Forget everything you know about being a leader

Marcus Buckingham teaches CEOs how to get the most out of their people and their organizations. His first lesson: Forget everything you think you know about being a leader.

 

There is a noble promise at the heart of the new world of business: Everyone has the right to meaningful work, and people who do meaningful work create the most value in the marketplace. Even as the talent wars have fizzled into pink-slip parties, few senior executives would dispute the vital importance of finding, engaging, and developing the best people. Ask any CEO, "What's your company's most precious asset?" Without hesitation, the answer will be, "Our people." Ask the same CEO, "What's the primary source of your competitive advantage?" Chances are, the reply will be, "Our unique culture."

 

This kind of talk drives Marcus Buckingham nuts. It's not that he disagrees with the sentiments -- he's spent his 15-year career as a pioneering researcher and a global-practice leader at the Gallup Organization, making the link between people, their performance, and business results. What troubles him is the lack of rigor behind the rhetoric. "There's a juicy irony here," says the 35-year-old Cambridge-educated Brit. "You won't find a CEO who doesn't talk about a 'powerful culture' as a source of competitive advantage. At the same time, you'd be hard-pressed to find a CEO who has much of a clue about the strength of that culture. The corporate world is appallingly bad at capitalizing on the strengths of its people."

 

Buckingham, on the other hand, is remarkably good at communicating his subversive message. He has produced two best-selling books: First, Break All the Rules: What the World's Greatest Managers Do Differently (Simon & Schuster, 1999), with coauthor Curt Coffman, and Now, Discover Your Strengths (The Free Press, 2001), with coauthor Donald O. Clifton. Meanwhile, Buckingham has helped build a ballooning consulting practice at Gallup, with more than 1,000 clients, including Best Buy, Disney, Fidelity Investments, Toyota, and Wells Fargo.

 

His mission, as he describes it, sounds almost quaint: "to create a better marriage between the dreams of workers and the drive of companies to win." His methodology is anything but quaint. Buckingham has led an effort inside Gallup to crunch three decades' worth of data on worker attitudes into actionable insights on human performance and productivity. First, he and his team tapped into a database of more than 1 million Gallup surveys that focused on workers from around the world. Although these workers had been asked many questions, there was one big question behind the interviews: "What does a strong and vibrant workplace look like?" Buckingham eventually distilled 12 core issues (called the "Q12" in Gallup-speak) that represent a simple barometer of the strength of any work unit.

 

Next, Buckingham's team ran massive number-crunching studies to analyze how answers to the Q12 shaped hard-core business results. The link between people and performance was vivid. The most "engaged" workplaces (those in the top 25% of Q12 scores) were 50% more likely to have lower turnover, 56% more likely to have higher-than-average customer loyalty, 38% more likely to have above-average productivity, and 27% more likely to report higher profitability.

 

Buckingham and his colleagues made one other finding that startled them: There was more variation in Q12 scores within companies than between companies. That is, in each of the more than 200 organizations that he analyzed, Buckingham found some of the most-engaged groups and some of the least-engaged groups. His conclusion: There is no such thing as a corporate culture. Companies are made up of many cultures, the strengths and weaknesses of which are a result of local conditions.

 

"It's staggering," he says. "Few of the CEOs in our study could say which work units in their company were engaged effectively and which weren't. They didn't know where their culture was strong and where it was weak, whether it was getting better or getting worse -- or how much this variation was costing."

 

Talk about speaking truth to power. CEOs don't understand what makes their employees tick. They don't know how to get the best performance out of the most people. They can't say where their companies are strongest or weakest -- or why. And that's just the first of Buckingham's series of assumption-busting messages. "The major challenge for CEOs over the next 20 years will be the effective deployment of human assets," he declares. "But that's not about 'organizational development' or 'workplace design.' It's about psychology. It's about getting one more individual to be more productive, more focused, more fulfilled than he was yesterday."

 

In several conversations with Fast Company, the tireless Buckingham offered an overview of his pathbreaking research and identified five attitude adjustments that redefine the essence of leadership in business.

 

Attitude Adjustment #1

 

Measure what really matters. (By the way -- the numbers you're using now don't matter.)

 

Numbers are crucial to running a company, and CEOs love them. Yet the numbers that most leaders use to manage the people who are part of their business are mostly off target. The CEOs who come to us are almost always fixated on two questions: How is our average performance improving over time? and How do we stack up against our competitors?

 

Both of those questions obscure what's really important. Averages hide the fact that within any company are some of the most-engaged work groups and some of the least-engaged work groups. But this range is what is most revealing.

 

You can divide any working population into three categories: people who are engaged (loyal and productive), those who are not engaged (just putting in time), and those who are actively disengaged (unhappy and spreading their discontent). The U.S. working population is 26% engaged, 55% not engaged, and 19% actively disengaged.

 

In essence, then, the CEO's job is to improve the ratio of engaged to actively disengaged workers. But here's the problem: Few of the CEOs in our study could say which work units in their company were effectively engaged and which weren't. They didn't know where their culture was strong and where it was weak, whether it was getting better or getting worse.

 

That's where the Q12 comes in. Survey the workforce every six months, and the result will be a vivid picture of which work units are engaged in a way that leads to the best performance and which workers are not.

 

I work closely with Best Buy, the big electronics retailer. When they started surveying their employees in 1997, they were in the 45th percentile of our Q12 database. By the end of last year, they were in the 70th percentile. More important, in those four years, 99 stores improved their Q12 scores significantly, while just 18 stores had scores that fell. The 99 stores that improved their engagement level dramatically improved their P&L budgets. The stores whose engagement level fell missed their P&L budgets. These are the numbers that matter.

 

Attitude Adjustment #2

 

Stop trying to change people. Start trying to help them become more of who they already are.

 

CEOs hate variance. It's the enemy. Variance in customer service is bad. Variance in quality is bad. CEOs love processes that are standardized, routinized, predictable. Stamping out variance makes a complex job a bit less complex.

 

There is, however, one resource inside all companies that will hinder any attempt to eliminate variance: each individual's personality. Human beings are the one irreducible complexity in every company. And you can't eliminate that complexity by forcing people to become more like one another. You can't standardize human behavior. Of course, that's precisely what most leaders attempt to do. That goal -- standardizing human behavior -- is the driving force behind most executive-training programs and leadership-development courses. What's the quickest way to build a coherent culture? Get everyone to manage the same way.

 

Not only is that approach psychologically daft, it's hugely inefficient. It's fighting human nature, and anyone who fights human nature will lose. The best managers don't even try to fight that fight. We studied 80,000 of them from 400 different companies -- people who excelled at getting great performance from their people. These managers followed the same basic set of principles: People don't change that much, so don't waste your time trying to rewire them or trying to put in what was left out. Instead, spend your time trying to draw out what was left in. When it comes to getting the best performance out of people, the most efficient route is to revel in their strengths, not to focus on their weaknesses.

 

Let me give you an example from my company. Our senior VP of marketing, Larry Emond, doesn't have a lick of empathy. It was surgically removed at birth. He also lacks a quality that I call "developer": getting a kick out of seeing someone else grow. Now, I could spend my time admonishing Larry. I could try to explain to him why that blistering email he dashed off had a crushing effect on several people. But he still wouldn't get it.

 

You might think that Larry is doomed to be a poor manager. Absolutely not. Larry's strength is that he has the qualities of self-assurance and a strategic mind-set. He doesn't need to have empathy to achieve results. People feel that Larry encourages their development, because he keeps thinking about how they can be part of this future he's describing.

 

Now Larry's approach seems obvious -- why would you do anything else? And yet, in most organizations, Larry would be confronted by some nice, well-intentioned HR person -- probably going off of feedback from a 360-degree survey -- who would say, "Larry, as a leader, you need to be more responsive to your direct reports." There would be a lot of, "Tone that down, Larry." Well, how about, "Dial that up, Larry"?

 

If you are clear about the outcome that you want, instead of standardizing the qualities and steps that you think are required to get to that outcome, you should honor the fact that Larry's nature is irreducibly unique -- rather than wasting time and money wishing that it weren't so. What goes for Larry goes for all kinds of people in companies. The best strategy for building a competitive organization is to help individuals become more of who they are.

 

Attitude Adjustment #3

 

You're not the most important person in the company. (Believe it or not, your middle managers are.)

 

American culture is CEO obsessed. We celebrate the hard-charging heroes and mythologize the iconoclastic visionaries. Those people are important. But when it comes to getting the most productivity out of everyone in the company, they're not the most important people. Our research tells us that the single most important determinant of individual performance is a person's relationship with his or her immediate manager. It just doesn't matter much if you work for one of the "100 Best Companies," the world's most respected brand, or the ultimate employee-focused organization. Without a robust relationship with a manager who sets clear expectations, knows you, trusts you, and invests in you, you're less likely to stay and perform.

 

I admit, it seems like the most obvious point in the world. But do we revere the role of the middle manager? Hardly. We don't even like the term! We'd rather transform everyone into grassroots leaders, change agents, intrapreneurs. We look at managers as costs to be cut -- or, at best, as leaders-in-waiting, people who are putting in time before they get the big job.

 

So what exactly do great managers do? First, the best managers start with a radical assumption: Each person's greatest room for growth is in the area of his greatest strength. It goes back to my last point. Good managers believe that each person is wired in a unique way -- and these managers are fascinated by this individuality. Rather than seek to round it out or fill it in, the best managers do everything they can to sharpen and amplify that uniqueness. And then those managers work with people to help them understand their strengths, to build on them, to give them the confidence to be different.

 

Attitude Adjustment #4

 

Stop looking to the outside for help. The solutions to your problems exist inside your company.

 

Talent is a multiplier. The more energy and attention you invest in it, the greater the yield will be. That's why the best leaders are relentless at seeking out, shadowing, studying, and highlighting the lessons of their own top performers.

 

The funny thing is that most CEOs spend their time benchmarking best practices in other companies. They want to know how they're doing relative to their peers. I tell my clients, Don't go on a tour of Disney, Southwest Airlines, or Discover Financial Services. You have some of the world's best managers working inside your own company. Look to them first. Learn from your own people first.

 

At Gallup, we've spent years documenting the simple, charming secrets of these extraordinary people. In the corners of every big company that we've studied, there are hundreds or thousands of them toiling away in relative obscurity. If you find them and shine a light on them, they will point the company's way to the future.

 

Take another look at Best Buy. It's like a controlled laboratory that is devoted to understanding the power of local managers and local work groups. In a sense, the company's strategy is built on uniformity -- everything from store layout to product positioning to uniforms to operations manuals are standardized across the country. Yet even across 400 nearly identical environments, there's an amazing range of employee engagement and business performance. In the Best Buy store that has the highest Q12 scores, 91% of employees strongly agreed with the statement, "I know what's expected of me at work." In the store with the lowest score, just 27% agreed.

 

Not incidentally, the store with the highest Q12 score ranks in the top 10% of Best Buy stores as measured by P&L budget variance -- and the store with the worst Q12 score falls in the bottom 10%. To improve overall corporate performance, Best Buy's leaders don't need to look outside the company. They just need to figure out how to build on the strengths of its best stores.

 

Building on these strengths means identifying internal best practices and shining a light on your best managers -- people like Ralph Gonzalez. Ralph is a store manager who was charged with resurrecting a troubled Best Buy in Hialeah, Florida. He immediately named the store the Revolution, drafted a Declaration of Revolution, and launched project teams, complete with army fatigues. He posted detailed performance numbers in the break room and deliberately over-celebrated every small achievement. To drive home the point that excellence is ubiquitous, he gave every employee a whistle and told them to blow it loudly whenever they "caught" anybody -- whether coworker or supervisor -- doing something "revolutionary." Today, the whistles drown out the store's soundtrack, and, by any metric -- sales growth, profit growth, customer satisfaction, employee retention -- the Hialeah store is one of Best Buy's best.

 

But here's what really impressed me. Most companies would take a best practice like Ralph's whistle and say, "That's a great form of recognition. Let's give out whistles in every store." Best Buy did something much smarter: It extracted and spread the core lesson from Ralph's best practice, rather than institutionalizing the practice itself.

 

Attitude Adjustment #5

 

Don't assume that everyone wants your job -- or that great people want to be promoted out of what they do best.

 

There are two myths about talent that feed the conventional -- and misguided -- approach to career tracks and leadership development in most companies. The first myth: Talent is rare and special. Wrong. We all have talent. What's rare and special is a worker who finds a role that suits his or her talents. The second myth: Some roles are so easy that they don't require talent. Wrong again. We hear a lot about developing more respect for frontline workers and customer-facing employees, but peel the onion and you run into a rigid hierarchy of jobs. The compensation system evolves out of that hierarchy. So do titles and careers.

 

We say that we want to build world-class organizations. That's meaningless if we don't value world-class performance in every role. Yet the people who touch customers the most -- hotel housekeepers, outbound telemarketers -- get the least respect and the lowest paychecks. The assumption is that anyone can do that job and that nobody would want to do it if they were given a choice to do something else. Frontline talent has a prestige problem, and it's turning into a corporate-performance problem.

 

We studied the 3,000 housekeepers of a 15,000-room luxury-hotel chain. It turns out that great housekeepers are not beaten down by the relentless grind of cleaning rooms. On the contrary, they seem to be energized by doing the work. In their minds, the work they do asks that they be accountable and creative and that they achieve something tangible every day.

 

Unfortunately, the only way we have to reward excellence on the front lines is to promote people out of the very roles that they do best. We turn great housekeepers into supervisors, virtuoso shelf stockers into salespeople, and managers into leaders. A major challenge for CEOs is to define excellence in every role -- and pay on it, award titles on it, distribute prestige on it, and make it a genuine career choice.

 

Satisfaction at work depends on nothing more than self-knowledge. And that gets leaders right back to their main task of engaging their employees at every level. What are you doing to turn your people's talent into the kind of performance that thrills customers, whether those customers are internal or external? The beautiful thing about a culture that is built by focusing on individual strengths is that no one can steal it. And any advantage that's hard to steal is an advantage that lasts.

 

Polly LaBarre (plabarre@fastcompany.com) is a Fast Company senior editor based in New York.

 

Sidebar: 12 Questions That Matter

 

If you want to build the most powerful company possible, then your first job is to help every person generate compelling answers to 12 simple questions about the day-to-day realities of his or her job. These are the factors, argue Marcus Buckingham and his colleagues at the Gallup Organization, that determine whether people are engaged, not engaged, or actively disengaged at work.

 

1. Do I know what is expected of me at work?

2. Do I have the materials and equipment that I need in order to do my work right?

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

4. In the past seven days, have I received recognition or praise for doing good work?

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

6. Is there someone at work who encourages my development?

7. At work, do my opinions seem to count?

8. Does the mission or purpose of my company make me feel that my job is important?

9. Are my coworkers committed to doing quality work?

10. Do I have a best friend at work?

11. In the past six months, has someone at work talked to me about my progress?

12. This past year, have I had opportunities at work to learn and grow?

 

(c) 1992-1999, The Gallup Organization, Princeton, NJ. All rights reserved.

 

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