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The New Rules for Remote Work: Pandemic Edition

30 Mar 2020|by Dina Gerdeman

Welcome to the new world of remote work, where employees struggle to learn the rules, managers are unsure how to help them, and organizations get a glimpse into the future!

With more people working remotely right now, many of us have experienced a videoconference interrupted by barking dogs or hungry kids demanding snacks, punctuated, perhaps, by cabinet doors slamming and ice makers grinding in the background. We all understand, of course—we’re living it, too.

Welcome to the new world of remote work, pandemic style.

Before the coronavirus hit, 5.2 percent of US employees reported telecommuting most of the time, while 43 percent worked from home at least some of the time. Now, with the pandemic shuttering workplaces, that figure has skyrocketed globally.

But remote work during this bizarre time, with so many people scrambling to get their work done while sharing close quarters with shut-in kids, spouses, and pets, is certainly not business as usual, even for work-from home veterans. While some of the typical remote work rules apply, others don’t. Business leaders need a new game plan.

We asked Harvard Business School professors to provide practical advice for managing large-scale, long-term remote work at a time when many employees are not only distracted by the commotion in their homes, but are shaken by the crisis unfolding outside their doors.

“Managers should make the call on high-level priorities, so employees can focus on their best work.”

Here are 10 ways that leaders can support employees who are working remotely during an unprecedented and uncertain time:

1. Communicate clearly and be decisive

Business leaders have already had to make difficult decisions, such as closing offices or eliminating travel, but now they should express in black-and-white terms how employees’ work priorities should change as a result of these business disruptions.

If certain non-essential tasks are too difficult to pull off from home, take them off the table or at least put them on a back burner for now, and let workers know which projects should be prioritized, says HBS Senior Lecturer Julia Austin, who provides leadership coaching to companies.

“While now is a time to foster trust and delegate, you don’t want people debating about whether they should or shouldn’t do a major project. All that time questioning what to do will impact productivity,” Austin says. “Managers should make the call on high-level priorities, so employees can focus on their best work.”

At a time when many business leaders can’t gather their staffs in the same room, they need to “show up” on videoconference or in email to update workers regularly about how their companies are pivoting to weather this crisis and are protecting employees worried about their jobs, says HBS professor Tsedal Neeley, the Naylor Fitzhugh Professor of Business Administration, who has researched how to fix broken global teams.

“They may not be able to completely reassure workers about what will happen tomorrow, but they can provide a glimpse of the big picture from their perspective,” says Neeley, who is writing a case about a leader of a US company whose entire China operation was shut down and has seen no revenue, with thousands of employees home, since November.

2. Lead by example

Managers should model the behavior they want to see in others. If they say employees can leave the office or avoid travel, but the manager keeps popping into the workplace and hitting the road, workers may feel guilty staying home.

“Leaders underestimate how much what they do is mirrored by their employees,” Austin says. “Hypocrisy degrades them. Employees not only want to be told what to do, they want their managers to follow through on everything they’re saying, so they don’t feel pressure to keep up or start questioning their own performance.”

3. Be extra flexible

The beauty of classic remote work is the breathing room for employees to take a walk, throw in a load of laundry, or start dinner, all while getting more work done by avoiding unnecessary office meetings and traffic-snarled commutes.

But right now, with offices, schools, and day cares closed, those time-on-your-side benefits have evaporated for many remote workers who no longer have the house to themselves and are struggling with the tremendous challenge of focusing on work while balancing the demands of family members.

So, this period requires a new frontier of flexibility, the professors say. Managers should ask employees what challenges they face and allow workers the freedom to choose their own best windows of time to get work done, whether at the crack of dawn, late at night, or in two-hour shifts with breaks throughout the day.

“Managers should yield to the expertise and knowledge of their subordinates and let them decide the best times and ways for them to work right now,” Neeley says.

If the team is working on a project that is time-critical, one option is to ask employees about their availability so everyone knows not to expect an immediate response during certain chunks of the day. And, if a manager starts sending out emails on Sunday mornings because that’s her own best time to work, she should make it clear that her subordinates need not reply until Monday.

“Employers should understand the fundamental shift in employees’ lives and recognize that they have to radically alter their work expectations.”

4. Adjust work expectations

With business practices changing as the result of widespread remote work, some workers have too much to do and others have too little, and some may have a tougher time getting work done than others. Whenever possible, managers should trust workers to make decisions about what they can and cannot accomplish, Neeley says.

And based on input from employees, managers may want to evaluate each employee’s workload and ability to handle the work under the current circumstances and shift projects around as needed, Austin says.

In some cases, it might even be appropriate for employers to decrease workloads for now and reevaluate when working hours should return to normal, says Lakshmi Ramarajan, the Anna Spangler Nelson and Thomas C. Nelson Associate Professor of Business Administration.

Her research suggests that employer expectations can create conflicts between employees’ personal and professional identities, decreasing their performance and commitment.

“Employers should understand the fundamental shift in employees’ lives and recognize that they have to radically alter their work expectations until this crisis winds down,” Ramarajan says. “An employee with young kids at home, or someone taking care of elder relatives, or a worker needing to focus on their own physical and mental health as a result of the situation will not be able to do a 40-hour workweek.”

More tips for remote workers

Unsure of your footing when it comes to working at home? Remote work expert Prithwiraj Choudhury answers all your questions.

Readers Ask: I Need Tips for Working at Home

Wikimedia, the nonprofit organization behind Wikipedia, is telling staff and contractors they can work 20 hours per week and still get paid for 40. “Work is not the only thing on people’s minds right now. Their families, their bills, childcare and school closures, the economy … we are all trying to manage a lot,” CEO Katherine Maher wrote. “It is unreasonable and unrealistic to expect someone to be fully present, eight hours a day, when they have a three-year-old with crayons drawing on the wall, or an elderly parent who needs help navigating the stairs.”

On the flip side, some employees are working more than usual now—partly to prove they’re still plugging away when they can’t be seen. “There’s this pressure to say to your supervisor, ‘Yes, I’m here!’ by making yourself super available at all hours,” Austin says.

Managers should discourage workers from being “heroes,” Austin says. “If an employee is cranking at home because he’s good at it, but his colleagues are struggling, don’t start assigning all the work to him,” she says. “Managers should be patient and give people time to catch up, so you’re not adding pressure to anyone’s plate.”

5. Rethink meetings

Managers should understand that some employees can’t do back-to-back phone or online meetings all day long. “People are still spending too much time in meetings, even though our work and lives have changed significantly,” Austin says.

If your office has a meeting-heavy culture normally, consider scaling back the total number and length of meetings, Austin says. Could you reduce a get-together that typically lasted an hour in the office to a 30-minute huddle on Zoom if the meeting leader sticks to a clear agenda?

One of the simplest ways to trim meetings is to move to email, Slack, and other writing-based tools for information-sharing and idea-gathering, and call meetings only for decision-making, says Austin, who has written about how to master team meetings. “Meetings should be reserved for getting things done,” she says.

At the same time, Neeley notes that for some organizations, additional contact with staff and more meeting-based communication may be necessary now, particularly in the early days of adjusting to the remote work world. Research shows that informal conversation benefits remote employees, so she advises managers to devote time during meeting calls to connecting with staff on a personal level, for instance, by asking how everyone is holding up.

“It can be harder to pay attention to a long meeting online versus face-to-face.”

Afterward, managers should articulate key outcomes of the meeting using other media like email. “It can be harder to pay attention to a long meeting online versus face-to-face, so some form of redundant communication would be helpful so things don’t slip through the cracks,” Neeley says.

6. Move to more asynchronous work

Given the disruption to the 9-to-5 workday, employers should decrease “synchronous” work that employees perform simultaneously and increase “asynchronous work” that workers can do on their own time in a Google doc, Slack, or email, says Prithwiraj Choudhury, whose research shows companies often benefit when employees work remotely. Choudhury is the Lumry Family Associate Professor in the Technology and Operations Management Unit.

“The crisis accentuates what remote companies already understand—that work does not need to happen at the same time,” says Choudhury. “People can wake up in different time zones and cities, open documents, and get going.”

Those who are new to remote work also need to change their mindset about how quickly to expect responses and learn to practice patience, he says.

“If you post a message in Slack, trust that people will be responsible and come to it when they can,” he says. “It doesn’t hurt to throw your question in the deep, dark water and wait a few hours. We will all learn that things don’t have to happen right this instant. This is the new norming that needs to happen.”

7. Accept that productivity will probably suffer

Choudhury’s research shows productivity often increases with remote work. But now, with workers who have never operated this way scrambling to get up to speed while dealing with the anxiety of the virus and distractions at home, this period is not the best litmus test for measuring the productivity of remote work, Choudhury says.

In fact, companies may need to face the hard truth that productivity could suffer by at least 10 to 20 percent in the short term, Austin says. “I have a client who hung a sheet in his basement because it was the only way he could hide from his kids. And his kids were still handing him notes under the sheet during our call,” she says. “With that happening everywhere, productivity is bound to suffer.”

Ramarajan says business leaders should send this message: We get it—this isn’t easy. Take care of yourself and your families first. And since employees are concerned about the global health and economic conditions affecting their job security, employers should also reassure them they won’t be penalized if productivity drops, whenever possible. This will generate greater long-term commitment to organizations, she says.

“Great leaders will share their own struggles about adjusting to their partners being on conference calls in the next room,” Austin says. “People often think that everyone else has it figured out except them. They’ll be relieved to know this isn’t easy for anyone.”

8. Focus on outcomes rather than monitoring activities

Supervisors who lack experience managing remote workers might seek to keep close tabs on employees—asking them to keep their webcams on all day or alert managers when they take quick breaks. Or they might send emails at 4:45 p.m. to test whether workers are still online. Neeley says this type of micromanaging, which was found, for example, in a Wall Street Journal editor’s leaked memo, sends a hidden message to workers: We don’t trust you.

“The crisis accentuates what remote companies already understand—that work does not need to happen at the same time.”

“It’s terribly intrusive and tone deaf,” says Neeley. “Managers who don’t see the people they’re managing are struggling. They feel like they’re losing control, and their insecurities are creeping in.” She urges managers to let go of commanding by fear and trust they’ve hired competent people who aren’t slacking off.

One caveat: While most workers thrive with a hands-off approach, Choudhury’s research suggests that junior workers who are new to a company may need additional supervision and guidance while working remotely.

But in general, rather than monitoring every move employees make, companies should establish work goals and measure individual productivity based on output, he says.

“If you’re on a team in a traditional company, one imperfect measure of productivity is showing up to work every day,” Choudhury says. “Now companies don’t see their workers, so the immediate priority should be to make productivity more objective and measurable to the person, so you don’t worry people are free-riding.”

9. Take time to empathize

It’s a terrible, uncertain time, and managers need to acknowledge the obvious. After all, employees are worried not just about keeping their jobs and how their business is faring, but about the welfare of their families and friends, their personal finances, and even the logistics of squeezing in a germ-harrowing run to the grocery store.

Managers might want to give employees space to talk with each other, offer support, and listen.

“Now, more than ever, teams need empathy and to feel like you are all suffering together,” Austin says. “Everyone is dealing with a crisis that is very real. Managers should show their vulnerabilities by saying, ‘We’re all feeling this.’ After 9/11, crying with my coworkers was one of the most transformational moments in my career. Work teams may bond over this current crisis.”

10. Let workers blow off steam

With many employees feeling anxious and isolated, companies could set up attendance-optional social events online—coffee breaks, lunch gatherings, happy hours, cooking and crafting classes, talent shows, and even meet-the-pet sessions.

Knowing that workers are bound to feel some screen fatigue these days, business leaders should encourage self-care by allowing employees to take breaks, naps, and walks between work calls.

“A manager can say, ‘It’s 3 p.m., and it’s been a tough week. Take the rest of the afternoon off and spend time with your loved ones.’ You’d be meeting people where they are by recognizing that everyone is stressed out,” Neeley says.

While this period of remote work isn’t normal, Choudhury says, the silver lining is that many business leaders who have long been resistant to the idea of remote work may open their eyes for the first time to its benefits, including happier workers, less need for office space, and, for some, a possible bump in productivity over the long haul, once the virus settles down.

“Now that you’ve opened the door to adopting a remote work culture, it may be hard to go back,” Austin says. “My prediction is that there will be a higher demand for more remote-friendly software solutions, a lot of empty space in office parks, and more workers looking for remote roles.”


Fintech’s Game-Changing Opportunities for Small Business

In the new book Fintech, Small Business, & the American Dream, Karen Mills describes how technology is opening up new capital for entrepreneurs. Around the corner: The transformative benefits of AI and big data.

Artificial intelligence, machine learning, and big data will transform financial services and small-business lending long before they impact driverless cars, predicts Harvard Business School Senior Fellow Karen G. Mills. “As we speak, large banks and fintech providers are working on solutions that will dramatically change the options for small businesses.”

Her new book, Fintech, Small Business, & the American Dream: How Technology is Transforming Lending and Shaping a New Era of Small Business Opportunity, will be published April 4.

The book explains why small business is key to the United States economy, and how innovation in financial services will reduce the friction and barriers in small-business lending, helping more of them thrive. In our Q&A, Mills, who served as a member of the Obama Cabinet and headed the US Small Business Administration from 2009 to 2013, outlines the challenges and opportunities facing small businesses, the rise of fintech innovation, and the policy implications for regulation.

Martha Lagace: How do you define small business?

Karen Mills: Small businesses are all different, of course. While I define them the same way the US Census does, as any firm with fewer than 500 employees, in my book I focus on three kinds: sole proprietorships, Main Street businesses, and suppliers. All three groups seek financing from loans and have traditionally used banks as their source.

Of the 30 million small businesses, 24 million are sole proprietorships. These are important livelihoods for Americans and the number is growing with the gig economy and the opportunity to work remotely. Then there are about 4 million Main Street businesses: coffee shops, dry cleaners, and car repair operations, for example. Another 1 million are suppliers like small parts makers or B2B service businesses, which is a growing segment.

“Decisions we make over the next several years will influence large parts of our financial services systems.”

Only a relatively tiny number of US small businesses are the high-growth ones funded by venture capital. While these entrepreneurs are critical to innovation and the creation of the next companies like Google, they do not make up a large part of the small businesses community who are seeking loans.

Lagace: How does the US small business landscape look now?

Mills: There are 30 million small businesses and they are absolutely critical to the US economy. Half of the people who work in this country own or work for a small business. So that’s half the jobs. Sometimes small businesses don’t have a seat at the table with policymakers in Washington or in economic models, but they are, in fact, vital to job creation, economic mobility, and the fabric of our communities.

The Bright Future of Small Business in America

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Karen Mills provides an example of the bright future of small businesses from her new book, “Fintech, Small Business, and The American Dream,” with the story of Ron Siegel and his pursuit to start When Pigs Fly, the now popular New England bakery.

Lagace: As you write in the book, the number of small-business starts has been declining. Why?

Mills: This decline in starts is extremely worrisome. We used to average 500,000 to 600,000 small businesses starting every year in the US. That fell abruptly in the Great Recession and has not come back. There are a number of theories about too much regulation, for example, or too much student debt, but it is a problem because small businesses provide a path to the American dream. Traditionally, immigrants have over-indexed in small business starts. That is the story of my family. If we want to have a more equitable economy, if we want America to continue to be the land of opportunity, we need to pay close attention to this trend.

Lagace: What are the sticking points in getting access to capital?

Mills: This book has its origin in the time I spent at the US Small Business Administration beginning in 2009. We were in the midst of a terrible recession. In the first quarter I was in Washington we lost 1.8 million small-business jobs because credit markets froze, causing tremendous difficulty for the small-business owners. I saw how devastating it was when lending froze, and how much of a lifeline it was when we could revitalize the lending marketplace.

When I came to Harvard and began to study small-business lending, it was clear there were structural issues. It was not cost effective to make a small-dollar loan using a traditional relationship manager. We identified a funding gap in the smallest dollar loans—those under $100,000. The smallest businesses who wanted the smallest loans were not being well served, in part because it was hard to know whether they were actually creditworthy.

The advent of technology and the entrance of new fintech entrepreneurs began to change that by improving the speed and ease of the small business customer experience, and making their financial activity more visible to potential lenders.

Lagace: How much do small-business owners want fintech?

Mills: When owners were able to go online, fill out an application in minutes, and get an answer the same day and money in their bank account the next day, they flocked to the new lenders. Some issues arose quickly, though, such as high prices and bad actors charging hidden fees.

The initial innovation that fintechs brought was in the front end of the application process, automating it and making it digital first. Soon, however, big banks woke up and realized they did not have to cede this market to the disruptors. JP Morgan, Bank of America, and Wells Fargo all started working on new solutions. Big tech companies also got involved. Amazon, PayPal, and Square developed lending operations, and American Express and Capital One entered the field. Now there is a wide array of large and small companies investing deeply in tech, all centered around recreating the lending experience for small businesses. This is incredibly exciting.

Lagace: Regulation: What are the hurdles?

Mills: In the book, I have two chapters on regulation. Often people find regulation boring, but we are at a critical juncture. Decisions we make over the next several years will influence large parts of our financial services systems. In the US there are seven agencies overseeing banks and lending, yet issues relevant to small-business lending—such as disclosure rules—have often fallen through the cracks. For example, if you are a consumer and you buy a truck, all costs and financing fees must be clearly disclosed. But if you buy the same truck for your snow removal business, you’re on your own. This must change.

A more complicated set of regulatory issues is looming around big data and artificial intelligence. My book focuses attention and predictions on what the world will look like as big data, AI, and machine learning come into financial services—lending in particular—in full force. This trend will be transformative. With the ability to aggregate and organize data and analyze it rigorously, lenders can have more predictive algorithms about who is creditworthy, and small business owners can have a dashboard that will help them understand and predict their cash needs. These two activities could perhaps improve small business longevity and maybe turn around this worrisome trend in small business starts.

But they also come with a set of questions that demand thoughtful attention. The UK and Europe are ahead of the US, making it clear that customers own their banking data and can designate it to be available to a third party. Open data and open banking are important so that data streams are available to multiple financial institutions and entrepreneurs who could provide new products and services. Borrowers could be smarter about their cash needs and how they access capital.

We have a long way to go in Washington to be fully engaged and intelligent about these issues. Fortunately, small business is one place where there is a lot of bipartisan agreement. I believe we can make progress and give small businesses the results they deserve.

Martha Lagace is writer based in the Boston area..
Image credit: andresr

6 Ways That Emerging Technology Is Disrupting Business Strategy

10 Feb 2020|by Danielle Kost

Even though the internet has been publicly available for almost three decades, executives at just about every company are wrestling with how to use digital technology to advance their business strategy.

We asked professors from Harvard Business School’s Strategy Unit how emerging technologies involving artificial intelligence (AI), data analytics, and the Internet of Things are changing the way business leaders think about strategy. Here’s what they said:

1. Talent and data are more critical than ever


“Traditionally, companies focused on technology they own and have exclusive rights to use as a critical driver of competitive advantage. However, increasingly cutting-edge technology is developed as a shared resource where the core technology is freely available to anyone who wants to use it and it is frequently released as open source software.

Therefore, instead of the technology itself, companies are considering their user data and their tech employees as the primary drivers of competitive advantage.”

Frank Nagle (@frank_nagle), an assistant professor who is also affiliated with the HBS Digital Initiative, the Managing the Future of Work Project, and the Laboratory for Innovation Science.

2. Technology is propelling business transformation


“While some firms think about technology merely as a different type of capital investment that does not impact their way of doing things, others are adopting new technologies as they make significant changes to the customers they serve, the skills they employ, and their organizational structures. The latter approach involves higher costs and time horizons, but most likely also much higher returns.”

Raffaella Sadun (@raffasadun), a professor of business administration and a faculty research fellow at the National Bureau of Economic Research.

3. Algorithms are changing the pricing game


“Firms are increasingly using pricing algorithms to set prices, especially in online markets. Pricing algorithms can enable better-targeted prices, but they also can fundamentally alter how a firm competes.

A firm that adopts a pricing algorithm can change the nature of price competition in its market and change the focal set of rivals. In addition, adopting a pricing algorithm may change the direction of a firm, requiring additional investments in IT, modified production decisions, and different personnel, among other changes.”

Alexander J. MacKay, an assistant professor of business administration who studies the economics of competition.

4. Platforms are upending traditional business models


“Emerging technologies of all types and forms are helping companies exploit new business models. Classic competitive strategy (as its name suggests) has focused more on value capture and competition within existing business models, and yet the most valuable companies in the US today simply did not exist 30 years ago. The technology they exploit creates enormous value for customers through the novelty of the ‘job to be done’ and by monetizing their offerings in very different ways.

The fact that many of these digital firms are based on a ‘platform’ business model—a term that only applied to railroads a few decades ago—only goes to show how far the new technologies have transformed the strategy landscape.”

David J. Collis, adjunct professor and author of International Strategy: Context, Concepts and Implications.

5. Companies can test everything


“Firms can now rapidly and cheaply experiment with crucial competitive decisions like pricing, product positioning, and which markets to serve. Historically, these decisions relied on master plans and involved time horizons measured in decades. Now, online platforms, algorithms, and ubiquitous data allow firms to test these decisions quickly, sometimes in a matter of months or weeks.

Recent work (pdf) by myself and colleagues at Duke University’s Fuqua School of Business suggests these ‘experimental strategies’ improve performance in new ventures, but questions, such as whether experiments bias firms toward easy-to-test and measure ideas and markets, remain.”

Rembrand M. Koning (@orgRem), an assistant professor of business administration who studies experimentation, A/B testing, and agile strategies.

6. Cloud computing is lowering barriers to entry


“Competition will intensify in many digitally enabled industries as the cloud makes it ever easier for competitors to enter a market, which we’ve seen with Disney and HBO streaming to compete with Netflix. The major cloud providers will themselves inevitably compete with and threaten their own customers and partners as they expand their offerings.

As companies incur increasingly massive cloud usage costs that threaten their own profitability, they should make sure they do not get locked in with one cloud provider. Using multiple cloud providers ensures that they can always switch to the lowest cost option.”

Andy Wu (@AndyWuAndyWu), an assistant professor who studies how technology entrepreneurs use resources to expand their businesses.

How to Turn Down the Boil on Group Conflict

12 Dec 2019|by Michael Blanding

Intergroup conflict can grind office productivity to a halt. Jeffrey Lees discusses how understanding psychological stereotypes can help divided parties compromise.

Even as polarized political discussion appears to have frozen the possibility of compromise, new research suggests that divided sides can come together on many issues to make decisions.

“Our research finds that inaccurate beliefs really drive behavior and contribute to intergroup conflict,” says Jeffrey Lees, a doctoral candidate in Organizational Behavior and Psychology at Harvard Business School.

In actuality, most people have a wildly inflated sense of just how negative the other side feels, according to a new paper that Lees co-wrote with Harvard University Associate Professor of Psychology Mina Cikara. “If you forecast that no matter what you propose, the other side will hate it, then you are going to say compromise is a waste of time,” Lees says.

“People not only have stereotypes of what other people are like, they also have stereotypes of what other people believe.”

The paper, Inaccurate Group Meta-Perceptions Drive Negative Out-Group Attributions in Competitive Contexts, was published in November 2019 in the journal Nature Human Behavior.

We want to compromise

In a series of experiments, Lees and Cikara found people are much more willing to compromise, but resist trying because they think those on the other side—and even those within their own group—will resist going along. But they also unearthed good news on how mistrust can be overcome on many issues.

Lees first started considering these dynamics in a business context. “I was thinking about how people inside organizations predict how people outside of the organization perceive it, and how they might get that judgment wrong,” Lees says. “It didn’t take me long to realize how that sort of judgment applies in other contexts.”

He teamed up with Cikara, whose lab has looked at how people’s perceptions of others changed based on whether they think of them as individuals or groups. “How we attribute motives to other people becomes distorted when we stop thinking of them as individuals and instead move to a framework of ‘us versus them,’” Cikara says.

In a political context, that can quickly lead to conflict.

“People not only have stereotypes of what other people are like, they also have stereotypes of what other people believe,” Cikara says. “‘They hate us for our freedom,’ or ‘they think we’re liberal snowflakes,’ or ‘they’re doing that to be obstructive,’ or ‘they want to ruin our American way of life.’ But when you actually talk to people about their opinions, almost nobody actually talks like that.”

Lees’ and Cikara’s experiments found most people are much less negative than the stereotypes we harbor about the other group. For each experiment, the researchers presented real-world scenarios that advantaged one side or the other, and then asked participants to predict how negatively the other side would react.

For example, one scenario presented to participants who identified as Democrat, explained that Democrats in a state legislature were considering a change to committees that draw voting lines. While currently, committee members were appointed by the governor, a Republican, the new proposal would allow equal representation by both parties.

They then asked participants to predict on a 100-point scale how much Republicans would dislike or oppose the measure or consider it politically unacceptable. Responses averaged in the 80s, with the largest clump at 100.

As negative as possible

“The forecasts were pretty much as negative as possible,” Lees says. In reality, however, the real responses were closer to 50—showing that participants overrated how badly the other side would feel.

Lees and Cikara found similar results for other scenarios, involving changes to selection of judges, campaign financing, and renaming of a state highway. (The researchers purposefully stayed away from “hot button” issues such as gun control and abortion, which might spur too much passion.)

The results were consistent for both Democrats and Republicans, or even if they just presented an anonymous “Party A” and “Party B.”

“They are totally insensitive to the scope or impact of the issue,” Cikara says. “They just think the other side is going to be upset about anything.”

Even more interesting, people made the same forecasts about others in their own group, believing their fellow Democrats or fellow Republicans were angrier about a measure, even when they themselves were only mildly opposed.

Having such polarized views of both political parties naturally leads to less willingness to negotiate and compromise, Lees says.

“If you are a legislator, you are thinking no one across the aisle or in my own tribe will support compromise, but that’s in fact wrong. Both sides might be okay with compromise, but no one’s willing to propose it because of inaccurate forecasts.”

Overcoming bias to reach cooperation

The news from their experiments wasn’t all bad. When the researchers flipped the script to create scenarios that were cooperative, study participants were much more accurate in their predictions. For example, in the voting districts scenario, the researchers told participants that it was Democrats who were proposing the change to make the commission fairer, even though a Democrat was currently in the governor’s office and stood to lose advantage through the change.

In that case, Democrats and Republicans alike accurately predicted how both sides would feel.

“Suddenly, people’s forecasts become accurate, which is quite an optimistic finding for cooperation,” Lees says. “If you can actually engender cooperation, people are much more likely to have accurate perceptions that might drive reconciliatory behavior.”

In a final experiment, Lees and Cikara showed that people could change their perceptions when confronted with new information. After making their own predictions about the negativity of the other side, participants were shown their true level of opposition—on average, much lower than they’d assumed. Afterwards, people decreased the degree to which they thought the other side was engaging in purposeful obstructionism.

“How we attribute motives to other people becomes distorted when we stop thinking of them as individuals and instead move to a framework of ‘us versus them.’”

“There’s a lot written about how people are totally insensitive to the truth when told that their beliefs are wrong,” Lees says. “This suggests that’s not the case. People are willing to update their beliefs when they are simply told they are inaccurate.”

Better business outcomes

This finding, which indicates the potential for creating cooperation, carries implications for business as well.

“In the context of teams or negotiations, adopting a competitive mindset can lead to undue pessimism about how others feel,” Lees says. “These inaccurate beliefs can lead to missed business opportunities. But if those contexts are reframed as cooperative, accurately forecasting how someone across the negotiation table might respond to a particular proposal becomes easier.”

That’s good news in a society that often seems to be grappling with intractable partisanship on every issue. While some issues may still present a gulf too wide to bridge, the study shows that there is at least some room for compromise and mutual understanding between the parties, if they can just start talking to each other.

“When you’re not talking about hot-button issues, you shouldn’t be afraid to broach the topic with people who have a different position than you,” Cikara says, “because it turns out you most likely have an inaccurate perception about what they think—and they have the same of you. All it takes is one person to break the cycle.”

About the Author

Michael Blanding is a writer based in the Boston area.

Establishing and Sustaining a High Performance Culture: Article #2, The Mechanics of How High Performance Cultures Work

In our last article, Establishing and Sustaining a High Performance Culture, we defined what a high performance culture is and described its four key organizational functions. This article is intended to be more pragmatic in that it will outline the mechanics of cultivating a winning culture.

Before we get into the mechanics, lets talk about the real benefits senior leaders realize by focusing on culture. We will look at these benefits through the lens of a real world example – ANZ Bank. The Australia and New Zealand Banking Group Limited, commonly called ANZ, is the third largest bank by market capitalization in Australia and also the largest bank in New Zealand. In 2008, for the second year in a row, ANZ was named the most sustainable bank globally by the Dow Jones Sustainability Index. They attribute their success in the last decade to their focus on culture. In 2003, the bank implemented an initiative they described as a “unique plan of eschewing traditional growth strategies and recasting the culture of the bank to lift efficiency and earnings.” Their results were significant:

  • In two years, the share of employees having the sense that ANZ “lived its values” went from 20 to 80 percent
  • The share seeing “productivity in meetings” went from 61 to 91 percent
  • Revenue per employee increased 89 percent
  • The bank overtook its peers in total returns to shareholders and customer satisfaction

Ten years later, ANZ has sustained its results. Its profit after tax has grown at a cumulative average growth rate of 15 percent, putting it well ahead of its industry. It announced a statutory profit after tax for the half year ended 31 March 2018 of $3.32 billion up 14% and a cash profit on a continuing basis of $3.49 billion up 4% on the prior comparable period.

ANZ Chief Executive Officer Shayne Elliott attributes most, if not all if their success to its corporate culture. In their half year results of 2018 he reported, “We are now benefiting from a more focused organization with sector-leading capital and improving returns. The progress of our multi-year transformation demonstrates we have the right team in place to manage difficult conditions and deliver for our customers and our shareholders.”

Organizational Culture and Leadership

Culture and Leadership

The model illustrated above is the traditional way of viewing how organizational cultures influence the day-to-day environment in which managers and senior leaders operate. It depicts how the collective values, beliefs, norms and customs of the organization determine how decisions are made. Decisions lead to actions. Actions lead to results. The results reinforce the values, beliefs, norms and customs of the culture. In this article, I am going to propose a counter argument regarding organizational cultures that will be a departure from this model. Not only will it challenge the efficacy of the model depicted above, but it may also challenge any predisposition about business cultures you have been educated to adopt. However…after considering its potential value, you will find the proposition at least interesting enough to ponder or test.

We all know how it goes…at the beginning of the fiscal year, senior leaders convene off-site meetings. Along with producing a corporate strategy and a compliment of initiatives, senior leaders often create a set of corporate beliefs and values. They invest a significant amount of thought and time to define and communicate the meaning of these value statements. The hope is that the values will become a code of conduct by which the workforce can operate whenever they are faced with a unique circumstance or an absence of a defined policy. If the workforce operates by the values, they can consider their conduct to be in the company’s interest thereby making them good corporate citizens. This, my friends and colleagues, is a fallacy! Moreover….the posters, speeches and business workshops built around this model not only creates an illusion of corporate culture, but also explains why the expression, “Culture eats strategy for lunch,” is valid.

Organizational Culture: Which comes first the chicken or the egg?

In reality organizational culture resides in how leaders and managers make decisions and take actions. Whether their decision models are used to address corporate politics, problem-solving or improving performance; organizational culture resides in the nature of the decisions leadership makes and actions they take. For example, if leadership values a culture of collaboration but their decisions are made 1. without seeking the pooled knowledge and creativity of a team, or 2. by kicking them upstairs to be made by a select group of senior leaders, then consensus and collaboration are killed in their infancy. If, on the other hand, the senior leaders value managing-by-fact and they use a series of metrics and scorecards to analyze shifts, trends and changes in key performance indicators, then a culture of data-based decision making can thrive.

In conclusion: proposed beliefs, values, norms and customs don’t feed decision and actions. Quite the contrary. The way we make decisions, the decisions we make, the actions we take and the results we achieve, produce and sustain our business cultures.

When TPMG first began training and coaching senior leaders on high performance cultures ten years ago, this theory was met with some skepticism. But….through exhaustive experimentation and analysis, we have found the theory to hold true. We welcome any and all comments.

Whats Next?

Next in this series is The Role of Senior Leadership in Establishing a High Performance Culture.

If you would like the series delivered directly to you, feel free to contact us by clicking here!

Gerald Taylor is the Managing Director of TPMG’s Strategy and Operations Advisory Practice. His expertise includes coaching and advising senior leaders, strategy and performance improvement.

Establishing and Sustaining a High Performance Culture

By Gerald Taylor, Managing Director TPMG

We have heard many definitions for corporate culture. Some academics take an anthropological perspective defining corporate culture as a system of company values, beliefs, norms and customs. Anthropologists believe it is culture that shapes the identity of society. They conclude culture determines how members of the society dress, what they eat, how they worship and overall how they govern themselves. By the same token, a business culture shapes the identity of a corporation. It determines how company employees work, how they set priorities and accomplish goals. In effect, corporate culture is the day to day climate that absolutely plays the dominant role in determining the success of the firm. But what is a high performance culture?

At TPMG Consulting we define a high performance culture quite simply as:

The collective and consistent individual decisions and organizational practices that systematically pursue and obtain higher levels of individual and overall productivity. A high performance culture is the collection of decisions made and actions taken which deliver improvements in results and value. Based on research from TPMG analytics, companies with high performing cultures possess an intense, almost religious focus on four key organizational functions:

  1. Service: there is a fanatical commitment to meeting the needs, attitudes and perceptions of customers.
  2. Workforce Engagement: the terms and conditions upon which people and functions relate are very well defined and integrated.
  3. Performance Analysis: leaders review, analyze, share and improve performance using data and analytics.
  4. Leadership: management creates and maintains formalized methods and practices that promote and reinforce measurable improvement.

Like a genome, high performance cultures can be both dominant and recessive. This means high performance cultures literally exist on a continuum within organizations.


Why does a High Performance Culture Matter?

Before getting into the mechanics of cultivating a winning culture, it is important for all senior leaders to first understand the benefits of a High Performance Culture.

A recent Gallup study uncovered several insights. They concluded high performance cultures inspire high commitment from employees. Their study revealed that companies with a favorable culture attracted and retained talented employees at a measurably higher rate and their employees were more easily inspired to consistently deliver on their organization’s value proposition.  Favorable cultures improve performance. Among US healthcare systems, when 8 in 10 of their employees feel connected to their organization’s mission and purpose. They realize a 41% reduction in absenteeism, a 50% drop in patient safety incidents and a 33% improvement in quality. According to a McKinsey & Company study (2013), a favorable culture is a key predictor of revenue, profits, costs and quality of customer service. The bottom line is……employees and teams who most align with their organization’s culture consistently perform higher on internal performance metrics than those who least align.

The Leadership Challenge: Culture Eats Strategy for Lunch!

We all know how it goes…. At the beginning of the fiscal year, senior leaders convene off-site meetings. The goal is to set the stage so the accomplishments for the coming year will out perform prior year’s results. They reflect on organizational performance and most always believe they can achieve more.

For the most part leaders know their business. The know their competition and are experienced enough at formulating winning strategies. Every year they go big and expect things will be different……but the results usually end up falling short of expectation. What continually frustrates their success is their company culture. No matter how much they plan, implement policies, or how many consultants they engage…..their day-to-day climate limits their potential. The one true lesson in both business and government is – culture eats strategy for lunch!  This subject is what the coming series of articles is all about: How to Establish and Sustain a High Performance Culture. 

In this series, we will provide real world examples of why high performance cultures matter. We will break down the organizational climate and discuss the mechanics of how cultures work and share proven practices we have applied over the past 15 years.

If you would like the series delivered directly to you, feel free to contact us directly by clicking here!

Gerald Taylor is the Managing Director of TPMG’s Strategy and Operations Advisory Practice. His expertise includes coaching and advising senior leaders, strategy and performance improvement.

Jack Welch on Hiring Talented People

Jack Welch on “Strategy, Execution and People”

Change Management and the Workforce

Gerald Taylor – Managing Director

TPMG Consulting

The purpose of this article is to provide insight relating to the topic of organizational change. It is our hope that it provides you a perspective you can use to stimulate creative thought and support your change management activities.

I have drafted 6 important questions that relate to change management. This article provides concise answers based on sound primary and secondary research. The questions and responses are as follows:

  1. What is change in the business context?
  2. What is the most important thing to know about change and employees?
  3. Why do employees fear or resist change?
  4. How does a change agent overcome resistance to change?
  5. Why do employees remain with companies?
  6. What can companies do today to satisfy and retain quality employees?

The body of this article will provide analysis and conclusions from prevailing management literature and from TPMG’s Research Group. Should you have any additional questions, feel free to contact me directly at


What is change in the business context? A business context is the strategy, structure, procedures, technology, systems, and objectives employees function within.  Organizational change involves altering or transforming the business context or significant portions of the business context from its present state to some future condition. Appropriate drivers of change to the business context include:

  • Changes in Strategy: Shifts in direction and resources toward new business or market opportunities.
  • Changes in Technology: Advances in internal operations for the sole purpose of improving cost, quality or operational productivity.
  • Changes in Structure: Improvements in the hierarchy to improve the speed, quality and efficacy of decisions and actions.
  • Changes in Culture: Counter measures undertaken to rid negative attitudes or behaviors that serve no useful purpose.

What ever the change, it can be likened to a rock being tossed into still waters. Change can cause ripple effects throughout an organization, often with unintended consequences.


What is the most important thing to know about change and employees?  Change to the business context is disruptive and produces stress for employees. The introduction of new ways of performing a task can produce intellectual and emotional strain. New technology or procedures establish new learning curves for employees.  Changes to the business context can also introduce new relationships into the work environment. When this occurs, storming and interpersonal conflicts between employees create sources of stress.  Regardless of the reasons or the intensity of a change, the impact of the change causes stress. . A common reaction to organizational change is resistance from those whose jobs may be directly impacted.   Management must be certain that the benefits of the change are worth the cost of the tension placed on the employee.


Why do employees fear or resist change? Employees fear and resist change simply because they will be asked to do something new. This is even more true for older, more experienced employees.  These veterans of the workforce can resist change because they are more intellectually and emotionally invested in the current context to accommodate a change. Younger employees, however, may be more comfortable doing their job with a new twist.

Change for middle managers and supervisors can cause a loss of power or diminished influence in their sphere of responsibility – so they will resist. Additional reasons for fear and resistance to change are illustrated in the force field analysis in figure 1.0.

Figure 1.0 Change management


How does a change agent overcome resistance to change?  The first step in successfully implementing a change to the business context is communicating a solid and compelling business reason for the change.   Management must be certain that the need to change is greater than the need to stay the same.  Employees need to know that the change is either provoked by a threat to the business or by an added value that will simplify their daily efforts.  If employees perceive a change will be worth the effort, they can be persuaded to “do the right thing.”  Before introducing a change to the business context, management must be prepared to ask and respond to tough questions.  They must ask themselves:

  • What is the reason for the current policy, procedure or system we want to change?
  • What will happen if the current policy, procedure or system is changed or eliminated?
  • How do we minimize the risk of doing away with the old and installing the new one?
  • What is the link between what we are proposing and the company’s strategy?
  • How can I address the concerns of those attached to the old way of doing things?

It is imperative that management not only have a solid business reason, but also a solid moral argument for change.  For example, a utility company often uses their field service technicians, who typically perform sophisticated maintenance work, to perform low skilled tasks because it provides the service techs with a break from the hard work of the day.  The company’s senior management team decided to create a lower skilled, lower paid job category to specialize in performing the lower skilled duties.  This change was preceded by a pilot study which found matching higher skilled work with higher skilled employees and lower skilled work with lower skilled employees increased the overall service order productivity 60% while reducing operational cost by more than 35%.  Senior management’s business reason was solid.  Their moral argument was articulated in terms of the employees’ long term financial needs.  Senior management argued that this improvement in productivity would save the company more than 1 million dollars a year.  These savings, over time, will increase the value of the company and thus each employees’ investment in company stock.  They conveyed that the long term value of the company and financial security of employees was greater than the need for some employees need to “take a break” during the day.

Additional prescriptions for overcoming resistance to change include:

  1. Demonstrate Leadership:  Employees respect strong, smart and effective leadership.   The leaders should create, in the mind of the affected group, a tangible picture of the future state of the business context and the reasons why.
  2. Create options for those adversely affected by the change: A workforce trusts a management team who looks out for their employees.  If management takes care of their people, their people will take care of them.
  3. Over Communicate:  Employees respond effectively when they know what, why and how they will participate in the change. Communicate, in as many modes as possible, the true need and the logic behind the change.  Over communicate!
  4. Move slow, as much as time permits:  Employees who do not feel out of balance when change comes will be better positioned to help facilitate the change.

Think about when cities construct stop lights in new intersections.  They first erect the post.  Four weeks later they connect the stop lights (non working).  Weeks later they turn on the lights, but blinking, to serve as caution lights.  Then weeks later, they make the stop lights functional.

  1. Provide Resources:  Ample resources are of particular importance if the change involves moving to a more sophisticated system.  Management can head off much resistance by committing enough resources to train people to use new technology.
  2. Manage the change:  Employees trust and respect a management team that can create and professionally execute a change plan.

A final strategy for implementing change, we recommend only as a last resort.  Mandate compliance to the change.  Such a coercive action often happens when change must come quickly or when change is undesirable to the affected group.  Pressing or forcing change can increase resistance to change, making the manager or change agent’s job more difficult.  Managers and change agents sometimes have no choice but to force change onto an affected group.


Why do employees remain with companies?  Retaining a hardworking, motivated workforce is not a difficult matter.  As a manager, one merely needs to understand the sources of employee dissatisfaction, the sources of satisfaction and respond accordingly.

To that end, a company can be guided by theory.  In the 1950’s, Frederick Herzberg proposed the most relevant theory of employee motivation – Herzberg’s Two Factor Theory of Motivation.  His theory implied that a satisfied employee is motivated from within to work harder and a dissatisfied employee is not self-motivated4.  Herzberg’s research uncovered two classes of factors associated motivation – employee satisfaction and dissatisfaction.  These factors are outlined in table 1.0.

Table 1.0 Herzberg’s Two Factor Theory of Motivation


Factors Mentioned Most Often by Dissatisfied Employees


Factors Mentioned Most Often by Satisfied Employees

1.   Company policy and administration 1.  Achievement
2.   Supervision 2.  Recognition
3.   Relationship with supervisor 3.  Work itself
4.   Work Conditions 4.  Responsibility
5.   Salary 5.  Advancement
6.   Relationship with peers 6.  Growth
7.   Personal life
8.   Relationship with subordinates
9.   Status
10. Security

Herzberg developed a list of dissatisfiers by asking a sample of 200 employees to describe job situations in which made them feel exceptionally bad.  Herzberg’s research revealed dissatisfaction tended to be associated with complaints about the job context.  He then asked the same sample of 200 employees to describe job situations in which made them feel exceptionally good about their jobs.  His survey concluded that satisfaction tended to be focused on the nature of the job itself.  The responders articulated that the opportunity to experience achievement, receive recognition, work on an interesting job, take responsibility and experience advancement and growth was at the top of their list.

What Herzberg concluded in the 1950s still has relevance today.  By insisting that satisfaction is not the opposite of dissatisfaction, he encouraged managers to think carefully about what actually motivates employees.  The implications are simple to understand.  By providing competitive pay, good working conditions, and the like, a company can, at best, eliminate dissatisfaction.  A workforce requires interesting, meaningful, and satisfying work to be motivated.

Unfortunately, many corporations and executives see things differently.  A job factor survey from 1993 asked a sample of employees to rank certain facets of their job in order of importance.  The survey then asks the same of a sample of managers and executives.  The results are listed in table 2.0.

Table 2.0 Contrast of Employee and Manager Ranking of Work Factors

Factor Employee Rating Manager Rating
Interesting Work









Job Security



Good Pay






Good Working Conditions



Loyalty to Employees



Help with Personal Problems



Tactful Discipline



This study published the Advanced Management Journal found if managers hope to be successful at motivating their employees, they must align their actions closer to those factors that their employees think are important.

What can companies do today to satisfy and retain quality employees?  One of the most altering decisions an employee can make is to change companies.  If companies lose good employees, 9 times out of 10, they deserve it.

Companies should first do their best to eliminate all sources of dissatisfaction:

  1. Employees will stay with a leadership team they can trust.  Supervise employees fairly and nurture good relations between managers and their employees.
  2. Employees will stay with a leadership team they respect.  Manage and administer the company’s policies, procedures and resources with professionalism.
  3. Most employees will put forth a good faith effort if they are being paid fairly for the value of their effort. Pay competitive wages and compensation.
  4. Provide life time employment.  If employees don’t have to worry about their future with the company, they can concentrate on becoming more competent and productive.
  5. Provide an environment that is safe and an environment that has the resources for employees to get their job done well.

These steps should go a long way toward eliminating dissatisfaction.

In order to encourage job satisfaction and employee retention, companies should do their best to provide the following:

  1. Provide work that has identity in the workplace and significance to the value chain.  Jobs which directly relate to generating profits, (i.e., customer service, field services, billing, collections) are all value creation jobs with identity and significance to the financial health of the company.
  2. Seek advice and council from employees regarding changes.  Management may learn hidden details of the business, and employees feel important and appreciated for their input.
  3. Provide employees with feedback about their performance.  Employees want to know that they are making a contribution to the success of the business.

Provide training and employee development.  If employees believe a company is interested in their future success they will be interested in the future success of the company.


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