May 13, 2010

I’ve been neglecting my blog over the last couple of weeks while I wrapped up my interim assignment. I’m back to a more normal schedule and looking forward to contributing again.

Today’s topic is Chemistry, which I think is an often overlook or misunderstood concept. A business needs to be greater than the sum of its parts. This comes from teamwork and collaboration between the employees. When you add a person to a business they need to make the people around them better.

As a business gets larger it becomes harder and harder for one person to make a difference. Certainly the person at the top always matters, but can one person be a catalyst for change? It depends on the current chemistry of the organization. Let’s keep the rest of the discussion simple and narrow it down to three types of companies: good chemistry, average chemistry, and bad chemistry.

Add a strong personality to company with good chemistry could just as easily backfire as create an incremental gain. If you have good chemistry and real strong people and you bring in a superstar with a skill set that is redundant, chemistry will be fractured. The existing people will feel threatened by the person you’ve added and wonder why you don’t have faith in them. You’ll find having more is less in this situation. If you add a superstar to a company with good chemistry that has complementary skills to the team it likely will raise the bar for everyone. This type of add is how you become greater than the sum of the parts.

It’s easier to improve a mediocre company by adding a new hire as a catalyst. In one of Jack Welch’s books he talked about the type of person they sought to hire at GE. Key things they looked for were people with Energy and Edge. A high energy person with a bit of an edge is likely to raise everyone’s game in an average company. Even if the skill set is redundant this person is likely to challenge everyone to produce more.

Adding the high energy-edge person will almost always fail in a company with bad chemistry. The strange thing is they’re the ones most likely to do it. It really doesn’t matter if the skill set is complementary or redundant. This person will do one of two things when they are added. They might become like everyone else (the vortex), or they quit. Either way it doesn’t change anything.

Let’s talk about what I like to call the bad chemistry “vortex”. Several years ago I was asked to take on a business unit with about 200 people that was severely underperforming. When I first entered the building I was struck by how quiet it was and how there didn’t seem to be any interaction between the employees. I held several early town-hall meetings and discussed the need to communicate and work together, but nothing changed.

Like most people I thought I could change this by simply adding a couple of strategic hires. I added one person to a key function and it didn’t work. Then I very carefully seeded change agents in management positions in the most critical areas. The result was a big thud. Not only did it not change anything, but these people quickly became like all the others. My frustration continued to build.

Finally, I asked high performing managers from other businesses I managed to get engaged and give me their opinion. After about 30 days they all came back and said it was hopeless. People were hunkered down and you simply couldn’t get a feel for what was causing the problem.

Not being a person who gives up easily, and never one to shy away from risk, I decided to make a sweeping change. I cut over 75 people on one day. My thought process was to keep those who I thought had potential, but had been sucked into the vortex. I figured if we simply forced them to do more they would rise to the occasion. I was surprised by what happened next.

When it comes to letting people go I tend to be hands-on. I believe reduction need to be handled delicately and most managers simply don’t have the experience. In the process of letting these people go there was a theme. For the first time in my career I had people thank me when I informed them their job had been eliminated.

Many of these people’s jobs had been greatly or reduced or completely eliminated over time. They lived in fear that someday someone would find out that they really didn’t have much responsibility. To avoid being found out they isolated themselves from others. They were thanking me for bringing this isolation and their paranoia to an end.

Now the above example is quite extreme, but I’ve seen it at other places. For one reason or another people reach a point where they feel they don’t matter and crawl into a cocoon. The longer they stay there the higher the level of paranoia that develops. When many people do the same thing it feeds on itself.

Imagine trying to get something done in an organization like this. Every person you go to offers no help or direction. They simply want to be left alone. It doesn’t take long before you simply give up or quit. When you give up you start to behave just like these people. The more people that do it, the harder it is to fix.  You eventually reach a point where the only choice is a sweeping change. Most businesses don’t survive sweeping changes. You simply can’t replace the majority of people and expect to succeed.

The lesson to be learned here is to never let the above situation take root. This is easier said than done, but at its root are managers who don’t make the hard people calls. If the person’s job was eliminated give them a chance to fill another open position. If there isn’t a fit cut them. It doesn’t matter how good they were before, you can’t keep people who don’t have jobs or don’t fit the jobs you have. If you have someone who isn’t performing, don’t minimize their responsibilities coach them to improve. If they don’t improve let them go. I know this sounds harsh but if you don’t do this you will create the bad chemistry vortex and jeopardize the entire business.  Proactive management is required constantly to keep a business thriving.


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