High Commitment High Performance E-Book

Michael Beer

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch
• Veröffentlichungsjahr: 2009

Seitenzahl: 734

Beschreibung

How to create the high-performance, high-commitment organization Integrating knowledge from strategic management, performance management, and organization design, strategic human resource expert and Harvard Business School Professor Michael Beer outlines what the high-commitment, high-performance organization looks like and provides practitioners with the transformation process to help them get there. Starting with leaders who have the right values, Beer shows how to weave together a complete system that includes top-to-bottom communication, organization design, HR policies, and leadership transformation process, and outlines what practitioners must do in HR, structure, systems, goals, culture, and strategy to create high-performance organizations.

Leseprobe

Table of Contents

Cover

MORE PRAISE FOR HIGH COMMITMENT, HIGH PERFORMANCE

Title

Copyright

Dedication

PREFACE

A Short History of Management Thought

The Purpose of This Book

Who Should Read This Book

CHAPTER ONE: INTRODUCTION

High-Commitment Manufacturing Plants

Innovations at the Business Unit Level

Academics Discover HCHP Corporations

Assumptions Underlying HCHP Organizations

Summary

Plan for the Book

How to Read This Book

PART ONE: THE HIGH COMMITMENT, HIGH PERFORMANCE ORGANIZATION

CHAPTER TWO: PILLARS OF HIGH COMMITMENT, HIGH PERFORMANCE ORGANIZATIONS

Are HCHP Organizations a Realistic Objective?

Southwest Airlines: An Illustrative Case

Three Pillars of HCHP Organizations

Solving for All Three HCHP Pillars Simultaneously

Leader Values and Philosophy

Can Companies Not Born Right Be Transformed?

Does National Culture Pose a Constraint?

The Challenge

Summary

CHAPTER THREE: PRINCIPLED CHOICE AND DISCIPLINE ARE ESSENTIAL

The Case of NICO

Firm Purpose and Values: The Multiple Stakeholder Model

Strategy

Risk

Motivating, Organizing, and Managing People

What HCHP Firms Are Not

Evidence for HCHP Success

Summary

CHAPTER FOUR: BUILDING THE HIGH COMMITMENTHIGH PERFORMANCE SYSTEM

Diagnosing and Rebuilding the System

Organizations Are Multilevel and Multi-Unit Systems

Summary

PART TWO: WHAT STANDS IN THE WAY

CHAPTER FIVE: HIDDEN BARRIERS TO SUSTAINED HIGH COMMITMENT AND HIGH PERFORMANCE

Corning’s Electronic Products Division (EPD)

Silent Barriers to Commitment and Performance

The Silent Killers: A Mutually Reinforcing Syndrome

Root Causes of the Silent Killers

The Transformation of Corning’s Electronic Product Division

Summary

PART THREE: LEADERSHIP AND LEARNING CHANGE LEVERS

CHAPTER SIX: LEAD A COLLECTIVE LEARNING PROCESS

Why Heroic Leadership Fails

Henry Gullette

What HCHP Leaders Must Do, Be, and Know

Surviving and Thriving in the Leadership Role

Summary

CHAPTER SEVEN: ENABLE TRUTH TO SPEAK TO POWER

Merck Latin America

How and Why Learning and Governance Systems Work

Empirical Support for Voice and Participation

Challenges That Learning and Governance Systems Must Overcome

Governance and Learning Design Guidelines

Conditions for Governance and Learning Systems

Why Institutionalize Learning and Governance?

Summary

PART FOUR: ORGANIZATION DESIGN CHANGE LEVERS

CHAPTER EIGHT: MANAGE ORGANIZATIONAL PERFORMANCE STRATEGICALLY

Why Companies Fail to Manage Performance Strategically

Symptoms of Failure

GE’s Commercial Equipment Finance Business

Strategic Performance Management Principles

The Challenge: Overcome the Silent Killers

Integrating Learning and Governance with Strategic Management

Summary

CHAPTER NINE: ORGANIZE FOR PERFORMANCE AND COMMITMENT

Success and Failure in Navigating Organizational Revolution

The Organizing Challenge

The Santa Rosa Systems Division

Organization Design Logic

Choosing How to Organize

Self-Designing the Organization

Structure Is Not Organization

Organizing as Continuous Learning

Summary

CHAPTER TEN: DEVELOP HUMAN AND SOCIAL CAPITAL

Social Capital: The Underemphasized HR Dimension

How Social and Human Capital Interact

Becton Dickinson: A Company in Need of Transformation

The HCHP Human Resource Management System

Transforming Human Resource Management

Summary

PART FIVE: TRANSFORMING THE ORGANIZATION

CHAPTER ELEVEN: EMBRACE E AND O CHANGE STRATEGIES

Theory E or O: The Conventional Choice

Embrace Contradictions of E and O

ASDA: A Remarkable Transformation to HCHP

Integrating E and O Change Strategies

Sustaining High Commitment and Performance

Summary and Conclusion

CHAPTER TWELVE: EPILOGUE

END NOTES

ACKNOWLEDGMENTS

INDEX

THE AUTHOR

End User License Agreement

List of Tables

CHAPTER TWO: PILLARS OF HIGH COMMITMENT, HIGH PERFORMANCE ORGANIZATIONS

TABLE 2.1. HIGH COMMITMENT, HIGH PERFORMANCE COMPANIES.

TABLE 2.2. THE HCHP PSYCHOLOGICAL CONTRACT.

TABLE 2.3. SUCCESSFUL HCHP TRANSFORMATIONS.

CHAPTER SIX: LEAD A COLLECTIVE LEARNING PROCESS

TABLE 6.1. WHAT HIGH COMMITMENT, HIGH PERFORMANCE LEADERS MUST DO, BE, AND KNOW.

CHAPTER SEVEN: ENABLE TRUTH TO SPEAK TO POWER

TABLE 7.1. THE RELATIONSHIP BETWEEN SPEED AND PARTICIPATION.

CHAPTER EIGHT: MANAGE ORGANIZATIONAL PERFORMANCE STRATEGICALLY

TABLE 8.1. COMMERCIAL EQUIPMENT FINANCING: BEFORE AND AFTER.

TABLE 8.2. COMMERCIAL EQUIPMENT FINANCE’S STRATEGIC TASKS.

TABLE 8.3. THE ANNUAL CYCLE FOR STRATEGIC PLANNING AT GE’S COMMERCIAL EQUIPMENT FINANCE.

TABLE 8.4. WHAT’S DIFFERENT ABOUT HCHP REVIEWS?

TABLE 8.5. SILENT KILLER BEHAVIORS THAT BLOCK STRATEGIC PERFORMANCE MANAGEMENT.

CHAPTER NINE: ORGANIZE FOR PERFORMANCE AND COMMITMENT

TABLE 9.1. STRENGTHS AND WEAKNESSES OF ALTERNATIVE ORGANIZING MODELS.

CHAPTER TEN: DEVELOP HUMAN AND SOCIAL CAPITAL

TABLE 10.1. THE AND/ALSO OF HCHP COMPANIES.

TABLE 10.2. CRITERIA FOR PROMOTION IN HCHP COMPANIES.

CHAPTER ELEVEN: EMBRACE E AND O CHANGE STRATEGIES

TABLE 11.1. E AND O STRATEGIES FOR CHANGE AND THEIR INTEGRATION.

List of Illustrations

CHAPTER ONE: INTRODUCTION

FIGURE 1.1. THE VIRTUOUS COMMUNICATION AND LEARNING CYCLE.

CHAPTER TWO: PILLARS OF HIGH COMMITMENT, HIGH PERFORMANCE ORGANIZATIONS

FIGURE 2.1. PILLARS OF HIGH COMMITMENT, HIGH PERFORMANCE ORGANIZATIONS.

FIGURE 2.2. THE VIRTUOUS HCHP CYCLE.

FIGURE 2.3. ALIGNMENT AND ORGANIZATION TYPE

CHAPTER FOUR: BUILDING THE HIGH COMMITMENTHIGH PERFORMANCE SYSTEM

FIGURE 4.1. THE HIGH COMMITMENT, HIGH PERFORMANCE SYSTEM.

FIGURE 4.2. FIVE CRITICAL CAPABILITIES AND CHANGE LEVERS THAT SHAPE THEM.

FIGURE 4.3. CORPORATE TRANSFORMATION INVOLVES MULTILEVEL AND MULTI-UNIT CHANGE.

CHAPTER FIVE: HIDDEN BARRIERS TO SUSTAINED HIGH COMMITMENT AND HIGH PERFORMANCE

FIGURE 5.1. HOW THE SILENT KILLERS AFFECT EFFECTIVENESS, COMMITMENT, AND PERFORMANCE.

FIGURE 5.2. THE EFFECTIVE AND RESILIENT HCHP ORGANIZATION.

CHAPTER SEVEN: ENABLE TRUTH TO SPEAK TO POWER

FIGURE 7.1. THE STRATEGIC FITNESS PROCESS.

FIGURE 7.2. GOVERNANCE AND LEARNING AS AN ITERATIVE PROCESS OF ADVOCACY AND INQUIRY.

FIGURE 7.3. THE “FISHBOWL”—A STRUCTURE THAT ENABLES TRUTH TO SPEAK TO POWER.

FIGURE 7.4. GOVERNANCE AND LEARNING AS CONTINUOUS IMPROVEMENT IN QUALITY OF MANAGEMENT AT MULTIPLE LEVELS.

CHAPTER EIGHT: MANAGE ORGANIZATIONAL PERFORMANCE STRATEGICALLY

FIGURE 8.1. SHORT-TERM FINANCIALLY ORIENTED STRATEGIC ORGANIZATIONAL PERFORMANCE SYSTEM.

FIGURE 8.2. CEF’s “VIRAL GROWTH STRATEGY” ACROSS SEGMENTS, PRODUCTS, AND GEOGRAPHIES.

FIGURE 8.3. HIGH-PERFORMANCE, STRATEGIC PERFORMANCE MANAGEMENT SYSTEM.

FIGURE 8.4. STRATEGIC PLANNING AND ORGANIZATION ALIGNMENT PROCESS.

FIGURE 8.5. STRATEGIC PLANNING PROCESS AT SUN LIFE.

CHAPTER NINE: ORGANIZE FOR PERFORMANCE AND COMMITMENT

FIGURE 9.1. EVOLUTION AND REVOLUTION AS ORGANIZATIONS GROW AND ADAPT.

FIGURE 9.2. COORDINATING MECHANISMS “LADDER.”

FIGURE 9.3. SIMPLE STRUCTURED NETWORK AS “DIAMOND.”

FIGURE 9.4. RESPONSIBILITY CHART.

FIGURE 9.5. THE ITERATIVE REDESIGN PROCESS.

CHAPTER TEN: DEVELOP HUMAN AND SOCIAL CAPITAL

FIGURE 10.1. DERAILMENT PATTERNS OF HIGH POTENTIALS AND HR POLICIES.

CHAPTER ELEVEN: EMBRACE E AND O CHANGE STRATEGIES

FIGURE 11.1. THE MULTI-UNIT AND LEVEL PERSPECTIVE OF CHANGE.

FIGURE 11.2. MULTI-UNIT CHANGE STRATEGY.

FIGURE 11.3. THE EFFECTS OF EXPERT AND PROCESS CONSULTATION.

Guide

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MORE PRAISE FOR HIGH COMMITMENT, HIGH PERFORMANCE

“Michael Beer sheds a much-needed spotlight on building resilient, high-performance organizations—and the transformation process to get there. The research is compelling, the insights spot-on. A well crafted must-read for any executive faced with the challenge of driving effective change that recaptures leadership and enables a company to win in today’s markets.”

—Douglas W. Stotlar, president and chief executive officer, Con-way Inc.

“By unearthing the profound relationships between organizational, human, and competitive challenges, Mike Beer shows managers at all levels how they can navigate through these most trying economic times to build a strong and sustainable high performance organization. This book is essential reading.”

—Danny Miller, professor, HEC Montreal and University of Alberta, author of Managing for the Long Run

“Mike Beer has done it, studied it, and now gives us a great guide that can help us create high performance organizations.”

—Edward E. Lawler III, professor and director, Center for Effective Organizations, USC and author of Talent: Making People Your Competitive Advantage

HIGH COMMITMENT, HIGH PERFORMANCE

How to Build a Resilient Organization for Sustained Advantage

Michael Beer

In collaboration with Russell Eisenstat and Nathaniel Foote

Copyright © 2009 by John Wiley & Sons, Inc. All rights reserved.

Published by Jossey-Bass

A Wiley Imprint 989 Market Street, San Francisco, CA 94103-1741—www.josseybass.com

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, 978-750-8400, fax [phone], or on the Web at www.copyright.com. Requests to the publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, 201-748-6011, fax [phone], or online at www.wiley.com/go/permissions.

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Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

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Library of Congress Cataloging-in-Publication Data

Beer, Michael.

High commitment, high performance : how to build a resilient organization for sustained advantage / Michael Beer ; in collaboration with Russell Eisenstat and Nathaniel Foote.

p. cm.

Includes bibliographical references and index.

ISBN 978-0-7879-7228-8 (cloth)

1. Organizational change. 2. Industrial management.

I. Eisenstat, Russell A., 1955- II. Foote, Nathaniel. III. Title.

HD58.8.B44 2009

658.4′06–dc22

2009013924

This book is dedicated to those from whom I have learned:My clientsand

The giants in the field of organizational studieson whose shoulders I stand

PREFACE

In my forty years as scholar and consultant I have made it my mission to help senior executives transform their businesses into high commitment, high performance organizations and to study their journey of change. As a nascent scholar-practitioner working at Corning Glass Works (now Corning Inc.) in the then emerging field of Organization Development, I was strongly attracted to the proposition that organizations can become less bureaucratic and more effective by appealing to people’s desire for meaning, and their potential to learn and contribute. What I found to be effective and true to one company eventually became part of a larger sea change in management practice and studies.

In the past several decades, during which I have had the privilege of observing or partnering with many managers on a journey to high commitment and high performance, I have sought the answers to these fundamental questions. Why do some firms in every industry survive and outperform their peers over a long time frame, in some cases, over decades? Why do so many start-up firms fail in their infancy? Why do others become efficient and effective operations, only to lose their identity when there are major inflections and shocks in the industry? The core arguments that I make to answer these questions and others like them come from my hands-on experience in organizations as observer, case writer, consultant, and action researcher. They are also richly informed by the growing body of research and scholarship of my colleagues in the field of organizational studies as well as by my own research findings.

This book is about the challenges, rewards, dangers, and hopes inherent in the journey toward a high commitment, high performance (HCHP) organization. By this I mean an organization that achieves sustained high levels of performance through organizing and managing to: (1) implement its strategy, (2) elicit commitment, and (3) enable ongoing learning and change. Building an HCHP organization requires leaders to make a conscious choice. That choice involves promises; for example, leaders must maintain the firm’s mission and cultural identity, maintain the “psychological contract” on which commitment has been built, and allow employees to have a voice in the affairs of the enterprise. It involves promises to customers inherent in the firm’s brand and to those investors who seek sustained and predictable returns. Leaders of HCHP firms must be prepared to accept constraints with regard to firm purpose and values, strategy, financial and cultural risks taken, and the means they will employ to select, motivate, and organize people. Perhaps most essential, choosing to build an HCHP firm is to reject creative destruction of the marketplace as the only adaptive mechanism, and to substitute for it a resilient organization in which managers and front-line employees have a psychological and often an economic stake, as well as a voice.

Not all leaders can or should build HCHP organizations. If, for example, they choose to grow a business very rapidly through massive debt, acquisitions, and mergers, and then cash out, they will not build an HCHP firm. If their primary goal is to acquire money and power, building an HCHP organization will be beyond their reach. To choose HCHP is to trade off potentially very attractive expedient options for building an institution that will last. Some years ago I was teaching a case about an HCHP manufacturing plant to senior management of a company, when the CEO broke in during the discussion to say that he would not make the promises to employees embedded in the HCHP organization we were discussing. He could not, he said, promise the level of involvement, decision rights, development, and the implicit promise of long-term employment inherent in the way people were organized and managed in this organization, given market uncertainties and pressure from investors. Leaders like this CEO may choose not to impose constraints on their freedom of action because it prevents them from achieving their personal goals or because the challenge of building an HCHP firm is simply too great and would impose a leadership burden that does not fit with their values and skills.

The reader will learn that part of what makes building and sustaining an HCHP organization difficult is coping with undiscussable fault lines that develop in all organizations—for example, poor coordination, unclear priorities, and ineffective leadership behavior—when markets quake and historic patterns of management are no longer aligned with new competitive realities. These fault lines, which I call the “silent killers,” arise from natural stress points inherent in all organizations which make them susceptible to low commitment and performance. They are not necessarily a manifestation of bad leaders. They do call for exceptional leadership—and most important, values and skills essential for confronting the truth, learning, and changing.

Research and experiences to which I refer throughout the book suggest that leaders can adapt their organizations to new circumstances by enabling honest, collective, and public conversations and, as I will show, realigning the organization as a total system. This not only enables an effective response to immediate market threats but builds commitment and resilience for the long run. The organization’s redesign must focus on five organizational levers or subsystems, each intended to strengthen natural organizational stress points that otherwise would erupt and damage commitment and performance. Of these levers, the weakest found in most organizations is the learning and governance system which, if institutionalized, can ensure leaders’ capacity to identifying emergent fault lines or barriers, including their own roles and behavior. And such a system enables leaders to solve problems in a way that maintains commitment and performance.

For fundamental change to occur, it’s not enough to change only one aspect of the organization’s design. All design levers available to management must be co-designed in a way that solves for both commitment and performance. It is leaders’ commitment to this “simultaneous solve” that is at the heart of HCHP organizations. Such a simultaneous solve cannot be accomplished, I will argue, unless the means for change—the change process itself—enables the development of both high commitment and high performance. Exceptional leaders with whom I have worked and studied demonstrate that an organization can be transformed into an HCHP system if a leader consciously chooses to do so by employing the means discussed in this book.

Building an organization to last is a difficult and never-ending process. Each threat and opportunity will give rise to organizational fault lines that demand redesign of the organization and changes in leaders’ roles and behavior. The leader’s biggest challenge is to recognize demands for change in his or her role, values, and skills. The rewards for meeting these challenges are profound: serving customers with care; giving employees work that offers dignity, personal growth, and meaning; allotting shareholders good and steady returns, if not always the industry’s highest; and developing a reputation as an extraordinary company, recognized for contributions to all stakeholders, including community and society.

A Short History of Management Thought

The history of management thought and practice has drifted between two different answers to the question of what constituted good management. Until the 1930s, management thought and practice was dominated by Max Weber’s conception of organizations as machine bureaucracies in which roles and relationships were tightly defined and hierarchically organized. Frederick Taylor’s scientific management reified this concept of organization and management. Taylor provided a method by which managers could pursue efficiency, profits, and, incidentally, increase their control over people.

Every revolution spurs a counterrevolution, and in this case, change was led by the human relations movement. Research and theory turned to the causes of alienation and its consequences for productivity and employee well-being. The labor union movement in the United States, validated by legislation in the 1930s, was the most powerful signal that bureaucracy and control had human and performance costs. The landmark Hawthorne Studies, conducted by Harvard Business School researchers, showed unequivocally how the social context associated with bureaucracy and tight control undermines motivation and productivity. It sent management scholars and managers in search of new means for organizing and managing employees, means that would yield higher commitment and performance. The Hawthorne Studies were the foundation on which the human relations movement and participative management were founded. And this research clearly identified the power of the social system to govern attitudes, skills, and behavior.

In The Human Side of Enterprise, published in 1960 and arguably one of the most influential management books, Douglas McGregor argued that the social system is governed by leaders’ assumptions about the nature of “man.”1 Theory X managers—autocratic leaders focused on controlling people to achieve efficiency, productivity, and profits—have pessimistic assumptions about the motivation and potential of people to learn and perform. Their organizations become bureaucracies. Theory Y managers—participative leaders who engage and involve people in how to achieve productivity and profits—have positive assumptions about people’s capacity to commit and to learn. Their leadership results in participative patterns of management and internal commitment. If leaders’ assumptions are false, not in touch with the consequences of their organization’s design or leadership, nor consistent with emerging knowledge about how high commitment and performance can be achieved, then perhaps enabling leaders to learn about their organization’s behavior, and its causes and consequences, could lead to significant improvements in leadership and effectiveness. This idea gave rise to the field of organization development, a theory and practice for planned organizational change aimed at overcoming the problems of bureaucracy.

It only took a few decades for the management pendulum to swing back to a preference for control and a dismissal of the positive view of people and motivation, this time in the guise of a revolution in capital markets. With this revolution in the 1980s came the influence of economists on management thought. Despite many positive outcomes of this revolution—management responsiveness to investors and, by extrapolation, sometimes to customers—there were also many unintended negative by-products. The market perspective that economists brought to the field of management favors Theory X assumptions about human nature. Incentives, instead of bureaucracy and autocracy, increasingly became the preferred means of control. Financial incentives, economists argued, are necessary to discipline irresponsible managers to become agents of investors. Though there is some truth in this observation, the consequence, with the exception of relatively few HCHP organizations and their leaders, was a short-term focus on profits to the exclusion of a longer-term concern for building identity and commitment. Managers’ relationships to the firm became more transactional and short term, performed for money rather than love of the firm’s mission, customers, or culture. Consequently, corporate leaders have been less motivated or found it more difficult to build a high-commitment system. This pattern of management unfortunately has become conventional wisdom and, in a different way than bureaucracy, has undermined the potential for high commitment and high performance.

In reality both financial performance and human commitment are fundamental to developing a great institution. So it is not surprising that the relatively few firms that have demonstrated sustained performance are also firms that achieve high commitment. They do not subscribe to the either-or assumptions inherent in the swing from profits and control to people and back again. As management scholars such as Jim Barron and Michael Hannan, Jeff Pfeffer and Charles O’Reilly, Jerry Porras, and Jim Collins have documented, truly great firms and their leaders embrace the tension of people and profits and have found ways to integrate these objectives. These scholars have described at a high level some of the principles and practices of high commitment, high performance firms and supplied empirical evidence for the claim that these firms are better for people and performance. The question of how to design and transform a company into an HCHP system has not, however, been tackled in a way that integrates theory and practice. I present a normative systemic operating theory or model of HCHP organizations and situate it within the important question of change and transformation. My “bottom-up” work with managers to change low or average performance and commitment organizations into HCHP organizations enables me to bring a grounded and action-oriented point of view that “top-down” normal science findings do not.

The Purpose of This Book

Unlike other volumes about high commitment and performance firms, I synthesize the perspectives and knowledge of a number of key disciplines; notably, strategic management, organization design, human resource management, culture and organization development, learning and change. Employing these diverse perspectives, I propose three paradoxical organizational outcomes needed to achieve sustained high commitment and performance, articulate five managerial levers for designing an organization to achieve these outcomes, and present a framework for change and transformation.

My hope is that this book will spur conversations about building HCHP organizations between CEOs, between CEOs and their next-generation leaders, between CEOs and their internal and external advisers, and between students of management. These necessary, stimulating communications will hopefully begin to form a new conventional wisdom about what constitutes excellence in organizing, managing, and leading organizations.

This book is about possibility. In a world in which capital markets have come to define success in financial terms only, a normative framework for “good” organization and management can hopefully contribute to the development of standards by which the work of CEOs might be judged, something that my colleagues Rakesh Khurana and Nitin Nohria have argued is essential if management is to be a profession.2 What if we evaluated CEOs and key business heads inside the corporation on their progress and effectiveness in building an HCHP organization? What if we taught next-generation leaders how to build HCHP organizations? Without specifications this is not possible.

Although competitiveness and customers by necessity have to be the primary focus for high-performance organizations, it must be done in a way that simultaneously builds rather than destroys manager and worker commitment. This book discusses HCHP organizations through the lens of employees. Substantial and rigorous evidence exists that unless employees are highly committed, a business will not be able to obtain high customer commitment or high performance.3 This lesson was brought home to me when I interviewed senior executives at Hewlett-Packard (HP) in 1995. Interviewees stressed the quality of HP’s relationship with distributors, suppliers, and customers. “They prefer us to other companies because of the relationship of trust we have developed with them. We don’t take advantage of them,” one senior executive said. As the conversation progressed, it became clear that the high-commitment philosophy of management that guided HP as an organization was also the foundation for their relationship of trust with other stakeholders—yes, even investors.

Who Should Read This Book

Senior executives who aspire to build an HCHP firm can develop insights about the architecture of such firms and the process of transformation they must lead. Senior human resource, organization development, and strategy professionals who are interested in new ways of thinking about how to build, transform, or maintain a values-driven firm should read this book. For teachers and students, I hope this volume, together with its accompanying full-length teaching cases, will provide the foundation for courses in HCHP organizations. Prospective managers ought to learn about what it takes to build a great institution, rather than simply how to manage for financial results, which is the perspective that dominates business education today. My fellow academics, with whom I have openly discussed, debated, and formulated many of the ideas in this book, will no doubt recognize places where I have benefited from their work. I hope they will find my insights useful and benefit from them, particularly about how their diverse research and theoretical lenses connect in the practical endeavor of organizing, managing, and leading HCHP organizations.

Executives who have the will to begin the journey to an HCHP organization face many uncertainties. What does this system look like? How do I diagnose my organization to determine what stands in the way of achieving high performance and commitment? What organizational levers can I exercise to improve performance and commitment? Where should the process of change begin? How do I assess progress and how do I know when I have strayed off the path? And perhaps the most important two questions: what leadership values and behavior are required? How do I develop my own leadership and that of leaders at lower levels to enable a successful transformation?

Unless senior leadership teams come up with solid, thoughtful answers to questions such as these, it is unlikely that they will succeed in building an HCHP organization. It is highly likely that they will be seduced by the latest fad or program. Leadership can all too easily be swayed by short-term business opportunities that may well waste scarce financial and human resources. Of these, leadership can least afford to waste employee trust, a resource hard-won and slowly gathered. In this book, I lay out a framework for both diagnosing organizational weakness and building a strong and resilient organization capable of sustained commitment and performance. I discuss three key outcomes that must be managed and five managerial levers that senior leaders can influence. Throughout, I advocate an honest, collective, and public conversation that is essential for the development of an HCHP organization, and I emphasize strategies for change that embrace the tension between the goals of high performance and high commitment.

Internal staff or consultants in human resource management, strategic management, and organization development will find in this book a comprehensive treatment of the knowledge domains they must master to help senior leaders transform their organization. I hope this framework can help these professionals in their conversations with senior leadership teams. Though I do not present the everyday details, I do specify the key principles for designing and changing the system.

Companies on the journey to HCHP can employ this book and its accompanying cases to educate next-generation leaders—those who will occupy top management positions in the next five to ten years. They are more likely to make wise choices if they understand the nature of these firms and what it takes to build and lead them.

December 1, 2008Concord, Massachusetts

Michael Beer

CHAPTER ONEINTRODUCTION

My professional quest to study and build high commitment, high performance (HCHP) organizations began over forty years ago. Shortly after I joined Corning Glass Works (now Corning Inc.) in its corporate human resource department as a newly minted PhD in organizational psychology, I received a call from the plant manager of Corning’s newest plant in Medfield, Massachusetts. He had read Douglas McGregor’s The Human Side of Enterprise and wanted help in applying McGregor’s ideas about participative management.1 He aspired to develop a climate that would inspire commitment to the plant’s unique mission—developing high-quality instruments for medical use. These demands required a different approach to managing people, he believed. Could I help?

I didn’t have to think twice. My recently completed dissertation had been inspired by Douglas McGregor’s arguments for participative Theory Y management and Abraham Maslow’s view that people had high-order needs for achievement and self-actualization. Both thinkers believed that people could be motivated by organizations that engaged and stimulated people to realize their higher-order needs.2 Working at the Medfield plant would be an opportunity to find out if an organization could truly be transformed to incorporate these ideas. I knew of one model for the kind of organization I had in mind—Non-Linear Systems, a small privately owned manufacturer of voltmeters in California that had been founded as a high-commitment organization by its owner. But there existed no real road map for how this transformation could occur. My imagination sparked, I took my first of many trips to the plant.