Tag Archives: Social Capital

Trust in the workplace (part 3): Leadership Development

This post builds on the groundwork set up in my earlier post on “Connections: How Social Capital unlocks Human Capital“.  It completes the trio of practices that are greatly strengthened by adopting a wider-angle view than is common for many HR practitioners.

Leadership is relational and complex

Building leaders is certainly not a quick, efficient process.  If it was, we would not have such a dire shortage of these valuable creatures!  But why is so difficult to do?  Firstly, let us briefly remind ourselves what leadership is. The groundbreaking work of James MacGregor Burns shoots up an illuminating flare (from p.20 in “Leadership”):

…leadership occurs when one or more persons engage with others in such a way that leaders and followers raise one another to higher levels of motivation and morality. Their purposes, which might have started out as separate but related, as in the case of transactional leadership, become fused. Power bases are linked not as counterweights but as mutual support for common purpose. . . . The relationship can be moralistic, of course. But transforming leadership ultimately becomes moral in that it raises the level of human conduct and ethical aspiration of both leader and led, and thus it has transforming effect on both.

Leadership in of it itself is profoundly relational and collective, as Burns (1978) has persuasively pointed out.  This rendering of leadership and followership has provoked me to look at the phrase “field of leadership” with new eyes!

Force fields interacting

It is conceivable that leadership potential is widely present, but deeply buried.  To bring it forth and evoke this gift in others is likely to require significant time and persistent, earnest effort by all involved.

That is the subject we will now fleetingly visit.  This post will take a modest shot at exploring social capital’s catalytic role in the deliberate effort of developing leaders. Even more specifically, we will do a whistle-top tour of the world’s best known corporate university to highlight its key success factors.

Crotonville: The corporate university case-study

General Electric for decades has been the poster child for business schools.  Over the twelve years though GE has faced truly daunting business challenges – the company’s current US$240 billion market capitalisation is around half of what it was at its height. Nonetheless, an indisputable GE core competency is still the way the organisation identifies and develops leaders, as the large number of ex-GE corporate high-flyers, who subsequently became CEOs elsewhere, proves.

GE

GE spends about $1 billion a year on the corporate training of its 300 000+ strong workforce. To put that sum in context: that is more than the South African government spends on training its own one million-plus workforce.

Much of the credit for this enviable “deep bench” of leadership talent belongs to GE’s corporate learning programmes, conducted at their venerable learning facility in Crotonville, New York.  It is the oldest corporate university in the United States, having been started over 50 years ago.  It is also a residential facility with almost 200 executive bedrooms. Intense, face-to-face learner contact certainly seems to be part of the GE success formula (the early Crotonville courses were residential and up to three months in length!)

The previous CEO, Jack Welch truly put Crotonville on the map. “Jack put his time and energy into developing people,” according to Noel Tichy, the management professor who helped Welch revitalise Crotonville.  But the new CEO, Jeff Immelt has definitely not allowed Crotonville to go to seed.

GE’s leadership effort still seek to inspire, connect and develop its current and future leaders.  It does this through the “Crotonville experience” which also gives GE’s training investment a large multiplier effect.  The attendees are directed to go back to their workplaces and do much the same thing – inspire, connect, and develop the people who work for them and who may not be part of Crotonville’s 10 000 annual attendees.

The magnitude of this investment by participants and company is impressive.  What is remarkable is the time-related aspect – both the duration of the courses and the period over which they occur.  It is evident that mutual commitment is essential.  Companies with rapid turnover of talented staff would be insane to make this kind of investment! And they don’t.

By regularly bringing its leaders together to learn and grow, GE can steadily protect and build the social capital of this group. It is a virtuous cycle not easily copied by imitators.

Remarkably, the GE leadership team innately believes that the learning, the effort, the time, the money and the resources GE puts into learning have an inherent payback. Their learning & development teams focus on crafting and fine-tuning curricula and content on how to inspire, connect, and develop leaders instead of figuring out “Did GE make a specific financial ROI from Crotonville?”

Crotonville

Leadership commitment to and participation in leadership development is seen as the critical success factor.  Nigel Paine recounted some Crotonville folklore:

Legend has it that Welch only missed speaking at one top executive programme and that was because he was in hospital having a heart bypass operation. Jack did more than speak at courses, he debated with his top staff for hours on end and made sure that being at Crotonville was neither optional nor an easy ride.  He, apparently, sent hand written cards to those selected for executive programmes.  The card welcomed the individual, suggested that Jack was looking forward to meeting him or her and asked, should the person be unable to attend, to let him personally know, the reason for their absence.  Funnily enough attendance was always 100%!

Jack Welch grasped that building leadership depth requires huge collective effort, with him being the “chief cheerleader”.  Even the new CEO, Jeff Immelt indicates himself as the head of the Crotonville effort.  This is too important to ‘outsource’ to HRD.  It takes leaders to grow other leaders.  It is also a long-term socialisation process (GE top executives spend an average of 12 months at training & professional development events during an average 15 year tenure!).

Not surprisingly therefore, many global organisations have given up on the idea of corporate universities.  Virtual is in.  e-Learning is the future.  But these penny-wise organisations will not reap a great harvest.  They will simply have to (use supply-chain principles to) poach other organisations’ leaders.

Compare this to GE where 90% of their top 600 leaders are promoted from within!

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Trust in the workplace (Part 2): Knowledge management

A rapid review of knowledge management (KM) reminds us that knowledge and knowing are not equivalent.  This tension has been amply explored by a number of diverse thinkers and will be shared in the following paragraphs.

Their subtle, yet profound insights contradict the glossy assurances made by too many IT vendors pushing the “latest pipes-and-pumps” KM wonder; the latters’ sub-text typically is: “Build it and they will come!”

No surprise then that many KM capex (mis)adventures have also disappointed.  It is generally acknowledged that an organisation’s culture largely determines its ability to learn.  So let’s (re)visit this collective phenomenon…

What about the culture!?

“Cookie-cutter” solutions to organisational challenges ignore context. This is why they usually fail.  It is thus critical to know where the people are at in organisations.  The concept of Organisational Culture offers us this understanding.  This culture encompasses the beliefs, attitudes and behaviour of an organisation.  It is all about how things get done around here.

Rob Goffee and Gareth Jones have provided a simple, yet powerful picture to comprehend organisational culture. They employ a matrix with two dimensions:

  • Sociability
  • Solidarity

Sociability is the amount of camaraderie among members of the organisation.  Here members are more like friends than just work colleagues.  They tend to spend much time in face-to-face communication, sharing ideas, and sustain a high level of unspoken mutuality; there are no “strings” attached…

High sociability has many positives like, free sharing of knowledge and high team spirits. It can have disadvantages too, like disagreement or criticism being avoided so as not to upset others.  Under-performance from colleagues is thus often allowed to continue unchallenged.

Solidarity is a measure of the members of an organisation to pursue shared goals, regardless of personal relations.  Even if members don’t know each other, a clear commitment to shared goals will draw them together to act in concert.

High solidarity has many positives like a robust response to external pressures and other organisational crises and very little accommodation of slack performance.  But it also has drawbacks.

These lie mainly in a take-no-prisoners attitude and merciless tussles for resources.

When the above two dimensions are “cross-cut”, a revealing 2×2 is generated of the four faces of culture: Goffee and Jones point out that no particular quadrant is inherently superior; it simply shows how an organisation styles itself to cope with its environment.

But fragmented cultures (even when they are positively manifested) are meagre benchmarks for organisations with more pressing delivery time-frames (a few years instead of some decades).  Knowledge sharing is not a luxury, but a necessity in such modern organisations.

Layering more perspectives onto the Goffee/Jones model

Maish Nichani has done an astute meta-overlay on the Goffee-Jones (G-J) model, with respect to efforts by organisations implementing knowledge management.  He super-imposes several complementary models onto the definitive G-J culture model, by projecting additional views, such as those touching on trust, process and style.

1. Trust and knowledge sharing

Trust is known to be a great enabler of knowledge flows.  In “Trust and knowledge sharing: A critical combination”, two kinds of trust that shape knowledge sharing are posited:

Benevolence-based: belief that an individual will not harm another even when given the opportunity to do so – i.e. not expecting to be given the wrong information.

Competence-based: belief in another to be truly knowledgeable in their subject area – i.e. seeking and trusting only those who are the competent.

2. Organisation work and knowledge sharing

The iconic Xerox researchers, John Seely Brown and Paul Duguid, also pushed for the distinction between process and practice.  They challenge us that “there’s a large gap between what a task looks like in a process manual and what it looks like in reality”.

Practice: what actually takes place on the field. This rich, real-world arena contains a great deal of tacit knowledge.

Process: what can be codified into rules and procedures. This is how the world is supposed to operate.

3. Learning and Knowledge Strategy

These HBR-worthy authors also present two dimensions for managing knowledge based on the work practices of an organisation. They are:

Personalisation: This is a people-to-people approach. Here the focus is to link people with others and to foster networks and community of practices. Great faith is placed on informal knowledge sharing.

Codification: This is a people-to-documents approach. Here the focus is on populating databases with best-practices, case-studies and how-to guides to aid people in their daily work (in extremum = just-in-time performance support). Reusable ’knowledge-objects’ is the mantra.

Which KM approach works best?

Nichani, who overlayed these four models (see the composite graphic below), advises:

multi KM

The best way to use this model is to first take a stance on which quadrant(s) your department or organisation fits into and then work your way through …and then make a case for the strategy for your initiative.

I want to be more direct.  Traditional KM methods are strong on the theme of weaving together codification, process– and expert-centric models.  This is found along the horizontal axis shown in the matrix diagramme above.

Although this may be necessary to achieve KM success, it is not sufficient.  It is essential to also weave in the social dimension (the vertical axis).  This latter requirement is due to at least two major complications in KM:

  1. Sharing is effectively annulled in low-trust environments
  2. The most valuable knowledge is tacit – it cannot be readily codified but can be slowly shared

And there’s the catch-22!  Encouragingly, world-class organisations have long made peace with this inconvenient truth.  And hence willingly made the large investments in fostering the poorly understood, but potentially very valuable, people-to-people mingling process.

They also do not normally equate this particular outlay as building social capital, but this is what they are strongly contributing to.

Trust in the workplace (Part 1): Accountability-based management

Some years ago I had a big aha moment: the realisation that accountability is profoundly relational.  The well-known statement “people take responsibility, but are held accountable” only begins to dis-cover the insights of this deep reality.

Elliott Jaques — whose writings caused that aha for me — spent over 50 years labouring on a systemic design for effective work environments, which he finally called Requisite Organisation (RO).  He was arguably the greatest psychosocial scientist to ever study the world of work.  For all that however, he remains largely unknown, and when known generally misunderstood and vilified.

Jaques’ collaborators continue to produce significant work.  John C. Bryan has written a sublime paper titled “Three-tier Management: A Structure for Trusted Managerial Leadership” based on Jaques’ RO prescriptions.  I will largely base this post on Bryan’s inspiring distillation of RO’s deepest relating and relational principles.

Bryan submits that the relationship between trust, the quality of managerial leadership, and organisation structure is not well understood.  He proposes that trust requires a structure that supports accountable managerial leadership: a three-level unit comprising an employee, the employee’s manager, and the manager’s manager.

Most management systems today are two-level structures (manager and the direct report). This generally leads to deficits compared to what a fully trustworthy system needs, which are:

  • An accountability structure for the quality of the managerial leadership provided
  • Developmental support for employees’ future potential
  • A means of integrating competing priorities

The essential concept of the manager-once-removed (MoR) role and a three-tier management structure provides these necessities in a management system. The two- and three-tier structures are graphically represented below:

Three level unit

The relational principles in the manager-‘managee’ collective are found to requisitely be that:

  • The manager/direct report relationship provides a foundation for trust and operational excellence
  • The manager-once-removed role provides additional functions needed for sustaining trust
  • The manager-once-removed/employee-once-removed relationship provides for integrating competing activities (what the manager wants and her employee needs)

RO prescriptions for managers

The contemporary attack on management (i.e. the call for ‘flat’ organisations) is based on the misconception that managers are in place to communicate and control.  In fact, managers are in place to ensure accountability for creating value.  Managers ought to effectively do the following:

  • Communicate and monitor progress
  • Provide direction, context, resources, and leadership to their direct reports
  • Clarify what is expected of an employee, and why
  • Provide adequate resources to accomplish assigned tasks
  • Give guidance as to whether team members are moving in the right direction at the right tempo

To achieve operational excellence, organisations must gain employees’ trust and commitment.  To merit employees’ trust and commitment, organisations must ensure employees receive competent, effective managerial leadership from an accountable manager.

Since managers control the key variables that determine outputs (resources, priorities, task assignments, etc.), trust and fairness require that they (rather than their direct reports) be held accountable for achieving assigned outputs through efficient use of resources and effective direction and utilisation of their direct reports.

Because managers are accountable for the outputs of their direct reports, a manager’s self-interest is in meeting current demand through maximum use of his/her direct report’s abilities.  Tasking employees away from current work assignments to develop their capabilities for potential future roles, perhaps in different parts of the organisation, is not in the manager’s self-interest. Therefore, all employees require assurance that someone else is accountable (not HR) for providing development opportunities to help them achieve their potential, as well as for ensuring the quality of managerial support they are receiving.

This is the role of the Manage-once-removed.  It cannot be delegated or outsourced to HR!

Why three-tiers are requisite

A two-level management system risks misplaced priorities, amplified discontent and resentment among employees, competing goals becoming conflicts, loss or neglect of future potential, and not having adequate talent-supply ready when needed.  It is also trust destroying.

In a three-tier structure, what is often left to chance in a two-tier structure becomes part of an integrated management system.  This results in:

  • Managers having the structure they require to provide effective and accountable leadership
  • EoRs having the structure they need to receive fair treatment and equal opportunity
  • MoRs having a reliable structure through which to meet current and future demands

Effectiveness, accountability, and trust are largely reliant on organisation structure and policy – this claim is made at the rational, collective level in Alexander’s “set of windows” and hence where I locate accountability-based management.  As Bryan says “…trust means having reasonable confidence in the integrity, reliability, and justice of the management system, as well as in the managers who operate that system.”

This trust-inducing environment does not just happen!  The individual-level analysis occurring in much modern HRM striving, largely misses this with its overly “thin view of mutuality”.

Winston Churchill wisely observed: “We shape our buildings; thereafter they shape us.”

So, by being overly distracted with the particularities of individualism, we would end up blinded to the promise of organisation

Connections: How Social Capital unlocks Human Capital

My essay “Why Human Capital needs Social Capital” examines the critical individual / collective dynamic which is often absent in modern HRM (Human Resource Management).  The business school academics Bolton and Houlihan crisply capture this individual / collective ‘dilemma’ (emphasis added):

[Strategic HRM] particularly downplays the psychological contracts between the organisation and employee, and where these might diverge. By viewing the employee as an individual resource unit to be optimally configured and managed, these practices conceptually divorce employees from their social context – that is, other relations, other shaping forces and other commitments (even within the workplace).  In sum, contemporary HRM practice, and the theory that informs it, is based on a thin view of mutuality.

Jeffrey Alexander’s Integrative model is a useful construct to summarise much of my arguments so far.

Alexander model

His two key dimensions involve the level at which order is created (individual or collective) and the nature of action (instrumental versus normative).  The resulting 2×2 gives four windows on differing types of social analysis.  I propose that most “best practice” HRM effort is concentrated on perceiving through the lower two ‘windows’ which focus on the individual (“hard” HRM = Rational Action and “soft” HRM = Voluntary Agency).

I will briefly – in the next few posts – examine three areas highly relevant to business leaders, but do so through a distinctly collective lens. I have positioned these three topics on the 2×2 to indicate not only the collective nature of these phenomena, but also the differing degrees of “rationality” inherent in them.

Three posts

What these three practices all share (and hence their placement at the collective level) is that they need to be catalysed by the presence of trust.  No trust = no real impact!

But what is this intangible thing called trust?  Here I present just two.

Trust

Trust is also described by Barbara Misztal as having the following three properties.

Trust:

  1. makes social life predictable
  2. creates a sense of community
  3. makes it easier for people to work together

Trust is the cornerstone of social capital.  I will now consider in the following three posts how this usually overlooked “commonwealth” wonderfully unlocks – the typically latent promise in – human capital.

Connections: Why Human Capital needs Social Capital

Social Capital – which requires a broader and longer view – is actually indispensable to prudent “Human Capital” management.

We may as a collective of humans be ready to learn something important and useful… that more is not always better. In fact less, may truly, be more!

I want to offer reflections on two recent books as evidence.  The #1 is from the free markets-side, from a review of The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It:

Unfortunately, most of the players generate little empathy; their wonkish preoccupations seem to allow scant space for community and societal concerns. It doesn’t help, of course, that they have also made pots of money at the expense of the average investor and taxpayer. Sometime in the future, we may look back and marvel at a society that so richly rewarded some of its best minds to labor with such powerful means toward such narrow ends.

Example #2 is from the  well known David (and Wendy) Ulrich and their book, The Why of Work – the people-side. The reviewer offers views like this:

There’s something in the ether as business author after business author seeks to replace investor capitalism and the US business model with something new – or else rescue it through a more benign “enlightened shareholder value” model of corporate governance.

This commentary aims to remove the myopic corporate concern with only economic value to also encompass social and moral obligations.

There is a dire need to include such a sociological perspective in serious HR work.  Human beings must be seen as individuals and ‘collectives’ to fully understand what makes us tick and prosper (in the widest sense of that term).  Viewing employees only as “Human Capital” is shortsighted.

Peter Capelli of the Wharton business school writes books that self-respecting “human capital” leaders would readily buy and read.  His book Talent on Demand is usefully outlined in his own words in a 2008 interview:

Talent management is a simple issue. We’re trying to anticipate what the needs and the demand will be for people, for human capital, into the future, and then set up some sort of plan for meeting it. It is pretty simple. It’s the same problem that you see in lots of different parts of business: What do we think we are going to need? How are we going to go about meeting that?

Capelli’s “simple” views are not seen as problematic by most “human capital” professionals I have met.  These  sentiments could have been related at any HR-related conference I have personally attended and it would not have elicited a lively debate.

But what are the risks of such myopic behaviour by HR and other organisational leaders?

Harvard Business Review made a clarion call for restoring the US’ industrial “commonweal”.  The authors lament the evisceration of America’s manufacturing capabilities and that the US is losing (has lost?) its ability to develop and manufacture high-tech products. In summary:

To address this crisis, government and business must work together to rebuild the country’s industrial commons – the collective R&D, engineering, and manufacturing capabilities that sustain innovation. Both must step up their funding of research and encourage collaborative R&D initiatives to tackle society’s big problems. And companies must overhaul the management practices and governance structures that have caused them to make destructive outsourcing decisions.

It seems the professors at Wharton and Harvard are not in agreement! The former (Capelli) seemingly advocates expediency in stewarding human capital in the face of considerable uncertainties about the future. The latter two scholars remind us how such self-serving behaviours have cost America its leadership position in the realm of industrial prowess. Unfortunately, for the USA, they will probably not be able to reverse the consequences of these previous short-term, enterprise-centric decisions!

My take on this misadventure is that US enterprises were only trying to optimise the human capital side of equation, and also looking inside their own organisations only.  By remaining blind to the social capital side – including what happens outside their walls – they have allowed this precious store of capital to be squandered away (that someone else had helped to build up). Their continued use of the benefits of this “commons” was not budgeted and paid for; economists of course label this “externalising one’s costs”.  In other words, nobody cared about maintaining and stewarding this national asset.

But what is the origin of this “myopia”?

The US psyche greatly values self-reliance.  Others also point to the multi-billion dollar industries that spring up around and sustain a dizzying array of  global celebrities.  This is the land of the rags-to-riches dream!

This profound focus on individual agency can be a problem, however.  By refusing to acknowledge the critical importance of relational “assets”, it effectively ascribes too little value to them.

Social Capital’s pivotal role in creating Human Capital

Stephen M. R. Covey (son of the late icon), wrote a punchy book called The Speed of Trust.  I also bought it and read it and I won’t be tossing it out of my collection.  What I found amazing though is the comments made about the book.  Here is one from a Covey company marketing e-mail I received in 2007:

Covey’s breakthrough insight that trust is a competency is both revolutionary and immediately practical.  CEOs and Chief Learning Officers will embrace The Speed of Trust as an authentic and actionable strategy – a roadmap – for increasing the effectiveness of their organizations and leaders.

Breakthrough…?? Someone seemingly forgot about Fukuyama’s 1995 book, Trust: The Social Virtues and the Creation of Prosperity.  And also it seems they overlooked, Robert Putnam’s classic 1995 essay Bowling Alone: America’s Declining Social Capital which powerfully leverages the concept of social capital, and gives us an enticing glimpse of this most intangible of assets:

For a variety of reasons, life is easier in a community blessed with a substantial stock of social capital. In the first place, networks of civic engagement foster sturdy norms of generalized reciprocity and encourage the emergence of social trust.  Such networks facilitate coordination and communication, amplify reputations, and thus allow dilemmas of collective action to be resolved.

Both of the previous writers however acknowledge the seminal role played by James Coleman.  Although Coleman was not the first to use the term “social capital” he deserves much credit for developing the social capital theoretical framework.  His classic paper is sublimely titled: Social Capital in the Creation of Human Capital.  In it he defines the concept of social capital by contrasting it to its better-known forms:

If physical capital is wholly tangible, being embodied in observable material form, and human capital is less tangible, being embodied in the skills and knowledge acquired by an individual, social capital is less tangible yet, for it exists in the relations among persons.

Putnam’s Bowling Alone unpacks this interactional dynamic further:

When economic and political negotiation is embedded in dense networks of social interaction, incentives for opportunism are reduced. At the same time, networks of civic engagement embody past success at collaboration, which can serve as a cultural template for future collaboration. Finally, dense networks of interaction probably broaden the participants’ sense of self, developing the “I” into the “we,” or (in the language of rational-choice theorists) enhancing the participants’ “taste” for collective benefits.

We all probably agree with the saying “united we stand, divided we fall”.  The wonderful attraction of these social capital writings is that their detailed line of inquiry reveals the mechanics of how this principle works.

That is very valuable indeed.

The answer’s not so much in the boxes, as in the lines! (Part 1)

ImageI’ve remembered recently that I actually penned a couple of articles three years ago that speak directly to this vexing boxes vs. lines conundrum.  At that time I had a noisome bee-in-my-bonnet about Human Capital vs. Social Capital perspectives.

One of the hats I occasionally wear is that of a registered Master HR Practitioner.  Not having being trained as a traditional HR professional though, it had for a long time dismayed me that the “unit of analysis” in HR is typically the individual (hence psychology is widely studied in HR courses, but not sociology).

I then wrote these two articles in quick succession in mid 2010.

I believe they contain the seeds of my main contentions that organisations are:

  1. much like complex adaptive systems and so are enacted through relationships (aka the “lines”)
  2. enabled enormously by trust-inducing practices (hence critical role of Social Capital)
  3. misunderstood by many HR practitioners (because of a one-sided preoccupation with “talent”)

In the next few days I’ll re-digest these earlier pieces and see if I can rewrite a more aerodynamic version of these earlier two “blimps”.

In the meanwhile courageous explorers — who want to — can hopefully find many of the nuggets I believed I had hit upon during those heady World Cup months!