Interview Tom Foster (Management Skills Blog) – Part 3 of 6

Q3 Dr Lisa: As you know we recommend against most incentive or bonus programs. How does the prevailing belief by Western management that incentives are effective relate to the “best efforts” contract?

Tom: Yes, incentives are effective. They are most effective at creating mistrust in the organization. They violate the implicit contract between the employer and employee. Incentives lay the groundwork for counterproductive relationships and sow the seeds for deceit. Incentives pit manager against employee in a game of underperformance, where the carrot rules.

Even worse, managers use incentives to abdicate their responsibility to hold people accountable for performance. Managers throw up their hands and say, "the only way I can hold my people accountable is to withhold part of their pay until they meet the performance standard." If that is the only strategy a manager has to hold people accountable, then I think I need a different manager.

...to be continued.

Here's to maximizing YOUR profits!
Dr Lisa Lang
(c)Copyright 2008, Dr Lisa, Inc. All rights reserved.

Are you a Vistage/TEC member who would like your team to hear my speech? Here it is: NEXT Maximizing Profitability Event (no charge): December 1, 2008 in Denver from 1:00 to 5:00 pm at the Science of Business Training Center. More information at http://www.viable-vision.com/. You can register by fax or on-line.

Next Mafia Offer Boot Camp -- is December 2, 3, 4 2008 in Denver.

Interview Tom Foster (Management Skills Blog) – Part 2 of 6

Dr Lisa: Tom in your speech you mention the “best efforts” contract that exists between an employer and employee. Could you elaborate on what that is?

Tom:
There is a widely held notion that to get the best efforts from a person, management must engage in a game of trickery, using manipulation, incentives and bonuses to extract the last ounce of willingness from their employees. The notion concludes that employees are basically lazy and to get their best efforts, management must withhold some benefit or some money until that best effort is observed.

Under that notion, the contract reads like this: For your salary or standard compensation, I expect you to show up and trust that you will deliver less than your best effort. At the end, after you have delivered less than your best effort, if I can get you to deliver a little more than less your best effort, I am willing to pay you more.

How silly is that?

It does nothing more than breed mistrust and sets up an incentive system that employees will manipulate. It is a destructive game that tears at the fabric of most intentional cultures.

Now, try this contract: For your salary, or standard compensation, I expect you to show up and trust that you will do your best.

That's it, no games, no manipulation.

...to be continued.

Here's to maximizing YOUR profits!
Dr Lisa Lang
(c)Copyright 2008, Dr Lisa, Inc. All rights reserved.

Are you a Vistage/TEC member who would like your team to hear my speech? Here it is: NEXT Maximizing Profitability Event (no charge): December 1, 2008 in Denver from 1:00 to 5:00 pm at the Science of Business Training Center. More information at http://www.viable-vision.com/. You can register by fax or on-line.

Next Mafia Offer Boot Camp -- November 10, 11, 12 2008 in Denver.

Interview Tom Foster (Management Skills Blog) – Part 1 of 6

We'll take a break from our POOGI series for this interesting 6 part interview of Tom Foster.
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I had a chance to interview Tom Foster. Tom is a consultant and TEC Chair in Florida. Brad heard Tom speak, checked out his blog and then I ended up speaking to his group. During our trip to Florida we had dinner with Tom and discussed a number of interesting topics. Here are some questions we asked Tom and his answers.

Dr Lisa: Tom, as you know, we do results based consulting. We only get paid if our clients increase their profits. So it is very important for our clients and for us to have the right people on the bus. Many times we come into a company to find that the right people are no where near the bus.

You have found that “time span of discretion” is a better indicator than the various personality tests of how successful a person will be in a job. Please explain more about that.

Tom: Each of us has an innate ability to deal with various levels of complexity in our world. This is a finding by Elliott Jaques in his research on how organizations get work done. This innate ability to deal with complexity is measured in terms of "Time Span." While many companies employ various instruments (psychometric testing) to determine what Elliott describes as "temperament," the correlation of any given temperament to success in the position is hardly more than random.

The real key to determine whether a person has the capability to be successful, in a given role, lies in matching the Time Span of the role with the Time Span of the person.

To do this requires some understanding of Time Span and how to measure it. For now, I will leave you with the definition:

Time Span is the length of time that a person can work into the future, without direction, using their own discretionary judgment.

A Process Of On-Going Improvement (POOGI) - Part 29

We are continuing our series based on The Goal by Eliyahu M Goldratt and the Theory of Constraints.

How will we know if we have a good solution before we try to implement it?

As business leaders, we’re smart people and fancy ourselves as problem-solvers. So, not only do we skip the step of developing a deep understanding of the problem, we jump to our favorite direction of the solution. Usually, we propose the solution and are surprised by the resistance we encounter. If we have enough power and stamina, we impose the solution. If we require the consensus of other people, we often get stuck arguing about the pros and cons of alternative solutions. Other people are very good at seeing what is wrong with our idea!

A useful way out is to identify the few criteria that would be associated with any good solution to the problem. And then list as many alternative solutions that meet the criteria in whole or part as possible.

For each alternative, also predict the negative effects and the implementation obstacles. These are what are normally referred to as the “problems” with a proposed solution. In the example above, the recently imposed no-overtime policy was an attempt to control costs in the face of declining productivity. Could you have predicted the negative reaction to such a policy? When the incentive system was initially implemented, do you think management expected it to de-motivate the workforce at the end of every quarter in which it was not earned? Probably not, but it was a predictable negative effect that should have been thought through before the incentive plan was implemented.

In this example, criteria for a good solution might include:

• Immediately improve the morale of the plant
• Immediately support increased productivity
• Be sustainable.

As for alternative solutions with our example company, one is to do nothing differently. This, in fact, is what is normally done. Remember Einstein’s definition of insanity: “doing the same thing over and over but expecting different results”. Inertia is powerful. Better to live with the devil we know…

Another direction is to address directly the conflict between the current company policies and the employees’ security and satisfaction. Notice that this does not require an employee survey. We all have enough intuition about causes of security and satisfaction. The difficulty is in removing bad policies and replacing them with better policies.

So what happened? The owner took charge, realizing that the company was lax in keeping current with employee reviews. While to every employee his or her review was very important, the company had not prioritized doing them, especially since that would require delivering bad news and having to talk about pay rates. The management had also allowed a few bad attitudes to affect everyone. The bad attitudes were addressed; there was a company meeting acknowledging the importance of employee security and satisfaction, and brief reviews were held emphasizing the importance of skills, cross-training, and attitude. The company committed to paying its most skilled people better than they could make anywhere, but needed their help with increased productivity. The feedback was positive and that “something really changed” this time.

...to be continued.

Here's to maximizing YOUR profits!
Dr Lisa Lang
(c)Copyright 2008, Dr Lisa, Inc. All rights reserved.

NEW -- Seattle Group Mafia Offer Boot Camp. October 20 (all day), October 21 (pm), October 22 (pm), and October 23 (pm). If you're interested please contact me by email.

Are you a Vistage/TEC member who would like your team to hear my speech? Here it is: NEXT Maximizing Profitability Event (no charge): September 23, 2008 in Denver from 1:00 to 5:00 pm at the Science of Business Training Center. More information at http://www.viable-vision.com/. You can register by fax or on-line.

A Process Of On-Going Improvement (POOGI) - Part 28

We are continuing our series based on The Goal by Eliyahu M Goldratt and the Theory of Constraints.

What is the problem? Is it:

• Declining sales?
• Unrealistic expectations for increased productivity?
• No profit incentive payout?
• Low morale?
• The new no-overtime policy?
• Ineffective supervision?

TOC has cause and effect logic tools to determine which problems are causes and which are effects. To have the greatest impact on the business system, we don’t want to treat symptoms; we want to address what we call the “core problem” that is the cause of all of the symptoms.

The company’s objectives to “make more money now as well as in the future” and “provide a secure and satisfying environment for employees now as well as in the future” are currently jeopardized. The specific objective being addressed is improved productivity as measured by sales compared to total plant payroll.

The core problem is that company policies are in apparent conflict with the goal of secure and satisfied employees. Employee resistance instead of buy-in to the objective of improved productivity is a result.

What are the possible alternative solutions to such a problem? What are the criteria for a good solution? That is, how will we know if we have a good solution before we try to implement it?

...to be continued.

Here's to maximizing YOUR profits!
Dr Lisa Lang
(c)Copyright 2008, Dr Lisa, Inc. All rights reserved.

NEXT Group Mafia Offer Boot Camp: September 24, 25, 26 2008 in Denver. More information at http://www.mafiaoffers.com/. There are also PRIVATE and On-line Mafia Offer Boot Camps. The July boot camp SOLD OUT and there is no group boot camp in August. Don't miss September!

Are you a Vistage/TEC member who would like your team to hear my speech? Here it is: NEXT Maximizing Profitability Event (no charge): September 23, 2008 in Denver from 1:00 to 5:00 pm at the Science of Business Training Center. More information at http://www.viable-vision.com/. You can register by fax or on-line.