It's the Workgroup

Contagious Success: Spreading High Performance Throughout Your Organization
by Susan Annunzio

Share the secrets of your top workgroups to accelerate profitable growth

The Hudson Highland Center for High Performance recently completed the largest and most in-depth global study ever done of the factors that accelerate or stifle high performance. The alarming conclusion: only 10 percent of knowledge workers are part of a high-performing workgroup, one that makes money for the company and is creating a new product or service.

Contagious Success reveals Susan Lucia Annunzio's proven strategies for identifying, nurturing, and replicating business units that are already high performing. These workgroups tend to be ignored while senior management focuses on fixing its lowest performing units. But Annunzio argues for the opposite strategy: Focus on the groups that are doing the best work in the organization, learn their secrets, and help spread their expertise to the average groups.

Annunzio focuses on groups, not individuals, because even a great individual can't succeed in a weak environment. By using the high-performing groups to improve just the top 20 percent of the average performers what Annunzio calls "moving the middle" a company can achieve dramatic, sustainable growth in revenue and

This is a book for leaders who want to unleash the hidden potential in their organizations.

Chapter 1

Success is contagious. That's the premise of this book. Every company has high-performing workgroups that both make money for the business and develop new products, services, or markets. These workgroups create environments in which results are achieved and people flourish. High-performing groups adapt quickly to changes in the marketplace, understand their customers, and know how to get the internal resources they need to accomplish their goals.

If you spread the secrets of these groups, you can improve the overall performance of your company.

Just as the leaders of Wal-Mart think of their highly successful company as a series of individual stores, you can think of your company, regardless of size, as a series of workgroups. As Robert Slater wrote in The Wal-Mart Decade, ". . . the only way to manage such a large and complex organization is to think of it not as large and complex, but think of it as simply a series of individual units, that is, the stores. 'We run the business a store at a time,' said [David] Glass [president and CEO from 1988 to 2000]. 'How do you run a $240 billion retail business? I don't have a clue. But I know how to run retail stores.'"

How do you run a business in today's uncertain global environment? How do you improve performance in an era of tightening budgets, reduced resources, and increasing demands? The answer is to support your workgroups so they can generate new ideas to fuel profitable growth.

A workgroup can be a few people or a few hundred; it is the unit responsible for driving results. Workgroups can be formed based on functional areas (the marketing department); divisions within functional areas (the creative group); client; or product line. They can be permanent, or temporarily brought together to achieve a single purpose. Workgroups form their own smaller cosmos within the larger company. They are united by common goals and shared experience.

In this book, I will introduce you to some highly successful workgroups. Among others, you will meet:

• the Green Diesel Technology team at International Truck and Engine Corporation, which played a major role in preserving the diesel industry while creating a significant growth opportunity for the company.

• the People and Culture department at Microsoft UK, which helped make the company the United Kingdom's IT employer of choice, and generates 30 percent more revenue per employee than any other division of Microsoft worldwide.

• the Kellogg Food Away From Home marketing department, whose efforts resulted in nearly 10 percent profit growth between 2002 and 2003. Growth due to innovation tripled between 2001 and 2003.

• the Foreign Exchange Institutional Sales team at ABN AMRO, which advises financial institutions on how to optimize returns on currency management. The team was on pace to achieve $20 million in revenue in 2004, up approximately 67 percent from $12 million in 2002.

All of these workgroups have created high-performance environments that deliver exceptional results. Unfortunately, there are too few of such groups. Recent groundbreaking research on the workgroups of knowledge workers found that only 10 percent of these highly paid and well-educated respondents could provide evidence that their workgroup was high performing - that it made money for the company and introduced new products, services, or processes. The study was undertaken by the Hudson Highland Center for High Performance, which I lead. (See Appendix 1 for details on how the research was conducted.)

To increase performance, companies need to focus on the single factor that is most critical to high performance - the environment of their workgroups. According to Daniel Gilbert, professor of psychology at Harvard University, "Four decades of scientific research have shown that situations are powerful determinants of human behavior - and much more powerful determinants than most of us realize."

Gilbert continued, "We are exquisitely social animals who respond instantly to the most subtle demands of our social environments, but because those demands are so subtle, we often make the mistake of attributing these responses to internal characteristics such as motives, beliefs, traits, attitudes, desires, and intentions. We tend to think that people 'are the way they act' because we fail to recognize how much of their action is guided, shaped, influenced, and dictated by the situation in which it unfolds."

Instead of concentrating on the environment of their workgroups, too many companies focus on allocating financial capital and deploying human resources. On the financial side, their goal is to achieve the best return on investment, measured by profitable growth, meeting investment community expectations, or increasing shareholder value. Due to limited time and unprecedented pressure, senior leaders expend most of their energy managing the numbers. That often means reducing costs and limiting investments to grow profits.

At the same time, most companies want to be employers of choice, and consequently they don't ignore their people. By activities such as pay for performance, performance management, leadership development, and training, they reward performance, especially that of high-potential workers. They measure return on human capital based on how successfully they recruit and retain the best and brightest individuals for their workforce. Managing financial and human capital are necessary activities, but they are not sufficient for high performance. Most companies assume that if they provide their workgroups with reasonable financial targets and the right people, they will automatically be able to achieve a high return on their investment. But this assumption is faulty. To achieve the best return on financial and human capital investment, leaders need to deliberately create workgroup environments that can sustain high performance.

"Changing the situation and shaping the environment - that's what leadership is all about," noted Linda Ginzel, clinical professor of managerial psychology at the University of Chicago Graduate School of Business.

There's no question that individual performance does matter. People need to be trained, developed, and given appropriate rewards and incentives. It is also good business to monitor and measure performance. But individual performance is influenced by the environment. If the best and brightest people are not in the right environment, they will not do their best work. Stars in under-performing workgroups won't shine as brightly. Michael Jordan was already a star when he joined the Chicago Bulls. However, it was not until Phil Jackson became head coach that the basketball team started winning championships. Jackson created an environment in which all the members of the team could excel. When Coach Herb Brooks chose college players for the 1980 U.S. Olympic hockey team, he did not select the stars; he chose those who could gel as a team. The United States beat the highly favored Soviet team to win the gold medal, in what Sports Illustrated called the "greatest sports moment in the 20th century."

These examples demonstrate that in a team sport, an individual performer cannot win a championship alone. Business is a team sport.

Copyright © 2004 Susan Annunzio. All rights reserved. This excerpt, or any parts thereof, may not be reproduced without permission.

About the Author

Susan Lucia Annunzio is chairman and CEO of the Hudson Highland Center for High Performance, a subsidiary of Hudson Highland Group, Inc. The author of Evolutionary Leadership and coauthor of Communicoding, she advises senior executives around the world and is an adjunct professor of management at the University of Chicago Graduate School of Business.