investors (CII),which manages over$1trillion worthof stocks, and the California Public Employees Retirement System (CalPERS), which oversees a healthy $260 billion—define the agenda for the business world. Where they lead, everyone else follows.

Institutional investors have always been the ultimate numbers guys, representing the cold voice of massed shareholders, demanding effi-

A DisasterOff the Scilly Isles 23

ciency and profitability. Traditionally they focused on hard results, like return on assets and economic value added. Most of them didn't con

cern themselves with "soft" issues like "culture." In their minds a company's culture held the same status as public opinion polls did in Soviet Russia: superficially interesting but fundamentally irrelevant.

At least that's the way it used to be. In a recent about-face, they have started to pay much closer attention to how companies treat their people. In fact, the CII and CalPERS both met in Washington to dis cuss "good workplace practices .. . and how they can encourage the companies they invest in tovalue employee loyalty as anaid to produc tivity."

Why this newfound interest? They have started torealize thatwhether software designer or delivery truck driver, accountant or hotel house keeper, themost valuable aspects ofjobs are now, as Thomas Stewart de scribes in Intellectual Capital, "the most essentially human tasks: sensing, judging, creating, and building relationships." This means thata great deal ofacompany's value now lies "between theears ofits employ ees."Andthis meansthat when someone leaves a company, he takeshis value withhim—more often than not, straight to the competition.

Today more than ever before, if a company is bleeding people, it is bleeding value. Investors are frequently stunned bythis discovery. They know that their currentmeasuring sticks do a very poorjob ofcapturing all sources ofa company's value. For example, according to Baruch Lev, professor of finance and accounting at New York University's Stern School of Business, the assets and liabilities listed on a company's bal ance sheetnow account for only 60percent ofitsrealmarket value. And this inaccuracy is increasing. In the 1970s and 1980s, 25percent of the changes in a company's market value could be accounted for byfluctua tions in its profits. Today, according to Professor Lev, that number has shrunk to 10 percent.

The sources of a company's true value have broadenedbeyondrough measures of profit or fixed assets, and bean counters everywhere are scurrying to catch up. Steve Wallman, former commissioner of the Securities and Exchange Commission, describes what they are looking for:

If we start to get further afield so that the financial statements ... are measuring less and less of what is truly valuable in a company, then we

24 THE MEASURING STICK

start to lower the relevance ofthat scorecard. What we need are ways to measure the intangibles, R&D, customer satisfaction, employee satisfac tion, (italics ours)

Companies, managers, institutionalinvestors, even the commissionerof theSEC—everywhere you look, people are demanding asimple and ac curate measuring stick for comparing the strength of oneworkplace to another. The Gallup Organization set out to buildone.

The Measuring Stick "How can you measure human capital?"

Whatdoes a strong, vibrant workplace look like? When you walk into the building at Lankford-Sysco a few miles up

the road from Ocean City, Maryland, it doesn't initially strike you as a special place. In fact, it seems slightly odd. There's theunfamiliar smell: a combination of raw food and machine oil.There's the decor: row upon row of shelving piled high to the triple ceilings, interspersed with the occasional loading dock or conveyor belt. Glimpses of figures bundled up in arctic wear, lugging mysterious crates in andoutofdeepfreezers, onlyadd to your disquiet.

But you press on, and gradually you begin to feel more at ease. The employees you run into are focused andcheerful. On the way to recep tion you pass a huge mural thatseems to depict the history ofthe place: "There's Stanley E. Lankford Jr. hiring the first employee. There's the original office building before we added the warehouse. . . ." In the re ception area you face a wall festooned with pictures of individual, smil ing faces. There are dozens of them, each with an inscription underneath that lists their length of service with the company and then another number.

"They are our delivery associates," explains Fred Lankford, the presi dent. "We put theirpicture upsothatwe can all feel close to them, even though they're out with our customers every day. The number you see under eachpicture represents the amount of miles that eachone drove lastyear. We like to publicize eachperson's performance."

Stanley Lankford and his three sons (Tom, Fred, and Jim) founded the Lankford operation, a family-owned food preparation and distribu tioncompany, in 1964. In 1981 theymerged with Sysco, the $15 billion food distribution giant. An important proviso was that Tom, Fred, and Jim would be allowed to stay on as general managers. Sysco agreed, and todayallpartiescouldn'tbe happierwiththe decision.

The Lankford-Sysco facility is in the top 25percentof all Sysco facili ties in growth, sales per employee, profit per employee, and market penetration. They have single-digit turnover, absenteeism is at an all- company low, and shrinkage is virtually nonexistent. Most important,

26 THE MEASURING STICK

the Lankford-Sysco facility consistendy tops the customer satisfaction charts.

"Howdo youdo it?"youaskFred. He says there is not much to it. He is pleased with his pay-for-

performance schemes—everything is measured; every measurement is posted; and every measurement has some kind of compensation at tached. But he doesn't offer that up as his secret. Hesays it is just daily work. Talk about the customer. Highlight the right heroes. Treat people with respect. Listen.

His voice trails off because he sees he is not giving you the secret recipe youseemto be looking for.

Whatever he's doing, it clearly works for his employees. Forklift oper ators tell you about their personal best in terms of "most packages picked" and"fewest breakages." Drivers regale you with theirstories of rushing out an emergency delivery of tomato sauce to a restaurant caught short. Everywhere you turn employees are talking about how their Httle part oftheworld is critical togiving the customer thequality that is now expected from Lankford-Sysco.

Here are 840 employees, all ofwhom seem to thrill to the challenge of their work. Whatever measurements you care to use, the Lankford- Sysco facility in Pocomoke, Maryland, isa great place towork.

You will have your own examples of a work environment that seems to be firing on all cylinders. It will be a place where performance levels are consistently high, where turnover levels are low, and where a grow ing number ofloyal customers join the fold every day.

With your real-life example in mind, the question you have to ask yourself is, "What lies at the heartof this great workplace? Which ele ments will attract only talented employees andkeep them, andwhich el ements are appealing to every employee, the best, the rest, and the ROAD warriors?"

Do talented employees really care how empowered theyare, as long as they are paid on performance, such as at Lankford-Sysco? Perhaps the opposite is true; once their most basic financial needs have been met, perhaps talented employees care less about payand benefits than they do about being trusted by their manager. Are companies wasting their money byinvesting in spiffier work spaces andbrighter cafeterias? Or do talented employees value a clean and safe physical environment above all else?

To buildour measuring stick, we hadto answer thesequestions.

The Measuring Stick 27

Over the last twenty-five years the Gallup Organization has interviewed more than a million employees. We have asked each of themhundreds ofdifferent questions, onevery conceivable aspect ofthe workplace. As you can imagine, one hundred million questions is a towering haystack of data. Now, we had to siftthrough it, straw bystraw, and find the nee dle. We had to pickout those few questions that were trulymeasuring the core of a strongworkplace.

This wasn't easy. If you have a statistical mind, you canprobably haz arda pretty good guess as to how we approached it—a combination of focus groups, factor analysis, regression analysis, concurrent validity studies, and follow-up interviews. (Our research approach is described in detail in the appendix.)

However, if you think statistics are the mental equivalent of drawing your fingernails across a chalkboard, the following image may help you envision what we were tryingto do.

In 1666 Isaac Newton closed the blinds of his house in Cambridge and sat in a darkened room. Outside, the sun shone brighdy. Inside, Isaac cut a small hole in one of the blinds and placed a glass prism at the entrance. As the sun streamed through the hole, it hit the prism and a beautiful rainbow fanned out on the wall in front of him.

Watching the perfect spectrum of colors playing on his wall, Isaac realized that the prism had pried apart the white light, refracting the colors to different degrees. He discovered that white fight was, in fact, a mixture of all the other colors in the visible spectrum, from dark red to deepest purple; and that the only way to create white light was to draw all of these different colors together into a single beam.

Wewantedour statistical analyses to perform the same trickas Isaac's prism. We wanted them to pry apart strong workplaces to reveal the core. We could then sayto managers and companies, "If you can bring allof these core elements togetherin a single place, then youwill have createdthe kindofworkplace that canattract, focus, and keepthe most talented employees."

So we took our mountain of data and we searched for patterns. Which questions were simply different ways of measuring the samefac tor? Whichwere the best questions to measureeach factor? Weweren't particularly interested in those questions that yielded a unanimous,

28 THE MEASURING STICK

"Yes, I strongly agree!" Nor were we swayed bythose questions where everyone said, "No, I strongly disagree." Rather, we were searching for those special questions where themost engaged employees—those who were loyal and productive—answered positively, and everyone else— theaverage performers and the ROAD warriors—answered neutrally or negatively.

Questions that we thought were a shoo-in—like those dealing with payand benefits—fell under the analytical knife. At the same time, in nocuous little questions—such as "Do I know what isexpected ofmeat work?"—forced their way to the forefront. We cut and we culled. We rejigge(l andreworked, digging deeper and deeper to find the core ofa greatworkplace.

When the dust finally settled, we made a discovery: Measuring the strength of a workplace can be simplified to twelve questions. These twelve questions don't capture everything you may want to know about your workplace, but theydo capture the most information and the most important information. Theymeasure the core elements needed to at tract, focus, andkeep the most talented employees.

Here they are:

1. Do I know whatis expected of me at work? 2. Do I have the materials and equipment I need to do my work

right? 3. At work, do I have the opportunity to do what I do best every

day? 4. In the last seven days, have I received recognition or praise for

doinggoodwork? 5. Does my supervisor, or someone at work, seem to care about me

as a person? 6. Is there someone at work who encourages mydevelopment? 7. Atwork, do myopinions seem to count? 8. Does the mission/purpose of my company make me feel my job

is important? 9. Are myco-workers committed to doing quality work?

10. Do I have a best friend at work?

11. In the last six months, has someone at work talked to me about myprogress?

12. This last year, have I hadopportunities atwork to learn andgrow?

The Measuring Stick 29

These twelve questions are the simplest and most accurate way to measure the strengthof a workplace.

When we started this researchwe didn't know we were going to land on these twelve questions. But after running a hundred million ques tions through our "prism," these exact questions were revealed as the most powerful. If you can create the kind of environment where em ployees answer positively to all twelve questions, then you will have built a great placeto work.

While at first glance these questions seem rather straightforward, the more you look at them, the more intriguing theybecome.

First, you probably noticed that many of the questions contain an ex treme. "I have a bestfriend at work" or "Atwork I have the opportunity to do what I do best every day." When the questions are phrased like this, it ismuch more difficult to say "Strongly Agree," or "5" ona scale of 1 to 5. Butthis is exactly what wewanted. We wanted to find questions that would discriminate between the most productive departments and the rest. We discovered that if you removed the extreme language, the question lost much ofits power todiscriminate. Everyone said "Strongly Agree"—the best, the rest, andeveryone in between. Aquestion where everyone always answers "Strongly Agree" isa weak question.

Much ofthepower ofthis measuring stick, then, lies in thewording of the questions. The issues themselves aren't a big surprise. Most people knew, for example, that strong relationships and frequent praise were vital ingredients ofa healthy workplace. However, they didn't know how to measure whetheror not these ingredients were present, and if so, to what extent. Gallup has discovered the bestquestions to dojust that.

Second, you may be wondering why there are no questions dealing with pay, benefits, senior management, or organizational structure. There were initially, but they disappeared during the analysis. This doesn't mean they are unimportant. It simply means they are equally important to every employee, good, bad, and mediocre. Yes, if you are paying 20percent below the market average, you may have difficulty at tracting people. But bringing yourpayand benefits package up to mar ket levels, while a sensible first step, will not take you very far. These landsof issues are liketickets to the ballpark—they can get youinto the game, but they can't help youwin.

Putting the Twelve to the Test "Does the measuring stick link to business outcomes?"

Gallup hadsetout to devise a way to measure strong workplaces: work places thatwould attract and retain the most productive employees and scare away the ROAD warriors. If thesequestions werein truth the best questions, then employees who answered them positively would pre sumably work in higher-performing departments. That was our goal when we designed the measuring stick. Would it prove to be true in practice?

Throughout the spring andsummer of 1998 Gallup launched a mas sive investigation to find out.

We asked twenty-four different companies, representing a cross sec tion of twelve distinct industries, to provide us with scores measuring four different kinds ofbusiness outcome: productivity, profitability, em ployee retention, and customer satisfaction. Some companies had diffi culty gathering this data, but in the end we managed to include over 2,500 business units in our study. The definition ofa "business unit"var ied byindustry: forbanking it was the branch; for hospitality it was the restaurant or the hotel; for manufacturing it was the factory; and so on.

We then interviewed the employees who worked in these branches, restaurants, hotels, factories, and departments, asking them to respond to each of the twelve questions on a scale of 1 to 5, "1" being strongly disagree, "5" beingstrongly agree. One hundred and five thousandem ployees tookpart.

Armed with all this data, we were setto go. We knew the productivity, the profitability, the retention levels, and the customer ratings of these different business units. And we knew howthe employees of the busi ness units hadanswered the twelve questions. We could now see, finally, whether or not engaged employees did indeed drive positive business outcomes, across 2,500business units and24 companies.

We were optimistic that the linkswould surface, but, truth be told, it was entirely possible that we wouldn't find them. The links between employee opinion and business unit performance seem inevitable— after all, mostof us have probably heard ourselves rattle offsuchcliches as"Happy employees are more productive" or "Ifyou treat yourpeople

Puttingthe Twelve to the Test 31

right, they will treat your customers right." Yet in their attempts to prove these statements, researchers have frequently come up empty- handed. In fact, in moststudies, ifyoutest one hundred employee opin ion questions, you will be lucky to find five or six that show a strong relationship to anybusiness outcome. Disappointingly, if yourepeat the study, you often find that a different set of five or six questions pop up the second time around.

We also knewthat no one had ever undertaken this kind of study be fore, across many different companies. Since eachof these fourbusiness outcomes—productivity, profit, retention, and customer service—is vi tally important to every company, and since the easiest leverfor a man agerto pullis the employee lever, you would have thoughtthe airwould be thick with research examining the links between employee opinion and these four business outcomes. It isn't. You can track down research

examining these links within a particular company—with decidedly mixed results—but neveracross companies and industries. Surprisingly, the Gallup research was the first cross-industry study to investigate the links between employee opinion and business unit performance.

Why does this research vacuum exist? More than likely it's because each company has different ways of measuring the same thing. Blockbuster Video mightmeasure productivity by sales per square foot. Lankford-Sysco might use packages shippedand number of breakages. The Walt Disney Company might include only full-time employees in their retention figures. Marriott might include full-time and part-time. It is frustratingly difficult to pick up on linkages between employee opinionand business performance, wheneverycompany insists on mea suringperformance differently.

Fortunately we had discovered a solution: meta-analysis. A detailed explanation can put even the most ardent number cruncher to sleep, so let's just saythat it is a statistical technique that cuts through the differ ent performance measures used by different companies and allows you to zero in on the real linksbetween employeeopinion and business unit performance.

So, having entered the performance data from over 2,500 business units and punched in the opiniondata fromover 105,000 employees, we programmed the meta-analysis formulas, pressed Run, and held our breath.

This is what we found. First, we saw that those employees who re-

32 THE MEASURING STICK

sponded morepositively to the twelve questions also worked in business units with higher levels of productivity, profit, retention, and customer satisfaction. This demonstrated, for the first time, the link between em ployee opinion and business unit performance, across many different companies.

Second, the meta-analysis revealed that employees rated the ques tions differently depending on which business unit they worked for rather than which company. This meant that, for the most part, these twelve opinions werebeing formed by the employees' immediate man ager rather than by the policies or procedures of the overall company. We had discovered that the manager—not pay, benefits, perks, or a charismatic corporate leader—was the critical player in building a strong workplace. The manager was the key. We will discuss this finding in more detaillater in the chapter. For nowlet's concentrateon our first discovery, the link between employee opinion andbusiness unit perfor mance.

THE LINKS BETWEEN EMPLOYEE OPINION

AND BUSINESS UNIT PERFORMANCE

If you are so inclined, you can find in the appendix a detailed descrip tionofallour discoveries andthe methodology behindthem. This is the top line.

• Everyone of the twelve questions was linkedto at least one of the four business outcomes: productivity, profitability, retention, and customer satisfaction. Most of the questions revealed links to two or more business outcomes. The twelve questions were indeed capturing those few, vital employee opinions that related to top performance, whether in a bank, a restaurant, a hotel, a factory, or anyother kindofbusiness unit. The measuring stick had withstood its most rigorous test.

• As you might have expected, the most consistent links (ten of the twelve questions) were to the "productivity" measure. People have always believed there is a direct link between an employee's opin ion and his work group's productivity. Nonetheless, it was good to see the numbers jibe with the theory.

Puttingthe Twelve to the Test 33

Eight of the twelve questions showed a link to the "profitability" measure. That means employees who answered these eight ques tions more positively than other employees also worked in more profitable banks, restaurants, hotels, factories, or departments. To some peoplethis might seema little surprising. After all, many be lieve that profit is a function of factors that fie far beyond the con trol of individual employees: factors like pricing, competitive positioning, or variable-cost management. But the more you think about it, the more understandable this link becomes. There are so many things one employee can do to affect profit—everything from turning off more lights, to negotiating harder on price, to avoiding the temptations of the till. Simply put, these will happen more often when each employee feels trulyengaged. What about employee retention?Strangely enough, onlyfive of the twelve questions revealeda linkto retention:

1. Do I knowwhat is expectedof me at work? 2. Do I havethe materials and equipment I need to do mywork

right? 3. Do I have the opportunity to do what I do best everyday? 5. Does my supervisor, or someone at work, seem to care about

me as a person? 7. Atwork, do myopinions seem to count? Most people would instinctively agree with the generalization

"Engaged employees will stay longer." But our research suggests that the link between employee opinion and employee retention is subtler and more specific than this kind of generalization has al lowed. Even more than the rest, these five questions are most di rectly influenced by the employee's immediate manager. What does this tell us? It tellsus that people leave managers, not compa nies. So much moneyhas been thrown at the challenge of keeping good people—in the form of better pay, better perks, and better training—when, in the end, turnover is mostly a manager issue. If you have a turnoverproblem, look first to your managers. Of the twelve, the mostpowerful questions are thosewith a combi nationof the strongest links to the most business outcomes. Armed with this perspective, we now know that the following six are the most powerful questions:

1. Do I knowwhat is expectedof me at work?

34 THE MEASURING STICK

2. Do I have the materials andequipmentI need to do mywork right?

3. Do I have the opportunity to dowhat I dobest every day? 4. In the last seven days, have I received recognition or praise

for goodwork? 5. Does my supervisor, or someone at work, seem to care about

me as a person? 6. Is there someone at work who encourages mydevelopment?

As a manager, ifyouwantto know whatyoushould doto builda strong andproductive workplace, securing 5's to thesesix questions would be an excellent place to start. We will return to these questions in a moment.

MANAGERS TRUMP COMPANIES

Once a year a studyis published entitled "The Hundred Best Compa nies to Work For." The criteria for selection are such factors as Does the

company have an on-site daycare facility? Howmuchvacation doesthe company provide? Does the company offer anykind of profit sharing? Is the company committed to employee training? Companies are exam ined, and the listof the top one hundred is compiled.

Our research suggests that these criteria miss the mark. It's not that these employee-focused initiatives are unimportant. It's just that your immediate manager is more important. She defines and pervades your work environment. If she sets clearexpectations, knows you, trusts you, and invests in you, then youcan forgive the company its lackof a profit- sharing program. But if your relationship with your manager is frac tured, then no amountof in-chair massaging or company-sponsored dog walking willpersuade you to stayand perform. It is better to work for a great managerin an old-fashioned company than for a terrible manager in a companyoffering an enlightened, employee-focused culture.

SharonF, a graduateof Stanford and Harvard, left American Express a litde over a year ago. Shewanted to get into the world of publishing, so she joined one of the media-entertainment giants in the marketing department of one of their manymagazines. She wasresponsiblefor de vising loyalty programs to ensure that subscription holders would renew. She loved the work, excelled at it, and caught the eye of senior

Putting the Twelve to the Test 35

management. Sharon is a very small cog in this giant machine, but ac cording to the chairman of this giant, employees like her—bright, tal ented, ambitious employees—are "the fuel for our future."

Unfortunately for this giant, the fuel is leaking. After only a year Sharon is leaving the company. She is joining a restaurant start-up as head of marketing and business development. Her boss, it appears, drove her away.

"He's not a bad man," she admits. "He'sjust not a manager. He's inse cure, and I don't think you can be insecure and a good manager. It makes him compete with his ownpeople. It makes him boast about his high-style living, when he should be listening to us. And he plays these silly little power games to show us who's the boss. Like last week he didn't showup for a ten a.m. interview witha candidatewhohad made a two-hourcommutejust to see him,becausehe had stayedout much too late the night before. He called me at nine fifty-five a.m., asked me to break the news to her, and tried to make it seem like he was giving me somekindof compliment, that he couldreally trust me to coverfor him. I can't stand behavior like that."

Listening to Sharon, you mightwonderif it is just a personality clash or even whether it is she who is somehow causing the problems. Soyou askher, "Does anyoneelse on the team feel the sameway?"

"I'm not sure," she confesses. "I don't like to bad-mouth my boss, so I haven't really talked about it with anyone at work. But I do know this: When I came here there were thirteen of us on his team. Now, a year later, everysingle one of them has left, exceptme."

Sharon's company does many things very well, both in terms of its overall business performance and its employee-friendly culture. But deep within this giant, unseen by the senior executives or Wall Street, one individual is draining the company of power and value. As Sharon says, he is not a bad man, but he is a bad manager. Woefully miscast, he now spends his days chasing away one talented employee after another.

Perhaps he is an exception. Or perhaps the giant makes a habit of promoting people into manager roles who are talented individual achievers but poor managers. The giant would certainly hope for the former. But Sharon doesn't care one way or the other. When she told her company that she was considering leaving, they offered her more money and a bigger title, to try to coax her back. But they didn't offer her what she wanted most: a new manager. Soshe left.

36 THE MEASURING STICK

An employee mayjoin Disney or GE or TimeWarnerbecause she is lured by their generous benefits package and their reputation for valu ing employees. But it is her relationship with her immediate manager that will determine how long she stays and how productive she is while she is there. Michael Eisner, Jack Welch, GeraldLevin, and allthe good will in the worldcan do onlyso much. In the end these questions tell us that, fromthe employee s perspective, managers trump companies.

Unlike Wall Street and the business press, employees don't put their faith in the myth of "great companies" or "great leaders." For employ ees, there are only managers: great ones, poor ones, and many in be tween. Perhaps the best thing any leader can do to drive the whole company toward greatness is, first, to hold each manager accountable for what his employees say to these twelve questions, and, second, to help each manager know what actions to take to deserve "Strongly Agree" responses from his employees.

The following chaptersdescribe the actions taken by the worlds great managers.

But first, a casein point: Whatdo allthese discoveries mean for a spe cific company or a specific manager?

A Case in Point

"What do these discoveries meanfor one particular company?"

In the winter of 1997 Gallup was asked by an extremely successful re tailer to measure the strength of their work environment. They em ployed thirty-seven thousand people spread across three hundred stores—about one hundred employees per store. Each one of these storeswas designedand built to provide the customerwith a consistent shopping experience. The building, the layout, the product positioning, the colors, every detail was honed so that the store in Adanta would have the same distinctive brand identityas the store in Phoenix.

We asked each employee the twelve questions—over 75 percent of all employees chose to participate for a total of twenty-eight thousand. We then looked at the scores for each store. The following table offers an example of what we found: two stores at opposite ends of the mea suring stick. (We asked the questions on a 1-5 scale, where "1" equals strongly disagree and "5" equals strongly agree. The numbers in the columns are the percentage of employees who responded "5" to each question.)

Store A Store B

% responding "5"

% responding "5"

Knowwhat is expected of me 69 41 Materials and equipment 45 11 Do what I do best everyday 55 19 Recognition lastsevendays 42 20 Supervisor/someone at work cares 51 17 Encouragesdevelopment 50 18 Progress in last sixmonths 48 22 My opinions count 36 9 Mission/purpose of company 40 16 Co-workers committed to quality 34 20 Best friend 33 10

Opportunity to learnand grow 44 24

38 THE MEASURING STICK

These are startling differences. Whatever the company was trying to do for its employees from the center, at the store level, these initiatives were being communicated andimplemented in radically different ways. For the employees, Store A must have offered a much more engaging workexperience than Store B.

Look at the different levels of relationship, for example. In Store A, 51 percent of employees said they felt cared about as a person. In Store B, that number sank to 17 percent. Given the pace of change in today's business world, one of the most valuable commodities a com panycan possess is the employees' "benefit of the doubt." If employees are willing to offer their company the benefit of the doubt, they will give every new initiative a fighting chance, no matter how sensitive or controversial it might be. Store A possesses this precious commodity. Here the employees will tolerate ambiguity, trusting that, as events playout, their manager will be there to support them. Store B doesn't have that luxury. Lacking genuine bonds between manager and em ployee, anynewinitiative, no matter howwellintended, will be greeted with suspicion.

How about individual performance? In Store A, 55 percent of em ployees saidthat theyhada chance to dowhattheydo best every day. In Store B, only 19 percent responded "5." What a difference that must make in terms of per person productivity, retention, and workers' com pensation claims.

Whereveryou look, the differences leap out at you. "Do youropinions count?" StoreA, 36 percent. Store B?A quarter of

that, 9 percent. "Do you have a best friend at work?" Store A, 33 percent. Store B,

only10percent. Perhaps the most bizarre discrepancy can be found in the second

question. In Store A,45 percent of employees stronglyagreed that they had the materials and equipment they needed to do their work right. In Store B, only 11 percent said "5."The truly odd thing about this is that StoreAand Store B had the same materials and equipment;yet the em ployees' perception of them was utterly different. Everything, even the physical environment, was colored by the store manager.

This company didn't have one culture. It had as many cultures as it did managers. No matter what the company's intent, each store's culture was a unique creation of the managers and supervisors in the field.

A Case in Point 39

Some cultures were fragile, bedeviled with mistrust and suspicion. Others were strong, able to attract and keep talented employees.

For this company's leaders, the widevariation in results was actually verygood news. Yes, looking only at the negative, it meant there was a limitto what they couldcontrolfrom the center. The challenge of build ing a strong all-company culture had suddenly turned into a challenge of multiplication.

On the brighter side, however, these results revealed that this com pany was blessed with some truly exemplary managers. These man agers had built productive businesses by engaging the talents and passions of their people. In their quest to attract productive employees, this company could now stop hunting for the magical central fix. Instead they could find out what their newly highlighted cadre of bril liant managers was doingand then build their company culture around this blueprint. They could try to hire more like their best. They could take the ideas of their best and multiply them companywide. They could redesign training programs based upon the practices of their best. Tobuild a stronger culture, this company wouldn'thave to borrow ideas from the likes of "best practice" companies like Disney, SouthwestAirlines, or Ritz-Carlton. All they would have to do is learn from their own best.

"Sowhat if they do learn fromtheir best?"somemightask. "Do more 5's on the twelve questions necessarily translate to higher levels of real performance? Does Store A actually outperform Store B on any of the more traditional performancemeasures like sales, profit, or retention?"

Of course, our general discoveries would sayyes, workplaces where manyemployees can answer positively to the twelve questions will in deed be more productive workplaces. But this is too general. Likeyou, we wanted to knowthe specifics. Sowe askedthe company to supplyus with the rawperformancedata that theywouldnormally use to measure the productivityof a store. We punched in these scores and then com pared them with each store's scores on the twelve questions. This is what we found:

• Stores scoring in the top 25 percent on the employee opinion sur veywere, on average, 4.56 percent over their sales budget for the year, while those scoring in the bottom 25 percent were 0.84 per cent belowbudget. In real numbers this is a differenceof $104mil-

40 THE MEASURING STICK

lion of sales per year between the two groups. If realized, this fig ure would represent a 2.6 percent increase in the company's total sales.

• Profit/loss comparisons told an even more dramatic story. The top 25 percent of stores on the survey ended the year almost 14 per cent over their profit budget. Those stores in the bottom group missed their profit goals bya full 30percent.

• Employee turnover levels were also vasdy different. Each store in the top group retained, on average, twelve more employees per year than eachstore in the bottom group. Across both groups this means that the top25percentscoring stores on the survey retained one thousand more employees per year than the bottom group of stores. If you estimate that the wage of the average storeemployee is $18,000 and that the cost of finding, hiring, and training each newemployee is 1.5timeshis salary, then the total cost to the com pany forthe different levels ofretention between the two groups is $18,000 x 1.5 x 1,000 = $27,000,000. And that's just the hard cost. The drainof experienced employees who have developed valuable relationships withtheir customers and their colleagues is harder to measurebut is just as significant a loss.

These results are compelling. In this company the business units were measurably moreproductive where the employees answered posi tively to the twelve questions. Excellent front-line managers had en gaged their employees and these engaged employees had provided the foundation for top performance.

Any measuring stickworth its saltnot only tellsyou where you stand, it alsohelps you decide what to do next. Sowhat can a manager, any man ager, do to secure 5's to these twelve questions and so engage his em ployees?

First youhave to know where to start. Gallup's research revealed that some questions were more powerful than others. This implies that you, the manager, should address these twelve questions in the right order. There is litde point attacking the lesser questions if you have ignored the most powerful. In fact, as many managers discover to their detri-

A Case in Point 41

ment, addressing the twelve questions in the wrong order is both very temptingand actively dangerous.

We will show you why, andbyway ofcontrast, wewill describe where the world's great managers start laying the foundations for a truly pro ductiveworkplace.

Mountain Climbing "Why is there an order to the twelve questions?"

To help us describe the order ofthese twelve questions, we ask you to picture, in your mind's eye, a mountain. At first it is hard to makeout its full shape and color, shifting from blue togray togreen as you approach. Butnow, standing at the base, you sense itspresence. You know there is a climb ahead. You know the climb will vary, sometimes steep, some times gradual. You know there will be gullies to negotiate, terrain that will force you to descend before you can resume your climb. You know the dangers, too, the cold, the clouds, and the most pressing danger of all, your own fragile will. But then you think ofthe summit and how you will feel, soyoustart to climb.

You know this mountain. We all do. It is the psychological climb you make from the moment you take on a new role to the moment you feel fully engaged in that role. At the base ofthe mountain, perhaps you are joining a new company. Perhaps you have just beenpromoted to a new role within the same company. Either way you are atthe start ofa long climb.

At the summit of this mountain you are still in the same role—the mountain doesn't represent a career climb—but you are loyal and pro ductive in this role. Youare the machinist who bothers to write down all the little hints and tips you have picked up so that you can present them as an informal manual toapprentice machinists just learning their craft. You are the grocery store clerk who tells the customer that the grape fruit are in aisle five but who then walks her to aisle five, explaining that the grapefruit are always stocked from the back tothe front. "Ifyou like your grapefruit really firm," you say, "pick one from the front." You are the manager who so loves your work that you get tears inyour eyes when asked todescribe how you helped so many ofyour people succeed.

Whatever your role, at the summit ofthis mountain you are good at what you do, you know the fundamental purpose ofyour work, and you are always looking for better ways to fulfill that mission. You are fully engaged.

Howdid youget there? If a manager can answer this, he will know how to guide other em-

Mountain Climbing 43

ployees. He will be able to help more and more individuals reach the summit. The more individuals he can help move up the mountain, one by one, the stronger the workplace. So how did you get there? How did you make the chmb?

Put on your employee hat for a moment. This may bea psychological mountain, but aswithan actual mountain, you have to chmbit in stages. Read in the right order, the twelve questions can tell you which stage is which and exactly what needs must be met before you can continue yourclimb up to the nextstage.

Before we describe the stages on the climb, think back to the needs you had when you were first starting your current role. What did you want from the role? What needs were foremost in your mind at that time? Then, as time passed and you settled in, how did your needs change? And currently, what are your priorities? What do you need from yourrole today?

You may want to keep these thoughts in mind as we describe the stages on the climb.

Base Camp: "What do I get?"

When you first start a new role, your needs are pretty basic. You want to know what is going to be expected ofyou. How much are you going to earn? How long will your commute be? Will you have an office, a desk, even a phone? At this stage you are asking, "What do I get?" from this role.

Of the twelve, these twofundamental questions measure BaseCamp:

1. Do I know what is expected ofme at work? 2. DoI have thematerials and equipment I need todomy work right?

Camp 1: "What do I give?"

You climb a little higher. Your perspective changes. You start asking different questions. You want to know whether you are any good at the job. Are you in a role where you can excel? Do other people think you are excelling? If not, what do they think about you? Will they help you? At this stage your questions center around "What do I give?" You are focused onyour individual contribution andotherpeople's perceptions of it.

44 THE MEASURING STICK

These four questions measure Camp 1:

3. At work, doI have theopportunity todo what I dobest every day? 4. In the last seven days, have I received recognition or praise for

doinggoodwork? 5. Does my supervisor, or someone at work, seem to care about me

as a person? 6. Is there someone atwork who encourages my development?

Each ofthese questions helps you know not only ifyou feel you are doing well in the role (Q3), butalso ifother people value your individ ual performance (Q4), ifthey value you as aperson (Q5), and ifthey are prepared to invest inyour growth (Q6.) These questions all address the issue of your individual self-esteem and worth. As we will see, if these questions remain unanswered, all of your yearnings to belong, to be come part of a team, to learn and to innovate, will be undermined.

Camp 2: "Do I belong here?"

You keep chmbing. By now you've asked some difficult questions, of yourself and of others; and the answers have, hopefully, given you strength. Your perspective widens. You look around and ask, "Do I be long here?" You may beextremely customer service oriented—is every one else as customer driven as you? Orperhaps you define yourself by your creativity—are you surrounded bypeople who push the envelope, as you do? Whatever your basic value system happens tobe, atthis stage ofthechmb you really want toknow ifyou fit.

These four questions measure Camp 2:

7. Atwork, do myopinions seem to count? 8. Does the mission/purpose ofmy company make me feel my job

is important? 9. Are my co-workers committed to doing quality work?

10. Do I have a best friend at work?

Camp 3: "How can we all grow?"

This is themost advanced stage ofthechmb. At this stage you are impa tientfor everyone to improve, asking, "How can we all grow?" You want

Mountain Climbing 45

to make things better, to learn, to grow, to innovate. This stage tells us thatonly after you have climbed upand through theearlier threestages can you innovate effectively. Why? Because there is a difference be tween "invention" and "innovation." Invention is mere novelty—like most ofus, you might have devised seventeen new ways ofdoing things a few weeks after starting in your new role. But these ideas didn't carry any weight. By contrast, innovation is novelty that can be applied. And you can innovate, you can apply your new ideas, only ifyou are focused on the right expectations (Base Camp), ifyou have confidence in your own expertise (Camp 1), and ifyou are aware ofhow your new ideas will beaccepted orrejected by the people around you (Camp 2). Ifyou can not answer positively to all these earlier questions, then you will find it almost impossible to apply all your new ideas.

These two questionsmeasure Camp 3:

11. In the last six months, has someone at work talked to me about myprogress?

12. This last year, have I had opportunities atwork to learn and grow?

The Summit

If you can answer positively to all ofthese twelve questions, then you have reached the summit. Your focus is clear. You feel a recurring sense ofachievement, as though thebest ofyou is being called upon and the best ofyou responds every single day. You look around and see others who also seem to thrill to the challenge of theirwork. Buoyed byyour mutual understanding and your shared purpose, you climbers look out and forward to the challenges marching over the horizon. It is not easy to remain at the summit for long, with theground shifting beneath your feet and thestrong winds buffeting you this way and that. But while you are there, it is quite a feeling.

If this is the psychological climb you made (or failed to make) from the moment you began your current role to the moment you felt fully engaged in this role, thenwhere are you?

Camp 1?Camp 3?The summit? Ask yourself those twelve questions. Your answers can give you a read

on where you are on the mountain. Perhaps your company is going through times ofchange and you find yourself languishing down at Base

46 THE MEASURING STICK

Camp. Change can dothattoa person—you genuinely want to commit, but the uncertainty keeps pushing you down and down. ("Quit telling me how great the future is going tobe. Just tell me what is expected of me today")

Perhaps you have just been promoted—you felt as though you were at the summit in your previous role, but now you find yourself right back down at Camp 1, with new expectations and a new manager. ("I wonder what he thinks of me. I wonder how he will define success.") Yes, even when good things happen you can quickly find yourself at the base ofa new mountain, with a long chmb ahead.

Ofcourse, the climb toward the summit is more complicated than this picture. Not only will people trade one stage off against another, but each individual will also place aslightly different value on each stage of the climb. For example, you might have taken your current role simply because it offered you the chance to learn and grow—in a sense, you flew straight in to Camp 3. And if these higher-level needs are being met, then you will probably be a little more patient in waiting for your manager to make his expectations crystal clear (I Base Camp). Similarly, ifyou feel very connected to your team members (t Camp 2), then you may be prepared to stick this out for a while longer, even though you feel that your role on the team doesn't allow you to use your true talents (i Camp 1).

However, these kinds of individual trade-offs don't deny the basic truth of the mountain—regardless of how positively you answer the questions at Camp 2 or Camp 3, the longer your lower-level needs re main unmet, the more likely it is that you will burn out, become unpro ductive, and leave.

Infact, ifyou do find yourself answering positively to Camps 2and 3, but negatively to the questions lower down, bevery careful. You are in an extremely precarious position. On the surface everything seems fine—you like your team members (t Camp 2), you are learning and growing (T Camp 3)—but deep down you are disengaged. Not only are you less productive than you could be, but you would jump ship at the first goodoffer.

We can give this condition a name: mountain sickness. In thephysical world, mountain sickness is brought onbythe lack of

oxygen athigh altitudes. Starved ofoxygen, your heart starts pounding. You feel breathless anddisoriented. Ifyou don't climb down to lower al-

Mountain Climbing 47

titudes, your lungs will fill with fluid andyou will die. There isnoway to cheat mountain sickness. There is no vaccine, no antidote. The onlyway to beat it is to climb down and give yourbody time to acclimatize.

Inexperienced climbers might suggest that ifyou have lots of money andnot much time, you could helicopter in to Camp 3 and race to the summit. Experienced guides know that you would never make it. Mountain sickness would sap your energy and slow your progress to a crawl. These guides will tell you that to reach the summit you have to pay your dues. During your ascent you have to spend a great deal of time between Base Camp and Camp 1. The more time you spend at these lower reaches, the more stamina you will have in the thin air near the summit.

In the psychological world, theiradvice still applies. Base Camp and Camp 1 are the foundation. Spend time focusing on these needs, find a manager who can meet these needs, and you will have the strength nec essary for the long chmb ahead. Ignore these needs and you are much morelikely to psychologically disengage.

AN EPIDEMIC OF MOUNTAIN SICKNESS

Now put yourmanagers hat back on. This metaphorical mountain reveals that the key to building a strong,

vibrant workplace hes in meeting employees' needs at Base Camp and Camp 1. This is where you should focus your time and energy. If your employees' lower-level needs remain unaddressed, then everything you doforthemfurther along the journey isalmost irrelevant. Butifyou can meettheseneeds successfully, then the rest—the teambuilding andthe innovating—is so much easier.

It almost sounds obvious. But over the last fifteen years most man agers have been encouraged to focus much higher up the mountain. Mission statements, diversity training, self-directed work teams—all try to help employees feel they belong (Camp 2). Total quality manage ment, reengineering, continuous improvement, learning organiza tions—all address the needforemployees to innovate, to challenge cozy assumptions and rebuild them afresh, every day (Camp 3).

All of these initiatives were verywellconceived. Manyof them were wellexecuted. But almost allof them have withered. Fiveyears agothe

48 THE MEASURING STICK

Baldrige Award for Quality was the most coveted business award in America—today only afew companies bother toenter. Diversity experts now bicker over theproper definition of"diversity." Process reengineer- inggurus try to squeeze people back intoprocess. And many of us snort at mission statements.

When you think about it, it is rather sad. An important kernel oftruth lay at the heart of all of these initiatives, but none of them lasted.

Why? An epidemic of mountain sickness. They aimed too high, too fast.

Managers were encouraged to focus on complex initiatives like reengineering or learning organizations, without spending time on the basics. The stages on the mountain reveal that if the employee doesn't know what is expected ofhim as an individual (Base Camp), then you shouldn't ask him toget excited about playing ona team (Camp 2). Ifhe feels as though he is inthe wrong role (Camp 1), don't pander tohim by telling him how important his innovative ideas are to the company's reengineering efforts (Camp 3). If he doesn't know what his manager thinks ofhim as an individual (Camp 1), don't confuse him by challeng ing him tobecome part ofthe new "learning organization" (Camp 3).

Don't helicopter in at seventeen thousand feet, because sooner or later youandyourpeople will die on the mountain.

THE FOCUS OF GREAT MANAGERS

Great managers take aim at Base Camp and Camp 1. They know that the core of a strong andvibrant workplace can be found in the first six questions:

1. Do I knowwhat is expectedof me at work? 2. Do I have the materials and equipment I need to do my work

right? 3. At work, do I have theopportunity todo what I do best every day? 4. In the last seven days, have I received recognition or praise for

doinggoodwork? 5. Does my supervisor, or someone at work, seem to care about me

as a person? 6. Is there someone atwork who encourages my development?

Mountain Climbing 49

Securing 5's to thesequestions isoneofyour most important respon sibilities. And as many managers discover, getting all 5's from your em ployees is far from easy. For example, the manager who tries to curry favor with his people by telling them that they should all be promoted may receive 5's onthe question "Is there someone atwork who encour ages my development?" However, because all his employees now feel they are inthewrong role, hewill get Is on the question "At work, do I have the opportunity to dowhat I dobestevery day?"

Similarly, themanager who tries tocontrol his employees' behavior by writing a thick policies and procedures manual will receive 5's to the question "Do I know what is expected ofme atwork?" But because ofhis rigid, policing management style, hewill probably receive Is totheques tion "Does my supervisor, orsomeone atwork, seem tocare about me?"

To secure 5's to all of these questions you have to reconcile responsi bilities that, at first sight, appear contradictory. You have to be able to set consistent expectations for all your people yetat the same timetreat each person differently. You have tobeable tomake each person feel as though he is in a role that uses his talents, while simultaneously chal lenging him to grow. You have to care about each person, praise each person, and, ifnecessary, terminate a person you have cared about and praised.

F. Scott Fitzgerald believed that "the test ofa first-rate intelligence is the ability tohold two opposed ideas inmind at the same time, and still maintain the ability to function." In thissensp, greatmanagers possess a unique intelligence. In the following chapters we will describe this in telligence. We will help you look through the eyes of the world's great managers and see how they balance their conflicting responsibilities. We will show you how they find, focus, and develop so many talented employees, soeffectively.

H A P T

The Wisdom of Great Managers

• Words from the Wise

• What Great Managers Know

• What Great Managers Do

• The Four Keys

Words from the Wise

"Whom did Gallup interview?"

How do the best managers in the world lay the foundations of a strong workplace? The flood of answers is rising andthreatens to swamp even the most level-headed managers. In 1975 two hundred books were pub lished on the subject of managing and leading. By 1997 that number had more than tripled. In fact, over the last twenty years authors have offered up over nine thousand different systems, languages, principles, and paradigms to help explain the mysteries of management andlead ership.

This barrage ofconflicting, impressionistic, and largely anecdotal ad vice is overwhelming, but it rarely enlightens. It lacks precision and simplicity. Something is missing, even from the most persuasive advice. There are volumes of case studies and "here's how I did it" personal success stories, but very little quantitative research and virtually no standard of measurement. No one has ever interviewed the best man

agers in the world andthencompared systematically theiranswers with the answers of average managers. No one has ever allowed great managers to define themselves. No one has tapped the source. So Gallup did.

Thissecondresearch effortwas the inevitable companion to the first. In the previous chapter we described the fink between engaged em ployees and business unit outcomes and revealed thecritical role played by managers everywhere. In this chapter we seek to delve into the minds of the world's great managers andfind out how theyengaged, so successfully, the hearts, minds, andtalents of their people.

Year after year we askedour clients to give us their great managers to interview. It was not always easy to identify who the best oneswere, so we began byasking, "Which ofyour managers would you dearly love to clone?" In some organizations this was the only criterion available. However, in the greatmajority oforganizations therewereperformance scores: scores measuring productivity and profit; scores for shrinkage, for absenteeism, for employee accidents; and, most importantperhaps, scores reflecting the feedback ofcustomers andofthe employees them-

54 THE WISDOM OF GREAT MANAGERS

selves. We used these performance scores to sort out the great man agers from the rest.

We interviewed hotel supervisors, sales managers, general agents, se nior account executives, manufacturing team leaders, professional sports coaches, pub managers, public school superintendents, captains, majors, and colonels inthe mihtary, even aselection ofdeacons, priests, and pastors. We interviewed over eighty thousand managers.

Each great manager was interviewed for about an hour and a half, using open-ended questions. For example:

• "As a manager, which would you rather have: an independent, ag gressive person who produced $1.2 million in sales or a congenial team player who produced about half as much? Please explain your choice."

• "You have an extremely productive employee who consistently fouls up the paperwork. How would you work with this person to helphim/her be more productive?"

• "You have two managers. One has thebest talent for management you have ever seen. The other is mediocre. There are two openings available: the first is a high-performing territory, the second is a territory that is struggling. Neither territory has yet reached its po tential. Where would you recommend the excellent manager be placed? Why?"

(You can find out what great managers said to these questions in Appendix B.)

The answers to these, and hundreds of similar questions, were tape- recorded, transcribed, read, and reread. Using the same questions, we then interviewed their rather less successful colleagues. These man agers were neither failing nor excelling. They were "average managers." Theiranswers weretape-recorded, transcribed, read, andreread.

Then we compared. We listened to 120,000 hours of tape. We combed through 5 million pages oftranscript. We searched for patterns. What, ifanything, did thebest have incommon? And what, ifanything, distinguished them from their less successful colleagues?

It turns out that great managers share less than you might think. If

Words from the Wise 55

you were to fine them all up against a wall, you would see different sexes, races, ages, and physiques. If you were to work for them, you would feel different styles of motivation, of direction, and of relation ship building. The truthis they don't have much incommon at all.

However, deep within all these variations, there was one insight, one sharedwisdom, to which allof these greatmanagers kept returning.

What Great Managers Know "What is the revolutionary insight shared by all great managers?"

An oldparable will serve to introduce the insight theyshared. There oncelived a scorpion anda frog. The scorpion wanted to cross the pond, but, being a scorpion, he

couldn't swim. So he scuttled up to the frog and asked: "Please, Mr. Frog, canyoucarryme across the pond on yourback?"

"I would," replied the frog, "but, under the circumstances, I must refuse. You mightstingme as I swim across."

"But why would I dothat?" asked the scorpion. "It isnot in my inter ests to stingyou, because youwilldie and then I will drown."

Although the frog knew how lethal scorpions were, the logic proved quite persuasive. Perhaps, felt the frog, in this oneinstance the scorpion would keep his tail in check. So the frog agreed. The scorpion climbed onto his back, and together they set offacross the pond. Just as they reached themiddle ofthepond, thescorpion twitched his tail and stung the frog. Mortally wounded, the frog cried out: "Why didyou sting me? It isnot in yourinterests to sting me,because nowI will die andyouwill drown."

"I know," replied the scorpion as he sank into the pond. "But I am a scorpion. I have to sting you. It'sin my nature."

Conventional wisdom encourages you to think like the frog. People's natures dochange, it whispers. Anyone canbe anything theywant to be if they just tryhardenough. Indeed, as a manager it is your duty to di rect those changes. Devise rules andpolicies to control your employees' unruly inclinations. Teach them skills and competencies to fill in the traits theylack. All ofyour bestefforts as a manager should focus on ei ther muzzling or correcting what nature saw fit to provide.

Great managers reject this out of hand. They remember what the frog forgot: that each individual, like the scorpion, is true to his unique nature. They recognize that each person is motivated differently, that each person has his own way of thinking andhis own style of relating to others. They know that thereisa limit to how much remolding theycan do to someone. But they don't bemoan these differences and try to

What Great Managers Know 57

grind them down. Instead they capitalize on them. They try to help each person becomemore and more ofwhohe already is.

Simply put, this is the one insight we heard echoed by tens of thou sandsof great managers:

People don't change that much. Don't waste time trying toputin what was left out. Try to draw outwhat was left in. That is hard enough.

This insightis the sourceof their wisdom. It explains everything they do with and for their people. It is the foundation of their success as managers.

This insight is revolutionary. It explains why great managers do not beheve that everyone has unlimited potential; why they do not help people fix their weaknesses; why they insist on breaking the "Golden Rule" with every single employee; and why they play favorites. It ex plains why great managers break all the rules of conventional wisdom.

Simple though it may sound, this is a complex and subtle insight. If you applied it without sophistication, you could quickly find yourself suggesting that managers should ignore people's weaknesses and that all trainingis a complete wasteof time. Neither is true. Likeall revolution ary messages, this particular insight requires explanation: How do great managers apply it? What does it ask of employees? What does it mean for companies?

Over the next chapters we will answerthese questions, but before we do, we have to agree on what a manager, any manager, actually does. What is their unique function in a company? What role do they play?

What Great Managers Do "What are thefour basic roles ofa great manager?"

Tony F.,a seniorexecutive in a large entertainmentconglomerate, has a familiar complaint: "Smart individual performers keep getting moved into manager positions without the slightest idea of what the manager role is, let alone the ability to playit. We send them off to one of these leadership development courses, but they come back more impressed with their miniexecutive status than with the day-to-day challenges of being a good manager. No one knows what being a good manager is anymore."

Maybe Tony isright. Nooneknows what being a good manager isany more. And on top of that, nobody cares. Conventional wisdom tells us that the manager role is no longerveryimportant. Apparendy managers are now an impediment to speed, flexibility, and agility. Today's agile companies canno longer afford to employ armies of managers to shuffle papers, sign approvals, and monitor performance. They need self- reliant, self-motivated, self-directed work teams. No wonder managers were first against the wall whenthe reengineering revolution came.

Besides, continues conventional wisdom, every "manager" shouldbe a "leader." He must seize opportunity, using his smarts and impatience to exerthiswill overa fickle world. In thisworld, the staidlittlemanager is a misfit. It is too quick for him, too exciting, too dangerous. He had better stayout of the way. He might get hurt.

Conventional wisdom has led us all astray. Yes, today's business pres sures are more intense, the changes neck-snappingly fast. Yes, compa nies need self-reliant employees and aggressive leaders. But all this does not diminish the importance of managers. On the contrary, in tur bulent times the manageris more importantthan ever.

Why? Because managers play a vital and distinct role, a role that charismatic leaders and self-directed teams are incapable of playing. The manager role is to reach inside each employee and release his unique talents into performance. This role is best played one employee at a time: one manager asking questions of, listening to, and working with one employee. Multiplied a thousandfold, this one-by-one-by-one

What Great Managers Do 59

role is the company's power supply. In times of great change it is this role that makes the company robust—robust enough to stay focused when needed, yet robust enough to flex withoutbreaking.

In this sense, the manager role is the "catalyst" role. As with all cata lysts, the manager's function is to speed up the reaction between two substances, thus creatingthe desiredend product. Specifically the man agercreatesperformance in eachemployee byspeedingup the reaction between the employee's talents and the company's goals, and between the employee's talents and the customers' needs. When hundreds of managers play this role well, the company becomes strong, one em ployeeat a time.

No doubt, in today's slimmed-down business world, most of these managers also shoulder other responsibilities: they are expected to be subject matter experts, individual superstars, and sometimes leaders in their own right. These are important roles, which great managers exe cute with varying styles and degrees of success. But when it comes to the manager aspectof their responsibilities, great managers all excel at this "catalyst" role.

Think back to the six questions measuring Base Camp and Camp 1.

1. Do I knowwhat is expectedof me at work? 2. Do I have the materials and equipment I need to do my work

right? 3. Atwork, do I have the opportunityto do what I do best everyday? 4. In the last seven days, have I received recognition or praise for

doinggoodwork? 5. Does my supervisor, or someone at work, seem to care about me

as a person? 6. Is there someoneat workwho encourages mydevelopment?

These questions provide the detail for the catalyst role. To warrant positiveanswers to these questionsfrom his employees, a manager must be able to do four activities extremelywell: select a person, set expecta tions, motivate the person, develop theperson. These four activities are the manager's most important responsibilities. You might have all the vi sion, charisma, and intelligence in the world, but if you cannot perform these four activities well, you willnever excelas a manager.

60 THE WISDOM OF GREAT MANAGERS

I. Tosecure "Strongly Agree" responses to the question"Atwork, do I have the opportunity to do what I do best every day?" you must know howto select a person.Thissounds straightforward, but to do it wellde mands clearheadedness. Most important, you must know how much of a personyoucan change. You mustknow the difference between talent, skills, and knowledge. You mustknow which of these can be taught and which can only be hired in. You must know how to ask the kinds of questions that can cut through a candidate's desire to impress and so re vealhis true talents. If you don't know howto do these things, you will always struggle as a manager. Cursed with poorly cast employees, all yourefforts to motivate and develop will be diminished.

II. If you want "Strongly Agree" responses to the questions "Do I know what is expected of me at work?" and "Do I have the materials and equipmentI need to do mywork right?" youmustbe able to set ac curate performance expectations. This activity encompasses more than simple goal setting. You must be able to keep the person focused on performance today, no matter howtemptingit is to stare at the changes massing over the horizon. You must know on which parts of a job you will enforce conformity andonwhich partsyouwill encourage yourem ployee to exercise her own style. You must be able to balance todays need for standardization and efficiency with a similarly pressing need for flair and originality. If youdon't know howto set these kinds of per formance expectations, youwill always be offbalance, lurchinghaphaz ardlybetween enforcing too many rules and enduring too much chaos.

III. "Strongly Agree" responses to the questions "In the last seven days, have I received recognition and praise for goodwork?" and "Does mysupervisor, or someone at work, seem to care about me?" are driven by your ability to motivate each employee. As a manager, you have only one thing to invest: your time. Whom you spend it with, and how you spendit withhim, determines your success asa manager. Soshould you spend more time with your best people or your stragglers? Should you help a person fix his weaknesses, or should you focus on his strengths? Can youever give someone too much praise?If so,when? If not, whynot? You must be able to answer these questions if you are to excelat helping each employeeexcel.

What Great Managers Do 61

IV. "Does my supervisor, or someone at work, seem to care about me?" is also driven by your ability to develop the employee, as is the question "Is there someoneat workwho encourages my development?" When an employeecomes up to you and asks the inevitable "Where do I go from here? Can you help me grow?" youneed to know what to say. Should you help each person get promoted? If you tell her to attend some training classes and pay her dues, is that the right thing to say? Perhaps you feel as though you are too close to your people. Can you ever get too close to them? What happens if you have to terminate someone you have come to care about?What do you owe your people, anyway? Your answers to allof these questions will guideyou as you try to set up each person for success, both in the current role and beyond.

Select a person, set expectations, motivate the person, and develop the person: these are the four core activities of the "catalyst" role. If a company's managers are unable to play this role well, then no matter how sophisticated its systems or howinspirational its leaders, the com panywill slowly start to disintegrate.

In the earlynineties one of the leading hospitality companies began experimenting with self-managed work teams as a replacement for the traditional manager role. It was the brainchild of a top industry execu tive whose flood of new ideas was matched only by his passion in pre senting them. He envisioned a hotel of teams. Each team would comprise a balancedroster of housekeepers, front-desk clerks, bellhops, maintenance staff, and table servers. The employees on each team would manage themselves, settingschedules, assigning duties, and dis ciplining colleagues. Toencourage mutualsupport, allpraise and recog nition would be meted out at the team level. To encourage individual growth, each employee would be able to increase hispayonlyby learn ing how to play each of the other roles on the team—the more roles he learned, the more he would earn. All of this would be monitored by a couple of managers whose chief responsibility was not to manage the people, but to ensure the smooth runningof the new team structure. It was an inspiredplan,withonlyone flaw:

It didn't work.

The employees liked the idea of supporting one another, as all great hotel employees do, but the team structure threw them into confusion.

62 THE WISDOM OF GREAT MANAGERS

The best housekeepers didn't want to become front-desk clerks. They hked housekeeping. Front-desk clerks didn't like table serving, and the table servers, looking up from their own troubles behind the reception desk, didn't appreciate the mess the front-desk clerks were making of their precious restaurant. Each employee came to feel as though he were in the wrongrole. He no longerknewclearly whatwas expectedof him. He no longer felt competent, and with the focus on team rather than individual excellence, he no longer felt important. Arguments broke out, guests complained, and the few remaining managers, forced to support novices in everyrole, dashedaroundand about, fighting fires, spinningplates.

It was a mess. The chief designer kept trying to rally the troops, but the slide continued. In the end the hotel was forced to revert back to

the traditional system, and its parent company was sold to an even largerhotel conglomerate.

This company paid a hefty price for substituting an elaborate team structure for the elegantpowerof great managers.

Unfortunately, many other companies seemto be heading for a simi lar fate, albeitdown a slightly different path. These companies havede cided to hand off the "catalyst" role to other departments, like human resources or training. These departments then devise sophisticated se lection systems or skills development classes and leave the manager to concentrate on "getting the job done." The thinking seems to be that managers have enough to do without having to worryabout things like selecting the rightpeople or developing them.

This thinkingis laced with good intentions; but, in fact, taking these activities away from managers actually starts to bleed the fife out of the company. Healthy companies need strong bonds to develop between each manager and each employee. If the managerhas not had a say in selectinghis people and if he is not investedin their current successand future growth, then those bondswither.

This doesn't mean that human resources or training departments should not give managers access to tools, systems, and classes. They should. But the chief focus shouldbe on educatingmanagers on howto use these tools, not on substitutingthe tools, or the department, for the manager. The core of the manager role consists of those four activities: selectinga person, settingexpectations, motivating him, and developing him. You cannot centralize activities that can be done well only one to one, individual manager to individual employee.

What Great Managers Do 63

MANAGERS ARE NOT JUST LEADERS-IN-WAITING

"Managers do things right. Leaders do the right things." Conventional wisdom is proud of maxims like this. As we mentioned earlier, it uses them to encourage managers to label themselves "leaders." It casts the manager as the dependable plodder, while the leader is the sophisti cated executive, scanning the horizon, strategizing. Since most people would rather be a sophisticated executive than a dependable plodder, this advice seems positive and developmental. It isn't: it demeans the manager role but doesn't succeed in doing much else. The difference betweena manager and a leaderis much more profound than mostpeo ple think. The company that overlooks this difference will suffer for it.

The mostimportant difference between a great manager and a great leader is one of focus. Great managers look inward. They look inside the company, into each individual, into the differences in style, goals, needs, and motivation of each person. These differences are small, sub tle, but great managers need to payattentionto them. These subde dif ferences guide them toward the right way to release each persons unique talents into performance.

Greatleaders, bycontrast, look outward. Theylook out at the compe tition, out at the future, out at alternative routes forward. Theyfocus on broad patterns, finding connections, cracks, and then press home their advantage where the resistance is weakest. They must be visionaries, strategic thinkers, activators. When played well, this is,without doubt, a critical role. But it doesn't have much to do with the challenge of turn ing one individual's talents into performance.

Great managers are not miniexecutives waiting for leadership to be thrust uponthem. Great leaders are not simply managers who have de veloped sophistication. The coreactivities ofa manager and a leaderare simply different. It is entirely possible fora personto be a brilliant man ager and a terrible leader. But it is just as possible for a person to excel asa leaderand fail as a manager. And, ofcourse, a few exceptionally tal ented individuals excel at both.

If companies confuse the two roles byexpecting every manager to be a leader, or if they define "leader" as simply a more advanced form of "manager," then the all-important "catalyst" role will soonbe underval ued, poorly understood, and poorly played. Gradually the company will fall apart.

64 THE WISDOM OF GREAT MANAGERS

KEEP IT SIMPLE

Mike K., a senior trader for a large merchant bank, was stunned. The thirty traders under him were having their best year ever. The atmo sphereon the desks was positive andsupportive. Hisboss had given him a verygenerous bonus. Yet he had just been told by Human Resources that he was the worstmanager in the firm. Theyhad come right out and saidit, just likethat. "You're the worst manager in the firm."

"Whaton earth gave youthat idea?" Mike had shot back. "This 360-degree survey," theyhad replied. "Your direct reports rated

you on these twenty-five different competencies, and although you scoredverywellon someof them, by our calculations your overall aver age was the lowest in the firm. Over the next few months you need to work onall ofthese low areas because this time next year we're going to send this survey out again." It wasn't a threat—not quite—but Mike knewhe wasgoing to be in for a longyear.

Mike is the unfortunate victim of good intentions. Some companies, not wanting to fall into the trap of overlooking the importance of the manager, have rushed to the other extreme. They have tried to define the manager role in so much detail that they have ended up overbur dening the poor manager with a frighteningly long list of "behavioral competencies." Here, for example, is a sampling of manager competen ciesused by a number of Fortune 50 companies:

Manage change Self-knowledge Establishplans Compelling vision Inspiration Strategic agility Troop rallying Risk taking Takecharge Business practices and controls Results orientation

Manages diversity Broadperspective

What Great Managers Do 65

• Calm under fire

• Interpersonallysensitive

Managers like Mike are rated on these competencies by their super visor, direct reports, and sometimes their peers. Areas where they are doing well are given a cursory once-over. Areas where they scorepoorly are labeled "areas of opportunity" and become the focus for next year's "individual development plan."

You canjust imagine howallthis is received by managers on the front line: "How can I have a 'compelling vision' yet also maintain a 'broad perspective'!? Howcan I 'take charge' and be 'interpersonally sensitive' at the same time!?" These are bizarre, backbreaking contortions. Creating supermanager may seem like a good idea at the time, but as with Dr. Frankenstein's plan, the results always end up looking faintiy ridiculous and a little scary.

In the end, however well intentioned, this kind of overdefinition is unnecessary. A company should not force every manager to manage his people in exactly the same way. Eachmanager will, and should, employ his own style. What a company can, and should, do is keep every man agerfocused on the four core activities of the catalyst role: select a per son, set expectations, motivate the person, and develop the person. No matterhow many different styles areused, when managers play this role well, the foundations are laid. As far as ishumanly possible, every single employee's talent isbeing released into performance. The company be comes strong.

The Four Keys "How do great managers play these roles?"

The catalyst role describes what great managers do. It tells us nothing about how they do it.

So how do they do it? How do great managers release the potential energyof their people? How do they select a person, set expectations, and then motivate and develop each and everyone of their employees?

There is a scene in Raiders oftheLost Ark where a frustrated Indiana Jones is trying to discover where to start digging for the Ark of the Covenant. His adversaries, the Nazis, have already begun their excava tions, and he is desperate to beat them to the prize. The location of the Ark is inscribed on an archaic ornamental headpiece, and a gnarled Egyptian fakir is turning it over in his hands, translating the Sanskrit symbols, slowly, exactly. Suddenly Indy stops his pacing. Hearing the translation, he realizes that the Nazis have misunderstood the ancient text. Their calculations are flawed. Their measuring stick is too short. He turns to his partnerandgrins. "They're digging in the wrong place."

When it comes to a managers four core activities, conventional wis dom is "digging in the wrong place." Its advice is close, veryclose. But whenyoulook through the eyes ofgreatmanagers yourealize that each element ever so slightly, but so significantly, misses the mark. Conventional wisdom encourages youto

1. select a person ... based on his experience, intelligence, and deter mination.

2. set expectations . . . by defining theright steps. 3. motivate the person ... by helping him identify and overcome his

weaknesses.

4. develop the person . .. by helping him learn and getpromoted.

On the surface there seems to be nothing wrongwith this advice. In fact, many managers andmany companies follow it devoutly. Butall ofit misses. You cannot builda greatteam simply by selecting peoplebased on their experience, intelligence, and determination. Defining the right

The Four Keys 67

steps and fixing people's weaknesses are not the most effective ways to generate sustained performance. And preparing someone for the next rungon the laddercompletely misses the essence of"development."

Remember the revolutionary insight common to great managers:

People don't change that much. Don't waste time trying toputin what wasleft out. Try to draw outwhatwas left in. That is hard enough.

If you apply their insight to the core activities of the catalyst role, this is what you see:

• When selecting someone, they select for talent. . . not simply ex perience, intelligence, or determination.

• Whensetting expectations, theydefine the right outcomes . . . not the right steps.

• When motivating someone, they focus on strengths . . . not on weaknesses.

• Whendeveloping someone, theyhelphimfindthe right fit. . . not simply the next rung on the ladder.

We've labeled this revolutionary approach, "the Four Keys" of great managers. Taken together, the Four Keys reveal how these managers unlock the potential ofeachandevery employee.

Let's examine how each of these Four Keys works and howyou can apply them to yourown people.

CHAPTER 3

The First Key: Select for Talent

• Talent: How Great Managers Define It

• The RightStuff

• The Decade ofthe Brain

• Skills, Knowledge, and Talents

• The World According to Talent

• Talent: How Great Managers Find It

• A Word from the Coach

Talent: How Great Managers Define It "Why does every role, performed at excellence, require talent?"

Normally we associate talent only with celebrated excellence—with a strong emphasis on the word "celebrated." We look at Michael Jordan, swaying and knifing his way to the basket, and we know that neither his training nor his dogged determination is the prime source of his bril liance. He may have bothofthese, but thensodo most other NBA play ers. Alone, these cannot explain why Michael shines. Deep down we know that his secret weapon is his talent. We look at Robert De Niro and we think the same: He has talent. Tiger Woods, Jay Leno, Maya Angelou, they are allpart of the talentclub. Theyare blessed with a se cret gift. For most of us talent seems a rare and precious thing, be stowed on special, faraway people. Theyare different, these peoplewith talent. They are "not us."

Great managers disagree with this definition of talent. It is too nar row, too specialized. Instead they define a talent as "a recurring pattern of thought, feeling, or behavior that can be productively applied." The emphasis here is on the word "recurring."Your talents, they say, are the behaviors you find yourself doing often. You have a mental filter that sifts through your world, forcing you to pay attention to some stimuli, whileothers slippast you, unnoticed. Your instinctive ability to remem ber names, rather than just faces, is a talent. Your need to alphabetize your spice rack and color-code yourwardrobeis a talent. So is your love of crossword puzzles, or your fascination with risk, or your impatience. Anyrecurring patterns of behavior that can be productively applied are talents. The key to excellent performance, of course, is finding the match between your talents and your role.

This definition of talent is deceptively neutral, almost bland. Never theless it guides great managers toward a momentous discovery: Every role, performed at excellence, requires talent, because every role, per formed at excellence, requires certain recurring patterns ofthought, feel ing, or behavior. This means that great nurses have talent. So do great truck drivers and great teachers, great housekeepers and great flight at tendants. (We will describe some of these talents later in this chapter.)

Whether the excellence is "celebrated" or anonymous, great man agers knowthat excellence is impossible without talent.

The Right Stuff "Why is talent more important than experience,

brainpower, and willpower?"

For most roles, conventional wisdom advises managers to select for ex perience, for intelligence, or for determination. Talent, if mentioned at all, is an afterthought.

Conventional wisdom says:

"Experience makes the difference." Managers who place a special em phasis on experience payclosest attention to a candidate's workhistory. They pore over each person's resume, rating the companies who em ployed him and the kind of work he performed. They see his past as a window to his future.

"Brainpower makes the difference." These managers put their faith in raw intelhgence. They saythat as long as you are smart, most roles can be "figured out." Smart people simply "figure it out" better than the rest. When selecting people, they tend to favor articulate applicants blessedwithhigh-powered academic records.

'Willpower makes the difference." This is the "Success is 10 percent in spiration, 90 percent perspiration" school of thought. Managers from this school beheve that the technical part of most roles can be taught, whereas the desire to achieve, to persistin the faceof obstacles, cannot. When selecting people, they look for past evidence of grit.

As far as it goes, great managers would agree with all of this advice— experience can teach valuable lessons; intelhgence is a boon; and willpower—which great managers actually label a talent—is almost im possible to teach. But conventional wisdom stops there. It fails to take into account that there are so many other kinds of talents and that the right talents, more than experience, more than brainpower, and more than willpower alone, are the prerequisites for excellence in all roles— talents such as a waiter's ability to form opinions, empathy in nurses, as- sertiveness in salespeople, or, in managers, the ability to individualize.

The Right Stuff 73

Conventional wisdom assumes either that these behaviors can be

trained after the personhas been hired or that these characteristics are relatively unimportant to performance on the job.

Bothassumptions are false. First,you cannot teach talent. You cannot teach someone to form strongopinions, to feel the emotions of others, to revel in confrontation, or to pickup on the subtledifferences in how best to manage each person. You have to select for talents like these. (We shallexplain whythis is true later in the chapter.)

Second, talents like these proveto be the driving force behind an in dividual's job performance. It's not that experience, brainpower, and willpower are unimportant. It's just that an employee's full complement of talents—what drives her, how she thinks, how she builds relation ships—is more important.

No matter how carefully you select for experience, brainpower, or willpower, you still end up with a range in performance. In the retail company describedin chapter 1, allstore managers facedthe samecon ditions and were providedthe same training, yet some were 15 percent overtheir P/L budget and somewere 30 percent below.

In a large telecommunications company, the lower-performing cus tomer service representatives take three times as many calls as the best reps to resolve the same customer complaint—and since millions of customers call in each year, and each call costs the company $10, this range in performance rightly gets management's attention.

Similarly, a nationwide trucking company reports that their average drivers cover 125,000 miles per year and suffer four accidents per year—yet one of their best drivers hasjust celebratedhis four millionth mile of accident-freedriving.

There is range in every role, no matter how simple it seems. While experience, brainpower, and willpower all affect performance signifi cantly, onlythe presence of the right talents—recurring patterns of be havior that fit the role—can account for this range in performance. Only the presence of talents can explain why, all other factors being equal, somepeople excel in the role and somestruggle.

Let's take an extreme example where candidates were carefully se lected for experience, brainpower, and willpower. They were expertly trained, and yet they stillperformed verydifferently from one another.

Brigadier General Don Flickinger faced one of the more daunting management challenges in history. He had to find and train seven men

74 THE FIRST KEY: SELECT FOR TALENT

to perform an extremely difficult role. No one had ever performed this role before, and each man would have the opportunity to do it only once. The stakes were very high. Succeed in their role, and these men would restore America's faith in America. Fail, and theywould addfuel to the Easternbloc's swelling self-confidence.

As any manager would, the general spent a great deal of time and energy trying to find the right men for the job. First he laid out his minimum criteria: They had to be no older than thirty-nine, no taller thanfive feet eleven, in excellent physical condition, andgraduates ofa mihtary test-pilot school, with at least 1,500 hours of flying experience in jets.

After passing muster, all successful applicants were subjected to the most exacting physical and psychological tests. Tests of physical en durance—how long can you support a column of mercury with one lungful of breath? Tests of mental stability—how long can you endure being locked up in a pitch-black, soundproof "sensory deprivation chamber" with no idea when you will be released? Tests of pain sup pression—if we drive a long needle into the big muscle at the base of your thumb and pass an electric current through it, what will you do?

Eventually the generalfoundhis seven men. He found Alan Shepard, Gus Grissom, John Glenn, Scott Carpenter,

Wally Schirra, Gordon Cooper, and Deke Slayton. He found the seven astronauts of the Mercury Space Program.

And like any good manager, after having found them, he trained them. They were taught everything from the esoterics ofgravitation and rocket propulsion to the very practical matter of how to control yaw, roll, andpitch in the vacuum of space. They were given the best teach ers, the most up-to-date equipment, and the time to focus. Over two years theyacquired a wealth of newskills and knowledge.

ByMay5, 1961, they were ready. Alan Shepards fifteen-minute sub orbital flight was the first of six successful missions (Deke Slayton fell foul of a preexisting heart condition), which culminated in Gordon Cooper's thirty-four-hour, twenty-two-orbit marathon.

By the time Cooper splashed down on May 17, 1963, the Russians had been caught up with, America's pride had been restored, and the platform had been laidfor the leap to the moon.

From almost every angle, the MISS program (Man in Space Soonest) was a model of projectexecution excellence: superior technology com binedwithcarefully selected andwell-trained employees, allfocused on

The Right Stuff 75

a specific mission and buoyed by the hopes of a nation. No wonder it succeeded.

But look closer. When you examine the Mercury Program through a strictly managerial lens, you do not see a picture-perfect project. You see six very different missions. And putting aside for a moment the spectacular dimension of the endeavor and the inspirational bravery of each astronaut, the quality of the performance in each of the six mis sions can be comparatively ranked—two textbook, two heroic, and two mediocre. Look closer still and you realize that, in most instances, the individual astronauts themselves caused this variation.

Alan Shepard and Wally Schirra, both career mihtary men, executed their dutiesperfectly: no drama, no surprises, textbook missions.

John Glenn and Gordon Cooper were a little special. Glenn was the heroes' hero. Cooper was so laid-back, he actually fell asleep on the launchpad. But both of them faced severe mechanical difficulties and then responded with cool heroism and technical brilliance—Cooper even managed to achieve the most accurate splashdown of all, despite the completefailure of his automatic reentryguidance systems.

The performances of Gus Grissom and Scott Carpenter were rather less impressive. Grissom piloted a clean flight, but he appearedto panic after his capsule splashed down. It seems he blew the escape hatch too early, the capsule filled with water, and it sank to the sea floor sixteen thousand feet below. NASA never recoveredthe three-thousand-pound capsule.

Carpenter, meanwhile, was so excited to be up in space that while in orbit he maneuvered his capsule thisway and that until he had used up almostallhis fuel.When it came time to reenter the earth's atmosphere, he was unable to make the appropriate corrections to his angle of reen try and ended up splashing down 250 miles from hisdesignated landing sight. He was lucky. If he hadbeen a couple of degrees shallower in his approach, the capsule would have bounced off the atmosphere and spun off into space for eternity.

NASA must have looked at the performance of their astronauts and wondered, "Why this range in performance? We selected for experi ence, for intelligence, and for determination. They all had the same training and the sametools. Sowhy didn't theyperformthe same?Why did Cooper excel while Carpenter struggled? Why did Glenn behave so calmly and Grissomless so?"

The answeris that despite being similarin manyways—and all excep-

76 THE FIRST KEY: SELECT FOR TALENT

tionally accomplished, in comparison with the rest ofus—these six men possesseddifferent talents.

What does that mean? It means that although each of these men faced the same stimuli, the way they reacted to these stimuli and then behaved was very different. During orbit, Carpenter was so excited that he couldn't stop playing with the altitude jets; yet Cooper felt so calm, he actually slept through some ofhis orbits. At takeoff, Grissom's pulse rate spurted to 150. Glenn's never climbed above 80.

Same stimuli, vastly different reactions. Why? Because eachman fil tered the world differently. Each man's mental filter sorted and sifted, making one man acutely aware of stimuli to which anotherwas blind. Bobbing in the water after splashdown, the dependable Wally Schirra was so focused on"doing it right" that he stayed in the capsule for four hours inorder tocomplete every step ofhis postflight routine. His men tal filter blocked out any twinges of claustrophobia. Gus Grissom's didn't. All indications are thatbarely five minutes after splashing down, he felt the tiny little capsule closing in around him. Hismental filter, no longer able to dampen his growing panic, told him togetout, to escape, now, now. The hatch blew.

You have a filter, a characteristic way of responding to the world around you. We all do. Your filter tells you which stimuli to notice and which to ignore; which to love and which to hate. It creates your innate motivations—are you competitive, altruistic, or ego driven? It defines how you think—are you disciplined or laissez-faire, practical or strate gic? It forges your prevailing attitudes—are you optimistic or cynical, calm or anxious, empathetic orcold? It creates inyou all ofyour distinct patterns of thought, feeling, and behavior. In effect, your filter is the sourceofyour talents.

Your filter is unique. It sorts through every stimulus and creates a world that onlyyou can see. This filtercan account for the fact that the same stimulus produces vastly different reactions in you from those in the personnextto you.

For example, imagine you are asleep on a long flight when the plane encounters some high-level turbulence. Do you wake up, convinced thatthe main reason you haven't heard any explanation from the cockpit is that the pilots are too busy strapping on theirparachutes? Or do you stay sleeping, a slightly more vigorous headnodding the only sign that yourbodynotices the bumps?

The Right Stuff 77

Imagine you are at a party with some people you know and some you don't. Do you find yourself compelled to dive into the crowd of strangers and swim easily through the throng, remembering names, telhng stories, turning strangers into friends? Ordo you hug thecorner with your significant other, scanning the room for anyone else you might know and nervously rehearsing the one joke you might have to tell tonight?

Imagine you are arguing with your boss. As the argument intensifies, do you find yourself becoming colder, clearer, more articulate, as your brain hands you one perfect word after another? Or, despite all your preparations, does your emotion rise and your brain shut down, separat ingyou from all ofthose carefully rehearsed words?

Because every human being is guided by his unique filter, the same situation produces very different reactions. What is ridiculously easy for him is excruciatingly difficult for you. What is stimulating to you is te dious for someone else.

All truck drivers face the same situation—miles of road, an unwieldy load, and swarms of little cars buzzing around them. They all have the same training, the same experience. But some of these drivers drive twice as many miles as their colleagues yet suffer half as many acci dents. Why? Their filter. When you ask the best drivers, "What doyou think about when you are driving?" they all say the same thing. They all say, "I think about what would I doif. . . if that carpulled outright now. If thatpedestrian decided to trytocross before the light changed. Ifmy brakes failed." While the other drivers are thinking about the next rest stop, how much longer they have to go today, or other, more diverting subjects, the best drivers are playing "what if?" games, anticipating sce narios, planning evasive maneuvers. Same stimuli, different reactions, verydifferentperformance.

Likewise all customer service representatives face the same situa tion—thousands of telephone calls coming in from disgruntled cus tomers. They all have the same technology, the same experience and training. Yet the best take a third fewer calls than the average to solve the same complaint. Why? Because for the best, many ofwhom are shy in person, the phone isaninstrument ofintimacy. It offers themshelter from the customer while at the same time giving them the chance to reach through the phone and connect more quickly and more closely than if they were standing face-to-face with her. They picture what

78 THE FIRST KEY: SELECT FOR TALENT

room the customer is in. They imagine what the customer looks like. They smile and wave their hands even though they know that the cus tomer cannot see what they are doing. Instinctively their filter takes every disembodied voice and fashions a full human being. Ontheother end of the line, the customer feels the difference.

This filtering of their world is not a conscious, rational process. It does not happen once aweek, allowing them the luxury ofsitting back and weighing up all alternatives before deciding onthe most "sensible" course ofaction. Rather, their filter is constantly atwork, sorting, sifting, creatingtheir worldin real time.

Yours does the same. It's happening now, as you read this book. Maybe, just at this moment, you have looked upfrom thepage topause and think through something. Maybe you haven't. Maybe you are speed-reading this so that you can get to theend ofthe chapter before your plane flight ends. Maybe the flight has nothing to do with it; you are simply a compulsive speed reader. Maybe you have just picked up yourpen to underline thisparagraph or to make a scrawled note in the margin. Maybe you hate it when people mark up books.

Your filter is always working. Of all the possibilities of things you could do or feel or think, your filter is constantly telling you the few thingsyou must do or feel or think.

Your filter, more than your race, sex, age, or nationality, isYou.

The Decade ofthe Brain

"How much ofa person can the manager change?"

How much of You can be changed? Ifyou hate meeting new people, can you learn tolove theicebreaking

with strangers? Ifyou shy away from confrontation, can you be made to revel in the cut and thrust of debate? If the bright lights make you sweat, can you be taught to thrill to the challenge of pubhc speaking? Canyou carve newtalents?

Many managers and many companies assume that the answer to all these questions is "Yes." With the best of intentions they tell their em ployees thateveryone has thesame potential. They encourage their em ployees to be open and dedicated to learning new ways to behave. To help them chmb up the company hierarchy, they send theiremployees to training classes designed to teach all manner ofnew behaviors—em pathy, assertiveness, relationship building, innovation, strategic think ing. From their perspective, one of the most admirable quahties an employee can possess is the willingness to transform herself through learningand self-discipline.

The world's great managers don't share this perspective. Remember their mantra:

People don't change that much. Don't waste time trying toput inwhat was left out. Try todraw out what was left in. That is hard enough.

They believe that a person's talents, his mental filter, are "what was left in." Therefore no amount of "smile school" training is going to transform the person who is intimidated by strangers into a smooth wooer. Despite his bestefforts, the person who becomes less articulate the angrier he gets will never acquire what it takes to excel at debate. And no matter how much he understands the value of "win-win" scenar

ios, the intense competitorwill neverlearn to love them. A person's mental filter is as enduring and as unique as her finger-

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print. This is a radicalbelief, one that flies in the face of decades of self- help mythology. Butover the last tenyears, neuroscience has started to confirm what these great managers have long believed.

In 1990Congress and the president declared the nineties the decade ofthe brain. They authorized funding, sponsored conventions, and gen erally did everything within their power to help the scientific commu nityunravel the mysteries of the humanmind.

Their encouragement accelerated ongoing efforts by industry, acade- mia, andresearch organizations. According to Lewis L. Judd, former di rector ofthe National Institute ofMental Health: "The pace ofprogress in neuroscience is so great that 90 percent of all we know about the brain welearned in the last ten years."

In the pastwehadto infer the workings ofthe brain from the behav ior ofthe patient. Today new technologies like positron emission tomog raphy (PET) and magnetic resonance imaging (MRI) actually allow scientists to see the brain at work. Armed with these and other tools, we have taken giant leaps in learning.

We have learned that thecauses ofmental illness are as biological as any physical disease. We have learned why the neurotransmitter dopamine calms us down and why serotonin fires us up. We have learned that, contraryto what we used to think, our memories are not stored inone particular place butare scattered like clues onevery high way and backalley of our brain.

And we have learned how the brain grows. Given the pace of scien tific discovery in this arena, we shall surely advance ourknowledge dra matically over the next few years. But this is what we know today.

At birth the child's brain contains one hundred billion neurons, more brain cells than there are stars in the Milky Way. These cells will grow and die regularly throughout the child's life, but their number will re main roughly the same. These cells are the raw material of the mind. But they are not the mind. The mind of the child hves between these cells. In the connections between the cells. In the synapses.

During the first fifteen years oflife, thecarving ofthese synaptic con nections is where the drama unfolds.

From the day she was born, the child's mind begins to reach out, ag gressively, exuberantly. Beginning at the centerof the brain, every neu ronsends out thousands andthousands ofsignals. They aretrying to talk to oneanother, to communicate, to make a connection. Imagine every-

The Decade of the Brain 81

one alive today simultaneously trying toget in touch with 150,000 other people and you will get some idea ofthe wonderful scale, complexity, andvitality of the young mind.

By the time the child reaches herthird birthday the number ofsuc cessful connections made is colossal—up to fifteen thousand synaptic connections for each of its one hundred billion neurons.

But this is too many. She is overloaded with the volume of informa tion whirling around inside herhead. She needs to make sense ofit all. Her sense. So during the next tenyears or so, herbrain refines and fo cuses its network ofconnections. The stronger synaptic connections be come stronger still. The weaker ones wither away. Dr. Harry Chugani, professor ofneurology atWayne State University Medical School, likens thispruningprocess to a highway system:

"Roads with the most traffic get widened. The ones that are rarely used fall into disrepair."

Scientists are still arguing about what causes some mental highways tobe used more regularly than others. Some contend thatthe child's ge netic inheritance predisposes her toward certain mental pathways. Others claim that the way she is raised has a significant effect onwhich pathways will survive the Darwinian pruning and which will die.

These views are not mutually exclusive. But whatever their nature- nurture bias, few disagree on the outcome of this mental pruning. By the time the childreaches her early teens, she hashalfas many synaptic connections as she did when she was three. Her brain has carved out a unique network of connections. She has some beautiful, frictionless, traffic-free, four-lane highways, where the connections are smooth and strong. And she has some barren wastelands, where no signal at all makes it across.

If she ends up with a four-lane highway for empathy, she will feel every emotion of those around her as though it were her own. By con trast, if she has a wasteland for empathy, she will be emotionally blind, forever saying the wrong thing at the wrong timeto the wrong person— notoutofmalice, but simply outofaninability to pick up the frequency ofthe emotional signals being sent. Likewise if shehas a four-lane high way for confrontation, she will be that lucky person whose brain just hands her oneperfect word after another during the heatofa debate. If she has a wasteland for confrontation, she will find that her brain always shuts her mouth down at the most critical moments.

82 THE FIRST KEY: SELECT FOR TALENT

These mental pathways are her filter. They produce the recurring pattern ofbehaviors that makes herunique. They tell herwhich stimuli to respond to andwhich to ignore. They define where she will excel and where shewill struggle. They create all ofher enthusiasms andall ofher indifferences.

The carving of these pathways is the carving of her character. Neuroscience is telling us that beyond her mid-teens there is a limit to how much of her character she can recarve.

This does not mean that she cannot change. As we will describe later, she can learn new skills and new knowledge. She can alter her values. She can develop agreater sense ofself-awareness and agreater capacity for self-regulation. And if she does indeed have a wasteland for con frontation, then with enough training, coaching, and encouragement, she can probably be helped to build a thin path so that she is at least able to copewith confrontation. But it does mean that in terms of these mental pathways, no amount oftraining, coaching, or encouragement will enable her to turn her barren wastelands into frictionless four-lane highways.

Neuroscience confirms what great managers know. Her filter, andthe recurring patterns of behavior that it creates, is enduring. In the most important ways she is permanently, wonderfully, unique.

So areyou. And, ofcourse, so are thepeople you hire.

Skills, Knowledge, and Talents "What is the difference among the three?"

Great managers are not troubled by thefact that there is a hmit to how much they can rewire someone's brain. Instead they view it as a happy confirmation that people are different. There is no point wishing away this individuality. It's better to nurture it. It's better to helpsomeone un derstand his filter and then channelit toward productive behavior.

So if you can't carve out new talents for your people, what, if any thing, canyou change about them?

First, you can help them discover their hidden talents. As we shall discuss in more detail in chapter 5, the best managers are adept at spot ting a glimpse ofa talent insomeone and then repositioning him so that he canplay to that talentmore effectively.

Second, a manager can teach her employees new skills and new knowledge. Here we come toone ofthe most profound insights shared bygreat managers: Skills, knowledge, and talents are distinct elements ofa person's performance. The distinction among the three is that skills and knowledge can easily be taught, whereas talents cannot. Combined in the same person, they create an enormously potent compound. But you must never confuse talents with skills and knowledge. Ifyou do, you may waste a great deal of time and money trying to teach something that is fundamentally unteachable.

Skills are the how-to's of a role. They are capabilities that can be transferred from oneperson to another. For accountants, arithmetic isa skill. If, for some strange reason, the neophyte accountant doesn't know how to doarithmetic, he canstill be taught. For pilots, the mechanics of yaw, roll, and pitch are a skill. For administrative assistants, Microsoft Word or Excelare skills. For nurses, the details of how to give a safe in jection are a skill. The best way toteach a skill is tobreak down the total performance into steps, which thestudent then reassembles. And, natu rally, the best way to learn a skill is to practice.

Your knowledge is simply "what you are aware of." There are two kinds ofknowledge:factual knowledge—things you know; andexperien tial knowledge—understandings you have picked up along the way.

84 THE FIRST KEY: SELECT FOR TALENT

Factual knowledge for an accountant would be knowing the rules of double-entry bookkeeping. For flight attendants, the Federal Aviation Administration's safety regulations are factual knowledge. Forsalespeo ple, their products' features and benefits are factual knowledge. Foren gineers, the National Bureau of Standards' electrical frequencies are factual knowledge. Factual knowledge can and should be taught.

Experiential knowledge is a little different. It is less tangible and therefore much harder to teach. Acquiring it is your responsibility. You must discipline yourself to stop, look back on past experiences, and try to make sense ofthem. Through this kind ofmusing or reflection, you can start to see patterns and connections. You can start to understand.

Some of these understandings are practical. For example, over a number of years an accountant comes to know a variety of ways to shield aclient's assets from excessive taxation. Aretail store manager, re flecting back on customer buying patterns, now knows which products to highlight during the holiday seasons. A teacher, remembering the glazed eyes ofpast students, is now prepared with videos and field trips to spice up the particularly stodgy sections of the course.

Some understandings are more conceptual. Your awareness of who you are and how you come across toothers is experiential knowledge. It comes with time, if you are listening. In the same way, your values— those aspects oflife that you hold dear—are experiential knowledge. As you make your choices, sometimes compromising, sometimes holding firm, you come torealize that certain aspects ofyour fife are more impor tant than others. These critical aspects become your values, guiding the choices you make in the future. Some of these values will remain con stant throughout your fife. Others will change with time and reflection.

Talents are different phenomena altogether. Talents are the four-lane highways in your mind, those that carve your recurring patterns of thought, feeling, or behavior. Through Gallup's studies ofgreat accoun tants, wehave discovered that oneof their most important talents is an innate love of precision. Ask a great accountant—not any accountant, but a great accountant—when he smiles andhe will tellyou, "When the books balance." When the books balance, his world isperfect. He may not show it, but inside he is aglow. All he can think about is, Oh, when canI do that again! This might seem rather oddto you. Butifyou think about it, forthe person blessed with aninnate love ofprecision, accoun tancy must be a wonderful job. Every time his books balance he experi ences absolute perfection in his work. How many of us can claim that?

Skills, Knowledge, andTalents 85

Alove ofprecision is not a skill. Nor is it knowledge. It is a talent. If you don't possess it, you will never excel as an accountant. If someone does nothave thistalentas partofhis filter, thereisvery littlea manager can do to inject it.

THREE KINDS OF TALENT

At Gallup we have studied the talents ofover 150 distinct roles and, in the process, have identified a multitude of different talents (some of which are described in the appendix). As you would imagine, the talents needed to excel at these roles vary gready—an all-star goalie in the NHL possesses rather different talents than an excellent Catholic dea con; the best nurses are not cut from the same cloth as the best stock brokers.

Fortunately wehave found away to simplify these diverse talents into three basic categories: striving talents, thinking talents, and relating talents.

Striving talents explain thewhy ofa person. They explain why he gets outofbed every day, why he is motivated to push andpushjust that lit tle bit harder. Is he driven byhis desire to stand out, or is good enough good enough for him? Is he intensely competitive or intensely altruistic or both? Does he define himself by his technical competence, or does he just want to be liked?

Thinking talents explain the how of a person. They explain how he thinks, how he weighs up alternatives, how he comes to his decisions. Is he focused, or does he like to leave allof his options open? Is he disci plined andstructured, or does he love surprises? Is he a linear, practical thinker, or is he strategic, always playing mental "what if?" games with himself?

Relating talents explain the who of a person. They explain whom he trusts, whom he builds relationships with, whom he confronts, and whom he ignores. Is he drawn to win overstrangers, or ishe at easeonly with his close friends? Does he think that trust must be earned, or does he extend trust to everyone in the belief that mostwill prove worthyof it? Doeshe confront peopledispassionately, or does he avoid confronta tion until finally exploding in an emotional tirade?

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Striving, thinking, and relating: these are the three basic categories of talent. Within each you will have your own combination of four-lane highways and barren wastelands. No matter how much you might yearn tobedifferent, your combination oftalents, and therecurring behaviors that it creates, will remain stable, familiar toyou and toothers through out your life.

A COUPLE OF MIND GAMES

If you want to experience firsthand the distinct properties of skills, knowledge, andtalents, trythis little game.

Can you seethe well-known phrase or saying in this word:

MILLION

The solution: "One in a million."

If the answer leapt out at you, thenyou probably have an innate tal ent for finding word patterns. We have seen this kind ofthinking talent in great computer programmers. Like them, you might also love cross wordpuzzles and brainteasers.

But perhaps you didn't see theanswer immediately. If so, don't worry. We will try to teach you a skill thatwill help you to improve your pat tern-finding performance. The skill has threesteps:

1. Identify what seems out ofplace within the word. 2. Evaluate where it is in relation to the whole word.

3. Combine steps 1 and 2 and discover the phrase.

Thus, with this first puzzle, the number 1 is out ofplace. Where is it in relation to thewhole word? It isinthemiddle. So bycombining these two facts, you discover the phrase: "One in a million." Simple, really.

Now try gaining some experience at applying this new skill. Can you see the well-known phrase in thisword:

PAY

Skills, Knowledge, and Talents 87

What is out ofplace? The letterA. Where is it in relation to the rest of the word? It is raised and in the middle.

The solution: "A raise in pay." How about this one:

TEM PERATU RE

What isoutofplace? TheletterA again. Where is it in relation to the rest of the word?It is droppedand in the middle.

The solution: "Adrop in temperature." One more:

CR^CE

Hopefully the solution is starting to come a little quicker: "A fall from grace."

Okay, youhave been given the opportunity to learna newskill and to gain some experiential knowledge at applying this skill, just as youpro vide yourpeoplein the realworld. But now we are going to change the rules on you, just as in the realworld.

Canyousee the well-known phrase in thesewords:

BUT

1) THOUGHT 2) THOUGHT

This one is a little harder, but if you have the innate thinking talent for perceiving patterns, then once again the solution should gradually emerge:

"But on second thought." But if you don't have this talent, then the skills and knowledge you

just acquired didn't help you at all, did they? Lacking the talent, your performance suffered when you were confronted with a novel situation not covered in your training.

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The same thing happens in the real world. Let's say you have just trained some new associates in the skills and knowledge they need to provide good customer service. You send them out into the field. As long as the customers' requests stay within the guidelines covered in training, mostof them perform acceptably well.

But what happens when, all of a sudden, they are confronted by a customer request that they have never heard before? If they have the relating talent of empathy and/or persuasion, they will perform well. Instinctively they will find just theright words and justthe right tone to calm the customer down and resolve the situation.

But if they lack these talents, all the skills and knowledge they have just acquired will be oflittle help. Theirperformance will suffer.

The power of skills and knowledge is that theyare transferable from one person to another. Theirlimitation is that they are oftensituation- specific—faced with an unanticipated scenario, they lose much of their power.

In contrast, the powerof talent is that it is transferable from situation to situation. Given the right stimulus, it fires spontaneously. If you have the striving talent of competitiveness, then almost any kind of contest can spark you. If you have the relating talent of empathy, then every emotion speaks to you. If you have the relating talent of assertiveness, then no matter what the subject, you will be able to state your case plainly and persuasively.

The limitation of talent, of course, is that it is very hard to transfer from one person toanother. You cannot teach talent. You can only select for talent.

SIMPLE LANGUAGE, SMART THINKING

Now that you know the difference between skills, knowledge, and tal ents, you can use these terms to throwlighton all the other words used to describe human behavior—words like "competencies," "habits," "at titude," and "drive." At present many of us assume that they all mean virtually the same thing. We usephrases like "interpersonal skills," "skill set," "work habits," or "core competencies" so naturally that we rarely questiontheir true meaning.

This isn't just careless language. It's careless thinking. It leads man-

Skills, Knowledge, and Talents 89

agers astray. It leadsthem to waste precious time, effort, and moneytry ing, with the best of intentions, to train characteristics that are funda mentally untrainable.

Solet'slookmore closely at competencies, habits, attitude, and drive. Which of these are skills, or knowledge, and therefore can be changed in a person? Andwhichare talentsand therefore cannot?

Competencies

Developed by the British military during World War II to define the perfect officer, competencies are now used in many companies to de scribe behaviors that are expected from all managers and leaders. Although no one really believes that this perfect manager/leader exists, competencies can occasionally be useful if they help a company think through the ideal set of behaviors for a particularrole.

But if you do use them, be careful. Competencies are part skills, part knowledge, and part talent. They lump together, haphazardly, some characteristics that can be taughtwithothersthat cannot. Consequently, even though designed with clarity in mind, competencies can wind up confusing everybody. Managers soon find themselves sendingpeople off to training classes to learn such "competencies" as strategic thinking or attention to detail or innovation. But these aren't competencies. These are talents. They cannotbe taught.

If youare going to use competencies, make it clearwhich are skills or knowledge and therefore can be taught, and which are talents and therefore cannot. For example, a competency such as "Implements business practices and controls" is a skill—all managers can learn it to some minimum degree of proficiency. A competency such as "Calm under fire" is a talent—you cannot teach someone to be cool.

Habits

"Habit" is another potentially confusing term. We have been told that our habits are second nature. We have been told that we can all change this nature and acquire new habits. Again, this advice is well intended but inaccurate. Most habits are ourfirst nature. Most habits are talents.

If you are habitually assertive or habitually empathic or habitually competitive, then you are going to have a tough time changing these

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habits. They are enduring. They make you You. It's potentially disas trous to suggest that the only way to become more effective is to try to change your first nature.

Ofcourse, this doesn't mean thatyou cannot change some ofyour be haviors. You can. Over time, through reflection, you might change your values and so learn a more positive and productive way to apply your talents. You might choose to play to one talent more than another. You might combine your talents with relevant skills. You might learn to ac cept your unique combination of talents and so become less defensive or insecure. There is a greatdealyou canchange.

Butwhatever you do, the beauty of this approach is that it relies on self-awareness, rather than self-denial, to helpyou become more effec tive. Some of your behaviors may have changed, but you haven't been forced to contort yourself intosomeone else. You have simply cultivated your unique set of talents.

Attitudes

Many managers say theyselectfor attitude—a positive attitude, a team- focused attitude, a service-oriented attitude. Theyare rightto do so,be cause a person's prevailing attitudes are part of her mental filter. They are created by the interplay of her unique pattern of highways and wastelands. Her attitudes are talents.

She may be cynical or trusting. She may be an optimist or a malcon tent. She maybe experimental or conservative. None of these attitudes arenecessarily better thanany ofthe others. None ofthemwill preventa personfrom playing certain roles extremely well—for example, the mal contentmight be a powerful entrepreneur, driven byher dissatisfaction with the status quo. The cynic might fit right intoa role in law, policing, or investigative reporting, anywhere a healthy mistrust is a prerequisite.

Butallof these attitudes form part of the person's recurring patterns of thought, feeling, or behavior. Managers may be able to change someone's mood from one day to the next. However, managers will al ways struggle to changethat person's prevailing attitudes. As MickK., a manager in a large consulting company, describes it: "If I find myself telling the same person to look on the bright side' time and time and time again, I should take a hint. He's not a bright-sider. He's a dark- sider. I shouldstopwasting mybreath and try to finda rolewhere skep ticism is key to success."

Skills, Knowledge, and Talents 91

Drive

Many managers make a distinction between talent and drive. They often find themselves counseling someone by saying: "Look, you are very talented. But you need to apply yourselfor that talent will go to waste."

This advice sounds helpful. More than likely it is well intended. But fundamentally it is flawed. A person's drive is not changeable. What drives him is decided by his mental filter, by the relative strength or weakness of the highways in his mind. His drives are, in fact, his striv ing talents.

Take the striving talent of competitiveness as an example. Somepeo ple have a four-lane highway for competition. Show them scores and they will instinctively try to use these scores to compare their perfor mance with that of their peers. They love scores, becausewhat you can measure you can compare; and if you can compare, you can compete.

However, people with a wasteland for competition will see the same scores and not feel any jolt of energy at all. Putting themselves on a level playing field, pitting their best efforts against their peers, and winning .. . means nothing to them. They rationalize their behavior by opining, "I don't like competition; I prefer win-win scenarios," or the classic, "I prefer to competewith myself." But these comments are just signs that their filter is, understandably, trying to describe itself in the most positive light.

The truth is that they are not competitive. There is nothing good or bad about this. It is simply whothey are. Andthere is not much that ei ther they or you, their manager, can do about it.

Similarly, somepeople have a four-lane highway for constantachieve ment, a striving talent we call achiever. They may not have to win, but they do feel a burningneed to achieve something tangible every single day. Andthese land of people mean "every single day." For them, every day—workday, weekend, vacation—every day starts at zero. They have to rack up some numbers by the end of the day in order to feel good about themselves. This burning flame may dwindle as evening comes, but the next morning it rekindles itself, spurring its host to look for new items to cross offhis list. These people are the fabled"self-starters."

Not all roles require employees to possess this striving talent of achiever. Nurses, for example, do not have to generate all of their drive fromwithin. Instead they have to respond caringly and efficiently to the

92 THE FIRST KEY: SELECT FOR TALENT

urgent needs that face themevery day—for nurses the altruistic striving talent mission ismuch more important thanachiever. Butifyou manage roles that do require achiever—like an insurance agent, a pharmaceuti cal salesperson, or any rolewhere the person must initiate rather than respond—then remember: You hadbetter select forit. Because if a per sondoes not feel this burning fire, you cannot light it forhim.

The same applies to all striving talents: the need to be of service, the need to be on stage, the needto be seenascompetent, the need to help others grow. All of these drives are talents, and therefore they have the same characteristics as other talents. Namely, they are part of each persons mental filter. They are unique andenduring.

A manager can neverbreathe motivational life into someone else. All she can do is try to identify eachemployee's striving four-lane highways and then, asfarasispossible, cultivate these. (Moreon thisin chapter5.)

Whendescribing humanbehavior, wewould advise youto stickwiththe clarity of skills, knowledge, and talents. Tread carefully when using habits or competencies—they lump too much together rather haphaz ardly. Likewise, if you feel a need to use attitude or drive, be cautious. Remember that a person's drive and her prevailing attitudes are talents, and as such, they are veryhard to change. When you hear yourselfbe ratingthe personto "geta better attitude," watchout. You mightbe ask ing her to tackle the impossible.

None of this implies that a person cannot change. Everyone can change. Everyone can learn. Everyone can get a litde better. The lan guage of skills, knowledge, and talents simply helps a manageridentify where radical change is possible andwhere it is not.

The World Accordingto Talent "Which myths can we now dispel?"

Guided by their own beliefs, and supported by recent scientific ad vances, great managers can now dispel two of the most pervasive man agement myths.

MYTH #1: "TALENTS ARE RARE AND SPECIAL"

There is nothing very special about talent. If talents are simply recur ring patterns of thought, feeling, or behavior, then talents are actually rather commonplace. Everyone has certain recurringpatterns of behav ior. No one can take credit for these talents. They are an accident of birth, "the clash of the chromosomes," as the ethologist Robert Ardrey described them. However, each person can and should take credit for cultivating his unique set of talents.

The best wayto help an employee cultivate his talents is to findhim a role that plays to those talents. Employees who find such roles are spe cial. These people are naturally able to do what someoneis prepared to paythem to do. We rightly label these people"talented."

Take nursing as an example. Working with a large health care provider, Gallup had a chance to study some of the best nurses in the world. As part of our research we asked a study group of excellent nurses to inject one hundred patients and a control group of less pro ductive nurses to perform the sameinjection on the samepopulation of one hundred patients. Although the procedure was exactly the same, the patients reported feeling much less pain from the best nurses than from the rest. Why? What were the best nurses doing to lessen the pain? Did they have some special technique with the needle? Did they applythe disinfectant usinga firmerhand or a softer swab?

Apparently not. Apparently it allcame downto what the nurse said to the patient right before the needle punctured the skin. The average nurses introduced themselves with a brisk, "Oh, don't worry, this won't hurt a bit," and then plunged in the needle with businesslike efficiency.

94 THE FIRST KEY: SELECT FOR TALENT

The best nurses opted for a verydifferent approach. They were just asefficient withthe needle, but theyset the stage rather more carefully. "This is going to hurt a little," they admitted. "But don't worry, I'll be as gentle as I can."

The best nurses were blessed with the relating talent empathy. They knewthe injection would hurt, and eachof them, in their ownstyle, felt compelled to share that knowledge with the patient. Surprisingly, this confession eased the patients' pain.To the patients it seemed as though the nurse were, in some small way, going through the experience with them. The nurse was on their side. The nurse understood. So when the

needle broke the skin, somehow it didn't feel as bad as they thought it would.

The relating talent of empathyis not particularly special. Manypeo ple have it and call upon it in all aspects of their life. But those people withempathywhobecomenurses are special. Theycan share a patient's pain.They are "talented."

Similarly, some people are fascinated with risk. This striving talent is neither a goodthing nor a bad thing, although it can prompt some oth erwise normal people to hurl themselves out of planes or swim with great white sharks just for the fun of it. However, if these people be come anesthesiologists or surgeons, then their four-lane highway for risk becomes a positive strength. For them, the literal life-or-death quality of their work is a thrill, not a pressure. They are special, these people. They are "talented."

The samegoes for the personwiththe talent for rememberingnames aswellas merelyfaces. This talent is nice to have, but it becomespartic ularly valuable if she is hired as the concierge in a hotel.

In all of these situations the talent aloneisn't special. It is the match ing of the talent with the role that is special. As with the performing arts, the secret to great performances is all in the casting.

Of course, in today's highly specialized business world, finding the right fit between the person and the role is a gooddeal more challeng ing than it used to be. It is not enough to say, "This person has a talent for assertiveness; I think I'll hire him to sell." You have to know very specifically what kind of selling you are going to be asking him to do. For example, to be a great salesperson for IBM, as in many sales roles, you have to lovepushingfor the close—a striving talent—and you have to knowexactly when and howto do it—a relatingtalent. These talents, amongothers, are critical to an individual's success in the role.

The WorldAccording to Talent 95

But if you are a salesperson for Merck, the pharmaceutical giant, you'd better not have these talents, because you'll never have a chance to use them. The job will quickly frustrate you. The goal of pharmaceu tical sales is for the sales representative to build up influence with the doctoror the HMO gradually, sothat, overtime, more ofyour drugsare prescribed. Here, success has a great deal to do with the sales rep's re lating talent for patienceand influence and almost nothing to do with a talent for closing.

As a manageryourjob is not to teachpeopletalent.Your job is to help them earn the accolade "talented" by matching their talent to the role. To do this well, like all great managers, you have to payclose attention to the subtle but significant differences between roles.

MYTH #2: "SOME ROLES ARE SO EASY, THEY DON'T REQUIRE TALENT"

The famous management theorist OscarWilde once said: "A truth ceases to be a truth assoon as two people perceive it." All right, so Mr. Wildewas better known for hiswit than for his man

agement advice; nonetheless, every manager should be required to re member this one remark. Although he phrased it in the extreme, Mr. Wilde simply meant that the only truth is your own. The world you see is seen by you alone. What entices you and what repels you, what strengthens you and what weakens you, is part of a pattern that no one else shares. Therefore, as Mr. Wilde said, no two people can perceive the same "truth," because eachperson's perspective is different.

This canbe both a blessing andcurse. You are blessed witha wonder fully unique filter but cursed with a systematic inability to understand anybody else's. Trueindividuality canbe lonely.

One way to cope with this lonelinessis to succumb to the illusion that other peopleoperateunder many of the same assumptions asyou. Your ambitions, passions, likes, and dislikes are not special or distinct. They are "normal." So you are "normal." In moments of calm objectivity, you may concede that your point ofview is not the only one, but day to day it is simply easier ifyou assume that everyone shares yours.

Of course, this is a generalization—some people, particularly em- pathic people, seem able to walk a genuine milein someone else's moc casins. Nonetheless it is a generalization that pervades our working

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world. Managers look at "lower-level" roles like housekeeping or out bound telemarketing and wonder, "How could anyone want to do that job?That job mustbe so demoralizing." Misled by the illusion that everyone shares their filter, they make two false assumptions: first, that virtually anyone withthe righttraining could do the job adequately; and second, that everyone, regardless of who they are, will want to be pro moted out of the job as soon as possible. With the best of intentions, they then define these roles as "entry-level" and buildcareer paths and compensation plans that reward top performers with speedypromotion out of the "drudgery."

Great managers do not believe that their filter is common to every one. Instead, when they select for a role, they are guided by the belief that some people are probably wired to excel at this role and to derive enduring satisfaction from doing it well. The Gallup research confirms this belief. Let's take hotel housekeepers as an example.

Mostof us haven't spent muchtime mulling over the detailsof house keeping. But consider, for a moment, what hotel housekeepers do and howoften they haveto do it. Put yourselfin their shoes.

Okay. Two things might have occurred to you: first, that this is an easyjob

anyone with a modicum of responsibility can do; and second, that this is a terrible job that everyone, including housekeepers, must hate to do.

If these thoughts crossed your mind, then you would be wrong on both counts.

We shouldn't devalue housekeepers. Anyone can probably clean a hotel room once in a while, but great housekeepers are special. Every day they vacuum themselves out of each room knowing that the next day they will return to find the roomhit by the usual tornado of towels, toiletries, and bed linen. It is enough to make Sisyphus weary, endlessly pushing his rock up the hill. But great housekeepers don't get weary. They get stronger. Theyare not beaten down by the relentless grind of their work. On the contrary, they seem to be energized by it. In their mind, their work asks them to be accountable, to be creative, and to achieve something tangible each and everyday. They want to come in and attacktheir sectionof rooms. The challenge gives them strength.

All this is so because great housekeepers possess a certain specialset of talents. Does this sound incongruous? What follows may give you a clearer sense of some of the talents needed to be a great housekeeper.

The World According to Talent 97

Gallup was asked by a large entertainment company to help them find more housekeepers like theirbest. This company already knew how special housekeepers were. Leaders in service quality the world over, they had over fifteen thousand hotel rooms, cleaned byover three thou sand housekeepers. But to maintain their edge over competitors, they wanted to learn more about what made their best the best.

Sitting around the table we had assembled eight of this company's best housekeepers. Some were shy, perplexed by being asked to talk about their work. Others were completely relaxed, chatting away in English or Haitian Creole or Portuguese. One of them had been a housekeeper for only eighteen months, while another had cleaned the same section of rooms in the same hotel for twenty-three years. They were of different races, sexes, and ages. But theywere all great house keepers.

Ourgoal was to encourage them to talk about theirwork to seewhat, if anything, these eightgreathousekeepers had in common.

"How doyou know if a room isclean?" we asked them. They said that the last thing they did before leaving a room was to lie on the guest's bed and turn on the ceiling fan.

"Why?" "Because," theyexplained, "that is the first thing that a guest will do

aftera long day out. Theywill walk intothe room, flop down on the bed, and turn on the fan. If dust comes off the top of the fan, then no matter how sparkling clean the rest of the room was, the guest might think it was as dirtyas the top of the fan."

Weaskedthem iftheywerefront-of-house or back-of-house. (In many hotelcompanies housekeepers areconsidered back-of-house staff.)

"Front-of-house. I am always on stage, always, always." A grumpy chorusof English, Creole, and Portuguese.

"Why do yousay you are on stage?" "Because we make a show forour guests. Unless the guests object, we

will take the toys that the children leave on the bed and every day we will make a little scene with them. We will put Pooh and Piglet on the pillows together. Pooh will have his arm in a chocolate candy box. Piglet willhave his on the remote control.When the children come back, they imagine that all day long Pooh and Piglet just hung out on the bed, snacking and watching TV. The next day they find Donald and Goofy dancingon the windowsill. We makea show."

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These eight great housekeepers were not just trying harder, nor did they simply "take more pride intheir work." These great housekeepers had talent. They shared a unique filter. Seen through this filter, a hotel room wasn't just another chore to be completed. It was a world, a guest's world. When they cleaned the room, they looked through the guests' eyes and imagined how the world should look. Making each guest's world justright brought them strength andsatisfaction.

Noone toldthesehousekeepers to behave like this. Butforsome rea son their mental filter drove them tothese behaviors and togain endur ing satisfaction from the outcome. These individuals were probably some of the best housekeepers in the world.

The managers ofthese housekeepers knew that the best way to rec ognize these Michael Jordans of housekeeping was not necessarily to promote them out of it. They looked for other ways—more specific praise, better compensation, tighter selection criteria for aspiring housekeepers—to highlight these superstars. Guided bythe knowledge that great housekeepers possessed talent, they did everything in their power to make excellence inhousekeeping publicly revered and a gen uine career choice.

In the minds of great managers, every role performed at excellence deserves respect. Every role has itsown nobility.

Talent: How Great Managers Find It "Why are great managers so good at selectingfor talent?"

Even if you know to select for talent, it is not always easy to identify thosewho have it. First off, many people don'tknow whattheir true tal ents are. They maybe experts in their chosen field, but when it comes to listing their unique set of talents, they are stumped. As Peter Drucker, the elder statesmanof management wisdom, says:

"Even today, remarkably few Americans are prepared to select jobs for themselves. When you ask, 'Do you know what you are good at? Do you know your limitations?' they look at you with a blank stare. Or they often respond in terms of subject knowledge, which is the wrong answer."

This confusion is understandable. Your own skills and knowledge are relatively easy to identify. You had to acquire them, and therefore they are apart, distinct. Theyare"notYou." Butyour talents? Your talents are simply your recurring patternsof behavior. Theyare yourveryessence. It takes a rare objectivity to be ableto standbackfrom yourself and pick out the unique patterns that makeyouYou.

Second, when someone applies for a job, he naturally wants to im press. Therefore those few recurring behaviors of which he is aware will be painted in as rosy a hue as possible. In the job interview he la bels himself"assertive," not "aggressive." He describes himselfas "am bitious" rather than "pushy." More often than not these are not deliberate misrepresentations. They are genuine attempts to describe himselfto you positively. But whatever his true motivations, his instinct to try to impress you makes your job—the talent scout—that much more difficult.

These barriers to talent scouting are a fact of life. Human nature being what it is, people will always struggle to know themselves, and they will always sell themselves in job interviews. Despite these barri ers, great managers stilldo much better than their colleagues at select ing people with the right talents for the role. They have discovered some simple techniques to cut through the barriers and so find the match between the person and the role.

100 THE FIRST KEY: SELECT FOR TALENT

KNOW WHAT TALENTS YOU ARE LOOKING FOR

In the early nineties Gallup began work with two of the largest retail brokerage firms in the United States. Both companies wanted help in selecting brokers. And both ofthem defined the role in exactly the same way—the broker was not paid to be a money manager, doing financial analysis, picking stocks. Instead he was paid to be a money gatherer, identifying high-potential prospects andthenpersuading themto invest their money with his firm. He was a salesperson.

Although thedefinition ofboth roles was thesame, each company or ganized itselfdifferently. One was extremely structured. Each broker spentmonths learning how to represent the same suite of meticulously packaged products, and regular refresher courses helped keep him from straying too far from the company's mandate.

By comparison, the other company was wildly entrepreneurial. Licensed brokers were told, "Here's a phone, here's a phone book. I want to see $500,000 in assets under management by this time next year. Best of luck."

Both strategies had their strengths. And as it turns out, both strate gieshaveprovenverysuccessful. However, both could not be executed by the same kindof person. Although the job title was the same—"bro ker"—and the job description was the same—"gather money"—the tal ent profiles were significantly different.

For the structuredcompany, the critical striving talent was achiever, the burning inside-out push; in this environment of frequent supervi sion, other striving talents, like the need for independence, were actu ally weaknesses. Thecritical thinking talent was discipline—an ability to work in a highly regimented environment. Thinking talents like focus or strategic thinkingwere much less important because the company, not the broker, set the direction and determined the best routes forward. Any brokerwho wanted to dothis forhimselfwould quickly start to butt heads withthe company He would lose.

In the entrepreneurial company, the opposite was true. The critical striving talent was desire—a burningneed for independence—and the critical thinking talent was focus—the ability to pick out a genuine prospectfrom the phone book, to sort out whom to call from everyone who could be called. Lacking these talents, the unfortunate broker would feel lost and lonely, a company man in an entrepreneurs world.

Talent: HowGreat Managers Find It 101

A broker with lots of desire and focus is not necessarily a better bro ker than one with lots of achiever and discipline. But she would cer tainly fit better in the entrepreneurial company, just as the broker blessed with achiever and discipline would be better cast in the more structured company. Lacking this knowledge, both companies might have ended up hiring each other's brokers, with disastrous repercus sions.

As a manager you need to know exactly which talents you want. To identify these talents, look beyond the job tide and description. Think about the culture of the company. Is your company the kind that uses scores to drive performance and makes heroes out of those with the highest scores? If so, make sure thatthe striving talent competition isin your profile. Or maybe yours is anorganization thatemphasizes the un derlying purpose of its work and confers prestige only on those who manifestly live the values of the company. If so, search for people who possess the striving talent mission, people who must seethe greater pur poseofwhich their efforts are a part.

Think about how expectations will be set andhow closely the person will be supervised. Think about who you are as a manager andwho will mesh with your style. Do you preferto set short-term goals and expect to check in regularly with each person to monitor incremental progress? If so, you need to surround yourself with direct reports who yearn for structure and detail and regular updates, the thinking talent discipline. Or areyou the kind ofmanager who likes to handoffas much responsi bility as possible, who sets long-term goals andthen expects employees to orientthemselves toward those goals without much helpfrom you? If so, your direct reports will needthe thinking talent focus, which we de scribedpreviously.

Think about the other people on the team. Think about the total work environment into which this person must fit. Perhaps the team is filled with solid but serious performers who are in need of drama and excitement—find a person with the relating talent stimulator, a person who can find the drama in almost any milestone or achievement. Perhaps the team is friendly but lacks the ability to confront one an other with the truth—look for a personwho leads with her relating tal ent assertiveness, so that you have at leastone team memberwho feels compelled to bring every issue, no matter how sensitive, to the surface. Perhaps your organization has a strong human resources department that can give your managers detailed feedback on the strengths and

102 THE FIRST KEY: SELECT FOR TALENT

weaknesses ofeach oftheir direct reports. Inthis case you may not need to select managers who possess the relating talent individualized per ception, defined as the ability to identify and capitalize upon the uniqueness in people. Orperhaps your organization offers no HR sup port at all. In this case relating talents like individualized perception, or relator—the need to build bonds that last—or developer—the need to invest in other people's growth and to derive satisfaction from doing so—will need to serve as thecornerstones ofyour desired talent profile.

Pondering all of these variables can become overwhelming. So sim plify, bring things down to size. Try to identify one critical talent in each ofthe three talent categories, striving, thinking, and relating. Use these three talents as your foundation. Focus on them during theinterviewing process. Mention them when asking people for referrals. Do not com promise on them, no matter how alluring a candidate s resume might appear.

STUDY YOUR BEST

Ifyou want to be sure that you have started with the right three talents, study your best in the role. This may sound obvious, but beware: con ventional wisdom would advise the opposite.

Conventional wisdom asserts that good is the opposite of bad, that if you want to understand excellence, you should investigate failure and then invert it. In society at large, we define good health as the absence of disease. In the classroom, we talk to kids on drugs to learn how to keep kids offdrugs anddelve into the details oftruancy to learn how to keep more kids in school.

And in the working world, this fascination with pathology is just as pervasive. Managers are far more articulate about service failure than theyare about service success, andmany still define excellence as"zero defects."

When it comes to understanding talent, this focus on pathology has caused many managers to completely misdiagnose whatit takes to excel in a particular role. For example, many managers think that because badsalespeople suffer from call reluctance, great salespeople must not; or that because bad waiters are too opinionated, great waiters must keep their opinions in check.

Reject this focus on pathology. You cannot infer excellence from

Talent: How Great Managers Find It 103

studying failure and then inverting it. Why? Because excellence and failure areoften surprisingly similar. Average isthe anomaly.

Forexample, bystudying the best salespeople, great managers have learned that the best, just like the worst, suffer call reluctance. Apparently thebest salesperson, as with the worst, feels as ifhe is sell ing himself. It is this striving talent offeeling personally invested in the sale that causes him to be so persuasive. But it also causes him to take rejection personally—every time he makes a sales call he feels the shiver of fear that someone will say no to him, to him.

Thedifference between greatness andfailure in sales is that the great salesperson isnotparalyzed bythis fear. He is blessed with another tal ent, the relating talent of confrontation, that enables him to derive im mense satisfaction from sparring with the prospect and overcoming resistance. Every day he feels call reluctance, but this talent for con frontation pulls him through it. His love of sparring outweighs his fear of personalrejection.

Lacking this talent for confrontation, thebadsalesperson simply feels the fear.

The average salesperson feels nothing. He woodenly follows the six- stepapproach he has been taught andhopes forthe best.

Bystudying their best,greatmanagers are able to overturn many sim ilarly long-standing misconceptions. For example, they know that the best waiters, just like the worst, form strong opinions. The difference between the best and the worstis that the best waiters use their quickly formed opinions to tailor their style to each particular table of cus tomers, whereas the worstare just rude—average waiters form no opin ions and so give every table the same droning spiel.

Andthe best nurses, contrary topopular opinion, doform strong emo tional relationships with theirpatients. Thedifference between the best and the worst is that the best nurses use their emotions to take control

andsmooth the patient's world asfarasispossible, whereas the worstare overwhelmed bytheir emotions. Average nurses? Average nursesprotect themselves bykeeping theirdistance. They areemotionally disengaged.

Take timeto study your best, say great managers. Learn the whys, the hows, and the whos ofyourbest and then select for similar talents.

In the end, much of the secret to selecting for talent liesin the art of in terviewing. When interviewing for talent, most managers are aware of

104 THE FIRST KEY: SELECT FOR TALENT

the more obvious pitfalls: don't put the candidate under undue stress; don't evaluate people on their appearance alone; don't rush to judg ment. Avoiding these will certainly lay the foundations for a productive interview.

However, ifyou want to excel in theartofinterviewing you will need to do more. In chapter 7 we will describe in detail the interviewing techniques thathave enabled great managers to select for talent so un erringly.

A Word from the Coach

"John Wooden, on the importance oftalent."

Selecting for talent is the manager's first and most important responsi bility. If he fails to find people with the talents he needs, then every thing else he does to help them grow will be as wasted as sunshine on barren ground. John Wooden, the legendary coach of the UCLA Bruins, puts it more pragmatically:

"No matter how you total success in the coaching profession, it all comes down to a single factor—talent. There may be a hundred great coaches of whom you have never heard in basketball, football, or any sport who will probably never receive the acclaim they deserve simply because they have notbeenblessed with the talent. Although not every coach canwin consistently with talent, nocoach canwin without it."

According to everything we have heard from great managers, the coach is right. But he is also a little humble. What made John Wooden sosuccessful was notjustthe talents onhis teams, but also his own abil ity to create the right kind of environment to allow those talents to flourish. After all, talent is only potential. This potential cannot be turned into performance in a vacuum. Great talents need great man agers if theyare to be turnedinto performance.

Selecting for talent is only the first of the Four Keys. In the chapters that follow we will present the others and describe howgreat managers focus, recognize, anddevelop the talents they have socarefully selected.

CHAPTER 4

The Second Key: Define the

Right Outcomes

• Managing by Remote Control

• Temptations

• Rules ofThumb

• What Do You Get Paid to Do?

Managing by Remote Control "Why is it so hard to manage people well?"

"Iam ultimately responsible for the quality ofall teaching inmy district. Yet every day, in every classroom, there is a teacher and there are stu dents ... and the door is shut."

Gerry C, a superintendent for a large public school district, captures the managers challenge perfectly: How can you get people to do what you want them todo when you are not there totell them todo it? Gerry knows what all great managers know: As a manager, you might think that you have more control, but you don't. You actually have less control than the people who report to you. Each individual employee can de cide what to do and what not to do. He can decide the hows, the whens, andthewith whoms. Forgood or for ill, he can make things happen.

You can't. You can't make anything happen. All you can do is influ ence, motivate, berate, or cajole in the hope that most ofyour people will do what you ask ofthem. This isn't control. This is remote control. And it is coupled, nonetheless, with all of the accountability for the team'sperformance.

Your predicament is compounded by the fact that human beings are messy. No matter how carefully you selected for certain talents, each of your people arrived with his own style, his own needs, and his own mo tivations. There is nothing wrong with all this diversity—it is often a real benefit tohave a team ofpeople who all look at theworld inslightly dif ferent ways. But this diversity does make your job significantly more complicated. Not only do you have to manage by remote control, but you have to take into account that each employee will respond toyour signals in slightly but importandy different ways.

If it's any consolation, great managers are in the tightest spot of all. They are further hemmed in by two fervent beliefs. First, as we de scribed in chapter 2, they believe that people don't change that much. They know that they cannot force everyone inaparticular role todo the job in exactly the same way. They know that there is a limit to how much each employees different style, needs, and motivation can be ground down.

110 THE SECOND KEY: DEFINE THE RIGHT OUTCOMES

Second, they believe that an organization exists for apurpose and that that purpose is performance—with "performance" defined as any out come that is deemed valuable by either an external or internal cus tomer. In their view, the manager's most basic responsibility is not to help each person grow. It is not to provide an environment in which each person feels significant and special. These are worthy methods, but they are not the point. The point is to focus people toward performance. The manager is, and should be, totally responsible for this. This explains why great managers are skeptical about handing all authority down to their people. Allowing each person to make all ofhis own decisions may well result in ateam offully self-actualized employees, but itmay not be a veryproductive team.

So this is their dilemma: The manager must retain control and focus people onperformance. But she is bound by herbelief thatshe cannot force everyone toperform inthe same way.

The solution is as elegant as it is efficient: Define the right outcomes andthen let eachperson find his own routetoward those outcomes.

This solution may sound simple. But study it more closely and you canbegin to see itspower.

First, it resolves the great manager's dilemma. All ofa sudden her two guiding beliefs—that people are enduringly different and that managers must focus people on the same performance—are no longer inconflict. They are now inharmony. In fact, they are intertwined. The latter frees her up to capitalize on the former. To focus people on performance, she must define the right outcomes and stick to those outcomes religiously. But as soon as she does that, as soon as she standardizes the required outcomes, she has just avoided what she always knew was impossible anyway: forcing everyone to follow the same path toward those out comes. Standardizing the ends prevents herfrom having tostandardize the means.

If a school superintendent can keep focused on his teachers' student grades and ratings, then he need not waste time evaluating them on the quality of their lesson plans or the orderliness of their classrooms. If a hospitality manager can measure her front-desk clerks' guest ratings and the repeat visits they created, then she won't have to monitor how closely they followed the preset welcome script. Ifthe sales manager can define very specifically the few outcomes he wants from his salespeople, then he can ignore how well they filled out their call-reporting sheets.

Managing byRemote Control 111

Second, this solution is supremely efficient. The most efficient route thatnature has found from point Ato point Bis rarely a straight line. It is always the path of least resistance. The most efficient way to turn someone's talent into performance is to help him find his own path of least resistance toward the desired outcomes.

With his mind firmly focused on the right outcomes, the great sales manager can avoid the temptation of correcting each person's selling style so that it fits the required mold. Instead he can go with each person's flow, smoothing aunique path toward the desired result. Ifone salesperson closes through relationship building, one through technical competence and detail orientation, and another through sheer persua siveness, then the great sales manager doesn't have to interfere ... so long asquality sales are made.

Third, this solution encourages employees to take responsibility. Great managers want each employee to feel a certain tension, a tension to achieve. Defining the right outcomes creates that tension. By defin ing, and more often than not measuring, the required outcomes, great managers create an environment where each employee feels that little thrill of pressure, that sense of being out there by oneself with a very definite target. This kind ofenvironment will excite talented employees and scare away the ROAD warriors. It is thekind ofenvironment where a person must learn. She must learn the unique combination of plays thatwork for her time and time again. She must learn how sheresponds to pressure, how she builds trust with people, how she stays focused, how and when she needs to rest. She must discover her own paths of least resistance.

Defining the right outcomes does expect a lot ofemployees, butthere is probably nobetterway to nurture self-awareness and self-reliance in your people.

Temptations "Why do so many managers try to control their people?"

Ifdefining outcomes rather than methods is so elegant and so efficient, why don't more managers do just that? When faced with the challenge ofturning talent into performance, why do so many managers choose, instead, to dictate how work should be done? Every manager has his own reasons, but in the end it is probably that the allure of control is just too tempting. On the surface these temptations seem justifiable, but play them out, and each one soon saps the life out ofthe company and shrivels its value.

TEMPTATION: "PERFECT PEOPLE"

This first temptation isvery familiar. Imagine an expert, a well-intentioned expert. He wants to help all

employees rise above their imperfections. He looks at all the fumbling inefficiency around him, and he knows, he just knows, that ifonly peo ple would learn his simple steps, the world would beabetter place. And everyonewould thank him.

This expert believes that there is "one best way" to perform every role. With time and study, hewill find this "one best way" and teach it to all employees. He will make them more efficient and more successful. You, the manager, will simply have to monitor each person to ensure thatthey are all sticking to theregimen.

Many managers can frequently be seduced by the idea that there is "one best way" and that it can be taught. Thus they dispatch the sales person to learn the tensecrets ofeffective negotiation andthenevaluate him based upon how closely he followed the required steps. They send the budding executive off to acquire the twenty competencies of suc cessful leadership and then grade him onhis ability todemonstrate each and every one. And, with the best ofintentions, they encourage every employee to develop thenine habits for effective living.

Although their areas ofinterest differ, these scientific experts all base

Temptations 113

theirideas on the same premise: namely, thateach person's uniqueness is a blemish. If you want to make your people perform, they say, you must teach the perfect method, remove the blemishes, and so perfect the person.

Frederic Taylor, ofthe infamous time-and-motion studies, is consid ered thefather of"one best way" thinking, butdespite some formidable competition of late, the most influential "one best way" expert is proba bly awoman bythe name ofMadelaine Hunter.

Virtually every educator in the United States knows her name. Having studied effective teaching practices at UCLA's University Elementary School, Madelaine Hunter identified what she considered tobe the seven most basic components ofaneffective lesson:

• Step 1: Abrief review • Step2: Introduction • Step 3: Explanation • Step 4: Demonstration • Step 5: Check for understanding • Step 6: Q&Asession • Step7: Independent study

She gave each ofthe steps aunique moniker (for example, step 5she called "Dipsticking;" step 6 became "Monitored Practice"). But by her own admission all she was basically doing was repackaging what tal ented teachers had always done. Not that there was anything wrong with this. In fact, for any educator interested inlearning from thebest, it was an extremely valuable analysis.

If she had left it at that, she would probably have attracted a little less attention and much less criticism. But she didn't leave it at that. She couldn't. She had become convinced that her seven steps were not just a perceptive summary ofwhat most good teachers did in the classroom; they were aformula, astrict formula. Anyone who took the time to learn and apply her formula would be transformed into an excellent teacher. She was sure of it.

"I used to think that teachers were born, not made. But I know better now," she claimedin an interview with the Los Angeles Times. "I've seen bumblers turned into geniuses."

It is doubtful that she had, but since she believed that her formula

114 THE SECOND KEY: DEFINE THE RIGHT OUTCOMES

could indeed transform "bumblers into geniuses," then couldn't she fix the entire education system? Couldn't she make a better world for teachers and students and parents? Well, in her mind, yes, she could. She was on a mission.

Beginning in the late sixties and continuing until her death in 1994, she expanded her formula into books and videotapes. She raced around and around the lecture circuit. She courted school superintendents and administrators. She spread her good word. "At University Educational School," she announced, "we identified the nutrients required for asuc cessful school situation. We showed teachers what those learning nutri ents are, how to put everything together to make anourishing meal. We have made some darned good cooks."

As you can imagine, these optimistic claims were a sweet song for manyembattled educators. Thousands of schooladministrators became disciples. They decided not only to train teachers in the seven steps, but also to evaluate each teacher based upon how closely and how well he or she followed the required sequence. What began as a thoughtful message about great teachers quickly became acreed that every teacher was forced to recite. Today hundreds of thousands of teachers have been indoctrinated in the "Madelaine Hunter method," and sixteen states still, to some degree, officially embrace her methods.

However, the tide is beginning to turn against the scientific doctrine of Madelaine Hunter. Some critics point out that her research was faulty—she didn't study thousands ofgreat teachers; she studied a few teachers working at her school at UCLA. Some comment on the unim pressive results ofHunterized school districts—over the years, student achievement scores were either no higher than regular school districts or, in somecases, significantly lower.

Some are quite forgiving of the woman herself: "I don't think that Madelaine meant for all this to happen," said Gerry C, the school su perintendent. "Her seven steps were meant to be ideas that each teacher could then incorporate into his own style. They were never meantto be rules which everyone had to follow."

Others judge her more harshly. Here's Amy F, another school super intendent: "I think Madelaine suckered us into it. We liked the teach- by-the-numbers feel of it all. Teachers can be insecure, and she made teaching seem like a science, a real profession. We forgot that the essence of great teaching is to treat every child as an individual. You

Temptations 115

can't train that. There aren't seven steps to discovering that Billy learns by doing, while Sally learns by reading. Its a talent. Madelaine dis tracted us from this. She led the whole of teaching astray."

Whatever the criticism, most educators agree: In ten years' time her theories will still be known, and probably revered, as a perceptive study ofgreat teaching. But they will no longer carry the force ofdogma that they do today.

This isa teaching example, butit could apply toany role. Any attempt to impose the "one best way" is doomed to fail. First, it is inefficient— the "one best way" has to fight against the unique, grooved four-lane highways possessed by each individual. Second, it is demeaning—by providing all the answers, it prevents each individual from perfecting and taking responsibility for her own style. Third, it kills learning— every time you make a rule you take away a choice and choice, with all ofitsilluminating repercussions, isthe fuel for learning.

Adrian P., the manager of two thriving car dealerships, describes it this way: "The hardest thing about being a manager is realizing that your people will not do things the way that you would. But get used to it. Because ifyou try to force them to, then two things happen. They be come resentful—they don't want to do it. And they become depen dent—they can't do it. Neither of these is terribly productive for the longhaul."

In your attempts to get your people to perform, never try to perfect people. The temptation may becaptivatingly strong, butyou must resist it. It is a false god. What looks like amiraculous cure-all is actually a dis ease that diminishes the role, demeans the people, andweakens the or ganization.

Perhaps George Bernard Shaw was just in a particularly bad mood when he commented, "The road to hell is paved withgood intentions." But when it comes to attempts to perfect people, he wasn't entirely off the mark.

TEMPTATION:

"MY PEOPLE DON'T HAVE ENOUGH TALENT"

As we discussed in the previous chapter, it is tempting to believe that some roles are so simple that they don't require talent. Hotel house-

116 THE SECOND KEY: DEFINE THE RIGHT OUTCOMES

keepers, outbound telemarketers, and hospital service workers are all examples ofroles that conventional wisdom suggests "anyone can do."

Misled by this wisdom, many managers don't bother selecting for people who have talent for these roles. They hire virtually anyone who applies. Consequently they end up with a hopelessly miscast work force—thousands ofemployees who see their role as demeaning and who can think only ofgetting out ofit as fast as possible. Thus cursed, their managers respond with strict legislation. They impose a Bible- thick procedure manual on their people in the hope that they can make the role "idiotproof." Their rationale: "IfI give these people the chance to make choices, many ofthem will use that freedom to make the wrong choices."

Faced with this scenario, you can't really fault these managers their need for control. Ifyou don't select for talent, then you shouldn't give people leeway. You should dot every "i" and cross every "t" and you should monitor every employee's performance to ensure that it meets the step-by-step guidelines. This is a time-consuming approach that, unfortunately, turns managers into policemen, but why leave anything tochance? Since your employees weren't carefully selected, who knows which way they would jump ifthe restraints were loosened?

Of course, amore productive solution would be to start by respecting the role enough toselect for talent inthe first place.

TEMPTATION:

"TRUST IS PRECIOUS—IT MUST BE EARNED"

Even when they have selected for talent, some managers are hamstrung by their fundamental mistrust ofpeople. This mistrust might beaprod uctofsome deep-seated insecurity, or it might be couched as a rational conclusion—"I think the human race is basically driven by selfishness, and therefore most people will cut corners if they think they can get awaywith it." But whatever its source, their mistrust means that these managers are extremely reluctant to let each employee find his or her own route to performance.

Plagued by the nagging suspicion that someone, somewhere, is taking advantage ofthem, a mistrustful manager's only recourse is to impose rules. They spin a web of regulations over their world. Only through

Temptations 117

regulation, they believe, will they be able to protect themselves from peoples inevitable misdeeds.

For a mistrustful person, the manager role is incredibly stressful. The ambiguity—"What might that employee be doing!?"—and the suspi cion—"Whatever it is, I'm sure it's bad"—must be excruciating. Unfortunately for managers like this, the rules and regulations they im pose rarely succeed in quelling their suspicions. They succeed merely in creating a culture ofcompliance that slowly strangles the organization offlexibility, responsiveness, and, perhaps most important, goodwill.

Consider this: Ifyou are ateacher inFlorida, it is illegal for you touse your judgment when assigning grades to your students. This is not an exaggeration. It is illegal Driven by their mistrust and their desire to control, state legislators enacted a law defining percentages and grades. Ifachild scores above 94 percent, it is illegal for him toreceive anything otherthanan A. If he scores between 85 percent and93percent, then he must receive a B. Arkansas is another state that saw fit to legislate away a teacher's judgment, although they were a little more lenient on thechildren—in Arkansas 90 percent orabove gets anA, while anything over80 percent warrants a B.

Great school superintendents say that there is nothing wrong with of fering teachers agrading/percentage guideline. Most states do it, and it helps to ensure consistency across districts. But a law? No wonder so many teachers feel they have lost the trust and goodwill ofthe people.

Andwhat of the notion that "trust must be earned"? Sensiblethough it may sound, great managers reject it. They know that if, fundamen tally, you don't trust people, then there is no line, no point intime, be yond which people suddenly become trustworthy. Mistrust concerns the future. If you are innately skeptical ofother people's motives, then no amount ofgood behavior in the past will ever truly convince you that theyare not just about to disappoint you. Suspicion isa permanent con dition.

Of course, occasionally a person will indeed let you down. Butgreat managers, like Michael, the restaurant manager from the introduction, arewired toview this as the exception rather than the rule. They believe that ifyou expect the best from people, then more often than not the best is what you get.

Innate mistrust is probably vital for some roles—lawyering or inves tigative reporting, for example. But for amanager it is deadly.

118 THE SECOND KEY: DEFINE THE RIGHT OUTCOMES

TEMPTATION:

"SOME OUTCOMES DEFY DEFINITION"

Many managers say they would like to define the right outcomes and then let each person find his or her own route, but they can't. Some out comes, they say, defy definition. And ifyou can't define the right out comes then you have to try to define the right steps. It's the only way to avoid chaos, theysay.

From some angles this perspective is actually quite sympathetic. First, some outcomes are indeed difficult to define. Sales, profit, or even student grades lend themselves to easy measurement. But cus tomer satisfaction doesn't, nor does employee morale. Yet both ofthese are critical toexcellent performance inmany roles.

Second, if youdo fail to define, in outcome terms, "customersatisfac tion" or"employee morale," then you still have to find some way toen courage people to pay attention to their customers and to their employees. Defining the right steps would certainly be one such way.

This perspective may be sympathetic, but it is not wise. These man agers have given up too quickly. Just because some outcomes are diffi cult to define does not mean that they defy definition. It simply means that the outcomes aren't obvious. Some thinking is required. Ifyou do give it some thought, you find that even the most intangible aspects of performance can, in fact, be defined in terms of outcomes. And with these outcomes defined, you can then avoid the time-wasting futility of trying to force everyone to satisfy their customers ortreat their employ ees in exactly the same way.

Let's look at the outcome "employee morale" in more detail (we will address customer satisfaction later in the chapter). As we described in chapter 1, many companies have realized that the strength oftheir cul ture is part oftheir competitive weaponry. If they can treat their people better than their competitors, they will be able to attract more talent, focus that talent, develop that talent, and ultimately dominate. In their view, culture—how managers treat their people—has become tremen dously important. Too important, it appears, tobe left tochance.

Rather than defining astrong culture interms oftheemployees' emo tional outcomes—"This is how we want our employees to feel"—many companies have chosen to break "culture" down into steps—"This is

Temptations 119

what all managers/leaders must do." As we described inchapter 2, these steps are usually called "competencies."

Once defined, competencies provide a common focus and a common language for a great deal of what happens within the company. New managers are required to learn them. Existing managers are rated against them, by peers, direct reports, and their superior. The picture of the perfect manager is he who possesses them all. Ofcourse, everyone knows this person is a phantom, but that doesn't stop you from becom ing concerned ifyour direct reports rate you low on competencies like "Compelling vision" or "Calm under fire." Nor does it stop your boss from telling you to improve your scores for thecoming year ifyou are to earn 100 percent of your discretionary bonus. Yes, these competencies are quickly takenveryseriously.

Not bygreat managers, fortunately. They know that you should not legislate in advance how a manager is to interact with his people, mo ment bymoment. You should not try toscript culture. First, it's distract ing—it focuses the manager on compliance to a "standard" while she should be figuring outwhat style works best for her. Second, it's impos sible—her innate talents, not her "competencies," drive the manager's moment-by-moment interactions, and talents cannot be taught.

But this does not mean that you should not hold your managers ac countable for treating their employees well. You should. You just shouldn't legislate how to do it, step bystep bystep. It would be more effective to identify the few emotions you want your employees to feel and then to hold your managers accountable for creating these emo tions. These emotions become your outcomes.

As an example, take those first six questions of the twelve that mea sure workplace strength:

1. Do I know what is expected ofme at work? 2. Do I have the materials and equipment I need to do my work

right? 3. Atwork, do I have the opportunity to dowhat I dobest every day? 4. In the last seven days, have I received recognition or praise for

goodwork? 5. Does mysupervisor, or someone at work, seem to care about me

as a person? 6. Is there someone at work who encourages mydevelopment?

120 THE SECOND KEY: DEFINE THE RIGHT OUTCOMES

These questions describe some ofthe most important emotional out comes that you should expect your managers to create in their employ ees. You want their employees responding "Strongly Agree" to these questions by the end ofthe year, and you certainly want to hold your managers accountable for securing these 5's. But now thatyou've identi fied what you want their employees tofeel, you are, happily, freed from forcing each manager to create these feelings inlockstep.

Take the emotion "trust," as measured by the question "Does my su pervisor, or someone at work, seem to care about me?" One front-line supervisor has a quiet, caring relationship style. One supervisor builds relationships through his straightforwardness and his consistency. One supervisor uses his rah-rah passion and humor. But the great manager doesn't care one way or the other, as long as the supervisors' employees respond "5" to the question "Does my supervisor, or someone at work, seem to care about me as a person?" The great manager knows thathe doesn't need to waste time and money sending the quiet one to public speaking class orthe straightforward one to interpersonal sophistication class. (Of course, he may discover that a particular supervisor has no path of least resistance to building relationships with his people. For whatever reason, they just don't trust him. We'll describe how great managers handle this problem in chapter 6.)

As Gallup discovered, defining the right outcomes to measure "cul ture"canbe quitea challenge. Butit isworth the effort. If as much ef fort were spent identifying the right employee outcomes as has been spent trying to legislate the manager's style, then everyone would be better off. Thecompany would be more efficient. Thehuman resources department would be more popular. The employees would be more trusting. And the managers would be themselves. Finally.

Rules ofThumb

"When and howdo great managers rely on steps?'

The best managers avoid all of these temptations. They know that the managers challenge is not to perfect people, but to capitalize on each person's uniqueness. They select for talent, no matter how simple the role. Their first instinct is to trust the people they have selected. And they believe that, with enough thought, even intangibles like "customer satisfaction" and "employee morale" can be defined in terms of out comes.

However, this does not mean they dismiss the need for steps. They don't. A manager's basic responsibility is to turn talent into perfor mance. Certain required steps can often serve as the platform for that performance. In the course of Gallup's interviews, these managers de scribed how and when they used required steps to drive performance. Here are the rules of thumb that guide them.

RULE OF THUMB #1: "DON'T BREAK THE BANK''

Employees mustfollow certain required stepsfor all aspectsoftheir role that deal with accuracy or safety.

Take bankingas an example. Abankperformsmanydifferent functions, but in the long run it has value for its customers onlyif it handles their money accurately and safely. Therefore the foundation of every role within the bank, whether it be trader, investment adviser, or teller, is the need to do it accurately and safely. To show employees exactly what it means to be "accurate"or "safe," the bankingindustry has defined regu latory steps, and each bank has its own internal guidelines. The bank's employees must adhere to these. Thisisn't the onlypart of their job, but it is the foundational part. Any manager who forgets this, who gives his employees too much room to maneuver, runs the riskof destroying the bank's value.

The managers of Baring's bank, a two-hundred-year-old English bankinginstitution, forgot.

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In late 1994 Baring's general manager offutures trading in Singapore, twenty-eight-year-old Nicholas Leeson, began to invest heavily in the Japanese stock market, guessing that the market would rise. He guessed wrong. The market keptfalling. And, naively, he keptincreasing his bet, hoping against hope for an upswing. During November and December he losta greatdealof the bank's money.

This wasn't particularly unusual. Futures traders lose large sums of their company's money all the time. When this happens repeatedly, the company simply cuts offthe money supply, fires the trader, absorbs the losses, and chalks it allup to the cost of doing business.

What was unusual was that, in Nick Leeson's case, it appears his su periors didn't know about the extent ofthe losses. In a bizarre example ofempowerment run amuck, his manager hadgiven him control ofboth the front and back office in Singapore—he was a fox in his own hen house, policing hisown trading. Therewas no system in place to ensure that Leeson was following the guidelines for "accurate" accounting and "safe" investing. This made it relatively easy to dowhatmorethan a few desperate twenty-eight-year-olds might do: set up dummy accounts to hide his mounting losses. Back in London, blithely unaware, his man agerkept the money coming.

Leeson tookhis final gamble in January of 1995. He bet the farm that the Japanese Nikkei index would rise, finally. He musthave done some thing spectacularly bad in a previous life, because on January 17 a vio lent earthquake pummeled the cities of Kobe and Osaka, driving the Nikkei indexdown throughthe floor. The bet had failed.

The next morning Baring's woke up to losses of over $1.3 billion, about $700 million more than they had in their cash reserves. A month later, on February 27,1995, the bank collapsed. Leeson wentto jail, and four thousand jobswere put in jeopardy. The two-hundred-year-old in stitution was destroyed.

This is a banking story, but it could just as well have been a story about jet engine manufacturing, theme park ride design, subway train operation, or scuba-diving instruction. All roles demand some level of accuracy or safety, and therefore all roles require employees to execute somestandardized steps. Great managers know that it is their responsi bility to ensure that their employees knowthese steps and can execute them perfectly. If that flies in the face of individuality, so be it.

Unrestrainedempowerment can be a value killer.

Rules of Thumb 123

RULE OF THUMB #2: "STANDARDS RULE''

Employees mustfollow required stepswhenthosesteps are part ofa company or industrystandard.

It would be hard to overestimate the importance of standards. And by "standards" we are not referringto moral or ethicalstandards. We mean languages, symbols, conventions, scales. These are the DNA of civiliza tion. Without our ability to devise and then accept standards, we could never have developedsuch a complex society.

Standards enable us to communicate. Each language is simply a shared set of standards. If you don't share someone's grammatical stan dards, and if you cannot agree on what certain symbols mean, then you can't speak that persons language. All communication, no matter what its medium, demands shared standards—just ask a Windows user who has tried to download a document from his Mac-bound buddy.

Standards drivelearning. The skill of arithmetic is teachable precisely because all the students and all the teachers know that they are adding and subtractingin "base ten." Sharedstandards makeskills transferable.

Standards make comparison possible. For example, in order to func tion, market-driven economies needed a standardsystem for comparing the value of one company with that of another. Until the late fifteenth century no such system existed. But in 1494 a Venetian monk, Luca Pacioli, formalized that system and communicated it in the first book detailing the standards of double-entry bookkeeping. Wall Street still uses that system today.

Counterintuitively, standards fuel creativity. Take music as an exam ple. There is no rightway to structure sounds. But in Western Europe in the late sixteenth century, a structured scale gradually became stan dard. This scale, called a "chromatic scale," used twelve tones per octave, with each tone being one hundred cents apart in pitch—repre sentedbythe seven white keys and five black keys on a pianokeyboard. On the surface this sounds as though it would restrict the composers' genius. But the opposite was true. Being limited to just twelve tones didn't dampen their creativity; it fostered their creativity. The chromatic scale, and its formal notationsystem, spawned twocenturies of the most prolific and original composition. Composers as diverse asVivaldi, Miles

124 THE SECOND KEY: DEFINE THE RIGHT OUTCOMES

Davis, Stravinsky, and Madonna allused the standardchromaticscaleto give voice to the unique music playing in their minds.

Standards, then, are the code in which human collaboration and dis covery is written. Great managers know that if they want to build a co operative, creative organization, they will have to ensure that their employees use the relevant codes. Lawyers must study case law. Air traffic controllers have to learn the standard navigational protocols. Accountants have to learn the rules of double-entry bookkeeping. And engineers have to design products that will operate on the standard electrical frequency broadcast twenty-four hours a day from the National Bureau of Standards' radio station, WWVB.

If standards are important today, then that importance will surely multiply many times over in the coming decade. Here is how Kevin Kelly, writing in Wired magazine, describes this decade:

The grandirony of our times is that the era of computers is over. All the major consequences of stand-alone computers have already taken place. Computers have speeded up our lives a bit, and that is it. In contrast, all the mostpromising technologies making their debut noware chiefly due to communication between computers—that is, to connections [italics added] rather than to computations.

Connections mean networks, and networks require standards. Andas we speed into this networked world, the companies that define the new standards—the new languages, platforms, scales, conventions—will gain a huge advantage over latecomers. They will be the gatekeepers, perfectly positioned to meet the needs of the hungry new community theyhelped to create.

Making your standards universal is already a telling competitive ad vantage. This is how VHS beat Betamax. This is how Microsoft beat Apple. Over the next fewyears youwill see more and more companies breaking all the rules of traditional business in order to build networks. This explains why Netscape gives away its browser; Sprint, MCI, and AT&T lure us with free cellular phones; and Sun Microsystems floods the market with Java. They are all trying to launch their standards to ward the critical mass needed to become the standard.

Since building networks is so important, all employees will have to play their part. In the same way that Swiss clock makers were not en-

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couraged to devise their own units of time, the employee of tomorrow will not be allowed to create his own standards. For example, given their intense competition with Sun Microsystems, Microsoft program merswill rarelybe given the freedom to write newsoftware usingSun's version of Java. Or, in a lesshigh-tech setting, with the national focus on standard achievement tests, teachers will not be permitted to redesign their curriculabased on their ownpreferences.

This doesn't mean that in the future managementwillbe rigidand in trusive. It simply means that employees will have to express their cre ativity and individuality through a standard medium. Here again, unrestrained empowerment can kill a company's value.

RULE OF THUMB #3 : "DON'T LET THE CREED

OVERSHADOW THE MESSAGE

Required stepsare usefulonly iftheydo not obscure the desired outcome.

Mark B., a managerin a large consulting company, was takingthe four P.M. flight from New York to Chicago. His plane had already left the gate and was lumbering over to its designated runway. Suddenly the captain's voice crackled over the intercom, announcing: "There is a weather ground stop at O'Hare. At this time, no planesare takingoffor landing. Somedelays maybe possible. We'll let you knowas soon as we hear anything."

As a passenger, this is a singularly depressing announcement. A groundstopisworse than a cancellation. Atleastwitha cancellation you know for certain that youwill have to make other arrangements. With a weather ground stop, who knows whatyou should do to take control of your situation. You might be delayed for five minutes or two hours. The weather godsare fickle.

So Mark pressed his call button and asked the flight attendant: "Please, do youthinkwe couldgobackto the gate and deplane?"

The flight attendant had obviously heard this plea before and was al ready shaking her head. "I'm sorry, sir, but we don't want to miss our place in fine. Besides, you never know when a ground stop will be lifted."

Marksmiledweakly and settled down to try to find something to do.

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With no computers allowed and one hundred passengers battling for the three phone fines, he opted for a vacant stare out the window. He was still staring three hours later. He had seensquadrons ofplanes take off, but apparently none of them were destined for Chicago. Thinking that time might have softened her stance, he beckoned to the flight at tendant and tried a morepersuasive approach:

"Look, it's been all afternoon. Why don't you take usbackto the gate? We'd allbe happier. You'd be happier—you wouldn't haveto dealwith a planeload of short-tempered passengers. The airport would be hap pier—we'd be spending money in their stores and restaurants. Please take us backto the gate."

The flight attendant, perhaps feeling sympathetic, knelt down and whispered conspiratorially: "Sir, I'm afraid that the quality of this airline is partly measured by on-time departures. And unfortunately, on-time departures are measured bywhen weleft the gate, not bywheels-up. So you see, sir, we really aren't encouraged to take passengers back to the gate in situations like this."

At this, Markbroke downand wept. Well, no, he didn't, but it's fair to say that he was lessthan pleased.

Thisis a classic example ofwhere the very steps designed with a par ticular outcome in mind—in this case customer satisfaction—actually hindered the achievement of that outcome. And in fact, when you in vestigate this specific situation still further, you discover that there are other,even more compelling reasons not to return to the gate: flight and cabin crews are paida higher wage, a command wage, whentheir plane leaves the gate.

Of course, manypilots will use their ownjudgment and decide that the present discomfort of the passengers is more important than the airline's future on-time departure rating or their own pay packet. But you can hardly blame the ones who choose to stay on the runway. Allthe signals are telling them to ignore the most important outcome—cus tomer satisfaction.

As you look around, you can see many examples of steps hindering the very outcomes they were designed to facilitate. During the wave of quality initiatives, many hotel reservation centers decided that cus tomers would want to have their call answered within three rings. Jobs were redefined, departments were reshuffled, and compensation sys tems were changed to ensure that the reservation agents would meet

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the three-ring goal. However, it gradually emerged that customers didn't reallycare about how quickly the phone wasanswered. They just wanted to have their questions, all of their questions, answered when they had the agent on the line. With agents hurrying to complete the call and move on to the next one, customers were feeling rushed. The steps were obscuring the outcome.

Perhaps the most obvious example, though, is scripting. Many man agers seem to feel that the onlyway to ensure that employees delivera consistent levelof service is to put words in their mouth.

How manytimes have you heard a variation on this? "Welcome to New York, where the local time is approximately 8:06

P.M. For your safety and for the safety of those around you, please re main in your seats until we reach the gate. Pleasebe careful when you open the overhead bins, as contents may have shifted during flight. If NewYork isyour final destination, welcome home. If not, we wish youa pleasant journeyon to wherever yourfinal destination may be. Weknow youhave a choice of airline, andwe hope that youwill think of us again wheneveryour plans call for air travel."

You might think that the Federal Aviation Administration requires that flight attendants read this script. It doesn't. The FAA requires only that passengers be toldaboutseatbelts, oxygen masks, safety exit opera tions, and the waterevacuation procedure if the flight is due to cross a large body of water. The rest of the script has been designed by man agers to ensure consistency of service. Someairlines insist that their em ployees read it wordforword. Others simply offerit, or someversion of it, as a guideline. Although the level of enforcement may vary, most flight attendants are encouraged to use this script to show concern and warmth for their customers.

This is quite a trick. Concern andwarmth, ifyou are going to attempt them, must be genuine emotions. And a script, even when designed with the best of intentions, makes it supremely difficult to convince a customerthat youare genuine, evenwhenyouare. The problemhere is not that managers provided their people with a script—all employees, particularly new hires, appreciate help in finding their feet. The prob lem here is that following the script, rather than showing genuine concern for the passengers, has become the definition of good perfor mance. The creed hasbeen allowed to overshadow the message.

Southwest Airlines, for the last six years winner of the Triple Crown

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Award—fewest complaints, best baggage handling, best on-time perfor mance—is one of the few airlines that has succeededin maintaining its focus on the message. EllenP. is their directorof in-flight training:

"Everything is focused on 'fun' here at Southwest. Obviously safety is important—all our flight attendants must follow FAA regulations. But the whole purpose of our company is to help the customers have fun. How he or she makes that happen is up to each flight attendant. We don't want them all sounding the same. In our training classes we will give you ideas and tools, but you've got to use them in the way that fits you. For example, we give everysingle flight attendant our Fun Book. In the Fun Book we have a section on jokes, a section on five-minute games, a sectionon twenty-minute games, a sectionon songs. There are some great ideas in this littie book for how you can entertain our cus tomers. But youdon't haveto use them if that'snot your style. It sounds simple, really, but whatwe do here in mydepartment is train youhowto be the best You possible for our customers. Because at Southwest, we don't want clones."

Southwest Airlines, with their unabashed focus on fun for the cus tomer, can then allow each flight attendant to find his or her own route to that outcome. Ellen says it better:

"At Southwest, I think everyone is expected to color outside the lines."

RULE OF THUMB #4: "THERE ARE NO STEPS

LEADING TO CUSTOMER SATISFACTION"

Required steps onlyprevent dissatisfaction. They cannot drive customer satisfaction.

In virtuallyevery kind of business, customer satisfaction is paramount. You, and everyother employee worth his salt, want to do everything in your power to build a growing number of loyal customers. You want to take prospects, who have never tried your product or service before, and turn them into advocates. Advocates are customerswho are aggres sively loyal. Theywill not only withstand temptations to defect, theywill actively singyour praises. These advocates are your largestunpaid sales force. These advocates, more than marketing, more than promotions, even more than price, are your fuel for sustainedgrowth.

So how do you create them?

Rules of Thumb 129

Over the last twentyyears Gallup has interviewed over a billion cus tomers, trying to identify what customers really want. As you would ex pect, we first discovered that customers' needs vary by industry. Customers demand a different kind of relationship from their doctor than theydo from their cable repairman. They expect a more intimate bondwith their accountant than they dowith their local grocery store.

Our second discovery was more surprising: Despite these differ ences, four customer expectations remain remarkably consistent across various types ofbusinesses andtypes ofpeople. These four expectations are hierarchical. This means that the lower-level expectations must be met before the customer is ready to pay attention to the levels higher up. These four expectations, in sequence, show companies what they mustdo to turn prospects into advocates.

Level 1: At the lowest level, customers expect accuracy. They expect the hotel to give them the room they reserved. They expect theirbank statements to reflect their balance accurately. When theyeat out, they expect the waiter to serve what they ordered. It doesn't matter how friendly the employees are, if the company consistently fails the accu racytest, then customers defect.

Level 2: The next level is availability. Customers expect their pre ferred hotel chain to offer locations inavariety ofdifferent cities. They expect their bank to be open when they can use it and to employ enough tellers to keep the line moving. They expect their favorite restaurant to be nearby, to have adequate parking, and to have waiters who notice that distinctive "I need help now" look. Any company that makes itselfmore accessible will obviously increase the number of cus tomers who are willing to give it a try. Hence the proliferation of drive- through windows, ATM machines, and, more recently, Web sites.

Acouple of points about these two lower-level expectations: On the one hand, they are, fortunately, quite easy to meet. Both lend them selves to technological or step-by-step solutions.

On the other hand, these solutions are, unfortunately, quite easy to steal. Any restaurant succeeding because of its location soon finds itself surrounded bycompetitors hoping to cash in on the prime real estate. Federal Express's innovative package-tracking system is quickly repli catedby UPS, Airborne, and the postoffice. And, of course, ATM ma chines are now a dime a dozen. Any effort to meet these lower-level

130 THE SECOND KEY: DEFINE THE RIGHT OUTCOMES

expectations, no matterhow unique, quickly shrivels from a competitive advantage to a commodity.

Finally, and most significant, both of these expectations, even if met successfully, can only prevent customer dissatisfaction. If the utility company manages to send an accurate bill, customers don't sit back and smile in admiration. The accuracy is demanded and expected. They react only if their bill seems to reflect the gas usage of the entire apart ment complex nextdoor. Similarly, if the cable company actually agrees to an appointment that is convenient, customers don't start calling all their friends withglee. Theysimply sigh with reliefat being spared one of fife's inevitable frustrations.

Accuracy and availability are undoubtedly very important expecta tions. Companies that consistently fail to meet them will wither. But ac curacy and availability are insufficient. On their journeyfrom prospect to advocate, your customers are onlyhalfway there.

The next two expectations complete the journey. Theydon't just pre vent negative feelings of dissatisfaction. Rather, when met consistentiy, these expectations create positive feelings of satisfaction. They trans form a fickle customerinto yourmostvocal advocate.

Level 3: At this level customers expect partnership. Theywantyou to listento them, to be responsive to them, to make them feel they are on the same side of the fence asyou.

Service businesses have long realized the importance of this partner ship expectation. That's why Wal-Mart positions hearty senior citizens at their front door to smile a welcome and remember names. That's why all airlines create loyalty clubs offering special treatment to frequent fliers. And that's presumably why video stores offer a "staff picks" sec tion: "We'relikeyou. Wewatch videos, too."

But recendy other businesses have zeroed in on the importance of looking at the world through the customers' eyes. For example, in the spirit of partnership, Levi's now offers you the chance to purchase made-to-order jeans. Furnished with your measurements, the retail store relays them to the manufacturing plant, which punches out a unique pair, for your sizeonly.

Snapple has also cottoned on to the powerof partnership. Tourge its target market, college students, to drink more Snapple, it promises prizes if you are lucky enough to buy a bottle with the special code

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under its cap. Rather than offering hard cash, Snapple decidedto posi tion the prizes to coincide with the priorities of theiryoung consumers. Thus the first prize is presented as "Let Snapple pay your rent for a year. 12 payments of $1,000." The second prize becomes "Let Snapple make your car payments for a year. 12 payments of $300." Even the smaller prizes, with onetime payments, are described by the way a young college student might spend them—thus a prize of $100 be comes "Let Snapple payyourphonebillfora month." Although fewcol lege students actually win, bypresenting the prizes in this way, Snapple manages to communicate the same message to every young customer: "We understand whatyouare going through."

Most businesses, whether in the service, manufacturing, or packaged goods sectors, now realize that a customer who feels understood is a stepcloser to realsatisfaction andgenuine advocacy.

Level 4: The most advanced level of customer expectation is advice. Customers feel the closest bondto organizations thathave helpedthem learn. Its no coincidence, for example, that colleges and schools are blessed with the strongest alumni associations. But this love of learning applies across all businesses. Thebig public accounting firms now place a special emphasis on teaching their clients something that will help them manage their finances more effectively. Home Depot, the home improvement retailer, proudly advertises their on-site experts who offer training on everything from plant care to grouting. And Amazon.com, the on-fine bookseller, continues to build a devoted following, at least in part, because they offer customers a recommended reading list based upon what other customers, who have purchased the same book, are also reading. Everywhere you look, companies are trying to transform their tellers/salespeople/clerks into "consultants." They have realized that learning always breeds loyalty.

Partnership and advice are the most advanced levels of customer ex pectation. If you canconsistently meetthese expectations, you will have successfully transformed prospects intoadvocates.

This is all well andgood, but it does beg one question: How can you meet these higher-level expectations? The answer rarely lies with tech nology or steps. For example, customers will feel a sense ofpartnership only when employees are responsive. Therefore, to meet this expecta tion you need employees on the front line who are wired to find the

132 THE SECOND KEY: DEFINE THE RIGHT OUTCOMES

right words and right tone for each specific customer. By its very defini tion, you cannot legislate this in advance. Asense ofpartnership devel ops in realtime. It isin the hands ofthe employees.

Thesame goes for advice. Amazon.com may have found a technolog ical solution, but they are the exception. Most teaching will occur be tween one employee and one customer. Realizing this, managers can certainly encourage theiremployees to help each customer learnsome thing new, but teaching/learning is a veiy sensitive interaction. It re quires a special kind of retail clerk or bank teller to find just the right time andjust the right way to educate each customer. Technology can provide support. Suggested action steps can serve as guidelines. But the teaching/learning will happen, or fail to happen, based upon what tran spires between each employee and each customer, moment bymoment.

Gallup s research confirms what great managers know instinctively. Forcing your employees to follow required steps only prevents cus tomer dissatisfaction. If your goal is truly to satisfy, to create advocates, thenthe step-by-step approach alone cannot getyou there. Instead you must select employees who have the talent to listen and to teach, and thenyou must focus them toward simple emotional outcomes like part nership and advice. This is not easy to do, but it does have one decid edly appealing feature. If you can do it successfully, it is very hard to steal.

All ofthese rules ofthumb help great managers decide how much ofthe role should be structured and how much should be left up to the em ployees discretion. But even though some aspects of the role will in deed require conformity tosteps orstandards, great managers still place the premium on the role s outcomes. They use these outcomes to in spire, to orient, and to evaluate their employees. The outcomes are the point.

What Do You Get Paid to Do?

"How do you know ifthe outcomes are right?"

Getting focused on outcomes isone thing. Figuring outwhich outcomes are right is something elseentirely. So how canyou define the rightout comes? Of all the things yourpeoplecould be doing, howcanyouknow which are the few things theyshould be doing?

Well, as youwouldexpect, we can't offeryou a step-by-step solution. First, it takes a certain talentto hear the siren song through the clamor. Second, even if you havethis talent, this talent to focus, to discriminate, then youwill undoubtedly have yourown way of deploying it. Whatwe can offeryou are some deceptively simple guidelines from some of the worlds great managers.

#1: WHAT IS RIGHT FOR YOUR CUSTOMERS?

This is the first question you should ask. Whatever you happento think, if the customer thinks that a particular outcome isn't valuable, it isn't. Since this is the basic tenet of capitalism, it is a rather straightforward guideline. Nonetheless, many companies, perhaps dazzled by their own habits and expertise, seemto have forgotten that the customer is the ul timate judge of value.

Notto pickon the airline industry, but theyare asgood an example as any. Most airlines ask their flight attendants to focus on safety first. Hence the captain s announcement "Please remember, the flight atten dants are here primarily for your safety. If there is anything else they cando to make yourflight more enjoyable, please don'thesitate to ask." Our flight attendants are professional safety experts, this announcement stresses, not glorified wait staff. Safety isparamount. Anything else, like friendly, attentive service, is an optional extra.

These airlines forget that customers don't usually choose one airline over another by comparing safety records. Whatever the airline, cus tomers fully expect that they will arrive at their destination unharmed. They demand safety, but they are not impressed by it. It is the wrong outcomefor airlines to emphasize.

134 THE SECOND KEY: DEFINE THE RIGHT OUTCOMES

Southwest Airlines again stands out as the exception. Their flight at tendants are experts in all the required safety procedures, but safety is not the point of their work. Fun is the point. Their passionate CEO, Herb Kelleher, instinctively empathized with air travelers. He realized that air travel is inevitably stressful. He knew that he would never be able to remove everyone's fear and frustration. All he could do was en courage every one of his employees to make the flying experience as muchfun aspossible. Hence the songs, the jokes, the games, the "color ing outside the lines." Kelleher's intuition means that every Southwest employee is focused on the rightoutcome.

Intuitions likethis can be powerful, but there are other, more practi cal ways to see the world through your customers' eyes. For example, Adrian P., the manager of two car dealerships, conducts focus groups with a selection of recent buyers every other month. The Walt Disney Company's Imagineers, the supremely creative individuals who design and build the theme parks, are constantly "on site," standing in the lines, mingling with guests, riding the rides.

Customer surveys are an even more sophisticated way to delve into the mind of your customers. If you have the time and the inclination, you candesign a survey that includes questions on allpossible aspects of the customers' experience. To identify the most important aspects, you must work out which questions show the strongest link to the cus tomers' ratings of overall satisfaction, likelihood to recommend, and likelihood to repurchase. Using this technique, Gallup has been able to help many companies zeroin on those few emotional outcomes that are trulyimportant to their customers.

Alarge insurance company wanted to holditsdoctors accountable for the quality of service they provided their patients. The insurance com pany was interested in doing this for all kinds of reasons, not least of which was the fact that unhappy patients tended to stay in the hospital longer, sue more readily, and die moreoften. For an insurance company these are rather important considerations. Thus you might have for given themif theyhad forced every doctor to run hisor her practice ac cording to a detailed procedures manual. But they resisted this tactic. Instead they asked Gallup to investigate which core emotional out comes patients trulyvalued. Wediscovered that onceyou feel secure in your doctor's basic competence, there are only four things you really want fromyour doctorwhen youvisit:

What Do You Get Paid to Do? 135

• You want to be kept waiting for no more than twenty minutes, (availability)

• You want to feel as though someone cared about you. It doesn't have to be the doctor. It might be the receptionist or the nurse. But someone has to care aboutyou. (partnership)

• You want the doctor to explain whatyourcondition is in words that youcan understand, (partnership)

• You want the doctor to give you something that you can do for yourself at home to alleviate yourcondition, (advice)

If you can say "Yes" to all of these questions, you are much more likely to recommend and return and much less likely to sue or die. Usingthese four emotionaloutcomes as their measureof service, the in surance company couldthen holdeachdoctoraccountable for quafity of service withouthaving to dictatehoweach doctor shouldrun his or her practice.

#2: WHAT IS RIGHT FOR YOUR COMPANY?

Make surethat the outcomes you define foryour people are in linewith your company's current strategy. Again, this sounds like motherhood and apple pie. Butwith the dizzying pace of change in today's business world, it is sometimes hard for managers to keeptrack.

The key distinction here is between "mission" and "strategy." A company's mission should remain constant, providing meaning and focus for generations of employees. A company's strategy is simply the most effective way to execute that mission. It should change according to the demands of the contemporary business climate.

For example, the Walt Disney Company's mission has always been to release peoples imagination by telling wonderful stories. In the past they relied on the twin strategies of movies and theme parks. Today, however, faced with increased competition, theyhave broadened their strategy to include cruise ships, Broadway shows, video games, and re tail stores. As Bran Ferren, executive vice president of research and development at Walt Disney Imagineering, describes it: "Vibrant com panies must put together five-year plans. But they must be willing to

136 THE SECOND KEY: DEFINE THE RIGHT OUTCOMES

change these five-year plans every single year. It's the onlyway to stay alive."

Although this constant reassessment of strategy is vital to the health of the company, it does place managers in a rather difficult position. They are the intermediaries, charged with explaining the new strategy to the employees and then translating it into clearly defined perfor mance outcomes.

Often this can be as simple as tellingyour salespeople that with the new company strategy focused on growing market share rather than profit, each salesperson will now be encouraged to focus on the out come "sales volume," rather than the outcome "profit margin per sale."

However, sometimes the changes in strategy are moreradical and the pressures on managers to refocus employees on different outcomes are more acute. For example, the most effective strategy for many high- tech companies used to be innovation. Hence the large R&D budgets, the hordes of disheveled but creative software designers, and the un predictable, slightly unfocused work environments. Recently, though, the strategy of these high-tech companies has shifted focus. For the major players who dominate the marketplace, critical mass—getting your product to be accepted as the standard—is now more important than innovation. Innovation can be bought from the smaller boutique houses. Thusthese larger companies need to change the way theyoper ate to ensure that virtually everyone's efforts are focused on spreading the new language/platform/product into the marketplace. This means that managers in thesecompanies will have to hustle to redefine the de sired outcomes and find new definitions of success. Number of users,

for example, may now be moreimportant than revenue per user. Of course, there are times whenthe change in strategy is so dramatic

that no matter howclearly youredefine the desiredoutcomes, yourcur rent cadre of employees will be unableto achieve them. Faced with this situation, you can't rewire people's brains, as high-tech companies found whentheytried to turn software designers into marketers, and as banks discovered whentheytried to retraintellers to become salespeo ple. All you candoistryto find roles within the newstrategy that play to their talents. If no such roles exist, then you have no choice: these em ployees have to moveon.

What Do You Get Paid to Do? 137

#3: WHAT IS RIGHT FOR THE INDIVIDUAL?

Dennis Rodman isarguably the bestrebounder ever to play the game of basketball. He is certainly the most bizarre player. With hair that changes color every week, a fondness for women's clothing, anda perse cution complex, he is an explosive, unpredictable man. How do you manage him so that he is motivated to use his talents and to limit his outbursts?

During the previous three seasons, the Chicago Bulls had lost Rodman to various infractions for at least twelve games per season, so for the 1997-98 season they opted for a different strategy. Keeping in mind Rodman's talents, and the challenges he presented, they drew up a contract built around some very specific outcomes. It was the most incentive-laden contract in the history of the NBA. Rodman was guar anteed $4.5 million. He would receive another $5 million if he stayed out of trouble for the duration of the season; another $500,000 for win ning the rebounding title for the seventh time; and another $100,000 for having a positive assist-to-turnover ratio.

The numbers here are stratospheric, but the conceptis applicable to every employee: Identify a person's strengths. Define outcomes that play to those strengths. Find a way to count, rate, or rank those out comes. And then let the person run.

It worked for Rodman and the Chicago Bulls. By the end of the sea sonRodman had missed only one game for disciplinary reasons. He had wonthe rebounding title for the seventh time. He had 230assists versus 147turnovers. And the Bulls had won the championship.

Of course, if you are managing a large group of peoplewho perform exactly the same role, it maybe more difficult to tailor the outcomes to each individual. But if your team is small and variously talented, then you must take each person's unique talents into account when defining the right outcomes. Bud Grant, stone-faced Hall of Fame coach of the MinnesotaVikings, described it this way:

"You can't draw up plays and then just plug your players in. No mat ter how well you have designed your playbook, it's useless if you don't know which plays yourplayers can run. When I drawup myplaybook, I always go from the players to the plays."

When defining the right outcomes for their people, great managers do the same. They go from the players to the plays.

H A P T

The Third Key: Focus on Strengths

• Let Them Become More of Who They Already Are

• Tales ofTransformation

• Casting Is Everything

• Manage by Exception

• Spend the Most Time with Your Best People

• How to Manage Around a Weakness

Let Them Become More of Who They Already Are

"How do great managers release each person's potential?"

So, you have selected for talent and you have defined the right out comes. You have your people, and they have their goals. What should you do now? What should you do to speed each person's progress to wardperformance?

Great managers would offer you this advice: Focus on each persons strengths and manage around his weaknesses. Don't try to fix theweak nesses. Don'ttry to perfect each person. Instead do everything you can to help each person cultivate his talents. Help each person become more of who he alreadyis.

This radical approach is fueled byone simple insight: Each person is different. Each person has aunique setoftalents, aunique pattern ofbe haviors, ofpassions, ofyearnings. Each person's pattern oftalents is en during, resistant tochange. Each person, therefore, has aunique destiny.

Sadly, this insight is lost on many managers. They are ill at ease with individual differences, preferring the blanket security of generaliza tions. When working with their people, they are guided bythe sweep of theiropinion—for example, "Most salespeople are ego driven" or"Most accountants are shy."

In contrast, great managers are impatient with the clumsiness of these generalizations. They know that generalizations obscure the truth: that all salespeople are different, that all accountants are different, that each individual, no matter what his chosen profession, is unique. Yes, the best salespeople share some of the same talents. But even among the elite, the Michael Jordans of salespeople, the differences will out weigh the similarities. Each salesperson will have herdistinct sources of motivation and a style of persuasion allher own.

This rampant individuality fascinates great managers. They aredrawn to the subtle but significant differences among people, even those en gaged in the same line ofwork. They know that a person's identity, his uniqueness, lies not just in what he does—his profession—but in how he does it—his style. Peter L., the founder ofa capital equipment rental

142 THE THIRD KEY: FOCUS ON STRENGTHS

company, describes two unit managers, one who is a terrific salesperson, networking the neighborhood, joining local business or community groups, literally wooing customers intothe fold. The other is an extraor dinary asset manager who squeezes life out ofevery piece ofmachinery byrunning the most efficient workshop in the company. Both of them excel at their roles.

Guy H., a school superintendent, manages two exemplary school principals. The first principal is what he calls a "reflective practitioner." Heconsumes libraries ofjournals, stays current with educational theory, and teaches others what he has learned. The second operates exclu sively out ofa sense ofmission and anatural instinct for teaching. There is no educational jargon inherschool, just boundless energy and a pas sion forlearning, however it happens.

One ofthe signs ofa great manager istheability to describe, in detail, the unique talents ofeach ofhis or her people—what drives each one, how each one thinks, how each builds relationships. In a sense, great managers are akin togreat novelists. Each ofthe"characters" they man age is vivid and distinct. Each has his own features and foibles. And their goal, with every employee, is to help each individual "character" playout his unique role to the fullest.

Their distrust of generalizations extends all the way to the broader categories of race and sex. Of course, cultural influences will shape some ofyour perspectives, giving you something in common with those who shared those influences. An affluent white female living in Greenwich, Connecticut, might have a more benign view of the world than, say, a young Hispanic male growing up in Compton, California. But these kinds of differences are too broad and too bland to be of much help. It would be more powerful to understand the striving tal ents ofthis particular white female or the relating talents ofthatpartic ular Hispanic male. Only then could you know how to help each of them turn his talents into performance. Only then could you help each one live out her individual specialness.

For great managers, then,the most interesting andthe most powerful differences are among people, notpeoples.

This isa grand perspective, with far-reaching implications, but it's just common sense. Here's what Mandy M., a manager of a twenty-five- person design department, has to say onthe subject:

"I want to find what is special andunique about each person. If I can

Let Them Become MoreofWhoTheyAlready Are 143

find what special thing they have to offer, and if I can help them see it, then theywill keep digging for more."

Gary S., a sales executive for a medical device company, describes it in even more pragmatic terms:

"I deliberately look for something to like about each ofmy people. In one, I might like his sense ofhumor. Inanother, I might like theway he talks about his kids. In another, I'll enjoy her patience, or the way she handles pressure. Ofcourse, there's abunch ofstuff about each ofthem that can get onmy nerves. If I'mnot deliberate about looking for what I like, the badstuffmight startcoming to mind first."

For Mandy, Gary, and other great managers, finding the strengths of each person andthenfocusing onthese strengths isa conscious act. It is the most efficient way to help people achieve their goals. It is the best way to encourage people to take responsibility for who they really are. And it is the only way to show respect for each person. Focusing on strengths is the storyline thatexplains all theirefforts as managers.

Tales ofTransformation

"Why is it so tempting to try tofix people?"

As you might expect, conventional wisdom tells a rather different story. First, it spins us this tale: You can beanything you want tobe ifyou hold on to your dreams and work hard. The person you feel yourself to be every day is not the real You. No, the real You is deep inside, hidden by your fears and discouragements. If you could free yourself of these fears, if you could truly believe in yourself, then the real You would be released. Your potential would burst out. The giant would awaken.

This is a tale oftransformation, and we love it. It is just so uplifting and so hopeful, who wouldn't root for the hero who confronts his demons and transforms himself into everything he always knew he could be? Well, surely we all would. That's why we root for Michael J. Fox in The Secret ofMy Success, Melanie Griffith in Working Girl, and John Travolta in Phenomenon. We love all these stories of transforma tion, not least because they imply that all ofus have the same potential and that all ofus can access this unlimited potential through discipline, persistence, andperhaps some good luck along the way.

Softened by conventional wisdom's first installment, we are easily persuaded bythe second: To access your unlimited potential, you must identify your weaknesses and then fix them. This remedial approach to self-perfection is drummed into you from your first performance ap praisal. You are told that to advance your career, you must "broaden your skill set." You must become more "well-rounded." During each subsequent appraisal there may beafew words ofcongratulation for an otheryear ofexcellent performance, but thenit's into the nitty-gritty of the conversation—how to improve your "areas of opportunity." Your manager brings up, yet again, those few areas where you struggle— where you have always struggled—and you and she then cobble to gether another "developmental plan" to tryto shore upyour weaknesses once andforall. By the time you reach the end ofyour career, you have spent so much time fixing yourself that you must be well-nigh perfect.

The best managers dislike this story. Like all sentimental stories, it is comforting and familiar, but strangely unsatisfying. Thehero, diligently

Tales of Transformation 145

shaving off his rough edges, seems sympathetic and noble, but some how not... real. The more you ask these managers about this story, the more vivid their criticisms become. Listen to them long enough and they will peel back its cheery surface completely toreveal therather sin ister messages hidden beneath. This iswhat they told us:

First, its promise that each ofus can "be anything we want tobeifwe just work hard" is actually quite a stark promise. Because ifwe can all "be anything we want tobe," then we all have the same potential. And if we all have the same potential, then we lose our individuality. We are not uniquely talented, expressing ourselves through unique goals, unique capabilities, and unique accomplishments. We are all the same. We have nodistinct identity, nodistinct destiny. We are all blank sheets ofcanvas, ready, waiting, andwilling, but featureless.

Second, there's the message that if you keep working away on your nontalents, your persistence will pay off inthe end. On the surface this is a solid, if cliched, morsel of advice: "If at first you don't succeed, try, try again." Yet the most effective managers reject it. Why? Because if the focus of your life is to turn your nontalents, such as empathy or strategic thinking orpersuasiveness, into talents, then itwill be a crush- ingly frustrating life.

Persistence isuseful ifyou are trying to learna newskill or to acquire particular knowledge. Persistence can even be appropriate if you are trying to cut a thin path through some ofyour mental wastelands, so that, for example, your nontalent for empathy doesn't permanently un dermine your talents in other areas. But persistence directed primarily toward your nontalents isself-destructive—no amount ofdetermination orgood intentions will ever enable you to carve out a brand-new set of four-lane mental highways. You will reprimand yourself, berate yourself, and put yourself through all manner of contortions in an attempt to achieve the impossible.

From the vantage point of great managers, conventional wisdom's story, nomatter how optimistic it may appear onthe surface, is actually about fruitless self-denialand wasted persistence.

Third, this story describes a doomed relationship. The conventional manager genuinely wants tobring outthebest in theemployee, but she chooses to do so by focusing on fixing the employee's weaknesses. The employee probably possesses many strengths, but the manager ends up characterizing him by those few areas where he struggles. This is the

146 THE THIRD KEY: FOCUS ON STRENGTHS

same dynamic that often proves the undoing of other failed relation ships.

Have you ever suffered through a bad relationship, the kind of rela tionship where the pressures ofeach day sapped your energy and made you a stranger to yourself? If you can stand to, think back to how you felt during that relationship and remember: Abad relationship is rarely one where your partner didn't know you very well. Most often, a bad re lationship is one where your partner came to know you very well indeed ... and wished you weren't that way. Perhaps your partner wanted to perfect you. Perhaps you were simply incompatible and your weak nesses grated on each other. Perhaps your partner was a person who simply enjoyed pointing out other people's failings. Whatever thecause, you ended up feeling as though you were being defined by those things you didnotdorather than those things you did. And thatfelt awful.

This is the same feeling that many managers unwittingly create in their employees. Even when working with their most productive em ployees, they still spend most oftheir time talking about each person's few areas of nontalent and how to eradicate them. No matter how well intended, relationships preoccupied with weakness never end well.

Finally, at the heart of this story lurks its bleakest theme: The victim isto blame. Less effective managers cast themselves in the mentor role. Blind to the distinction between skills and knowledge—both ofwhich can be acquired—and talents—which cannot—these managers relent lessly point out each employee's nontalents in the beliefthat he can fix them and become well-rounded. "You can become more persuasive, more strategic, or more empathic ifyou just work at it," or so theirstory goes. Their implicit message is that you, the employee, can control the outcome by "working at it." You can take classes, modify your reactions, censor yourself. The responsibility is yours. Therefore when you fail to achieve the impossible, to turnyour nontalents intotalents, the invisible finger ofblame is left pointing at you. You weren't persistent enough. You didn't apply yourself. Thefault isyours.

By telling you that you can transform nontalents into talents, these less effective managers are not only setting you up to fail, they are in trinsically blaming you for your inevitable failure. This isperverse.

For all of these reasons, great managers reject conventional wisdoms story. Their rejection does not mean that they think all persistence is wasted. It simply means that persistence focused primarily on nontal-

Tales of Transformation 147

ents iswasted. Nor does their rejection meanthat they ignorea persons weaknesses. Each employee has areas where she struggles, and these areas must be dealt with—we will describe in more detail how great managers deal with a person's weaknesses later in this chapter.

But it does mean thatgreat managers are aggressive in trying to iden tify each person's talents and help hertocultivate those talents.

This is how they do it: They believe that casting is everything. They manage by exception. And they spend the most time with their best people.

Casting Is Everything "How do great managers cultivate excellent performance

so consistently?"

As we have noted, everyone has talents—recurring patterns ofthought, feeling, and behavior that can be applied productively. Simply put, everyone can probably do at least one thing better than ten thousand other people. However, each person is not necessarily in a position to use her talents. Even though she might initially have been selected for hertalents, after a couple ofreshuffles and lateral moves, she may now be miscast.

Ifyou want to turntalent into performance, you have toposition each person so that you are paying hertodo what she isnaturally wired todo. You have to cast her in the right role.

In sports this is relatively straightforward. Given his physical strength and combative personality, it's obvious that Rodman should be paid to crash the boards, notrunthefloor. In theperforming arts, it isalmost as clear cut. The original casting of Butch Cassidy and the Sundance Kid had Paul Newman playing Sundance and Robert Redford as Butch. After a few rehearsals it became apparent thatthe roles didnotelicit the actors' strengths. The switch was made, and almost immediately both characters materialized. Newman reveled intheglib, self-confident per sona of Butch Cassidy, while Redford captured perfecdy the more brooding, almost deferential Sundance Kid. The strength of these per formances gave this classic film anappeal it might otherwise have lacked.

In theworking world casting becomes a little more challenging. First, what matters is what is inside the person, not physical prowess or ap pearance. Some managers find it hard to see beyond the physical to each person's true talents. Second, managers are often preoccupied with the person's skills or knowledge. Thus people with marketing de grees areinevitably cast into the marketing department andpeople with accounting backgrounds are siphoned offinto the finance department. There is nothing wrong with including a person's skills and knowledge on yourcasting checklist. Butifyou do not place a persons talent at the topofthat list, you will always runthe risk ofmediocre performance.

Casting Is Everything 149

Casting for talent is one of the unwritten secrets to the success of great managers. On occasion it can be as simple as knowing that your aggressive, ego-driven salesperson should take on the territory that re quires a fire tobelit beneath it. And, by contrast, your patient, relation ship-building salesperson should be offered the territory that requires careful nurturing. However, most ofthe time casting for talent demands a subtler eye.

Forexample, imagine you have justbeenpromoted to manage a team of people. You have no idea whether these people have talent or not. You didn't select them. But they have now been handed to you. Their performance is your responsibility. Some managers quickly split the team members into two groups: "losers" and "keepers." They keep the "keepers," clear thehouse of"losers," and recruit their "own people" to fill the gaps.

The best managers are more deliberate. They talk with each individ ual, asking about strengths, weaknesses, goals, and dreams. They work closely with each employee, taking note ofthe choices each makes, the way they all interact, who supports who, and why. They notice things. They take their time, because they know that thesurest way to identify each person's talents istowatch his orherbehavior over time.

And then, yes, they separate the team into those who should stay and those who should be encouraged to find other roles. But, significandy, they add a third category: "movers." These are individuals who have re vealed some valuable talents but who, for whatever reason, are not in a position to use them. They are miscast. By repositioning each in a re designed role, great managers are able to focus on each person's strengths andturn talentintoperformance.

Mandy M., the manager of the design team whom we met earlier, tells this story. Recently promoted to head up her company's design di vision, Mandy inherited anemployee called John. Hewas positioned in a strategic role where he was being paid to offer conceptual advice to the client. The environment was intense and individualistic, with associ ates competing with each other to devise the cleverest solution for the client. And John was struggling. Everyone knew that John was smart enough to do the job. But the performance just wasn't there. He was emotionally disengaged and, according to most company sources, onhis way out the door. If he didn't jump, he would soon be pushed.

But Mandy hadseen something in John. Acouple of months before

150 THE THIRD KEY: FOCUS ON STRENGTHS

being promoted, she had noticed that theonly time he really blossomed was when he was working for a supervisor who paid attention to him. They developed a relationship, these two, and John began toshine. But then the supervisor moved on to a new role, and John's light dimmed.

Guided bythatone glimpse, Mandy put John into the "movers" cate gory. She guessed that hewas aperson who needed connections theway some people need recognition. So she took his thirst for relationships and applied itwhere it could beofgreat value tothecompany: business development.

John became a sales machine. Hewas naturally wired to reach out to people, to learn their names, to remember special things about them. He built genuine relationships with hundreds of individuals scattered among his company's clients and prospects. Bonded by these relation ships, the clients stayed clients, and the prospects soon joined them. John was in his element, using his natural strengths to everyone's ad vantage.

When Mandy tells this stoiy you canhear a little catchin her throat. Like many fine managers, she is overjoyed at the thought of someone using his talents tothefullest. She knows that it isa rare thing tobe able to find a role that gives you a chance to express the specialness inside you, a role where what makes you You isalso what makes you good. It is rare, not because there aren't enough interesting roles—virtually every role performed at excellence has the potential to interest somebody— but because so few individuals ever come to know their true talent and

somany managers fail to notice the clues. Mandy knows that onanother day, in another company, she might have missed that briefglimpse of John's talent. He would have failed, and he would have had little to learn from his failure.

But she didn't miss it. She noticed the sign of a latent strength. And through careful recasting she was able to focus on that strength and so turn John's talents into performance.

Everyone has the talenttobe exceptional at something. The trick is to find that"something." Thetrick isin the casting.

Manage by Exception "Why do great managers break the Golden Rule?"

"Everyone is exceptional" has a second meaning: Everyone should be treated as an exception. Each employee has his own filter, his own way ofinterpreting the world around him, and therefore each employee will demand different thingsof you, his manager.

Some want you to leave themalone from almost the first moment they arehired. Others feel slighted ifyou don't check inwith themevery day. Some wantto be recognized byyou, "theboss." Others seetheir peersas the truest source of recognition. Some crave their praise on a public stage. Others shunthe glare ofpublicity, valuing only that quiet, private wordofthanks. Eachemployee breathes different psychological oxygen.

Kirk D., a sales manager for a pharmaceutical company, learned this quickly. He tells ofone particular salesperson, Mike, who was always in the top ten of the company's 150 salespeople, but who, Kirk felt, still had more to give.

"Initially I couldn't figure him out. I'm real competitive, and since he was a professional football player foreight years, a running back, I natu rally assumed he must be as competitive as me. I would try to rile him up by telling him how much some of the other salespeople had done that month. Butwhen I told him he just looked bored. No fire, no burn. Just bored. It turned out that, despite his background, Mike wasn't competitive at all. He was an achiever. He simply wanted to beat him self. He didn't care about anybody else. In his mind, they were irrele vant. So I started asking him what he was going to do this month to better himself. As soon as I asked him this he couldn't stop talking. Ideas poured out. And together we made them happen. He became the number one salesperson in the company for six straightyears."

Remember the Golden Rule? "Treat people as you would like to be treated." The best managers break the Golden Rule every day. They wouldsaydon't treat people as you would like to be treated. This pre supposes that everyone breathes the samepsychological oxygen as you. For example, if you are competitive, everyone must be similarly com petitive. If you like to be praised in public, everyone else must, too. Everyone must share your hatred of micromanagement.

152 THE THIRD KEY: FOCUS ON STRENGTHS

This thinking is well intended butoverly simplistic, reminiscent per haps of the four-year-old who proudly presents his mother with a red truck for her birthday because that is the present he wants. So the best managers reject the Golden Rule. Instead, they say, treateach person as hewould like to be treated, bearing in mind who he is. Of course, each employee must adhere to certain standards of behavior, certain rules. But within those rules, treat each one differently, each according to his needs.

Some managers will protest, "How can I possibly keep track of each employee's unique needs?" Andwhocan blame them? It's hard to treat each employee differently, particularly since outward appearance offers few clues toan individual's particular needs. It's a little like being told to play chess without knowing how all the pieces move.

But the best managers have the solution: Ask. Ask your employee about her goals: What areyou shooting forin your currentrole? Where do you see your career heading? What personal goals would you feel comfortable sharing with me? How often do you want to meet to talk aboutyourprogress?

Feel her out about her taste in praise: does she seem to like public recognitionor private?Written or verbal?Who is her best audience? It can be very effective to ask her to tell you about the most meaningful recognitionshe has ever received. Find out what made it so memorable. Also ask her about her relationship with you. Can she tell you how she learns? You might inquire whether she has ever had any mentors or partners who have helped her. How didtheyhelp?

With such a bulk of information to remember about each employee, managers often find that it helps to jot it all down. Some design orga nized fifing systems, where each employee has his own folder, flecked with ticklers that remind the manager when each employee's check-in cycle has come full circle. Others just scribble the details down on scruffy litde note cards and carry them around in their pocket—em ployee "cheatsheets," theycall them.

Obviously there is no right way to capture this information. Just cap ture it.Without it you are functionally blind, flailing aroundwithstereo types, generalizations, and misguided notions that "fairness" means "sameness." But armed with it you are focused. You can focus on each person's strengths and turn talents intoperformance. You can "manage by exception."

Spend the Most Time with Your Best People "Why do great managers play favorites?"

If you are a manager, you may want to trythis exercise. On the left-hand sideof a blank sheet of paper write down the names of the peoplewho report to you in descending order of productivity, the mostproductive at the top, the least productive at the bottom. On the right-hand side, write down the same names, but this time in descending order of "time you spend with them," the most time at the top, the least time at the bottom. Now drawstraight lines joining the names on the left with the appropriate names on the right.

Do your lines cross? They often do. Many managers find themselves spending the mosttime withtheir leastproductive people and the least time with their most productive people. On the surface this would ap pear to be an eminently safeway for a manager to invest his time. After all, your best employees can already do the job. They don't need you. But those few employees who are struggling? They need all the help you can give them. Withoutyour support they mightnot onlyfail as in dividuals, they might also drag down the entire team.

Investing in your strugglers appears shrewd, yet the most effective managers do the opposite. When they join the names, their lines are horizontal. They spend the most time with their most productive em ployees. They invest in their best. Why?

Because at heart they see their role very differently from the way most managers do. Most managers assumethat the point of their role is either to control or to instruct. And, yes, if you see "control" as the core of the manager role, then it would certainly be productive to spend more time with your strugglers becausethey stillneed to be controlled. Likewise if you think "instructing" is the essence of management, in vestingmost in your strugglers makes similarly goodsense because they still have so much to learn.

But great managers do not place a premium on either control or in struction. Both have their place, particularly with novice employees, but they are not the core: they are too elementary, too static.

For great managers, the core of their role is the catalyst role: turning

154 THE THIRD KEY: FOCUS ON STRENGTHS

talent into performance. So when they spend time with an employee, they are notfixing or correcting or instructing. Instead they are racking their brains, trying to figure out better and better ways to unleash that employee's distinct talents:

• They strive to carve out a unique set of expectations that will stretch and focus each particular individual; think back to detail and the uniqueness of Rodman's contract, and remember that every other Bulls player will demand a similarly detailed and simi larly uniqueset of expectations.

• They try to highlight and perfect each person's unique style. They draw his attention to it.They helphim understand why it works for him andhow to perfect it.That's what Mandy was doing with John; it's what shehas to doforall ofher direct reports.

• And theyplothow they, the manager, canrun interference foreach employee, so that each can exercise his or her talents even more freely. As Robert T, a branch manager fora large brokerage house, explains: "Mybrokers don't workfor me. I work for them. If I can't think up anynewideas to help mysuperstars, the least I can do is grease the administrative wheels sothat nothing gets in their way."

If this ishow you seeyour role, if this iswhat you are doing when you spendtimewithyour people—setting unique expectations, highlighting andperfecting individual styles, running interference—you cannot help but be drawn toward yourmosttalentedemployees. Talentis the multi plier. The more energy and attention you invest in it, the greater the yield. The timeyou spendwith yourbest is, quite simply, yourmostpro ductive time.

"NO NEWS" KILLS BEHAVIOR

Conversely, time away from your best is alarmingly destructive. Graduates from the machismo school of management, with its steely- eyed motto"No news is goodnews," would be surprisedbyjust howde structive it is.

At its simplest, a manager's job is to encourage people to do more of certain productive behaviors and less of other, unproductive behaviors.

Spend the Most TimewithYour BestPeople 155

Machismo managers have forgotten that their reactions can significantly affectwhich behaviors are multiplied and which gradually die out. They have forgotten that they are on stage every day and that, whether they like it or not, they are sending signals that every employee hears.

Great managers haven't forgotten. Theyremember that they are per manentlycenter stage. In particularthey remember that the less atten tion they pay to the productive behaviors of their superstars, the less of thosebehaviors theywill get. Since humanbeings are wired to need at tention of somekind, if they are not gettingattention, they will tend, ei ther subconsciously or consciously, to alter their behavior until they do.

Therefore, as a manager, if you pay the most attention to your strug glers and ignore yourstars, you can inadvertently alter the behaviors of yourstars. Guidedbyyourapparentindifference, yourstarsmaystart to do less of what made them stars in the first place and more of other kinds of behaviors that mightnet them some kind of reactionfrom you, good or bad. When you see your stars acting up, it is a sure sign that you havebeen paying attention to the wrong people and the wrongbe haviors.

So try to keep this in mind: You are always on stage. Your misplaced time and attention is not a neutral act. No news is never good news. No newskills the veiy behaviors youwant to multiply.

In practicalterms, then, great managers investin their best because it is extremely productive to do so and actively destructive to do other wise. However, during our interviews great managers were happy to ex plain the benefits in more conceptualterms. They told us that investing in their best was, first, thefairest thing to do; second, the best way to learn; and, third, theonly waytostayfocused on excellence.

INVESTING IN YOUR BEST IS ...

THE FAIREST THING TO DO

Although great managers are committed to the concept of "fairness," they define it rather differently from most people. In their mind "fair ness" does not mean treating everyone the same. They would say that the only way to treat someone fairly is to treat them as they deserve to be treated, bearing in mind what they have accomplished. Jimmy Johnson, the coach who led the Dallas Cowboys to two Super Bowl

156 THE THIRD KEY: FOCUS ON STRENGTHS

rings and who now manages the Miami Dolphins, captures their atti tude toward "fairness." He made this point in a speech to the Miami players immediately after taking the reins from Don Shula:

"I am going to be very consistent with every one of you because I'll treat every one of you differently. That's the way it is. The harder a guy works, the better he performs, and the more he meets my guidelines, the moreleeway he is going to have withme. Bythe sametoken, if a guy doesn'tworkveryhard or if he's not a goodplayer, he's not goingto be around for verylong."

That language might seem a little blunt for the corporate environ ment, but the concept rings true with great managers. Quite simply, they choose to invest more time with their best because their best are more deserving of it.

They know that human beings crave attention. Each individual mightvalue different kinds of attention, but, to a person, we all hate to be ignored. If love is not the opposite of hate, then surelyindifference is the opposite of both. If youspend the most time withyourworstper formers, then the message you are sending to your employees is that "the better yourperformance becomes, the less time and attentionyou will receive from me, your manager." From any angle, this is an odd message.

So spend the most time with your top performers. Pay attention to them. Be fair to the rightpeople.

One of the mostpowerful things youcan do after readingthis bookis to gobackand "rehire" yourbestpeople—that is,gobackand tell them whythey are so good. Tell them whytheyare one of the cornerstones of the team's success. Choose a style that fits you, and don't allow the con versation to slip into promises about promotion in the future—that's a different conversation, for a different time. Simply tell them why their contribution is so valued today. Don't assume your best know.

INVESTING IN YOUR BEST IS ...

THE BEST WAY TO LEARN

There's a great deal you can learn from spendingtime with your strug glers. You can learn why certain systems are hard to operate. You can learn whyinitiatives are poorly designed. You can learn whyclientsbe-

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come unhappy. And over time, you can become, as some managers are, highly articulate in describing the anatomy of failure and its various cures.

Ironically, none ofthis isgoing to helpyouunderstandwhatexcellence looks like. You cannot learn very much about excellence from studying failure. Of allthe infinite number ofways to performa certain task, most of them are wrong. There are onlya few rightways. Unfortunately you don't come anycloser to identifying those rightways by eliminating the wrongways. Excellence is not the opposite of failure. It is just different. It has its own configuration, which sometimes includes behaviors that looksurprisingly similar to the behaviors ofyourstrugglers.

For example, if youspent mostof yourtime investigating failure, you wouldnever discover that great housekeepers lie on the guests'bed and turn on the ceiling fan, or that greattableservers offerclearopinions, or that great salespeople feel call reluctance on almost every call they make, or that greatnurses form strong emotional attachments withtheir patients. Instead, having found some of the very same behaviors among the very worst housekeepers, the worst table servers, salespeople, and nurses, you might have actually devised regulations or policies to pre vent these behaviors from happening.

Gallup worked with oneofthe largest health careproviders in Europe to help them find more nurses similar to their best. As part of our re search we identified, using supervisor ratings, one hundred excellent nurses andone hundred average nurses. We then interviewed eachindi vidual, searching for those few talents that the excellent nurses shared.

Among the many talents common to greatnurses, we discovered one called "patient response." Great nurses need to care. They cannot not care. Their filter sifts through life and automatically highlights opportu nities to care. But if the caring itselfis a need, thejoy of caring comes when theysee the patientstart to respond. Each little increment of im provement is fuel for them. It is their psychological payoff. This love of seeingthe patient respond is the talent that preventsgreat nurses from feeling beaten down bythe sadness andsuffering inherent in their role. It is the talent that enables them to find strength and satisfaction in their work.

Whenwe told their managers this, theyreplied: "We're not organized that way, because we don'twantour nurses getting too close to their pa tients." Theysaidthat patients were moved aroundallof the time. That

158 THE THIRD KEY: FOCUS ON STRENGTHS

it was usual for a nurse to return after a weekend or a dayoff and find his patients gone, moved to a different ward, transferred to a different hospital, or simply discharged. "There's a greatdealofpressureto make beds available," they said. "And there's no way we can organize our selves to keep a nurse and a patient together for very long at all. Some of our nurses got upset when they found their patients gone. Consequently we now tell our nurses to keep their distance. We don't want them feeling anyloss whenthe patient is moved."

Despite theseworthy intentions, their arrangement caused suffering all around. The nurses suffered—the whole setup denied them one of their most potent sources of satisfaction. The patients suffered—many studies have shown that patients will recover faster if theyare caredfor by a nurse with whom they have established a relationship. And the managers suffered—they hadto cope with patients feeling isolated and nursesfeeling demoralized.

How should the hospitals have been organized? This is a difficult question. There's no getting past the fact that in order to keep health care costs down, every hospital feels pressure to "turn" patients quickly so that the beds can be made available. However, although Gallup couldn't offer them a quick-fix answer to their predicament, we could highlight the bestroute to that answer: Sit down with your best nurses andask them to describe how they would balance the needs ofpatients, nurses, and number crunchers. Whatever solution they came up with, they couldn't do worse than theassembly-line system thatdemeans pa tients andcuts great nurses offfrom theiroxygen supply.

Unfortunately this organization chose to ignore the voices of their best. They could not find the reasons, or perhaps the will, to altertheir flawed but superficially efficient system. They are now struggling more than ever with patient dissatisfaction, nurse morale, andrising costs.

Fortunately many other companies have started to realize the wis dom of studying excellence to learn about excellence. Organized busi ness tours of such "gold standard" companies as Southwest Airlines, GE, and Ritz-Carlton have year-long waiting lists, andthe Walt Disney Company even packages the secrets of "the Disney Way" as a seminar series.

Doubtless managers can learn something useful from investigating the practices of these companies, but even when focused on external best practices, they often miss the most important lesson: Go backand

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study yourown top performers. That's whatDisney, Southwest Airlines, GE, and Ritz-Carlton did. To generate the material for their tours and seminars, they interviewed, shadowed, filmed, and highlighted their best practitioners. They studied excellence as it was happening every daywithintheir world. Theylearned from their best.

Every manager should do the same. Spend time with your best. Watch them. Learn from them. Become as articulate about describing excellence as you are about describing failure. Studying external best practices has its merits. But studying internal best practices is the regi men that makes the difference.

Howcanyoudo it? The best way to investigate excellence is simply to spend a great dead of time withyourtop performers. You might start by asking them to explain their secret—although most of them are so close to their own success that it often proves difficult for them to describe exactly what they do that makes them so good.

Instead, manyof the great managers we interviewed said they spend a lot of time just observing their best. Sales managers discipline them selves to travel with one or two of their sales stars every month. School principals observea coupleof their best teachers' classes. Customer ser vice supervisors regularly listen in on their top customer service reps' calls. The point of this time and attention is not to evaluate or monitor. The point is, as one sales managerput it, "to run a tape recorder in my head, so that back in my office I can replay it, dissect it, understand what happened and why it worked." Like other great managers, you need to keep that tape recorder running.

INVESTING IN YOUR BEST IS ...

THE ONLY WAY TO REACH EXCELLENCE

The language of "average" is pervasive. Reservation centers calculate the "average" number of calls a customer service representative can handle in an hour. Restaurant chains project staffing needs by estimat ing how many servers are needed to staff the "average" restaurant. In sales organizations, territories are divided up based on how many prospects the "average" salesperson can handle. "Average" is every where.

The best managers wouldn't necessarily disagree with this kind of

160 THE THIRD KEY: FOCUS ON STRENGTHS

"average thinking." They would admit thatthe effective management of a company requires some way of approximating what is going on every day within the company. However, they disagree vehemently when this "average thinking" bleeds into the management of people. Unfortu natelyit happens all the time.

They might notbe aware ofit, but many managers are fixated on"av erage." In theirmind theyhave a clear ideaofwhat theywould consider to be an acceptable level ofperformance; what sales organizations often call a "quota." This quota, this performance "average," serves as the barometer against which each individual's performance is assessed. So, for example, a manager may give her employees a rating based upon how farabove or below "average" theirperformance lies. Shemay calcu late her employees' bonuses by figuring out the correct proportion of the "average" bonus each should receive. And, probably the most obvi ous symptom of"average thinking," shemay well spendmost ofher time trying to helpher strugglers inch theirperformance up above "average," while leaving her above average performers to their owndevices.

Thiskindof "average thinking" isvery tempting. It seems so safeand sopractical—by focusing onyour strugglers you are protecting yourself, and the company, from their inevitable mistakes. Nonetheless, great managers reject it.

Here are a couple of reasons why. First, they don't use average per formance as the barometer against which eachperson's performance is judged. Theyuse excellence. From their perspective, average is irrele vant to excellence.

Second, they know that the only people who are ever going to reach excellence are those employees who are already above average. These employees have already shown some natural ability to performthe role. These employees have talent. Counterintuitively, employees who are al ready performing above average have the greatest room for growth. Great managers also know that it is hard work helpinga talented person hone his talents. If a manager is preoccupied by the burden of trans forming strugglers into survivors by helping them squeak above "aver age," he will have little time left for the truly difficult work of guiding the good toward the great.

Jean P.'s story illustrates both the irrelevance of average and the growthpotential of talent.

For data entry roles, the national performance average is 380,000 keypunches per month,or 19,000 per day. Many companies use an aver-

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age performance measure like this to determine how many data entry employees they need to hire. Uponhiring these data entry folk, a good manager should probably be able to raise his employees' performance higherthan thisnational average. How much higher? Using thisaverage as your measure, what should a good manager's goal be—25 percent higher? 35 percent higher? 50 percent higher? Fifty percent higher would put you over 500,000 keypunches per month. In fact, the top- performing data entry employees make a mockery of the national aver age. They outperform it almosttenfold.

Jean P. is one such employee. When shewas first measured, she aver aged560,000 punchesper month, already 50percent above the national average. She was recognized for her performance, then she and her manager set out some individual goals that couldhelp her improve and trackher performance. Three months later she hit a million keypunches. Acoupleofweeks after that milestone, Jeancheckedher total at the end of the day and saw that she had managed 112,000 keypunches in one day. She approachedher manager and said, "You know what? If I aver age over 110,000 for the whole month, then I'll hit the 2 million mark." Theyput a plan together, and six months later she soaredpast 2 million.

Jean became a model for the role. Her managerspent time watching her, asking her whyshe loved her worksomuch—"I'm real competitive; I love counting"—and why she seemed to make fewer mistakes the more keys she punched—"I have more practice." He designed a talent profile to find more likeher and a compensation plan to reward her ex cellence. Today Jean's personal best is 3,526,000 keypunches in a month, and the average of all the data entry employees working around her is over a million.

The lessons from Jean's storyare applicable to almost any role. Don't use average to estimate the limits of excellence. You will drastically un derestimate what is possible. Focus on your best performers and keep pushing them toward the right-hand edge of the bell curve. It is coun terintuitive, but top performers, likeJean P., have the most potential for growth.

BREAKING THROUGH THE CEILING

"Average thinking" not only leads managers away from excellence and away from their top performers. There is one final, and perhaps most

162 THE THIRD KEY: FOCUS ON STRENGTHS

damaging, way in which it harms a manager's best efforts. "Average thinking" actively limits performance. Jeff H., a sales manager for a computer software company, describes this debilitating effect:

"I work for a company with one goal: 20 percent annual growth in revenue and profits. We have it drummed into us from dayone that 20 percentgrowth ishowwewill judgeoursuccess asa company. We've hit it for twelve years straight, and Wall Street loves us. I can see why the company needs to shoot for that numberevery year. I can see whyWall Street likes that predictability. But as an individual manager of people, it's hard.

"Put yourself in myshoes. We've been the numberone region for the last four years. Everyyear I get to the end of the third quarter and all mypeople havehit their 20 percent growth targets. They have a whole quarter to go, but they've already reached their target. You try motivat ing this group to give it all they've got for the final three months. To them, it makes much more senseto save all their sales for nextyear, so that, comeJanuary, they've gotthemselves offto a rolling start. You can't blame them for slowing down. The quota system encourages it. Every year I have to fight against the very system that was designed to help us allexcel. I have to hunt forother ways to keep everybody fired up."

How does he do it? Jeff happens to have an intense and conceptual style, so he resorts to writing thoughtful letters to allof his people, cajol ing them to lookinside themselves and deliver one last ounce of effort. Here's an example:

October 29

People: Withonlytwomonths remaining it is imperative that youstayfocused on yourgoals for thisyear. It hasbeen a long, well-run race sofar thisyear, and for many of you you could just coast the rest of the year and still makequota.That decision isyours; I can't makethat for you—and I will not pound or threaten for more. However, ifwe wantandyouwantto be the best youare capableof being and youwant to develop yourabilities to their maximum, that goal is a never-ending one. You must understand that success is achieved through a never-ending pursuit of improvement—personally, professionally, financially, and spiritually. Likeit or not, that iswhat is involved, and that is the commitmentyoumade to yourselfwhen you accepted the challenge to be the best.

Spend the MostTimewith Your Best People 163

Remember, stayfocused. Neverloseyourcommitmentto your own standard of excellence. Push a litde everyday, and a lot over time. Sincerely, Jeff PS. You are the best the company has and the best I haveever had the privilege of managing.

Jeff is fortunate. With his sincere personal appeals and his mantra that each person should "push a little every day, and a lot over time," Jeff has managed to break through the restraints of the quota system. He has found a way to keep everyone focused on excellence. Despite the limits imposed by quotas, Jeff has now led his region to the company's top spot four years in a row.

Other great managers, with their unique talents and styles, willhave devised their own routes to excellence. But despite their success, it is still a shame that they have had to waste so much creativity maneuver ing around performance evaluation schemes that unwittingly place a ceiling on performance. It is stilla shamethat they have had to exert so much energyrailing against "average thinking." Thisenergyand creativ ity would be much more valuable in the unfettered pursuit of excel lence.

However, if you face the same "average thinking," you should rail against it just as energetically. Define excellence vividly, quantitatively. Paint a picture for your most talented employees of what excellence looks like. Keep everyone pushing and pushing toward that right-hand edge of the bell curve. It's fairer. It's more productive. And, most of all, it's much more fun.

How to Manage Around a Weakness "How do great managers turn a harmful weakness into

an irrelevant nontalent?"

Of course, none of this means that great managers ignore nonperfor mance. They don't. Focus on strengths is not another name for the powerof positive thinking. Badthings happen. Somepeople fail. Some people struggle. And even your star performers have their faults. Poor performance mustbe confronted head-on, if it is not to degenerate into a dangerously unproductive situation. And it must be confronted quickly—as withalldegenerative diseases, procrastination in the face of poor performance is a fool's remedy.

The most straightforward causes of an employee's poor performance are the "mechanical" causes—perhaps the company is not providing him with the tools or the information he needs; and the "personal" causes—perhaps she is still grieving from a recent death in the family. As a manager, if youare confronted withpoor performance, lookfirst to these two causes. Both are relatively easyto identify. Both also happen to be rather difficult to solve—the former will almost certainly require some careful job redesign and better cooperation between individuals or departments; the latter will demandunderstanding and patience. But at least youwill knowwhat is causing the performanceproblems.

However, many performance problems have subder causes. Causes like this are more difficult to identify, but fortunately, with the right mind-set, their solutions are allwithin a managers control.

The great manager begins by asking twoquestions. First, is the poor performance trainable? If the employee is strug

gling because he doesn't havethe necessary skills or knowledge, then it almost certainly is trainable. Jan B., a manager in an advertising agency, gives us a simple example:

"One associate was supposed to turn allof myhandwrittennotes into killer presentations. But it wasn't happening. Her turnaround was slow, and the finished productwasn'tthat great. I sat her downand subjected her to one of my heart-to-hearts, during which she confessed that she had never learned PowerPoint properly. She was a brilliant art student,

Howto Manage Around a Weakness 165

but no one had taught her the detailed mechanics of putting that bril liance onto a computer. Well, that's easy. I just set her up with some in tensive PowerPoint trainingand nowshe's a star."

Laurie T, a manager in a petrochemical company, describes a slighdy more subtle approachto imparting knowledge:

"Jim was a young man, very talented, who always used to come in late. We talked about it, and he saidthat he was just terrible at organiz ing himself to arrive on time. Every morning something would happen to throw him off. He said I shouldn't worry because he always stayed late and completedhis assignments. I toldhim that I was worried. I was worried about how others were perceiving him. I asked him what he imagined other people's perceptions of him were. He confessed that theyprobably associated his lateness with laziness, a lack of responsibil ity, a poor team player. 'But that's not me,' he said. 7 know that's not you,' I replied. 'But they don't. I'm not saying that you must come in on time from now on. I am saying that you must manage your teammates' perceptions better. Otherwise theywon't trust you, you'll drag the team down, and I'll have to askyou to leave.'

"Jim nowcomes in on time 95percent of the time. I didn't changehis behavior. What changed his behavior was his knowledge of how nega tively others were perceiving him and his awareness that he didn't like that."

These examples are probablyfamiliar to you. You mayhave faced the salesperson who didn't know the product wellenough. Or the secretary who didn't know how to process expenses. Or the recendy hired busi nessschool graduatewho hadn't yet learned howto prepare a report for the real business world. All of these cases of nonperformance can be traced to the employee's lackof certainskills or knowledge. Whether its as simple as teaching someone a computer program, or as delicate as helping someone gain a perspective on himself, all of these skills and knowledge can and should be trained.

The second question great managers ask is this: Is the nonperfor mancecausedby the manager himselftripping the wrongtrigger?Each employee is motivated differently. If the manager forgets this, if he is trying to motivate a noncompetitive person with contests, or a shy per son with public praise, then the solution to the nonperformance might well lie in his hands. If he can find the right trigger and trip it, perhaps the employee s true talent will burst out.

166 THE THIRD KEY: FOCUS ON STRENGTHS

John R, a general insurance agent, needed a very public misstep to help him understand this. His most productive agent was an individual called Mark D. A repeatwinner of the Agent of the Year award, Mark let it be known that he hated the banal plaques that accompanied the award. If he was going to be recognized, he said, he would prefersome thing otherthananother meaningless plaque to shove in a drawer along withthe others. Johnlistened patiently, but believed he knewbetter. All salespeople love plaques, he thought.

At the awards banquet, John announced Mark as the winner yet again, ushered him up onto the stage, and proudly presented himwith his plaque. Mark took one look at it, turned to the audience, made an obscene gesture, andstalked offthe stage, vowing to leave the company. The banquet wasa disaster.

John F. spoke to some of Mark's colleagues to see if he could learn anything that would help recover the situation. Apparently on car jour neys, in the hallways, and over lunches, or whenever the conversation inched toward fife outside the office, Mark would bring up his two daughters. He and his wife thought they could never have children, so these two litde girls were a particularly precious gift. Mark would de scribe their exploits and their triumphs and the funny Httie things they would say to him. He was soproudof them. Theywere his life.

As quick as he could, John called up Mark's wife and explained the situation. Mark's wife had an idea. Shebrought the two girls into a pho tographic studio. Abeautiful portraitwas takenof them and mounted in a frame. Mark's plaquewas embossed on the frame.

Two weeks later John held a luncheon. In front of all his agents and the guests of honor, Mark's wife and daughters, John unveiled the por trait and presentedit to Mark. The same primadonnawho had flipped off the crowd nowstarted to cry. Mark's trigger was his two daughters.

This would not have worked if Mark had felt that John didn't gen uinely care about him. But fortunately, over the years, trust had devel oped between the two of them. The only aspect that had been missing from their relationship was a full understanding, on John's part, ofwhat was truly important to Mark. Guided by the clues from Mark's col leagues, John filled that gap. From now on he would respect, and play to, Mark's unique motivational trigger.

All managers can learn from John's example. If an employee's perfor mance goes awry, perhaps you have misread what motivates him.

Howto Manage Around a Weakness 167

Perhaps if you tripped a different trigger, the employee's true talents would reengage. Perhaps you are to blame for his poor performance. Before youdo anything else, consider this possibility.

However, ifyou cangenuinely answer "No" to both ofthese initial ques tions—"No," it'snot a skills/knowledge issue, and "No," it'snot a trigger issue—then by default the nonperformance is probably a talent issue. The person is struggling because she doesn't have the specific talents needed to perform. In this case, training is not an option. Given the en during nature of talent, it is highly unlikely that the person will everbe able to acquire the necessary talent. She is who she is, and left to her own devices, shewill always be hamstrung bythosefew areas where she lacks talent.

Thissituationseemsbleak. Butit's actually rather commonplace. After all, noone's perfect. Noone possesses allofthe talentsneeded to excel in a particular role. Eachofusisa couple oftalentcards shortofa full deck.

THE DIFFERENCE BETWEEN A NONTALENT

AND A WEAKNESS

As youmightexpect, great managers takea welcomingly pragmatic view of our innate imperfection. Theybeginwith an important distinction, a distinction between weaknesses and nontalents. A nontalent is a mental

wasteland. It is a behaviorthat always seemsto be a struggle. It is a thrill that is never felt. It is an insight recurrentlymissed. In isolation, nontal ents are harmless. You mighthave a nontalent for rememberingnames, being empathetic, or thinking strategically. Who cares? You have many more nontalents than you do talents, but most of them are irrelevant. You should ignore them.

However, a nontalent can mutate into a weakness. A nontalent be comes a weakness when you find yourselfin a role where success de pends on your excelling in an area that is a nontalent. If you are a server in a restaurant, your nontalent for remembering names becomes a weakness because regulars want you to recognize them. If you are a salesperson, your nontalent for empathy becomes a weakness because your prospects need to feel understood. If you are an executive, your

168 THE THIRD KEY: FOCUS ON STRENGTHS

nontalent forstrategic thinking becomes a weakness because your com pany needs to know what traps or opportunities He hidden over the horizon. You would be wise not to ignore yourweaknesses.

Great managers don't. As soon astheyreaHze that a weakness is caus ing the poor performance, they switch their approach. They know that there are only three possible routes to helping the person succeed. Devise a support system. Find a complementary partner. Orfind an al ternative role. Great managers quickly bear down, weigh these options, and choose the best route.

DEVISE A SUPPORT SYSTEM

Approximately 147 milHon Americans are incapable of seeing with twenty-twenty vision. Seven hundred years agoanyone cursed with far sightedness, shortsightedness, or astigmatism would have beenseriously handicapped. Butas the science ofoptics developed, it became possible to grind lensesthat couldcorrect for these conditions. These lenseswere then mounted in frames to make spectacles or glasses. Andwiththisone invention, the weakness ofimperfect vision was reducedto an irrelevant nontalent. MilHons of Americans still suffer from imperfect vision, but armed withthe support system ofglasses orcontact lenses, nobody cares.

The speediest cure for a debifitating weakness is a support system. If one employee finds it difficult to remembernames, buyhim a Rolodex. If another is an appalHng speller, make sureshe always runs spell check before she prints. Mandy M., the manager of the design department, describes one effective consultant who undermined her own credibiHty byalways wearing trendycoveralls. Mandy tookher shopping and made sure she had at leastone presentable business suit that couldbe worn in front of cHents. Jeff B., the sales manager for the computer software company, saw one of his salespeople's performance slipping because of pressures at home—the salesperson's wife was upset that he was receiv ing so manybusiness calls on their personalline. Jeff bought him a sec ond line and told him to designate one roomin his house as an office, to define set hours when the office door would be shut, and to turn off the ringer during those hours.

Marie S., a general insurance agent, had to contend with a superbly productive agentwhonot only wielded a huge ego, but also spread neg ativity around him every time he was back in the office. Her solution?

Howto Manage Around a Weakness 169

Cut a newdoor in his office wall that openeddirectly onto the elevator hallway and thenmount a plaque over the door announcing the agent's name in classic gold lettering. With one stroke she not only fulfilled his ego needs, she also diverted him directly into his office and away from his negative wanderings.

This solution may seem a Httie extreme, but whether theyare cutting holes in walls or simply buying Rolodexes, these managers are all doing the same thing: theyare managing around the employee's weakness so that theycanspend time focusing on his strengths. As with all focus on strength strategies, devising a support system is more productive and more fun than trying to fix the weakness.

OccasionaUy a support system can serve a different purpose. A large restaurant chainhad made a commitment to hiringa certain number of mentally retarded employees, beHeving that theycould find these indi viduals some simple yet meaningful work. Their altruism occasionally proved rather difficult to execute in the real world. The president de scribes one individual, Janice, who was employed to unpack chicken, place each piece carefully in the fryer, and then Hft them all out once the timer had sounded. Janice was fully capable of understanding the responsibilities of the role and performed its mechanics perfectly. But she couldn't count. And unfortunately the fryer could hold only six pieces of chicken. More often than not Janice would overfill the fryer, leaving eachpieceof chicken dangerously undercooked.

The company could have easily given up onJanice because of her in ability tocount. Buttheychose notto. Instead theydevised asimple sup port system to manage around her weakness: they asked their chicken suppHer to sendthe chicken inpackages ofsix. This way Janice wouldn't have to count. She couldjust emptyeachpacketinto the fryer, and the chicken would be cooked to perfection every time. The supplier refused the request. "It will be toomuch work onourend," theycomplained.

Sothe company firedthe supplierand engaged another that was wiU- ingto shipchicken in packets of six. Now nobody cares that Janice can't count. Her weakness is irrelevant; it is now a nontalent.

FIND A COMPLEMENTARY PARTNER

Each year, buoyedby the hope that leaders are made, not born, tens of thousands of budding executives traipse off to leadership development

170 THE THIRD KEY: FOCUS ON STRENGTHS

courses. Here they discover the many different traits and competencies that constitute the model leader. They receive feedback from their peers and direct reports, feedback that reveals thepeaks and valleys of their unique leadership profile. Finally, after all thelearning and reflec tion iscomplete, thehard work begins. Each wilHng participant isasked to craft a plan to fill in those valleys, so that he can reshape himself into the model leader, smooth and well-rounded.

That last step, according to great managers, is an unfortunate mis take. Theyagree that leaders should know all the roles that need to be played. They agree that leaders should look in the mirror and learn how they come across to peers and direct reports. But that last step, crafting a plan to become more weU-rounded, is in their view woefully naive. If the individual comes to the training class a poor pubHc speaker, he will leave a poorpubHc speaker. If he is nonconfrontational, hewill always be tempted to shy away from battle. If he is impractical, hewill forever struggle with bringing his ideas down toland. Atraining class might help him learn why certain talents are important and how they work. But no matter how earnest he is, a training class will not help him acquire them.

This isn't a depressing revelation. The most renowned leaders in the history ofcorporate America have always known it. As they struggled to carve out their success, the last thing on their mind was to become well- rounded. They may have been aware of their own shortcomings, but none of them worked at turning these shortcomings into strengths. They knew what a hopeless waste of time that would be. So they did something else instead: theylooked fora partner.

Walt Disney didn't have to look far to find his brother, Roy. Through the good graces of their Stanford professor, William Hewlett found David Packard. Bill Gates and Paul Allen were fortunate enough to bump intoeach otherin theirhigh school computer club. None ofthese extraordinarily successful leaders were well-rounded. They may have had a broad knowledge of their respective businesses, but in terms of talent, each one was sharp in one or two key areas and blunt in many others. Each partnership was effective precisely because where one partner was blunt, the other was sharp. The partnerships were well- rounded, not the individuals.

Evenleaders who appeared to standalone usually balanced their act with a complementary partner. At Disney the massively intelHgent, insa-

Howto Manage Around a Weakness 171

tiably competitive Michael Eisner benefited from the more practical, down-to-earth Frank Wells. And at Electronic Data Systems, behind the impetuous, inspirational Ross Perotyou would have found the wise, guiding hand of the president, Mitch Hart.

The lesson from these leaders is quite clear. You succeed by finding ways to capitalize onwho you are, not bytrying to fix who you aren't. If you areblunt in oneor two important areas, tryto find a partner whose peaks match your valleys. Balanced bythis partner, you are then free to hone your talents to a sharperpoint.

This lesson is applicable across virtually all roles and professions. Since few people are a perfect fit for their role, the great manager will always be looking for ways to match upone person's valleys with another person's peaks.

Jan B. had a highly creative researcher, Diane, who seemed to be congenitally incapable of turning in her expense reports on time. Instead ofwasting time berating her for her constant failure, Jansimply told her: "Every time youget backfrom a trip, drop yourexpenses into an envelope and hand them to Larry. He'll figure them out." Larryisn't an assistant; he's a researcher like Diane. But he's the most organized person on the small team, so he gets to handle his peer's expenses. It may be unconventional. It certainly requires trust and respect between Larry and Diane. But in Jan's mind, it is the only way to capitalize on Larry's talentandsimultaneously release Diane from her weakness.

Jeff B., the software sales manager, is not only a sincere, passionate, and conceptual man,he is also, it turns out, a rotten planner. "I'venever been good at tactics," he confesses. "I am excellent at ground zero, building trust face-to-face. And I am excellent at twenty thousand feet, finding patterns, playing out scenarios. But I'm terrible in between. That's where Tony's sogood. When we look at a situation he asks differ ent questions than me. I'll ask, "What if?' or, 'Why not?' He'll ask, 'How many?' or, 'When?' or, Trove it.' If I went to the board with my half- bakedideas, I'd get shot down every time. Butwiththe twoof us work ing on the same idea, our case ends up looking so convincing, they haven't been able to turn us down once. As I say to Tony, individually we're not much, but together we have a brain."

When you interview great managers, you are bombarded with exam ples like these. After a while the partnerships they describe begin to seem almost archetypal. Of course the creative but impractical thinker

172 THE THIRD KEY: FOCUS ON STRENGTHS

wound up partnered with the streetwise, business-sawy operator. Of course the administratively impaired salesperson teamed up with the "no detail too small" office manager. And of course the cocky, needy highflier found a mentor in the tough-loving veteran. It was inevitable. These things justhappen.

But they don't. The partnerships great managers describe arenotar chetypes. There is nothing inevitable about them at all. Each partner ship is, in fact, ananomaly, a surprisingly rare example ofone manager bucking thesystem and figuring out how to make the most ofuniquely imperfect people. Great managers talk about these partnerships so non chalantly, it is easy to forget just how difficult they are to forge in the real world.

HOW COMPANIES PREVENT PARTNERSHIPS

A healthy partnership is based on one crucial understanding: Neither partner is perfect. If potential partners are afraid to admit their imper fections, or are trying diligendy to correct them, or are reluctant to ask for help, neither will be on the lookout for a productive partnership. They will be nervous ofconfessing to too many faults and suspicious of anyonewho offers.

Strangely, most companies actively encourage this kind of behavior. Job descriptions, for even thesimplest roles, run to two or three pages, presumably in hopes ofcapturing every minute task thatthe perfect in cumbent should be able to perform. Training classes and development plans target those few behaviors where you consistently struggle. Everyone talks ofthe needto "broaden your skill set."

Perhaps the most pervasive example of "partnership prevention," however, can be found in the conventional wisdom on teams and team

work. Conventional wisdom's most frequently quoted line on teams is "There is no T in team." The point here seems to be that teams are built on collaboration and mutual support. The whole is, apparendy, more important than its individual parts.

On the surface this appears to be eminently right-minded. Taking these sentiments as their starting point, many companies have dedi catedthemselves to creating self-managed teams. Here team members are encouraged to rotate into different roles on the team. The more

How to Manage Around a Weakness 173

roles they learn, the more they are paid. And everyone is supposed to focus on the team's goals andperformance, nothis own.

However, conventional wisdom's view of teamwork is dangerously misleading. Great managers do not believe that a productive team has camaraderie as its cornerstone and team members whocan playall roles equally well. On the contrary, they define a productive team as one where each person knows which role he plays best and where he is cast in that role most of the time.

The founding principle here is that excellent teams are built around individual excellence. Therefore the manager's first responsibility is to make sure each person is positioned in the right role. Her second re sponsibility is to balance the strengths and weaknesses ofeach individ ual so that they complement one another. Then, and only then, should she turn her attention to broader issues like "camaraderie" or "team

spirit." One team member might occasionally have tostep out ofhis role to support another, but this land ofpinch-hitting should be a rarity on great teams, not their very essence.

Jim K., a full bird colonel inthearmy—an organization that might be forgiven for emphasizing flexibility and camaraderie over individual ex cellence—gives this description ofteam building:

"When I first assemble the platoon I ask each person to tell mewhat activities he is mostly drawn to. One will say sharpshooting. Onewill say radio. One will say explosives. And so on. I'll go around the whole group, taking notes. Then, when I build each squad, I try toassign each person to the role he said he was drawn to. Obviously you won't get a perfect match. And obviously every soldier will be required to learn every role ontheplatoon—we might lose a man inbattle, and every sol diermust be able to step in. But you've got tostart byassigning the right duties to the right soldier. If you get that wrong, your platoon will falter in combat."

Whereas conventional wisdom views individual specialization as the antithesis of teamwork, great managers see it as the founding principle.

If individual positioning is so important, then at the heart of a great teamthere mustbe an I. There mustbe lots ofstrong, distinct Is. There mustbe individuals who know themselves well enough to pickthe right roles and to feel comfortable in them most of the time. If one individual

joins the team with little understanding ofhis own strengths andweak nesses, then he will drag the entire team down with his poor perfor-

174 THE THIRD KEY: FOCUS ON STRENGTHS

mance andhis vague yearnings to switch roles. Self-aware individuals- strong Is—are the building blocks ofgreat teams.

FIND AN ALTERNATIVE ROLE

There are some people for whom nothing works. You trip every trigger imaginable. You train. You find partners. You buy Rolodexes, teach spell check, and cut through office walls. But nothing works.

Facedwith this situation, you have little choice. You have to find this employeean alternativerole. You haveto movehim out. Sometimesthe only way to cure a bad relationship is to get out of it. Similarly, some times the only way tocure poor performance is toget the performer out of that role.

How do you know if you are at that point? You will never know for sure. But the best managers offer this advice:

You will have to manage around the weaknesses of each and every employee. But if, with one particular employee, you find yourself spending most of your time managing around weaknesses, then know thatyou have made acasting error. At this point it istime to fix the cast ingerrorandto stop trying to fix the person.

CHAPTER

The Fourth Key: Find the Right Fit

• The Blind, Breathless Climb

• One Rung Doesn't Necessarily Lead to Another

• Create Heroes in Every Role

• Three Stories and a New Career

• The ArtofTough Love

The Blind, Breathless Climb "What's wrong with the old career path?"

Sooner or later every manager is asked the question "Where do I go from here?" The employee wants to grow. He wants to earn more money, to gain more prestige. He is bored, underutilized, deserves more responsibility. Whatever his reasons, the employee wants to move up andwants youto help.

What should you tell him? Should you help him get promoted? Should you tell him totalk to Human Resources? Should you say thatall you can do is putina good word for him? What is the right answer?

There is no right answer—any one of these answers might be the right one, depending onthe situation. However, there is a right way to approach this question—namely, help each person find the right fit. Help each person find roles that ask him to do more and more ofwhat he is naturally wired to do. Help each person find roles where her unique combination of strengths—her skills, knowledge and talents— match the distinct demands of the role.

For one employee, this might mean promotion to a supervisor role. For another employee, this might mean termination. For another, it might mean encouraging him to grow within his current role. For yet another, it might mean moving her back into her previous role. These are very different answers, some ofwhich might be decidedly unpopu larwith the employee. Nonetheless, nomatter how bitterthe pill, great managers stick to their goal: Regardless of what the employee wants, the managers responsibility is tosteer theemployee toward roles where the employee has the greatest chance ofsuccess.

On paper this sounds straightforward; but as you can imagine, it proves to be a great deal more challenging in the real world. This ispri marily because, in the real world, conventional wisdom persuades most ofus thatthe right answer to the question "Where do I go from here?" is "Up."

Careers, conventional wisdom advises, should follow a prescribed path: You beginin a lowly individual contributor role. You gain some ex pertise and so are promoted to a slightly more stretching, slightly less

178 THE FOURTH KEY: FIND THE RIGHT FIT

menial individual contributor role. Next you are promoted to supervise other individual contributors. Then, blessed with good performance, good fortune, and good contacts, you climb up and up, until you can barelyremember what the individual contributors do at all.

In 1969, in his book, The Peter Principle, Laurence Peter warned us that ifwe followed this path without question, we would wind up pro moting each person to his level of incompetence. It was true then. It is true now. Unfortunately, in the intervening years we haven't succeeded in changing very much. We still think that the most creative way to re ward excellence in a role is to promote the person outofit. We still tie pay, perks, and titles to a rung on the ladder: the higher the rung, the greater the pay, thebetter the perks, the grander the title. Every signal we send tells the employee to look onward and upward. "Don't stay in yourcurrent role for too long," we advise. "It looks bad on the resume. Keep pressing, pushing, stretching to take that next step. It's the only way to getahead. Its the only way togetrespect."

These signals, although well intended, place every employee inan ex tremely precarious position. To earn respect, he knows he must climb. And as hetakes each step, hesees that the company is burning the rungs behind him. He cannot retrace his steps, not without being tarred with the failure brush. So he continues his blind, breathless climb to the top, and sooner or later he overreaches. Sooner or later he steps into the wrong role. And there he is trapped. Unwilling to go back, unable to climb up, heclings tohis rung until, finally, the company pushes him off.

A RUNG TOO FAR

Marc C. was pushed. He was pushed off, down, and out. Standing on Pennsylvania Avenue, Marc gazed up at the White House and tried to piecetogetherwhathad happened.

Two years earlier he had still been living out of his suitcase. As the leading foreign correspondent for a European television station, one week he would find himself in Zaire covering the fall of a dictator, and the next week he would turn up in Chechnya to record the retreat of rebel insurgents. Wherever he went, everyone acknowledged Marc as themaster. Somehow hewas able to find thecenter ofall theanger and the confusion and extract some meaning from the madness. When

The Blind, Breathless Climb 179

armies shelled marketplaces, or snipers picked offcivilians ontheirwalk to work, Marc would be found at the scene explaining what happened, why it happened, andwhat it all meant. To his viewers he was a calming, authoritative presence. They trusted him. So no one was surprised when he was posted to Jerusalem.

On the foreign correspondents' ladder, Washington is the top rung. It has the most prestige, the most money, and, important, the most air- time. It is the posting everyone wants. ButifWashington isnumberone, then Jerusalem runs a close second. More interesting than the European parliament in Brussels, more important than post-cold war Moscow, Jerusalem is one of the few places where local clashes have such global significance. It isa foreign correspondents dream.

In Jerusalem Marc refined his talents. Israel is a small country, and Marc was able to report live from the scene no matterwhere the action erupted. Israeli settlers protesting the latest peace accords? Marc would be in their midst, marching with them, shouting his report over the noise of the crowd. Palestinian youths hurling paving stones at Israeli troops? Marc would be filmed inone ofthe narrow side streets, explain ingthe reasons for theiranger simply andclearly. In the overheated cli mate of the Middle East, Marc became the cool voice of reason.

Ayear later his European managers offered him the top rung. They offered him the money, the prestige, and the exposure of Washington. Marc loved what he was doing, but there was no way he was going to turn this down. It was the plum job of all reporting assignments. He willingly unpacked his suitcases for the last time and settled in to be come the newest, best Washington bureau chief. And very quickly things started to fall apart.

Outside of the occasional titillating scandal, not much happens in Washington—at least not during his tenure. Yes, there might be a presi dential veto one week and a filibuster the next, but back in Europe few understand these events and even fewer care. Most of the action is dry and repetitious, important but uninteresting. The Washington bureau chiefs role is to take the tedious business of politics and inject it with heroes and villains, daring triumphs and crushing defeats. His job is to spice things up.

And Marc couldn't do it. He was brilliant at giving real-fife drama a political context. Buthe was terrible at giving politics the sheen of real- life drama. Marc was surefooted in the aftermath of a mortar attack. But

180 THE FOURTH KEY: FIND THE RIGHT FIT

in a town where a State of the Union address was big news, he didn't know what to do. The stories went begging. His reporting became bland. He was lost.

Back in Europe, his audience turned away. His European managers couldn't put their finger on it, but they noticed the difference. They stuck with him for a while—he deserved that much—and then they pulled the plug. In six months the hero ofJerusalem had shriveled into the embarrassment inWashington. Hewas removed.

Marc's role might seem quite exotic, but his fate iscommonplace. In his desire to grow and toplease his managers, he kept climbing the lad der until, one day, he climbed one rung too far. Sadly, this happens all the time. In order to gain money, title, and respect, teachers must be come administrators. Managers must reach for leadership. Nurses must aspire tobe nurse supervisors. Craftsmen must yearn tobe managers of othercraftsmen. And reporters must yearn to be bureau chiefs. In most companies Marc's fate awaits us all.

Laurence Peter was right. Most employees are promoted to their level ofincompetence. It's inevitable. It's built into thesystem.

IT DOESN'T HAVE TO BE THIS WAY

This system is flawed, for it is built on three false assumptions. The first fallacy is that each rung on the ladder represents a slighdy

more complex version of the previous rung. Consequendy, if a person excelled onone rung onthe ladder, it isa sure sign thatwith justa litde more training, he will be able to repeat his success on the rung above. The best managers reject this. They know thatone rung doesn't neces sarily lead to another.

Second, the conventional careerpath iscondemned to createconflict. By limiting prestige to those few rungs high up onthe ladder, it tempts every employee, even the most self-aware, to try to clamber onto the next rung. Each rung isa competition, and since there are fewer rungs than there are employees, each competition generates many more losers thanwinners. Great managers have a betteridea. Why notresolve the conflict bymaking prestige more available? Why notcarve outalter native careerpaths byconveying meaningful prestige on every roleper formed at excellence? Why not create heroes inevery role?

The Blind, Breathless Climb 181

The third, and most devastating, flaw in the system is its assumption that varied experiences make the employee more attractive. This as sumption focuses theemployee onhunting for marketable skills and ex periences. With these skills and experiences proudly displayed on his resume, the employee then meekly waits—or aggressively lobbies—to be chosen forthe next rung. In this scenario the employee is the suppli cant. The manager is the gatekeeper, pushing back the hordes and se lecting the attractive ones—the ones with the most skills and the best experiences—for advancement. Great managers know that this whole scenario is awry. In theirview the hunt for marketable skills and experi ences should not be the force driving the employee's career. Theyenvi sion a different driving force. They have a new career in mind.

One Rung Doesn't Necessarily Lead to Another

"Why do we keep promoting people to their level ofincompetence?"

Why do we continue to assume that a person's success on one rung will have any relevance to his or her likelihood to succeed on the rung above? More than likely we have been confused aboutwhatis trainable and what is not. We have made no distinction among skills, knowledge, and talents, and this clumsy language has made it easier for us tosay, "If John has shown himself tobeagood salesperson, thenI am sure we can justtrain him tobeagood manager." Or, "Since Jan has proven herself a solid manager, I am confident that we can teach herthestrategic think ingandthe vision needed to be a great leader."

As we noted earlier, we now know that excellence in every role re quires distinct talents, and that these talents, unlike skills and knowl edge, are extraordinarily difficult to train. Armed with this knowledge, we can dismantle some long-standing career paths. We know that the talents needed to sell and the talents needed to manage, while not mu tually exclusive, are different—if you excel at one, it does not tell us very much about whether you will excel at the other. We can say the same about the talents needed to manage, as compared to the talents neededto lead. In fact, wecansay the same about all roles—even roles that, at first glance, seem tobevery similar.

Consider, for example, the conventional information technology ca reer path. Ifyou work ininformation technology, you will tend tobegin your career as a computer programmer—writing code—and then progress to a systems analyst role—designing integrated systems. Programmer to systems analyst: these arethe first two rungs on the con ventional IT career path. And given their superficial similarity, this would seem tobe a sensible way tostructure things.

In fact, these two roles are quite different. Great programmers pos sess a thinking talent called problem solving. The best programmers want to be given all of the pieces to the puzzle. Once they are armed with all the pieces, their particular talent is the ability to rearrange the pieces sothatthey all fit together perfectly. In theirpersonal fife this tal-

One Rung Doesn't Necessarily Lead to Another 183

ent often draws them toward crossword puzzles or brainteasers, like the ones in chapter 3. In their professional life this talent enables them to write thousands of linesofcomputercodeand arrange them in the most effective and efficient order.

While this talent is nice for a systems analyst to possess, it is not par ticularly relevant to success on the job. By contrast, their most impor tant thinking talentiscalled formulation. They revel in situations where they are faced with incomplete data. Lacking some of the most impor tant facts, they can then do what they love: play out alternative scenar ios, hypothesize, test out their theories. On the job this talent enables them to construct highly intricate systems and then test these systems for bugs. If one system has a glitch, theythen playout differentscenar ios, narrowing the range of possible solutions until theyhave identified exactly whatneeds to be changed andwhereand why.

The talents of problem solving and formulation are not mutually ex clusive. It is entirelypossible foran employee to possess both. But ifyou are blessedwith problem solving, it does not necessarily mean that you are similarly blessedwith formulation. Topromote programmers to sys tems analysts simply because the conventional career path dictates that youshould is to takea blindrollofthe dice. You are just as likely to wind up witha team of misfits asyouare a team of talented systems analysts.

Before you promote someone, look closely at the talents needed to excel in the role—the striving, thinking, and relating talents necessary for success. After scrutinizing the person and the role, you may still choose promotion. And since each person is highly complex, you may still end up promoting your employee into a position where he strug gles—no manager finds the perfect fit every time. But at leastyou will have taken the time to weigh the fit between the demands of the role and the talent of the person.

If Marc's managers had bothered to thinkthis through, perhaps they would have seen the poor fit between the Washington job, which re quired a reporter who loved to spice things up, and Marc, whose domi nant talent wasan ability to calmthings down.

Create Heroes in Every Role "How to solve theshortage ofrespect"

Even ifyou thoughtfully examine the match between the employee and the role, you've still got a problem. No matter what conclusion you come to, the employee will invariably want to move up. The employee will want to be promoted. Every signal sent by the company tells him that higher is better. Alarger salary, a more impressive title, more gen erous stockoptions, a roomieroffice with a couchand a coffeetable, all this andmore awaits the lucky employee onthe next rung onthe ladder. Nowonderhe wants to move up.

These blazing neon lights are a damaging distraction. They not only temptemployees to jumpfrom excellence ononerungto mediocrity on another, they also create a bottleneck—legions of employees all trying to scramble onto increasingly fewer rungs. Conflict anddisappointment areinevitable. There has tobe away to redirect employees' driving am bition andto channel it more productively.

There is. Create heroes in every role. Make every role, performed at excellence, a respected profession. Many employees will still choose to climb the conventional ladder, and for those with the talent to manage others or to lead, this will be the right choice. However, guided by meaty incentives, many other employees will decide to redirect their energies toward growth within theircurrent role. Great managers envi sion a company where there are multiple routes toward respect and prestige, a company where the best secretaries carry a vice president title, where the besthousekeepers earn twice as much as their supervi sors, andwhere anyone performing at excellence is recognized publicly.

If this sounds fanciful, herearea few techniques that great managers are already using to buildsucha company.

LEVELS OF ACHIEVEMENT

How long does it take to become excellent in a chosen field? In a study called the Development of Talent Project, Dr. Benjamin Bloom of

Create Heroes in Every Role 185

Northwestern University scrutinized the careers of world-class sculp tors, pianists, chess masters, tennis players, swimmers, mathematicians, and neurologists. He discovered that across these diverse professions, it takes between ten and eighteen years before world-class competencyis reached. If you showsomeinterest, he becomeseven more specific. He will tell you, for example, that it takes 17.14 years from your first piano lessons to your victory at the Van Cliburn, Tchaikovsky or Chopin piano competitions. While figures like this can feel a little too precise, Dr. Bloom's general point is nevertheless well taken: The exact length of timewill vary bypersonand profession, but whetheryouare a teacher, a nurse, a salesperson, an engineer, a pilot, a waiter, or a neurosurgeon, it stilltakesyearsto become the world's best. As Hippocrates, the philoso pher and founder of modern medicine, observed: "Life is short. The art is long."

If a company wants someemployees in every role to approachworld- class performance, it must find ways to encourage them to stayfocused on developing their expertise. Defining graded levels of achievement, for everyrole, is an extremely effective wayof doingjust that.

Lawyers figured this out a longtime ago. The young lawyer, fresh out of lawschool, selects his field of expertise—corporate law, criminal law, taxlaw—is hired into that fieldby a lawfirm and joins as a junior associ ate. Overthe next four or five years he will be promoted to associate and then to senior associate. As a senior associate he will still be practicing lawin his chosen field. He will simply be more accomplished. Over the next five years he will, hopefully, be promoted to some kind of equity positionwithin the firm, where he willstart as a junior partner, move up to partner, and then be promoted to seniorpartner. As a senior partner in the firm he will garner a tremendous amount of respect and earn a very generous salary, yet he will stillbe practicing the same kind of law as he wasback in his junior associate days. The workwill be more com plex, and he willhave his pick of the most interesting and most lucrative work. The onlydifferenceis that, by now, he will be one of the world ex perts in his chosen field.

Lawfirms are rarelyconsideredcutting-edge organizations, but with their use of graded levels of achievement, they are far ahead of most companies. Although all lawyers are free to choose more conventional career paths—moving into the management of other lawyers, perhaps, or becoming a legal generalist for a corporation—these levels of

186 THE FOURTH KEY: FIND THE RIGHT FIT

achievement provide lawyers with analternative, but equally respected, pathto growth. It isa paththatoffers them boththe opportunity to be comeexperts and a simple way to track theirprogress.

Lawyers aren't the only ones to realize the power of these levels of achievement. In medicine the levels build from internall the way to se nior consultant over a period of, at minimum, fifteen years. In profes sional sports you can measure your expertise as you progress from rookie to second string to starter to all-star. In sales the entry grade might be the Million Dollar Roundtable, an important first step for the fledgling salesperson, but the pinnacle is the Presidents Club, where the criteria for membership are ten million dollars in sales and perfect client-service scores. And in music you track your progress not by whether you are promoted from the violin to the conductor, but rather by your journey from the most junior third-chair violinist to concert- master or first-chair associate.

In fact, anywhere individual excellence is revered, you will find these graded levels of achievement. Conversely, if you cannot find them, it means that, either overtly or accidentally, the company does not value excellence in that role. And bythis standard, companies don'tvalue ex cellence in most roles.

As we stated earlier, great managers rebel against this. Theybelieve instead that every role performed at a level of excellence is valuable, that there is virtuosity in every role. So no matter howmenial the role appears, they work hard to define meaningful criteria that can help a dedicated employee track his orherprogress toward world-class perfor mance.

• AT&T provides help desk solutions to hundreds of companies. AT&T managers decided to organize each help desk according to the complexity of the client's question. Level one deals with simple queries like "How can I turn on my computer?" Level two ad dresses slighdy more difficult issues. Level three handles the pan icked'What do I do? I thinkI'vejust crashed our entire intranet!" inquiries. These three distinct levels are not onlythe mostefficient way to structure the operation—each level has a different pace, a different call volume, and so on—but they also provide a genuine career path for employees whowant to growinto superior techni ciansrather than into supervisors.

Create Heroes in EveryRole 187

• At Phillips Petroleum, managers provide employees with a well- respected engineer career track. If the employee can show profi ciencyin the required procedures, then she can gradually progress through the different levels of this career path, all the way up to a director-level position, where she will be recognized as one of the most accomplished engineers in the firm.

• In the mid-eighties Gallup worked with Allied Breweries to mea sure the performance of bartenders in pubs. One of the signs of greatness in bartending is an ability to remember not only the names of regulars, but also the drinks that go with them. We de vised a program called the One HundredClub. Any bartender who could prove that he knew one hundred names, and the drinks to match, would be awarded a button and a cash prize. The levels progressed up to the world-class Five Hundred Club, which brought better prizesand biggerbonuses.

When we started the One Hundred Club with Allied Breweries, few managers believed that any bartender would ever reach the Five Hundred Club level. But by 1990 Janice K., a bartender in a pub in the north of England, became the first member of the ThreeThousand Club. Sheknew the names of three thousand reg ulars and their favorite beverage. From this angle Janice was the best bartender in the world.

It just goes to show: In mostcases, no matterwhat it is, ifyou mea sure it and rewardit, peoplewill try to excel at it.

These are just a few examples of managers guiding employees with a series of levels that lead to world-class performance. Levels of achieve ment like these are invaluable for a manager. When confronted by that thorny question "Where do I go from here?" the manager is now able to offer a specific and respected alternative to the blind, breathless climb up.

BROADBANDING

These levels of achievement will certainly help redirect an employee's focus toward becoming world class. However, the manager's efforts at

188 THE FOURTH KEY: FIND THE RIGHT FIT

career redirection will be forever hindered if all of the pay signals are tellingthe employee to look upward.

Although eachof us is motivated bymoney in different ways, the fact of the matter is that few of us are repelled by money. All of us maynot hunger for it, but only a tiny minority of us find money positively dis tasteful. Therefore the simple truth is that it will be much easier for managers to redirect employees toward alternative career paths if some of those paths involve a raisein pay.

The idealpayplan would allow the company to compensate the per son in direct proportion to the amount of expertise she showed in her current role—the more she excelled, the more she wouldearn. In prac tice this ideal plan is complicated by the fact that some roles are simply more valuable than others. On balance, a pilot is probably more valu able than a flight attendant. Aprincipal is more valuable than a teacher. A restaurant manageris morevaluable than a waiter. Any payplan must take these value differentials into account.

But before we design our plan, there is one final twist to consider. Some roles performed excellendy are more valuable than roles higher up the ladder performed averagely. An excellent flight attendant is probably more valuable than an average pilot. A brilliant teacher is more valuable than a novice principal. A superstarwaiter is more valu able than a mediocre restaurant manager. The perfect payplan must be sophisticated enoughto reflect this overlap.

Simple and effective, it is called broadbanding. For each role,youde fine pay in broad bands, or ranges, with the top end of the lower-level roleoverlapping the bottomend of the roleabove.

For example, at Merrill Lynch the top end of the payband for finan cial consultants is over $500,000 a year. In contrast, the bottom end of the branch manager payband is $150,000 a year. This means that if you are a successful financial consultant and you want to move into a man ager role, you might have to endure a 70 percent pay cut. The upside for the novice manager is that the top end of the managerpayband runs into the millions. Sowhile you mayhave to stomach the 70 percent pay cut initially, if you prove yourself to be excellent at managing others, then in the end you will reap significant financial rewards.

The Walt Disney Company takes a similar approach. As a brilliant server in one of their fine-dining restaurants, you might earn over $60,000 a year. If you choose to climb onto the manager career path,

Create Heroes in EveryRole 189

your starting salary will be $25,000 a year. Again, once you start to excel as a manager and are promotedup and through the various supervisory levels, yourtotal compensation package cantakeyoufar above $60,000. But, initially, yourpaypacketwill be sliced in half.

Even traditional, hierarchical organizations are startingto experiment with broadbanding. Martin P., the chief of police for a state capital in the Midwest, describes the conventional career path from policeofficer to police sergeant—the front-line supervisor role—to police captain (he removed the lieutenant role a couple of years ago) to assistant chief to pofice chief. "Time was," he says, "when the only way to earn more moneywas to move into management—to go from officer to sergeant. Now all my pay grades overlap. If you are a superb police officer, you don't need to get promoted to sergeant to earn more. The fact is, my verybest policeofficers earn more than their captaindoes."

On the surface, broadbanding appears disorienting. Front-line em ployees earning two or three timeswhat their managers earn? This is a world turned upside-down. On closerscrutiny, however, broadbanding makes sense.

First, with its broad bands of pay, it provides a way to value world- class performance in a particular roleverydifferendy from average per formance in that role. As with levels of achievement, wherever individual excellence is revered, we see broadbanding. In professional sports, no matter what the position, the superstars at that position earn multiples greater than the average players in the same position. This also applies to actors, musicians, artists, singers, and writers. In all of these professions the broad range in pay encourages the person to re fine his talents and so become world class. Great managers advise us to applythe samelogic to all roles.

Second, with its overlapping bands of pay, broadbanding slows the bfind, breathless climb up. It forces the employee to open her eyes and ask, "Why am I angling for this next promotion? Why am I pushing so hard to climb onto the next rung?" Without broadbanding, the answer to these questions is clouded by her knowledge that the next rung brings more money. With broadbanding the employee can answer only by examining the content of the role and weighing the match between its responsibilities and her strengths. Her answers will be more honest and more accurate. She will make her career choices based at least as

much upon fit as upon finances.

190 THE FOURTH KEY: FIND THE RIGHT FIT

Some companies takebroadbanding to its limits. At Stryker, a $2 bil lion medical device manufacturer, the pay band for salespeople ranges from $40,000 for a novice to $250,000 for the bestofthe best. If you de cide to move into the manager ranks, you have to take a 60percent pay cut—the starting salary for a new regional manager is just under $100,000 a year. What is intriguing is that the top end of the manager band—about $200,000 in total compensation—is lower than the top end for salespeople. The best regional manager in the company can never earn as much as the best salesperson. WhywouldStryker choose to do this?All mannerof reasons: Theyvalue their best salespeople very highly; theywantto enticetheirbest salespeople to stayclose to the cus tomerforaslong aspossible; theywant eachemployee to think long and hard beforeclimbing onto the manager ladder. Whatever their reasons, their payplanhasproven very successful. Powered bythe best salespeo ple and the best managers in die business, Stryker has achieved 20 per cent annualgrowth in sales and profitfor the last twentyyears.

Broadbanding is a vital weapon in the arsenal of great managers. It gives teeth to their commitment that every role, performed at excel lence, will be valued. And if the Stryker example appears a little ex treme, remember this: DuringGallup's interviews with great managers, we found a consistent willingness to hire employees who, the managers knew, mightsoonearn significandy more than they did.

CREATIVE ACTS OF REVOLT

Great managers have to survive in a hostile world. Most companies do notvalue excellence in every role. Theydonot provide alternative career paths for their employees. Andthey do not give their managers the lee wayto designgraded levels of achievementor broadbanded payplans. If you findyourselfliving in this restrictedworld,what can you do?

Brian J. can tell you. His advice: Revolt, quietly and creatively. Brian manages artists in a large media company. His company has seen fit to construct an intricate hierarchy comprising over thirty distinct pay grades, each with clearly defined benefits and perks. One of the rules within this elaborate structure is that you cannot be promoted to a director-level position unlessyou manage other people. Another rule is that onlydirectorsare grantedsuchperks as stockoptionsand first-class seatingwhen traveling.

Create Heroes in EveryRole 191

"I was caughtbetween a rockand a hard place," Briansays. "I wanted to show some of my best graphic artists how valuable they were, but rules are rules. I couldn't reward them with a director-level promotion without promoting them to a manager role. But I didn't want to pro mote them to a managerrolebecause that's not their talent. Soinstead I asked each of them to become mentors for junior graphic artists—they wouldn't manage these people, they wouldjust be expected to pass on their expertise. I then went to Human Resourcesand said that, as far as I was concerned, a mentorwas the equivalent of a manager and so I had a right to promote them to a director-level position. HR tooksome con vincing, but I got myway in the end."

Garth P. tells a similar story. Garth runs an applied technology divi sion in an aeronautics company. In his production facilities he employs hundreds of technical specialists.

"The best engineer I had was a guy called Michael B. We've got a pretty rigid structure here, so whenever we wanted to reward Michael we had to promote him up the ladder. After ten years of promotions, he found himself doing less and less of the engineering he loved and more and more people management, which, to be frank, he struggled at. So together we decided to create a new position: master engineer. Michael would be a roving genius, getting involved in only the most complex projects. He would also be the main resource, and the last word, on all engineering problems any of the other teams faced. And he would be freed from any manager responsibilities at all. I decreed that this was a vice president-level job, got the okay from personnel, and then promoted him. I can't think of when I've made an employee happier."

Laura T, an executive in a Texas-based petrochemical company, faced a similar situation but solved it in a slightly different way:

"I have lots ofpeople who want to grow andwho deserve to be recog nized, but since wearen'tgrowing right now, newpositions aren'topen ing up. So I take mytop performers and assign them to special projects. These projects are ad hoc. They have a specific objective, with a specific timeline. Once the objective is met, the project team disbands. Special projects like thiswork really well forme, because theygive mytalented employees a chance to grow, and at the same time they give me a chance to recognize each of them for excellent work—I gotpermission from HR to reward eachsuccessful team member with a gift certificate for a weekend in Dallas and seats to a Cowboys game. Recognition like

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that might not sound like a big deal to you, but for a traditional petro chemical company like ours, it's a whole new way of thinking."

Eachof these managers, in his or her own way, is providing alterna tive routes toward growth and prestige. Each of them, maneuvering within a restricted world, is devising innovative ways to reward employ ees for excellent performance, without necessarily promoting these em ployees out of their current role. Each of them is trying to create heroes in everyrole.

Three Stories and a New Career

"What is theforce driving the New Career?"

Today's unpredictable business climate has undoubtedly caused a shift in the employer-employee relationship. Employers, acutely aware ofthe need to be nimble, can no longer guarantee lifelong employment. All they arewilling to offer the employee is lifelong employability: "We will provide you with marketable experiences that will make you attractive to other employers, should we ever need to cut back our labor costs." This is certainly a shift from twenty years ago, but great managers con tendit is merely a superficial shift. Very little ofsubstance has changed. Conventional wisdom's core assumption about careers remains the same, and it remains wrong.

It assumes that the energy for a career should emanatefrom the em ployee's desire tobetter herself, to fill herself out with attractive experi ences. She should not linger long in one particular role. Instead she should skip from one role to the next every couple ofyears so that, over time, her resume becomes impressively varied. Under the terms of life long employment, the employees with the most impressive resumes were the most likely tobe selected for thenext rung onthe internal lad der. Under the terms of lifelong employability, the employees with these attractive resumes are the most likely to be snapped up, exter nally, by anew company. The location may bedifferent, buttheassump tion is the same: Varied experiences make an employee attractive. Therefore, from conventional wisdom's perspective, a career can be best understood as the employee's focused search for interesting and marketable experiences.

Great managers disagree. Acquiring varied experiences is important but peripheral to a healthy career. It is an accessory, not the driving force. The true source ofenergy for a healthy career, they say, is gener ated elsewhere. Listen toenough oftheir stories and you can start to fig ureoutwhere. They tell stories ofpeople who took a step, looked in the mirror, and discovered something about themselves. In some cases the person looked in the mirror spontaneously. In others he hadto be coaxed to turn his head before seeing himself clearly. There are stories where

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the discovery was a confirmation to stay the course. There are stories, like the three that follow, where the discovery prompts a change in di rection. Butwhatever the details of the story, it is always the same story.

Their recurring story reveals that self-discovery is the driving, guid ingforcefor a healthy career. The energy for a healthycareer is gener ated from discovering the talents that are already there, not from filling oneself up with marketable experiences. Self-discovery is a long process, neverfully achieved. Nonetheless, great managers know that it is this searchfor a fullunderstanding ofyour talents and nontalents that serves as the sourceof energypowering your career.

#1: Dr. No's Story

George H. was the vice president of development in a large real estate development company. He had risen through the ranks as a project manager, and now, midway through his career, he found himself second in commandto a creative, articulate risktaker called Howard P. George was perfecdy suited to his role. While Howard dreamed up wildly elab orateand expensive schemes, George identified allof the impediments, allof the pitfalls, that could derail Howard's plan. George called thishis "parade ofhorribles." Everyone called George "Dr. No."

Dr. No was respected and admired. He was honorable and coura geous anddetail oriented. And thewhole company knew that every plan was strengthened by exposure to Dr. No's refining fire. He was a most valuable executive.

Then Howard left, and Dr. Nowas promoted, and quite soonhe lost the admiration of his colleagues. You see, Dr. No's particular talent was to make small things out of big things. This talent had enabled him to take Howard's crazy ideas and breakthem down into manageable proj ects, each of which could then be analyzed for costs,benefits, and risks. But this talent was rendered useless without raw material, without a dreamer to dream up the humongous, outrageous idea. And the dreamer had moved on.

There were others within the company who would now present Dr. No with an Everest of an idea, but he would immediatelyslice it up into a series of middling hillocks, small projects, low risk. And, thus disman tled, the idea lost its impact. It was no longer worth the effort. Bythe middle of hisfirst yearDr. Nohad red-lighted every single project.

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Dr. Noknew whathe was doing, but, strangely, he couldn'tprevent it. When he imagined the sheersize of the risk, so many variables, allout of his control, he would feel his throat begin to constrict. As he played out the project in greater and greater detail, his throat would close so tightly that he couldbarelybreathe. It happened everytime and a little worse each time. At work he now felt physical pain and the attack of panic.

Panicky feelings like thiscansometimes bringclarity. As the yearpro gressed, Dr. No came to understand what everyone else already knew: He wouldnever get anything going. The talents that had served him so well as the dreamer's partner would forever strangle the organization. Left to his own devices, he would always kill big ideas.

So Dr. Noremoved himself from theposition. He sethimselfup asan independent contractor, where he would be paid to conceive, design, and execute lots and lots ofsmall ideas. Hecan breathe more easily now.

#2: A Touching Story

Mary G. has fingers that are as strong and as firm as they appear, and powerful forearms. Standing up straight above you, she has shoulders that seem to stretch from wall to wall, and as she reaches back to twist her hair out of the way, you notice that her elbows are surprisingly rounded. Later, when she bears down on them, they feel as though they must be six inches across. It is a good feeling.

Mary is a massage therapist, and she was born to touch. "Other people's bodies fascinate me. When someone is lying in front ofme, it's like their skin is transparent. I can see the bands ofmuscle stretched up and around their shoulder blades, across their back, and down their legs. I can see where the muscles are pulled taut and where they are all scrunched up in an angry little knot. I canalmost see the nerves, too. I sense thatwith one person they might like long strokes that pump the muscle and get the blood going. With someone else they might prefer Shiatsu. That's a technique where you use pressure points on thebody to stimulate the nerve endings and open up the whole nervous system. Everyone is different."

Three years after finishing her training, Mary found herself the most sought-after therapist at the exclusive Arizona health spa where she worked. The word had spread. If you want a massage that pummels

196 THE FOURTH KEY: FIND THE RIGHT FIT

and loosens and opens you up, but with no pain, you must schedule with Mary.

Soon her employer decidedto promoteher to manage allof the mas sage therapists at the resort. This meant more money, more security, better benefits, and fewer appointments of her own. And she was mis erable.

"I missed the intimacy. As a massage therapist, I standin a roomwith another person for an houror more, in silence, and look through their skin andsee theirpainandease theirpain. I come to love eachone,just a litde bit. I love the immediate gratification of releasing someone's stress. They look different afterward, immediately afterward. Their skin looks brighter, theireyes are clearer. And I know it will last. It isa great feeling forme and, I hope, forthem."

Mary wanted to get that feeling back. So she quit herjob, moved to Los Angeles, and set up her own practice. Her appointment book is filled up, and once again Mary gets totouch people every single day.

#3: Mandy's Designer Story

We met Mandy back in chapter 5. She is the manager ofa department that designs logos and other images to drive a product's brand identity. She tells this story:

"I inherited this woman, a design consultant, called Janet. A design consultant has two responsibilities—first, tointeract with theclients and find out their needs; and second, to manage the designers so that they deliver what the client wanted. Janet was very ambitious, very talented, but she wasn't performing either of these roles very well. She wasn't failing, but she wasn't astar, either. And she was the kind ofperson who needed to be a star.

"She realized pretty quickly that I thought she was mediocre, so her attitude took a dive. Shewouldn't tell me direcdy, but I gotwordfrom her best friend in the office that she wanted me to fire her so that she could collect unemployment. It pissed me offthat she wouldn't come clean with me,but I was damned if I was going to let her manipulate me into firing her. I wanted her tobehonest with herself about herfeelings and her intentions. I wanted her to understand that, in the end, she would be rewarded for her honesty.

"So I waited her out. And over a period of about four months, we

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started to talk. Wediscussed her performance, her strengths, her weak nesses, likes, dislikes, that kindof thing. I told her that it wasn'ther fault she wasn't excelling in this role, but that, together, we would have to find a solution.

"Then one day it occurred to me that she should go back to school and become a designer herself. Shewas very curious aboutthe business, very creative, and much preferred to do a job by herself. She played with the idea for a while, and then she acted on it. She enrolled at New York University, gother degree, andisnow at a large advertising agency as a designer. Andverysuccessful.

"Janet wasn't a bad person. Shehadjustpicked the wrong career, and having started it, she didn't want to admit to herselfthat she had made a mistake. I helped her."

With self-discovery as its energy source, great managers now paint this picture of a healthy career. Guided perhaps by her choice of college major, perhaps byher family, perhaps bynecessity, the employee selects her first role and jumps into the fray. In this first role she is unsure of herself. Sheisunsureofher ability to perform, unsureofher talents and her nontalents. As sheachieves certain levels ofperformance, shemight then move intodifferent roles, or shemight simply grow within that first role. Either way it isnow her responsibility to look in the mirrorand ask, "DoI thrill to this role? DidI seem to learn this role quickly? Am I good in this role?Doesthis rolebringme strength and satisfaction?" It is her responsibility to listen for the clues that this role plays to her talents.

She might have startedin sales, then moved into marketing—in this new role does she likebeing further removed from the customer?Does she love dealing with the patterns and concepts inherent in marketing, or does she miss the direct interaction andthe knowledge that she,and she alone, made that sale? She might have started as a flight attendant and then moved into the training department—does she like helping novice flight attendants grow, or does she yearn for the drama and the challenge ofwinning over tired, nervous passengers?

As she looks in the mirror, she learns. Eachstep is the chance to dis cover a little more about her talents and her nontalents. These discover

ies guide her next step and her next and her next. Her career is no longer a blind hunt for marketable experiences and a breathless climb

198 THE FOURTH KEY: FIND THE RIGHT FIT

upward. It has become an increasingly refined series of choices, as she narrows her focus toward that role, or roles, where her strengths—her skills, her knowledge, and her talents—converge and resound.

Deep down, mostpeopleprobably know that self-discovery is impor tant to the building of a healthy career. The difference lies in the way great managers use self-discovery.

First, they give self-discovery a central role, making it an explicit ex pectationfor each employee. Mike C, a manager in a courier company, describes how he turns self-discovery from a theoretical concept into a simple, practical demand:

"When someone joins the team, I tellhim that one of our majorgoals in working together is to help him figure out who he is. I tell him to look in the mirror. And if he doesn't know how to do that, I tell him to use the Sunday night blues test. If he doesn't feel that litde stab of de pression on Sunday night, ifhe actually finds himself looking forward to the week, then he should stop and ask himself, 'Why?' What is it about the role that he loves so much? Whatever he answers, he should scrib ble it down and make sure that he keeps it in mindwhen he chooses an other role.

"If he does feel those Sunday nightblues coming on everyweekend, then it's not necessarily his fault. It's not some failing in him. But he does need to ask the same question, 'Why?' Whatdoes he need that his current roleis not giving him? Again, he should bear hisanswer in mind as he looks for other places to work."

Managers like Mike C. aren't suggesting that gaining varied experi ences is a bad idea, simply that it is insufficient. Theyknow that an em ployee will fail to find the roles that fit him if he spends his career gorging himselfonskills andexperiences, while neglecting to look in the mirror—an approach to careerbuilding that is as likely to succeed as is trying to build a healthy bodyby popping vitamins and diet pills while neglectingto exercise.

Second, these exemplary managers emphasize that the point of self- discovery is not to fix your nontalents. The point is not to "identify and then fill in your skill gaps," as many human resources departments eu phemistically describe it. In the spirit of the insight that "you cannotput in whatwas left out, you can only drawout whatwas left in," the point of self-discovery is to learn about yourself so that you can capitalize on who you are. The point is to take control of yourcareer, to make more

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informed decisions, and to gradually select roles that represent an in creasingly good fit for your natural talents.

THE MANAGER AND THE NEW CAREER

Howcanthe manager help?In the newcareer, the employee is the star. It is his responsibility to takecontrol ofhiscareer. It is his responsibility to look in the mirror and make sound choices based upon what he dis covers. But what role should the manager play? She is no longer the gatekeeper, picking and choosing from among the most attractive, the mostskilled, the mostexperienced supplicants. What is her role?

One could make a case for saying that since the employee is the star and since companies can no longer guarantee lifelong employment, the manager's role hasbecome less significant. Sheshould focus her people on performance today, but not concern herself with where they are headed tomorrow. The employee should figure that out for himself. Besides, if the manager invests too much in her people, she might soon be disappointed. Given the speed of change today, she might well end up having to terminate the people shehasnurtured socarefully.

The best managers rejectthisperspective. Theyknow that in thisnew career they can play some significant roles. Theycan level the playing field. Theycan be the onesto hold upthe mirror. Andthey can create a safety net.

GREAT MANAGERS LEVEL THE PLAYING FIELD

This is why creating new heroes, designing graded levels of achieve ment, and establishing broadbanded pay plans are all so important. These techniques provide an environment where money and prestige are spreadthroughout the organization. Since the employee nowknows he can acquire them through a variety of different paths, money and prestige become less of a factor in his decision making. He is free to choose his pathbaseduponhis current understanding ofhis talents and nontalents. He may still make the occasional misstep, but he is much more likely to focus not only toward roles where he excels, but toward roles that bringhim lasting satisfaction and roles that he yearns to play for a verylong time.

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On this leveled playing field, you hear conversations that you never thought you would hear. Conversations like the one Jeff H., the com puter software sales manager, had withhis supervisor:

"I love myrole. I'm the best in the company at it. I am making a lot of money doing it. AndI am having moreof an impact than I ever thought was possible in mylife. So I saidto myboss, I said, Tour one objective with me is to see to it that I am never promoted again. If you can do that, youhaveme for life.' "

GREAT MANAGERS HOLD UP THE MIRROR

Great managers excel at "holding up the mirror." They excel at giving performance feedback. Don't confuse this with the once-a-year perfor mance appraisal chore, with its labyrinthine form filling and remedial focus; or with the empty, arbitrary employee-of-the-month feedback. The feedback given by great managers is quite different.

It is the kindof feedback that LauraT, the petrochemical executive, gives to her people. She describes a program called Excel, where she meets with each of her twenty-two direct reports once every quarter. "In these meetings we quickly review the last three months. And then it's on to the good stuff—the next three months. What are their plans, their goals, what measurements will we use?With each of them, we talk about what they enjoy doing and how we can structure things so that they get to do more of that."

MartinP., the police chief, is less structured but has the samekinds of conversations. "I have sixteen direct reports, and with each of them I probably spend about twenty minutes each week talking about their performance, the project they are working on, how they can improve, and what I can do to help. These discussions happen all the time. With one of my guys, we went to a convention together last month. We ac complished nothingat the convention. But we did on the plane, and in the rental car, and overdinner, and in the lobbyof the hotel."

Jeff H. simply schedules time to travelon sales calls with each of his salespeople once or twice a quarter. "I try to not play the role of the knight on the white horse, riding in and saving the day. Instead I just travel with them, listen to their challenges, watch them with clients. I need to get a granular look at them at work. Backat the office, I replay

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what I saw for them. We then talk aboutplans and goals, and together we figure out the best way forward. My role isn't to correct or fix. My roleis to keep them aware oftheir style andto keepthem realistic about what is possible, given that style."

Other great managers make use of 360-degree feedback techniques or psychological profiles or employee opinion surveys or customercom ment cards. Whatever their style, whatever their tools of choice, they are alltrying to do the same thing: to hold up the mirror sothat the em ployee has a chance to discover a little more about who he is, how he works, and the footprinthe leaves on the world.

Although each manager employed his or her own approach to feed back, in the studyof great managers Gallup found that their approaches did share three characteristics.

First, theirfeedback was constant. Theyvaried the frequency accord ing to the preferences or the needs of the individual employee. But whetherthe meetings happened for twenty minutes every month or for an hour every quarter, these performance feedback meetings were, nonetheless, a constant part of their interaction with each employee throughout the year. Howmuch of a time commitment did this repre sent? According to the managers in Gallup's study, the total time spent discussing each employee's style and performance was roughly four hours per employee per year. And as one front-line supervisor said, "If youcan't spendfour hours a yearwith eachofyourpeople, then you've either got too many people, or you shouldn't be a manager."

Second, each session began with a briefreview of past performance. The purposeof thiswas not to evaluate, "You should do less of that. You should fix this." Rather, the purpose was to help the employee think in detail about her style and to spark a conversation about the talents and nontalents that created this style. After this review, the focus always shifted to thefuture andhow the employee could useherstyle to bepro ductive. Sometimes theywouldworktogether to identifythe employee's path of least resistance towardher goals, but often the discussion would revolve around partnership. What talents did the manager bring that could complement the nontalentsof the employee?

During that convention trip, most of Martin P.'s conversations dealt withpartnership. "This guyisincredibly driven, incredibly goal oriented, but he lacks strategic thinking—he has a hard time imagining what ob stacles mightget in hisway ashe plows ahead. I can help him here. I can

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play outalternative scenarios for him, and thenwe can put together con tingency plans should any ofthese scenarios actually happen."

JeffH. gives a similar description. "One of my salespeople knows all the tricks for getting herfoot inthedoor and asking the right questions, but lacks creativity when it comes topricing thedeal. I'mpretty good at that. So when we meet, shetells methe players and the situation, and I tell herwhether she should present a leasing option, a buy-back option, a volume discount deal, or whatever."

Third, great managers made a point ofgiving theirfeedback in pri vate, one onone. The purpose of feedback is to help each individual to understand andbuild upon his natural strengths. You cannot do this in a group setting.

This sounds obvious, but given today's preoccupation with teamwork, it is surprising how many managers forget the importance of spending time alone with each oftheir people. As Phil Jackson, theextraordinarily successful coach of the Chicago Bulls, observes:

"I prefer to deal with [the players] onan individual basis. This helps strengthen myone-on-one connection with the players, who sometimes getneglected because we spend so much ofourtime together en masse. Meeting with players privately helps mestay in touch with who theyare out of uniform. During the 1995 playoffs, for instance, Toni Kukoc was troubled byreports that Split, Croatia, where his parents live, hadbeen hit by a barrage of artillery fire. It took several days for him to get through onthe phone andlearn thathis family was all right. Thewar in his homeland isa painful reality ofToni's life. If I ignored that, I proba bly wouldn't be able to relate to him on any but the most superficial level."

GETTING TO KNOW YOU

With descriptions like this, Phil helps provide an answer to the manager's age-old question "Should you build close personal relation ships with your employees, or does familiarity breed contempt?" The most effective managers say yes, you should build personal relationships with your people, andno, familiarity does notbreedcontempt.

This does not mean that you should necessarily become best friends with those who report to you—although if that is your style, and if you

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keep them focused on performance outcomes, there is nothing wrong with doing so. The same applies to socializing with your people—if that is notyour style, don't do it. If it isyour style, thenthere isnothing dam aging about having dinner ora drink with them, as long as you still eval uate them on performance outcomes.

When great managers like Phil Jackson say they build close relation ships with their people, when they say that familiarity does not breed contempt, they simply mean that a great manager must get to know his employees. And "getting to know someone" extends beyond a detailed understanding ofanemployee's talents and nontalents. It extends all the way to the practicalities anddramas ofhis personal life. The great man ager does not necessarily have to intervene in the employees life—al though some do—but she does have to know about it. And she does have to care about it.

During Gallup's eighty thousand manager interviews we asked this question: "You have a talented employee who consistently shows up late for work. What would you say to this employee?" The answers ranged from the authoritarian to the laissez-faire:

"I would fire him; we don't tolerate lateness here." "I would give him a verbal warning, thena written warning, then fire

him."

"I would lock the door to the office and tell him that, from now on, even ifyou are two seconds late, you won't be allowed in."

"That's fine. I don't care what time they come in as long as they stay late andget their work done."

Each of these responses is defensible. Each has its merits. But these were not the answers of great managers. When told that an employee was consistently showing up latefor work, the great managers gave this onereply, which sums up theirattitude toward manager-employee rela tionships:

"I would ask why." Maybe it has something to do with a bus schedule. Maybe he has to

wait for a nanny to arrive. Maybe there is trouble at home. Once they had understood the employee's personal situation, they might take any number of different actions—ranging from changing the employee's hours to ten to six to telling himto get the situation sortedout, fast. But no matter what the next step, theirfirst step was always to get to know the employee: "Ask why."

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Phil Jackson's comments about personal relationships ends with this line:

"Athletes are not the most verbal breed. That's why bare attention andlistening without judgment aresoimportant."

GREAT MANAGERS CREATE A SAFETY NET

The conventional career path lacks forgiveness. As theemployee climbs from rungto rung, the rungs areburnedbehind him. If he climbs ontoa rung and struggles, he knows that his reputation will suffer and his job will be in jeopardy. There is no turning back. By punishing career mis steps so severely, this path discourages everyone from taking bold ca reer steps. In conventional wisdom's world, taking bold career steps in orderto discover a latent talent or to refine an existing oneis almost as foolhardy as volunteering to learn the trapeze without a safety net. No wonderpeopleare so protective of their careers, so closed to their own feedback, so reluctant to change their career track based upon what they have discovered about themselves. This career path kills learning.

Great managers want to encourage career learning. They want to promoteactive self-discovery Sotheyhave devised their own makeshift career safety net: trialperiods.

Ellen P., the manager of in-flight training at Southwest Airlines, de scribes the safety net shebuilt:

"It is a big step for a flight attendant to move out of the planes and into the training room. Some people want to become a trainerbecause they will get to travel less—we knock those people out right away. But others talk about wanting to teach, wanting to pass on the tradition of Southwest. If we think they have the talent, and if we think they are seeking the job for the right reasons, then we bring them in for a six- month trial period.

"Weare veryexplicit that this is a time for them, and for us, to decide if this is really something that they will love to do, for a long time. People don't realize that teaching ishard. We doteach ideas for having fun with the guests and playing games and telling jokes. But there is a lot of boring detail to communicate and a lot of rules for the students to learn. This trial period is a way for them to get a sense ofhow theylike this kind ofwork.

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"During the trial period, we sit down with them once a month and discuss their performance, what they are really enjoying, where they are struggling. We send other trainers in to evaluate them and give them feedback. And at the end of the six months they have to pass certain tests to show that they have learned all the necessary information.

"Most do exactly that—and we now have a really talented group of trainers. But all of our trainees knew that if, during the trial period, ei ther they or the company felt that they were not a fit, they would have been able to go back to the planes and resume their flight attendant role. And that's happened a couple of times over the last few years. There was no shame in that, no failure. Thesepeoplewantedto experi ment, to learn if they could be a trainer. They took the step andlearned that teaching was not for them.

"Itworked outgreat for us, too. They are back onthe planes now, fo cused onourguests, andundistracted byvague thoughts ofmoving into training. They have closed that door. They canmove on."

Trial periods are tricky. You must not use them as a substitute for se lection. Like Ellen, you should use them only with people who have al ready shown some talent and some genuine interest intherole. After all, your main focus as a manager is not tohelp every employee play around within the company in the hope of finding something they like to do. Your main focus is to drive performance by matching the talent to the role. Evenifanemployee begs andpleads for a chance to discover a new talent, ifyou know he doesn't have it,don't offer him the trial period.

Furthermore, if you use trial periods, then, like Ellen, you must be very clear about thedetails. How long will it last? What criteria will you use to assess fit? Howoften, if at all, will you meet duringthe trial pe riod to discuss performance? Where will the employee go if she does not stay in the new role? You must answer all ofthese questions explic itlyif the trialperiodis to be a success.

Finally, and most significant, you must make it clear that the em ployee will be moved back into his previous role if either you orhe is unhappy with the fit. This will avoid any unfortunate misunderstand ings. The trial period is not just for his benefit; it is also for yours. If, after the trial period isover, he loves the role but you perceive a misfit, your assessment wins. He may not be happy with this, but at least he will not feel ambushed.

The ArtofTough Love "How do great managers terminate someone and still keep the

relationship intact?"

Whether the employee is at the end of a trial period, or whether he is juststruggling along in his current role, it is still difficult to bring him bad news. It is still difficult to tell him that he needs to move out of his role. During Gallup's interviews, many managers, both great and aver age, confessed that theywere physically sick before eachconversation of this kind. No matter how you approach it, no matter how accomplished you are asa manager, removing someone from his role isnever easy.

Herewe arenotreferring to situations where the employee has com mitted some heinous or unethical act—with their quasi-legal or legal nature, these dramas are more clear-cut. Rather, we are referring to those unfortunate times when it becomes obvious thata particular em ployee isconsistently failing to perform.

Situations like this are much less well defined. As a manager, you have many decisions to make: What level ofperformance is unaccept able? How long is too long at that level? Have you done enough tohelp, with training, motivation, support systems, or complementary partner ing? Should you break the news all at once, or should you give them a probationary period? When the final conversation happens, what words will you use?

Some managers are so overwhelmed by these questions that they avoid the issue altogether. They take the easy way out and "layer over" theproblem employee with a new hire. In theshort run this can appear to be a painless andconvenient solution. Butin the long run, like wrap ping pristine bandages around an infected wound, it is deadly for the company.

Some managers solve the problem by deciding to keep all their employees at arm's length. With this neat trick they hope to diminish the tension and the pain inherent in giving bad news to a friend. Unfortunately, as Phil Jackson pointed out, by refusing to get to know theiremployees, they also diminish the likelihood that they will ever be able to help anyof theseemployees excel.

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The best managers do not resort to either of these evasive maneu vers. They don't have to. They employ tough love, which is nota tech nique, or sequence ofaction steps, but a mind-set, one that reconciles an uncompromising focus on excellence with a genuine need to care. It is a mind-set that forces great managers to confront poorperformance early and directly. Yet it allows them to keep their relationship with the employeeintact.

Sowhatis toughlove? How does it work? The "tough" part is easy to explain. Because great managers use ex

cellence astheir frame of reference whenassessing performance, Tough love simply implies that they donotcompromise on this standard. So in answer to the question "What level of performance is unacceptable?" these managers reply, "Any level that hovers around average with no trendupward." In answer to the question "How long at that level is too long?" Greatmanagers reply, "Notvery long."

It was this uncompromising standard of excellence that drove Harry D., a successful manager of two car dealerships. "We opened a second car dealership, much larger than the first. I wanted to create what I called a total service culture, where the customers received a seamless quality experience whether they were dealing with thesales department, the financing department, or the service department. I was looking for total integration of systems and total cooperation from my department heads. Big plans, right? It got offto a rocky start, let metellyou.

"My biggest mistake was the guy I promoted to head up the sales de partment, Simon. He came from my smaller dealership, where he was sales manager, very successful. Butwhen he moved into the newspot, he couldn't get intothe cooperation thing at all. He wouldn't communi cate with the other department heads. He wouldn't show up for meet ings. He wouldn't sit down with the other department heads and work out how to integrate the systems and ease the interdepartmental hand- offs so that the customerwouldn't feel a jolt. He was just interested in his guys and his numbers.

"At the same time, back at the other dealership, I had stupidly pro motedone of the salespeople to sales manager, and he was struggling, too. SoI had grown from one success to two failures. Notbad going.

"I knew I had to move quickly. I had talked with Simon about my concerns a couple of times but saw no improvement at all. So, five months in, I pulled him into my office and toldhim that I wanted him

208 THE FOURTH KEY: FIND THE RIGHT FIT

back inthe other dealership. I told him that inthis new dealership I was not interested simply in sales numbers, that I wanted to build this inte grated, total service experience, and that he wasn't helping. I told him that hewas a loner and that, back inthe other dealership, hecould nar row his focus all hewanted, but here, in the new world, it wouldn't fly. I'm sending youback, I said.

"Hewas sopissed off, he looked like he was going to punch me. 'You haven't given meenough time. You got to let mehave another shot.' All that kind of stuff. But I know my people, sometimes better than they know themselves. I knew thatSimon wasn't a team person. I knew that hewould never be able tobuild thetotal experience I wanted. Better to pull the trigger now, I thought, rather than letting things drag on, with him beginning tofeel more invested and me getting more disappointed.

"Now he's doing extremely well back at the smaller place, and I man aged to find a collaborative sales manager for this place. My brave new world is coming along nicely."

Harry is universally loved byhis employees. He is a pushover when employees need to change their hours, take a day off, or short-cut a process for the sake of the customer. But he is rock solidwhen it comes to excellence. As he says, "Excellence is my thing. If you don't like it, that's fine. Just don't cometo work here."

The "love" element of tough love is a little subtler. This element still forces managers to confront poor performance early but allows them to do so insuch away that much ofthebitterness and theill will disappear. And it all springs from theconcept oftalent. An understanding oftalent, an understanding that each person possesses enduring patterns of thought, feeling, and behavior, is incredibly liberating when managers have toconfront poor performance. Why? Because itfrees the manager from blaming the employee.

Consider the manager who believes that with enough willpower and determination, virtually all behaviors can bechanged. Forthis manager, every case ofpoor performance is the employee's fault. The employee has been warned, repeatedly, and still he has not improved his perfor mance. If he hadmore drive, more spirit, more willingness to learn, he would have changed his behavior as required, and the poor perfor mance would have disappeared. Butit hasn't disappeared. He mustnot be trying hard enough. It is his fault.

This seductive logic puts this manager in a very awkward position.

The Artof Tough Love 209

Since she told the employee what to do, and since it wasn't done, then the employee must beweak-willed, stupid, disobedient, ordisrespectful.

How can you have a constructive conversation with someone when beneath the surface politeness this is what you are compelled to think ofhim? It's hard. If you are, by nature, an emotional manager, you fear you might lose your temper and let your anger show. If you are, by na ture, a caring and supportive manager, you worry that he might see through your soothing words and realize how deeply disappointed you are in him. Whatever your style, a conversation where you have to mask your true feelings is a stressful conversation, particularly when your feelings are so negative. No wonder so many managers try to avoid it.

But great managers don't have to hide their true feelings. They un derstand thata person's talent andnontalent constitute anenduring pat tern. They know that if, after pulling out all the stops tomanage around his nontalents, an employee still underperforms, the most likely expla nation is that his talents do not match his role. In the minds of great managers, consistent poor performance is not primarily a matter of weakness, stupidity, disobedience, or disrespect. It is a matter of mis casting.

If there is blame here, it is evenly spread. Perhaps the employee should have been more self-aware. Perhaps the manager should have been more perceptive. Perhaps. But this is just hindsight pointing the finger. No employee will ever be completely self-aware. No manager will ever know each ofhis people perfectly, even ifhe has selected very carefully for talent. So casting errors arenotcause for anger or recrimi nation. Casting errors are inevitable.

When an employee is obviously miscast, great managers hold up the mirror. They encourage the employee to use this misstep to learn a little more about his unique combination oftalents andnontalents. They use language like "This isn't a fit for you, let's talk about why" or "You need to find a role that plays more to your natural strengths. What do you think that role might be?" They use this language not because it is po lite, not because it softens the bad news, but because it is true.

This is the "love" element of toughlove. The mosteffective managers do genuinely care about each of their people. But they imbue "care" with a distinct meaning. In theirminds, to "care" means to setthe per son up for success. They truly want each person to find roles where he

210 THE FOURTH KEY: FIND THE RIGHT FIT

has a chance to excel, and they know that this is possible only in roles that playto his talents.

By this definition, ifthe person is struggling, it is actively uncaring to allow him to keep playing apart that doesn't fit. By this definition, firing the person is a caring act. This definition explains not only why great managers move fast to confront poor performance, but also why they are adept atkeeping the relationship intact while doing so.

All in all, the tough love mind-set enables a great manager to keep two contradictory thoughts in mind at the same time—the need to maintain high performance standards and the need to care—and still function effectively. Tough love enables Mike H., an IT executive, to say in the same breath, "I've never fired someone too early," and, "I truly careabout helping mypeople be successful."

Tough love allows John F, a manufacturing supervisor, to reminisce, "I have fired a few people in my time. But I've stayed close to them. Now that I think about it, each ofthe best men atmy two weddings was someone I had previously fired."

Tough love explains theincongruous nature ofGary L.'s conversation. Gary, an enormously successful entrepreneur, six-time winner of the Queens Award for Industry, brought inone ofhis factory managers one evening and told him, "Come in, sit down, I love you; you're fired; I still love you. Now, get a drink and let's talk this through."

"MANAGER-ASSISTED CAREER SUICIDE"

Tough love is a powerful mind-set, providing a coherent rationale and a simple language for handling a delicate situation. But if you choose to incorporate it intoyour own management style, remember: Counseling a person outofa role is, and will always be, a delicate situation. Tough love ishelpful butwill never make it easy.

HanyD., thecar dealer, captures one oftheconstant difficulties per- fecdy with his comment "But I know my people, sometimes betterthan they know themselves." In the tough love approach, the manager often has toconfront the employee with truths that theemployee may not be ready to hear. This will always bea subtle negotiation. That is why you need to get to know your people so well, why you need to meet with them so regularly, why your rationale needs to be clear and your lan guage consistent.

The Art ofTough Love 211

Some may complain that even ifyou do all ofthese things, you still don't have the right to believe that you know theperson better than he does himself. Great managers disagree. When Gallup asked, "Would you rather get employees what they want, orwould you rather get them what is right for them?" the great managers consistently replied, "Get them what is right for them."

This sounds authoritarian, even arrogant, but Martin P., the police chief, makes a compelling point:

"Ibelieve that, deep down, thepoor performer knows he isstruggling before you do. Maybe hecan't find the words, ormaybe his pride won't lethim say it, buthe knows. On some level hewants your help. And so, subconsciously, he puts himself in situations where his weaknesses are exposed. He is daring you, pushing you to fire him. I call this manager- assisted career suicide. If you suspect that this is happening, the best thing you candoishelp put him outofhis misery.

"I had one police officer, Max, who couldn't handle confrontation. Imagine, as anofficer you meet the worst people, and you meet thebest people ontheir worst days. You get shouted at, verbally, and sometimes physically abused. You have to keep your cool under all ofthese condi tions.

"Max couldn't. He would become frustrated, angry, rude. We had re ports ofan occasional use ofprofanity. These are low-level disciplinary matters that arebrought before a tribunal. I would sitin on thesemeet ings and read the reports and Max would deny them, vigorously. Very vigorously I saw exactly the kinds ofbehaviors in these meetings that citizens were complaining about.

"We gave him behavioral counseling, and he worked on it. Butit was such a basic part ofhis personality. He kept going outonpatrol, hekept losing his cool, andhe kept denying it in the tribunals. He was commit ting manager-assisted career suicide. He wanted me to fire him. It was his onlywayout.

"So I did. I removed himfrom the department. He was a goodperson with the wrong demeanor for a police officer. Through our outplace ment service he found a role as a claims adjuster for an insurance agency here in town, which fits his character so much better. I am still in touch with him, still friendly, and more important, he is doing very well."

Many of the great managers we interviewed echoed the themes in Martin's story: The employee refused to confront the truth of his situa-

212 THE FOURTH KEY: FIND THE RIGHT FIT

tion and so was angry at the time, but months, and sometimes years later, the employee would make acall, or write aletter, orwalk up to the manager in an airport, to tell him, "Thank you. I didn't realize it then, but moving me out ofthat job was one ofthe best things anyone has ever done for me."

It doesn't always happen this way. Some employees remain bitter to the end. But tough love does provide a way for the manager and the employee to handle this delicate situation with dignity. Tough love keeps everyone whole.

H A P T E

Turning the Keys: A Practical Guide

• The Art of Interviewing for Talent

• Performance Management

• Keys ofYour Own

• Master Keys

Every great manager has his or her own style. Butevery great manager shares the same goal: to turn each employees talent into performance. The Four Keys, select for talent, define the right outcomes, focus on strengths,find the rightfit, reveal how they attack this goal.

In the previous four chapters we described the Four Keys, how each works, and why each isimportant to thechallenge ofturning talent into performance. Now, inthis chapter, we will describe what you can do to turn each of these Keys. Bear in mind that these Keys are not steps. They are not a structured series of actions intruding on your natural style. Rather, eachKey issimply away ofthinking, a newperspective on a familiar set of challenges. As we mentioned in the introduction, our purpose is tohelp you capitalize onyour style by showing you how great managers think, notto replace your style with a standardized version of theirs.

We are not suggesting that you incorporate every single one of these actions into your style. These techniques simply represent a cross sec-

214 TURNING THE KEYS: A PRACTICAL GUIDE

tion of ideas gleaned from thousands of different managers. No one manager embodies them all. We suggest you pick and choose from these actions, refine them, improve them, andfashion them into a form that fits you.

The Art of Interviewing for Talent "Which are the right questions to ask?"

1. MAKE SURE THE TALENT INTERVIEW

STANDS ALONE

Recruiting can be a complicated process. The candidate has to learn about you, the company, the role, and the details of his compensation. You have to check his resume, make him an offer; he may counter, you then resubmit your offer; and so the negotiating continues until finally you both feel comfortable enough to commit. This process is important, but allof it shouldbe handledseparately from the talent interview.

The talent interview should stand alone. It has but one purpose: to discover whetherthe candidate s recurring patterns of thought, feeling, or behavior match the job. This is difficult enough without trying to ac complish everything else simultaneously. So setaside a defined amount of time where bothyou andthe candidate know that the exclusive goal is to learn about his talents. Let him know that the interview will be a

little different from other interviews. It will be more structured, more

focused; less banter, more questions.

2. ASK A FEW OPEN-ENDED QUESTIONS AND THEN TRY TO KEEP QUIET

The best way to discover a person s talents in an interview is to allow himto reveal himself bythe choices he makes. In a sense, the talentin terview should mirror verbally what will face him on the job behav- iorally On the job, he will face thousands of situations every day to which he could respond in any number ofways. How he consistently re sponds will be hisperformance.

So in the interview, askopen-ended questions that offer manypoten tial directions and do not telegraph the "right" direction—questions such as "How closely do you think people should be supervised?" or "What do youenjoy most aboutselling?"

216 TURNING THE KEYS: A PRACTICAL GUIDE

The direction he takes, spontaneously, will be most predictive ofhis future behaviors.

When you have asked a question it isbestto pause andremain silent. If he asks you to explain what you mean, deflect his question. Tell him thatyou are really more interested inwhat he means. Say that it is his interpretation that is important. Let him answer your questions as his filter dictates. Lethim reveal himself toyou.

Most important, when he answers, believehim. No matter how much you might like his first impression, ifyou ask him how important it is to bethe best and he replies, "Well, I like tobethe best, butmostly I just try to be the best I can be," believe him. If you ask him what he likes about selling and he keeps talking about how quickly he wants to move into management, believe him. If you ask him what he loves about teaching and he never mentions children, believe him. Whatever he says, believe him. Apersons unaided response to an open-ended ques tion is powerfully predictive. Trust it, no matter how much you might wantto hear something else.

3. LISTEN FOR SPECIFICS

Past behavior is a good predictor of future behavior. Therefore ques tions like "Tell me about a time when you ..." can serve you well.

But becareful with these "Tell me about a time" questions. First, you should always be listening for a specific example. And by "specific" we mean specific bytime, by person, orby event. In this way you will avoid giving credit to the person who ratdes off a whole paragraph oftheory about how important something is but who never actually recounts a specific time when she did it.

Second, give credit only to the persons top-of-mind response. Past behavior is predictive offuture behavior only if thepast behavior is re curring. If the behavior does indeed happen a lot, then the person should be able to come up with a specific example with only one prompt. If he can, then it gives you a clue that this behavior is a recur ring part of his fife.

For example, lets say you are selecting for a sales position and you have decided to include the relating talent assertiveness in your talent profile. You might ask a question like "Tell me about a time when you

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overcame resistance to your ideas." Notice that you haven't asked for a specific—you have simply asked the individual to tellyou about a time when it happened. However, you are now listeningfor a specific.

Here are two,of the infinite number of possible answers:

1."I think it isvery important to be persistent, particularly if you really believe in your ideas. We really encourage that kind of candor here. With my team, if I have a suggestion that others disagree with, I know theywill expect me to keep supporting my ideauntil somebody comes up with a better one. In fact, it happens all the time."

2. "It happenedyesterday."

Which is the better answer? Well, it is hard to say which is "better." But2 is certainly the more predictive answer. Here the candidate spon taneously gave you an example that was specific by time, "yesterday." You don't know exactly what happened, but who cares? The details are less important than the top-of-mind specificity. You didn't ask for a spe cific, but withonly oneprompt,"Tell me abouta time . . ."he gave youa specific. Although you must ask many more questions to gain a fuller picture ofhis talent, his answer hereisa first clue that this behavior, sup porting his ideas in the face of resistance, is a recurring part of his life.

By contrast, in 1,the candidate gave you anice little description ofwhy she thoughtit was important to be candid andthen claimed that "it hap pensall the time." There isnothing wrong with this answer. But, lacking any specifics, there is nothing predictive about it, either. Facedwithan swers like 1, some managers are tempted to probe, "Can you tell me moreaboutthat? Canyou tellmewhat happened?" Theythen judgethe answer on the quality of the person's example: Howmuchdetaildid she provide? How articulate was she? DoI agree with what shesaid shedid?

This is a cardinalsin of interviewing. Regardless of the detail the can didate eventually provided, if she needed two or three probes to de scribe a specific example, then the chances are that the behavior in question is not a recurring part ofher life. Whenyouask "Tell me about a time" questions, don'tjudgethe response on the quality of its detail. If you do, you will end up evaluating whether the person is articulate or whether the person has a goodmemory, rather than whether he or she has the particular recurring talent youwant.

218 TURNING THE KEYS: A PRACTICAL GUIDE

Instead, judge the response on whether it was specific and top of mind.

(Of course, with either 1 or 2, if you want to ask more questions to satisfy your own curiosity, go ahead. Butremember, even if she eventu ally provides you with adetailed example, the fact that she required two or threeprobes to dredge it up tells you that the behavior isnot a recur ring part of her life.)

4. CLUES TO TALENT

Aside from specific examples ofpast behavior, what else should you be listening for? Are there any other signs thatcan tipyou offthatthecan didate does indeed possess thetalents you are looking for?

Over theyears we have found many small clues to a persons talent: a sudden glimpse ofexcellence at the role, a yearning toward certain ac tivities, a feeling offlow while performing the activity. Ofall these clues, two might be useful to you during the talent interview. Each person is so complex that no interviewing or testing system will ever be able to define his profile oftalents perfecdy. However, ifyou focus your ques tions toward these clues, then, like an image on a fresh Polaroid, the person's most dominant talents should gradually emerge. You can then compare his talents to those in your desired profile and assess the match.

a. Rapid Learning

When you learn a new role, you tend to learn it in terms of steps. Sometimes thesteps stay with you nomatter how hard you practice. For example, you may have beengiving presentations foryears, but you still struggle. Every time you have to present you revert back to the three basic steps you remember from public speaking class: "Okay, first I must tell them what I am going to tell them; then I must tell them; then I must tell them what I just told them."

Butwith other activities, the steps just seem to fall away. You feel a sense of gliding, of smoothness. For example, aftera couple of months as a salesperson you may have begun to feel this smoothness. All of a sudden you seemed to be able to see inside the mind of the prospect

The Art of Interviewing for Talent 219

andyou knew almost instinctively what words to say next. Or perhaps as a studentteacher, afteryourinitial nervousness had faded, the names of the children came easily and you found yourself walking up and down the rows of desks as ifyouhad been teaching allofyourlife.

Whenyouhave this feeling it isasif the steps of the newroleare sim plygiving form to a mental patternalready grooved within you—which, if you think about it, they are.

Rapid learning is an important clue to a person's talent. Ask the can didate what kinds of roles she has been able to learn quickly Ask her what activities come easily to her now. She will give you more clues to her talent.

b. Satisfactions

Everyone breathes different psychological oxygen. What is fulfilling for one person is asphyxiating for another.

Great accountants love the fact that two plus two equals four every time they do it. Great salespeople get a kick out of turning a no into a yes. Great flight attendants gravitate toward the tired, angry business traveler or the boisterous school sports team at the back, because they enjoyturning around the tough customers.

A person's sources of satisfaction are clues to his talent. So ask him what his greatest personal satisfaction is. Ask him what kinds of situa tions give him strength. Ask him what he finds fulfilling. His answers will help you know what he will be able to keep doing weekafter week after week.

5. KNOW WHAT TO LISTEN FOR

Many managers have a list of favorite questions they resort to every time they interview someone. So do great managers, but with one im portant distinction. They ask only questions where they know how top performers respond.

In their mind, the question is not nearlyas important as knowing how the best answer.

For example, here is a questionthat can identifythe different striving talents of salespeople and teachers: "How do you feel when someone

220 TURNING THE KEYS: A PRACTICAL GUIDE

doubts what you have tosay?" You might think that thebest salespeople would say they like a litde doubting, thatitwould give them a chance to show just how persuasive they could be. Surprisingly, they don't. They report that they hate it. It upsets them to be doubted (although they may notshow it) because, as we described earlier, great salespeople are selling themselves. To doubt them is toquestion their personal integrity. Disagree with them, argue with them, choose not to buy from them. But don't doubt them.

Average salespeople are not personally invested. They don't mind being doubted, sothis question doesn't strike any emotional chord with them at all.

For sales managers, then, this has proved to be a good question, be cause what they listen for is, "Upset." (Of course, this isn't the only question great sales managers ask. As we described earlier, the worst salespeople are also upset by rejection. Managers must ask further questions—"how" questions and"who" questions—to discover whether the candidate possesses other vital sales talents, likeinnate assertiveness or a love ofbreaking the icewith people.)

By contrast, it turns out that great teachers say they love being doubted. They cherish those moments. Great teachers instinctively in terpret the "doubters" as students, and they see this doubting as a sign ofanactive, inquisitive mind. Forgreat teachers, then, doubting means learning. Conversely, average teachers say they don'tlike to be doubted. Their first point ofreference istheir own competence, not the students' learning. Being doubted means having their competence challenged, and for them there is nothing worse.

This question works well for selecting teachers, then, but only if the desiredresponse is,"I love it."

The question doesn't work at all if you are selecting nurses. Why? Because the best nurses do not answer in a waythat is consistent with each other and different from their less successful colleagues. When you think about it, this ishardly surprising. After all, on those rare occa sions when a nurse is doubted, how she reacts to the doubting probably has litde to dowithhow good a nurse she is overall.

How can you develop these question/listen-for combinations? First, youcan try out a question on a few ofyourbest employees and a fewof the "rest" and then see if the best answer differendy, consistendy If theydo, the question/listen-for combination isa good one. If theydon't,

The Art of Interviewing for Talent 221

aswithnurses and the "doubting" question, then the question might not be worth asking.

Second, you can ask the question of all new applicants. Write down what they say andkeep a record ofit.After they have beenhired, check back to see if the people who subsequendy performed well answered your question in a consistent way.

This takes time and focus, but, aswith anyart, time and focus are re quiredto cultivate the art of interviewing fortalent.

The concept of talent applies to all that great managers do. However, the activity of selecting for talent is separate. It occurs at the time that you make the hiring decision. The activities of the other three Keys— define the right outcomes, focus on strengths, and find the right fit— cannot be separated so easily. How you set expectations for someone is interwoven with the way you motivate him to achieve those expecta tions. How you motivate and encourage him is oftenpart of a broader conversation where you are also helping him find the right fit. The day- to-day challenge ofturning talent into performance involves the turning of all three Keys, allat once, allthe time.

Performance Management "How do great managers turn the last three Keys every day,

with every employee?"

The exemplary managers Gallup interviewed described a variety of ideas for turning the final three Keys. But their real challenge lay in dis ciplining themselves to implement these ideas with each of theirpeo ple, despite the day-to-day pressures of getting the actual work done. They met this challenge by following a routine, a "performance man agement" routine. This routine, of meetings and conversations, forced them to keep focused on the progress of each person's performance, even though many otherbusiness demands were competing for theirat tention.

Each manager's routine was different, reflecting his or her unique style. Nonetheless, hidden within this diversity wefound four character istics common to the "performance management" routines of great managers.

First, the routine is simple. Great managers dislike the complexity of most company-sponsored performance appraisal schemes. They don't wantto waste their timetrying to decipher the alien terms and to fill out bureaucratic forms. Instead they prefer a simple format that allows them to concentrate onthe truly difficult work: what to say to each em ployee and howto sayit.

Second, the routine forces frequent interaction between the manager and the employee. It is no good meeting once a year, or even twice a year, to discuss an employee's performance, style, and goals. The secret to helping an employee excel lies in the details: the details ofhis partic ular recognition needs, ofhis relationship needs, ofhis goals, and ofhis talents/nontalents. Ayearly meeting misses these details. It degenerates into a bland discussion about "potential" and "opportunities for im provement." The onlyway to capture the details is to meet at a mini mum once a quarter, sometimes even more frequently. At these meetings the specifics of a success or a disappointment are fresh in the memory. The employee can talk about how a particular meeting or in teraction made him "feel." The manager can recall the same meeting

Performance Management 223

andsuggest subde changes in approach or a different way of interpret ing the same event. The conversation can be vivid, the advice practical. Furthermore, in the intervening weeks between meetings the manager andthe employee are motivated to concentrate onevents as theyoccur, because each knows that a forum for discussing these events will soon arise. Frequent performance meetings force both manager and em ployee to pay attention. (Ifyou areworried about the time drain inher ent in frequent performance meetings, remember that the best managers spend, on average, only one hour per quarter per person dis cussing performance.)

Furthermore, frequent performance meetings make it so much eas ier to raise the always sensitive subject of the employee's areas of poor performance. If you meet only once or twice a year, you are forced to drop your criticisms ontheemployee all atonce, like abomb. When the employee inevitably recoils, you then have to dredge your memory for examples to support your argument. But bymeeting frequently, you can avoid this battle of wills. You can introduce areas of poor performance little by little over time, and each time you raise the subject, you can refer to recent, vivid examples. Your criticisms will be easier to swallow and the conversation more productive.

Third, the routine isfocused on the future. Great managers do use a review of past performance to highlight discoveries about the person's style or needs. However, their natural inclination is to focus on the fu ture. They want to discuss what "could be," rather than allowing the conversation to descend into recriminations and postmortems that lead nowhere. Therefore, while the first ten minutes of the meeting may be used for review, the rest of the time is devoted to the truly creative work: "What do youwant to accomplish in the next few months? What measuring sticks will we use? Whatis your most efficient route toward those goals? How can I help?" In their view, these kinds of conversa tions are more energetic, moreproductive, and more satisfying.

Last, the routine asks the employee to keep track of his own perfor mance and learnings. In many companies "performance appraisal" is something that happens to an employee. Sheis a passive observer, wait ing to receive the judgmentof her manager. If she is lucky, she maybe asked to rate herself before she sees how the company rates her. But even here she is still reactive. She knows that the purpose of her self- assessment is to serve as a counterpoint or comparison with the assess-

224 TURNING THE KEYS: A PRACTICAL GUIDE

ment of her manager. So her self-assessment becomes a negotiat ing tool—"I'll pitch mine high and we'll probably end up somewhere in the middle"—rather than an honest evaluation of her own perfor mance.

The best managers reject this. They want a routine that asks each employee to keep track ofher own performance and learnings. They want her to write down her goals, her successes, and her discoveries. This record is not designed tobeevaluated orcritiqued by hermanager. Rather, its purpose is to help each employee take responsibility for her performance. It serves as her mirror. It is a way to stepoutside herself. Using this record, she can see how she plans to affect the world. She can weigh the effectiveness of those plans. She can be accountable to herself.

Naturally, great managers want to discuss and agree to each em ployee's short-term performance goals, but the rest of the record—her discoveries about herself, the descriptions ofnew skills shehas learned, the letters of recognition she may have received—are partof a private document. If the employee is fortunate enough to have a trusting rela tionship with her manager, she may feel comfortable sharing the whole record—successes, failures, perceived strengths. But this is not the point ofit. Thepoint is to encourage the employee to keep track ofher own performance and learnings. The point isself-discovery.

Recent research into adult learning reveals that students stay in school longer and learn more if theyare expected to direct and record theirprogress. Great managers realized this long ago and now apply it with their employees.

These four characteristics—simplicity, frequent interaction, focus on the future, and self-tracking—are the foundation for a successful "per formance management" routine. In the basic routinebelowwe describe some of the questions many greatmanagers ask to learnabouttheir em ployees and the format they usually follow. Our purpose is not to tell youexactly whatto say, or howto say it, or to whom, because that would be cumbersome and artificial—you will of course want to adapt the questions and tools to yourown talent and experience.

However, if you follow this basic routine and incorporate it success fully into your own style, you will give yourself the bestchance possible

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to define the right outcomes, tofocus onstrengths, and to help eachper- sonfind therightfit.

THE BASIC ROUTINE

The Strengths Interview

Atthe beginning ofeachyear, or aweek or two afterthe personhasbeen hired, spendabout an hourwithhimasking the following ten questions:

Q.l Whatdidyouenjoy most aboutyourprevious workexperience? What brought youhere? (If an existing employee) Whatkeeps youhere?

Q.2 Whatdoyouthinkyourstrengths are?(skills, knowledge, talent) Q.3 What about yourweaknesses? Q.4 What are your goals for your current role? (Ask for scores and

timelines) Q.5 Howoftendoyou like to meetwith meto discuss yourprogress?

Areyouthe kindofpersonwhowill tell me howyouare feeling, or will I have to ask?

Q.6 Do youhave anypersonal goals or commitment youwould like to tell me about?

Q.7 What is the best praiseyou have ever received? What made it so good?

Q.8 Have you had any really productive partnerships or mentors? Why do you think these relationships worked so well for you?

Q.9 What are your future growth goals, yourcareer goals? Arethere anyparticular skills youwantto learn? Are there some specific challenges you want to experience? How can I help?

Q.10 Is there anything elseyouwantto talkaboutthat mighthelp us workwell together?

The main purpose of this session is to learn about his strengths, his goals, and hisneeds, asheperceives them. Whatever he says, evenifyou disagree with him, jot it down. If you want to help him be productive, you have to know where he is starting from. His answers will tell you wherehe thinks he is. Duringthe course of the yearit may be appropri-

226 TURNING THE KEYS: A PRACTICAL GUIDE

ate to help him change his opinions, but initially you are interested in seeinghisworldthroughhiseyes.

During the course of the strengths interview he will tell you how often he wants to meet to discuss hisprogress withyou (Q.5) Schedule the first performance planning meeting of the yearat the interval he in dicated. For the purposes of this description, we will assume he said, "Once everythree months."

The Performance Planning Meetings

To help him prepare, ask him to write down answers to these three questions before each meeting:

A. What actions have you taken? These shouldbe the details of his performance over the last three months. He should include scores, rankings, ratings, and timelines, if available.

B. What discoveries haveyou made? These discoveries mightbe in the form of training classes he attended, or they might simply be newinsights derived from an internal presentation he made, or a job-shadowing session in which he participated, or even a book that he read. Wherever they came from, encourage him to keep track of his own learning.

C. What partnerships have you built? These partnerships are the relationships he has formed. They might be new relationships or the strengthening of existing relationships. They might be rela tionships with colleagues or clients, professional relationships or personalones. It is up to himto decide. Whatever he decides, it is important that he takeresponsibility forbuilding hisconstituency, inside and outside the company.

At the beginning of the meeting ask him A, B, and C. Jot down his an swers and keep a copy. He should keep hiswrittencopy. If he wants to share all of his written answers withyou, wonderful, but don't demand it. Either way, use his answers as a jumping-offpoint to discuss his per formance over the last three months.

After about ten minutes direct the conversation toward the future, drawing on the following questions:

Performance Management 227

D. What is your main focus? What is his primary goal(s) for the next three months?

E. What new discoveries are you planning? What specific discov eries is he hopingto make overthe nextthree months?

F. What new partnerships are you hoping to build? How is he planningto growhis constituency overthe next three months?

Terms suchas"discovery" or "partnership" maynot fityourstyle or your company's culture. You will know the right words to choose. But what everyourwordchoices, make sure that yourconversation about hisnext three months extends beyond simple achievement goals. Suggest that he write down his answers. You should discuss his answers, agree to them, and then keep your copy. His answers will nowserveas your spe cific expectations of him for the next three months.

After another three months have elapsed, ask him to write down his answers to A, B, and C, and once again, at your second performance planningmeeting, askhim these three questions and use his answers to spur discussion about his performance. Then quickly move into a dis cussion about the future and askhim D, E, and F—onceagain, it will be helpful if you and he write down what he says and keep copies. As you talkthrough his successes, his struggles, and his goals, try to keep focus ing on his strengths by setting expectations that are right for him, by helping him to perfect his style, and by discussing how you can run in terference for him.

Repeat this routine at the next three-month interval, and the next, until the year cycle is complete.

Bythe end of the year you will have met at least four times. You will have reviewed his past and planned in detail his future progress. You will have learned more about his idiosyncrasies and, perhaps, have used whatyoulearnedto help himidentify histrue strengths and weaknesses more accurately. Perhaps he will have changedhis mind about some of his opinions and some of his needs. You will have been close to him through somedifficult times and throughsome successes. You will have disagreed on some things and agreedon much. But whateverhappens, you will nowbe strongerpartners. By meeting frequently, by listening, by paying attention, by advising, and by planning in detail,youwill have developed a shared and realistic interest in his success. And, important, he will have a record of it all.

228 TURNING THE KEYS: A PRACTICAL GUIDE

Career Discovery Questions

At some point during your performance planning meetings, the em ployee maywant to talkabout his career options. He maywant to know where you think he should go next. A healthy career discussion rarely happens all at once. Instead it is a product of manydifferent conversa tions, at many different times. However you choose to handle these conversations—and each will be unique, according to the potential and the performance of the individual employee—you need to ensure that, over time, two things happen. First, the employee needs to become in creasingly clear about his skills, knowledge, and talents. Lacking this land of clarity, he will be a poor partner asyou and he together plan out his next career steps. Second, he needs to understand, in detail, what this nextstep would entailand why he thinks he wouldexcel at it.

He must come to these understandings by himself. But you can help. You can use these five career discovery questions, at different times, to prompt his thinking:

Q.l Howwouldyoudescribe success in your current role? Can you measureit? Here iswhat I think. (Add yourowncomments.)

Q.2 What do you actually do that makes you as good as you are? What doesthis tellyouaboutyourskills, knowledge, and talents? Here iswhat I think. (Add yourowncomments.)

Q.3 Which part of your current role do you enjoy the most? Why?

Q.4 Whichpart of yourcurrent role are you struggling with? What does this tell youaboutyourskills, knowledge, and talent? What canwe do to manage aroundthis? Training? Positioning? Support system? Partnering?

Q.5 What wouldbe the perfect role for you? Imagine you are in that role. Its three P.M. on a Thursday. What are youdoing? Whywouldyou likeit so much? Here is what I think. (Addyour own comments.)

These questions, scattered throughout the year, will function as cues to get the employee thinking in detail about his performance. Does he

Performance Management 229

want to build his career by growing within his current role? Does he want to move into a new role? If so, what strength and satisfaction would he derive from it? These five questions won't necessarily provide the answers. But, asked in the right way, at the right time, theywill help the employee focus his thoughts, and he will come to know your thoughts. Together you will form a few firm conclusions about his pres ent performance and his potential. Together you will now make better decisions about his future.

Keys ofYour Own "Can an employee turn these Keys?"

Nomanager canmake an employee productive. Managers are catalysts. They canspeed up the reaction between the talent ofthe employee and the needs of the customer/company. They can help the employee find his path ofleast resistance toward his goals. They can help theemployee plan his career. Butthey cannot do any of these without a major effort from the employee. In the world according to great managers, the em ployee is the star. The manager isthe agent. And, asin the world ofper forming arts, the agent expects a great deal from his stars.

This iswhat great managers expect ofevery talented employee:

• Lookin the mirror anychanceyouget. Use anyfeedback tools provided by the company to increase your understanding of who youare and howothers perceive you.

• Muse. Sit down for twenty or thirty minutes each month and play the last few weeks back in your mind. What did you accom plish? What didyou learn? What didyou hate? What didyou love? Whatdoes allof this say about you andyourtalents?

• Discover yourself. Over time become more detailed in yourde scription of your skills, knowledge, and talents. Use this increas ingly deep understanding to volunteer for the right roles, to be a betterpartner, to guide your training anddevelopment choices.

• Buildyour constituency. Overtime, identify which kinds of rela tionships tend to work well foryou. Seekthem out.

• Keep track. Build yourown recordof your learnings and discov eries.

• Catch your peers doing something right. Whenyou enter your placeof work, you never leave it at zero. You either makeit a little better or a little worse. Make it a little better.

Keys ofYour Own 231

SO YOU WORK FOR A DISCIPLE OF "CONVENTIONAL

WISDOM" ... OR WORSE

Great managers are still a minority. Few employees are lucky enough to work for "supersupervisor": the perfect balancer ofwarmth and drive, support and authority, a manager who understands them, accepts them in all of their imperfection, and knows just how to energize them on eventhe most sluggish of mornings.

Instead most employees work for a supervisory "work in progress": a manager who genuinely wants to treat his people well, who genuinely wants them to excel, but who is still struggling to get it right. Maybe he spends too much time telling his people what to do and not enough time listening to the unique needs of each person. Maybe he wants to perfect his people by making them learn his way ofdoing things. Maybe he naively treats everyone the way he would like to be treated. Maybe he is well intentioned but too busy to find the time to talk with all em ployees about their performance. Or maybe he is less well intentioned. Maybe he dislikes people, distrusts them, takes credit for their suc cesses, and blames them for his failures.

If you work for any one of these managers, what can you do? What can you do to help him or her make the most ofyou? While we cannot offer you a surefire solution, we can give you a few pointers for manag ing your manager.

A. If your manager isjust toobusy to talk with you aboutyour perfor mance or your goals ... schedule a performance planning meeting with him. Remove the planning burden from his shoulders andtellhim that you will provide the structure for the meeting in advance so that you can use your time together most efficiendy. You will prepare a short review of the last three months, the actions you took, the discoveries you made, the new partnerships you built. You will then want to discuss withhim the next three months—specifically, yourmain focus, the new discoveries you want to make, and the new relationships you want to build. All he has to do is show up to the meeting and focus on you for forty-five minutes.

If he consistently cancels the scheduled meeting, or has nothing to say to you during the meeting, then your problem is not that he is too

232 TURNING THE KEYS: A PRACTICAL GUIDE

busy. Your problem is that he is a poor manager. Faced with this prob lem, you are limited in your options. If you love the job itself and feel you are doing well, you may simply have to putupwith him. The alter native is to make a move, which we will discuss in item E.

B. Ifyour manager forces you todo things herway . . . she is probably focusing on process too much. Pick your moment, perhaps during your performance planning meeting, and tell her that you want to define your role more by its outcomes than by its steps. Ask her which out comes she would use to measure your success. As you discuss this, de scribe for her how your style, although different from hers, will still enable you to achieve theoutcomes expected ofyou. Your point here is nottopersuade her thatyour style is betterthan hers. Your point is sim ply that your style is the most efficient way for you to reach the out comes on which you and she have agreed. When viewed through this lens, her style, no matter how sensible it might seem to her, really does not apply.

Ofcourse, a misfocus onsteps rather than outcomes may notbe the problem. She may be forcing you to do things herway because she likes this feeling ofpower and control. If you can adapt to her style without compromising your integrity, fine; otherwise you may wish to make a move to another job.

C. If your manager praises you inappropriately or at inappropriate times ... you cansuggest alternatives. This isn'talways an easy conver sation. In fact, telling your manager that you much prefer to be praised in private rather than in public, can sometimes feel arrogant and pre sumptuous. Once again, you have topick your moment. It would proba bly be neither wise nor sensitive to correct him immediately after he had the whole team standup and cheer yoursuccess—Mark D., the in surance agent from chapter 5, certainly woke his manager up bystorm ing off the stage, but we wouldn't recommend this approach. Instead make your comments at a time when you are discussing all aspects of your performance, perhaps during the structured, dispassionate setting ofa performance planning meeting, (and it would not hurt to thankhim forhis good intentions). This will show him thatyou have thought care fully about what you needfrom him andwill give him a chance to assim ilate what you toldhimintothe way he manages you.

Keys of Your Own 233

If the problem is less that he gives you the wrong kind of praise, and more that he gives you no praise at all, you will need to survive for as long as possible on your own reserves. If you are a natural self-starter, you may find that you can survive adequately for quite a while without any recognition at all. Most people, though, will soon feel a drain on their energy. Facedwiththe prospect of a recognitionless environment, youmaywish to considera move.

D. If your managerconstantly asks you questions about howyou are doing and feeling, or otherwise intrudes ... suggest that you don't find this helpful. It is a delicate matterbecause you don't want to seem insubordinate or asifyou arehis manager. Butask if it would be okay if you "check in" with him less frequently than he obviously wants to check in withyou. Tell him that it is no reflection on him. Say that you are hoping to function a little more independently, and that if you can schedule a "check-in" meeting on your cycle rather than his, then you will probably be able to be a great deal more productive. Obviously it is a sensitive situation, but ifyou useunambiguous, unemotional terminol ogy like "I like to check in every couple ofweeks rather than every cou pleofdays," you should be able to handle it andcome to some practical arrangements that workfor both ofyou.

Ifyour manager isintruding because he issuspicious ofyou, the most unambiguous, unemotional terminology will be of little help. You will have to resort to a different strategy—a move.

E. If the problems we have discussed are of an altogether different nature, which is to say, if yourmanager consistently ignores you, dis trusts you, takescredit for yourwork, blames youfor his mistakes, or disrespects you . . . then get out from under him. You might look for a lateral move or another position within the company, or you might sim plyleave. Yes, youmight decide to stick it out for six months in the hope that he will leave. Yes, the generous company benefits might dull your pain enough to make your situation tolerable. Yes, you might be able to find a sympathetic ear withyour manager's boss or with the human re sources department. But don't fool yourself. If his behavior has been consistent over time, he is not going to change that much. Some man agers simply should not be managers. Their misbehavior is not a func-

234 TURNING THE KEYS: A PRACTICAL GUIDE

tion of misunderstandings or misdirected good intentions. It is a func tion of lack of talent (or sometime neurosis). Lacking the appropriate four-lane highways in theirmind, they will forever make poordecisions. They will forever mistrust, overshadow, abandon, intrude, and stifle. Theyhave to. It'sin theirnature. Neitheryou nor thisbooknorweeks of sensitivity training will give themthe strengths, the self-esteem, and the security they need to be a great manager.

We would like to be able to tellyou, "Don't worry. Soldier on. Rely on the strength ofyourown talentandyou will still excel." Butwe cannot. You might be able to survive your predicament for a while in the hope that the manager will prove his own undoing andget fired. But, lacking a good manager, you won't be able to last long. As this book hasshown, in yourstruggle to turn allofyourtalents intoperformance, yourimme diate manager is a very important partner. If you are cursed with a truly bad one, then you will never see the best of you. No matter howmuch youenjoy the job itself, get out, fast. You deserve better.

Master Keys "What can the company do to create afriendly climate

for great managers?"

Wehavesaidthat an employee may join a company because of its pres tige and reputation, but that his relationship with his immediate man agerdetermines how long he stays andhow productive he iswhile he is there. We have said that the manager is the critical player in turning each employee's talent into performance. We have said that managers trump companies.

All this is true. From the employees' perspective, the manager is in deed more influential than the company. However, the company still wields enormous power. Bythemselves, great managers can offer lim ited local resistance to conventional wisdom. Only a total company ef fort can dislodge it completely.

In most companies conventional wisdom remains deeply entrenched. Even though many managers might disagree with some of its central tenets—each person has unlimited potential; help each person to over come his weaknesses; treat others as youwould like to be treated—still these tenets survive. They are held firmly in place by a networkof poli cies, practices, and languages. This network pervades the company, af fecting the way employees are selected, trained, paid, punished, and promoted. Bythemselves, great managers can make small advances in the opposite direction, but they can neverbreak all the way through to the other side. No matterwhich route theytry, sooneror later they open a door and find convention standing there with some policy or rule or system that stopsthe great manager in his tracks:

"You can't pay people that way." "You can't promote him if he doesn't have more than three years' ex

perience." "You're not treating everyemployee the same. That's unfair." "Here's our new performance management system. Make sure every

employeeis trained on everyone of these competencies." "You can't give her that title. She doesn't have anyone reporting to

her."

236 TURNING THE KEYS: A PRACTICAL GUIDE

Conventional wisdom is barricaded behind a wall of selection, train ing, compensation, and performance management systems. The only way to dislodge it completely is to replace these systems. And only the company can replace these systems.

Using the Four Keys as our guide, here are some of the master keys that the senior management of a company can use to break through conventional wisdom's barricades.

A. Keep the focus on outcomes: The role of the company is to iden tifythe desired end. The role of the individual is to find the best means possible to achieve that end. Therefore strong companies become ex perts in the destination and give the individual the thrillof the journey.

• As much as is possible, define every role using outcome terms. • Find a way to rate, rank, or count as many of those outcomes as

possible. Measurement always improves performance. • The four most important emotional outcomes for a customer are

accuracy, availability, partnership, and advice. Examine each role within the company and identify what actually needs to happen to create these outcomes. In training classes, explain how the stan dardized steps of the role lead to one or more of these emotional outcomes. Also explain where, how, and why employees are ex pected to use their discretion to create these outcomes.

• Hold managers accountable for their employees' responses to the twelve questions presented in chapter 1. These twelve questions are a veryimportantoutcome measure. Although wewouldnot ad vise paying managers on their employees' responses, managers should use the twelve questions as part of their overall perfor mance scorecard.

B. Value world-class performance in everyrole: At strongcompanies everyrole, performed at excellence, is respected. If you want to under stand the culture of a company, look first to its heroes.

• Withinas manyrolesas possible, set up different levels of achieve ment. Identify specific criteria for moving up from one level to the next. Reward progress with plaques, certificates, and diplomas. Takeeverylevelseriously.

Master Keys 237

• Within as many roles as possible, set up broadbanded compensa tion plans. Identify specific criteria for moving up within each band. Explain clearly the reasonfor the paycut when shifting from one band to another.

• Celebrate "personal bests." Many people like to compete with themselves. Design a system so that each person can keep track of his or her performance monthly or quarterly. Use this system to celebrate monthly or quarterly"personal bests," as and when they occur. A growing number of "personal bests" means a growing company.

C. Study your best: Strong companies learn from their very best. Internal best practice discovery is one of their most important rituals.

• Start with your most significant roles and study your best practi tioners. Builda talent profile for each role. Thiswill help you select more people likeyour best.

• Revise all training to incorporate what you have learned about ex cellence in each role.

• Set up an internal "university." The main function of this "univer sity" should be to provide a forum for showcasing how your best, in every role, do what they do. As far as is possible, every em ployee shouldbe exposed to the thinking, the actions, and the sat isfactions of your best, in every role. Your employees can learn many other things at this "university"—policies, rules, tech niques—but the main focus should be a presentation of internal best practices. Remember, this "university" can be as flexible, in formal, and brief as the size and complexity of your organization requires—the important thing is to learn from your best in a disci plined way.

D. Teach the language of great managers: Language affects think ing. Thinking affects behavior. Companies must change how people speakif they are to change howpeople behave. Strongcompanies turn the language of great managers into the common language.

• Teach the Four Keys of great managers. In particular emphasize the difference among skills, knowledge, and talents. Make sure

238 TURNING THE KEYS: A PRACTICAL GUIDE

people know that all roles, performed at excellence, require talent, that a talent isany recurring pattern of thought, feeling, or behav ior, and that talents are extraordinarily difficult to teach.

• Change recruiting practices, job descriptions, and resume qualifi cations to reflect the critical importance and the broader definition of talent.

• Revise all training content to reflect the differences among skills, knowledge, and talents. A great company is clear about what can be trained and what cannot.

• Remove the remedial element from training. Send your most tal ented people to learn new skills and knowledge that can comple ment their talents. Stop sending less talented people to training classes to be "fixed."

• Give every employee the benefit of feedback. Know that 360- degree surveys, personality profiles, and performance appraisal systems are all useful as long as they are focused on helping the person understand himself better and build upon his strengths. Stopusing them if theyare focused on identifying whatneeds to be fixed.

• Start the great managers' "performance management" routine.

Thesemasterkeys, although nota substitute forgreatmanagers, are a valuable companion. Left unturned, they allow conventional wisdom to create a climate hostile to great managers. With every policy, system, and language built around its core assumptions, conventional wisdom drowns out the small voices ofdissent and forces eachgreat manager to question even her most fervently held beliefs. In a climate like this, great managers cannot grow. They cannot refine their intuitions with practice. Theyare toobusytrying to stay clearheaded and to survive.

However, when turned successfully, these master keys alter the whole company climate. The climate becomes supportive to great managers, reinforcing their insights and pushing them to practice and to experi ment and to refine. In this climate great managers will thrive. Employees will excel. The company will sustain its growth. Andconven tionalwisdom will be uprootedonce and for all.

Gathering Force

Great managers make it allseemsosimple. Just selectfor talent, define the right outcomes, focus on strengths, andthen, aseachperson grows, encourage him or her to find the right fit. Complete these few steps with every single employee, andyour department, division, or company willyieldperennial excellence. It sounds almost inevitable.

We know, just as you do, that it isn't. It is very hard to manage oth ers well. The essence of the role is the struggle to balance the com peting interests of the company, the customers, the employees, and even your own. You attend to one, and you invariably upset the oth ers. If you have just intervened between a rude customer and a stam mering employee, it is hard to find the right words to placate the customer and yet save face for the employee. If you have just as sumed responsibility for a team of thirty jaded veterans, it is hard to know how to gain their trust while still pushing them to perform. If you have just realized that the new employee, whom you so carefully selected, does not, in fact, have the talent to perform, it is hard to know how to break the news without demoralizing him and alarming his colleagues. No matter which way you spin it, its hard being the middleman.

This book doesn't offer to make your role easy. It simply offers you a vantage point. It offers you a way to gain a clearer perspective on what you are doing, why you are doing it, and how to do it better. This per spective won't tell you what to do in every situation. But it will guide you toward sound action. It will help you know how to start laying the foundations for an enduringly strong workplace.

We cannot promise miracles overnight. Andyou wouldn't believe us ifwe did. You know thatat work tomorrow you are going to seea lotof people cast inthewrong roles. You know that you are going tosee many managers marching in lockstep with conventional wisdom. And you know thelimits ofwhat you can change onyour own. You know thatyou will only be able to change things oneemployee at a time, conversation byconversation. Like all great managers, you are at the start of a long journey.

We can only promise that these Four Keys are an extraordinarily powerful beginning.

242 GATHERING FORCE

On your journey, take strength from this: As you chip away at conven tional wisdom, you are being aided by the gathering of two powerful forces. The needs of the company and the needs of the employee, mis aligned sincethe birth of the "corporation" 150years ago, are slowly be ginning to converge. Today you, the manager, find yourself at their meeting point.. ..

Everywhere employees are demanding more of their work. With the breakdown of other sources of community, employees are looking more and more to their workplace to provide them with a sense of meaning and identity. They want to be recognized as individuals. They want a chance to express themselves and to gain meaningful prestige for that expression. Onlyyou, the manager, can create the kind of environment where each person comes to know his or her strengths and expresses them productively.

At the sametime, companies are searching for undiscovered reserves of value. Human nature is one of those last, vast reserves of value. If theyare to increase their value, companies know they must tap these re serves. In the past theyhave tried to access the powerof human nature by containing it and perfecting it, just as mankind has done with the other forces of nature. We nowknow whythis cannot work: the power of human nature is that, unlike other forces of nature, it is not uniform. Instead its power lies in its idiosyncrasy, in the fact that each humans nature is different. If companies wantto use thispower, theymustfind a mechanism to unleash each human's nature, not contain it. You, the manager, are the best mechanism theyhave.

The intersection of these two forces—each company's search for value and each individuals search for identity—will change the corpo rate landscape forever. You will see neworganizational models, new ti tles, new compensation schemes, new careers, and new measurement systems—all designed around the mantra "Don't try to put in what was left out. Tryto drawout whatwas left in."Somemanagers maytry to re sist these forces of change, but they will fail. A company's search for value is asunending and asirresistible asan individual's search for iden tity. You can slow these gathering forces down. You cannot stop them.

But youcan speed them up. You can be the catalyst. The world's best managers have shown youhow.

APPENDICES

• Appendix A:The Gallup Path to Business Performance

• Appendix B: What the Great Managers Said

• Appendix C: A Selection of Talents

• Appendix D: Finding the Twelve Questions

• Appendix E: The Meta analysis

Appendix A: The Gallup Path to Business Performance

"What is the path to sustained increase in shareholder value?"

Through research examining the linkages between key elements of a healthybusiness, the Gallup Organization has developed a model that describes the path between the individual contribution of every em ployee and the ultimate business outcome ofanycompany—an increase in overall company value. For publicly traded companies, this is, of course, best measured by increase in stockprice and market valuation. Below is a schematic of the path. Abriefoverview of each step along the path follows.

ENTER HERE

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REALPROFIT INCREASE -*

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REAL PROFIT INCREASE DRIVES STOCK INCREASE

Many variables influence the market value of a company, including ex ternalvariables beyonda company's control. But of the variables a com pany can control, real profit increase is the most important driver of

246 APPENDICES

stock increase. We emphasize "real," because there are many maneu vers a company can take to driveshort-termprofitability. Some are solid operational initiatives, such as improving process efficiency or cutting costs. Others are generously described as creative accounting, such as write-downs, aggressive one-time charges, or forcing orders for prod ucts at the end-of-period to overstate revenue. However, onlysustained profit increasefromnormal operations can drivea sustainedincrease in stock value.

SUSTAINABLE GROWTH DRIVES

REAL PROFIT INCREASE

Real profit increase can only be driven by sustainable growth. Sustainable growth is quite different from "boughtgrowth." Acompany can buy growth through a variety of techniques: acquiring another company's revenue stream, slashing prices, or, a perennial favorite amongfast-growing restaurantor retailchains, openingas manynew lo cations as possible as quickly as possible. All of these techniques create a welcome spike in your revenue, but none of them addresses the issue of sustaining that revenue—in fact, someof them actively undermine it. Sustainable growth is not measured by a short-lived revenue spike. Rather, sustainable growth is measuredby metrics such as revenue per store, or revenueper product,or number of services used per customer. These metrics reveal whether or not your revenue stream is robust, whether it will last.

LOYAL CUSTOMERS DRIVE SUSTAINABLE GROWTH

The most critical driver of sustainable growth is an expanding base of loyal customers. In some industries it is also critical to have a growing base of loyal customers who are willing to pay a premium price. It is evenbetter if these loyal customers become advocates, thereby creating a large,vocal, and unpaid sales force.

Customers can be persuaded to try a product or service through ef fective sales and marketing communications, but true customer loyalty can be created onlyby treatingcustomers to a superior product and su-

Appendix A: The Gallup Path to Business Performance 247

perior service. At Gallup we refer to the sales and marketing communi cations as the "brand promise," and the quality of the products and ser vices as the "brand experience." A company will be able to create a growing number of loyal customers only if its brand experience matches or exceeds its brand promise.

ENGAGED EMPLOYEES DRIVE CUSTOMER LOYALTY

Jack Welch, the CEO of General Electric, oncesaid, "Any company try ing to compete ... must figure out a way to engage the mind of every employee." This is especially true in service industries, where nearly all of the company's value is delivered to customers by individual employ ees. But evenin pure manufacturing environments, quality products are unlikely to be produced withoutengaged and committedemployees.

The twelve circles in the schematic on page 245 refer to the twelve questions described in chapter 1. A "fully engaged" employee, by our definition, is one who can answer witha strong affirmative to all twelve of those questions. Remember, the four outcome measures we used in our meta-analysis at the business unit level were employee reten tion, productivity, customer satisfaction, and profitability. While the schematic above only illustrates the link between engaged employees and customer loyalty, there are often very direct links between an in creasein the number of engaged employees and profit, either indirectly through an increase in productivity, or directly through major decreases in employee turnover.

THE RIGHT PEOPLE IN THE RIGHT ROLES

WITH THE RIGHT MANAGERS

DRIVE EMPLOYEE ENGAGEMENT

Atthe entrypoint of the path, the first steps mustbe performedalmost perfectly or the remaining linkages to customer satisfaction, revenue growth, andprofit will not occur. First,you mustidentify the employee's individual strengths. In step two, you must position that individual to perform a role that capitalizes on these strengths. Failureto meet these two requirements cannot be corrected by either the employee's motiva-

248 APPENDICES

tion or by expert coaching. As this bookdescribes in some detail, when we refer to "strengths" we are referring primarily to a person's recurring patterns of thought, feeling, or behavior—his talents—and less to learned skills and acquired knowledge. We believe that when selecting employees, companies have spent far too much time and money focus ing on the skills and knowledge of employees and not nearlyenoughon their talents. Truth be told, mostcompanies trip themselves up right at the start of thispath because theyhave no accurate wayof knowing how much talent they are bringing in, nor howwell that talent is positioned.

Having successfully taken thesefirst two steps, youarrive at the path's mostcritical juncture.You mustfind a way to engage these talented em ployees. Again, there are many ways to do this—pay them more, pro vide more generous benefits—but these are low-character solutions. The only way to engage talented employees successfully is to select great managers and then provide these managers witha climate friendly to the Four Keys. In this climate great managers can select the best people, set accurate expectations for them, motivate them, and develop them. Every single employee's talent will be released into customer- focused performance. The company will becomestrong.

The company that is unable to take this step will be forced off the path. Theywill losemoretalentedpeoplethan theykeep.Theywill mis cast, overpromote, undervalue, and otherwise misuse those talented employees who do stay. Lacking talented people in the right roles, this company will have to revert to less robust routes to performance—an overreliance on marketing, an unquestioned fondness for acquisition, a frantic push for "bought" growth. Pressed by high character competi tion, these routes will serve this company poorly. And, in the end, lack ing great managers to keep it on the right path, this companywill lose.

Appendix B: What the Great Managers Said "What did great managers say to the three questions

quoted in chapter 2?"

"As a manager, which would you rather have: an independent, ag gressive person who produced $1.2 million in sales or a congenial team player whoproduced about halfasmuch? Please explain your choice."

Great managers replied that they would prefer an independent, ag gressive person rather than the half-as-productive team player. They reasoned that the independent, aggressive person was probably more talented but harder to manage. The team playerwas probably less tal ented for the role but much easier to manage. Great managers are not looking for peoplewhoare easy to manage. Theyare looking for people who have the talent needed to be worldclass. Therefore they prefer the challenge of taking a talented person and focusing him or her toward productivity to the challenge of trying to make a less productive person talented.

<eYou have anextremely productive employee who consistentlyfouls up the paperwork. How would you work with this person to help him/her bemore productive?"

Great managers would find out why this employee is fouling up the paperwork. Perhaps she is new to the role, perhaps she could benefit from some training. But if they find out that the problem is lackof tal ent for paperwork, they will workto finda solution that enables the em ployee to manage around her weakness for administration and focus on her productivity instead.

"You have two managers. One has the best talentfor management you have everseen. The other is mediocre. There aretwo openings available: thefirst is a high-performing territory, the second is a territory thatis struggling. Neither territory has yetreached itspo-

250 APPENDICES

tential. Where would you recommend the excellent manager be placed? Why?"

Greatmanagers would always place the most talentedmanager in the higher-performing territory. The key phrase in the question is "neither territoryhas yet reached its potential." Great managers use excellence as their measure. They know that only the talented manager working in the higher-performing territory has a chance to help that territoryreach its true potential. Taking that territory to excellence is just as much of a challenge for the talented manager as is moving the struggling territory up above average. Furthermore, the former is much more fun and much more productive. With the talented manager positioned in the higher-performing territory, great managers say they would then re move the poor manager and select a talented turnaround expert to fix the lower-performing territory.

To those who would do the opposite, great managers offer this cau tionary word: Your less talented manager will never make the most of the higher-performing territory, andthe lower-performing territory may well defeatyour talented manager. In this case, with the best of inten tions, you have set up two people to fail and halved your productivity.

Appendix C: A Selection ofTalents "Which talents are found mostfrequently across all roles?"

Duringour research Gallup has hadthe opportunity to studyexcellence in hundreds of distinct roles. The talents needed to excel in these roles

vary greatly. Butin response to requests from managers, wefist here the most commonly found talents with a short definition of each. You can use these definitions to guideyour thinking as you decidewhich talents you shouldbe selectingfor.

StrivingTalents

Achiever: A drive that is internal, constant, and self-imposed Kinesthetic: A need to expendphysical energy Stamina: Capacity for physical endurance Competition: Aneed to gauge yoursuccess comparatively Desire: A need to claim significance through independence, ex

cellence, risk, and recognition Competence: A need for expertise or mastery Belief: A need to orient your life aroundcertainprevailing values Mission: A drive to put yourbeliefs into action Service: A drive to be of service to others

Ethics: A clear understanding of right and wrong which guides your actions

Vision: Adrive to paintvalue-based word pictures aboutthe future

Thinking Talents

Focus: An ability to set goals and to use them every day to guide actions

Discipline: Aneed to impose structureonto lifeand work Arranger: An ability to orchestrate Work Orientation: A need to mentally rehearse and review Gestalt: A need to see order and accuracy Responsibility: A need to assume personal accountability for your

work

252 APPENDICES

Concept: An ability to develop a framework by which to make senseof things

Performance Orientation: Aneedto be objective and to measure performance

Strategic Thinking: An ability to playout alternative scenarios in the future

Business Thinking: The financial application of the strategic thinking talent

Problem Solving: An ability to think things through with incom plete data

Formulation: Anability to find coherent patternswithin incoher ent data sets

Numerical: Anaffinity for numbers Creativity: An ability to break existing configurations in favor of

more effective/appealing ones

RelatingTalents

Woo: Aneed to gain the approval ofothers Empathy: An ability to identify the feelings and perspectives of

others

Relator: A need to build bonds that last

Multirelator: An ability to build an extensive network of acquain tances

Interpersonal: An ability to purposely capitalize upon relation ships

Individualized Perception: An awareness of and attentiveness to individual differences

Developer: Aneed to invest in othersand to derive satisfaction in so doing

Stimulator: An ability to create enthusiasm and drama Team: Aneed to buildfeelings of mutual support Positivity: Aneed to look on the brightside Persuasion: Anability to persuade otherslogically Command: Anability to take charge Activator: An impatience to move others to action Courage: An ability to use emotionto overcome resistance

Appendix D: Finding the Twelve Questions "How did Gallup find the twelve questions?"

We began with focus groups. Each focus group included employees from each company's most productive departments. An occupational psychologist from Gallup conducted the groups, asking open-ended questions about the workplace. Each focus group was tape-recorded. Over the last twenty-five years Gallup has conducted thousands of such focus groups.

From these focus groups we developed lengthy surveys, including questions on all aspects ofthe employees' work experiences. These sur veys were administered to over one million employees. After each study we performed analyses to identify the factors within the data.

Fivefactors consistently emerged:

1. Work Environment/Procedures. This factor addressed issues re

lating to the physical work environment—issues such as safety, cleanliness, pay, benefits, and policies.

2. Immediate Supervisor. This factor addressed issues relating to the behavior ofthe employees' immediate supervisor—issues such as selection, recognition, development, trust, understanding, and discipline.

3. Team/Co-workers. This factor addressed issues relating to the employees' perceptions ofteam members—issues such as cooper ation, sharedgoals, communication, and trust.

4. Overall Company/Senior Management. This factor addressed is sues relating to company initiatives and leaders—issues such as the employees' faith in the company's mission and strategy or in the competenceof the leaders themselves.

5. Individual Commitment/Service Intention. This factor ad

dressed issues relating to the employees' sense of their own com mitment to the company andto the customers—issues suchas the employees' pride in the company, likelihood to recommend the company to friends as a place to work, likelihood to stay with the company for their whole career, and desire to provide excel lent service to customers.

254 APPENDICES

Although other subfactors were found—subfactors like "communica tion" or "development"—these five major factors explain virtually all of the variance in the data. And of the five major factors, by far the most powerful is the immediate supervisor factor. It explains a disproportion atelylargepercentageof the variance in the data.

Following this factor analysis, we performed various regression analy ses on the data to identify some of the most powerful questions within the data set. During these analyses three dependent variables were used: rating of overall satisfaction; the five best questions from the indi vidual commitment factor; and the performance outcomes of the busi ness units.

Before selecting the final list oftwelve questions, weaddeda final cri terion: The questions had to be simple and easy to affect. They had to be "actionable" questions, not emotional outcome questions like "Overall how satisfied are you with your work environment?" or "Are you proudto be working foryour company?"

Having identified the twelve most powerful questions, we then sub jected them to rigorous confirmatory analyses. The meta-analysis pre sented in the book was one such study. In the next section we will describe it in detail.

Appendix E: The Meta-analysis "What are the details of the meta-analysis?"

An excerpt from "A Meta-analysis and Utility Analysis of the Relation ship betweenCore Employee Opinions and Business Outcomes"

Prepared by: James K. Harter, Ph.D.

AmeCreglow, M.S.

Background to the Core Items

Over the course of the last 25 years, Gallup researchers have qualita tively andquantitatively assessed the most salient employee perceptions of management practices. In addition to designing customized surveys for nearly every organization with which Gallup works, Gallup re searchers have sought to define a core set of statements that measure important perceptions across a wide spectrum of organizations. They have also tried to do so in a way that is not overly complicated or cum bersome for business professionals who are already deluged with other business-related responsibilities.

Researchers with the Gallup Organization have conducted thousands of qualitative focus groups across a wide variety of industries. The methodology underlying this research has been centered onthestudy of success. The Gallup Organization has studied productive work groups and productive individuals for more than 25years. In developing mea sures of employee perceptions, researchers have focused on the consis tently important human resource issues onwhich managers can develop specific action plans. The 13 Core statements evolved from a number of qualitative and quantitative studies. The quantitative data have been combined in the current meta-analysis. The 13 Core statements are as follows:

1. Overall Satisfaction—On a five-point scale, where "5" is ex tremely satisfied and "1" is extremely dissatisfied, how satisfied are you with (Name ofCompany) as a place to work?

256 APPENDICES

2. I know whatis expected of me at work. 3. I have the materials and equipment I need to do my work right. 4. At work, I have the opportunity to do what I do best every day. 5. In the last seven days, I have received recognition or praise for

doing goodwork. 6. My supervisor, or someone at work, seems to care about me as a

person.

7. There issomeone atwork who encourages my development. 8. Atwork, myopinions seemto count. 9. The mission/purpose ofmy company makes me feel my job is im

portant.

10. My associates (fellow employees) arecommitted to doing quality work.

11. I have a best friend at work.

12. In the last six months, someone at work has talked to me about my progress.

13. This last year, I have had opportunities atwork to learn and grow.

Meta-analysis

A meta-analysis is a statistical integration of data accumulated across many different studies. As such, it provides uniquely powerful informa tion, because it controls for measurement and sampling errors and other idiosyncrasies that distort the results ofindividual studies. Ameta analysis eliminates biases and provides an estimate of true validity or true relationship between two or more variables. Statistics typically cal culated during meta-analyses also allow the researcher to explore the presence, or lack thereof, of moderators of relationships. More than 1,000 meta-analyses have been conducted in the psychological, educa tional, behavioral, medical, andpersonnel selection fields. The research literature in the behavioral and social sciences includes a multitude of individual studies with apparently conflicting conclusions. Meta analysis, however, allows the researcher to estimate the mean relation ship between variables and make corrections for artifactual sources of variation in findings across studies. It provides a method by which re searchers can ascertain whether validities and relationships generalize across various situations (e.g., across firms or geographical locations).

This paperwill notprovide a full review ofmeta-analysis. Rather, the

Appendix E:The Meta-analysis 257

authors encourage readers to consult the following sources for both background information and detailed descriptions of the more recent meta-analytic methods: Schmidt (1992); Hunter and Schmidt (1990); Lipsey and Wilson (1993); Bangert-Drowns (1986); and Schmidt, Hunter, Pearlman and Rothstein-Hirsh (1985).

Hypothesis and Study Characteristics

The hypotheses examined for this meta-analysis were as follows:

1. Employee perceptions of quality of management practices mea suredby the 13Core items are related to business unit outcomes (i.e., units with higher scores onthese items have, ingeneral, more favorable business outcomes).

2. The validity of employee perceptions of quality of management practices measured by the 13 Core items generalizes across the or ganizations studied.

Atotal oftwenty-eight (28) studies are included in Gallup's database— studies conducted as proprietary research for various organizations. In each study, one ormore ofthe Core items were used, and data were ag gregated atthe business unit level and correlated with aggregate perfor mance measures:

• customer satisfaction/loyalty • profitability • productivity • turnover

That is, in these analyses the unit of analysis was the business unit, not the individual employee.

Pearson correlations were calculated, estimating the relationship of business unit average measures of employee perceptions to each of these four general business outcomes. Correlations were calculated across business units within each company, and these correlation coeffi cients were entered into a database for each of the 13 items. The re searchers then calculated mean validities, standard deviations of validities, and validity generalization statistics for each item for each of the four business unit outcome measures.

258 APPENDICES

Here is a summary ofthestudies composing this meta-analytic study.

• There were eighteen (18) studies that examined the relationship between business unit employee perceptions and customer per ceptions. Customer perceptions included customer satisfaction scores, patient satisfaction scores, student ratings of teachers, and quality ratings by those posing as customers (mystery shoppers). Customer instruments varied from study to study. The general index of customer satisfaction/loyalty was an average score of the items included in each measure.

• Profitability measures were available for fourteen (14) studies. Definition ofprofitability typically was a percentage profit ofrev enue (sales). In several companies, the researchers used, as the best measure ofprofit, a difference score from the prior year ora difference from abudgeted amount, because it represented amore accurate measure of each unit's relative performance. As such, a control for opportunity was used when profitability figures were deemed less comparable from one unit to the next. For example, a difference variable involved dividing profit by revenue for a busi ness unit and then subtracting a budgeted percentage from this percentage. In every case, profitability variables were measures of margin, and productivity variables were measures ofamount pro duced.

• Fifteen (15) studies included measures ofproductivity. Measures ofbusiness unit productivity consisted ofeither revenue figures, revenue-per-person figures, revenue per patient, or a managerial evaluation which was based on all available productivity measures and management judgment as to which business units were most productive. In many cases, this was a dichotomous variable (top performingbusiness units = 2, lesssuccessful units = 1).

• Turnover data were available for fifteen (15) studies. These studies consisted of the annualized percentage of employee turnover for each business unit.

The overall study involved 105,680 individual employee responses to surveys and 2,528 business units, an average of42 employees perbusi ness unitand90business units per company.

Here is a summary ofstudies (per company) sorted byindustry and type of business unit.

Appendix E:The Meta-analysis 259

• Twenty-eight percent of all business units in this meta-analysis were from financial organizations, 21 percent were from health care business units, and 18percent were from restaurants. The re maining industries included in the meta-analysis were entertain ment, grocery, research, telecommunications/publishing, medical sales, electronics, hospitality, government, andeducation.

• Thirty-one percent ofall business units were retail operations and 28 percent were financial organizations; 21 percent were health care units, 9 percent were education units, and 11 percent were other businesses.

There is considerable variation among companies in the extent to which employee perception data and business performance data can be aggregated at enough levels to provide comparable analyses. Retail businesses and financial organizations provide numerous opportunities for this type ofanalysis, as they typically include alarge number ofbusi ness units that use similar measures.

Meta-analytic Methods Used

Analyses included weighted average estimates oftrue validity, estimates of standard deviation of validities, and corrections made for sampling error and measurement error in the dependent variables for these va lidities. The most basic form of meta-analysis corrects variance esti mates only for sampling error. Other corrections recommended by Hunter and Schmidt (1990) include correction for measurement arti facts, such as range restriction and measurement error in the perfor mance variables gathered. The definitions ofthe above procedures are provided in the sections that follow.

For this study, the researchers gathered performance variable data for multiple time periods to calculate the reliabilities of the business performance measures. Since these multiple measures were not avail able for each study, the researchers utilized artifact distributions meta analysis methods (Hunter &Schmidt, 1990, pp. 158-197) to correct for measurement error in the performance variables. The artifact distribu tions developed were based on annual test-retest reliabilities, where they were available, from various studies.

At the time of the study there were no population estimates of stan dard deviations of itemsfor each of the scale types used. Therefore, no

260 APPENDICES

corrections for range restriction were made. Similarly, no corrections were made for measurement error in independent measures (the 13 Core items). To adequately correct for item-level independent variable measurement error, test-retest reliabilities (with a short time interval) would be necessary. Such estimates wereunavailable at the time of this study. For composite dimensions (provided later in the report), true score correlation estimates were calculated by using Cronbachs alpha estimates for independent variable reliability values.

As noted, no corrections were made in the item validities or variances due to measurement error in the independent variables and for range restriction. The following itemanalyses should therefore be considered conservative estimates, and estimates of true variance should be consid ered asslightly largerthan actual true variance.

In anygiven meta-analysis there may be several artifacts forwhich artifact information is only sporadically available. For example, suppose measure ment error and range restriction are the only relevant artifacts beyond sampling error. In such a case, the typical artifact distribution-based meta-analysis isconducted inthree stages:

• First, information iscompiled onfour distributions: the distribu tion of the observed correlations, the distribution of the reliabil ity ofthe independent variable, the distribution ofthe reliability ofthe dependent variable, and the distribution ofthe range de parture. There are then four means and four variances compiled from the set ofstudies, with each study providing whatever in formation it contains.

• Second, the distribution ofcorrelations is corrected for sampling error.

• Third, the distribution corrected for sampling error is then cor rected for error ofmeasurement and range variation (Hunter & Schmidt, 1990, pp. 158-159).

In this study, corrections for measurement error in the dependent variable were made inall analyses. The meta-analysis for each item and each performance variable includes an estimate ofthe mean sample size weighted validity and the variance across the correlations—again weighting each validity by its sample size. The amount ofvariance pre dicted for weighted correlations on the basis ofsampling error was also

Appendix E: The Meta-analysis 261

computed. The following is the formula to calculate variance expected from sampling error in "Bare Bones" meta-analyses, utilizing the Hunter/Schmidt technique referred to in the previous paragraph:

<¥ = (l-r*)2/N-l>

True score standard deviations were calculated by subtracting the amount of variance due to sampling error and the amount of variance dueto measurement error inthe dependent variable from the observed variance. Taking thesquare root ofthis figure, acorrection for theatten uation effect in the dependent variable was then made. The amount of variance due to sampling error and measurement error was divided by the observed variance to calculate the total percent variance accounted for. One rule of thumb adopted from the literature is that, if over 75 percent ofvariance in validities across studies is due to sampling error and other artifacts, the validity is assumed generalizable. Since two measurementerror artifacts couldnot be corrected for in this study, the researchers chose to use a figure of70 percent or more in determining whethervalidities generalized across organizations.

Results

Below is a summary of the meta-analysis for each of the 13 Core items with regard to customer satisfaction/loyalty criteria. Statistics included the number of business units contained in the analysis, the number of correlations, the weighted mean observed correlation, the observed standard deviation, the true validity standard deviation (subtracting out variance due to sampling error and measurement error in the perfor mance variables), the percent variance due to sampling error, the per cent variance accounted for, and the 90 percent credibility value (the point above which 90 percent ofthe true validities fall).

Results indicate that, across all 13 items, true validity estimates are in the positive direction. Validity estimates range from a low of .057 to a high of.191. Ifan item had apositive 90 percent credibility value, itwas considered generalizable in thesense that we are confident the trueva lidity is positive (in thehypothesized direction). Items inwhich over 70 percent ofthe variance in validities was accounted for were considered generalizable in the sense that the validity did not vary across studies.

262 APPENDICES

Eleven (11) of the 13 items had positive 90 percent credibility values, and six (6) didnotvary across studies.

Interestingly, for item number 12 ("In the last six months, someoneat work has talked to meabout my progress"), the calculations indicate 148 percent of the variance in validities across studies is due to sampling error. The interpretation ofthis is: By chance there was less variability across studies in this data set in the observed correlations than pre dicted from random sampling error, based on the number of business units in each study, and dependent variable measurement error. Two otheritems also hadover 100 percent ofvariance accounted for due to sampling error alone. The practical significance of the size of correla tions depicted here will be discussed following the results section. For item validities that did not appear to generalize across companies, it is possible that there are other variables moderating the strength of the relationship of these employee perceptions to customer satisfaction. For instance, perhaps the moderator for "opinions count" is the extent to which the manager not only listens to the employees' opinions, but also uses them to affect the customer. Items with highest true validities that appear togeneralize across companies include:

• I have a best friend at work.

• At work, I have the opportunity to do what I do best every day. • I know what isexpected ofmeat work. • My supervisor, or someone at work, seems to care about me as a

person.

When multiple generalizability estimates are derived, second order sampling error can slightly influence results. To compute the mean per centvariance accounted for, the following formula was used:

Variance = (2(1% Var.)) / K

On average, 66.96 percent of variance was accounted for across item validities to customer satisfaction criteria. While the mean true validity is clearly positive, the strength of the relationship may be moderated slightly by one or more other variables. It is important to remind the reader that these estimates have notyet been corrected for other arti-

Appendix E: The Meta-analysis 263

facts, suchas measurement error in the independent variable and range restriction. Once theyhave been corrected forotherartifacts, it is likely that there will be little room left for detecting substantial moderating relationships.

Hereisthe same summary analysis foritems with regard to their rela tionship to profitability criteria. Ten (10) of the 13 items have positive 90 percent credibility values, and it is possible to account for over 70 percent of the variance in validities for nine items. The mean percent variance accounted for across items is 69.21 percent. Again, there is some room (although little) for possible moderating relationships. Those that may not generalize include "talked about progress," "mis sion," "materials andequipment," and "best friend." Approximately half of the variance in vahdities for these items is explained by sampling errorand measurement errorin the dependent variable. Items that ap pear togeneralize across companies and that tended tohave the highest validities to the profitability criteria are:

• Overall Satisfaction

• My associates (fellow employees) are committed to doing quality work.

• At work, I have the opportunity to do what I dobestevery day. • My supervisor, or someone at work, seems to care about me as a

person.

Here is a summary of the meta-analytic and validity generalization statistics for the 13 Core items relative to productivity criteria. Again, the relationships were positive. All 90 percent credibility values were positive, and we were able to account for over 70 percent of the vari ance invahdities for 11 items. Themean percent variance accounted for across items is 83.72 percent, suggesting very little room for possible moderators. There was variation, however, in the magnitude of true va lidity estimates across items. Those with highest validity estimates to productivity criteria were:

• I know whatis expected of me at work. • At work, my opinionsseem to count. • The mission/purpose of my company makes me feel my job is im

portant. • Overall Satisfaction

264 APPENDICES

• My associates (fellow employees) are committed to doing quality work.

Finally, here is a summary ofthe meta-analytic and validity general ization statistics for items as they relate toturnover. Four items had neg ative 90 percent credibility values and two were approximately zero. Therefore, for six items, we can be quite certain the direction of the re lationship is negative (as hypothesized for turnover). We were able to account for over 70 percent of the variance in validities for ten items. The mean percent variance accounted for across items is 91.96 percent, again suggesting very Httle room for moderators. Interestingly, one of the highest true validity estimates was Item No. 3 ("Ihave the materials and equipment I need to do my work right"). Employee perceptions with regard to this item, as they relate to turnover, do not vary substan tially across companies. Items with the highest negative correlations thatappear to generalize across companies included:

• I have the materials and equipment I need to do my work right. • Overall Satisfaction

• My supervisor, or someone at work, seems to care about me as a person.

Table 1 now provides a summary of all item statistics calculated for each of the four general performance criterion measures included in the study. This table presents the mean number ofstudies per variable, the mean number of business units across items, the mean observed correlation peritem, and the mean true validity

In general, items correlated at a similar magnitude with customer, profitability, andproductivity criteria, andat a lower level with turnover.

TABLE 1 Summary of Item Statistics

Criterion

Measure

No. of Studies

Mean No.

of Bus. Units

Mean

Observ. r's

Mean

True

Validity r's

Customer

Profitability Productivity Turnover

18

14

15

15

2,170

1,490

1,148

1,552

.107

.084

.126

-.023

.122

.133

.128

-.045

Appendix E: The Meta-analysis 265

Of the correlations included in these analyses, the average meta- analytic correlation was .107. The practical utility of the magnitude of these correlations is discussed later in Harter and Creglow, 1998.

Table 2 provides a summary of the items that had positive 90 percent credibility values (zero or negative for the turnover measure) and in whichover 70percent of the variance in validities wasaccounted for. Six items fit this criterion with regard to customer satisfaction. Nine items fit this criterion for profitability outcomes, and eleven items fit this cri terion for productivity outcomes. Fiveof the 13 items met this criterion with regard to turnover.

TABLE 2 Items with Meta-analytic r's That Are Generalizable across Organizations

Core Item Customer Profitability Productivity Turnover

1) Overall Satisfaction x x x

2) Know what is expected x x x x 3) Materials/equipment x x 4) Opportunity to do what

I do best xx x

5) Recognition/praise x x x 6) Cares about me x x x x

7) Encourages development x x 8) Opinions count x x 9) Mission/purpose x

10)Committed—quality x x 11) Best friend x x

12)Talkedabout progress x x 13) Opportunities to learn

and grow x

Computation of Dimension Correlations

Items were combined into four frequently used theoretical constructs taught by the Gallup School of Management:

Base Camp: "What do I get?" Item 2 Knowwhat is expected Item 3 Materials/equipment

266 APPENDICES

Camp 1: "What doI give?" Item 4 Opportunityto do what I do best Item 5 Recognition/praise Item 6 Cares about me

Item 7 Encourages development

Camp 2: "Do I belong?" Item 8 Opinions count Item 9 Mission/purpose Item 10 Committed—quality Item 11 Best friend

Camp 3: "How can wegrow?" Item 12 Talked aboutprogress Item 13 Opportunities to learnand grow

The reliabilities of the above composite dimensions are reviewed in Harter (1998).

Reliability estimates of the above dimensions and the sum of the 12 items (all except overall satisfaction) were used to correct for indepen dent variable measurement error. In estimating composite dimension correlations with criteria, a distribution of interitem correlations was compiled at the aggregate business unit level and combined across 12 studies. While a majority of the 12 items were included in most of the studies, the number of items included varied from study to study. For this reason, item statistics were calculated and the meta-analytic esti mates ofitems were used to compute composite dimension correlations with various criteria. Since both Yes/No/Don't Know scales and one-to-

five-point Likert scales were used interchangeably across studies, the researchers calculated weighted average interitem correlations based on the proportion of Yes/No/Don't Know and one-to-five-point scales used.

For the overall sample ofstudies, 19 studies used a one-to-five-point scale and 9 used a Yes/No/Don't Know scale. The weighted average in teritem correlations, based on the above overall study proportions, are provided in Appendix B. Interitem correlations were needed for the composite score estimation (Hunter & Schmidt, 1990, p. 455). Composite scores were calculated as follows:

Appendix E: The Meta-analysis 267

1 + (n - lfc, n

c^ = the average item covariance

r = the average item correlation to criterion.

r^ = the average item intercorrelation

rx = the composite scorecorrelation

For the sum of the 12 items, the true score correlation is .19 to cus

tomer satisfaction/loyalty, profitability, and productivity criteria. (For true score correlations, the denominatorbecomesthe square root of the dependent variable reliability multiplied by the square root of the inde pendent variable reliability.) The true score correlation is negative to turnover, but at a lesser magnitude. The dimension correlated highest withturnoverisBase Camp. As such, business unitswithemployees who indicate theyknow whatis expected of them and have the materials and equipment to do their work righttended to have lowerturnoverin com parison to other business units. The dimension most highly correlated with profitability was Camp 1. Dimensions most highly related to cus tomer satisfaction/loyalty outcomes wereBase Camp and Camp 2. Camp 3 was least highly correlated with business outcomes, although it was positively relatedto customer satisfaction, profitability, andproductivity.

For more detail on these and other discoveries, please see the report "A Meta-analysis and Utility Analysis of the Relationship between Core Employee Perceptions and Business Outcomes," prepared by Dr. Jim Harter and Ame Creglow, available from our world headquarters at 47 Hulfish St., Princeton, N.J. The excerpt above was written in 1998. The report is updated every yearwiththe latestdiscoveries from Gallup s re search.

Acknowledgments

Dr. George H. Gallup founded the Gallup Organization on the behef that each individual had a right to be heard, that, in his words, "there are four billion ways to live a life and we should study them all." Dr. Donald O. Clifton pioneered the systematic study of individual strengths and developed the concept of talent. This bookis the product of the spiritand the inquisitiveness of these two scientists.

A book like this needs focus. It needs clarity and energy and impa tience andpassion. It needs love. Jim Clifton embodied allof these and so drove the book from start to finish.

Our book took a while to find its form. The first drafts staggered along and collapsed in a heap under the slightest pressure. To help us through theseearly fumblings weturnedto a few, carefully chosen peo ple. Richard Hutton guided us with his sense of pacing, of drama, of humor, and with his disconcerting ability to understand what we were trying to say before we did. Alec Gallup examined the text with his clas sicists eye and (we hope) prevented us from letting the style slide into jargon. Jane Buckingham suffered through draft after draft—and so much more—but somehow always managed to keep the point and the spirit clearly in mind. Whatever you think ofthebook as it is, be thank ful that you didn'tsee it before thesethree gottheir hands on it.

The Gallup Organization isworld renowned foritspolitical polls. But this book is not about polls. It is about strong workplaces and the man agers who build them. Larry Emond is responsible for helping the worldextendits understanding of Gallup to include allof our discover ies in the area of employee opinion and employee talent. This book owes much to his astonishing ability to articulate.

The Gallup Organization has been asking questions for seventy years. Sarah Van Allens experience andsensibility keptthis book rooted in the Gallup tradition of measuring andreporting with integrity.

In this bookwe have organized a bodyof knowledge that already ex-

270 Acknowledgments

isted within Gallup. Our colleagues Dr. Jim Harter, Jan Miller, Dr. Mick Zangari, Dr. Kathie Sorensen, Dr. Glen Phelps, and Graeme Bucking ham discovered much of this knowledge and, over the years, shared it with us. We owethem a great debt.

Until someone thinks to organize all facts and make them available the [email protected], authorswill need pearl divers. The most ef fective pearl divers are persistent, charming, resourceful, and blithely optimistic—"The exact depth of the sunken Mercury space capsule? I'm sure I can find that." We had the best in Antoinette Southwick.

Over the last seventy years the Gallup Organization has workedwith some of the worlds finest organizations. We have learned a great deal from these partnerships, but perhaps our greatest boonwas the oppor tunityto forge relationships with some outstanding executives. For their vision, their concepts, and their passion for building people-centered workplaces, Brad Black, Ronni Fridman, Kevin Cuthbert, and Mel Warriner stand out in our minds. Thankyou for all of those wonderful conversations. Welookforward to manymore.

This is not a book of theory. Thevoices ofone million employees and eighty thousand managers can be heard in this book. Their time and their opinions have been invaluable to us. But a few managers gave us even more. They gave us stories and vignettes and details, which we have used to help bring the messages of the book to fife. To protect them from unwanted attention wehave changed their names and with held the specifics of their organizations. They know who they are. Thankyou.

And a special thank-you to Linda and Mitch Hart—part family, part manager, but always complete supporters.

When we began thisprojectwewere familiar with our materialbut ill at ease in the unfamiliar terrain ofthe book world. Joni Evans, ouragent at William Morris, was our guide, helping us differentiate between the friends and the foes, the truthsandthe mirages. Candid whenwewould have tiptoed, assertive when we would have shied away, clear-eyed when we would have stumbled, and, above all, so confident, Joni, and her inspirational associate Tiffany Erickson, led us toward the right book andthe right partners. Without her, nothing good would have hap pened.

Fred Hills was our editor at Simon & Schuster. When we learned, early on, that he had been Vladimir Nabokov's editor, our insecurities

Acknowledgments 271

reached an all-time low. But he pulled us up then, as he did on many other occasions, and refocused us on the book we needed to write. His wisdom and his relentless expertise, combined withthe insight ofhisas sociate Priscilla Holmes, have fashioned our best efforts into the book you are nowholding. Its strengths are his, its weaknesses our own.

You don't write a bookwithout some peoplevery close to youbeliev ing that you can. When things slowed to a slumped halt, our families' belief inched us forward and upwardand over the hump, until we were happily careening down the other side. Thank you, Jane and Michael, Graeme, Jo, Neil, Pippa, Nader and Ingrid, Tim, Miles and Steve, Tammy, Katie, Claire, and Clayton: weowe yousomuch.

About the Authors

Marcus Buckingham is the leader of The Gallup Organization's twenty-year effort to identify the core characteristics ofgreat managers andgreat workplaces. Heisalso a senior lecturer in Gallup's Leadership Institute.

Curt Coffman is the global practice leader forThe Gallup Organiza tion's Workplace Management Practice. He consults regularly on the development ofproductive, customer-oriented workplaces.

For more than sixty years, The Gallup Organization has been a world leader in the measurement and analysis of human attitudes, opinions, and behavior. Although the company is best known for the Gallup Poll, most of Gallup's work is in providing measurement, consulting, and ed ucation to many of the world's largest companies. Gallup's clients in clude Audi, BankAmerica, Best Buy, Blockbuster, Carlson, Citigroup, Delta Air Lines, Fidelity, Marriott, Searle, Sears, Swissotel, andToyota.

(continued from front flap)

different survey questions on the subject of

employee opinion—finally produced the twelve

simple questions that work to distinguish the

strongest departments of a company from all the

rest. This book is the first to present this essential

measuring stick and to prove the link between

employee opinions and productivity, profit, cus

tomer satisfaction, and the rate of turnover.

There are vital performance and career lessons here

for managers at every level, and, best of all, the book

shows you how to apply them to your own situation.

• MARCUS BUCKINGHAM is the

leader of The Gallup Organization's

twenty-year effort to identify the

core characteristics of great man

agers and great workplaces. He is also

a senior lecturer in Gallup's Leadership Institute.

CURT COFFMAN is the global practice leader for The Gallup

Organization's Workplace Management

Practice. He consults regularly on the

development of productive, customer-

oriented workplaces.

For more than sixty years, The Gallup Organization

has been a world leader in the measurement and

analysis of human attitudes, opinions, and behavior.

Although the company is best known for The

Gallup Poll, most of Gallup's work is in providing

measurement, consulting, and education to many of

the world's largest companies. Gallup's clients

include Audi, BankAmerica, Best Buy, Blockbuster,

Carlson, Citigroup, Delta Air Lines, Fidelity, Marriott,

Searle, Sears, Swissotel, and Toyota.

To keep abreastof Gallup's latestresearch into great man

agers and workplaces, visit www.gallupjournal.com

VISIT US ON THE WORLD WIDE WEB

http://www.SimonSays.com

JACKET DESIGN BY ERIC FUENTEC1LLA

AUTHOR PHOTOGRAPHS:BUCKINGHAM BY ROTEM STUDIOS;

COFFMAN BY TOWNSEND STUDIO

PRINTED IN THE U.S.A. COPYRIGHT © 1999 SIMON & SCHUSTER

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