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A N D C O M M E N T A R YH B R C A S E S T U D Y

When a New Manager Stumbles, Who’ s at Fault? by Gordon Adler

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Is it too late to save Goldstone?

Six commentators offer expert advice.

Reprint 96201

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H B R C A S E S T U D Y

When a New Manager Stumbles, Who’ s at Fault? by Gordon Adler

harvard business review • march–april 1996 page 1

HBR’s cases, which are fictional, present common managerial dilemmas and offer concrete solutions from experts.

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Bulwark Securities’ new managers get a five-pound policy manual. They need a lot more.

Everything was fine until Paul MacKinley, my manager at the Minneapolis, Minnesota, branch of Bulwark Securities, waved me down in the parking lot. It was June 1995. He was standing directly in the bright sun, so I had to squint to make out his features. “Gold- stone,” he said, “there’s a management slot opening up in the Framingham, Massachu- setts, branch.”

I parked the car and found him ten minutes later, hunched over a spreadsheet. MacKinley cared about the bottom line, you had to give him that. He was fond of saying, Just do your job and don’t saddle me with lawsuits. He looked up at me. “If my memory serves me right, Goldstone [he never called me Rafferty], you’ve got an M.B.A. from Kellogg, eight years under your belt as a sales rep, and you’ve been at play in the fields of management, so to speak.”

“Uh-huh, I’ve been coordinator of the Centu-

rion Graphics account, I was Frank Arnold’s mentor, and I was a member of the task force for improving sales calls.”

MacKinley nodded. “Management’s where it’s at—power, prestige, money. Are you 40 yet?”

“Thirty-eight.” “Good, young enough to want it bad, and

too young to know better.” My father used to say leaders are born, not

made. I’d wanted to test his theory for a long time—find out what it was like to take charge. For some time, I had resented MacKinley hounding me about quotas and compliance; after all, I’d been one of the top three reps, averaging $300,000 per year. I dreamt of hav- ing MANAGER on my door. My view back in 1995 was this: I understand sales and the Bulwark line of products. I understand reps. That’s all it takes.

That night, my wife, Jane, said that sheD o

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When a New Manager Stumbles , Wh o’ s at Fault?•••HBR CA SE ST UD Y

harvard business review • march–april 1996 page 2

Gordon Adler is a novelist and com- munications consultant who lives in Thun, Switzerland. He has managed an international school and written articles and monographs on business, medi- cine, and education.

wasn’t sure it was a good thing for us or for Jamie, our son. I remember her exact words. I don’t want to be married to a 45-year-old heart patient. I tried to bring her around by telling her that Framingham was my hoop dream, maybe my only chance to make the move into management. I could try out my own manage- ment philosophy: Do unto the reps as you would have done unto you. She said we didn’t need the hassle. I told her it wouldn’t be any hassle—branch manager was nothing more than being lead sales rep, only with more sway and liability. The numbers’ll be a cakewalk.

I think often of the image of management I had eight months ago, an image I talked about only to Jane. It’s always there, a searing re- minder. It’s still the only image of manage- ment that I like, the only one in which I can picture myself. It’s amazing I could have been so wrong.

I signed my new contract on June 30, and on July 17 they flew me and 11 other green dreamers out to Bulwark headquarters in San Francisco for five days of management ori- entation. It was college all over again. Three hundred pages of theory: strategic analysis, product positioning, performance evaluation, diagnosing personnel problems, setting expec- tations, delegating, coaching, feedback. A mar- keting guy told us that customers had been clamoring for better quality and service. Spin- naker Invest, our major competitor in the full- service market, had already jumped on the bandwagon, and now Bulwark was reposition- ing itself as well. He said corporate expected us to unleash our new investment products like the Assurance Funds and, most important, the Plus Service Account. I remember thinking, Great, I’ll be spending more time on the key accounts.

On the last afternoon, Bulwark’s CEO, Christopher Woodbone, made an appearance. He bestowed on each of us a five-pound policy manual with our names embossed in one-carat gold. When he shook my hand, he gave me a grave look and said, “Apply it scrupulously, fol- low the Bulwark Commandments, and you won’t be kicking off from the end zone.” After- ward there was an exchange of cards. Jim Slake, head of human resources, clapped me on the back and told me to call him anytime. I had met him during the interview process; he had said the same thing then. He also told me his only management handicap was that he

couldn’t tell a teaspoon from a tee shot. I said, “I don’t play golf, so I don’t have to worry about my handicap.” It seemed funny at the time.

I spent the last two weeks in Minneapolis messing with details—prepping the guys who would be taking on my accounts, bickering with the real estate agent who was selling our house, arguing with the Country Properties lady who would be showing us around the sub- urbs west of Boston. Then we pulled up stakes and took a few days off to settle in. Finally, I drove over to my new office. It took me the en- tire weekend of August 26 and 27 to set it up. When I was a rep, my desk was strewn with scraps of paper, forms, a Rolodex, pictures of my kid, pictures by my kid, a cactus, I didn’t care. Now the placement of everything seemed so momentous. The desk was a gargantuan problem. I finally settled on facing it out the window. For head-to-heads, I bought a confer- ence table and four Wassily chairs. I parked the policy manual and the other five pounds of training stuff on my shelf. (Every time I look at it, I wonder if anybody ever uses it. Reading policy manuals doesn’t prepare you for real- life jams. And what was I supposed to say in the middle of a conversation with a sales associate—“Excuse me, let me look this up in the manual so I can find out the politically cor- rect way to respond to you”?)

A few days later, I got a card from MacKinley. Good luck, Goldstone. My commandments: 50% people development, 30% sales and prod- uct leadership, 30% administrative compli- ance. Right—110%. I had no idea what he meant.

On Wednesday, August 30, Gloria Ludlow dropped in. She’s my regional director. We ex- changed chitchat for about 20 minutes, then she declared, “I’m not going to ask questions on expenses: You can do whatever you want, but you’ll be accountable. You’re not being evaluated on how well you produce. It’s all in how your reps do.”

I told her the reps were already cracking jokes about the Plus Service Account. They weren’t exactly enamored of the investment counseling part. Her reply? “You sell Wood- bone’s policy, you hit quota.” I didn’t want to contradict her, but I just couldn’t stop myself from blurting out that reps sell what they know, and I’d rather not shove the PSA down their throats. She raised an eyebrow. “Rafferty,D

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When a New Manager Stumbles , Wh o’ s at Fault?•••HBR CA SE ST UD Y

harvard business review • march–april 1996 page 3

call me if you need to talk. Don’t wait until there’s a crisis.” I thought, What crisis?

My first official day was Tuesday, Septem- ber 5. I was so nervous in the morning that I just filed papers, joked around with the sup- port staff, and asked the reps to come by one by one in the afternoon.

Around 1 o’clock, right in the middle of my egg salad, my youngest rep, Juba Puckett, came in. I told her I’d read her updates and thought she should change her strategy for the Cummaquid account. It felt like my first ten minutes of real management. I was smiling like a banshee until she pointed out that I had egg on my tie.

The rest of the afternoon, I asked the reps questions about their goals, ambitions, prod- uct ideas, suggestions. Exactly What I always wished MacKinley’d asked me. Three reps wanted to know how I’d pulled off my promo- tion, a few said they just wanted to be left alone to do their jobs, others really wanted to know my expectations. The interviews went okay, except that as the afternoon dragged on, it dawned on me that I’d seen them all as clones of myself—my motivations, my talents. No way was I prepared for their individuality.

At around 5:30, Bill Durkee came by and apologized for his falling sales. He was having problems at home. Durkee’s a real nice guy: On the secretaries’ birthdays, he brings them orchids that he breeds in his garage. I told him it’s tough to balance work with family. When his lips started quivering, I went into a big brother act. “Bill, you know you can come by anytime.” He thanked me profusely and shook my hand.

The first weeks whizzed by. It was like driv- ing late at night in a rainstorm, and suddenly you realize you have no memory of the last ten miles. I was poring over the details of the Plus Service Account. (For the reps, the program meant changing how they helped clients with assets of less than $5,000.) At orientation, Slake had recommended that we hold off on the first sales meeting until we’d gotten the feel of the branch. I had this gnawing feeling it was time to show them who was in charge, so I called the first one for Thursday, September 28. I’ll never forget that day.

I started with the new commandments: profit, service, compliance. I told them about a minor skirmish I’d had with legal—Puckett had had some problems, so I’d chewed out one

of the junior lawyers. It was spooky: They were all staring at me, and a few were actually tak- ing notes. Ten minutes into my sermon, Tony Skrow shouldered into the room.

Take Brando’s voice, Nicholson’s laugh, add a pinch of Donald Trump, and you’ve got Tony Skrow. The top performer. He’d been so good for 15 years that there had been rumors, never substantiated, that he was churning his accounts.

He stood at the door, and for a half minute or so, the only sound was his huffing. I was about to repeat my spiel about easing off on our sales pressure when he launched his first strike at me.

He said, “Hey, I’m into traditional invest- ment management. I’m about as interested in insurance, tax minimization, retirement annu- ities, real estate—except my own, of course— as I am in Tofutti. I don’t make $400,000 a year advising Granny Clampett what to buy with the $5,000 life savings she’s got in a tomato can.”

While Skrow bellowed on, I heard Durkee and Puckett giggling like a couple of delinquent high schoolers in the corner by the drinking fountain. I had a feeling they’d checked up on me, and they knew I was only the second or third performer in Minneapolis.

I cleared my throat. “Not everybody’s inter- ested in money and personal gain.” Skrow crouched down like Joe Louis and rasped, “I don’t like money, actually, but it quiets my nerves.”

I pointed out that whether he liked it or not, Bulwark was moving into service. Skrow boomed, “And profit. Without us heavy pro- ducers, the company would be nowhere.”

I knew I had to do something to counter the damage, so I sent a survey to the reps. One hundred percent checked the box: Manager Should Spend More Time with Me. In the space for comments, they wrote that I shouldn’t peer over their shoulders about compliance. Thirty percent were satisfied with my direction; 35% were neutral; 35% wanted more. How was I supposed to deal with that? In San Francisco, they’d told us to set sales and team-leader agendas. I began to wish that Jim Slake and his whole human resources department were working down the hall.

By Columbus Day, 30 reps were vying for most of my time, and the rest was being eaten up by system crashes, conflagrations between

It dawned on me that I’d seen all the sales reps as clones of myself.

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When a New Manager Stumbles , Wh o’ s at Fault?•••HBR CA SE ST UD Y

harvard business review • march–april 1996 page 4

reps, and head-on collisions with clients. I felt like I was drowning in waves of potentially relevant information. I found myself making notes on strategic plans at the dinner table and reading budgets at 3 A.M.

One Friday at about 5:30, I really felt like calling somebody. Someone who could help me sort this out. Gloria Ludlow seemed like a natural choice. I picked up the phone. She had years of experience and MacKinley’d told me she was on the way up, express. Still, she was an unknown. She set the quotas. She had her own agenda. And this didn’t feel like “keeping her informed.” I put the phone back in its cra- dle and left.

To get control of my days, I bought a deluxe master planner. The owner’s manual says, Don’t let irrelevant people and topics interrupt your schedule. Get control of your time. And your- self. The very next day, between 7:10 and 5:55, I had 41 disjointed conversations that lasted any- where from ten seconds to 20 minutes. Walk- ing from my desk to the men’s room, the only place I seemed to get any peace, I played con- versation tag—a pregnant wife, a herniated disk, Durkee’s problem client in London, the new training program for the Assurance funds, a malfunctioning keyboard, a call to the guys in Tucson about a loan. My assistant tried to prioritize my time. Too big a job.

Since July, corporate had come up with a wide array of new products. I was raised on stocks and bonds, and now we were talking about derivatives, trusts, even precious metals. My one area of expertise was rapidly becoming my greatest area of ignorance. If you’d asked me, I couldn’t have told you where Bulwark should be going with new products. We had reps’ meetings every Wednesday, and I felt more and more ignorant at each one. When Skrow deigned to show up, he asked nitpicky questions about new products that only Dur- kee could answer.

The Friday before Veterans Day, one of our lowest-producing reps quit. Talk about luck. I knew the top rep at Spinnaker, our main competitor, and I lured him away with the promise of his own corner office, wrenched from finance, which was having turnover prob- lems. I could tell the other reps were ticked off—Skrow in particular, though he didn’t say anything.

The morning after my quarterlies came in, Ludlow called me. “Goldstone,” she said,

“you’re under quota.” As if I didn’t know I’d gone over on my expense ratios. I told her sales were off, reps were doing long hours, a thou- sand a week. Her answer? “No excuses, Goldstone.”

Then she went over every little credit and debit with a fine-tooth comb, talking cut, cut, cut. I wanted to tell her that if we don’t bring in the sales, the costs are BS. But in the end, I just said that my brokers didn’t like having the Plus Service Account crammed down their throats. She said, “Your reps are your problem, your quotas are mine.” I didn’t say anything, and she must have sensed panic. After a pause, I heard, “Look, Rafferty, why don’t you sign up for one of the employee development pro- grams. It’s usually two half-day seminars. You’ll see how other managers handle their loads.” “Sure,” I said, but when I hung up, I was think- ing that’s just what I need—a whole day out of the office, wasted.

Ten minutes later, when I had just started working on some expense forms for corporate that were already a month overdue, Durkee came into my office and started blubbering. He was working incredible hours. He sat in the front row at every sales meeting with his blue Eagle notebook. He could quote the PSA stuff verbatim. Customers loved him. He never bull- dozed them. Problem was, they never called back and he never sold. I really felt sorry for the guy. He’s got two kids, a mortgage, a sick father, debt, and a wife, sort of, and I’m sup- posed to tell him he’s just not made to be a broker.

Boy, was I relieved when he left. Ludlow called the next day to remind me

she’d had complaints from corporate—I wasn’t getting my expense forms in on time. I told her I was going to be on quota second quarter be- cause I was doing the forms meticulously.

“From now on, I want them meticulous and on time,” she shot back. “Have you signed up for a training seminar?”

“Sure.” I filled the gray space between Christmas

Eve and New Year’s with paperwork—forms for legal I’d gotten behind on and the first per- formance appraisals I’d scheduled for early in the new year.

I needed to talk to someone about Durkee, but I didn’t want to go back to Ludlow. I signed up for a seminar. One full day, the second Monday in January, in New Haven, Connecti-

I felt like I was drowning in waves of potentially relevant information. I was reading budgets at 3 A.M.

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When a New Manager Stumbles , Wh o’ s at Fault?•••HBR CA SE ST UD Y

harvard business review • march–april 1996 page 5

cut. It was basically a pep talk. Consultants hired by corporate. The expert reminded us to read our manuals. We role-played some, but none of the parts matched Durkee’s situation— or mine, for that matter. I talked to two man- agers from Philadelphia and one from Atlanta. They sympathized. I sympathized. It was touchy-feely. It didn’t help solve my problems.

On February 5, Ludlow and I flew out to corporate.

I figured it was a chance to talk with Jim Slake about Skrow and Durkee and explain my first-quarter figures to the financial guys. In- stead, I got third degree. What are you doing to keep your people up to speed? What’s the size of the market going to be? What did you want your share to be? What kind of expenses can you maintain and still be competitive? What’s your projected return on investment? I felt like I was running my own $50 million business. I guess I did all right because they said they were looking forward to my five-year plan and half- year results—in two weeks.

After my presentation, Ludlow and I killed an hour in the Faulty Propeller, a bookstore and coffee shop she knew near the wharf. I had been an English major at the University of Michigan, and the more I looked around and sipped at my double espresso, the more I won- dered why I’d ever gone into finance.

I wanted to talk about a new sales idea I had, a mailing to our best clients with a per- sonal letter from me. She didn’t want any of that. She wanted to talk about my organiza- tional agenda, hiring and firing, training and motivating my people. She said my priority should be developing my people, then main- taining a higher level of customer satisfaction. She pointed out that it’s tough to manage someone who has been in the business longer than you have. She said that when someone has personal problems, you need to listen, but you also need to try to get that person to sepa- rate work from home; sometimes work can be a haven. She wrapped it up by asking if the seminar had been helpful. I said it had been, but it had eaten into my time. “Well, we’d all like to have more time, wouldn’t we?” When I figured out time management, I should clue her in.

We touched down in Boston in an early- morning sleet storm. When I got to the office, I had a sour expression on my face. One of the reps out front asked if I’d been sucking on a

lemon or were the numbers that bad? By lunch, people were talking about overtime and no bonuses.

Early in the afternoon, Puckett appeared and asked how to handle the Middlesex ac- count. I explained over and over that she needed to get them into the Plus Service Ac- count program and balance their biotech stocks with something a little more stable like munis, but she just wasn’t getting it. She kept saying they wanted the growth funds. I kept saying they didn’t understand the advantages of the PSA, and besides, if the market dipped, they’d be all over us for not covering their risk. I got dizzy and my face felt like it had caught fire. I led her to my desk, sat down, and called Thorpe, their investment officer. Within ten minutes, I’d sold my first PSA, opening balance 40 grand.

Puckett asked why I was still on customer calls with her and said she really resented it. I told her I was just trying to help. Her voice rose. “Maybe I’m not the best rep on the floor, but I’m not incompetent.” I told her I wasn’t suggesting that, just showing her a method. She got really steamed. She clenched her jaw and said, “If you want to be the rep for this ac- count, you can have it.” She chucked the file on my desk and stormed out of the room.

I wanted to jump through one of those little windows on my computer’s screen saver.

I dashed after her and whisked her back into my office. And that’s when I lost my cool. I plunked her into a chair and started holler- ing. “You’re lucky I’m helping at all.”

Her chin started to quiver and then she started to cry. I went on: “I covered when you couldn’t handle that hassle with legal. Why are you worried? The Middlesex sale goes on your account, even though I made it.”

The rest is a blur. It wasn’t me. I always figured you had to have a steel rein-

forcing rod in your backbone and the skin of an alligator to be a rep, but it’s nothing com- pared to management. You’ve got to keep your cool, you’ve got to find it, keep it, protect it. Your cool is about all you’ve got.

Two days later, I made quota for the second quarter. Win one. Puckett terminated her con- tract. Lose one. She wrote, “PS—thanks for the motivation. I always wanted to work at Spinnaker!”

Last Friday, February 23, I met with Ludlow. She’d called to say that we needed to give

You need a steel rod in your backbone to be a rep, but it’s nothing compared to management.

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When a New Manager Stumbles , Wh o’ s at Fault?•••HBR CA SE ST UD Y

harvard business review • march–april 1996 page 6

some serious consideration to my perfor- mance. I’d been expecting it.

She got right to the point. “I picture the story of your first six months as a jagged line. You’ve had your successes. Reached quota sec- ond quarter, hired Vance away from Spinna- ker. But there’s no point in pulling punches, it’s a downward slope. You lost Puckett, you’re probably going to lose Skrow, you should have lost Durkee. You’re late with forms and there was that fight with legal. I’m up to my ears. I just don’t see how I can do any more for you, Rafferty.” I asked her what she expected me to do. She gave me until March 1 to figure out what to do about my performance. One week.

Last night, I called MacKinley. He had a plan: two hours a week on improving relations with San Francisco; two more hours starting up regular relationships with the other guys in the Boston area. But politics just isn’t my

thing. He told me to capitalize on my on-the- job experience. That’s like trying to learn from a stomach ulcer. Who’s got the time for self- analysis? I’m worn out.

If I stay, I’ve got to do something about Dur- kee and Skrow, replace Puckett. Durkee’s a tragedy looking for a final act. Skrow’s the rea- son I’m making my quotas. Breaking in a new sales rep is the last thing I need. I can’t call MacKinley every morning. I’ve read the lit, I’ve got to manage Ludlow.

What’s my option? Go back? Quitting means defeat. How will I tell the old man?

Is it too l ate to save G oldstone? • Six

Case Comm entar ySee

commentators offer expert advice.

Ludlow gave me one week to figure out what to do about my performance.

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page 7 harvard business review • march–april 1996

When a New Manager Stumbles, Who’ s at Fault? • HBR CAS E STU DY

Case Comme ntar y

by Thomas J. DeLong

Is it too late to save Goldstone? “Management’s where it’s at—power, pres- tige, money.” Paul MacKinley’s words to Raf- ferty Goldstone set the stage for this case. A company’s managers personify its values and norms. At Bulwark Securities, those values and norms are troublesome and woven with inconsistencies.

• At management orientation, the trainers— including the CEO—talk theory but not appli- cation. They don’t teach any specific skills. The human resources staff plays an administrative role rather than a strategic one. How can Bul- wark claim that management development is important if its training session doesn’t even touch on the practicalities of being a manager?

• Executives from the CEO down consider the hefty policy manual their bible. If it’s so im- portant, why is it a “parting gift” at the end of orientation week?

• MacKinley hounds Goldstone the sales rep about his quotas and compliance. Yet, in a post- card, he urges Goldstone the manager to con- centrate on people development. No wonder the guy doesn’t understand.

• Gloria Ludlow lays down the law about Goldstone’s responsibilities and says his prior- ity should be developing his people. Then she cuts him loose. He doesn’t react well. It’s no surprise, then, that Goldstone later issues “commandments” at his own sales meeting— which he calls, sadly, because he has something to prove—and is rebuffed.

Successful organizations often mishandle how they develop their people, and Bulwark is a classic example. The purported philosophy of management at Bulwark is not evident any- where in its actual day-to-day business. In fact, Bulwark’s sink-or-swim management training system is no system at all.

Effective management-development pro- grams give employees opportunities to test their managerial skills—and to reflect on their own situations and ambitions—long before they face the prospect of moving into a full- time managerial position. As Edgar Schein suggests in Career Dynamics: Matching Individ- ual and Organizational Needs (Addison-Wesley, 1978), the multidimensional activities of man- aging are more complex than meet the eye. Those activities range from making decisions

with incomplete information to having the communicative and emotional competence to deal with “human capital.” To learn about the complexities firsthand, with little risk, would- be managers might start by repairing a dam- aged client relationship, organizing a confer- ence, designing and delivering a training course, coordinating the launch of a new product line, or even managing small task forces. Goldstone had had a taste of that. MacKinley called it being “at play in the fields of management.” But then what? Too often such experiences are not evaluated and put into the context of em- ployees’ overall career prospects.

Companies should also provide a formal process through which individuals can lever- age their strengths (and overcome some weak- nesses) so that the learning process is ongoing throughout their career. Frequently, as is the case at Bulwark, training is front-loaded at the beginning of a job with little or no follow-up.

Rigorous, regular performance evaluations are part of the answer. Such evaluations allow employees—from top to bottom—to get at the truth regarding their strengths and weak- nesses. And ongoing career-development dis- cussions provide a foundation on which to reinforce organizational values.

Honest feedback on an informal basis is an- other critical component of training. It sounds so simple. Yet managers’ “spinning” the facts—being less than absolutely direct with their employees—is a prevalent problem that leads many organizations to entropy. Bulwark is the epitome of disorder.

If Bulwark’s senior managers are commit- ted to building an effective management- development system, they have much work to do. The first steps are as follows:

The company, led by its CEO, Christopher

Woodbone, must begin to hold managers ac-

countable for the development of people. For ex- ample, Ludlow’s compensation should be based, in part, on whether her people grow and develop. The company should make that policy clear from the start. During her perfor- mance evaluations, Ludlow should be asked point-blank: “Under your watch, how have your people changed in the last year?” Ludlow should begin to set specific objectives for her

Bulwark’s sink-or-swim management training system is no system at all.

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When a New Manager Stumbles , Wh o’ s at Fault?•••HBR CA SE ST UD Y

harvard business review • march–april 1996 page 8

subordinates, saying something like, “I think you should work on developing your presenta- tion skills. Let’s meet with our human re- sources representative and come up with a plan.” Three months later, she could follow up to determine if her subordinates have met the objectives.

Few organizations are that explicit about accountability. But adherence to a formal pro- cess shows that senior managers believe in de- veloping people. Managers who simply send their employees to human resources for train- ing are abdicating their direct responsibility.

Ludlow and other Bulwark employees who are

“bringing up” new managers should begin to

offer frequent feedback. Six months had elapsed before Ludlow mentioned “serious consideration” of Goldstone’s performance. That’s inexcus- able. She should be much more communica- tive. She can start by helping Goldstone develop solutions to the problems that have sprung up in part because of her reticence.

Bulwark’s managers and subordinates must

create an implicit and an explicit contract that

links the career-development process with its em-

ployees’ positions in real time. Such a contract would clarify Goldstone’s own path and would give future Goldstones a better chance at a re- warding, satisfying career from the beginning.

Bulwark’s CEO must articulate the organiza-

tion’s values. If employee development is in- deed an explicit value, then the company must demonstrate that through its actions, not sim- ply talk about it. Leadership can’t be taught; it can only be learned.

Goldstone should meet immediately with Lud-

low to determine how success is defined in his

new role and to solicit real direction. He should also take advantage of Bill Durkee’s technical expertise and have Durkee train both him and the other sales reps in the area of new prod- ucts. Goldstone might also spend more time

one-on-one with Durkee, teaching him the art of closing a deal. Or he could ask Tony Skrow to show Durkee his style and explain his sales methods in detail.

If Bulwark takes the above steps, it will become a stronger company. A well-rounded management-development and feedback sys- tem gives future leaders a much higher prob- ability of success. The process of learning to manage becomes more than a long stumble upward.

Unfortunately, even if the company makes outstanding progress along these lines, it’s probably too late for Goldstone. Goldstone has been in his new job for six months, and he has lost his credibility and, more important, his courage. Timidity guarantees failure. He is not likely to stay in a managerial position over the long term.

That doesn’t mean his career is over, how- ever. Goldstone was a good salesman. Quitting won’t mean defeat. Going back to a sales job won’t mean that Goldstone is a loser. Rather, the move might be the beginning of wisdom— for him and for Bulwark. Many organizations face the puzzle of how to motivate productive technicians who think they must become man- agers if they are to have status and prestige in the organization. Bulwark’s top-level execu- tives may have a chance to demonstrate to em- ployees that they believe that technical experts are every bit as important to the company as managers.

How will Goldstone tell his father? If he’s straightforward, he will have learned an im- portant characteristic of successful managers.

Thomas J. DeLong is managing director and chief

development officer of Morgan Stanley &

Company in New York City, where he is

responsible for individual and organizational

development.

It’s probably too late for Goldstone. After six months, he has lost his credibility and his courage.

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page 9 harvard business review • march–april 1996

When a New Manager Stumbles, Who’ s at Fault? • HBR CAS E STU DY

Case Comme ntar y

by Ellen Hart

Is it too late to save Goldstone? Bulwark has a problem that extends well be- yond Goldstone. If his story is representative of Bulwark’s approach to selecting and shap- ing new managers, then the company’s chances of meeting customers’ demands for improved quality and service are greatly constrained.

Bottom-line-oriented organizations like Bul- wark often rely on a “spaghetti model” of managerial development: After you’ve boiled it, throw it against the wall; whatever sticks is done. Goldstone and ten other people have been flung into managerial roles, and six months later, their performances are being evaluated; some may be doing fine—they may be “done”—but Goldstone isn’t. The spaghetti model surrenders control of the managerial- development process to fate. That’s not a for- mula for improving quality and service.

The organization, as represented by MacKinley, Slake, and Ludlow, appears uncon- cerned about—or, worse, unaware of—the difference between a good sales rep and an effective manager. MacKinley is cynical, prais- ing Goldstone for being “young enough to want it bad, and too young to know better.” Slake and Ludlow, meanwhile, keep Goldstone at arm’s length: “Call me if you need to talk.” Many companies rationalize such a laissez- faire posture as empowerment. To Goldstone, it feels like abandonment at a time when he needs help but regards asking for it as admit- ting failure. The company’s squandering of Goldstone’s potential is the equivalent of un- dermanaging a portfolio or, worse, putting money in a mattress.

It’s easier to enumerate the sequence of missed opportunities than it is to chart Bul- wark’s path forward. First, the selection pro- cess is vague and poorly developed. It provides neither a clear picture of the competencies re- quired for success in different positions nor an assessment of performance based on the ac- complishments of its best managers. Second, Bulwark’s attempts to help its employees with career management are far from ideal. Em- ployees are given the impression that successful development is all about the “power, prestige, money” that MacKinley cites as the advan- tages of becoming a manager. Instead, it

should be about the mutual realization of the organization’s goals and the individual’s goals through a good fit in a rewarding role. Third, roles and expectations are ambiguous: Compli- ance is important, but so is pushing new prod- ucts. Customers want quality and service, but quotas are paramount. Managers can get ahead by developing their people, but they need to manage expenses tightly.

For a mature manager, such apparent con- tradictions require a series of trade-offs, nego- tiated with the organization. For a newly minted manager like Goldstone, who is spin- ning like a top and making himself sick with uncertainty, such ambiguity can be disorient- ing and paralyzing. What Goldstone needs is one-on-one coaching—a mentor to guide him as he manages assignments and begins to fig- ure out how to act as a mentor and a coach for his staff. But his managers, MacKinley and Ludlow, have abdicated their responsibility for coaching and development to the human re- sources department in the form of manager- orientation and employee-development pro- grams. Goldstone may be able to pick up some valuable lessons at the training sessions, but that’s not where his real development will take place.

Successful companies make the acquisition and development of managerial talent one of the highest priorities for their senior people. At Bulwark, the new managers are given mini- mal trial-run experiences, the CEO relies on a policy manual, MacKinley advises using poli- tics to get ahead, and Ludlow lets Goldstone flounder for four months before she even broaches a dialogue about what successful management of people looks like. Given their track record and their de facto adoption of the spaghetti model, it’s hard to know what will help them change their stripes. In high-growth periods, securities firms like Bulwark lull themselves into thinking that the manager is superfluous; yet in slow-growth periods, they crack the whip as if the manager is the one who makes things happen. Then they scratch their heads and wonder why their managers aren’t more loyal.

On the other hand, Goldstone is no paragon of a high-potential manager. With his untested

What Goldstone needs is one-on-one coaching, but his managers have abdicated their responsibility for coaching and development.

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When a New Manager Stumbles , Wh o’ s at Fault?•••HBR CA SE ST UD Y

harvard business review • march–april 1996 page 10

notions of power and “cool” and a manage- ment philosophy based on a narcissistic golden rule (“I’d seen them all as clones of myself”), he has made just about every mistake one could make. He’s drowning, yet he doesn’t know how to ask for or accept help. He’s un- happy and the symptoms are apparent to those around him. He’s reaching the limits of his credibility and his ability to handle the role.

Yet he has glimmers of insight. Anxiety is making him question his prior assumptions. Carpe diem! Instead of letting him self-destruct, Bulwark should commit to investing in Gold- stone. He and Ludlow should build a near- term, concrete performance plan and lay out the actions to execute it. Bulwark should as- sign Goldstone a coach. (Ideally, that would be Ludlow.) The company should also allow a grace period for the administrative burden, or it should invest in human or technical solu- tions to the paper load so that Goldstone can focus on people and performance. The com-

pany should encourage Goldstone to seek an ally from within his department—most likely one of his reps—so that he can stay in touch with the pulse of the office. He should also be encouraged to seek technical help about prod- ucts, sales, and marketing, and he should be given counseling by human resources. Ludlow needs to commit to skull sessions, perhaps two per week, to keep shaping Goldstone’s focus and sense of priorities.

If Bulwark were to take these actions, it would be in a position by the next quarter to ask whether it had made the right choice in se- lecting Rafferty for management. In fact, by then, the company’s senior managers might even know him well enough to call him by his first name.

Ellen Hart is a vice president in charge of the

Leadership, Mobilization, and Renewal Practice

of Gemini Consulting, headquartered in

Morristown, New Jersey.

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page 11 harvard business review • march–april 1996

When a New Manager Stumbles, Who’ s at Fault? • HBR CAS E STU DY

Case Comme ntar y

by Kathleen Collman

Is it too late to save Goldstone? Goldstone is only one symptom of a larger management problem at Bulwark. Look into any one of the company’s branch offices and you’ll most likely find other Goldstones strug- gling to learn the ropes while they’re on the ropes as well. Bulwark has failed to legitimate management as a career path and to select, develop, and manage its human resources to their fullest potential. Instead, the company continues to promote its top producers and then abandon them, with the unrealistic ex- pectation of a seamless transition and contin- ued success. How shortsighted, considering that an effective sales manager can have as great an impact on a salesperson’s productiv- ity as any other single variable.

If Bulwark’s senior managers took a mo- ment to think, they would realize that the cri- teria for success among sales reps are signifi- cantly different from those that lead to success in managing a sales force. Good sales- people know that success depends on what they do themselves, whereas effective sales managers understand that their goals are achieved through others’ performances. Rec- ognizing just that basic difference, the CEO, Slake, and even MacKinley and Ludlow might then realize that their system of developing sales managers is woefully inadequate. The transition from one job to the other requires changes of mind-set and behavior, not simply a new set of policy books and a few pep talks. But how to reverse the damage? With com- mitment, it wouldn’t be difficult. Effective management development need not be com- plex. In fact, the solution can be outlined in five steps:

• Define performance expectations. • Communicate performance expectations. • Develop through training the knowl-

edge and skills needed to achieve those exp ectations.

• Evaluate performance against the defined expectations.

• Reward or correct behavior to continu- ally enhance performance.

In Bulwark’s current environment, I have no doubt that the first two steps would be in- terpreted as “Hand the new manager a job description.” That’s not what I mean. Sure,

start with a job description, but then keep go- ing. Show the new managers what behaviors they would demonstrate if their performances were outstanding. Explain the company’s pro- ductivity standards, its administrative stan- dards, its service policy. Describe an accept- able level of product knowledge. Tell the new managers specifically what they are supposed to do as they conduct day-to-day business with their sales organization. How will their days look? What are some viable ways in which sales managers budget their time?

Bulwark’s senior management team must learn to define and communicate the what, when, and how of good sales management at the company. No ambiguities. The mandate must be simple, clearly stated, based on behav- ior, and easy to measure. Then it can become the “performance contract” upon which all other activities, such as training and perfor- mance evaluations, are based.

The next step is helping the new sales managers develop the knowledge and skills they need to meet the company’s expecta- tions. Most new managers will have some ad- ministrative tasks to master, such as learning the proper procedures for reporting and for using the management information systems, but their training should focus on teaching them how to do with the sales reps exactly what their managers are now doing with them: working through the five steps. (Note that Bulwark’s formal training program should be based on the actual experiences of its sales managers; ideally, it should be con- ducted by successful and credible real-life practitioners.)

For training to be effective over the long term, Bulwark must make ongoing, regular performance assessment a natural part of its culture. Every single time a senior manager walks past a sales manager, hears him on the phone, watches him in an interaction, or looks at a performance report, he or she makes an evaluation. But it makes no sense to observe someone’s behavior simply to store it up for future reference. The key is to convert that assessment into a meaningful manage- ment tool by commending positive behavior (thereby reinforcing it) and correcting nega-

Bulwark’s senior managers must define and communicate the what, when, and how of good sales management. No ambiguities.

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When a New Manager Stumbles , Wh o’ s at Fault?•••HBR CA SE ST UD Y

harvard business review • march–april 1996 page 12

tive behavior (thereby eliminating it)—in real time. That way, there won’t be any nasty sur- prises or unrealistic ultimatums at formal reviews.

Nearly every employee’s failure can be traced to some failure on the part of his or her manager to follow the simple process of set- ting and communicating performance stan- dards, training people to meet them, evaluat- ing their performance against them, and following up with appropriate commendation or correction. Bulwark has an opportunity to turn this situation around with Goldstone.

And Goldstone, in turn, can and should do the same with his sales reps.

Many fine businesspeople are overwhelmed (perhaps even intimidated) by the prospect of managing people. A simple, logical, system- atic approach to performance management can be the winning formula for developing skill and confidence in the line managers re- sponsible for sales excellence.

Kathleen Collman is managing director of

organization development and training at

Putnam Investments in Boston, Massachusetts.

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page 13 harvard business review • march–april 1996

When a New Manager Stumbles, Who’ s at Fault? • HBR CAS E STU DY

Case Comme ntar y

by John Doumani

Is it too late to save Goldstone? Goldstone has fallen prey to an all-too - common paradox. It seems logical enough to reward strong performers in a technical disci- pline with a promotion to management. The expectation is that their performance in a tech- nical area indicates their ability to perform in management. The problem, however, is that technical expertise alone is not enough to be successful in a managerial role. Being a good manager requires skills far beyond those re- quired in a technical role. A sales representa- tive, for example, succeeds by being driven and competitive and by taking complete ownership of the achievement of results. Although these traits are critical to a sales rep’s success, who would want to work for someone like that?

Successful management requires a combi- nation of strategic and people-management skills. Unfortunately, Goldstone possesses nei- ther. He lacks strategic skills and therefore can- not see the big picture. It’s pretty clear that he doesn’t understand the company’s new strat- egy, so how can he accurately focus his team on a vision of the future? Similarly, Goldstone doesn’t know how to concentrate his efforts on the important issues that will make a differ- ence to his staff and to his bosses. Instead, he continually attacks the details, which results in a frenetic management style. It’s no wonder that people like Skrow have gone off and pursued their own agendas, even though their actions may conflict with the company’s mission.

As far as people-management skills go, that’s probably an even bigger problem. Gold- stone doesn’t understand that in his new role, he will be able to achieve results only through his team of reps. His performance, in fact, is the sum of his team’s performance. He should be retaining high-caliber people and motivat- ing them to perform at their best. Instead, he frustrates his staff by micromanaging them. No wonder Juba Puckett left! Goldstone is tak- ing personal responsibility for everyone’s job and problems. If he continues to do so, he will soon be left with ordinary performers who are more than willing to allow him to carry the burden. All his top people will have left the company.

The fault is not all Goldstone’s. The com- pany bears blame as well. Goldstone was not

properly prepared for his new role. Why? In large part because Bulwark didn’t give him any examples of good management to learn from. Having strong role models is key to de- veloping managers in any organization, and Woodbone, MacKinley, and Ludlow are not exactly perfect mentors.

So what can Goldstone do? Clearly, he needs to build his strategic and people- management skills. He should identify a role model or mentor within Bulwark—perhaps someone from another division—to use as a sounding board. He could also benefit from further training in situation leadership. The training course he attended a few months into his new job was not a bad idea, but at the time Goldstone was probably too flummoxed to think clearly about its potential benefits.

He must also move quickly to secure his high-performing sales reps. He needs to figure out the company’s strategy and then communi- cate it accurately to his team. He must also ar- ticulate the role they need to play in success- fully following it. And he must define the skills that his team will require. If there are deficien- cies, then he must arrange formal training for his salespeople—or replace them. MacKinley can probably help him with that. At the end of the case, it seems as if MacKinley is finally reaching out to Goldstone with substantive ad- vice. Goldstone can’t afford to pass up the help.

It’s not easy to learn management skills all at once, on the job. An initiation such as the one Goldstone is being put through is quite difficult. But I’ve been through it—as have many other managers. I had much more sup- port from my company when making the tran- sition between management levels, functions, and countries than Goldstone seems to have had. But Goldstone can get through this pro- cess, too, if he keeps his wits about him. He may even be able to reconcile his mental image of the ideal management position with the reality of a rewarding management role.

John Doumani is the managing director of

Johnson & Johnson Pacific in St. Leonards,

Australia. He has held numerous senior sales and

marketing positions in Australia, the United

Kingdom, Italy, and the United States.

Goldstone doesn’t understand Bulwark’s new strategy, so how can he focus his team on a vision of the future?

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harvard business review • march–april 1996 page 14

When a New Manager Stumbles, Who’ s at Fault? • HBR CAS E STU DY

Case Comme ntar y

by Joseph L. Galarneau

Is it too late to save Goldstone? Although many corporations have formal de- velopment processes in place and use all the right words when describing them, the Gold- stones of the world are not rare. Quite often, in fact, management development means testing new managers to see if they are made of the “right stuff,” instead of supporting their growth and progress.

I believe that if Bulwark truly valued man- agement development as a means to create and sustain competitive advantage, the major players would have behaved more like this:

MacKinley: MacKinley would have con- ducted developmental sessions with Goldstone to discuss his career objectives, including his dream of taking on more responsibility. He would have painted a picture of what it takes to lead a group of sales reps successfully and explained to Goldstone how the task would present both exciting and difficult challenges. He would also have pointed out how impor- tant it is to learn how to learn and told Gold- stone that learning from his failures would be as important as learning from his successes. He would have helped Goldstone see how valu- able it is to have the ability to stop the action at any moment and reflect on what is happen- ing and why. And how important it is to ask, when something goes wrong, What could I have done to be more effective in that situa- tion? MacKinley would have made a sincere offer to act as Goldstone’s coach; he would have known that new managers are often re- luctant to ask for coaching.

Goldstone: Assuming that Goldstone took advantage of a robust development process, he would have been in a better position to assess the benefits and risks of accepting the promotion in the first place. An individual development plan would have given him a clear picture of his strengths and his opportunities for growth—a useful tool whether or not he chose to take on the new job. Once in the new posi- tion, Goldstone would have been more com- fortable about asking for coaching when he needed it. His education at Bulwark would have allowed him to appreciate his own learn- ing capabilities and to develop strategies to achieve his desired results. The support and coaching he would have received from

MacKinley and Ludlow would have enabled him to be a more effective mentor.

Ludlow: Ludlow would have realized that Goldstone’s success would be her success as well; she would have encouraged him to set reasonable goals and then would have sup- ported his efforts to achieve them. She would have worked hard to build trust between them, and that trusting relationship would have allowed for open, honest communication about the tough issues a new manager faces. Her initial coaching session would have in- cluded a primer on the strengths and weak- nesses of the sales reps.

Of course, those behaviors are ideal. Many situations are more like the one portrayed in this case. So what should be done?

The responsibility for turning the situation around probably lies with Goldstone. To get the ball rolling, he’ll need to find the courage to admit that he is floundering.

Ludlow clearly knows that there is a problem— and she would certainly be happier if Gold- stone were doing better—but her future with Bulwark will not be jeopardized if Goldstone fails. Similarly, MacKinley and Slake could sim- ply decide that they had made a mistake with- out risking their jobs. Goldstone, on the other hand, has everything to lose—and therefore, the most motivation to make things work.

First, Goldstone must step back and analyze his own performance. He must try to understand what it is about this job that is so different from his last one and why he isn’t succeeding. Then he must admit to Ludlow that he doesn’t know what to do, but he must do so in a way that gives her some solid material to work with. He must not be defensive; instead, he must put enough on the table so that they have a starting point on which to build a solid plan. He could begin by telling her what he learned about the company and its new strate- gies during the corporate training session. Then he could explain how he has tried to communicate that message and what the re- sponse has been. The key is for him to get be- yond the surface-level discussions that he has had with Ludlow in the past. Ludlow, mean- while, should take on the role of coach. She has begun to communicate with Goldstone,

In order to turn the situation around, Goldstone will have to find the courage to admit that he is floundering.

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When a New Manager Stumbles , Wh o’ s at Fault?•••HBR CA SE ST UD Y

harvard business review • march–april 1996 page 15

but she has a long way to go if she is really to be of any help.

Overall, if Goldstone takes the first step and Ludlow responds, MacKinley, Slake, and Woodbone should use this situation as a cata- lyst for rethinking Bulwark’s management- development program. Education should be part of the strategic process at every company. Educational experiences should be designed to support the company’s goals and linked to the company’s success in the marketplace. Train- ing programs should not be designed as one- time events but rather as a systemic way of communicating and enhancing the company’s

mission. Employees should be given regular opportunities to learn and practice new ways of delivering value to customers. And they should be encouraged to support one another back on the job as they continue to learn how to learn.

Joseph L. Galarneau is the executive education

director at the AT&T School of Business in

Morristown, New Jersey. He is responsible for the

strategic planning, design, development,

delivery, and evaluation of custom programs and

experiences for managers who are part of the

AT&T Leadership Team.

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harvard business review • march–april 1996 page 16

When a New Manager Stumbles, Who’ s at Fault? • HBR CAS E STU DY

Case Comme ntar y

by Julie Johnson

Is it too late to save Goldstone? Before any employee is moved into his or her first management position at a company, that person’s senior managers should ask the follow- ing questions:

Is there a match between the skills and motiva-

tions of the individual and the needs of the com-

pany? No one at Bulwark thought about the implications of moving a star individual con- tributor into a management role. No one had a serious conversation with Goldstone about his understanding of management. No one had a clear idea of his motives and expectations. Goldstone didn’t have a clue about what his new job would actually entail. He thought that understanding sales and products was all he would need to succeed. He thought that all sales reps would want to be managed the way he wished he had been managed. If Slake or MacKinley had talked with Goldstone about his views and hopes, they might have identi- fied the potential problems and done some- thing about them before Goldstone was already six months into his new job.

It also seems as if Goldstone was given not only a new job to handle but also a new busi- ness to figure out. His appointment came at a time when Bulwark was shifting from being product driven to being customer driven. Ev- erything else aside, it’s no wonder Goldstone found himself in trouble. His experience, such as it was, had prepared him to present the company in one way even as the company was changing its position in the marketplace.

Do the people who will be surrounding the

new manager make a good fit for him or her? All too often, companies do not think about con- text when they are moving people into new positions. Bulwark fell short of the mark on several counts here, but consider just one: The company sent Goldstone halfway across the country to work for Ludlow and manage a group of sales reps without having him spend any time with those people before his appoint- ment. He probably met Ludlow during the in- terview process, but he should have spent at least a few days working alongside her on some sort of project before the company de- cided to give him the job. The experience would have given him a sense of her style and her expectations while there was still an oppor-

tunity for him to ask questions and consider his options without risk. Similarly, at the very least, Goldstone should have had background information about each of his reps before starting the job. In the best case, he would have met with them a few times before mov- ing and would have had a lengthy discussion with Ludlow about their skills and goals.

Is the organization’s training process suited to the individual, and does it provide support once

that person has begun in the new position? Bul- wark’s senior executives certainly did not “walk the walk” when they said that 50% of management was people development. In fact, there were few role models or processes in place to support that notion. Ludlow told Goldstone to call her if there was a crisis, MacKinley called after the crisis had occurred, and Slake was more interested in being glib than in being helpful. Little thought was given to Goldstone’s selection, and the company’s initial training session did not even begin to address the people- and time-management is- sues faced daily by those trying to shift from being individual contributors to being managers. What’s more, like many companies, Bulwark responded to its new manager’s transition troubles by sending him to another training session. Such exercises can be useful but not in response to a problem in progress. For Gold- stone, the course was too little, too late.

Having said all this, there is hope for Gold- stone and for Bulwark. Over the short term, I would recommend that Bulwark assign someone— possibly Slake—to assess the situation. If I were called in as an executive coach, I would first interview each of the key players to deter- mine what went wrong and what they think can be done to salvage the situation. For exam- ple, I would try to find out whether Bulwark is truly in danger of losing Skrow and what Skrow really thinks of Goldstone and the com- pany’s new policies. (I would also try to find out whether Skrow is churning his accounts. If he is, the organization should not look the other way; it should take action to modify his behavior.)

Then I would conduct a 360-degree assess- ment of Goldstone by collecting information from him and from other members of the or- ganization to determine which problems Gold-

No one thought about the implications of moving a star individual contributor into a management role.

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When a New Manager Stumbles , Wh o’ s at Fault?•••HBR CA SE ST UD Y

harvard business review • march–april 1996 page 17

stone must solve himself and which “belong” to the company. I would try to determine if the manager’s job is the right one for someone with his skills and personality. Both Goldstone and Bulwark might be better off with Gold- stone in a senior sales position rather than a managerial role.

Perhaps most important, I would make my- self available as a resource if Goldstone or any of the other parties wanted to talk. At the very least, these people all need someone they can use as a sounding board.

Over the long term, I would recommend that Bulwark overhaul its entire executive develop- ment process so that it is proactive, not reactive. The company should establish career crossroads for the major functions in the organization. Its senior managers should make sure that employ- ees understand how they all depend upon one another to make the company tick. That way, sales reps who have an inkling that they would like to become managers will learn more about their options—and the realities of the various jobs—before they need to make a decision.

Bulwark’s senior management team should also learn what the company’s positions call for in terms of skill and personality, and how those positions match up against the skills, per- sonalities, and ambitions of its employees. Armed with that knowledge, they can assess and train employees in advance of promotions instead of throwing someone into a position that won’t tolerate anything less than a run- ning start.

In place of—or as part of—the five-day training session, Bulwark should consider con- ducting a team-building session in which new managers meet with their direct reports to dis- cuss expectations on both sides and the issues the company will be facing in the coming year. As new managers begin their assignments, Bul- wark should provide each of them with an in- ternal mentor or an external coach—someone who can serve as a confidential sounding board for the new manager.

Finally, as a part of its career-development effort, the company should establish a process of clear objective setting and quarterly perfor- mance reviews at all levels. Such a process would have provided a forum for Goldstone to raise issues with Ludlow—and for his reps to do the same with him—before a crisis could develop.

Julie Johnson is the founder and president of the

Reid Group, a consulting firm in Fairfield,

Connecticut, that specializes in coaching senior

executives. She is the former practice head of

executive coaching at the Strickland Group and a

former vice president of executive development

at Merrill Lynch.

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