When trying to manage change, leaders often make a huge mistake by not telegraphing a tolerance for risk. This article digs into the issue of risk in making changes and suggests an antidote to this common problem.

It is a common statement that the only thing that is constant is change. Perhaps that is an over statement, or you may believe it is literally true. For sure, we are living in times where the level of change is increasing at an exponential pace. The reason for this is that worldwide technology uncovers new ways to do things every minute of every day. If you doubt that, just to try to buy the most advanced cell phone. It is impossible. Before you have swiped your credit card, another model has been introduced somewhere that has more capability than the one you just purchased.

Organizations change in order to keep pace with customer needs and to survive the competitive landscape. The global marketplace has made stability of internal processes impossible. We need to reinvent ourselves just about every day in some ways.

I once heard the great Ken Blanchard describe an instance he had with a Motor Vehicle bureau in California. He had been procrastinating about getting his license renewed due to past memories of standing in long lines only to be told when he got to the teller that he was in the wrong line. We have all experienced this type of bureaucratic bumbling, and no one would blame Ken for not wanting to go.

When he finally could put it off no longer, he scheduled the better part of a day to get his license renewed. He went in and was blown away with the level of service. He was completely done with the transaction (which included a new picture) in 9 minutes. He was so astounded that before leaving he approached the manager to congratulate him and ask how he changed things so drastically. The manager told him it was his job to reorganize the operation on a minute by minute basis to match what the customers needed. With that attitude, the whole focus of the operation became a game of how well employees could serve the public, and productivity skyrocketed.

When managers describe the need for change, they often make a critical error by saying something like this. “We have to go from A to B in less than 3 weeks. This is going to be extremely difficult, but it is critical we not make blunders along the way. Think hard about what you are going to do before doing it. We can get there quickly, but we cannot afford to make mistakes.”

The impact of a speech like that is to paralyze the people who need to be creative in order to actually get from A to B in 3 weeks. They will fail with this strategy.

An alternative way to challenge the group would be for the manager to say, “We need to get from A to B in three weeks. That is a huge task, and it will require us to do some very creative things. I recognize this will mean taking some risk. I want you all to know I will not shoot anyone if something does not work out. We need to break the mold to accomplish our goal. Let’s be sure not to make the same mistakes over and over, but let’s realize there will be some setbacks along the way. My job is to support you in your efforts to achieve the goal.”

With a speech like that, people will be more empowered to use their brains and figure out the pathway to success. In the first case, the manager petrified the workers, in the second case the manager turned them loose to solve their challenge.

For many years, I have been intrigued that it is nearly impossible to see one’s self as others do. I focus on this conundrum from the standpoint of a leader, since leadership training is the center of my business. Many leaders are often not aware that they are deceiving themselves with ideas about how others are reacting to them.

Several years ago, Daniel Goleman (father of Emotional Intelligence) observed that leaders who are most deficient in Emotional Intelligence usually have the most significant blind spots.

I pondered the validity of Goleman’s observation for several years. Typically, when I asked leaders or students of leadership, whether Goleman’s observation is consistent with what they see in their environment, they enthusiastically agree, once they understand what Goleman was actually saying.

The idea is that leaders cannot know how others see them. Therefore, leaders with low Emotional Intelligence usually are unaware that they have this problem. They believe people at work are enthusiastically behind them and have complete respect in them as their leader. Of course, when you talk to the people being led, the exact opposite observation is closer to the truth. They typically observe the leader is simply clueless.

Why is it that leaders are often blind to their own incompetence? Is it hubris? Is it ego? Is it overdrive? Is it stupidity? I believe the truth is that all of these things are in play. For many leaders, the lack of humility is one of the most significant impediments to accurately see themselves.

In my work, I teach that the ability to build trust between people in an organization allows a leader to see him or herself more accurately than ever before. The reason is, when trust is high people are not afraid to tell the leader when he or she is acting like a jerk. In fact, people understand they will be rewarded for pointing out leader foibles when they occur. That means leaders who are able to accomplish an environment of high trust have a major advantage. Trust is like the surface of the mirror that allows leaders to be able to see themselves accurately.

If you want to understand how you are coming across as a leader, your best bet is to work on building an environment of higher trust. In my book, I describe reinforcing candor as a key method for doing this. I believe if people feel it is safe to bring up scary stuff, they will be more inclined to share their truth on a daily basis. When leaders reinforce people for speaking out, it allows trust to grow and gives them the opportunity to be able to view themselves as they never have in the past.

I have coined a word to describe the impact of unions on organizations. They “complify” the situation. “Complify” is my pet word for the opposite of simplify. In a time where every organization is struggling to remain viable, the presence of a third party between management and workers is an inefficiency we can no longer afford as a society. I believe the automobile industry got that message last year.

In addition to complifying things, the unions add non value adding management jobs, which raise the costs of things. They also create significant work for lawyers, who we all know make a pretty good buck. You have to pay the salaries of the union officials and the people who work for them, including the lawyers and the people who work for them. That cost is paid out of union dues, which lower the standard of living for the workers. So, the union officials bid up the salaries to allow the workers to not take the brunt of their expenses, but that makes the organization less able to compete – i.e. the automobile example.

Here is a note from a student of mine in an online class. This scenario is so typical it has been mentioned by numerous people who work in a union setting.

Well we have a union at the Post Office for the carriers, but honestly other than if you get fired, they don’t seem to interfere or help out too too much. And yes I think rewards and pay should be based on the quality of the work you do. Too much with the unions is based off of seniority. You can be lazy, but if you’ve been there longer than someone else, you get most everything over them. I don’t think that is right. Unions need to have some sort of penalties and accountability for their members who don’t pull their weight.

I once worked in a union factory as a non-unionized engineer. I witnessed some of the ways this system drains money and time away from the vital work of the organization. The workers got to vote on which union to have represent them every three years. When I was there, it was time for an election.

The campaign seemed similar to a High School election where people were putting up posters and giving out trinkets supporting their candidate. It turns out this election was unusual because there were normally only two groups running (Party A, and Party B). In this election there was a third Party C that was known to be linked to a communist organization. The Party C group had infiltrated the society for several years preparing for this moment to take control of the factory. By this time, they had placed some highly capable people in key slots within the organization. The campaigning was fierce, and there was a lot of mud being slung around.

The election day came, and when the votes were counted, Party C had the most votes at 41%. The rest were split between Parties A and B. The plant manager was highly disturbed that a known communist group had taken over his operation, but was powerless to do anything about it because the election was done according to the rules. But this plant manager was clever enough to go back and re-read the rules one more time very carefully. He picked up a loophole that the lawyers had inadvertently placed in the contract.

The plant manager summoned all workers to a large meeting to announce the winner. He got up and said. “In this election, Party C received the most votes at 41% while Party B got 31% and Party A got 28%. That leaves us with a large problem because the Union rules in paragraph 4.3.b state that ‘There shall be an election every three years, and the party which receives more than 50% of the vote will be the ruling Party for the succeeding three years.’ Unfortunately, none of the parties in this election received more than 50% of the votes, so this election is void according to the Union Bylaws. We will have another election in two weeks to see if one Party can gain more than the required 50% of the votes.”

Of course Party C shouted all kinds of foul language at the manager, but he had the upper hand because he was only going by the contract. Starting the next morning the HR manager of the plant took the leaders of Party C one by one into the office and told them their services were no longer required at this plant. For months thereafter, there were people carrying signs outside the plant about unfair practices.

I am sure this particular situation hardly ever comes up, but my observation is that there was a lot of dither and wringing of hands that took the focus off the critical work of the plant for months. This would not have happened if there was no union in the organization. While this example is rather extreme, I think it is illustrative of how the existence of unions, serves to “complify” things in an organization. That raises costs and lowers efficiency at the very time when organizations are feeling the competitive pressures from global competitors like never before.

Managers need to be particularly careful when setting up measures that they actually drive the behavior that is desired. It sounds ridiculous to think a measure would actually drive people to do the wrong thing, but it happens in every organization on a daily basis. Be careful it does not happen to you. 

For example, in an effort to boost sales, the CEO instituted “number of sales calls” as a measure. This was based on historical data showing total revenue is highly correlated with the number of sales calls. Unfortunately, with the new measures in place, your sales team spends significantly less time and energy on each individual customer in order to get more sales calls accomplished. This reduces the “hit rate” at closing sales. You are pretty sure the data for this year will show a negative correlation between revenue and number of sales calls, but the measure will show a stellar year, and the sales team will be richly rewarded for making a lot of calls.

In an effort to reduce costs, a measure has been set to decrease the amount of rework in the factory. Rework has accounted for 30% of the product cost, and the goal is to cut that in half. So far the measure is on track, but you have discovered the inspectors are passing slightly defective product that would have been previously rejected. You are fearful that customer satisfaction will take a hit, but at least the level of rework measure will look good so workers will get their bonus.

One significant problem has arisen due to the measure selected for “employee satisfaction.” Based on some HR literature, the senior management has focused on training as the key driver of employee satisfaction. A strong link has been shown between training and motivated employees. Everyone in the organization must have at least 50 hours of training a year for the company to score well on the measure. You are finding that people are being forced to attend training they don’t want or need in order for the corporation to get a maximum score. However, the employees are very unhappy because nobody is there to backfill for the 50 hours they miss, so they have to work extra hard to make up the time. Of course, there is no overtime available because that is too costly. Employees seem really up in arms about this issue and are considering bringing in a union, but the measure is going to show outstanding “employee satisfaction” for the year.

It is critical for managers to verify that the behaviors being driven by the metrics on which people are being compensated are really helping  not hurting corporate performance.