Times Have Changed

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

(Page 2 of 4)

The way workgroups are managed today is critically important - even more so than in the past. This is because times have changed. In the Industrial Age, the assembly line fueled economic success. Business decisions were less complex, competition was clear, and how to make money was more straightforward. Top-down, command-and-control leadership was effective; plant workers needed to follow directions and do precisely what they were told. It wasn't necessary or helpful for them to think creatively to do their jobs.

Today, that model no longer works. The business environment is uncertain, markets are saturated, capital is scarce, industries are consolidated, and products are commoditized. Customers have more choices, so companies have to work harder to understand and meet their needs.

To be sustainable, companies have to grow revenues; cutting costs is not sufficient nor is operational excellence. The only way they can grow revenues is to differentiate themselves by creating new products, services, and markets. Workers can no longer simply follow orders. Now they need to use their brainpower to foster growth.

Whirlpool Corporation, based in Benton Harbor, Michigan, expects all employees to come up with new ways to meet customer needs. "We feel like everyone from the very top of the organization to the people on the manufacturing floors can contribute to driving relationships with our customers," said Donna Samulowitz, Whirlpool's vice president of Global Customer Loyalty.

Samulowitz said that Whirlpool is not abandoning the core strengths that grew the business to where it is today. "Our trade partner relationships and our operational excellence are still critical, but they are not enough. To drive our growth goals, we recognize the importance of customer loyalty, which comes from meeting customers' needs through new products and services, and staying with the customer throughout their relationship with our brands."

Samulowitz added, "It's critical that everybody play a part in driving innovation. Unique solutions can come from anywhere in the organization as long as people have the right focus."

This approach requires leaders to act differently than in the past. The strategies that worked in the Industrial Age are no longer effective. Leaders need to be honest about their own strengths and weaknesses. They must recognize that they can't be or do everything and, therefore, should make sure the people around them have complementary strengths.

"Arrogance is out of fashion in the executive suite. So are autocratic executives who rule by intimidation, think they have all the answers and don't believe they need to be accountable to anyone," wrote Carol Hymowitz in the Wall Street Journal. She added that executives who are not willing to share authority and be more accountable "may find themselves passed over for the top job."

Since leaders can't have all the answers, they must rely on others for help. It is most likely that the answers - new services, products, and markets - will emerge from knowledge workers, people who manipulate information and use it to make business decisions.

That's why, when the Hudson Highland Center for High Performance decided to study high performance in companies, we focused on knowledge workers' perceptions of their workgroups. The goal of our research was to identify the "genes" that make up a healthy workgroup. If companies knew what genes distinguish high-performing workgroups from other groups, they would be able to clone those genes to increase overall performance. Our study of more than three thousand knowledge workers in the United States, Europe (France, Germany, Italy, the Netherlands, Sweden, the United Kingdom), Japan, Australia, Beijing, and Shanghai revealed three factors that are the biggest differentiators between high-performing and nonperforming workgroups. (See Appendix 2 for details about the results in individual regions.) We found a global standard: The genes that enable high performance are consistent around the world.

The major factors that distinguish high-performing workgroups are:

• Valuing people
• Optimizing critical thinking
• Seizing opportunities

Not surprisingly, when we asked members of high-performing groups to rate the applicability of a series of statements to their workgroups, they gave the highest scores to the following: "The group learns what customers want;" "our group leader knows our business well;" and "the group meets customer needs." As many experts have argued, companies need to know their business and their customers to succeed. However, that alone won't produce high performance. What differentiates high-performing and nonperforming workgroups is the environment.

The work environment is linked to customer satisfaction. The right work environment results in satisfied employees, and studies have shown a high correlation between employee and customer satisfaction. For example, a frequently quoted University of Michigan study found that the correlation between customer satisfaction and employee satisfaction is .86, with 1.0 being a perfect correlation.

A 1998 Harvard Business Review article, "The Employee-Customer-Profit Chain at Sears," discussed a business model that tracks the impact of employee attitudes on customer satisfaction and, ultimately, financial performance. According to the Sears model, improving employee attitudes by five points on the company's survey scale will drive up customer satisfaction by 1.3 points, which in turn leads to a 0.5 percent increase in revenue growth. The authors stated, "These numbers are as rigorous as any others we work with at Sears. Every year, our accounting firm audits them as closely as it audits our financials."

Other companies have found similar correlations. In a 1998 study that tracked employee attitudes and behaviors, customer satisfaction, and profitability, Xerox concluded that employee satisfaction measures are closely linked to customer results. Using data from annual surveys, Northern Telecom of Toronto found "conclusive evidence" that boosting employee satisfaction leads to more satisfied customers and improved financial results. It is logical to conclude that people who work in environments in which they are valued, can do their best thinking, and have the freedom to seize opportunities are more satisfied with their jobs.

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.