How to avoid common practices that destroy your company (culture).

What I wrote here are just some examples. What exactly it is, that prevents your company from being a great place to work and highly successful at the same time, might be totally different. Only a deeper analysis with a systems view can uncover that.

Does every generation have to reinvent the wheel again?

About 20 years ago our company culture turned 180°after a new CEO took over. It started with a lot of communication about grand plans. Those plans were quickly followed up by all kinds of targets, rules and policies that had a very strong impact on the way people behaved.?

Dynamic and competitive...

The CEO's objective was to create a more dynamic and competitive organisation, the actual result was fear and passivity for almost everyone. Some, who saw an opportunity, took a chance to jockey for a position around the CEO. But many of them collected unemployment benefits soon after. To keep the company on its toes, the CEO introduced a new theme every quarter. One quarter it was the 3 Q's, then the 5 P's, then the 4 S's, or the 3 W's. Never was there any time to reap the rewards of these initiatives. Those who didn’t go along were escorted out.

Organisational behaviour

The fact that I had studied organisational behaviour allowed me to see this clearly. As the late football (soccer) player Johan Cruyff used to say:

"Once you understand it, you’ll be able to see it."

Trust

Despite not having heard of W. Edwards Deming at that time, I practiced several of his management insights. I used a facilitating leadership style within my teams. We used root cause analyses. This was possible because my people were open about problems. And that again was possible, because they trusted me and knew that I would never blame them for errors or mistakes.

Not an isolated case

The implemented subtle (and blunt) targets, rules and policies incited a closed mindset with fear and anxiety throughout the organisation. This made it increasingly difficult for me to maintain these healthy functioning teams. After I left that company many years later, I started to recognise some of these same aspects around (invisible) psychological safety in other organisations as well.

Grown accustomed

Each individual goal or policy seemed harmless when you looked at it superficially. But each one chipped something away from the employee's engagement, respect, trust and motivation. The rules and HR-instruments also compelled people to become selfish and self preservative. Everyone did what they were told (performance review) and no-one dared to come up with clever new ideas as they wanted to avoid potential failures (tall poppy syndrome) . Over the decades, we’ve all grown accustomed to many of these targets, rules, and policies, such that we don’t even question them anymore. That is something I want to change by making you aware!

The VISIBLE effects can be:

• Lots of fire fighting
• Lack of motivation
• No real improvements
• People blaming each other
• Lots of meetings about problems
• Large performance differences between employees
• Lots of training, with meagre results
• Lack of initiative, every change or improvement must be directed from above
• Poor margins
• Poor customer service
• Managers having to use pressure
• Growing buffers and inventory
• Fast growing departments
• Higher levels of stress and absenteeism

The more difficult to observe effects can be:

• Lack of engagement
• Resistance to change
• Problems keep reappearing
• People not sharing tips and tricks
• People not doing what is needed, but what they are measured on
• Lack of new ideas and innovation
• Evasive answers during a problem analysis
• Reorganisations and changes are sabotaged or complicated
• Errors and mistakes that are hidden
• Higher (invisible) costs due to lack of cooperation and systems thinking
• Longer than necessary lead times
• Increased waste and unnecessary work
• Reported numbers are better than reality
• No one seems to be thinking
• Silo mentality
• Poor handovers from one department to another
• Inefficient processes and workflow

Just six months before, people were cooperative, helpful, and innovative. The previous CEO was very open, always interested in how people were doing, asked lots of questions, and implemented ideas and suggestions from the employees. However, after the new rules came into effect, people were keeping a low profile and were just trying to keep their job. Fear had suppressed all initiative. As Dr. W. Edwards Deming used to ask:

“Why do you hire dead wood? Or why do you hire live wood and kill it?”

In other organisations I have seen similar symptoms. Maybe not as pronounced, and therefore more difficult to see, but the effects were similar. This makes it difficult to discern and thus convince the C-suite. Countermeasures like training and workshops, might help initially, but these effects wear off after a while. Have you ever wondered why you need to repeat this process constantly?

“Insanity is doing the same thing over and over again and expecting a different result.”

Don't get me wrong about Learning & Development (I've been a L&D trainer, manager, and director for over a decade). They can do wonderful work, they might even uncover these fundamental issues during their deeper analyses, but they can't change the system for you. All they can do is to report their findings (if they can find the courage). So the only option left to L&D is to develop programs that counteract and work around these effects. However, by not addressing the root causes, in the end training is just symptom relief, which needs to be repeated over and over again. Many lean approaches fall in that same category by ignoring the culture and pushing people to do things against their better (subconscious) judgment (e.g. fear of making yourself redundant).

Example. Years ago I was asked to organise additional training for a department that had been training their employees for almost two years, week in week out. After my analysis, I realised that the problems couldn't be solved with more training. The root of the performance problems was not the employees, but the whole "system" around them. When I presented my analysis, I was disappointed when management ignored it and demanded that my trainers would perform the requested additional training. Only years later, did I realise that management was trapped in those same rules and policies, set by the C-level, that forced them to behave exactly as they did. My suggestions might have sounded like common sense to an outsider, but here the "system" prevented those changes.

So what’s underneath these behaviours?

• Lack of trust
• Fear of making yourself redundant
• Fear of a poor performance evaluation (ranking)
• Focus on making the numbers
• Disappointed about previous programs
• Discouraged to help colleagues
• Not feeling respected and cared for
• Deep down your colleague now is your competitor
• Just doing what you're told
• Fear of making a mistake
• Waiting for the storm to pass
• Feeling alone
• Cooperation is thwarted and discouraged
• Fear of trying something new

Employee behaviour cause and effect

In this circle of cause and effect, the rules and policies create some form of fear or anxiety at a deep (and often unconscious) level. This then controls the behaviour of both the managers and the employees. This behaviour creates unwanted results, which are then corrected through tougher targets, rules and policies.

By what means?

As Deming replied to a question about wanting to change: “By what means?”. Just to give a very general example in e.g. a production environment. A company is going to be tougher on meeting its targets. These targets are increased by 5% for the coming year. They also have set a goal of?zero accidents next year. To me, it is clear what this company wants to achieve. The way they formulated it is probably not going to achieve those goals. Why? Because the means on how this is going to be achieved was failing.

State of mind

The employees will feel the pressure and their single focus becomes hitting those targets every day and making sure that there are no (reported) accidents (limiting and preserving state mind). They haven’t learned how to increase their productivity (no method), nor do they have time to think about it. All they can do is work harder to achieve those targets. Machine maintenance is postponed to achieve the production numbers. They also decide to skip some recalibration tasks during the day, as this consumes time as well. When a machine breaks down due to a lack of maintenance, the maintenance records are quickly “updated” to hide the actual cause. Now that the machine is out of commission, there is a legitimate reason why the targets can’t be achieved. A few days later, when those hastily produced parts are being assembled, it becomes clear that many of them are out of specification. In order to ensure good quality products, an additional quality control process is put in place that measures and sorts the parts.

When Johnny dropped a crate from the forklift, fortunately no-one was hurt. His colleagues quickly and silently helped to load the parts into a new crate. They then discarded the broken crate together with some damaged parts. No-one reported the incident, because of the consequences. No analysis, nor process improvements were done. What happened to Johnny can still happen to anyone else and everyone knows that.

Other situations

I have similar experiences in e.g. office settings (e.g. one full day per week wasted by searching for the right documents, forms, etc.). Almost always, there are targets that focus on the results, not on how to get there and how to learn in the process. When you're results focused, failures are frowned upon. However, when you're focused on how to get better (development and growth mindset), experiments and failures are automatically part of the learning process. This single focus on results creates more problems, less cooperation and often poorer results.

Other symptom reliefs

Automation is often introduced as the solution, but that just automates all the waste in the processes. This is similar in many outsourcing projects where inefficient and wasteful processes are outsourced to cheaper countries, instead of improved locally. The reasons why this gets so out of control is that the goals are wrong (on many levels) and not defined with a systems view. As a result, the customer service desk is overwhelmed and growing. The same type of problem is addressed over and over again by customer service, instead of just once at the core.

Frozen

Poorly defined targets and HR instruments break down the team spirit and creates clusters of individuals who are all fighting to meet their personal targets in an attempt to keep their job. No more collaboration or helping each other, no more sharing of tips and tricks as your colleagues could become just as good as you. Errors and problems are hidden, only to surface much later anonymously when correcting them is difficult, expensive, and time consuming, which causes delays and rescheduling.

Vicious circle

The poor results are noticed by management. Their response is to make those results based targets even more important. Almost always, rules and policies created at the top are focused on the results and unintentionally create fear which blocks exactly those behaviours that are needed to propel the organisation forward.

On the shoulder of giants

I often see quotes from Dr. W. Edwards Deming, Taiichi Ohno, and others that show profound insights in the psychological effects of those targets, rules and policies. I know that many people are convinced about the importance of a psychologically safe environment, but I wonder how many of us realise that the true cause of stress, fear, and anxiety lies in those poorly designed targets, rules and policies? As a middle manager who strives to create a psychologically safe environment with respect and continuous improvement, there is only so much he/she can do to compensate for this strong influence from above.

Toyota

To me it’s such a shame that we have to rediscover these effects that were pointed out by people like W. Edwards Deming and Taiichi Ohno long ago. When Ohno introduced his plans to turn Toyota into a respectful and caring organisation, one of the first things he did was to address the underlying fear. He told the employees that:

"Everyone, who actively supports the transformation, will always have a job within the company."

Focus on HOW

Ohno also realized that giving people flat production targets was not the way to achieve the desired results in a respectful and sustainable way. Flat production targets would place the focus on the outcome, not on how to get there in a respectful and sustainable way with the best quality, least amount of effort and the lowest cost.

Method

After Ohno had addressed these negative influences of "results oriented targets", he introduced the Deming problem solving method to increase productivity and quality with strong involvement of employees in the improvement processes. Deming and Ohno understood the difference between "work as imagined vs work as done", that every process can be improved, and that processes need to be kept up-to-date due to all the constant changes around us. This can only be done when the employees are the lean experts themselves. The rest is history… Or not?

Off track

Let me start by saying that I am not close to Toyota, so the following is a hypothesis based on my personal observations ("correlation does not necessarily imply causation"). Toyota’s goals was to produce cars with the shortest possible lead time and the highest quality, whilst taking good care of the employees and environment. This was a customer and organisational culture focused goal. However, during the first decade of the 21st century, Toyota briefly went off track themselves. They were lured to adjust their goal: “To become the world's biggest carmaker!”. This was a "self-serving" results oriented goal, where neither the customer, nor the organisational culture were mentioned. Once they saw the lagging effects of this "self-serving results oriented goal", in terms of reported reliability problems, world-wide call-backs, and a tarnished reputation, which led to the CEO publicly apologizing, they quickly went back to their original goal, which had served them so well over the past 60 years. Their numerical "self-serving" target made them lose sight of their customers and made their sacred learning and improving culture subordinate.

Root cause areas

It is not just "self-serving results only" based objectives and HR "performance" instruments that can drive the company in the wrong direction. Over the years, I’ve found many perverse incentives and methods that created negative effects. You then need additional controls (more rules, managers, and systems) to counteract these effects. Here are some of the areas:

• The business model: Anglo-Saxon vs Rhineland business model
• The leadership philosophy: who supports who?, “Why?”, decision making, culture, contribution to society
• Financial control models: Wall Street, VC, leveraging, cost accounting, department P&L & budgets
• Outsourcing: loss of control, loss of IP, lower quality at home due to the broken feedback loop, chaos in chaos out
• HR "performance" instruments: targets, performance evaluation, 360°, KPI’s, Ranking method, training, PIP, overtime, temporary contracts
• Strategy & tactics development: top-down pressure vs collaborative, no systems thinking
• Learning & Development: having to work around system effects, presenting ready solutions, creating learned helplessness and passivity
• Lean departments: Top-down, no true continuous improvement, no thinking people
• Management tools and methods: dashboards?, “By what method?”, “How?”, hiring more people to solve problems and then firing them to cut spiralling costs. This kills trust and creates future reluctance to change.

Does this mean that I can’t set goals?

Of course you need goals! You need to focus on the customer, challenge your employees, sometimes even with “impossible” goals (BHAG's) to compel them to think outside the box and work on innovations instead of just continuous improvements. It’s all about creating a psychologically safe environment where people want to work together to solve challenges, aren’t afraid to experiment (in a structured and safe way), make mistakes, and learn from them. You foster their creativity, craftsmanship, and experience to learn and develop better ways of working. The goal is to get more done without working harder, whilst using less resources and polluting less. Improvements are done in a specific order: safer, better, easier, faster, and thus cheaper.

The way forward

In the section above, I’ve been critical about areas where over the decades, I have played important roles myself (L&D, Outsourcing, Consulting, CEO). Does that mean I don’t believe in L&D, Lean, consulting, or even outsourcing? No, not at all! They all play important roles once we get away from using them as symptom reliefs for deeper problems.

What about the 360° tools you mentioned?

I've even seen "harmless" instruments like the 360° tool used in such a way that it rated managers highly on system preservation tasks like fire fighting and creating learned helplessness. Of course, they used other words. I am not saying that the 360° tools are wrong, they can be wonderful, but as with any system, it all depends on how you use it.

Auftragstaktik

Why were the Germans so successful in the first phase of WW2? They used the "Auftragstaktik", which gives the soldiers and platoon leaders the mandate to make their own decisions based on the available resources, skills, and knowledge of the situation in the field. Later, due to a lack of trust and ignoring the requests and feedback from the front, the German top changed this to a central command structure. The system lost its agility and grinded to a hold despite all the rhetoric and force.

Directed teams

Management’s behaviour at all levels is extremely important, but as I said in the beginning, middle managers will fight an extremely difficult battle when targets, HR performance instruments, rules and policies from above creates fear and anxiety and suppresses those behaviours that are needed to innovate.

Self-directing teams

These forces can play an even stronger role in self-directing teams, as fear and competition creates the opposite behaviour of what is needed. There is a chance that one team member will take the informal leadership role whilst the other team members behave submissive.

Buurtzorg

One good example, there are many of course, of self-directing teams is "Buurtzorg" (neighbourhood care / home care). Its founder Jos de Blok created a culture of care and trust, and gave the thousands of local teams full autonomy "to decide what is best for the client/patient". As a former nurse himself, he knew how to support his people by reducing most of the administrative burdens, so they can spend more time taking care of their patients.

Systems view on cost

Because the independent "Buurtzorg" teams decide for their own, decisions that would have taken weeks to be approved in the traditional world, are decided on the spot. These early interventions reduce patient complications, which reduces hospitalisations. This is having a positive effect on overall costs, which is often killed in traditional models where each group is measured on their P&L. Traditional care systems use all kinds of administrative and organisational barriers in order to "save money". These controls reduces their costs, but dramatically increases hospitalisation costs, but hé, that's another budget.

Challenge

Do I have ready-made answers? No! Every situation is different and requires observations and analyses. The answers are developed by you, with external support. You need someone with an outsider view, who will challenge your current systems, methods, and thinking and who shows you the forces below the surface.

Harmony

Unconscious anxieties that often need to be addressed at the C-level are: Fear of “revenue decline” and the “perceived loss of control”. Harmony between thinking and feeling around your new leadership and business philosophy is important. Otherwise your unconscious will sabotage your own new plans, just as their unconscious, influences your employees to sabotage your top-down plans.

I am looking forward to your feedback.

Robert Ilbrink,

Essentrium.eu, People first Lean Executive Coaching and Consulting

Languages: Nederlands, English, Deutsch

December 2020