Managerial Integrity by Zoner Press

Managerial literature Publishing house & Bookshop www.motivpress.cz

Dedicated to all the people at Motiv to have inspired me since 1996.

FRANTIŠEK

HRONÍK

MANAGERIAL

Motiv Press / 2014

František Hroník MANAGERIAL INTEGRITY

Chief Editor: Martin Moravec Translation and language revision: Alfa CZ Technical editor, typesetting and cover: Jiří Mičkal Printing and bookbinding: FINIDR, s.r.o. Published by Motiv Press s. r. o. Řehořova 14, Brno 618 00 Czech Republic e-mail: info@motivpress.cz Tel.: +420 777 668 472 www.motivpress.cz Number of pages: 152 First English edition Brno, 2014 © František Hroník, 2014 © MotivPress, 2014 ISBN 978-80-87981-08-5

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Table of contents

Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 About the Author . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 The fundamental role of management. . . . . . . . . . . . . . . . . . . 14 The two tasks of a manager . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 The new management paradigm. . . . . . . . . . . . . . . . . . . . . . . 24 Personality and role. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 The three roles of the manager. . . . . . . . . . . . . . . . . . . . . . . . . 38 Commitment and responsibility . . . . . . . . . . . . . . . . . . . . . . . . 41 The parable of the talents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Trustworthiness and informal authority . . . . . . . . . . . . . . . . . 60 Courage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 The manager and his relationships. . . . . . . . . . . . . . . . . . . . . . 68 The subjectivity and objectivity of the manager . . . . . . . . . . 71 Values. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 Conscience. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 Maturity of personality and moral integrity . . . . . . . . . . . . . . 95 Vision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 Decision-making and its effectiveness. . . . . . . . . . . . . . . . . . 115 Mindsets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 Managerial role models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124 Individuality and individualism . . . . . . . . . . . . . . . . . . . . . . . . 127 All the rules of motivation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 130 Operating rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134 Situations that are demanding on managerial integrity . . . 140 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145 Literature. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147 List of terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150

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Praise for Managerial Integrity

was fascinated by the book. To me, it is a truly absorbing read about business and HR, one of the best I have ever read. Theory and practice are combined well, it is easy to read and hard to put down. This book has my utmost respect and praise. Dušan Gábor, Director of Human Resources at a leading Business Service Company

anagerial Integrity is a thought-provoking book on how to manage successfully in today's complex work environment. Each chapter contains valuable insights and I particularly identified with the lessons on trust and trustworthiness – essential elements that are too often missing in corporate life. David Lambert, author of Smarter Selling: How to Grow Sales by Building Trusted Relationships

Dr.

Hronik has masterfully integrated and synthesized scientific research, stories full of wisdom, and his vast experience to create a guidebook for managers in how to lead ethically and create a culture of integrity within their organization. Dr. Paul Marciano, Author: Carrots and Sticks Don’t Work.

he business world today places considerable demands on performance, results, and profit. Managers must resist the pressures that come while finding a way to succeed. Maintaining our integrity is challenging and when we lose our integrity, we lose our trustworthiness. This outstanding and unique book is a practical tool to help the reader maintain moral integrity while producing excellent results! John G. Miller, author of QBQ! The Question Behind the Question and Outstanding! 47 Ways to Make Your Organization Exceptional

o book can make a manager. This one, however, will move you far forward in your quest to become a true leader. It will help you realise the importance of acting in accord with yourself, with others and with your company’s long-term benefits. If you long for your staff to say, “It was an honour to work for him/her”, then František Hroník’s book Managerial Integrity is the one for you. Radovan Musil, Senior Director, Software Engineering, Red Hat Czech

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s has been the case with František Hroník many times before, I was astonished. I was astonished by the view from above with which the issue of integrity can be understood. How contemporary integrity is. The way in which integrity is connected to other “managerial terms”, such as performance, motivation, corporate culture. None of the chapters were simply dry theoretical views. Instead they were captivating reading, illustrated by up-to-date, “in” examples from the world today, from contemporary life, reading in which the author brings together that which would seem incompatible in a very compact whole. And so it is that you find Welch alongside Kipling, the film Braveheart, footballer Patrik Berger and much more. Ondřej Slabý, HR Director at Coca-Cola HBC

say what I think. I do what I say. This has perhaps always been the way I work. The mo dern manager comes face-to-face with many situations every day, situations in which it is hard to find your way and when you need an imaginary North star to point you in the right direction and help you decide. For me, this has always been integrity, the chiming of my values and conscience with my actions. František Hroník’s book describes connections that were entirely new to me very understandably, using plenty of examples and analogies, helping me better understand many aspects, and within a wider context. Stories, intelligent and understandable graphs and even a poem explain how important it is never to deviate from your North star. I would recommend the book to all those who believe that work is not just a duty, that trust accelerates relations and that values are the foundation of a company. David Vrba, CEE, 3M

he book of Fr. Hronik, Managerial Integrity, is listing and explaining a portfolio of managerial competencies, ranging goals, values, emotions and communication, to commitment, conflict, control, performance, decision making and moral integrity, among others. The text is higly motivational, interspersed with illustrating stories, compiled from a number of well-known authors and books from different cultures and circumstances. The book is especially useful for top managers who wish to motivate their employees with wellselected statements requiring not only their brains but also emotions, heart and empathy. Prof. Milan Zeleny

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Foreword

The integrity question mark I never really thought about integrity in its own right. It always seemed something of a matter of course. Another reason I did not think about it was that I never had the feeling that something had changed in me or that I was doing something I did not myself believe in or that would not be important and good for those around me. I began having questions about integrity when I became part of a work mechanism that wanted to and had to work in a particular way. By this I mean the team I work within and the management role I decided to take responsibility for. I always see integrity within the context of how much I believe in what I am doing, whether I am being myself and whether I act accordingly; whether others too believe in what I believe and whether it moves things forwards, towards the expected results we want to achieve as a team. I always notice integrity when deciding between what I think it is right to want to achieve and what others think. I have found myself in various situations that are “on the edge”. When taking a decision, it has always been important to me to find a common intersection of principles. If you are leading a team (is there any other way of working these days than as a team?), there are times when you all have to identify with a particular decision. Such identification can come about for a variety of reasons, whether individual or shared. Only in this way can the whole team work towards the same objective, achieve something together and individually at the same time. I find it encouraging that the longer I work in my profession, the more I am aware that integrity is important to me and that it is just as important to most people around me. It is not simple, however. When you are overly convinced of being right, it is harder to find those common points of intersection – they are, of course, all the more reliable for it; you attend to them and appreciate them more. The old adage of “practice what you preach”, of not drinking wine when you preach water, would seem to sum up the essence of it all. However, does this mean that if you drink wine, you are lacking integrity? I am not sure if it is a contradiction, but if it is a way to make sure everyone is pulling in the same direction to achieve a common objective and you are still able to drink a glass of pure water, you have a chance. I am certain that František’s book will answer this question for many of us. Anetta Gergeľová, Head of HR Department, Novartis s.r.o.

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Foreword to English edition

I was honoured to be given the opportunity to write a few words about František Hroník’s book about managerial integrity. Before I opened the book and began reading, I thought to myself for a moment. What is integrity? Do I understand what it means? How many forms can integrity take in practical life, in working and personal life? What makes managerial integrity specific? Things from my life began coming back to me and I reflected on how I am when it comes to integrity myself. I remembered situations from my own managerial experience and my private life in which I was not sure at all that I was acting with a sense of integrity. I brought my rumination to a close by asking the question of how engagingly and convincingly a book about integrity can be written in this day and age. At a time that is dynamically fast, when morals are pushed to one side all too easily for the needs of shortterm goals objectified in material packages, perhaps in the shape of annual bonuses. Then I opened the book and began to read. And as has been the case with František Hroník many times before, I was astonished. I was astonished by the view from above with which the issue of integrity can be understood. How contemporary integrity is. The way in which integrity is connected to other “managerial terms”, such as performance, motivation, corporate culture. After getting an initial feel for the book as a whole, I went back to look at individual chapters. None of them were simply dry theoretical views. Instead they were captivating reading, illustrated by up-to-date, “in” examples from the world today, from contemporary life, reading in which the author brings together that which would seem incompatible in a very compact whole. And so it is that you find Welch alongside Kipling, the film Braveheart, footballer Patrik Berger and much more. My many years of experience at several multinational companies mean that I have come across various approaches to corporate codes of morals and ethics. František’s consideration of examples of the ethical principles of major corporations (General Electric, ČEZ) and other organisations (Motiv P) provides this area with a bit of humanity and reduces the formality and unreadability of documents themselves. If I had to conclude with one idea or response that I take from reading the book, it would be the issue of “managerial maturity”, an issue that is seldom touched on. We often ask in our managerial work if this or that candidate is mature enough, senior enough, ready for such or such a task or role. Thanks to Managerial Integrity, I get the feeling that the word “maturity” has found deeper content and clearer connection to values, trust, morals and authority; meaning integrity. Enjoy reading … Ondřej Slabý, HR Director at Coca-Cola HBC

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About the Author

František Hroník, PhD You have in your hands the most celebrated work of one of the most prominent personages in the field of the psychology of work in the Czech Republic and Slovakia. Dr. Hroník has twice been nominated for manager of the year (2008 and 2012), and in both cases was a competition finalist. He is a qualified and practising psychologist, who has been operating within a company environment since 1996, when he founded his own educational company, known for its e-learning products (virtual courses, psychology tests, e-360° feedback, etc) and innovative approach to creating systems for education and the creation of tailor-made developmental programmes. He works primarily as a consultant and coach for top management and a lecturer in tailor-made programmes for management for large multinational companies, including AHOLD, BAYER, Commerzbank, ENEL, GE Money Bank, GlaxoSmithKline, Novartis, Philip Morris, Red Hat Czech, Siemens Czech Republic and UniCredit Bank. He is the author of 11 publications for management and human resources, and lectures on the subject of Managing People on MBA courses. He lectures at professional conferences, and publishes in professional journals. He holds inspirational educational events for managers, at which he presents innovations from various fields (primarily HR and management). Dr. Hroník also successfully creates programmes for conferences, featuring presentations by eminent managers, and the conferences are renowned for their connection with themes “from outside” – from the fields of sport, medicine and art.

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Introduction

Let’s begin with a word about principles. “It is impossible for us to break the law. We can only break ourselves against the law.” Cecil B. DeMille on his film The Ten Commandments. Stephen R. Covey differentiates between principles and values. He contends that principles are the territory or the compass and values are the map: “… the map provides description, but the compass provides more vision and direction.” (Covey, S.R.: Principle Centered Leadership) I have created a slightly different image of principles for myself. Different routes can be found to different destinations on the interactive map. Obstacles, places of danger and places where you can recharge the batteries all appear along the way. You can also change the destination. Perhaps you will not change the meaning and sense you attribute to the path. Nor will you change the principles. The principle is that when you go uphill, your center of gravity is in front of you, whereas it is slightly behind you when you go downhill – otherwise you risk taking a tumble, even though you might move forward more quickly. This change of your center of gravity might be a principle.

y colleague Michael Chytrý often teased me after the publication of my book Tales of Management that it was the first of my books that you could read – the others you had to study. He mentioned this once and it was mentioned, just by the way, by Mrs. Hana Krbcová, a true lady among personnel officers, that she had no books about managerial integrity that you could read. Could I not, perhaps, write one? So the very next day I began writing down everything such a book should include. This came at a time when I was involved in some inspiring discussion of integrity in practice with Milana Hrubá, a lady of clear and precise insight into a wide range of managerial situations. I met her at a company that had integrity defined as a competency and that was also the workplace of Anetta Gergeľová, whose will, application, and conscientiousness simply embodied managerial integrity in my eyes. I was also able to discuss values in business and in politics, where interests often win at the expense of values, with David Mack, an incredibly learned man, who introduced me to Lubomír Mlčoch, author of The Economics of Trust (original title: Ekonomie důvěry). There were, of course, other inspiring people that I was able to get to know better. I apologize for not naming them all. Among them are colleagues from Motiv that were my inspiration in a host of ideas. This book I dedicate to them. It is a book to be read and one that offers an understanding of my view of management. There is one other member of the Motiv team that I should mention, a person I have worked with for many years now. We began, in fact, before Motiv even existed. That person is Jana Dorazilová, who has the ability to read other people’s integrity with incredible speed. I am delighted that I could again write a book that is not about methods. That in itself, though, would not be enough. I am aware that many people – managers being no exception – long for manuals, instructions that will work. We live at a time when the method is sometimes given more importance that the purpose or principle. One example here is the ever-developing concept of individual coaching. One authority urges us to check a company or person that offers individual coaching to find out whether some element of management is not concealed beneath their coaching. A person having completed a certified coaching course will say that a coach

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need not actually know anything about the business of the company where his charge works. This is confusion of language and thought. The method is placed above the purpose. There are many ways (methods) of reaching the destination and I will choose the most appropriate. We are now faced with the most diverse range of situations and there is no universal guideline to deal with them, no single, correct method. We are, however, capable of understanding what is going on, what has always been here and what is simply a mark of the times. We can grasp principles and use these to find or create an approach, a way, a method to take us towards the objective. The need to find a stable point within ourselves is even greater in the world today, when all around us there is speed and uncertainty, when we move around an environment that is unstable. Managerial integrity is essential kit for a managerial environment that is particularly notable for its turbulence. My hope is that Managerial Integrity is an inspiration and puts us in mind of the supporting principles of management. The book is not a story, so I am unsure of whether it will require study. It is not written for the reader to devour in one gulp – it will hopefully provoke some thought. I will close here on a personal note. I thank my family, Jana and the children, for the patience they show when I am writing and cannot be with them.

I also talk in the book of the thoughts of people I have unfortunately not met or spoken to face to face. All the writers quoted and presented in the Literature section were of inspiration to me. I would, however, like to mention a few in particular: W. Bennis, S. R. Covey, P. F. Drucker, F. Fukuyama, C. Handy, J. F. Kennedy, J. Kotter, G. Lipovetsky, J. Magretta, K. Nordstrom, C. K. Prahalad, J. Ridderstrale, P. Senge, J. Sokol, R. Sprenger, H. and A. Toffler and J. Welch. All these writers make you reflect on things and think them through. Each of them has a strong opinion. Each is a “king” or a “lion” and I will talk about The Lion King in the chapter about Courage. I had to learn about them all, but how did it work out? Judge for yourself.

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The fundamental role of management How else could we begin defining the basic role of management than with Drucker, who wrote that: the task of management is to productively use human capabilities. The move toward workers with knowledge and the continual improvement of the ability of the labor force mean increasing the potential of human capabilities in advanced countries in a way that is massive and practically unprecedented. In fact, it is the situation that makes them “advanced” countries. In spite of this, however, we can say in general that management in advanced countries has not taken the initiative and is not trying to transform this potential into actual responsibility and civil consciousness. Specifically, we must make sure that employees at all levels – from the lowest to the highest – are entrusted with genuine responsibility for the community matters of their business and responsibility for the elaboration and administrative provision of non-salary benefits. They must take responsibility for setting objectives for their own work and for targeted self-management and self-control. They must take responsibility for the continual improvement of the running of the whole business, what the Japanese

here have been managers since time immemorial. Just as there have been sawbones, doctors if you like. Not much has changed in those years, centuries, and millennia. In terms of objectives, that is. For the sawbones, the objective was to cure the patient. The tools of the job might have changed, but the objectives remain the same.

Expertise (functional competency)

Effectiveness

Abilities (behavioral competency)

Managers transform the expertise and abilities of others into the effectiveness of the whole. The word “transform” sounds almost spiritual. For it to be such, we need to go further. A simple chart is not enough. We must ask the question, “How do managers transform the expertise and abilities of others?” They mainly use locomotive forces and cohesion. These are the two forces without which transformation cannot occur. This complicates the original chart a little, although it remains technically correct.

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Functional competency

Experts

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Locomotive force

Transformation

Behavioral competency

Manager

Cohesion

Effectiveness of the whole

Other variables have a crucial influence on effectiveness in addition to the competency of experts and the two strengths of managers: principally mindsets and shared values. Their inclusion changes a relatively static diagram into one that is dynamic. We will consider mindsets and shared values later.

Effectiveness and efficiency Many authors distinguish between effectiveness and efficiency, claiming that effectiveness itself is not enough. Charles Handy sketches out this difference quite clearly, saying that our passion for effectiveness itself leads to deformation. If we cannot look at effectiveness from the right angle, it might happen that we find ourselves in a position in which we work so hard on effectiveness that we forget the original sense of our actions. Effectiveness is not always synonymous with efficiency. Electronic and voice mail are excellent additions to business life, incredibly effective in terms of fast personal communication. They are so effective, in fact, that the manageress of one large consultancy group once complained to Handy that her staff spent so much time listening to and answering the messages they receive that they had completely stopped thinking. Is this effective? Yes. Is it efficient? Handy is not so sure. (Adapted from Handy, C.: The Hungry Spirit)

term “continuous learning”. They must be responsibly involved in thinking through and setting out corporate objectives and plans and in taking corporate decisions. (Adapted from Drucker, P.F.: Managing in Turbulent Times) A man of many firsts was American president W. H. Harrison, a highly effective man from a certain point of view. He gave what is to this day the longest inauguration speech of any incoming president. It lasted two hours and was givenin freezing cold weather on 4th March 1841. The president took ill and died of pneumonia exactly one month later, on 4th April. This meant another two “firsts”: he was the first president to die in office and to date the president with the shortest term. The efficiency of his term, however, is not open to question. Effort and results Effort and results are subsets of the terms effectiveness and efficiency. As a manager, I quite often hear people offer a defense based on how much effort has been invested in this or that. A report is sometimes a presentation of everything a person has been working on, but it is rare for us to find any specific results. Those are on the horizon. Results are the natural desire of every true manager. They are, however, not enough. The results we achieve must be of value to someone (the customer).

16 Production and production capability S. R. Covey distinguishes between production and production capability. This distinction he explains using the example of the goose that lays the golden egg, the goose from Aesop’s fables that the impatient peasant cuts open and guts so he can get as many golden eggs as possible at the same time. The golden egg in this fable is production and the goose is the symbol of production capability. According to Covey, effectiveness is based on the balance between P (production) and PC (production capability). Unfortunately, most people see effectiveness from the perspective of the paradigm of the ‘golden egg’: the more you produce, the more you do, the more effective you are. The fable, however, shows that genuine effectiveness is a function of two factors: what you produce (golden eggs) and the sources of production, meaning the capability to produce (the goose). If you adopt a way of life that focuses on golden eggs and do not care for the goose, you will soon lose the source of production that creates the golden eggs. On the other hand, if you only look after the goose without the objective of getting golden eggs, you will soon be faced with the problem of whether you should feed yourself or feed the goose. (Covey, S.R.: The 7 Habits of Highly Effective People: Powerful Lessons in Personal Change)

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The three types of effectiveness Robert Kuttner (in Charles Handy, The Hungry Spirit) defines three different types of effectiveness. Each of these is named after the economist that corresponds to that effectiveness:

> Smith effectiveness > Keynes effectiveness > Schumpeter effectiveness

SMITH EFFECTIVENESS Smith effectiveness makes sure that products are made in the right place at the right cost and are sold at the right price (a competitive price). Having Smith effectiveness means keeping nothing in reserve. That is why it is accompanied by a cost strategy and, where appropriate, a strategy for expansion or expansive retention of market share. Smith effectiveness ceases to be effective when there are “too many dogs fighting over the one bone”. To be effective, you need to have a finished product, to improve processes, and to respect the rules of the game.

KEYNES EFFECTIVENESS If an organization, or an entire economy, is “operating” at a level below its possibilities, the opportunity exists to launch its turnaround by stimulating demand. Workers, for example, are “kept in supply”, “stockpiled”, are supported in different ways so that they are available when required. This leads to debts that are then paid off by later results.

SCHUMPETER EFFECTIVENESS Schumpeter effectiveness is the most commonly stressed these days because it requires more than a sprint along a marked-out track (Smith effectiveness); it requires the search for new paths. Here there is time to think about how to do things differently. Only in this way can an advantage be maintained in the long term. Schumpeter effectiveness is accentuated in books such as Blue Ocean Strategy by W. Chan Kim and Renée Mauborgne. It is linked to the strategy of differentiation and the culture of friendly experiments. To apply Schumpeter effectiveness, you need to have sufficient resources. We expect the manager that works at an organization that practices Smith effectiveness to behave differently to one at a company that applies Schumpeter effectiveness. Different types of effectiveness are more or less effective with regard to the situation. Individual

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cases of effectiveness are not contrasting in principle and so the manager should look at a situation through different glasses, always using the right tools and methods.

Increasing the effectiveness of an organization Regardless of whether our organization is more Smith or Schumpeter, the following two areas exist for us to apply our approach:

> the effectiveness of processes; > the effectiveness of people.

Le ve l an of s d elf co -m m a pe na te ge nc m ie en s t

The effectiveness of people

Leadership (“soft” factors)

The effectiveness of processes

Management (“hard” factors)

The x and y axes are not dependent on each other. It is impossible to maintain the effectiveness and sophistication of processes if you have ineffective (unmotivated) people. And vice versa: you will not keep highly effective and motivated people in routine work.

A manager is expected to be able to manage the effectiveness of people and processes to the maximum possible extent and with balance. We have thus far concentrated mainly on the effectiveness of people and this is how we aim to continue. I mentioned the effectiveness of processes for the sake of completeness and to provide an understanding of contexts. To see the whole picture and capture the entire area in which a manager must operate, I use a diagram with four different fields, marked out by the axes of processes – people and strategy – ad hoc routine operations.

The difference between the role of manager and expert, or “How to get a square peg into a round hole”. The movie Apollo 13 provides us with an illustrative example of the difference between how managers and experts think. Experts converge on the leader of the rescue operation and hit him with the news: “Jean, it looks like we’ve got oxygen trouble.” “We’ve got CO2 problems.” “There are five filters.” “Enough for two men and a day and a half. I told the doctor …”“They’re at eight units already. If they go over fifteen, we’re talking about disrupted perception, vision and so on.” The commander enters the discussion, full of limits as it is, and says, “What about the filters in the command module?” The expert replies, “Those are square …”, “but round in the lunar module,” adds another. Commander: “Don’t tell me we can’t sort it out.” “We didn’t count on this sort of situation,” replies one of the experts, again talking in terms of limits. Another adds, “The CO2 is becoming poisonous...” The commander does not let the expert finish: “We have to work out how to get a square peg into a round hole. And fast.” The experts are thinking in terms of limits. The manager in terms of opportunities. Thinking in terms of opportunities is something that takes the limits and overcomes them. It is not

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detached from them. The manager needs experts and they need the manager. Managers and experts were poles apart before the launch of the Challenger space shuttle. In fact, the managers did not take the experts seriously. They considered their limiting approach to be a complication to be circumvented. Engineers had warned of the risks involved in the coupling rings some 6 months before the disaster. An in-house meeting was even held at Morton-Thiokol (manufacturer of auxiliary rocket engines) just a few hours before the fateful launch. Two engineers were vehement in their claims that the launch had to be stopped because of unfavorable weather conditions, which increased the risk even further. The meeting was memorable for one utterance, something in the vein of, “Take off your engineer’s hat and put a manager’s hat on.” And that was the beginning of the end for Challenger. It became clear during the investigation just how differently experts and managers viewed risk. Engineers on the ground claimed the likelihood of an accident was 1:100, whereas the managers thought it to be 1:100,000. This was nonsense, because if true, a disaster was not likely for at least another 300 years, even if a space shuttle was launched every day. There is a lot of talk of corporate social responsibility. In a famous article from 1970 (The Social Responsibility of Business is to Increase its Profits), in which he

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Strategy (longer timescale)

Processes

People

Routine operations (day after day)

All managers, including managers in the front line, operate in all four quadrants. It is highly likely that the focal point of activity of the general manager will fall within the 1st quadrant (strategy and processes), whereas a foreman will mainly operate in the 4th quadrant. What is more, what quadrant 1 actually involves, the content, will differ for the general manager and the foreman. To the foreman, for example, it might involve, “What do I want to improve in the running of the whole cycle I am in charge of?” I should add a short comment in explanation of the diagram: The 1st quadrant mainly signifies a notion, a system. The 2nd quadrant involves transferring notions into the heads of other people so that they take them on as their own. Quadrant 4 (if we go clockwise) means the everyday application of the shared notion. Quadrant 3 focuses on appraisal, feedback, and specifying or adjusting the whole procedure. We get things moving (locomotive force) by passing clockwise through the quadrants.

The performance-oriented culture It might seem inconceivable that a commercial organization could have any culture other than one that focuses on performance. We even expect managers at non-commercial organizations to put in a performance that has a recipient at the end in the shape of an internal or external customer. A movement sometimes appears to protest against the culture of performance and conformity. The last such movement of any note was that of the Hippies in the 1960s. It was an outpouring of the views of the generation, of people not wanting to live the same

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way as those before them. The thing was, though, that Lennon, the Beatles, the Rolling Stones, and other bands became factories, outand-out companies. We have been living in a culture that focuses on performance for centuries now, with only a few periods of interlude. A culture that is fully focused on performance asserts the management of excellence. Do you know who won the gold medal in the men’s 100-metres at the Olympics in 2008? It was a few years ago, but many people know that it was Usain Bolt. Few have any idea who came second. Similarly, we can all name the first man on the Moon, but might have problems remembering the second. One motto at General Electric says “today’s record, tomorrow’s standard”. This places pressure on performance. However, our outlook cannot end with performance, even in a performance-oriented culture. We need to ask questions about the sense of our business so as not to fall into a trap, like a mouse that runs itself to death on its wheel. So, is making profit the sense of it all? I have a provocative response to questions of this sort: the sense of doing business is not to generate profit. Profit is required and without it we would be hard pushed to fulfill the basic task of any organization; meaning to effectively serve the people it should serve. These people come from outside the organization and so the sense of an organization cannot be within – it does not exist for itself alone. All organizations exist for their customers, to whom they bring value or use. To be able to provide this value or use, they must create profit and relationships of trust. Profit and trust, however, are a means within an organization as opposed to the objective. Trust, by contrast, is an objective in a natural group like the family. Strategy of expansion

e tough guy culture

e friendly experiment culture

Smith effectiveness

Schumpeter effectiveness

e play it safe culture

Keynes effectiveness

Strategy of safety Cost strategy

Differentiation strategy

follows up his book Capitalism and Freedom, Milton Friedman stresses that it is not companies that have social responsibility, but managers or owners, meaning specific people. He infers in the article that the manager’s social responsibility is to gene rate profit whilst respecting open and free competition without fraudulence or deception. Other authors stress that success and social responsibility are bound to each other. Charles Handy offers the example of the co-founder and spiritual father of Hewlett Packard. Handy writes that just before he died, David Packard asked himself, “Why are we here?” It was Packard’s view that many people mistakenly had the idea a business exists solely to make money. Of course, money is an important part of the existence of a company, if it is a company worth its salt. Results, however, are not the sense of its existence. We must go deeper to find the real reason for its being. During this search, we unavoidably reach the conclusion that a group of people get together and co-exist as the institution we now know as a company so that they are able to collectively achieve something they would not manage on their own, to bring something to society. It might seem a well-worn phrase, but it is of fundamental significance. (Adapted from Handy, C: The Hungry Spirit) Organizational culture, business strategy, accentuated effectiveness, a changeable market,

20 and the distinctive notions held by customers all generate the conditions for an individual reaction. The fact that a manager did well at one company is no guarantee he will be as successful at another company where the shared expectations are different. I have seen many managerial transfers “from one quadrant to another” that have failed. This was not caused by personal qualities or a motivational deficit, but by the incompatible action of the person and the organization.The action of the manager aimed to repeat a successful template without taking the change of situation into account. Prahalad and Ramaswamy write in their The Future of Competition that it is very important to realize that managers are as varied as customers. You will not find two managers reacting in the same way to the same event. (Prahalad, C. K., Ramaswamy, V.: The Future of Competition. Co-creating Unique Value with Customers) The degree of uniqueness increases on all sides. Joan Magretta writes that the actual contribution of management resides in its ability to transform complexity and specialization into effectiveness. Given that the global economy is based more and more on the use of specialized knowledge and is becoming more and more interconnected, work will become more – and not less – specialized and complex. Meaning that management will play a greater

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We have simplified the world of cultures and strategies to provide a certain level of clarity. We can now add various concepts of effectiveness to this world. The tough guy culture is an individualistic culture in which every one competes with everyone else and there is nothing older than yesterday’s success. This was what it was like at Welch’s GE. In contrast to this is the culture of friendly experiments, a team culture, an innovative culture (adapted from Deal, T. E. and Kennedy, A. A.: Corporate Cultures: The Rites and Rituals of Corporate Life). NOKIA, whose market share significantly outstrips the competition, is one company with such a culture. The play-it-safe culture might look different depending on the strategy. The main points in both forms are not to make mistakes and to have good quality “brakes”. Most companies in the automotive industry (suppliers to the motor industry) have a culture that involves the strategies of safety and cost. The typology of corporate culture according to T. E. Deal and A. A. Kennedy is based on how the external surroundings create the internal environment in which the manager and his staff operate. Strategies act in the same way. Why, though, am I talking about this in a book about managerial integrity? A manager needs to know how to read the environment he operates in. To understand it. To respect it. He can then forecast what will happen, adjust accordingly and change.

What, then, is the fundamental role of management, of the manager? We have come up with the following so far: Managers transform the expertise and abilities of others into the effectiveness of the whole. I illustrated this sentence with several examples, in most of which the function of locomotive force is evident. Managers understandably put things in motion. This is not enough, though – they need to bring people together and create cohesion. When applying locomotive force, the role of the manager is often a differentiating one; in the case of appraisal and reward, for exam ple. However, it is an integrating role when creating cohesion.

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We can now expand somewhat on the fundamental role:

Management of excellence

Transforming expertise and capabilities into the performance of the whole

Creating an environment of commitment

We will return to commitment later in the book. For now, though, it is enough to say that commitment is an unwritten psychological contract. It is not about fervent solidarity or zealous identification with an organization.

– and not lesser – role in our lives. This also creates a paradox at the very heart of modern economics: the more educated and specialized we become, the more we need others to be able to put in performance. (Magretta, J.: What Management Is. How It Works and Why It's Everyone's Business)

The movie “The Horse Whisperer” offers an excellent illustration of good managerial behavior. One scene, lasting for about six and a half minutes, is able to show in this short space of time everything important about how to lead. The scene starts with the first meeting of Tom and Grace. If you have not seen the film or cannot remember the scene, here is a short summary: Annie is a manager in Manhattan whose daughter Grace is seriously injured in an accident and loses a leg. Grace’s friend dies in the accident and her horse, Pilgrim, very nearly dies too. The accident leaves both Grace and Pilgrim scared and bitter. Annie does not want to accept this and packs her daughter and horse “into the car” and drives them three-quarters of the way across the United States. Not one to hesitate when it comes to piling pressure on her subordinates or family, she tries to deal with Tom, the horse whisperer, in the same way. The others involved - Grace, Pilgrim and Lester – also try to define the situation for Tom. But Tom does not give an inch. Instead, he is the one to define the situation. He does not allow Grace to discourage him and does not force the issue. Neither does he follow Lester's advice not to get too close to Pilgrim. Pilgrim warns Tom off by breaking a few planks, but Tom continues regardless. Neither does he let himself be hemmed in or maneuvered into a dependent position when Annie tells him that nobody has ever got

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The two tasks of a manager

manager, whose fundamental role is to use the ability and expertise of others to achieve results as a team, needs to fulfill two tasks: to define the situation and delegate responsibility. This is true for all organizations, regardless of whether they emphasize productivity according to Smith, Keynes or Schumpeter.

Define situation

Delegate responsibility

“The only way to make sense of the future, whether in organizations, society or in your personal life, is to take that future into your own hands, and not just react to it.” (Handy, C.; in Gibson, R. (ed.): Rethinking the Future)

DEFINE THE SITUATION Defining the situation means assessing the current situation and the target outcome and, above all, being the one who has the situation under control, the one who defines it. The manager who defines a situation is not being pulled in its wake, is not just reacting. Quite the opposite, in fact: the manager is the one shaping the situation. Managers do not allow subordinates to shape the situation, even though they take their initiatives seriously and allow themselves to be inspired by them.

DELEGATE RESPONSIBILITIES Simply defining the situation is not enough. We need to involve others in the solution. This is best achieved by giving people responsibility, without giving up our own share of that responsibility. At the same time, we need to guard against upward delegation.

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SELF-REFLECTION Write down the significant decision-making situations you have encountered in the last month. State at least 3 situations. For each situation ask the following questions:

>D id I drive these situations or was I just reacting and accepting the definitions of others? >W ho walked away with what tasks? Did I prevent any upward delegation? >D id I choose a partnership approach when the other side accepted my definition of the situation? When reviewing events and how I have acted, I have to concede time and again that I am far from the ideal manager. I am frequently guilty of allowing upward delegation. It happened, then, in 2007, that I was the director of a consulting and training company and the most productive of its 60 employees. This is wrong! I failed in one of the two tasks of management – delegating responsibility.

About methods and principles I mentioned in the introduction that I am happy to be writing about principles again rather than methods. Perhaps I should explain this remark. It is obvious that the two go hand-in-hand. I can adapt and even create methods based on principles. And if I come across a method which looks interesting, I can set about framing it within a set of principles. The result is that I am a consistent manager - not a mosaic manager, meaning someone who arbitrarily uses whichever method is popular at the time. If I did that, I would become, to use Abraham Maslow’s phrase, a man who has learnt to use a hammer and sees everything around him as a nail. Defining the situation and delegating responsibilities are principles and to these principles we can assign a whole range of methods from a variety of management manuals.

as close to Pilgrim. He does not allow himself to be drawn into discussions on whether Grace will find riding again difficult because of her amputated leg. He answers, “It’s all the same to me whichever way you look at it, because she’s gonna ride him.” When Grace tries to talk about the problem, he answers her unambiguously, “you either want to or you don’t.” Grace agrees that she will try, but her words imply that she is shirking responsibility: “There is nothing else to do here anyway”. This does not satisfy Tom, and he walks away, saying that he can’t help her. The scene finishes with Grace calling out, “So what do I have to do?” She has finally accepted her responsibility. She has accepted that it is her responsibility to work on herself. (Incidentally, the scene begins with Grace defining boundaries by telling Tom not to count on her at all.) When showing this scene, I tell managers that they can learn everything important about managing their staff, or at least about their two fundamental tasks, during these six and half minutes.

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Personality and role

Legendary tenor Placido Domingo, nicknamed the “King of Opera,” said in one documentary, “When I come onto the stage, it isn’t me. I step out of my normal life.” Similar thoughts can be found among actors. It seems obvious to us that actors are in role on stage and that off it their lives are completely different. For example, an actor playing a sick person is not generally sick in real life. Placido Domingo probably meant it a little differently, however. One philosopher wrote, “I don’t know of a worse feeling than being in the hands of a dentist who chooses that moment to voice out loud doubts as to his chosen profession. This sort of ‘honesty’ is not appreciated by the patient.” (Sokol, J.: Filosofická antropologie. Člověk jako osoba [Philosophic Anthropology. Man as a Person]) The words of the tenor and the philosopher refer to the same idea – the idea of separating personality and role. It is this separation of personality and role that is the precondition of integrity, even if it might seem something of a paradox or a contradiction in terms. To play a role is an art form. It does not mean you have to “act”, but stick to the script you have. A role moves us into the real world. The benefits of sticking

he ability to differentiate between the personal, personal preferences and the expectations determined by a role is the basic method of creating commitment to a company and unity within it. An integrating element is also needed in addition to this differentiation, a “roof”, which might be described as the “collective interest” or “collective house”. This “roofing” holds needs and values. We are now approaching the idea and practice of integrity.

Why is it good to differentiate between personality and role? Managers (and others) in these rapidly changing times often find themselves in a situation where they must defend and press ahead with an opinion of which they are not 100 percent convinced. Even before a decision is taken, they try to influence it in a way they regard as more positive. However, this attempt will also have been made by five, six, or even more managers, meaning that several managers find themselves in an identical situation. You cannot, however, stand in front of your subordinates and say to them, “We’re going to have to do XYZ and proceed according to plan A, even though it’s not exactly the best solution, as time will tell and I’m sure I’ll be proved right. I tried to have the plan changed, but now they say there’s no going back. So let’s give it a try and see how it pans out.” Sometimes the language can be even more colorful, with comments about the “idiots at the top of the company”, people “who haven’t a clue about what is actually going on”, etc. Such managers may make themselves more popular with their subordinates at that particular moment, but at the same time they are resigning any claim to authority. It will be very difficult to motivate their people to do work everyone finds unpleasant, but which obviously needs to be done. Successful differentiation between personality and role is a prerequisite for personal effectiveness. A manager is paid according to how successfully he or she stays true to his or her role, not how much of an authentic personality

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he may be or his ability to express personal opinions, to be himself. However, being in role does not mean putting on a face as a way of functioning. Everyone relinquishes a little of their autonomy at every organization, (so that, paradoxically, they can achieve individual goals which would be unattainable without the organization). There is no alternative, apart from the company’s rapid demise. Let us take a positive approach to “being in role”. We usually take on a role when we have the scope to become what we want to be. For example, children play various roles for which they do not yet have the required tools. Politicians try to create the impression that they can manage any problem that might come their way, even if they might be less sure inside. Despite being a politician capable of spontaneity and unconventionality, it is hard to imagine Winston Churchill confiding his true fears and uncertainties to his people at times of national crisis. All roles are connected to expectations. The basic expectation of a manager is that he or she will guarantee long-term performance and effectiveness from his or her people and him or herself.

to the script are less important for me than they are for those around me.

How to voice both – personality and role

We fail to distinguish sufficiently between personality and role; we are obsessed with ourselves and not by our task or calling. What is more, we need to draw simple conclusions in terms of “good and evil”. We will expect the ma nagers of the near future to have a more systematic approach with a vision of the future.

Vladislaus II was the king of Bohemia and Hungary, a man with a good heart. He had the common touch – the ability to speak to people far below him in the social hierarchy. Not only that, he was smart too. King George of Poděbrady, on the other hand, was rather devious and had little consideration for the feelings of others. Kings, however, are not judged by character or intent, but by their actions. George’s actions were statesmanlike and he fulfilled his role as king in difficult times, surpassing expectations. In contrast, Vladislaus II, George’s successor, was one of the weakest kings in Czech history. Personality and role, i.e. being oneself and simultaneously being in role, need not be defined as mutually exclusive, as “either or”. It does not stand that someone who is good in role must suffer as a person or that those close to them must suffer. Although it may seem ideal when the two are in harmony, development is only possible when a dissonance exists between them. A very apt quip about the relationship between personality and role was penned by philosopher Jean Paul Sartre, who wrote, “Man is what he is not and is not what he is.” People who are not ready inside will understandably play various roles. Then, if they are lucky, they will grow into their particular

Armand-Jean du Plessis de Richelieu, better known as Cardinal Richelieu, is a telling example of the separation of individual personality and role. Most of us know Cardinal Richelieu from Dumas’ “The Three Musketeers,” where we see him as a plotter capable of anything in the name of power. Alexandre Dumas’ romantic notion, in which Louis XIII and Cardinal Richelieu are scoundrels, is similar to how many employees see their managers. Why is this so?

We will return to Cardinal Richelieu later, especially in the section about consciousness. For now, I will mention only the most important fact about his role as close collaborator to Louis XIII: Cardinal Richelieu was devoted to his king and played a key role in stabilizing France and preventing its possible dissolution. He fulfilled this role magnificently. But perhaps we could say the same about war criminals. How do we differentiate?

32 “A country without its own heaven loses everything, even itself.” (Singer songwriter Richard Müller, chorus from the song Baroko) Common interest obscures therein values and needs whose mutual relationships can be uneasy and which are occasionally in direct conflict. The idea of common interest was developed in more recent times by the aforementioned Cardinal Richelieu as the socalled “national interest” (raison d’état), which he defended with the words, “Man is immortal and later he will be saved. But the state is not immortal: either it is saved now or it will never be saved.” If we replace the word “state” with the word “company”, what he said becomes even more apt than it originally was. Raison d’état, and the ethical code of the “common good” which stems from it, is dismissed by people such as Friedrich August von Hayek, among other things a professor of social and moral science, as a collectivist ethic driven only by usefulness (the end justifies the means).

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roles. A correctly chosen role will allow for growth. Certainly, we can point to people from history or from our own experience that “grew” in certain situations and demonstrated themselves to be strong individuals. In many instances, a “strong individual” is precisely our assessment of someone whose personality and role have been harmoniously combined. One model situation, and a somewhat extreme example of mastering “personality and role”, is that in which, as a manager, you have to call in a subordinate who is also a long-time friend, someone you have known since high school and university and with whom you have shared a lot in the past. Your superiors have decided to cut back on the staff at the organization and have established a guide to determine who to make redundant. Your friend is among those being made redundant and it is up to you to tell him. How do you go about it?

Option 1 “Bill, I have to tell you that you have been chosen by management for redundancy. If it was up to me, I would have chosen differently. But you know how it is today. Tomorrow it could be me in your place.” This scenario can be even more difficult if the decision is made at the same managerial level. You tried as much as you could to defend your friend, but could not convince the others that you were not simply defending your own vested interest. In this second scenario, you can tell your friend that you were the one who fought for him tooth and nail.

Option 2 “Bill, I have some news for you that is hard for me to say. The company is being streamlined and we have decided to make 22 people redundant from our division. You are one of them. I truly hope that this will not jeopardize our relationship, which is dear to me.” If the decision was taken at the same level, do not offer information as to how it was made; instead, emphasize your true feelings then and there; for example, by saying “I’m sorry.” It is clear that the “statesmanlike” or “managerial-like” option is the second one. Here, the manager was able to separate personality from role and both sides could make their feelings known. Each one of us has personality and a variety of different roles. These mean that our personality changes too. This “game” needs a “third

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player”, though, someone who brings the two (personality and role) together. This is the sense of the roofing – the collective house – which is also home to values.

Why we need the “collective house”

Common house Personality Role

Understandably, if, as a manager, you have to make a close friend redundant, without “roofing” you will be forced to voice doubts such as, “For God’s sake – do I really need this?” or “What have I got myself into?” Here, personality and role have parted entirely. Personality has gained the upper hand and the manager is no longer in role. He has fallen out of role. Naturally, one should never fall out of role even after work or outside the workplace; at the pub, for example. Even here you “represent” your company as a manager. When the friend whom you made redundant, and who has finally came to terms with it and is happy to go for a beer with you, asks what really happened and who said what, you have no right to answer him. The most you can say is that you fought for him, but were unable to convince the others. If, on the other hand, you start expressing your unhappiness with certain decisions outside the relevant group of decision-makers (or implementers), you have fallen out of role. The problem is not restricted to falling out of role. It is also possible that you do not know or forget how to behave outside your role and lose contact with yourself and your personal preferences. Or you might live in a way in which your private life (personality) and your work role are entirely distinct. An extreme case of separating personal life and role is the example of the Nazi war criminals in Nuremberg. Many did their “work” (sending people to the gas chambers, for example) while at home they were model fathers and

This is why we must ensure that needs in the collective house do not predominate over values. Being driven by needs is basically the same as following the principle of the ends justifying the means. If we were driven by dominant needs alone, we would lose our heaven and ourselves.

34 Conflicts of interest in questions and answers (from Integrity: The Spirit and Letter of Our Commitment, GE 1993) Question: I work in the IT Department and I can design computer software for our company which is better and cheaper than what we get from our current supplier. If I used my free time to develop such software, could I start my own business and offer GE my own services? Answer: No. The company already pays you for work similar to that which you intend selling to the company. It is expected of you to give the company your maximum creativity and energy. You should try and find out whether creating such software could become part of your normal job description.

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lovers of Wagner, the personification of gentleness and lyricism. The defendants pleaded that they had just been fulfilling their roles. These men were examples of loyalty (although this can also be questioned, since many enriched themselves rather than hand over confiscated property to the Reich) but not commitment (see next section). It is clear then, that we need our personality and role to constantly confront each other, and that we constantly look for “roofing” in this confrontation. If our personality and role are out of synch and we are unable to find “roofing” (a common interest), it is honorable to leave the company. This roofing, meaning the common interest, reflects values and needs. Sometimes, we substitute needs with interests and at times we put values and interests face-to-face. Whether talking about needs or interests, we are usually thinking about something which is characteristically “here and now”.

Conflicts of interest One example of an antagonistic relationship between personality and role is called a conflict of interest. This occurs in the workplace when we put our personal interests above those interests that stem from the role. An example might be favoring more expensive or lesser quality suppliers who are able to show us their appreciation with an assortment of luxury gifts.

Question: My wife has the opportunity to become the office manager of a small company which is a supplier for GE, where I am employed. Occasionally, it happens that I myself have to confirm credentials in order to authorize this supplier to work in situations in which we urgently need their services. If my wife gets this position, do I have to inform my director? Answer: Of course. A competitor of the company where your wife works

Our resolution of conflicts of interest should be governed by the values and principles according to which we work at the company. A manager needs to be aware of the conflicts of interest his subordinates are exposed to. He or she needs to deal with conflicts of interest before they arise. Support might be found in the company’s code of ethics, which define potential conflicts of interest (see the margin on the left on this page and on the right of the next).

Absolute intersection of personality and role Can the situation ever arise in which personality and role are in perfect harmony, where one becomes the other? There are exceptional moments in our lives when such intersection does occur. For

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Commitment and responsibility

“Productivity is the result of commitment, not orders.” Wilbert Gore, founder of Goretex

ommitment is a very popular word. One MBA student even told me that at his company, they had banned people from using it. By this he certainly didn’t mean a ban on observing what the term involves; no, the aim was to prevent the word becoming hollow in meaning as a result of overuse. The post-modern manager is faced with a demanding task: that of harmonizing excellence and commitment. At the same time, though, the management of excellence is impossible without commitment. Commitment is sometimes considered a fundamental capability or mindset. What precisely, however, do we mean by the term? Commitment is most commonly considered to be an undertaking, a sense of solidarity and collegiality, a sort of unwritten contract between the worker and the organization. Specific responsibility invariably stems from every commitment.

What is it like at an organization with a low level of commitment? They look for reasons as to why something didn’t work and why deadlines were not met. Promises are not kept, even though many people willingly agree to many things. For this reason great care is taken to make sure everything is written down on paper as evidence of how it actually was. “Us and them” barriers are raised: “us down here and them up there, us in sales and them in marketing”. At this sort of organization, not everyone pulls in the same direction, meaning that management has to go to great efforts to drag the organization in the set direction. Of course, we cannot talk of commitment that stimulates company performance over the long term even at a company where the requirement of eager solidarity is supported by various mottos, the

"Neo-individualistic culture has its weaknesses, but it is not a catastrophe. Individuals identify with a company only in part, but they can devote themselves to their own tasks; they do not display fanatical affinity with the global community, but they are capable of mobilizing strength for definite projects which have a personal impact. Enthusiasm for the collective is weak; however, team spirit can realistically develop in certain defined groups based on internal self-regulation, shared feeling and mutual respect. An intelligent business is not one which tries to create at any cost an enthusiastic sense of belonging, but one that knows how to make use of the individual desire for promotion and an initiative for creativity and responsibility.” (Lipovetsky, G.: Le Crépuscule du devoir [The Twilight of Obligation])

42 The kidnapper’s dilemma or the dilemma of the victim? Perhaps everyone has heard some evidence or argument that long-term co-operation brings greater benefits than mere one-off success. It is, however, necessary to convince the other party that you are going to respect your commitments and behave co-operatively. Thomas Schelling called this the kidnapper’s dilemma. Imagine that a kidnapper, of whom the police are not yet aware, is overcome by fear and remorse for the act he has committed and would like to release his victim. He has only one condition: the victim will not testify against him. The victim promises at that moment that he will not testify. But when he is free, what will actually prevent him from testifying? Once he has his freedom, he can break his promise without risk. The victim suddenly has a dilemma. He does not know how to convince the kidnapper he is serious about the promise. Perhaps the only way is to confess to an equally serious crime or to perform one before the kidnapper’s very eyes. The kidnapper will then have the same ace up his sleeve, which until then was a card held only by the victim. This is the only way to convince the kidnapper. In the real world, it is much easier to provide this commitment. Such a commitment is emotional in character. (Adapted from Ridley, M.: The Origins of Virtue. Human Instincts and the Evolution of Cooperation)

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common tunes of company anthems, joint visits to company activity centers, or even warm-up exercises (yes, there are examples several large, (not surprisingly) mostly foreign companies). Brainwashing sessions on building a bright tomorrow and confessions of everything you are able to sacrifice for the company will soon become a target for jokes about what went on before. In the best of cases. Worse is when the organization becomes a sect at which being different is punished and diversity is not allowed.

What good is commitment to the organization and the worker? Managers at a company are expected to produce results and high quality long-term performance, something that is hard to imagine without creating a sense of solidarity between key workers and the company. In return, key people expect to have the opportunity to act in roles that include considerable individual responsibility and the prospect of learning something new – a balanced psychological contract. Commitment indicates the strengthening of responsible individualism (individual responsibility), in which the worker is willing to come up with an assignment, take it as his own and contribute towards the common good in everything he does. In return, the organization provides him with work opportunities that are difficult to find elsewhere. Work becomes a means of being more yourself and realizing your possibilities. The value of workers thus rises on the internal and external labor market. Given that companies regularly monitor how their value changes on the share market, why not monitor human capital in much the same way? Happy is the company that can say when trying to recruit staff, “All we can promise are opportunities which you can use to increase your value on the labor market.” It is not enough, however, just to say this: companies need to back up their claims with examples, or perhaps even “witnesses”. Commitment is a balanced psychological contract (unwritten) between the organization and the individual which enables:

> more effective use of potential; > long-term performance.

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Commitment is essential whenever there is a permanent shortage of experts, i.e. people who create high added value.

Is commitment not just another word for loyalty? Commitment is something different. While loyalty accentuates duties, subordination and obedience, commitment is a more voluntary and balanced obligation. Where loyalty is concerned, it is easy for two parallel worlds to emerge in which clear separations exist between the world of behavior and conduct and the world of thinking. Loyalty, expressed by obedience, the fulfillment of duties and the obeying of rules, does not allow for decision-making; it keeps one confined within narrow limits. People are presented with a certain situation and either demonstrate their loyalty or otherwise. By contrast, where commitment is concerned, people must have room to take their own decisions and accept responsibility. The learning organization

The effectiveness of people

Leadership (“soft” factors)

Commitment

Loyalty The effectiveness of procedures Management (“hard” factors)

Creating loyalty is the preferred option when the sophistication of processes is low (for example, routine work) and workers have a lower level of self-motivation (it is not expected of them that they will determine their own tasks). An environment of commitment is essential, however, if our effectiveness depends on people with greater knowledge who have room to make their own decisions. It is these people who Peter Drucker was discussing when he talked of the necessity to treat them like volunteers.

Commitment leads to individual responsibility; loyalty leads to the fulfillment of duties and obligations. Loyalty taken to extremes turns people into obedient machines. It is obvious that organizations that want to succeed in the face of ever greater competition are going to need to instill commitment in

Milgram’s experiments Stanley Milgram from Yale University used an advertisement to hire volunteers to take part in an experiment, ostensibly designed to explore learning and memory. Each volunteer was promised a payment of four dollars. Volunteers were between 20 and 50 years of age and from various occupations. Given the role of “teacher”, volunteers were instructed how to react when a “student” answered incorrectly. They were told to give them an electric shock. The intensity of the shock started at 15 volts and finished at 450 volts. The “teacher” started with the lowest shock intensity, increasing it with each wrong answer. Groups of buttons were labeled with tags, for example “weak shock” (up to 60 volts) or “strong shock” (from 120 V to 180 V) and even “dangerous - severe shock” (360 V–420 V). Altogether, the “teacher” had at his disposal 30 buttons in 8 groups. To give him an idea of what he would be administering, the “teacher” was given a shock of 45 V at the start of the experiment. When the “teacher” showed any inclination to abandon “teaching” by electric shock, the experimenter appealed to him to continue. Such appeals/orders came in four levels of urgency, from the weakest, “please continue”, to the strongest, “you have no other option, you must continue”. The experiment stopped when the “teacher” refused to continue after four appeals. It needs to be said that the “teacher” was perfectly aware of the reactions of the “students” to

44 whom they were administering electric shocks. They heard cries of pain proportionate to the given voltage. Fortunately, these were fake and the “students” were paid actors instructed by members of the experimental team. What was the point of the experiment? What were its results? Milgram’s experiments focused on investigating the influence of authority and the phenomenon of obedience.

františek hroník

managerial integrity

their workers (i.e. to enter into psychological contracts). Loyalty is still enough at some companies, but its effectiveness is dwindling overall. When considering the various merits of production workers (manual workers) and managers, it is impossible to make simple distinctions between them and claim, for example, that one group prefers not to think and simply follow instructions, while the other enjoys taking on responsibility. This proviso is illustrated in changes to the incidence of sick leave after production workers were given greater responsibility. Generally, it is accepted that managers take less sick leave than production workers because of managers’ greater sociocultural maturity. However, at companies where production workers were given greater responsibilities (e.g. they could stop the production line), the rate of sick leave notably decreased.

The results were not very encouraging: 62.5 % of “teachers” gave their students shocks in the highest ranges and the average maximum shock was 368 volts! There was nothing odd or sadistic in the personality of the “teacher”. They themselves thought the situation was regrettable. Nevertheless, the situation made them behave inhumanely, with blind loyalty to authority. When the authority figure was a scientist in a white coat who, when the “teacher” refused to continue giving shocks, opted to take their place, none of the “teachers” protested by, for example, attacking the experimenter or by pulling the plug on the generator, which they did when the authority figure was dressed similarly to themselves. These experiments provided Milgram with a wealth of research material. He even started to introduce obedience indexes for individual countries.

How can a manager improve the level of commitment within the organization?

What does this tell us in relation to managerial practice?

Although I did say that the book would not be about methods, I will nonetheless mention a few. They will be general. The “true”, practical, constituent ones will be easy to infer.

Propaganda speeches will certainly not help. The only way is to provide greater responsibility. In order to develop commitment, certain basic preconditions must be met:

> the market literacy of the worker; > use of the concept of the internal customer; > space to create one’s own tasks; > communication in all directions. The market literacy of our workers lags behind their language or computer literacy. Nonetheless, it is clear that if we do not know that the company primarily needs to make a profit so that it can serve its customers, or if we are ignorant of the value chain and our place within it, or unaware of the contributions of others, it is impossible to instill commitment. It is also essential to follow the needs of the (internal) customer. Employees from whom we expect commitment can only feel such commitment when they have space to make their own decisions and are prepared to use this space.

Methods