… Very interesting Q&A session with Mr.Beer on his High Commitment High Performance concept. A must read article. Mouaz.
“With many companies battered by the economy, commitment from leaders and employees might seem like increasingly precious resources. Yet commitment and performance are essential elements of any successful firm no matter the health of the economy, according to HBS professor Michael Beer. His book High Commitment High Performance: How to Build a Resilient Organization for Sustained Advantage explains why and how to align the two.
“High commitment, high performance (HCHP) companies are firms designed and led by their founders or by transformational CEOs—those who take charge of a company in a crisis—to achieve sustained high commitment from all stakeholders: employees, customers, investors, and community,” says Beer. “These firms stand out by having achieved long periods of excellence.”
HCHP stalwarts include Southwest, Johnson and Johnson, Hewlett Packard for six decades, Nucor Steel, McKinsey, Goldman Sachs and Toyota, says Beer. Yet any company can change for the better, no matter the industry. GE, Becton Dickinson, Campbell Soup, IBM, and ASDA, a U.K. grocery chain, are examples of companies that were transformed by new CEOs taking charge, usually in times of crisis. These CEOs employed change strategies that focused on both commitment and performance. As ASDA’s CEO, Archie Norman, tells it, the new leader has to set a general direction, but must listen and engage people to identify and solve problems. Top-down leadership, he argues, will not work.
“This list is illustrative and by no means inclusive. The majority of companies do not, however, fall into the HCHP camp. Despite many differences in industry, products, and strategy, the companies and their leaders employ common principles and values,” says Beer.
For our email Q&A he discusses what it takes to build a high commitment, high performance company.
Martha Lagace: What differentiates HCHP firms and their leaders?
Michael Beer: The leaders manage with a multiple stakeholder perspective. Contrary to many CEOs, HCHP leaders—with support from their boards—define firm purpose as much more than shareholder value, though they all understand profit as an essential outcome.
HCHP firms are able to show sustained performance because they achieve the following three paradoxical goals:
Performance alignment: Managing with their head, leaders develop an organizational design, business processes, goals, and measures, and capabilities that are aligned with a focused, winning strategy.
Psychological alignment: Managing with their heart, leaders create a firm that provides employees at all levels with a sense of higher purpose, meaning, challenging work, and the capacity to make a difference, something that people desperately need and want but often do not get in organizational life. To accomplish this, HCHP firms establish and institutionalize human resource management policies and practices that look fairly similar.
Capacity for learning and change: By keeping their egos in check, leaders of HCHP firms are able to avoid defensiveness and resulting blindness. HCHP firms institutionalize what I call Learning and Governance Systems, a means for having honest, collective, and public conversations with key people at lower levels about what stands in the way of success.
Why do firms need a learning and governance system? Performance and psychological alignment that works for a period of time—sometimes many years—can create rigidities that require challenges. In the book I discuss what leaders must do, be, and know to lead a collective process of learning, and I provide specifications for a Learning and Governance System that can help leaders avoid destruction, their own or their firm.
These three goals are paradoxical. That is, leaders who focus on one often undermine the others. Consider how hardheaded performance alignment can undermine psychological alignment and commitment if the process is too top-down. Or consider how achieving high levels of dedication to the firm (a strong culture) can easily slip into an attitude that resists change. Only if learning and change become an equally valued outcome can the status quo be challenged.”
… Read the full session here: http://hbswk.hbs.edu/item/6119.html