Coming to Grips with Corporate Culture

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“Culture” has been in the business news again lately, from General Motors’ failure to recall its faulty ignition switches to the replacement of an outsider for Target’s new CEO.  Those of us who have worked for more than one company, and/or have friends and acquaintances who work for different companies, know how powerful corporate culture can be. 

We all know that companies, like all social groupings, tend to form cultures that influence the way its employees think, feel and perceive what is going on.  When I worked for Citibank many years ago, I would compare notes with a colleague who worked for what was then called the Chase Manhattan Bank on how different our respective company cultures were.  Citibank was then brash, and its employees were expected to be aggressive, and even rude.  Chase Manhattan was more polite, and employees were expected to behave more gently.  As we know, cultural fit is important to corporate survival.  Many companies assess cultural fit before hiring managers, and many executives de-rail not because they lack technical expertise but because they lack this cultural fit.

Executives in successful companies, recognizing the importance of culture, try to shape their company’s culture to be aligned with the company’s strategy.  For example, Wal-Mart instills an almost obsessive regard for expense management that is in keeping with its strategy to be the low-cost provider and remain profitable through its “everyday low pricing” business model. 

As Lane et al. point out, culture is important because it serves two functions.  One, it helps efficiency.  Everyone in the company is expected to know that there is a way of doing things (companies even label these, such as “The Wal-Mart Way” and “The Toyota Way”) and once employees learn this, the company can operate more efficiently.  What is interesting is that many of these so-called norms are not necessarily written down or documented.  But once we learn the cultural code, many things don’t have to be spelled out.  We know that is the way things are done and violating this cultural code can have consequences.  I remember a company I was involved with where decisions had to be made by consensus.  An executive hired from the outside felt that this was not good for a company that was trying to be more agile and so he started to make decisions without going through the usual channels.  There was so much resistance to his attempts that he only lasted a year with the company.

The second function of culture, according to Lane et al., is that is provides an important source of social identity for its members.  Culture serves as a kind of psychological “glue”; the stronger the culture, the stickier the glue.  Belonging to a group not only provides some security; it also increases our identification and commitment with the group (or company).  Creating a strong culture is especially important for global organizations with subsidiaries in dozens of different countries.  Expatriates from these organizations who go overseas not only provide technical expertise but also serve as cultural ambassadors.  I have seldom seen expatriates being sent overseas who have either just joined their company or are not able to “represent” the company in a positive way.  Strong identification with the company also reduces turnover, and enhances the feeling of pride an employee has in working for the company.

Changing a culture as powerful as GM’s will be an uphill battle but it can be done.  There have been successful attempts at cultural change in companies like GE, Ford, IBM, Nissan and many other companies.  I have been involved with a few companies where the culture changed successfully although in all cases, it took time – as much as five years. 

In brief, what does it take?  Corporate culture, in my opinion, is shaped by three sets of forces, and so understanding these forces and using them to help drive change is a good first step.  In my opinion, these three forces are self-reinforcing and interdependent; implementing changes in one without taking into account the others will not work.  The first force is leader behavior.  Nothing speaks louder to employees than how leaders behave (not what they say should be done).  When Carlos Ghosn of Renault went to Japan to head Nissan, he made it a point to walk around the plant floors and introduced himself to shocked groups of employees.  When CEO John Reed championed Six Sigma at Citibank, he himself went through the training and taught some of the training workshops to employees.

The second set of forces involves the company’s processes and systems.  This is where the rubber hits the road, in the day-to-day activities that shape employees’ behaviors.  In my experience, the most important of these include decision-making processes, how conflicts are resolved, and how employees are recognized and rewarded.  Changing these processes and systems will begin to create changes in the culture. 

The third involves the company’s structure.  Microsoft recently restructured its organization to break down silos.  Many companies such as Cisco, P&G and IBM have moved to a more matrix-type structure.  Unfortunately, many companies start and stop with structure.  For example, GM has recently announced that it would have a head of Global Compliance.  If people still perceive that they will be punished for speaking up, then having an executive accountable for compliance practice alone is not likely to change the culture.

Given all this, here are three takeaways on corporate culture for managers and leaders.  First, unless you are near the top of the company’s hierarchical food chain, it will be impossible for you to change corporate culture.  In fact, even executives at higher levels sometimes find it difficult to change culture by themselves.  Think about living in another country with different cultural values and norms than your own; you have to adjust your behavior to the country’s cultural code.  Similarly, you have to adapt your behavior so it somehow fits in with the culture of the company you are working for.  Of course, you can deviate a bit but too much deviance and you will be rejected.

Second, by understanding the company’s cultural code, you can use culture to your advantage especially when trying to lead and influence.  For example, one of the companies I used to work for had a strong bias for being data-driven.  That is to say, recommendations or decisions had to be based on arguments based on analyses and good data.  In this organization, arguing by appealing to emotion would not get you very far.  Knowing this, those who were effective in this company made sure that they persuaded their key managers by always having solid data to back up their arguments. 

Third, you can create your own “mini-culture” within the larger corporate culture, as long as this is not too deviant.  Countries have national cultures, but they also have regional and even local cultures.  The southern United States can feel quite different than the eastern United States.  Let’s say that you are a manager of a customer service team in your company.  You have strong beliefs about how customers should be treated that may not be as much of a priority to the larger organization.  Within your sphere of influence, you can build a strong sense of customer service.  How?  Start by getting your manager’s buy-in and support.  Have a compelling vision that you can communicate to him or her, as well as to your team.  Then get your team involved and excited to make sure that they share and internalize the vision – it becomes not just your vision but everyone’s.  Then walk the talk.  Recognize team members who exemplify great customer service.  Spend time with customers yourself, and act on their suggestions and complaints.   You need not be merely a victim or product of the corporate culture.

 

Lane, H. et al.  (2009).  International Management Behavior (Sixth Edition).  United Kingdom:  Wiley.

OB Practices: Are They FEDUP?

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Free food!  Subsidies for buying hybrid cars!  No lay-off policies! Paternity leaves!  Employee sabbaticals! No more performance appraisals!  The list of perks, benefits and organizational practices is almost endless, and as many managers know, simply benchmarking or imitating practices or benefits what some of the “great places to work” employers offer is no guarantee that these practices will work for your company.  And by what will work, I mean whether or not they will lead to outcomes that will improve organizational and business performance.

In my OB class recently, one of my students brought up the potential benefits of salary transparency, a practice used by a handful of companies but is certainly not widespread.  There are a few good arguments that can be made for this practice. After all, publicly traded companies issue annual reports showing the compensation of their most highly paid executives.  You can easily access the average salaries of different professional groups (including professors) in public universities. In sports, we can quickly find out what the salary is of every professional player, and what their bonuses are.  And, some would argue, taking the mystery and black box out of salaries might help employee morale.

In my view, here are five questions to answer before one should consider implementing a particular organizational practice in an organization.  You can easily remember these questions using the acronym FEDUP.

First is Fit.  How does the practice align with the organization’s strategy and culture?  Zappo’s and Southwest are two companies known for having a “fun” culture. Tony Hseih, Zappos’s founder, and Herb Kelleher, former Southwest Airlines CEO, deliberately try to create an informal, almost wacky, atmosphere in their companies.   One of Zappo’s core values is “to create fun and a little weirdness.” Herb Kelleher used to dress outlandishly and encouraged his employees to do the same. Now imagine implementing these “fun” practices in companies where the culture emphasizes seriousness and even frugality.  Several years ago, a global company that had instituted “casual” Fridays, where employees could dress more informally one day of the week, decided to implement the practice globally. I was in Tokyo when the employees of its subsidiary received the e-mail memo. “Salary men” in Japan dress very conservatively, often in dark suits and white shirts.  This is part of their identity and they take pride in being recognized as such. Dressing informally made no sense to them at all.

Second is Evidence.  What is the evidence that this practice has worked?  Is there a solid theory or framework behind it? Is it likely to work in different industries?  Is it likely to work in different cultures? Fads are common in business, and imitating what your competitors are doing is not unusual.  This is no reason to adopt the same practice in your organization. Even when there is solid research behind a practice (for example, Collins’ concept of Level 5 leadership in his book Good to Great), it does not mean that this should be applied indiscriminately.  

Third is Difficulty of Implementation.  What are the barriers to implementing such a practice?  How difficult (and/or costly) will it be to implement? Is the timing right for your company?  In Pfeffer’s classic article “Seven Practices of Successful Organizations,” he identifies one such practice as self-managed teams and decentralization of decision making as basic principles of organizational design.  According to him, “organizing people into self-managed teams is a critical component of virtually all high-performance management systems.” However, the examples he gives include companies that have implemented true self-managed teams (e.g., Whole Foods) as well as companies that have implemented only certain aspects of the self-managed team concept (e.g., Ritz-Carlton).  In fact, there are very few companies that have implemented true self-managed teams, while virtually all corporations today actually have some form of team concept. Why are self-managed teams not more pervasive in the work place? For one, it requires a level of maturity and autonomy among team members that may not be there. Google at one point tried to increase spans of control and remove managerial levels but decided that their work force needed managers – not so much to supervise and oversee but also to coach employees, many of whom are very technical but relatively inexperienced.  Second, when a company goes through a major crisis, as Siemens did a few years ago with its bribery scandal, its new CEO implemented policies and compliance procedures that required employees to adhere to strict ethical policies. The timing for self-managed teams would not have been appropriate for this company.

Fourth are Unintended Consequences.  Are there things that could go wrong with the practice that you may not have anticipated?  Many years ago, Stephen Kerr wrote an article called “On The Folly of Rewarding A, While Hoping for B.”  The fundamental concepts of that article are still relevant today. Creating practices that focus primarily on extrinsic rewards (e.g., bonuses, stock options, status in the organization) will tend to attract people who are extrinsically motivated.  These individuals, while they may performing well in the short term to get their rewards, will not likely develop strong loyalty to their organization and will not perform good organizational citizenship behaviors. They are likely not going to be interested in behaviors that do not lead directly to these extrinsic rewards.  Is this the kind of organization that you want to build?

Fifth is Purpose.  Are you clear on what you are trying to achieve with this practice?  And is the outcome linked to business performance? A few years ago, I was advising a company on whether it should implement Six Sigma.  Senior executives had heard about its success in GE and other companies, and they believed that it might have some benefit for the organization, which had been experiencing some challenges with customer service.  They were not sure that Six Sigma would work, so they decided to “pilot” it in one department. Supervisors went through training in statistical quality control, and applied some of the Six Sigma tools. There was some improvement but it did not last.  For practices like Six Sigma to work, it has to start at the top, and the “philosophy” has to be embraced by senior management. By viewing Six Sigma as simply a collection of techniques that could be implemented in pieces, this practice never gained traction and was ultimately abandoned.

So should a company consider implementing salary transparency?  Let’s apply the five FEDUP. First on Fit. If your company has a culture of openness, where status differences are minimized, and where gaps in salary levels are not outrageously skewed, then this might work.  But I doubt that there are many companies who fit this criterion. Second on Evidence. There is surprisingly very little research that has been conducted on the impact of salary transparency, although we can certainly come up with many arguments on both the pros and cons of this.  So let’s pass on the Evidence test since we just don’t have a lot of information either way. Third on Difficulty. Implementing this practice would require a tremendous investment in time on the part of executives, and extensive communication throughout the organization. Is the company prepared to do this?  Is the timing right, especially when there might be some inequities that might have to be explained, or at least corrected, before taking this step. Fourth on Unintended Consequences. Will revelations of everyone’s salaries create feelings of inequity and unfairness, and is the company prepared to deal with these consequences?  Fifth on Purpose. So why exactly would a company want to implement this practice? What does it hope it will accomplish? Will revealing everyone’s salaries indeed lead to higher morale and productivity? Given all this, I would submit that salary transparency is not a practice that should be implemented by many corporations today without a lot of careful thought.

 

Kerr, S.  On the folly of rewarding A, while hoping for B.  (1995). The Academy of Management Executive, 9(1), 7-14.

Pfeffer, J.  Seven practices of successful organizations (1998).  California Management Review, 40(2), 96-124.

The Failure of Success When Internationalizing

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Wal-Mart in Korea … Best Buy in China … Tesco in the U.S. …  The list of companies that have tried to expand internationally and have failed is long indeed, as my students learn in my classes in International Business.  Of course, there are companies that have also been successful as they internationalized, such as IBM, BMW, Toyota, Mastercard, and UPS, to name just a few.

My students are initially very surprised that companies that have been so successful in their home markets could stumble when expanding overseas.  When I ask them why these companies have failed, the two most common reasons they give are that they did not do sufficient market research, and that they failed to adapt to the needs of consumers in the market.

But I push them to dig deeper, to look at some of the root causes.  I challenge them on why they would assume that these companies did not do any market research.  And was the failure to adapt simply a blindness to differences, or a willing choice they made?  After all, these companies have relatively deep pockets, and would want to be sure that their investments would pay off.  Wouldn’t they want to do their homework and due diligence before plunging into a new market?

In interviews with executives, various discussions with students (many of whom work for global companies, some at fairly senior levels), and from research on the topic, I believe that the reasons for failure come down to four underlying causes.

Number one is a “readiness” factor.  Cavusgil et al. (2012) have explained this very clearly when they write that management needs to “… determine the degree to which they have the motivation, resources, and skills necessary to successfully engage in international business.”  For many companies, considering the possibility of expanding into an international market and increasing revenues is reason enough for them.  Unfortunately, these companies get ahead of themselves and forge ahead without laying the proper groundwork.  Part of this groundwork includes the four questions that Cavusgil et al. suggest firms should ask themselves:

  1. What do we hope to gain from international business?
  2. Is international expansion consistent with other firm goals, now or in the future?
  3. What demands will internalization place on firm resources?
  4. What is the basis of the firm’s competitive advantage?

For example, Target is a successful company that has only recently started to expand internationally.  It did this by acquiring the Canadian retail chain Zellers.  Target seems to be very cautious in its approach.  Even though many Canadians are familiar with Target and its logo, Target will continue to use the Zellers name as it learns how to operate their business model in a different country.  Contrast this with Best Buy, which opened its largest-ever store in China and then quickly added eight more stores.  Then, in 2011, it pulled the plug on all nine stores, realizing that its business model did not work in the Chinese market. 

Cavusgil’s questions will not only help companies to determine if internalization is right for them at this time, but also help them to develop a game plan, with specific actions and timelines, to improve their readiness.  For example, a company might want to hire an executive who has had extensive experience in the industry and in that country, and who is familiar with that country’s regulatory requirements.  It helps if that executive has some established relationships with government officials, since such relationship-building is very important in certain markets. 

Number two is a failure to consider criteria other than ROI in the decision on whether, where, when and how to internalization.  A company’s financial analysts may crunch the numbers and come up with very favorable returns.  Companies can get giddy with dreams of tremendous returns that they sometimes fail to probe and question the assumptions on which these numbers are based. 

For example, have country, political, and cultural risks been considered seriously?  If intellectual property rights are not strongly adhered to in the country, what is the risk for the company and what risk mitigation strategies should be put in place?  What is the competitive environment like in the country?  Are there strong local competitors as well as global competitors already in the marketplace?  Companies face many short-term pressures, and the allure of expanding into new markets can be compelling.  But ROI and other financial indicators alone should not be the sole criteria for entering a market.  In the M&A research, for example, data clearly show that the majority of mergers and acquisitions fail to meet targeted returns on investment.

Number three is not effectively addressing the right balance between standardization and localization.   In the global companies I have worked for, this tension plays out in many different ways.  In one consumer products company, for example, some general managers in different subsidiary operations insisted on having the final say in such decisions as the color on the packages, the suppliers to use for their printing needs, and even the logo of the company for their countries. 

When Allan Mullaly became CEO of Ford, he was surprised to learn that Ford cars had 27 different car platforms.  Was every one of them necessary?  Ford now has reduced the number of platforms to 14, with nine of them accounting for 87% of Ford’s global sales (Detroit Free Press, February 20, 2013).  The more that a company customizes and localizes its value chain and its product offerings, the higher the costs – although others would argue that the profits will also increase because the products will appeal better to local consumers.  Nonetheless, there are trade-offs here that need to be considered, and companies need to be clear on their strategic priorities. 

Companies need to set clear boundaries on those aspects of their value chain, products and brand image that are “core” to their strategy.  They need to make sure that these boundaries are clearly communicated internally, and that these aspects are standardized globally with some centralized control.  For Ford, these would include their global platforms.  For Nike, it would include their brand image.

And number four is a company mindset that past success should predict future success, especially past success with the company’s business model.  In his terrific book, “What Got You Here Won’t Get You There,” Marshall Goldsmith describes many of his executive clients who refuse to change their behavior since their style, dysfunctional as it may be at present, is what made them successful to begin with.  I believe a parallel may be found with companies that have become so successful that they believe that replicating their business model will work everywhere.  There are companies of course that have succeeded with such replication, and arguably there are certain industries (e.g., consumer electronics) where replication is a safe approach to globalizing.  But for many companies and industries, it always pays to question the validity of a replication strategy.

Based on the above, here are four additional questions that companies should answer before internationalizing:

  1.  Is your company “ready” to go global?
  2. Does your definition of success include factors other than just ROI?
  3. Have you defined what aspects of your value chain, products and brand are core and what can be adapted?
  4. Is your company sure that a replication strategy will work?

 

Cavusgil, S. et al.  International Business.  (2012).  Upper Saddle River, New Jersey: Prentice Hall.

Goldsmith, M.  What Got You Here Won’t Get You There.  (2007).  New York:  Hyperion.

 

Stephen Covey and Global Management Principles Versus Practices

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When I was a young manager working for a Fortune 500 company, I signed up for a workshop that Stephen Covey was conducting at a conference center outside New York City.  I had just read his book, “The Seven Habits of Highly Effective People,” and wanted to learn more by listening to him live. He was a bit what I expected an author of such a book to be – sincere, straightforward, passionate about his beliefs.

When I learned that Mr. Covey passed away recently, I went back to this book that had such a profound influence on my professional life to see whether there were other insights I may have missed the first time around.  Over the years, I have always remembered to “begin with the end in mind” and to focus on the “important, and not necessarily the urgent” (although I have not always successfully followed this advice).

But something else struck me as I skimmed through the book.  In my classes in OB, I have interesting discussions with my students on what good OB practices are, and whether they can be applied to different companies in different industries.  One of the best articles on the subject is Professor Pfeffer’s “Putting People First for Organizational Success.” Here, he lays out seven OB practices that he claims have been proven to result in productivity and high performance.  They include selective hiring, employment security and self-managed teams. We have good debates in my classes as to whether these practices can apply to all organizations regardless of their situation, or to organizations in different parts of the world.

The “a-ha” for me was Covey’s insight that “Principles are not practices.   A practice is a specific activity or action. A practice that works in one circumstance will not necessarily work in another … While practices are situationally specific, principles are deep, fundamental truths that have universal application.”

There are many so-called “best” OB practices today that seem to work well for certain companies at certain times.  All you have to do is read the practices that Fortune describes in its annual Best Places to Work survey. Who does not know about Google’s free food, W. L. Gore’s self-managing teams, and GE’s Work-Out Programs, to name a few?

But Covey is right. Practices, including OB practices, are situationally specific.  Depending on the company’s strategy, its organizational goals, its cultural context, and its industry (among other things), these practices may or may not work.

But are there OB principles with universal application that lead to high performance and high commitment?  Based on my experience having worked for several different corporations, consulted with many others, having learned from some great minds in the field of OB, and having worked in many different countries, I would say there are at least five that I believe are universal.  First is to treat employees fairly and with respect. Whether it is a state-owned Chinese firm or a private enterprise in Brazil, organizations that uphold this principle will produce a higher level of commitment from employees than those that do not. The specific practices on how this principle is implemented will vary by culture.  In Western cultures, treating employees with respect might mean listening to their ideas. In Asian cultures, treating employees with respect might mean paying great attention to making sure employees do not lose face.

Second is to create a positive, motivating environment.  In Western cultures, this might mean such things as managers providing encouragement to employees, having an open-door policy, and conducting meetings where employees can express their opinions.  In Asian cultures, this might mean joining employees after work for karaoke, making sure they understand the history of the company, or even providing uniforms so employees can identify better with their company.

Third is to build self-confidence in employees.  Berating employees may instill fear and compliance but more than likely will build resentment and mere compliance, if at that.  We know from research that there is strong evidence of an “expectation effect” between teachers and students, as well as between managers and subordinates.  Sports trainers and coaches spend considerable amounts of time working on the mental aspects of the sport with their pupils, even with world-class athletes. In Western cultures, building self-confidence might mean giving some autonomy to employees or providing them with a challenging assignment.   In Asian cultures, this might mean offering them special titles or giving a team special recognition.

Fourth is to set high standards and expectations.   There is strong evidence from the research on goal setting that setting moderately difficult goals can be motivating.  GE popularized the practice of “stretch” goals. In Western cultures, setting high standards might involve meeting with subordinates to discuss goals and pointing to the alignment of these goals with department and company objectives.    In Asian cultures, this might involve having a senior leader of the company speaking to employees about the importance of meeting stretch goals for the good of the team and for the good of the company.

Fifth is to build collaboration and teamwork.  While talented individuals will continue to come up with inventions and innovations, breakthroughs today are more often than not the product of teams of individuals working together.  The image of the lone inventor or scientist toiling in isolation is somewhat exaggerated anyway; even Thomas Edison had a small team who worked with him to invent the light bulb. In Western cultures, building collaboration and teamwork might mean focusing on the right incentives and rewards to reinforce the right behaviors.  In Asian cultures, this might mean focusing on team-building to create a strong sense of group and company identity for employees, or on redesigning the work to build interdependence.

These are five principles that I believe represent good OB, are backed by years of research and that are universal.  However, let us also keep in mind, as Covey has wisely said, that principles are not practices. How these principles are applied and implemented will certainly vary and in this global world, Covey’s advice is worth heeding.

Leading Global Virtual Teams

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When I ask the students in my MBA classes how many of them belong to cross-functional teams, between half to three quarters typically raise their hands.  And when I ask them if they also belong to global teams (where members are from different cultures and are in different geographic locations), most of them keep their hands raised.  

Many of you working with global companies today know that these global virtual teams are becoming more and more common.  The reasons for the increasing frequency of these teams are not surprising. First of all, many organizations have recognized for some time that their talent pool is not restricted to their headquarters location, and so using the best and the brightest, no matter where they are located, makes sense.  Second, many organizational solutions require cross-functional as well as cross-border collaboration, and restricting team membership to only one function or to those coming from only a single country (typically where its headquarters office is located) is not a smart strategy.

What do we know about the effectiveness of these teams?  Unfortunately, there is not a lot of research on this subject.  We can start with what I consider to be three of the best references on the subject of teams – Lencioni’s The Five Dysfunctions of a Team, Hackman’s Leading Teams, and Katzenbach and Smith’s The Discipline of Teams.  At the risk of oversimplification, here are four key success factors that they and others say about what makes a team work effectively:  the team has to have a compelling vision or goal, members need to trust one another, their skills (whether these are technical or social skills) need to be complementary, and a great deal of attention needs to be paid to team processes.

In my opinion, these same key success factors can be applied to global virtual teams, although how to make these factors work effectively becomes more complex and more challenging with these types of teams.  Some of the challenges are obvious: differences in geography, time, language, diversity, culture, size and technology. Others, such as gaining the participation and commitment of team members, are subtler. To add to the challenges, many global team leaders are managing teams whose members do not report directly to them.  Therefore, these team leaders have to learn to exercise “influence without authority.”

According to research conducted by Govindarajan and Gupta (2001), 82% of global teams they surveyed said that they fell short of their intended goals – they were not successful as teams.  Govindarajan and Gupta identified five challenges of global virtual teams:

  1. Cultivating trust
  2. Overcoming communication barriers
  3. Aligning goals of individual team members
  4. Ensuring that the team possesses necessary knowledge and skills
  5. Obtaining clarity regarding team objectives

How can the four success factors I mentioned earlier help you as a global team leader address each of these challenges?

Cultivating trust.  In many parts of the world, building relationships takes precedence over immediately working on the task requirements.  Therefore, it is important for a team leader to make sure that at the very least global team members know one another on a personal level.  Introduce team-building activities early on to make sure that members are comfortable working with each other and that they understand each other’s background, experience and what they bring to the table.  It is simply not enough to assume that because you all work for the same company, you have common interests or shared goals. Although it may be difficult to have face-to-face meetings due to time or resource constraints, this is a worthwhile investment.  Pay attention to group processes; for example, make sure that you establish protocols on how the team will communicate, how they will interact with each other during meetings, and other “ground rules” on how the team will function (e.g., who is responsible for informing team members who may not be present for a meeting, how disagreements and conflicts will be resolved).

Overcoming communication barriers.  While most of your team members may speak English, their level of confidence with speaking English will vary.  To overcome this, you may need to use translators from time to time. Make sure that agenda items are communicated ahead of time, and minutes of meetings are circulated after the meeting.  Allow some time towards the end of meetings to encourage members to make comments if some have not done so. Develop clear operating procedures for your team meetings (e.g., agendas will be circulated three days in advance, identify the purpose for bringing up a topic – for discussion, recommendation, or making a decision).  And follow up individually with team members who do not seem to be participating as actively in team meetings and probe carefully for possible reasons.

Aligning goals of individual team members.  Do not assume that team members are all committed to the team goal.  Make sure you understand the work priorities and performance goals of each of your team members.  Watch for symptoms of non-alignment, e.g., members not showing up for meetings, not volunteering for tasks, not delivering on their commitments.  Work to make sure that you link team goals with members’ performance objectives. This may mean having discussions with team members’ bosses to make sure that they are aware of the commitments required by global team membership and that they are fully supportive of their subordinates’ participation.  This also means that you have to engage and excite the team with a compelling vision. This does not have to be some lofty abstract ideal, but has to be something that challenges and inspires, that taps into a business issue that members all agree is important for the organization to address. Have you linked the business impact of your team’s goals to the organization’s success?

Ensuring that the team possesses necessary knowledge and skills.  While team members may have the necessary technical skills, does the team have the right balance of cognitive and interpersonal styles?  In my experience with global teams, the better ones not only make sure skills are complementary, but that all members have opportunities to build their knowledge and skill base, not only in business and technical aspects, but also in two important areas:  understanding and dealing with cultural differences, and building collaboration skills.

Obtaining clarity regarding team objectives.  Is everyone on the team clear on what success looks like for the team?  Are metrics well defined and are they agreed to by everyone? If you sense a lack of clarity, or lack of agreement, tackle this by bringing in the team sponsor (the person or group that you as team leader are accountable to for the team’s progress) to help clarify goals.  Make sure that you define expectations and deliverables with the sponsor and communicate these to the team. The team sponsor can also be used to give some recognition to the team as it makes progress. Is everyone clear on his or her roles and responsibilities (especially for those who may still have their regular “day job” in addition to being a team member)? Apply a tool called RACI (which stands for Responsible, Accountable, Consulted, and Informed) to help clarify roles and responsibilities especially around decision-making.

Being aware of these challenges and some ways to address them should make the job of a global team leader a bit easier, and ultimately more rewarding and fulfilling for everyone on the team.

 

Govindarajan, V. and Gupta, A (2001).  Building an effective global business team.  MIT Sloan Management Review, 42(4), 65-71.  

Are Diversity Initiatives Worthless?

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Recently, Jack Welch, former CEO of GE, made some controversial comments at a Women in the Economy conference sponsored by the Wall Street Journal.  What did he say that upset at least some of the female attendees? First, he said that working hard and showing how your skills can benefit the company are the keys to getting ahead.  In effect, he said, “over deliver … performance is it.” Unlike what some may believe, this is not what upset them; who could argue against this, in the first place?

He then criticized mentorship programs and other diversity initiatives for women, referring to them as “victims’ units.”  He even mentioned some female executives who approached him while he was at GE, telling him that they refused to participate in these kinds of programs.  By inference, Welch would probably also argue against any kind of diversity initiatives for African-Americans or minorities.

We all know the numbers.  Of the Fortune 500 companies, only 3% have a female CEO today.  A survey of 60 major companies by McKinsey shows women occupying 53% of entry-level positions, 40% of manager positions, and only 19% of C-suite jobs.

In my experience, Welch represents the mindset of a generation of white male executives (mostly in their sixties), some of who still believe that there is true meritocracy in corporations, that there are no barriers to anyone getting ahead other than your own internal ambitions, and that regardless of the culture or work environment, those who are successful find ways to make it to the top.  In this Darwinian world, there is no need to do anything special or different for diverse groups. You just have to figure it all out, since “the cream rises to the top.” For these executives (I know; I have worked with quite a few of them in my career), diversity initiatives, affinity groups, and support networks for women (and by extension, African-Americans) are unnecessary and even unfair.  And some women and African-Americans agree with them! Taken to an extreme, what Welch implies is that managers should have no responsibility in developing others. Just leave them alone and let them figure it out for themselves.

Contrary to what Welch implies, there continue to be cultural, systemic, and organizational barriers to success in today’s work place.  The evidence is overwhelming, and I don’t need to rehash this in this column. Here are a couple of points I would like to offer based on what we know from the science and practice of Industrial-Organizational Psychology.  

First, we know from research and from schema theory that we have filters and expectations about individuals that tend to bias our perception of them.  And one of these pervasive biases is a “similar-to-me” bias. We tend to like those who are like us, and tend to react favorably to those with whom we perceive to have similarities.  No question that this has been a barrier to females getting ahead. Fortunately, through diversity programs and the track record of many outstanding women in the work force, I believe that individuals in corporations today are more “enlightened” than they have been in the past.  But the biases still exist. In Europe during the eighties, many orchestras changed their practice from having judges watch and evaluate potential orchestra members audition in front of them to having them audition “blind.” That is to say, the applicants performed behind a curtain so that the judges could not tell whether the applicants were male or female.  This simple practice led to a dramatic increase in the proportion of female orchestra members.

Second, while very few if any corporate executives would argue against evaluating people other than for their performance (as Welch suggests), how that performance is viewed can be subject to bias.  Here, attribution theory can shed much light.  Attribution theory states that we as managers not only evaluate performance, but also try to determine the causes of that performance.  Is the reason for their performance based on ability, effort, luck, or some other factor? A manager’s evaluation of the potential of an individual may depend therefore not just on his or her performance but also ona the manager’s answer to this question of what caused the performance.

Welch implies that it is all about performance.  But wait. Isn’t this the same Jack Welch who in GE introduced the famous 2 X 2 matrix where managers were evaluated not just on their performance (on the one axis), but also on their values (the other axis), and that a manager who performs well but who does not have the right values should be “terminated?”

Unfortunately, our biases creep into our evaluation of the causes of performance.  There is a lot of evidence, for example, that male managers tend to attribute the performance of their female subordinates more to luck than to ability or effort.

So what are the implications to individuals and to corporations of the Welch assertions?  First, for individuals, there is no question that your performance is your “foot in the door,” your ticket for punching your way to the dance.  This will mean making some personal sacrifices and trade-offs, and working some long hours to build a successful track record if your ambition is to be a successful executive.  But I don’t believe that this means rejecting whatever support and help you can take advantage of, whether within your company or outside the company. For example, many of us need to build our networks (as Reid Hoffman calls it, your personal board of directors) and if your company offers programs to help you with this, there is no reason not to take advantage of them.  Believe me, the Welches of the world (white males in their sixties and seventies), when they were rising stars, had their own network and support system. It may not have been formalized, but they still took advantage of them. And many of these groups excluded women, whether intentional or not.

For managers, this means that your responsibility as a manager includes developing and coaching others.  Catalyst just published some recent research demonstrating that a majority of high potentials received developmental support and are in turn developing others in their organizations.  This “culture of talent development” is critical for companies today, and yet Welch, of all people, would seem to suggest it is not necessary, or even desirable.

For corporations, continuing to provide mentoring programs, affinity groups, and similar initiatives – and more broadly implementing diversity initiatives – will provide them with a competitive advantage.  After all, the business case for diversity in attracting, developing and retaining talent is well-established, notwithstanding the opinion of Mr. Welch.

Global Mindset Part II

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An example:  you are an expatriate manager of a multinational company in a Middle Eastern country  and you have just found out that no women are allowed to even apply for certain jobs in your department.  You say to yourself, “I just don’t get it.”  Another example:  an executive who works with Korean nationals once expressed his frustration to me that Koreans will never tell you what they really think.  “Why can’t they just be candid like Americans?”

I could give many more examples to illustrate reactions to differences in cross-cultural management practices that suggest a gap in global mindset, especially in one aspect:  that of developing empathy, which suggests an ability (and willingness) to understand another person’s or group’s perspective.  Actually, lots of research suggests that this skill differentiates effective negotiators from average ones.  For managers working cross-culturally, I believe that this “perspective-taking” skill is critical.  As two researchers from the University of Chicago (Epley and Caruso, 2008) have stated, “… the ability to accurately adopt someone’s perspective is better than chance but less than perfect.”  They point to three barriers, which I will paraphrase here. 

            

The first barrier is “activating” or switching on in our minds a willingness to do this.  As managers and leaders of global teams, this is sometimes difficult to do when there are so many mental balls that we are juggling.  And if we have not even made the effort to learn about other cultures, or to recognize that our way is not the only way, switching mentally to consider practices from another person’s perspective will be tough.  Our default mode is our own perspective, our own way of viewing things.    

The second barrier is our natural tendency is to react to things from our own perspective.  In one experiment which they cite, participants were asked to send either sincere or sarcastic messages to another participant, either over the telephone or via e-mail.  They were asked to predict, for each of 10 sincere and 10 sarcastic messages, whether the recipient would interpret the message correctly or incorrectly.  Recipients were not significantly better than chance at distinguishing between sarcasm and sincerity over e-mail, but not surprisingly, were significantly more accurate over the telephone.  But the senders did not think there would be any difference in the recipients’ accuracy when communicating over e-mail or the telephone.  “The senders’ intentions to communicate sarcasm or sincerity were so clear that it rendered them unable to appreciate … that the perception of the person on the other end of the computer monitor would be very different from the person on the other end of the telephone.” 

From my experience, I can recall many times when executives say they don’t understand why their messages are not being understood, or are being misinterpreted by employees.  If the executive working with Korean nationals has asked them for their opinions and they don’t give him any, it must be because they prefer not being candid!  The perspective that in some cultures, authority is so respected that voicing an opinion is tantamount to challenging the boss, is not something that would occur right away to this executive.           

Third, if we do recognize that we need to understand another person’s perspective, our ability to do this may depend on whether we believe that person is similar to us or not.  In either case, this may lead to problems.  Let’s say that you are a manager for a global company working with a group of Japanese employees in the Tokyo subsidiary.  You could make the assumption that because these employees belong to the same company as you they should react similarly to you.  Or you could make the assumption that because these employees are Japanese, they will react based on your “stored knowledge” of what Japanese are like – which may or may not be accurate.  Each of these assumptions will not necessarily reflect the Japanese employees’ perspectives.

I was recently in Singapore to teach a class in Global Leadership to a group of intelligent and experienced Asian executives, most of whom have regional roles working in global companies.  One of their challenges is in managing within a matrix environment and convincing senior management that certain global policies and strategies might have to be adapted for different markets.  In discussing their situation, we had a productive dialogue in looking at the situation from the senior managers’ perspective – what could be going on in their minds, what might be driving their behavior?              

Although empathy and perspective-taking are sometimes difficult, developing this skill can be learned through practice and mindfulness.  I have three simple suggestions.  One, get to know the other person or group better, as well as their cultures.  By doing this, you will minimize your tendency to stereotype.  Second, learn to describe first before judging.  We have a quick tendency to evaluate based on first impressions.  But in cross-cultural situations, what you see is often not what you get, because our observations are filtered through our own cultural frame of reference.  And third, try to reflect on what is going on and what might be causing the behavior.    

So for the expatriate manager and the executive working with Korean nationals, learning about the local cultures might give them insight into why these practices exist.  It does not mean accepting these practices, but it may mean developing alternative approaches.  The executive working with Korean nationals, recognizing that he is an authority figure, might put more effort in asking specific questions rather than asking them generally for their opinion.  Ultimately the benefit of developing empathy and of having a global mindset will help you become a more effective global leader.      

 

Epley, N. and Caruso, E.  (2008).  Perspective taking:  misstepping into others’ shoes.  In K. D. Markman et al. (Eds.), Handbook of Imagination and Mental Simulation.  New York:  Psychology Press.

Global Mindset Part I

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Larry Parker (not his real name) was a marketing executive for the Asia Pacific division of a multi-national company.  He would hold regular teleconferences with his marketing directors in Asia and, according to him, he found it difficult to make much progress with them.  Asking for my advice, he commented, “Why is it that when I tell them that they need to meet a certain deliverable by a certain time, they all say they will do it, and yet nothing happens by the deadline.  I can never tell if they have agreed to do something or not.  Why can’t they just be straight with me?”

Does Larry have what many management experts are calling “global mindset?”  What is global mindset, anyway?  How do we know when someone has it?  Professors Anil Gupta and Vijay Govindarajan define global mindset as “combin(ing) openness to and awareness of diversity across cultures and markets with a propensity and ability to synthesize across this diversity.”  And The Thunderbird School of Management says that global mindset is made up of your:  intellectual capital (e.g., your global business savvy, your cosmopolitan outlook), psychological capital (e.g., your passion for diversity, your quest for adventure), and social capital (e.g., your intercultural empathy, your diplomacy).    

These are certainly reasonable.  As implied, global mindset is a mental attitude, an inclination.  It is not a behavior, but it should predict behavior.  In my own experience and interviews with executives and students, I would say there are four components which can be easily remembered with the acronym FACE:  Flexibility, Acceptance/openness, Curiosity, and cross-cultural Empathy.

I asked my students near the beginning of my course in Cross-Cultural Management to describe what global mindset means to them.  Here is a sampling of what they wrote:   

“Global mindset means that you are aware of your environment, of others and the impact of ideas and events in your business, strategy or position.”

“Taking a more macro look at things … understanding that things won’t work the same all over the world, and taking that into account.”

“Having an understanding that countries have different cultures, and going into each country, one must always be aware and sensitive to that country’s cultural ways.”

 “Someone who understands or has an open mind to understand different cultures and how these affect the outcomes of decisions.”

“Putting yourself in the other culture’s shoes.”

“Listening and resisting reflexive judgments.”

“Your way is not always the right way.”

“Understanding that different countries/cultures have different ways of doing things.  They value certain things differently.  A global mindset has to take all of that into consideration and be open-minded and willing to compromise.” 

When I asked Larry (a mid-westerner who had only begun to travel to Asia) what he thought was going on, he said that it was either because Asians don’t have the same sense of urgency as Westerners, and/or that they are not as candid.  Six months later, Larry requested a transfer from his position and eventually moved to a staff job in headquarters.

We can reasonably assume that Larry did not have a global mindset and was perhaps a poor fit in his global role.  He showed little curiosity for the geography he was managing, was not willing to explore other ways to accomplish his objectives, and could not imagine viewing things from his direct reports’ perspective.      

Developing a global mindset, on the other hand, is not easy.  Traveling to other countries, or reading about different cultures, may help, but is not sufficient.  And of the four components, developing inter-cultural empathy is probably the most difficult.  In a subsequent article, I will explain why, and also some of the ways you can develop global mindset.

Does Working Right Trump Finding the Right Work (or Passion)?

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We all have hobbies, and some of them we pursue with quite a bit of passion.  It’s been written that Charles Darwin, when he was young, was so intrigued by beetle collecting that when he had to make a choice between spending time with his girl friend or his hobby, he chose the latter – and ended up marrying someone else later in life.  Steve Jobs had a passion for music, especially for artists like Bob Dylan and the Grateful Dead.  He once had a $100,000 stereo system installed in his home.

Now we’ve all heard the adage to follow your passion.  Yet if these individuals had simply followed their passion, we might not have benefited from their contributions to science and technology, and the world would have been poorer as a result.

I became intrigued with this especially after I read a book called So Good They Can’t Ignore You by Cal Newport, a Computer Science Ph.D.  He pretty much states unequivocally that following your passion is bad advice because career passions are so rare.  He cites studies that show that less than four percent of students who are asked about their passions mention anything related to work.

Yet many of us probably know people who have decided that they are sick of the rat race, of the boring nature of their work, or that they are simply not interested in their chosen career that they get off the “treadmill” and decide to follow their dream – whether that is having their own business, pursuing a life-long hobby like tennis, playing the guitar, learning yoga, or writing a novel. Perhaps you have considered this yourself.

Newport, however, argues against our adopting this “passion” mindset, but instead suggests that we adopt a craftsman mindset.  For him, the passion mindset is about what the world can offer you, while the craftsman mindset is about what you can offer the world, what value you can create.  It is, ironically, the foundation for creating work that we love.

The craftsman mindset implies that we find those characteristics in the work that we are doing that taps into something that we enjoy, and that makes use of our talents.  Of course there may be conditions when you cannot apply the craftsman mindset (see page 56), such as when:

  1. The job presents few opportunities to distinguish yourself by developing relevant skills that are rare and valuable
  2. The job focuses on something you think is useless or perhaps even actively bad for the world
  3. The job forces you to work with people you really dislike.

So how do you become a craftsman?  Is it by following the 10,000-hour rule that Gladwell popularized in his book Outliers?  In that book, he cites research, for example, on what it takes to become a chess grandmaster.  Even Bobby Fischer took about ten years to become internationally famous.  But studies show that even among players who spent about the same amount of time – 10,000 hours – some became grandmasters while others remained at an intermediate level.  The answer seems to be that it is not just the time, but what you do with that time.  As Newport reports: “The researchers discovered that the players who became grandmasters spent five times more hours dedicated to serious study than those who plateaued at an intermediate level.  The grand masters, on average, dedicated around 5,000 hours out of their 10,000 to serious study.  The intermediate players, by contract, dedicated only around 1,000 to this activity.”

This seems to be the key – serious study, or as Anders Ericsson and his colleagues said, “deliberate practice.”  This is “an activity designed, typically by a teacher, for the sole purpose of effectively improving specific aspects of an individual’s performance …  (It’s) an approach to work where you deliberately stretch your abilities beyond where you’re comfortable and then receive ruthless feedback on your performance.”

Of course deliberate practice is not always enjoyable.  You are stretching yourself, pushing yourself, and getting feedback from others. However, in a study published in the Journal of Business Venturing and as reported in the Wall Street Journal (January 26, 2015), entrepreneurs who founded a business based on a personal pastime lagged behind other founders initially, but after 45 months they more than caught up.  Perhaps those who did it based on a hobby were not as business-savvy, so they had to do a lot more groundwork at the beginning?  The authors of the study don’t address this but here is what they do say:  “Since they’re working on businesses that are closely related to their pastimes, sure they’re going to encounter some difficulties.  But what our data are showing is that they’re still making progress at a steady pace.  They’re doing something that they enjoy, so it’s not as likely that they’ll give up.  And because they’re doing it for reasons not necessarily related to them making a lot of money or growing a big enterprise, the reasons for giving up are not necessarily the same as they might be for conventional entrepreneurs.”

So some advice to help you with your passion mindset and your craftsman mindset:

First, figure out whether you have the talent in something you are really interested in.  If not, keep it a hobby.  Don’t expect to make a career of it.  If so, put in the practice so that you can become better before you decide to make this into a career.

Second, examine what you are currently doing in your job and figure out what aspects you enjoy the most.  For some, you may discover that you really enjoying developing people.  For others, you enjoy the analytic side.  Can you build on these in your current job?  Once you are in a job, you might discover a career passion.

Charles Darwin did not make beetle collecting into a full-time endeavor, but the skills he learned while on his hobby certainly helped him in his observational skills that led to the theory of evolution.  Steve Jobs did not become a rock star literally, but his passion for music led to the development of the iPod.

Interestingly, Amy Wrzesniewski has conducted research in which she has found that the more experience people have in a job, the more they are likely to love their work.   Newport suggests that “… it’s more important to become good at something rare and valuable, and then invest the career capital this generates into the type of traits that make a job great.”

 

Ericsson, K. A., Krampe, R. and Tesch-Römer, C. (1993). The Role of Deliberate Practice in the Acquisition of Expert Performance. Psychological Review, 100 (3): 363-406.

Huston, C.  (2015).  First Comes the Hobby.  Then Comes the Startup.  And, Eventually, Profits.  Wall Street Journal, January 26.

Newport, C.  (2012).  So Good They Can’t Ignore You.  New York:  Hachette Book Group.

Wrzesniewski, Amy, et al.  (1997).  Jobs, Careers and Callings:  People’s Relations to Their Work.  Journal of Research in Personality, 31, 21-33.

Is Meritocracy Dying – Or Was It Just a Myth All Along?

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An organizational culture that values meritocracy sounds good, doesn’t it? After all, we want to be hired, evaluated, and promoted based on our own merits – as opposed to non-performance-related factors such as our race, our gender, our network, or our political skills. It’s all about getting what we deserve because of our performance.

Scan the web sites of companies and many of them make explicit reference to meritocracy. Goldman Sachs states it is “a meritocracy built on the belief that collaboration, teamwork and integrity create the right environment for our people to deliver the best possible results for our clients.” One of McKinsey & Company’s core values is to “sustain a caring meritocracy.” Similarly, one of Bank of America’s core values is “inclusive meritocracy.” AB InBev, the beer conglomerate, claims that its culture “is built on ownership, informality, candor, transparency and meritocracy. We set ourselves stretch targets and are never completely satisfied with our results.” The newly formed Kraft Heinz Company states on its web site that “we recognize and reward outstanding performance at every level, in the true spirit of meritocracy. In 2014 alone, more than 1,000 employees were promoted as a result of their high performance and value creation.” And there is GE, which has meritocracy as one of its values, which they define as “creating opportunities for the best people from around the world to grow and live their dreams.”

Not only employers but most employees also seem to value meritocracy. According to Ready et al. (2010), this is one of the factors that attracts talent in emerging markets. In my experience, I have also found that young professionals in Asia find the seniority-based system in many Asian firms to be hampering their advancement opportunities, and they want more recognition for their hard work and performance. In fact, when China recruited for its civil service examinations starting around the seventh century, it introduced a merit-based system. The exam was based on classical literature and philosophy, and candidates were selected based on their exam scores. Of course, there were many people from the lower classes who did not have the educational background to compete, and women were excluded from applying. In principle, however, the concept was based on a meritocracy.

Yet there are significant barriers to creating meritocracy in organizations. First, organizations may say they value it, but their practices might not necessarily reflect this. Executive coach Marshall Goldsmith (2004) has written about how leaders subtly encourage (and by implication, reward) those who fawn over and suck up to them. According to a recent survey by Right Associates (Lauby, 2012), 44% of employees believe the key to their success lies in “who you know,” and not job performance (39%). Other employee surveys show similar results, despite the prevalence of organizational practices such as performance appraisal systems.  In a 2014 survey of over 356,000 U.S. federal employees, 54% disagreed with the statement that “pay raises depend on how well employees perform their job.” (fedrev report, 2014) In their excellent book, The Meritocracy Myth, McNamee and Miller (2004) point to social capital (“whom you know”) and cultural capital (“what you need to know to fit into the group”) as important non-merit factors that influence life outcomes:

“It helps to have friends in high places, and the higher up one starts in life the greater the probability that one will travel in high-powered social circles. One must also have the cultural wherewithal to be fully accepted within these high-powered social circles. Those who are born into these circles have a nonmerit cultural advantage over those not born into these circles …” (p. 198)

Second, as Castilla and Benard (2010) have argued, emphasizing meritocracy might unintentionally introduce bias and create inequity in the distribution of employee rewards. Their research suggests that “… in contexts in which people are led to feel that they are unbiased, fair, or objective, they are more likely to then behave in biased ways.” (p. 547); they refer to this as the “paradox of meritocracy effect.” Why does this happen? Two mechanisms seem to be operating. One is through the concept of moral credentials. If you believe you have established your credentials as a non-prejudiced person, you are more prone to express prejudiced attitudes.  Similarly, if you believe strongly that your organization values and endorses meritocracy, then you must therefore not be biased and must be making your decisions based solely on merit. The second mechanism is through self-perceived objectivity. If you believe that you are an objective person, then you may not realize that you may be acting on your prejudices. And we all have conscious and unconscious biases. So the paradox here is that if you believe in meritocracy you might be more likely to behave in biased ways.

Third, we are subject to the fundamental attribution error, which is the tendency to overattribute other people’s behavior to internal rather than to external causes, and one’s own success to internal rather than external causes. Those who have made it and who are successful believe that it is due to their hard work and because they got there through their merits. They also believe that internal factors such as aptitude or motivation are the causes for others not succeeding, rather than external circumstances.

A fourth barrier is around our unconscious biases, especially related to (but not limited to) race and gender. As an example, Samson (2013) conducted a survey-based experiment in which half of the sample of White respondents in California were asked about the importance of GPA (a merit-based variable) as a factor for admission to the University of California. The other half received the following information prior to the question: Under current admissions procedures in the University of California system, Asians make up almost 40% of the student body (or 2 out of every 5 students), while they are only 12% of the California population (p. 240). His results showed that individuals’ acceptance of merit-based admission varies as a function of their perception of “group threat” and not just perceptions of fairness. In other words, when group threat is primed (as it was in half the subjects), these White subjects tended to decrease the importance of a merit-based variable like GPA as a factor in admissions. He concludes that commitment to meritocracy may be based not solely on principle but varies “… depending on the outgroups under consideration and the extent of the group threat they pose to Whites.” (p. 253)

In an interesting set of studies, Uhlmann and Cohen (2005) showed that individuals use different criteria to define merit that fits their own preconceptions and biases. For example, in one study, they asked participants to rate the strengths of male and female applicants for the job of police chief. Applicants’ credentials and gender were manipulated. Credentials were either strong on being streetwise (e.g., working in tough neighborhoods, getting along with fellow officers, poorly educated) or on being educated (e.g., experienced in administrated, well educated, did not get along so well with fellow officers). The participants then rated the importance of several hiring criteria, and whether the applicant should be hired. What they found was that educated characteristics were more important when the male applicant had them than when he did not. Educated characteristics were less important when the female applicant had them. In fact, male and female participants constructed criteria favorable to the male applicant. Because the job of a police chief is traditionally male, the participants defined merit in a way that favored male over female applicants.

As reported in the Wall Street Journal (Silverman, 2015), the Clayman Institute for Gender Research at Stanford has been analyzing hundreds of performance reviews in several technology companies. So far, researchers have found that women received 2.5 times the amount of feedback men did about aggressive communication styles (e.g., suggesting that they pipe down and be less aggressive), while men’s reviews contained twice as many words related to assertiveness, independence, and self-confidence (e.g., “drive,” “transform,” “tackle”). In addition:

“… women’s reviews had more than twice the references to team accomplishments, rather than individual achievements … while men … received three times as much feedback linked to a specific business outcome and twice the number of references to their technical expertise.”

Fifth, the criteria for determining merit can vary by company and by culture. Being promoted in some Asian companies means that you have to be able to speak English very fairly well. Many companies look at factors other than performance to determine who gets hired, rewarded and promoted, and arguably some of these factors are more subjective than others, as well as being weighted differently by different raters. For example, in identifying those who might be the future leaders of the company, executives might consider performance, but often look at other factors, such as interpersonal skills, that elusive quality called executive presence, and perhaps even the advocacy of other executives who might have mentored these individuals. Aren’t some of these “non-merit” factors? McNamee and Miller (2004) give a detailed example of their own experience selecting a new faculty member for their department, and they conclude:

“… we call into question the presumption that people know merit when they see it. … it is a cardinal principle in meritocracy that the ‘most’ qualified or ‘best’ person should be hired for the job … However, we argue that it is often difficult or impossible to ‘know’ who the ‘best’ is.” (p. 43)

What can organizations do? First, and the most basic, is to make sure their practices are consistent with their statements about merit. Do their performance and reward systems clearly reinforce excellence and high performance? They can conduct periodic surveys or pulse checks to determine what employees’ perceptions are, instead of simply relying on making pronouncements. Second, make these practices and processes more transparent by defining more clearly what excellent performance is, and why it matters. For example, if behaviors in addition to performance are used as criteria for rewards and promotions, make these explicit, and build in safeguards to minimize subjectivity.

Third, hold managers accountable. Have processes in place to make sure that managers evaluate and reward employees based primarily on performance and other merit-based factors. There is a lot of research evidence from studies of small groups that meritocratic hierarchies (for example, when individuals in groups are given higher rank because of their task expertise) predict group success (Anderson and Brown, 2010).

Fourth, raise awareness of unconscious biases. According to the Wall Street Journal (Lublin, 2014), as many as 20% of large corporations with diversity programs (including Chubb, Genentech, Google, Price Waterhouse Coopers, Roche and T. Rowe Price) now provide training on unconscious bias. Other companies (e.g., Microsoft) provide guidelines to managers before they write up their performance reviews to remind them about gender bias.  There is some evidence that such training might be helpful. Of course efforts to consider diversity in hiring and promotion decisions should continue. Especially important is making sure that there is diversity in the pool of candidates being considered. Most White senior executives when considering successors for their positions or those within their team might favor first those who they perceive to be like them (the “similar-to-me” bias). With a more rigorous screening process, organizations can make sure there are candidates who may be just as qualified but who may not be on their radar screen – and some of them might be female and people of color.

Fifth, as much as possible, define criteria for merit up front and get agreement from evaluators on what the indicators for these criteria are. This will reduce individuals’ tendencies to emphasize qualifications that tend to fit their biases. When working with organizations on evaluating their future leaders, make it a practice, as my colleagues and I do, to gain agreement with the executive team on what success looks like in concrete terms.

It is clearly not enough for organizations to simply state that they have a meritocratic culture. In fact, the reality is that it is very difficult for any organization to achieve this ideal, although it is well worth the effort. The current debates about wage and income inequality touch on the difficulties of achieving meritocracy in societies. However, companies that are serious in attracting and retaining talented employees need to continue to make serious efforts to eliminate these barriers.

 

Anderson, C. and Brown, C. (2010). The Functions and Dysfunctions of Hierarchy. In A. P. Brief and B. Staw (Eds.), Research in Organizational Behavior, 30: 55-89. New York: Elsevier.

Castilla, E. and Benard, S. (2010). The Paradox of Meritocracy in Organizations. Administrative Science Quarterly, 55: 543-576.

Goldsmith, M. (2004). http://www.marshallgoldsmithlibrary.com/cim/articles_display.php?aid=102

Kaplan, S. (2015). Meritocracy: From Myth to Reality. Rotman Magazine, Spring, 49-53.

Lublin, J. (2014). Bringing Hidden Biases into the Light. Wall Street Journal, January 9:  http://www.wsj.com/articles/SB10001424052702303754404579308562690896896

Lauby, S. (2012). For Your Career, It’s Not What You Know – It’s Who You Know. http://blog.shrm.org/blog/for-your-career-its-not-what-you-know-its-who-you-know

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