John Con­nolly says there’s one true path for com­pa­nies

A com­pany that knows where it is go­ing is on the path to suc­cess

The Australian - The Deal - - Contents - John Con­nolly Con­tact:

The main job of the per­son­nel man­ager used to be to keep the boss’s pay high and look af­ter his su­per. Then, most per­son­nel man­agers had the per­son­al­ity of Ivan the Ter­ri­ble. Then some­one came up with the idea that “peo­ple are our most valu­able re­source” and per­son­nel man­agers be­came hu­man re­source man­agers.

This was just another step in the search for the man­age­ment sil­ver bullet, a search that con­tin­ues to­day. Of course, it would be hard for any CEO to say that peo­ple are her least valu­able re­source or that “peo­ple are some­where in the mid­dle of value to us”.

Look, the fact is that in most or­gan­i­sa­tions most peo­ple are com­modi­ties. From the 80s through to the start of the noughties GE boss Jack Welch pop­u­larised the rank-and-yank ap­proach to HR. Ba­si­cally, this means a com­pany ranks its em­ploy­ees and fires the bot­tom 10 per cent ev­ery year. When Jack left GE, the com­pany be­came softer and cud­dlier. Rank and yank went. But as Forbes’ Peter Co­han wrote: “Of course, this kin­der, gen­tler GE has been a catas­tro­phe for share­hold­ers — the stock is down 68 per cent from its Septem­ber 2000 high of $US60.”

Even the public ser­vice is no longer safe. In John Howard’s first three prime min­is­te­rial years 30,000 of our ser­vants were shown the door. Tony Ab­bott man­aged to dis­pense with 15,000 in his short time at the helm. These days Aus­tralians un­der­stand no job is per­ma­nent and to quote that old Greek ras­cal Her­a­cli­tus, “change is the only con­stant”.

There may be no cor­re­la­tion be­tween warm and cud­dly and a lower share price. Just like there may be no cor­re­la­tion be­tween the best com­pa­nies to work for, cor­po­rate cul­ture, staff en­gage­ment, cus­tomer sat­is­fac­tion, best CEOs and per­for­mance. Maybe staff is more en­gaged in high-per­form­ing com­pa­nies than low­per­form­ing com­pa­nies. If you want science rather than folk­lore then ask the ques­tion: “If I do this this will that hap­pen ev­ery time?”

At In­tel, for in­stance, knowl­edge power is far more im­por­tant than po­si­tion power. For­mer CEO Andy Grove ex­pected mid­dle man­age­ment to con­front him and other se­nior ex­ec­u­tives and chal­lenge their ideas. He be­lieves if you are in top man­age­ment, it’s be­cause you were very good at some­thing 10 years ago or 15 years ago, or 20 years ago.

One thing we do know is that the more em­ploy­ees know where a com­pany is headed the more chance that they and the com­pany will get there. Welch talks about ex­haus­tive com­mu­ni­ca­tion of a com­pany’s mis­sion (where it’s go­ing) and its val­ues (the be­hav­iours that are go­ing to get it there). “I’m not talk­ing about putting a plaque on the lobby wall with the usual generic gob­blede­gook. I’m talk­ing about a com­pany’s lead­ers be­ing so spe­cific, gran­u­lar, and vivid about mis­sion and val­ues that em­ploy­ees could re­cite them in their sleep.”

And let­ting peo­ple know how they are do­ing: “I’ve spo­ken to more than 500,000 peo­ple around the world and I al­ways ask au­di­ences, ‘How many of you know where you stand in your or­gan­i­sa­tion?’ Typ­i­cally, no more than 10 per cent raise their hands.”

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