High Output Management

High Output Management-Vintage

Metadata

Author: Andrew S. Grove
Full Title: High Output Management
Category:books

Highlights

By the mid-eighties, the Japanese producers of Dynamic Random Access Memories, or DRAMs for short— the most popular computer memory devices, used in computers of all kinds— had perfected their technological capability and honed their manufacturing prowess to the extent that they could take on the American producers (who had pioneered the market and totally dominated it for the first fifteen years of its existence). The mid-eighties were also when the personal computer revolution took place. And because personal computers require a lot of memory, the Japanese DRAM juggernaut had a ready market for its products centered in the United States. (Location 79)
Under the ferocious attack of aggressively priced, high-quality Japanese DRAMs, we were forced to retreat and cut prices to a level where being in the DRAM business brought us major losses. Ultimately, the losses forced us to do something extraordinarily difficult: to back out of the business that the company was founded upon, and to focus on another business that we thought we were best at— the microprocessor business. (Location 87)
Being second best in a tough environment is just not good enough. (Location 92)
Globalization simply means that business knows no national boundaries. Capital and work— your work and your counterparts’ work— can go anywhere on earth and do a job. (Location 96)
If the world operates as one big market, every employee will compete with every person anywhere in the world who is capable of doing the same job. There are a lot of them, and many of them are very hungry. (Location 104)
Middle managers are the muscle and bone of every sizable organization, no matter how loose or “flattened” the hierarchy, but they are largely ignored despite their immense importance to our society and economy. (Location 134)
Another group should also be included among middle managers— people who may not supervise anyone directly but who even without strict organizational authority affect and influence the work of others. These know-how managers are sources of knowledge, skills, and understanding to people around them in an organization. (Location 140)
Thus a know-how manager can legitimately be called a middle manager. In fact, as our world becomes ever more information- and service-oriented, know-how managers will acquire greater importance as members of middle management. (Location 145)
Companies today basically have two choices: Adapt or die. Some have died in front of our eyes; others are struggling with the adaptation. (Location 149)
As they struggle, the methods of doing business that worked very well for them for decades are becoming history. Companies that have had generations of employees growing up under a no-layoff policy are now dumping ten thousand people at a time onto the street. Unfortunately, that’s all part of the process of adaptation. (Location 150)
What are the rules of the new environment? First, everything happens faster. Second, anything that can be done will be done, if not by you, then by someone else. Let there be no misunderstanding: These changes lead to a less kind, less gentle, and less predictable workplace. (Location 152)
as a manager in such a workplace, you need to develop a higher tolerance for disorder. Now, you should still not accept disorder. In fact, you should do your best to drive what’s around you to order. (Location 155)
“Let chaos reign, then rein in chaos.” (Location 162)
As a middle manager, of any sort, you are in effect a chief executive of an organization yourself. Don’t wait for the principles and practices you find appealing to be imposed from the top. As a micro CEO, you can improve your own and your group’s performance and productivity, whether or not the rest of the company follows suit. (Location 165)
This book contains three basic ideas. (Location 168)
The first is an output-oriented approach to management. That is to say, we apply some of the principles and the discipline of the most output-oriented of endeavors— manufacturing— to other forms of business enterprise, including most emphatically the work of managers. (Location 168)
we found that all our employees “produce” in some sense— some make chips, others prepare bills, while still others create software designs or advertising copy. (Location 175)
The output of a manager is the output of the organizational units under his or her supervision or influence. (Location 181)
managerial leverage, which measures the impact of what managers do to increase the output of their teams. High managerial productivity, I argue, depends largely on choosing to perform tasks that possess high leverage. (Location 184)
A team will perform well only if peak performance is elicited from the individuals in it. (Location 185)
task-relevant feedback to get and to sustain a high level of performance from the members of a business team. (Location 188)
You need to plan the way a fire department plans. It cannot anticipate where the next fire will be, so it has to shape an energetic and efficient team that is capable of responding to the unanticipated as well as to any ordinary event. (Location 190)
a responsive company should have fewer levels of managers. (Location 192)
management— the role of disseminating information— is no longer as important a managerial function as it was in the past. (Location 194)
one-on-one meeting between a supervisor and a subordinate. Its main purposes are mutual education and the exchange of information. (Location 196)
As a general rule, you have to accept that no matter where you work, you are not an employee— you are in a business with one employee: yourself. You are in competition with millions of similar businesses. There are millions of others all over the world, picking up the pace, capable of doing the same work that you can do and perhaps more eager to do it. (Location 213)
if you want to work and continue to work, you must continually dedicate yourself to retaining your individual competitive advantage. (Location 218)
Are you adding real value or merely passing information along? (Location 229)
every hour of your day should be spent increasing the output or the value of the output of the people whom you’re responsible for. (Location 231)
Are you plugged into what’s happening around you? And that includes what’s happening inside your company as well as inside your industry as a whole. (Location 233)
Are you trying new ideas, new techniques, and new technologies, and I mean personally trying them, not just reading about them? Or are you waiting for others to figure out how they can re-engineer your workplace— and you out of that workplace? (Location 235)
A manager’s output = the output of his organization + the output of the neighboring organizations under his influence. (Location 285)
A manager’s skills and knowledge are only valuable if she uses them to get more leverage from her people. (Location 288)
It’s not about how smart you are or how well you know your business; it’s about how that translates to the team’s performance and output. (Location 290)
If you only understand one thing about building products, you must understand that energy put in early in the process pays off tenfold and energy put in at the end of the program pays off negative tenfold. (Location 297)
always act on leading indicators of good news, but only act on lagging indicators of bad news.” (Location 350)
“In order to build anything great, you have to be an optimist, because by definition you are trying to do something that most people would consider impossible. Optimists most certainly do not listen to leading indicators of bad news.” (Location 351)
your task is to serve a breakfast consisting of a three-minute soft-boiled egg, buttered toast, and coffee. Your job is to prepare and deliver the three items simultaneously, each of them fresh and hot. (Location 371)
These are to build and deliver products in response to the demands of the customer at a scheduled delivery time, at an acceptable quality level, and at the lowest possible cost. (Location 373)
We start by looking at our production flow. The first thing we must do is to pin down the step in the flow that will determine the overall shape of our operation, which we’ll call the limiting step. (Location 382)
The key idea is that we construct our production flow by starting with the longest (or most difficult, or most sensitive, or most expensive) step and work our way back. Notice when each of the three steps began and ended. We planned our flow around the most critical step— the time required to boil the egg— and we staggered each of the other steps according to individual throughput times; (Location 393)
the three fundamental types of production operations: process manufacturing, an activity that physically or chemically changes material just as boiling changes an egg; assembly, in which components are put together to constitute a new entity just as the egg, the toast, and the coffee together make a breakfast; and test, which subjects the components or the total to an examination of its characteristics. (Location 414)
Process, assembly, and test operations can be readily applied to other very different kinds of productive work. (Location 418)
equipment capacity, manpower, and inventory can be traded off against each other and then balanced against delivery time. (Location 462)
your task is to find the most cost-effective way to deploy your resources— the key to optimizing all types of productive work. (Location 463)
whenever possible, you should choose in-process tests over those that destroy product. (Location 490)
A common rule we should always try to heed is to detect and fix any problem in a production process at the lowest-value stage possible. (Location 506)
Likewise, if we can decide that we don’t want a college candidate at the time of the campus interview rather than during the course of a plant visit, we save the cost of the trip and the time of both the candidate and the interviewers. (Location 508)
Indicators tend to direct your attention toward what they are monitoring. (Location 558)
So because indicators direct one’s activities, you should guard against overreacting. This you can do by pairing indicators, so that together both effect and counter-effect are measured. (Location 561)
a genuinely effective indicator will cover the output of the work unit and not simply the activity involved. Obviously, you measure a salesman by the orders he gets (output), not by the calls he makes (activity). (Location 569)
The second criterion for a good indicator is that what you measure should be a physical, countable thing. (Location 571)
The black box sorts out what the inputs, the output, and the labor are in the production process. (Location 606)
Leading indicators give you one way to look inside the black box by showing you in advance what the future might look like. And because they give you time to take corrective action, they make it possible for you to avoid problems. (Location 614)
The (Location 628)
stagger chart, which forecasts an output over the next several months. The chart is updated monthly, so that each month you will have an updated version of the then-current forecast information as compared to several prior forecasts. (Location 642)
The stagger chart then provides the same forecast prepared in the following month, in the month after that, and so on. Such a chart shows not only your outlook for business month by month but also how your outlook varied from one month to the next. (Location 647)
even more important, the improvement or deterioration of the forecasted outlook from one month to the next provides the most valuable indicator of business trends that I have ever seen. I would go as far as to say that it’s too bad that all economists and investment advisers aren’t obliged to display their forecasts in a stagger chart form. (Location 651)
indicators can be a big help in solving all types of problems. If something goes wrong, you will have a bank of information that readily shows all the parameters of your operation, allowing you to scan them for unhealthy departures from the norm. If you do not systematically collect and maintain an archive of indicators, you will have to do an awful lot of quick research to get the information you need, and by the time you have it, the problem is likely to have gotten worse. (Location 659)
factory builds to order. When it learns what you want, the factory looks for a hole in its manufacturing schedule and makes the item for you. (Location 665)
build to forecast, which is a contemplation of future orders. To do this, the manufacturer sets up his activities around a reasoned speculation that orders will materialize for specific products within a certain time. (Location 671)
most companies recruit new college graduates to fill anticipated needs— rather than recruiting only when a need develops, which would be foolish because college graduates are turned out in a highly seasonal fashion. Computer software products, such as compilers, are also typically developed in response to an anticipated market need rather than to specific customer order. So “building” to forecast is a very common business practice. (Location 678)
Because the art and science of forecasting is so complex, you might be tempted to give all forecasting responsibility to a single manager who can be made accountable for it. But this usually does not work very well. What works better is to ask both the manufacturing and the sales departments to prepare a forecast, so that people are responsible for performing against their own predictions. (Location 686)
Because neither the sales flow nor the manufacturing flow is completely predictable, we should deliberately build a reasonable amount of “slack” into the system. And inventory is the most obvious place for it. Clearly, the more inventory we have, the more change we can cope with and still satisfy orders. But inventory costs money to build and keep, and therefore should be controlled carefully. (Location 698)
inventory should be kept at the lowest-value stage, as we’ve learned before, like raw eggs kept at the breakfast factory. Also, the lower the value, the more production flexibility we obtain for a given inventory cost. (Location 701)
given Parkinson’s famous law, people would find ways to let whatever they’re doing fill the time available for its completion. (Location 714)
To assure that the quality of our product will in fact be acceptable, all production flows, whether they “make” breakfasts, college graduates, or software modules, must possess inspection points. (Location 718)
To get acceptable quality at the lowest cost, it is vitally important to reject defective material at a stage where its accumulated value is at the lowest possible level. Thus, as noted, we are better off catching a bad raw egg than a cooked one, and screening out our college applicant before he visits Intel. In short, reject before investing further value. (Location 719)
The key principle is to reject the defective “material” at its lowest-value stage. (Location 727)
While in most instances the decision to accept or reject defective material at a given inspection point is an economic one, one should never let substandard material proceed when its defects could cause a complete failure— a reliability problem— for our customer. (Location 736)
Inspections, of course, cost money to perform and further add to expense by interfering with the manufacturing flow and making it more complicated. (Location 742)
one should approach the need to inspect recognizing that a balance exists between the desired result of the inspection, improved quality, and minimum disturbance to the production process itself. (Location 744)
There is a gate-like inspection and a monitoring step. In the former, all material is held at the “gate” until the inspection tests are completed. If the material passes, it is moved on to the next stage in the production process; if the material fails, it will be returned to an earlier stage, where it will be reworked or scrapped. In the latter, a sample of the material is taken, and if it fails, a notation is made from which a failure rate is calculated. The bulk of the material is not held as the sample is taken but continues to move through the manufacturing process. (Location 746)
Another way to lower the cost of quality assurance is to use variable inspections. Because quality levels vary over time, it is only common sense to vary how often we inspect. For instance, if for weeks we don’t find problems, it would seem logical to check less often. But if problems begin to develop, we can test ever more frequently until quality again returns to the previous high levels. (Location 757)
If the manager examined everything his various subordinates did, he would be meddling, which for the most part would be a waste of his time. Even worse, his subordinates would become accustomed to not being responsible for their own work, knowing full well that their supervisor will check everything out closely. (Location 783)
the concept of leverage, which is the output generated by a specific type of work activity. An activity with high leverage will generate a high level of output; an activity with low leverage, a low level of output. (Location 804)
work simplification. To get leverage this way, you first need to create a flow chart of the production process as it exists. Every single step must be shown on it; no step should be omitted in order to pretty things up on paper. Second, count the number of steps in the flow chart so that you know how many you started with. Third, set a rough target for reduction of the number of steps. In (Location 814)
To implement the actual simplification, you must question why each step is performed. Typically, you will find that many steps exist in your work flow for no good reason. Often they are there by tradition or because formal procedure ordains it, and nothing practical requires their inclusion. (Location 818)
in the work of the soft professions, it becomes very difficult to distinguish between output and activity. And as noted, stressing output is the key to improving productivity, while looking to increase activity can result in just the opposite. (Location 827)
A manager’s output = The output of his organization + The output of the neighboring organizations under his influence (Location 845)
If the manager has a group of people reporting to him or a circle of people influenced by him, the manager’s output must be measured by the output created by his subordinates and associates. (Location 849)
If the manager is a knowledge specialist, a know-how manager, his potential for influencing “neighboring” organizations is enormous. The internal consultant who supplies needed insight to a group struggling with a problem will affect the work and the output of the entire group. (Location 851)
individual contributors who gather and disseminate know-how and information should also be seen as middle managers, because they exert great power within the organization. (Location 856)
the output of a manager is a result achieved by a group either under her supervision or under her influence. While the manager’s own work is clearly very important, that in itself does not create output. Her organization does. (Location 858)
Like a housewife’s, a manager’s work is never done. There is always more to be done, more that should be done, always more than can be done. (Location 947)
A manager must keep many balls in the air at the same time and shift his energy and attention to activities that will most increase the output of his organization. (Location 949)
much of my day is spent acquiring information. And as you can also see, I use many ways to get it. I read standard reports and memos but also get information ad hoc. I talk to people inside and outside the company, managers at other firms or financial analysts or members of the press. Customer complaints, both external and internal, are also a very important source of information. (Location 951)
To cut myself off from the casual complaints of people in that group would be a mistake because I would miss getting an evaluation of my performance as an internal “supplier.” (Location 955)
that the information most useful to me, and I suspect most useful to all managers, comes from quick, often casual verbal exchanges. (Location 958)
reports also have another totally different function. As they are formulated and written, the author is forced to be more precise than he might be verbally. Hence their value stems from the discipline and the thinking the writer is forced to impose upon himself as he identifies and deals with trouble spots in his presentation. Reports are more a medium of self-discipline than a way to communicate information. Writing the report is important; reading it often is not. (Location 961)
As we will see later, the preparation of an annual plan is in itself the end, not the resulting bound volume. Similarly, our capital authorization process itself is important, not the authorization itself. (Location 965)
To improve and maintain your capacity to get information, you have to understand the way it comes to you. There’s a hierarchy involved. Verbal sources are the most valuable, but what they provide is also sketchy, incomplete, and sometimes inaccurate, like a newspaper headline that can give you only the general idea of a story. (Location 969)
Your information sources should complement one another, and also be redundant because that gives you a way to verify what you’ve learned. (Location 975)
efficient way to get information, much neglected by most managers. That is to visit a particular place in the company and observe what’s going on there. (Location 977)
Beyond relaying facts, a manager must also communicate his objectives, priorities, and preferences as they bear on the way certain tasks are approached. This is extremely important, because only if the manager imparts these will his subordinates know how to make decisions themselves that will be acceptable to the manager, (Location 988)
once in a while we managers in fact make a decision. But for every time that happens, we participate in the making of many, many others, and we do that in a variety of ways. We provide factual inputs or just offer opinions, we debate the pros and cons of alternatives and thereby force a better decision to emerge, we review decisions made or about to be made by others, encourage or discourage them, ratify or veto them. (Location 995)
your decision-making depends finally on how well you comprehend the facts and issues facing your business. This is why information-gathering is so important in a manager’s life. (Location 1002)
information-gathering is the basis of all other managerial work, which is why I choose to spend so much of my day doing it. You often do things at the office designed to influence events slightly, maybe making a phone call to an associate suggesting that a decision be made in a certain way, or sending a note or a memo that shows how you see a particular situation, or making a comment during an oral presentation. In such instances you (Location 1005)
Let’s call it “nudging” because through it you nudge an individual or a meeting in the direction you would like. This is an immensely important managerial activity in which we engage all the time, (Location 1009)
Values and behavioral norms are simply not transmitted easily by talk or memo, but are conveyed very effectively by doing and doing visibly. (Location 1016)
How you handle your own time is, in my view, the single most important aspect of being a role model and leader. (Location 1028)
activities— information-gathering, information-giving, decision-making, nudging, and being a role model— could I have performed outside a meeting? The answer is practically none. Meetings provide an occasion for managerial activities. (Location 1031)
Getting together with others is not, of course, an activity— it is a medium. (Location 1033)
let’s look at the concept of leverage. Leverage is the measure of the output generated by any given managerial activity. Accordingly, managerial output can be linked to managerial activity by the equation: Managerial Output = Output of organization (Location 1037)
for every activity a manager performs— A1, A2, and so on— the output of the organization should increase by some degree. (Location 1044)
A manager’s output is thus the sum of the result of individual activities having varying degrees of leverage. (Location 1046)
HIGH-LEVERAGE ACTIVITIES These can be achieved in three basic ways:• When many people are affected by one manager.• When a person’s activity or behavior over a long period of time is affected by a manager’s brief, well-focused set of words or actions.• When a large group’s work is affected by an individual supplying a unique, key piece of knowledge or information. The (Location 1054)
Leverage can also be negative. Some managerial activities can reduce the output of an organization. (Location 1069)
Each time a manager imparts his knowledge, skills, or values to a group, his leverage is high, as members of the group will carry what they learn to many others. But again, leverage can be positive or negative. (Location 1073)
A manager can also exert high leverage by engaging in an activity that takes him only a short time, but that affects another person’s performance over a long time. A performance review represents a good example of this. (Location 1083)
Managerial meddling is also an example of negative leverage. This occurs when a supervisor uses his superior knowledge and experience of a subordinate’s responsibilities to assume command of a situation rather than letting the subordinate work things through himself. (Location 1098)
meddling stems from a supervisor exploiting too much superior work knowledge (real or imagined). The negative leverage produced comes from the fact that after being exposed to many such instances, the subordinate will begin to take a much more restricted view of what is expected of him, showing less initiative in solving his own problems and referring them instead to his supervisor. (Location 1101)
The third kind of managerial activity with high leverage is exercised by a person with unique skills and knowledge. (Location 1105)
high leverage is exercised by a person with unique skills and knowledge. (Location 1105)
The art of management lies in the capacity to select from the many activities of seemingly comparable significance the one or two or three that provide leverage well beyond the others and concentrate on them. (Location 1114)
delegation is an essential aspect of management. The “delegator” and “delegatee” must share a common information base and a common set of operational ideas or notions on how to go about solving problems, (Location 1121)
We all have some things that we don’t really want to delegate simply because we like doing them and would rather not let go. (Location 1126)
delegation without follow-through is abdication. (Location 1132)
You can never wash your hands of a task. Even after you delegate it, you are still responsible for its accomplishment, and monitoring the delegated task is the only practical way for you to ensure a result. (Location 1132)
Even after you delegate it, you are still responsible for its accomplishment, and monitoring the delegated task is the only practical way for you to ensure a result. (Location 1132)
Monitoring the results of delegation resembles the monitoring used in quality assurance. We should apply quality assurance principles and monitor at the lowest-added-value stage of the process. (Location 1141)
review rough drafts of reports that you have delegated; don’t wait until your subordinates have spent time polishing them into final form before you find out that you have a basic problem with the contents. (Location 1142)
to the frequency with which you check your subordinates’ work. A variable approach should be employed, using different sampling schemes with various subordinates; you should increase or decrease your frequency depending on whether your subordinate is performing a newly delegated task or one that he has experience handling. (Location 1144)
How often you monitor should not be based on what you believe your subordinate can do in general, but on his experience with a specific task and his prior performance with it— (Location 1147)
As the subordinate’s work improves over time, you should respond with a corresponding reduction in the intensity of the monitoring. (Location 1148)
To check into all the details of a delegated task would be like quality assurance testing 100 percent of what manufacturing turned out. (Location 1151)
the most obvious way to increase managerial output is to increase the rate, or speed, of performing work. The relationship here is: where L is the leverage of the activity. (Location 1158)
if we determine what is immovable and manipulate the more yielding activities around it, we can work more efficiently. (Location 1169)
batching similar tasks. Any manufacturing operation requires a certain amount of set-up time. So for managerial work to proceed efficiently, we should use the same set-up effort to apply across a group of similar activities. (Location 1171)
if a manager has a number of reports to read or a number of performance reviews to approve, he should set aside a block of time and do a batch of them together, one after the other, to maximize the use of the mental set-up time needed for the task. (Location 1177)
From my experience a large portion of managerial work can be forecasted. Accordingly, forecasting those things you can and setting yourself up to do them is only common sense and an important way to minimize the feeling and the reality of fragmentation experienced in managerial work. Forecasting and planning your time around key events are literally like running an efficient factory. (Location 1181)
To gain better control of his time, the manager should use his calendar as a “production” planning tool, taking a firm initiative to schedule work that is not time-critical between those “limiting steps” in the day. (Location 1187)
To use your calendar as a production-planning tool, you must accept responsibility for two things: 1. You should move toward the active use of your calendar, taking the initiative to fill the holes between the time-critical events with non-time-critical though necessary activities. 2. You should say “no” at the outset to work beyond your capacity to handle. (Location 1194)
Remember too that your time is your one finite resource, and when you say “yes” to one thing you are inevitably saying “no” to another. (Location 1200)
There is an optimum degree of loading, with enough slack built in so that one unanticipated phone call will not ruin your schedule for the rest of the day. You need some slack. (Location 1206)
things you need to do but don’t need to finish right away— discretionary projects, the kind the manager can work on to increase his group’s productivity over the long term. (Location 1210)
even as we try to standardize what we do, we should continue to think critically about what we do and the approaches we use. (Location 1216)
a manager whose work is largely supervisory should have six to eight subordinates; three or four are too few and ten are too many. (Location 1219)
a manager should allocate about a half day per week to each of his subordinates. (Location 1221)
anyone who spends about a half day per week as a member of a planning, advisory, or coordinating group has the equivalent of a subordinate. (Location 1225)
The arrangement, shown below, does not have the engineers appearing to be at the same organizational level as the manufacturing manager— something he would surely take exception to. (Location 1232)
we should try to make our managerial work take on the characteristics of a factory, not a job shop. Accordingly, we should do everything we can to prevent little stops and starts in our day as well as interruptions brought on by big emergencies. (Location 1242)
standard products. By analogy, if you can pin down what kind of interruptions you’re getting, you can prepare standard responses for those that pop up most often. (Location 1260)
production principle of batching— that is, handling a group of similar chores at one time— many interruptions that come from your subordinates can be accumulated and handled not randomly, but at staff and at one-on-one meetings, the subject of the next chapter. (Location 1264)
The point is to impose a pattern on the way a manager copes with problems. To make something regular that was once irregular is a fundamental production principle, and that’s how you should try to handle the interruptions that plague you. (Location 1277)
Earlier we said that a big part of a middle manager’s work is to supply information and know-how, and to impart a sense of the preferred method of handling things to the groups under his control and influence. A manager also makes and helps to make decisions. Both kinds of basic managerial tasks can only occur during face-to-face encounters, and therefore only during meetings. (Location 1285)
In the first kind of meeting, called a process-oriented meeting, knowledge is shared and information is exchanged. Such meetings take place on a regularly scheduled basis. (Location 1291)
the second kind of meeting is to solve a specific problem. Meetings of this sort, called mission-oriented, frequently produce a decision. They are ad hoc affairs, not scheduled long in advance, (Location 1292)
three kinds of process-oriented meetings: the one-on-one, the staff meeting, and the operation review. (Location 1300)
a one-on-one is a meeting between a supervisor and a subordinate, and it is the principal way their business relationship is maintained. Its main purpose is mutual teaching and exchange of information. By talking about specific problems and situations, the supervisor teaches the subordinate his skills and know-how, and suggests ways to approach things. At the same time, the subordinate provides the supervisor with detailed information about what he is doing and what he is concerned about. (Location 1302)
the most effective management style in a specific instance varies from very close to very loose supervision as a subordinate’s task maturity increases. (Location 1319)
It should be regarded as the subordinate’s meeting, with its agenda and tone set by him. (Location 1333)
with an outline, the supervisor knows at the outset what is to be covered and can therefore help to set the pace of the meeting according to the “meatiness” of the items on the agenda. (Location 1336)
important— potential problems. Even when a problem isn’t tangible, even if it’s only an intuition that something’s wrong, a subordinate owes it to his supervisor to tell him, because it triggers a look into the organizational black box. (Location 1342)
Grove’s Principle of Didactic Management, “Ask one more question!” When the supervisor thinks the subordinate has said all he wants to about a subject, he should ask another question. (Location 1349)
He should try to keep the flow of thoughts coming by prompting the subordinate with queries until both feel satisfied that they have gotten to the bottom of a problem. (Location 1350)
both the supervisor and subordinate should have a copy of the outline and both should take notes on it, which serves a number of purposes. I take notes in just about all circumstances, and most often end up never looking at them again. (Location 1352)
file where both the supervisor and subordinate accumulate important but not altogether urgent issues for discussion at the next meeting. (Location 1358)
The supervisor should also encourage the discussion of heart-to-heart issues during one-on-ones, because this is the perfect forum for getting at subtle and deep work-related problems affecting his subordinate. (Location 1362)
the supervisor should be wary of the “zinger,” which is a heart-to-heart issue brought up at an awkward time. More often than not, these come near the end of a meeting. (Location 1364)
Clearly, one-on-ones can exert enormous leverage. This happens through the development of a common base of information and similar ways of doing and handling things between the supervisor and the subordinate. And this, as noted, is the only way in which efficient and effective delegation can take place. (Location 1376)
the subordinate teaches the supervisor, and what is learned is absolutely essential if the supervisor is to make good decisions. (Location 1378)
I also think that one-on-ones at home can help family life. As the father of two teenage daughters, I have found that the conversation in such a time together is very different in tone and kind from what we say to each other in other circumstances. (Location 1388)
A staff meeting is one in which a supervisor and all of his subordinates participate, and which therefore presents an opportunity for interaction among peers. (Location 1393)
Staff meetings also create opportunities for the supervisor to learn from the exchange and confrontation that often develops. (Location 1398)
group discussion on any subject tended to get more detailed and more heated, but always more rewarding, than an exchange between me and one other specialist. (Location 1404)
It should be mostly controlled, with an agenda issued far enough in advance that the subordinates will have had the chance to prepare their thoughts for the meeting. But it should also include an “open session”— a designated period of time for the staff to bring up anything they want. (Location 1409)
the role of the supervisor in the staff meeting— a leader, observer, expediter, questioner, decision-maker? The answer, of course, is all of them. (Location 1413)
shows that the supervisor’s most important roles are being a meeting’s moderator and facilitator, and controller of its pace and thrust. (Location 1416)
A staff meeting is like the dinner-table conversation of a family, while other forums of interaction at work, involving people who don’t know each other very well, are like a group of strangers having to make a decision together. (Location 1420)
managers describe their work to other managers who are not their immediate supervisors, and to peers in other parts of the company. (Location 1429)
The basic purpose of an operation review at Intel is to keep the teaching and learning going on between employees several organizational levels apart— people who don’t have one-on-ones or staff meetings with each other. (Location 1429)
Such meetings are also a source of motivation: managers making the presentations will want to leave a good impression on their supervisor’s supervisor and on their outside peers. (Location 1433)
Who are the players at an operation review? The organizing manager, the reviewing manager, the presenters, and the audience. (Location 1434)
Facial expressions and body language, among other things, will tell him if people are getting the message, if he needs to stop and go over something again, or if he is boring them and should speed up. (Location 1452)
before calling a meeting, ask yourself: What am I trying to accomplish? Then ask, is a meeting necessary? Or desirable? Or justifiable? Don’t call a meeting if all the answers aren’t yes. (Location 1468)
Once the meeting is over, the chairman must nail down exactly what happened by sending out minutes that summarize the discussion that occurred, the decision made, and the actions to be taken. (Location 1511)
Making decisions— or more properly, participating in the process by which they are made— is an important and essential part of every manager’s work (Location 1523)
rapidly. What do I mean? When someone graduates from college with a technical education, at that time and for the next several years, that young person will be fully up-to-date in the technology of the time. Hence, he possesses a good deal of knowledge-based power in the organization that hired him. If he does well, he will be promoted to higher and higher positions, and as the years pass, his position power will grow but his intimate familiarity with current technology will fade. (Location 1533)
the faster the change in the know-how on which the business depends or the faster the change in customer preferences, the greater the divergence between knowledge and position power is likely to be. (Location 1540)
an ideal model of decision-making in a know-how business. (Location 1545)
The first stage should be free discussion, in which all points of view and all aspects of an issue are openly welcomed and debated. The greater the disagreement and controversy, the more important becomes the word free. (Location 1545)
The ideal decision-making process. (Location 1555)
The next stage is reaching a clear decision. Again, the greater the disagreement about the issue, the more important becomes the word clear. (Location 1559)
Again, our tendency is to do just the opposite: when we know a decision is controversial we want to obscure matters to avoid an argument. But the argument is not avoided by our being mealy-mouthed, merely postponed. (Location 1561)
everyone involved must give the decision reached by the group full support. (Location 1563)
This does not necessarily mean agreement: so long as the participants commit to back the decision, that is a satisfactory outcome. (Location 1564)
an organization does not live by its members agreeing with one another at all times about everything. It lives instead by people committing to support the decisions and the moves of the business. All a manager can expect is that the commitment to support is honestly present, and this is something he can and must get from everyone. (Location 1567)
for middle managers, the decision-making model is easier to accept intellectually than it is to practice. Why? Because they often have trouble expressing their views forcefully, a hard time making unpleasant or difficult decisions, and an even harder time with the idea that they are expected to support a decision with which they don’t agree. (Location 1574)
important feature of the model is that any decision be worked out and reached at the lowest competent level. The reason is that this is where it will be made by people who are closest to the situation and know the most about it. (Location 1577)
decision-making should occur in the middle ground, between reliance on technical knowledge on the one hand, and on the bruises one has received from having tried to implement and apply such knowledge on the other. (Location 1581)
status symbols most certainly do not promote the flow of ideas, facts, and points of view. (Location 1590)
Peers tend to look for a more senior manager, even if he is not the most competent or knowledgeable person involved, to take over and shape a meeting. (Location 1605)
One of the reasons why people are reluctant to come out with an opinion in the presence of their peers is the fear of going against the group by stating an opinion that is different from that of the group. Consequently, the group as a whole wanders around for a while, feeling each other out, waiting for a consensus to develop before anyone risks taking a position. If and when a group consensus emerges, one of the members will state it as a group opinion (“ I think our position seems to be…”), not as a personal position. After a weak statement of the group position, if the rest of the mob buys in, the position becomes more solid and is restated more forcefully. (Location 1607)
people didn’t really speak their minds freely. That certainly makes it harder for a manager to make the right decisions. (Location 1616)
self-confidence mostly comes from a gut-level realization that nobody has ever died from making a wrong business decision, or taking inappropriate action, or being overruled. And everyone in your operation should be made to understand this. (Location 1618)
If the peer-group syndrome manifests itself, and the meeting has no formal chairman, the person who has the most at stake should take charge. (Location 1620)
As a manager, you should remind yourself that each time an insight or fact is withheld and an appropriate question is suppressed, the decision-making process is less good than it might have been. (Location 1626)
Sometimes no amount of discussion will produce a consensus, yet the time for a decision has clearly arrived. When this happens, the senior person (or “peer-plus-one”) who until now has guided, coached, and prodded the group along has no choice but to make a decision himself. (Location 1639)
If you either enter the decision-making stage too early or wait too long, you won’t derive the full benefit of open discussion. The criterion to follow is this: don’t push for a decision prematurely. Make sure you have heard and considered the real issues rather than the superficial comments that often dominate the early part of a meeting. (Location 1647)
Sometimes free discussion goes on in an unending search for consensus. But, if that happens, people can drift away from the near consensus when they are close to being right, diminishing the chances of reaching the correct decision. So moving on to make the decision at the right time is crucial. (Location 1651)
Like other managerial processes, decision-making is likelier to generate high-quality output in a timely fashion if we say clearly at the outset that we expect exactly that. In other words, one of the manager’s key tasks is to settle six important questions in advance:• What decision needs to be made?• When does it have to be made?• Who will decide?• Who will need to be consulted prior to making the decision?• Who will ratify or veto the decision?• Who will need to be informed of the decision? (Location 1654)
If the final word has to be dramatically different from the expectations of the people who participated in the decision-making process (had I chosen, for example, to cancel the Philippine plant project altogether), make your announcement but don’t just walk away from the issue. People need time to adjust, rationalize, and in general put their heads back together. (Location 1699)
If good decision-making appears complicated, that’s because it is and has been for a long time. (Location 1704)
“Group decisions do not always come easily. There is a strong temptation for the leading officers to make decisions themselves without the sometimes onerous process of discussion.” (Location 1705)
general planning process should consist of analogous thinking. Step 1 is to establish projected need or demand: What will the environment demand from you, your business, or your organization? Step 2 is to establish your present status: What are you producing now? What will you be producing as your projects in the pipeline are completed? Put another way, where will your business be if you do nothing different from what you are now doing? Step 3 is to compare and reconcile steps 1 and 2. Namely, what more (or less) do you need to do to produce what your environment will demand? (Location 1727)
What should you look for when you examine your environment? You should attempt to determine your customers’ expectations and their perception of your performance. You should keep abreast of technological developments like electronic mail and other alternative ways of doing your job. You should evaluate the performance of your vendors. You should also evaluate the performance of other groups in the organization to which you belong. (Location 1737)
You need to focus on the difference between what your environment demands from (Location 1743)
The final step of planning consists of undertaking new tasks or modifying old ones to close the gap between your environmental demand and what your present activities will yield. (Location 1759)
As you formulate in words what you plan to do, the most abstract and general summary of those actions meaningful to you is your strategy. What you’ll do to implement the strategy is your tactics. (Location 1764)
I have seen far too many people who upon recognizing today’s gap try very hard to determine what decision has to be made to close it. But today’s gap represents a failure of planning sometime in the past. (Location 1806)
remember that as you plan you must answer the question: What do I have to do today to solve— or better, avoid— tomorrow’s problem? (Location 1809)
the true output of the planning process is the set of tasks it causes to be implemented. (Location 1811)
the idea that planners can be people apart from those implementing the plan simply does not work. Planning cannot be made a separate career but is instead a key managerial activity, one with enormous leverage through its impact on the future performance of an organization. (Location 1822)
by saying “yes”— to projects, a course of action, or whatever— you are implicitly saying “no” to something else. (Location 1825)
People who plan have to have the guts, honesty, and discipline to drop projects as well as to initiate them, to shake their heads “no” as well as to smile “yes.” (Location 1827)
management by objectives— MBO— concentrates on steps 2 and 3 of the planning process and tries very hard to make them specific. The idea behind MBO is extremely simple: If you don’t know where you’re going, you will not get there. Or, as an old Indian saying puts it, “If you don’t know where you’re going, any road will get you there.” (Location 1830)
MBO system needs only to answer two questions: 1. Where do I want to go? (The answer provides the objective.) 2. How will I pace myself to see if I am getting there? (The answer gives us milestones, or key results.) (Location 1833)
MBO is largely designed to provide feedback relevant to the specific task at hand; it should tell us how we are doing so we can make adjustments in whatever we are doing (Location 1841)
Accordingly, an MBO system should set objectives for a relatively short period. For example, if we plan on a yearly basis, the corresponding MBO system’s time frame should be at least as often as quarterly or perhaps even monthly. (Location 1843)
The one thing an MBO system should provide par excellence is focus. (Location 1845)
we fall victim to our inability to say “no”— in this case, to too many objectives. We must realize— and act on the realization— that if we try to focus on everything, we focus on nothing. (Location 1846)
For Columbus, the key results were relatively easy to achieve, but he most certainly did not find a new trade route to China, and therefore failed to meet his objective. Did Columbus perform well even though he failed by strict MBO terms? He did discover the New World, and that was a source of incalculable wealth for Spain. So it is entirely possible for a subordinate to perform well and be rated well even though he missed his specified objective. (Location 1865)
the MBO system cannot be run mechanically by a computer. The system requires judgment and common sense to set the hierarchy of objectives and the key results that support them. Both judgment and common sense are also required when using MBO to guide you in your work from one day to the next. (Location 1885)
management is not just a team game, it is a game in which we have to fashion a team of teams, where the various individual teams exist in some suitable and mutually supportive relationship with each other. (Location 1939)
Though most are mixed, organizations can come in two extreme forms: in totally mission-oriented form or in totally functional form. (Location 1947)
In the mission-oriented organization (a), which is completely decentralized, each individual business unit pursues what it does— its mission— with little tie-in to other units. (Location 1949)
The Breakfast Factory network organized in (a) totally mission-oriented and (b) totally functional forms. (Location 1952)
At the other extreme is the totally functional organization (b), which is completely centralized. (Location 1957)
The desire to give the individual branch manager the power to respond to local conditions moves us toward a mission-oriented organization. But a similarly legitimate desire to take advantage of the obvious economies of scale and to increase the leverage of the expertise we have in each operational area across the entire corporation would push us toward a functional organization. (Location 1960)
“Good management rests on a reconciliation of centralization and decentralization.” (Location 1965)
The business divisions are analogous to individual fighting units, which are provided with blankets, paychecks, aerial surveillance, intelligence, and so forth by the functional organizations, which supply such services to all fighting units. Because each such unit does not have to maintain its own support groups, it can concentrate on a specific mission, like taking a hill in a battle. And for that, each unit has all the necessary freedom of action and independence. (Location 1969)
The functional groups can be viewed as if they were internal subcontractors. (Location 1972)
Intel is a hybrid organization: balancing to get the best combination of responsiveness (Location 1976)
two thirds of Intel’s employees work in the functional units, indicating their enormous importance. What are some of the advantages of organizing so much of the company in such groups? The first is the economies of scale that can be achieved. (Location 1980)
things often move beyond negotiation to intense and open competition among business units for the resources controlled by the functional groups. (Location 1995)
What are some of the advantages of organizing much of a company in a mission-oriented form? There is only one. It is that the individual units can stay in touch with the needs of their business or product areas and initiate changes rapidly when those needs change. That is it. All other considerations favor the functional-type of organization. (Location 1997)
As the company grew and its product line broadened, the number of things it had to keep track of multiplied. It made more and more sense to create an organization serving each product line; hence the three product divisions. But as the news release indicates, the major functional organizations of ABC Technologies, such as sales and manufacturing, will remain centralized and will serve the three mission-oriented organizations. (Location 2015)
Grove’s Law: All large organizations with a common business purpose end up in a hybrid organizational form. (Location 2019)
Do any exceptions exist to the universality of hybrid organizations? The only exceptions that come to my mind are conglomerates, which are typically organized in a totally mission-oriented form. Why are they an exception to our rule? Because they do not have a common business purpose. (Location 2032)
the allocation of shared resources and the reconciliation of the conflicting needs and desires of the independent business units are theoretically the function of corporate management. Practically, however, the transaction load is far too heavy to be handled in one place. (Location 2051)
matrix management. This provided the means through which the work of various contractors could be coordinated and managed so that if problems developed in one place, they did not subvert the entire schedule. (Location 2064)
the need for dual reporting is actually quite fundamental. Let’s think for a minute about how a manager comes to be. The first step in his career is being an individual contributor— a salesman, for instance. If he proves himself a superior salesman, he is promoted to the position of sales manager, where he supervises people in his functional specialty, sales. When he has shown himself to be a superstar sales manager he is promoted again, this time becoming a regional sales manager. If he works at Intel, he is now not only supervising salesmen but also so-called field application engineers, who obviously know more about technical matters than he does but whom he still manages. The promotions continue until our superstar finds himself a general manager of a business division. Among other things, our new general manager has no experience with manufacturing. So while he is perfectly capable of supervising his manufacturing manager in the more general aspects of his job, the new boss has no choice but to leave the technical aspects to his subordinate, because as a graduate of sales, he has absolutely no background in manufacturing. (Location 2086)
they now have supervision that a general manager competent in manufacturing could have given them, but that supervision is being exercised by a peer group. The manufacturing managers report to two supervisors: to this group and to their respective general managers, as the figure opposite shows. (Location 2106)
The manufacturing managers report to two supervisors: to their general managers and to a group of their peers. (Location 2114)
The point is that a strong and positive corporate culture is absolutely essential if dual reporting and decision-making by peers are to work. (Location 2121)
This system makes a manager’s life ambiguous, and most people don’t like ambiguity. Nevertheless, the system is needed to make hybrid organizations work, and while people will strive to find something simpler, (Location 2122)
Hybrid organizations and the accompanying dual reporting principle, like a democracy, are not great in and of themselves. They just happen to be the best way for any business to be organized. (Location 2129)
To make hybrid organizations work, you need a way to coordinate the mission-oriented units and the functional groups so that the resources of the latter are allocated and delivered to meet the needs of the former. (Location 2131)
Consider how the controller works at Intel. His professional methods, practices, and standards are set by the functional group to which he belongs, the finance organization. Consequently, the controller for a business unit should report to someone in both the functional and the mission-oriented organizations, with the type of supervision reflecting the varying needs of the two. The divisional general manager gives the controller mission-oriented priorities by asking him to work on specific business problems. The finance manager makes sure that the controller is trained to do his work in a technically proficient manner, supervises and monitors his technical performance, and looks after his career inside finance, promoting him, perhaps, to the position of controller of a bigger, more complex division if he performs well. (Location 2132)
The controller for a business division should be supervised by both organizations. (Location 2148)
We have seen that all kinds of organizations evolve into a hybrid organizational form. They must also develop a system of dual reporting. (Location 2160)
the hybrid organizational form is the inevitable consequence of enjoying the benefits of being part of a large organization— a company or university or whatever. To be sure, neither that form nor the need for dual reporting is an excuse for needless busywork, and we should mercilessly slash away unnecessary bureaucratic hindrance, apply work simplification to all we do, and continually subject all established requirements for coordination and consultation to the test of common sense. But we should not expect to escape from complexity by playing with reporting arrangements. (Location 2169)
The work of Cindy’s group, and others like it, is supervised by another more senior group (called the Engineering Managers Council), which is made up of the engineering managers from all the plants. (Location 2181)
we see that Cindy’s name appears on two organization charts that serve two separate purposes— one to operate the production plant, the other to coordinate the efforts of various plants. Again we see dual reporting because Cindy has two supervisors. Cindy’s name appears on two organization charts— coordinating groups are a means for know-how managers to increase their leverage. (Location 2185)
Our ability to use Cindy’s skill and know-how in two different capacities makes it possible for her to exert a much larger leverage at Intel. In her main job, her knowledge affects the work that takes place in one plant; in her second, through what she does in the process coordinating group, she can influence the work of all plants. So we see that the existence of such groups is a way for managers, especially know-how managers, to increase their leverage. (Location 2197)
It could also turn out that people who are in a subordinate/ supervisory relationship in one plane might find the relationship reversed in another. (Location 2206)
the two- (or multi-) plane organization is very useful. Without it I could only participate if I were in charge of everything I was part of. I don’t have that kind of time, and often I’m not the most qualified person around to lead. The multi-plane organization enables me to serve as a foot soldier rather than as a general when appropriate and useful. This gives the organization important flexibility. (Location 2210)
Many of the groups that we are talking about here are temporary. Some, like task forces, are specifically formed for a purpose, while others are merely an informal collection of people who work together to solve a particular problem. Both cease to work as a group once the problem has been handled. The more varied the nature of the problems we face and the more rapidly things change around us, the more we have to rely on such specially composed transitory teams to cope with matters. (Location 2213)
our behavior in a work environment can be controlled by three invisible and pervasive means. These are:• free-market forces• contractual obligations• cultural values (Location 2235)
we count on other drivers to do the same thing, and we can drive through green lights. But for lawbreakers we need policemen, and with them, as with supervisors, we introduce overhead. (Location 2259)
When the environment changes more rapidly than one can change rules, or when a set of circumstances is so ambiguous and unclear that a contract between the parties that attempted to cover all possibilities would be prohibitively complicated, we need another mode of control, which is based on cultural values. (Location 2269)
the interest of the larger group to which an individual belongs takes precedence over the interest of the individual himself. (Location 2271)
When such values are at work, some emotionally loaded words come into play— words like trust— because you are surrendering to the group your ability to protect yourself. And for this to happen, you must believe that you all share a common set of values, a common set of objectives, and a common set of methods. These, in turn, can only be developed by a great deal of common, shared experience. (Location 2272)
for cultural values, management has to develop and nurture the common set of values, objectives, and methods essential for the existence of trust. How do we do that? One way is by articulation, by spelling out these values, objectives, and methods. (Location 2278)
The other, even more important, way is by example. If our behavior at work will be regarded as in line with the values we profess, that fosters the development of a group culture. (Location 2280)
given a certain set of conditions, there is always a most appropriate mode of control, which we as managers should find and use. (Location 2285)
first, the nature of a person’s motivation; and second, the nature of the environment in which he works. An imaginary composite index can be applied to measure an environment’s complexity, uncertainty, and ambiguity, which we’ll call the CUA factor. (Location 2287)
It is our task as managers to identify which mode of control is most appropriate. (Location 2295)
The individual motivation can run from self-interest to group-interest, and the CUA factor of a working environment can vary from low to high. (Location 2299)
When self-interest is high and the CUA factor is low, the most appropriate is the market mode, which governed our tire purchase. As individual motivation moves toward group interest, the contractual mode becomes appropriate, which governed our stopping for a red light. When group-interest orientation and the CUA factor are both high, the cultural values mode becomes the best choice, which explains to us why we tried to help at the scene of the accident. And finally, when the CUA factor is high and individual motivation is based on self-interest, no mode of control will work well. This situation, like every man for himself on a sinking ship, can only produce chaos. (Location 2301)
Let’s apply our model to the work of a new employee. What is his motivation? It is very much based on self-interest. So you should give him a clearly structured job with a low CUA factor. If he does well, he will begin to feel more at home, worry less about himself, and start to care more about his team. He learns that if he is on a boat and wants to get ahead, it is better for him to help row than to run to the bow. (Location 2306)
As time passes, he will continue to gain an increasing amount of shared experience with other members of the organization and will be ready to tackle more and more complex, ambiguous, and uncertain tasks. This is why promotion from within tends to be the approach favored by corporations with strong corporate cultures. (Location 2310)
But what do we do when for some reason we have to hire a senior person from outside the company? Like any other new hire, she too will come in having high self-interest, but inevitably we will give her an organization to manage that is in trouble; after all, that was our reason for going outside. (Location 2315)
our new manager have a tough job facing her, but her working environment will have a very high CUA. Meanwhile, she has no base of common experience with the rest of the organization and no knowledge of the methods used to help her work. All we can do is cross our fingers and hope she quickly forgets self-interest and just as quickly gets on top of her job to reduce her CUA factor. Short of that, she’s probably out of luck. (Location 2317)
This is work outside of his “regular” job as defined contractually, and so represents extra effort for him. But he does it because he feels the company needs what he has to contribute. (Location 2325)
Belief and faith are not aspects of the market mode, but stem from adherence to cultural values. (Location 2345)
A manager’s output is the output of the organization under his supervision or influence. (Location 2352)
management is a team activity. (Location 2353)
no matter how well a team is put together, no matter how well it is directed, the team will perform only as well as the individuals on it. In other words, everything we’ve considered so far is useless unless the members of our team will continually try to offer the best they can do. (Location 2353)
When a person is not doing his job, there can only be two reasons for it. The person either can’t do it or won’t do it; he is either not capable or not motivated. (Location 2356)
The single most important task of a manager is to elicit peak performance from his subordinates. (Location 2361)
if two things limit high output, a manager has two ways to tackle the issue: through training and motivation. (Location 2361)
motivation has to come from within somebody. Accordingly, all a manager can do is create an environment in which motivated people can flourish. (Location 2368)
motivation was based mostly on fear of punishment. In Dickens’ time, the threat of loss of life got people to work, because if people did not work, they were not paid and could not buy food, and if they stole food and got caught, they were hanged. The fear of punishment indirectly caused them to produce more than they might have otherwise. (Location 2374)
For Maslow, motivation is closely tied to the idea of needs, which cause people to have drives, which in turn result in motivation. (Location 2383)
People, of course, tend to have a variety of concurrent needs, but one among them is always stronger than the others. And that need is the one that largely determines an individual’s motivation and (Location 2386)
The social needs stem from the inherent desire of human beings to belong to some group or other. But people don’t want to belong to just any group; they need to belong to one whose members possess something in common with themselves. (Location 2401)
As one’s environment or condition in life changes, one’s desire to satisfy a particular set of needs is replaced by a desire to satisfy another set. (Location 2413)
The need for esteem or recognition is readily apparent in the cliché “keeping up with the Joneses.” Such striving is commonly frowned upon, but if an athlete’s “Jones” is last year’s Olympic gold medalist, or if an actor’s “Jones” is Laurence Olivier, the need to keep up with or emulate someone is a powerful source of positive motivation. (Location 2428)
All of the sources of motivation we’ve talked about so far are self-limiting. That is, when a need is gratified, it can no longer motivate a person. Once a predetermined goal or level of achievement is reached, the need to go any further loses urgency. (Location 2434)
Once someone’s source of motivation is self-actualization, his drive to perform has no limit. Thus, its most important characteristic is that unlike other sources of motivation, which extinguish themselves after the needs are fulfilled, self-actualization continues to motivate people to ever higher levels of performance. (Location 2441)
Two inner forces can drive a person to use all of his capabilities. He can be competence-driven or achievement-driven. (Location 2444)
When the need to stretch is not spontaneous, management needs to create an environment to foster it. (Location 2460)
In an MBO system, for example, objectives should be set at a point high enough so that even if the individual (or organization) pushes himself hard, he will still only have a fifty-fifty chance of making them. (Location 2460)
Output will tend to be greater when everybody strives for a level of achievement beyond his immediate grasp, even though trying means failure half the time. Such goal-setting is extremely important if what you want is peak performance from yourself and your subordinates. (Location 2462)
if we want to cultivate achievement-driven motivation, we need to create an environment that values and emphasizes output. (Location 2464)
The value system at Intel is completely the reverse. The Ph.D. in computer science who knows an answer in the abstract, yet does not apply it to create some tangible output, gets little recognition, but a junior engineer who produces results is highly valued and esteemed. And that is how it should be. (Location 2467)
Once there is enough money to bring a person up to a level he expects of himself, more money will not motivate. (Location 2472)
at the upper level of the need hierarchy, when one is self-actualized, money in itself is no longer a source of motivation but rather a measure of achievement. Money in the physiological- and security-driven modes only motivates until the need is satisfied, but money as a measure of achievement will motivate without limit. (Location 2478)
If the absolute sum of a raise in salary an individual receives is important to him, he is working mostly within the physiological or safety modes. If, however, what matters to him is how his raise stacks up against what other people got, he is motivated by esteem/ recognition or self-actualization, because in this case money is clearly a measure. (Location 2483)
if the possibility for improvement does not exist, the desire to keep practicing vanishes. (Location 2489)
The most appropriate measures tie an employee’s performance to the workings of the organization. If performance indicators and milestones in a management-by-objectives system are linked to the performance of the individual, they will gauge his degree of success and will enhance his progress. (Location 2493)
Given a specific task, fear of failure can spur a person on, but if it becomes a preoccupation, a person driven by a need to achieve will simply become conservative. (Location 2501)
in the upper levels of motivation, fear is not something coming from the outside. It is instead fear of not satisfying yourself that causes you to back off. You cannot stay in the self-actualized mode if you’re always worried about failure. (Location 2504)
our role as managers is, first, to train the individuals (to move them along the horizontal axis shown in the illustration on this page), and, second, to bring them to the point where self-actualization motivates them, because once there, their motivation will be self-sustaining and limitless. (Location 2509)
an ideal coach takes no personal credit for the success of his team, and because of that his players trust him. (Location 2542)
Second, he is tough on his team. By being critical, he tries to get the best performance his team members can provide. (Location 2542)
I’ll say again that a manager’s most important responsibility is to elicit top performance from his subordinates. (Location 2548)
high output is associated with particular combinations of certain managers and certain groups of workers. This also suggests that a given managerial approach is not equally effective under all conditions. (Location 2562)
the task-relevant maturity (TRM) of the subordinates, which is a combination of the degree of their achievement orientation and readiness to take responsibility, as well as their education, training, and experience. Moreover, all this is very specific to the task at hand, and it is entirely possible for a person or a group of people to have a TRM that is high in one job but low in another. (Location 2565)
a person’s TRM can be very high given a certain level of complexity, uncertainty, and ambiguity, but if the pace of the job accelerates or if the job itself abruptly changes, the TRM of that individual will drop. (Location 2575)
varying management styles are needed as task-relevant maturity varies. Specifically, when the TRM is low, the most effective approach is one that offers very precise and detailed instructions, wherein the supervisor tells the subordinate what needs to be done, when, and how: in other words, a highly structured approach. As the TRM of the subordinate grows, the most effective style moves from the structured to one more given to communication, emotional support, and encouragement, in which the manager pays more attention to the subordinate as an individual than to the task at hand. (Location 2578)
As the TRM becomes even greater, the effective management style changes again. Here the manager’s involvement should be kept to a minimum, and should primarily consist of making sure that the objectives toward which the subordinate is working are mutually agreed upon. (Location 2582)
The presence or absence of monitoring, as we’ve said before, is the difference between a supervisor’s delegating a task and abdicating it. (Location 2585)
do not make a value judgment and consider a structured management style less worthy than a communication-oriented one. What is “nice” or “not nice” should have no place in how you think or what you do. Remember, we are after what is most effective. (Location 2588)
As the child matures, the most effective parental style changes, varying with the “life-relevant maturity”— or age— of the child. (Location 2591)
TASK-RELEVANT MATURITY OF SUBORDINATE CHARACTERISTICS OF THE EFFECTIVE MANAGEMENT STYLE low Structured; task-oriented; tell “what,” “when,” “how” medium Individual-oriented; emphasis on two-way communication, support, mutual reasoning high Involvement by manager minimal: establishing objectives and monitoring The fundamental variable that determines the effective management style is the task-relevant maturity of the subordinate. (Location 2600)
commonality of operational values, priorities, and preferences— how an organization works together— is a must if the progression in managerial style is to occur. (Location 2614)
without a shared set of values a supervisor cannot effectively delegate. (Location 2617)
The responsibility for teaching the subordinate must be assumed by his supervisor, and not paid for by the customers of his organization, internal or external. (Location 2621)
As supervisors, we should try to raise the task-relevant maturity of our subordinates as rapidly as possible for obvious pragmatic reasons. (Location 2623)
once operational values are learned and TRM is high enough, the supervisor can delegate tasks to the subordinate, thus increasing his managerial leverage. Finally, at the highest levels of TRM, the subordinate’s training is presumably complete, and motivation is likely to come from within, from self-actualization, which is the most powerful source of energy and effort a manager can harness. (Location 2625)
As we’ve learned, a person’s TRM depends on a specific working environment. When that changes, so will his TRM, as will his supervisor’s most effective management style. (Location 2627)
a manager’s ability to operate in a style based on communication and mutual understanding depends on there being enough time for it. Though monitoring is on paper a manager’s most productive approach, we have to work our way up to it in the real world. Even if we achieve it, if things suddenly change we have to revert quickly to the what-when-how mode. (Location 2636)
We managers must learn to fight such prejudices and regard any management mode not as either good or bad but rather as effective or not effective, given the TRM of our subordinates within a specific working environment. (Location 2640)
Deciding the TRM of your subordinates is not easy. Moreover, even if a manager knows what the TRM is, his personal preferences tend to override the logical and proper choice of management style. (Location 2643)
Another problem here is a manager’s perception of himself. We tend to see ourselves more as communicators and delegators than we really are, certainly much more than do our subordinates. (Location 2648)
managers think of themselves as perfect delegators. But also, sometimes a manager throws out suggestions to a subordinate who receives them as marching orders— furthering the difference in perceptions. (Location 2651)
There is a huge distinction between a social relationship and a communicating management style, which is a caring involvement in the work of the subordinate. (Location 2654)
Everyone must decide for himself what is professional and appropriate here. A test might be to imagine yourself delivering a tough performance review to your friend. Do you cringe at the thought? If so, don’t make friends at work. If your stomach remains unaffected, you are likely to be someone whose personal relationships will strengthen work relationships. (Location 2665)
This should tell you that giving performance reviews is a very complicated and difficult business and that we, managers, don’t do an especially good job at it. (Location 2687)
It is how we assess our subordinates’ level of performance and how we deliver that assessment to them individually. It is also how we allocate the rewards— promotions, dollars, stock options, or whatever we may use. As we saw earlier, the review will influence a subordinate’s performance— positively or negatively— for a long time, which makes the appraisal one of the manager’s highest-leverage activities. (Location 2690)
it is to improve the subordinate’s performance. The review is usually dedicated to two things: first, the skill level of the subordinate, to determine what skills are missing and to find ways to remedy that lack; and second, to intensify the subordinate’s motivation in order to get him on a higher performance curve for the same skill level (see the illustration on this page). (Location 2695)
The review process also represents the most formal type of institutionalized leadership. It is the only time a manager is mandated to act as judge and jury: we managers are required by the organization that employs us to make a judgment regarding a fellow worker and then to deliver that judgment to him, face to face. (Location 2699)
Don’t think for a moment that performance reviews should be confined to large organizations. They should be part of managerial practice in organizations of any size and kind, (Location 2709)
Two aspects of the review— assessing performance and delivering the assessment— are equally difficult. (Location 2712)
Determining the performance of professional employees in a strictly objective manner is very difficult because there is obviously no cut-and-dried way to measure and characterize a professional employee’s work completely. Most jobs involve activities that are not reflected by output in the time period covered by the review. (Location 2714)
Anybody who supervises professionals, therefore, walks a tightrope: he needs to be objective, but must not be afraid of using his judgment, even though judgment is by definition subjective. (Location 2718)
To make an assessment less difficult, a supervisor should clarify in his own mind in advance what it is that he expects from a subordinate and then attempt to judge whether he performed to expectations. (Location 2719)
The biggest problem with most reviews is that we don’t usually define what it is we want from our subordinates, and, as noted earlier, if we don’t know what we want, we are surely not going to get it. (Location 2721)
we can characterize performance by output measures and internal measures. The first represent the output of the black box, and include such things as completing designs, meeting sales quotas, or increasing the yield in a production process— things we can and should plot on charts. The internal measures take into account activities that go on inside the black box: whatever is being done to create output for the period under review and also that which sets the stage for the output of future periods. (Location 2723)
weighing long-term-oriented against short-term-oriented performance. An engineer working on the design of a product needs to complete the project on a strict schedule to generate revenue. He may also be working on a design method that will make it easier for others to design similar products in the future. The engineer obviously needs both activities evaluated and reviewed. Which is more significant? A way to help weigh questions like this is the idea of “present value” used in finance: how much will the future-oriented activity pay back over time? And how much is that worth today? (Location 2732)
The time offset between the manager’s work and the output of his organization was just about a year. Greatly embarrassed, I regretfully concluded that the superior rating I had given him was totally wrong. Trusting the internal measures, I should have had the judgment and courage to give the manager a much lower rating than I did in spite of the excellent output indicators that did not reflect the year under review. (Location 2748)
As managers, we are really called upon to judge performance, not just to see and record it when it’s in plain sight. (Location 2755)
as you review a manager, should you be judging his performance or the performance of the group under his supervision? You should be doing both. Ultimately what you are after is the performance of the group, but the manager is there to add value in some way. (Location 2756)
Is he doing anything with his group? Is he hiring new people? Is he training the people he has, and doing other things that are likely to improve the output of the team in the future? (Location 2758)
At all times you should force yourself to assess performance, not potential. By “potential” I mean form rather than substance. (Location 2761)
the performance rating of a manager cannot be higher than the one we would accord to his organization! It is very important to assess actual performance, not appearances; real output, not good form. (Location 2766)
no action communicates a manager’s values to an organization more clearly and loudly than his choice of whom he promotes. (Location 2770)
The old saying has it that when we promote our best salesman and make him a manager, we ruin a good salesman and get a bad manager. But if we think about it, we see we have no choice but to promote the good salesman. Should our worst salesman get the job? When we promote our best, we are saying to our subordinates that performance is what counts. (Location 2772)
It is hard enough for us to assess our subordinates’ performance, but we must also try to improve it. No matter how well a subordinate has done his job, we can always find ways to suggest improvement, something about which a manager need not feel embarrassed. (Location 2774)
There are three L’s to keep in mind when delivering a review: Level, listen, and leave yourself out. (Location 2778)
You must level with your subordinate— the credibility and integrity of the entire system depend on your being totally frank. And don’t be surprised to find that praising someone in a straightforward fashion can be just as hard as criticizing him without embarrassment. (Location 2779)
How then can you be sure you are being truly heard? What techniques can you employ? Is it enough to have your subordinate paraphrase your words? I don’t think so. What you must do is employ all of your sensory capabilities. To make sure you’re being heard, you should watch the person you are talking to. Remember, the more complex the issue, the more prone communication is to being lost. Does your subordinate give appropriate responses to what you are saying? Does he allow himself to receive your message? If his responses— verbal and nonverbal— do not completely assure you that what you’ve said has gotten through, it is your responsibility to keep at it until you are satisfied that you have been heard and understood. (Location 2789)
listening: employing your entire arsenal of sensory capabilities to make certain your points are being properly interpreted by your subordinate’s brain. (Location 2794)
yourself out.” It is very important for you to understand that the performance review is about and for your subordinate. So your own insecurities, anxieties, guilt, or whatever should be kept out of it. At issue are the subordinate’s problems, not the supervisor’s, and it is the subordinate’s day in court. Anyone called upon to assess the performance of another person is likely to have strong emotions before and during the review, just as actors have stage fright. You should work to control these emotions so that they don’t affect your task, though they will well up no matter how many reviews you’ve given. (Location 2803)
“On the One Hand… On the Other Hand…” Most reviews probably fall into this category, containing both positive and negative assessments. Common problems here include superficiality, clichés, and laundry lists of unrelated observations. All of these will leave your subordinate bewildered and will hardly improve his future performance, the review’s basic purpose. Let me suggest some ways to help you deliver this type of review. (Location 2808)
You may possess seven truths about his performance, but if his capacity is only four, at best you’ll waste your breath on the other three. At worst you will have left him with a case of sensory overload, and he will go away without getting anything out of the review. The fact is that a person can only absorb so many messages at one time, especially when they deal with his own performance. The purpose of the review is not to cleanse your system of all the truths you may have observed about your subordinate, but to improve his performance. So here less may very well be more. (Location 2813)
How can you target a few key areas? First, consider as many aspects of your subordinate’s performance as possible. You should scan material such as progress reports, performance against quarterly objectives, and one-on-one meeting notes. Then sit down with a blank piece of paper. As you consider your subordinate’s performance, write everything down on the paper. Do not edit in your head. (Location 2817)
from your worksheet, look for relationships between the various items listed. You will probably begin to notice that certain items are different manifestations of the same phenomenon, and that there may be some indications why a certain strength or weakness exists. When you find such relationships, you can start calling them “messages” for the subordinate. (Location 2822)
Once your list of messages has been compiled, ask yourself if your subordinate will be able to remember all of the messages you have chosen to deliver. If not, you must delete the less important ones. (Location 2826)
there should never be any surprises at a performance review, right? Wrong. When you are using the worksheet, sometimes you come up with a message that will startle you. So what do you do? You’re faced with either delivering the message or not, but if the purpose of the review is to improve your subordinate’s performance, you must deliver it. Preferably, a review should not contain any surprises, but if you uncover one, swallow hard and bring it up. (Location 2843)
With a little soul-searching, you may come to realize that you have a major performance problem on your hands. (Location 2849)
To deal with the problem, you and your subordinate will likely go through stages commonly experienced in problem-solving of all kinds and particularly in conflict resolution. (Location 2851)
A poor performer has a strong tendency to ignore his problem. Here a manager needs facts and examples so that he can demonstrate its reality. (Location 2854)
Progress of some sort is made when the subordinate actively denies the existence of a problem rather than ignoring it (Location 2855)
Evidence can overcome resistance here as well, and we enter the third stage, when the subordinate admits that there is a problem, but maintains it is not his problem. Instead he will blame others, a standard defense mechanism. Using this defense, he can continue to avoid the responsibility and burden of remedying the situation. (Location 2856)
These three steps usually follow one another in fairly rapid succession. But things tend to get stuck at the blame-others stage. (Location 2858)
If your subordinate does have a problem, there’s no way of resolving it if he continues to blame it on others. He has to take the biggest step: namely assuming responsibility. (Location 2859)
Once responsibility has been assumed, however, finding the solution is relatively easy. This is because the move from blaming others to assuming responsibility constitutes an emotional step, while the move from assuming responsibility to finding the solution is an intellectual one, and the latter is easier. (Location 2862)
The stages of problem-solving: The transition from blaming others to assuming responsibility is an emotional step. (Location 2865)
is the reviewer’s job to get the subordinate to move through all of the stages to that of assuming responsibility, though finding the solution should be a shared task. The supervisor should keep track of what stage things are in. (Location 2870)
Complex issues do not lend themselves easily to universal agreement. If your subordinate says he’s committed to change things, you have to assume he’s sincere. The key word here is acceptable. It is certainly more desirable for you and your subordinate to agree about the problem and the solution, because that will make you feel that he will enthusiastically work toward remedying it. So up to a point you should try to get your subordinate to agree with you. But if you can’t, accept his commitment to change and go on. (Location 2877)
Don’t confuse emotional comfort with operational need. To make things work, people do not need to side with you; you only need them to commit themselves to pursue a course of action that has been decided upon. (Location 2881)
If it becomes clear that you are not going to get your subordinate past the blame-others stage, you will have to assume the formal role of the supervisor, endowed with position power, and say, “This is what I, as your boss, am instructing you to do. I understand that you do not see it my way. You may be right or I may be right. But I am not only empowered, I am required by the organization for which we both work to give you instructions, and this is what I want you to do…” And proceed to secure your subordinate’s commitment to the course of action you want and thereafter monitor his performance against that commitment. (Location 2889)
It seems that for an achiever the supervisor’s effort goes into determining and justifying the judgment of the superior performance, while giving little attention to how he could do even better. But for a poor performer, the supervisor tends to concentrate heavily on ways he can improve performance, providing detailed and elaborate “corrective action programs,” step-by-step affairs meant to ensure that the marginal employee can pull himself up to meet minimum requirements. (Location 2908)
I think we have our priorities reversed. Shouldn’t we spend more time trying to improve the performance of our stars? After all, these people account for a disproportionately large share of the work in any organization. Put another way, concentrating on the stars is a high-leverage activity: if they get better, the impact on group output is very great indeed. (Location 2912)
We all have a hard time saying things that are critical, whether we’re talking to a superior employee or a marginal one. We must keep in mind, however, that no matter how stellar a person’s performance level is, there is always room for improvement. (Location 2914)
So the integrity of the supervisors’ judgment here must be preserved at all costs, and they must commit themselves through an up-front judgment of their subordinates’ performance if the health and vitality of the review process are to be maintained. (Location 2924)
What about asking your subordinate to evaluate your performance as his supervisor? I think this might be a good idea. But you should make it clear to your subordinate that it’s your job to assess his performance, while his assessment of you has only advisory status. (Location 2926)
In my experience, the best thing to do is to give your subordinate the written review sometime before the face-to-face discussion. He can then read the whole thing privately and digest it. He can react or overreact and then look at the “messages” again. By the time the two of you get together, he will be much more prepared, both emotionally and rationally. (Location 2939)
Preparing and delivering a performance assessment is one of the hardest tasks you’ll have to perform as a manager. (Location 2942)
There are two other emotionally charged tasks a manager must perform. They are interviewing a potential employee and trying to talk a valued employee out of quitting. (Location 2958)
• select a good performer• educate him as to who you and the company are• determine if a mutual match exists• sell him on the job (Location 2961)
The means at your disposal typically consist of an hour or two of interview time and a check of the candidate’s references. (Location 2963)
Here we sit somebody down and try to find out in an hour how well he is likely to perform in an entirely new environment. (Location 2965)
If performance appraisal is difficult, interviewing is just about impossible. (Location 2966)
The fact is, we managers have no choice but to perform the interview, no matter how hard it is. But we must realize that the risks of failure are high. (Location 2966)
The applicant should do 80 percent of the talking during the interview, and what he talks about should be your main concern. But you have a great deal of control here by being an active listener. Keep in mind you only have an hour or so to listen. (Location 2973)
When you ask a question, a garrulous or nervous person might go on and on with his answer long after you’ve lost interest. Most of us will sit and listen until the end out of courtesy. Instead, you should interrupt and stop him, because if you don’t, you are wasting your only asset— the interview time, in which you have to get as much information and insight as possible. So when things go off the track, get them back on quickly. (Location 2974)
The person should talk about himself, his experience, what he has done and why, what he would have done differently if he had it to do over, and so forth, but this should be done in terms familiar to you, so that you can evaluate its significance. In short, make sure the words used mean the same thing to both of you. (Location 2980)
the best questions. They were:— Describe some projects that were highly regarded by your management, especially by the levels above your immediate supervisor.— What are your weaknesses? How are you working to eliminate them?— Convince me why my company should hire you.— What are some of the problems you are encountering in your current position? How are you going about solving them? What could you have done to prevent them from cropping up?— Why do you think you’re ready for this new job?— What do you consider your most significant achievements? Why were they important to you?— What do you consider your most significant failures? What did you learn from them?— Why do you think an engineer should be chosen for a marketing position? (Vary this one according to the situation.)— What was the most important course or project you completed in your college career? Why was it so important? (Location 2983)
First, you’re after an understanding of the candidate’s technical knowledge: not engineering or scientific knowledge, but what he knows about performing the job he wants— his skill level. (Location 2993)
Second, you’re trying to assess how this person performed in an earlier job using his skills and technical knowledge; in short, not just what the candidate knows, but also what he did with what he knows. (Location 2996)
Third, you are after the reasons why there may be any discrepancy between what he knew and what he did, between his capabilities and his performance. (Location 2998)
operational values, those that would guide him on the job. (Location 2999)
Technical/ Skills describe some projects what are your weaknesses What He Did With Knowledge past achievements past failures Discrepancies what did you learn from failures problems in current position Operational Values why are you ready for new job why should my company hire you (Location 3001)
The ultimate purpose of interviewing is to make a judgment about how the candidate would perform in your company’s environment. This is at odds with a principle we stressed about performance reviews: the need to avoid the “potential” trap. But when you’re hiring, you must judge potential contribution. (Location 3010)
Within the hour or so at your disposal, you must move between the world of the past employer and your own, and project the candidate’s future performance in a new environment based on his own description of past performance. This managerial task is clearly tricky and high-risk, but unfortunately unavoidable. (Location 3012)
Asking a candidate to handle a hypothetical situation can also enlighten you. (Location 3019)
The candidate can tell you a great deal about his capabilities, skills, and values by asking you questions. Ask the candidate what he would like to know about you, the company, or the job. The questions he asks will tell you what he already knows about the company, what he would like to know more about, and how well prepared he is for the interview. (Location 3026)
So in the end careful interviewing doesn’t guarantee you anything, it merely increases your odds of getting lucky. (Location 3047)
“I Quit!” This is what I most dread as a manager: a subordinate, highly valued and esteemed, decides to quit. (Location 3048)
almost all such cases, the employee is quitting because he feels he is not important to you. If you do not deal with the situation right at the first mention, you’ll confirm his feelings and the outcome is inevitable. Drop what you are doing. Sit him down and ask him why he is quitting. Let him talk— don’t argue about anything with him. (Location 3056)
Make him talk, because after the prepared points are delivered, the real issues may come out. Don’t argue, don’t lecture, and don’t panic. (Location 3060)
Because you have a major problem, you go to your supervisor for help and advice. He no doubt is also on his way to an important meeting… He, like you, will try to put things off, and most probably not because he doesn’t care, but because the situation affects you more than your supervisor— after all, it is your subordinate who has decided to quit. It is up to you to make it your supervisor’s problem and make him participate in the solution to your problem. (Location 3065)
You now must vigorously pursue every avenue available to you to keep him with the firm, even if it means transferring him to another department. If it seems that is the likely solution, you must become the project manager of that solution until the whole thing is settled. You may ask why you should put yourself out to keep an employee whom you are going to lose. There is a basic principle involved: you owe it to your employer to save an employee for the company. (Location 3069)
Today you save a valued contributor for the company by virtually giving him to a fellow manager. Tomorrow it will be his turn to do you the same favor. (Location 3073)
Now you may be ready to go back to your subordinate with a solution, one that addresses his real reasons for wanting to quit and one that in turn will benefit the company. By now he should know that he is important to you, but he might say that you should have offered him the new position long ago. (Location 3075)
You say he’s really made two commitments: first to a potential employer he only vaguely knows, and second to you, his present employer. And commitments he has made to the people he has been working with daily are far stronger than one made to a casual new acquaintance. (Location 3082)
This subordinate is valuable and important because he has attributes that make him so. Other employees respect him; and if they are like him, they identify with him. So other superior performers like him will track what happens to him, and their morale and commitment to the company will hinge on the outcome of this person’s fate. (Location 3086)
As one moves up the need hierarchy, money begins to mean something else— a measure of one’s worth in a competitive environment. (Location 3093)
If the absolute amount of a raise in salary is important, that person is probably motivated by physiological or safety/ security needs. If the relative amount of a raise— what he got compared to others— is the important issue, that person is likely to be motivated by self-actualization, because money here is a measure, not a necessity. (Location 3094)
As managers, our concern is to get a high level of performance from our subordinates. So we want to dispense, allocate, and use money as a way to deliver task-relevant feedback. To do this, compensation should obviously be tied to performance, but that, as we’ve seen, is very hard to assess precisely. (Location 3102)
We can base a portion of a middle manager’s compensation on his performance. Let’s call this a performance bonus. The percentage the bonus represents of a manager’s total compensation should rise with his total compensation. (Location 3107)
for a highly paid senior manager, for whom the absolute dollars make relatively little difference, the performance bonus should be as high as 50 percent, while a middle manager should receive more in the range of 10 to 25 percent of his total compensation this way. (Location 3109)
To design a good performance bonus scheme, we must deal with a variety of issues. We need to figure out if the performance is linked to a team or if it is mostly related to individual work. (Location 3112)
we must think about whether the bonus should be based strictly on countable items (financial performance, for example), on achieving measurable objectives, or on some subjective elements that might get us drawn into a beauty contest. (Location 3116)
If you take all of this into account, you are likely to come up with some complex arrangements. For example, you might have a scheme in which a manager’s performance bonus is based on three factors. The first would include his individual performance only, as judged by his supervisor. The second would account for his immediate team’s objective performance, his department perhaps. The third factor would be linked to the overall financial performance of the corporation. (Location 3119)
When you take, let’s say, 20 percent of a manager’s compensation and split it into three parts, any one will have only a small impact on total compensation, yet attention will still be called to its significance. No matter what way you choose to determine bonuses, none gives you exactly what you want, but most of them will spotlight performance and deliver task-relevant feedback. (Location 3122)
At one extreme, the dollar level is determined by experience only; at the other, by merit alone. In the experience-only approach, an employee’s salary increases with the time he has spent in a particular position. A key point here is that any job has a maximum value; no matter how long an individual has been in it, (Location 3125)
even though we say that every job has a finite value where compensation should level off, we often let an individual become too highly paid because we, management, keep giving routine raises. (Location 3131)
Large Japanese companies tend to place no distinction based on performance during the first ten or so years of employment— which are probably the most productive years of a professional’s life. (Location 3137)
Merit-based compensation simply cannot work unless we understand that if someone is going to be first, somebody else has to be last. (Location 3152)
competitive ranking frequently becomes a highly charged issue, difficult to accept and to administer— yet it is a must if we want to use salary as a way to encourage performance. (Location 3154)
Promotions, defined as a substantial change in a person’s job, are very important to the health of any organization and should be considered with great care. (Location 3156)
If we are going to consider promotions, we have to consider the Peter Principle, which says that when someone is good at his job, he is promoted; he keeps getting promoted until he reaches his level of incompetence and then stays there. (Location 3160)
he “meets the requirements” of the job. As time passes, he receives more training and becomes more motivated, and improves his performance to an above-average level, or, again in the jargon, to a point where he “exceeds the requirements” of the position. At this time we consider the person promotable, and in fact do promote him to Job 2, where he will at first perform only at a “meets requirements” level. With more experience, he again will “exceed the requirements” of the job. Eventually, he probably gets promoted again and the cycle repeats itself. (Location 3164)
you’ll find two basic types of “meets” performers. One has no motivation to do more or faces no challenge to do more. This is the noncompetitor, who has become settled and satisfied in his job. The other type of “meets” performer is the competitor. Each time he reaches a level of “exceeds requirements,” he becomes a candidate for promotion. (Location 3178)
There are times when a person is promoted into a position so much over his head that he performs in a below-average fashion for too long a time. The solution is to recycle him: to put him back into the job he did well before he was promoted. (Location 3184)
society. People tend to view it as a personal failure. In fact, management was at fault for misjudging the employee’s readiness for more responsibility. Usually the person who was promoted beyond his capability is forced to leave the company rather than encouraged to take a step back. This is often rationalized by the notion that “It is better that we let him go, for his own sake.” I think it is dead wrong to force someone in such circumstances out of the company. Instead, I think management ought to face up to its own error in judgment and take forthright and deliberate steps to place the person into a job he can do. (Location 3186)
If recycling is done openly, all will be pleasantly surprised how short-lived that embarrassment will be. And the result will be a person doing work we know from past experience he can perform well. In my experience, such people, once they regain their confidence, will be excellent candidates for another promotion at a later time— and the second time they are likely to succeed. (Location 3191)
we managers must be responsible and provide our subordinates with honest performance ratings and honest merit-based compensation. If we do, the eventual result will be performance valued for its own sake throughout our organization. (Location 3194)
Insufficiently trained employees, in spite of their best intentions, produce inefficiencies, excess costs, unhappy customers, and sometimes even dangerous situations. The importance of training rapidly becomes obvious to the manager who runs into these problems. (Location 3212)
Most managers seem to feel that training employees is a job that should be left to others, perhaps to training specialists. I, on the other hand, strongly believe that the manager should do it himself. (Location 3215)
In my view a manager’s output is the output of his organization— no more, no less. A manager’s own productivity thus depends on eliciting more output from his team. (Location 3217)
A manager generally has two ways to raise the level of individual performance of his subordinates: by increasing motivation, the desire of each person to do his job well, and by increasing individual capability, which is where training comes in. (Location 3218)
motivating employees is a key task of all managers, one that can’t be delegated to someone else. Why shouldn’t the same be true for the other principal means at a manager’s disposal for increasing output? (Location 3220)
Training is, quite simply, one of the highest-leverage activities a manager can perform. Consider for a moment the possibility of your putting on a series of four lectures for members of your department. Let’s count on three hours of preparation for each hour of course time— twelve hours of work in total. Say that you have ten students in your class. Next year they will work a total of about twenty thousand hours for your organization. (Location 3222)
This assumes, of course, that the training will accurately address what students need to know to do their jobs better. This isn’t always so— particularly with respect to “canned courses” taught by someone from outside. For training to be effective, it has to be closely tied to how things are actually done in your organization. (Location 3227)
For training to be effective, it also has to maintain a reliable, consistent presence. Employees should be able to count on something systematic and scheduled, not a rescue effort summoned to solve the problem of the moment. In other words, training should be a process, not an event. (Location 3234)
If you accept that training, along with motivation, is the way to improve the performance of your subordinates, and that what you teach must be closely tied to what you practice, and that training needs to be a continuing process rather than a one-time event, it is clear that the who of the training is you, the manager. (Location 3236)
Training must be done by a person who represents a suitable role model. Proxies, no matter how well versed they might be in the subject matter, cannot assume that role. The person standing in front of the class should be seen as a believable, practicing authority on the subject taught. (Location 3241)
At Intel we distinguish between two different training tasks. The first task is teaching new members of our organization the skills needed to perform their jobs. The second task is teaching new ideas, principles, or skills to the present members of our organization. The distinction between new-employee and new-skill training is important because the magnitude of the tasks is very different. (Location 3253)
make a list of the things you feel your subordinates or the members of your department should be trained in. Don’t limit the scope of your list. (Location 3263)
Having done this, take an inventory of the manager-teachers and instructional materials available to help deliver training on items on your list. Then assign priorities among these items. (Location 3267)
Especially if you haven’t done this sort of thing before, start very unambitiously— like developing one short course (three to four lectures) on the most urgent subject. (Location 3268)
To avoid letting yourself bog down in the difficult task of course preparation, set a schedule for your course, with deadlines, and commit yourself to it. Create an outline for the whole course, develop just the first lecture, and go. Develop the second lecture after you have given the first. (Location 3272)
To make sure that your first attempt causes no damage, teach this course to the more knowledgeable of your subordinates, who won’t be confused by it but who will help you perfect the course through interaction and critique. (Location 3276)
With your second attempt in the offing, ask yourself one final question: Will you be able to teach all members of your organization yourself? Will you be able to cover everybody in one or two courses, or will it require ten or twenty? (Location 3278)
Guess who will have learned most from the course? You. The crispness that developing it gave to your understanding of your own work is likely in itself to have made the effort extremely worthwhile. (Location 3290)
Identify the operations in your work most like process, assembly, and test production. 10 For a project you are working on, identify the limiting step and map out the flow of work around it. 10 Define the proper places for the equivalents of receiving inspection, in-process inspection, and final inspection in your work. Decide whether these inspections should be monitoring steps or gate-like. Identify the conditions under which you can relax things and move to a variable inspection scheme. 10 Identify half a dozen new indicators for your group’s output. They should measure both the quantity and quality of the output. 10 Install these new indicators as a routine in your work area, and establish their regular review in your staff meetings. 20 What is the most important strategy (plan of action) you are pursing now? Describe the environmental demand that prompted it and your current status or momentum. Is your strategy likely to result in a satisfactory state of affairs for you or your organization if successfully implemented? (Location 3302)

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