Thursday, April 17, 2014

Business Agility: Is The Company Hierarchy Holding You Back?

David AmerlandDavid Amerland , NetApp

What helps a business win in the 21st century? Agility.
But if you don’t feel very agile, why not? The answer may lie in the very structure of a legacy enterprise that’s mired in the past…
What Is “Agility”? 
To win, you need intelligence within your organisation, and nimbleness outside it. A personal, personable approach to marketing. The ability to see future trends and innovate to meet them.
Most organizations are still based around the familiar set-up of a C-Suite sitting atop a pyramid of lesser executive roles, each with its own cadre of minions to command and control.
Despite the lip-service that many enterprises pay to social business models, the transition is a slow one. Understandably, few within the organization want to give up their position of power and the perks that go with it.
In the pre-social-media age, when things in the market place moved at a slower pace, this wasn’t much of an issue. Memos would go out. Minions would get them. Things would slowly move along.
But that’s not what’s happening now. When three-quarters of customers expect to get a fast answer to a customer service complaint via Twitter, it’s clear that agility leads to a real, competitive advantage.
But becoming more agile—indeed most change—comes at a price. When executives are invested in the roles they have, anything that interferes becomes a problem.
Employees and managers go into defensive mode against each other. Change is resisted because it can’t be trusted to respect the boundaries and perks of organizational roles. Command and control reasserts itself as the only means of moving forward.
Yet, outside the enclave of the traditional enterprise, things are changing—rapidly.
Customers demand a human face and a human response from organizations that are not always prepared to work this way. The way a business meets those demands frequently becomes the bellwether that shows if it’ll grow or fail.
Disruption Is The Agile AnswerWhen you’re faced with an intractable problem, the clever thing to do is make the problem be part of the solution—“If you can’t beat them, join them.”
This is where holacracy comes in. As a social technology designed to reinvent the hierarchical organization, holacracy—or the “flat lattice”—is disruption made into a system and baked into the enterprise. At its heart lies the notion that no one in a group can be more important than the whole, and each is equally invested in the success of the holacratic organization.
Companies that adhere to this system of governance are few and far between: Gore-Tex inventor W.L. Gore and Associates, Twitter creator Obvious Corporation and, most recently, Zappos. (As one more mark of their forward-thinking cultures, they’re all significant users of cloud computing.)
The fact that Zappos, at 1,500 employees, is the largest company of its size to try holacracy speaks volumes to the conceptual difficulties involved, never mind the practical ones. Indeed, enterprises such as HP and GM did tactical experiments in the 1990s with what were then known as self-managed or self-directed teams: They showed small-scale promise, but often failed to scale up strategically to disrupt the organizational inertia.
Yet the potential advantages are enormous: Faster decision-making, greater transparency and accountability within the enterprise, employees that are emotionally invested in their roles and happier at their work. The inherent fluidity of roles and the assumption that anyone can do anything—provided they’re supported by the right framework—has a positive, disruptive effect on the traditional idea of how work is done.
The principle behind all this is sound enough: When everyone is fully invested in their work and equally mindful of threats and opportunities coming from outside, the organization can harness the full collective cognitive power of everyone within it to forge ahead.
Special Irony 
The current hierarchic model of the enterprise was based on the rigid structure in the military, which certainly doesn’t believe in equality of roles.
Yet even within the military, there are examples of holacracy at work: The legendary SAS, the elite special-forces regiment of the British Army, has active units comprised of five-man teams. The moment they’re on a mission, army hierarchy is abandoned. Information and objectives are shared, regardless of rank. Roles are ascribed to team members by the group. Anyone can lead at any time.
It’s an organizational method that’s proved extremely successful over the past 70+ years: The result is a robust, highly motivated, tight-knit unit that functions even when its “leader” is incapacitated. It can be trusted to make the right decisions under the most adversarial of circumstances.
So Why Doesn’t Everyone Try It?Of course, business isn’t exactly like war. The market place isn’t literally a battle zone.
But the company that can move fast has a distinct advantage. It can respond to its customer base with one voice, from any of its members, and can see threats and opportunities before the traditional enterprise reporting tools.
That’s more in keeping with the requirements of the modern market, where customer expectations are constantly changing and disruption can come from any direction.
The Bottom Line 
So far, those who’ve tried holacracy have been ad-hoc army units or companies that are either small in size or outliers. But if Zappos succeeds, it will send a clear signal to modern enterprises.
The days of traditional C-Suite meetings to decide how to get their workforce to fall in line may be a thing of the past.

Monday, January 13, 2014

Zappos is going holacratic: no job titles, no managers, no hierarchy

 By Aimee Groth on QZ  - 

During the 4-hour meeting, Hsieh talked about how Zappos’ traditional organizational structure is being replaced with Holacracy, a radical “self-governing” operating system where there are no job titles and no managers. The term Holacracy is derived from the Greek word holon, which means a whole that’s part of a greater whole. Instead of a top-down hierarchy, there’s a flatter “holarchy” that distributes power more evenly. The company will be made up of different circles—there will be around 400 circles at Zappos once the rollout is complete in December 2014—and employees can have any number of roles within those circles. This way, there’s no hiding under titles; radical transparency is the goal.

Hsieh told the crowd on that rainy November afternoon, “Darwin said that it’s not the fastest or strongest that survive. It’s the ones most adaptive to change.”

Last fall, while exploring ways to scale Zappos without letting bureaucracy set in, Hsieh met Brian Robertson, the founder of the management consultancy HolacracyOne. 

“Zappos’ focus on core values and culture has done a remarkably good job of getting around the limits of a conventional corporate structure,” says Robertson, who created the company in 2007 after using Holacracy to run a software company that he founded. “Leaders that already understand the limits of conventional structures are the ones that are attracted to Holacracy.”

CEOs who sign on to Holacracy agree to cede some level of power. The advantage is that they get to view their company through an entirely different lens. But it’s an adjustment for both leaders and employees. Zappos, which has 1,500 employees, will be the largest company to date to implement Holacracy.

“We’re classically trained to think of ‘work’ in the traditional paradigm,” says John Bunch, who, along with Alexis Gonzales-Black, is leading the transition to Holacracy at Zappos. “One of the core principles is people taking personal accountability for their work. It’s not leaderless. There are certainly people who hold a bigger scope of purpose for the organization than others. What it does do is distribute leadership into each role. Everybody is expected to lead and be an entrepreneur in their own roles, and Holacracy empowers them to do so.”

In its highest-functioning form, he says, the system is “politics-free, quickly evolving to define and operate the purpose of the organization, responding to market and real-world conditions in real time. It’s creating a structure in which people have flexibility to pursue what they’re passionate about.”
Twitter Co-Founder Ev Williams is one of the system’s early adopters; he uses Holacracy to run his publishing platform Medium, which has around 50 employees. Jason Stirman, whose roles include head of people operations and product designer at Medium, says that one of the best things about Holacracy is that it facilitates autonomy. “Ev isn’t the CEO of Medium to have another title for his Twitter bio. He wants the company to operate at the highest level possible, and he recognizes that all the power consolidated at top is great for people who are hungry but it can be a total bottleneck. There are decisions he wants to make and the rest can be absorbed in other areas of the organization.”

Still, Holacracy can feel unnatural, especially at first. Meetings are designed to rapidly process tensions. The focus is on the work, not the people. “It’s not a very human-centric model for things,” says Stirman. “For example, if you’re a junior designer, Holacracy says that you should bring up everything in this forum, but it can be difficult to ask for feedback or mentorship, especially when you’re new.”

Robertson says that Holacracy is meant to address structural issues, and that leaders will respond to the human element in different ways. Medium has created mentorship circles, and Zappos has similar plans. Williams and Hsieh both “have a high capacity to see the complex systems at play in their organizations,” says Robertson. “It’s not linear or a matter of just following the logical argument; it’s seeing the cloud of interconnections and influences, beyond just cause and effect thinking.”

At the Zappos “All Hands” meeting Hsieh said that at most companies, “there’s the org chart on paper, and then the one that is exactly how the company operates for real, and then there’s the org chart that it would like to have in order to operate more efficiently. … [With Holacracy] the idea is to process tensions so that the three org charts are pretty close together.”

Hsieh’s plans for Zappos are part of an even more ambitious undertaking. He’s currently investing $350 million of his own fortune to transform downtown Las Vegas, where  Zappos’ is now headquartered, into an improved holarchical system. For Hsieh, work, play and everything else are already a series of overlapping circles.

You can follow Aimee on Twitter at @AimeeGroth.

Saturday, December 14, 2013

Executives Ignore Valuable Employee Actions that They Can’t Measure

December 12, 2013

Does better data mean better employee performance and organizational outcomes? That’s the implication of the current emphasis on big data and the use of metrics in HR, but the answer isn’t an easy “yes.”

To see what I mean, consider your local schools. When teachers are evaluated and paid on the basis of students’ test scores, performance on tests typically improves. The moral: Data works. Long live data!

But research also shows that higher test scores don’t necessarily translate to greater student mastery of the material. In other words, teaching methods that are effective in improving test scores may not be the best for increasing students’ knowledge. The moral: Data doesn’t work. Down with data!

Teaching is a great example of the strengths and shortcomings of data-based performance assessments because, in a sense, teachers are both frontline workers (when actively teaching in the classroom) and executives (when they write lesson plans and develop teaching and classroom strategies). In their role as line workers, teachers can be expected to respond to whatever metrics are applied to them. But simple metrics such as test scores may not detect the difference between teaching strategies that increase students’ knowledge and those that don’t.

A lot of us have jobs like that—some of our work leads to easily measured outcomes (sales volume), while some is much harder to quantify (solving a complex technical issue while easing customer frustration). With the rise of eHRM—electronic human-resource management—it becomes easier than ever for organizations to automate the collection and analysis of employee data. But this also means that it becomes easier to rely on data that organizations can conveniently collect and analyze. Behaviors and aspects of performance that aren’t easily quantified and captured in eHRM can become neglected.

For example, an organization that measures only the number of cases a customer-service rep handles per day may overlook the value of an employee who is capable of winning over an agitated customer. Consider also the use of workload-scheduling software for maintenance employees or physicians. These systems can increase overall operational efficiency and employee performance (measured as number of service calls completed or patients seen), but what happens if the system doesn’t account for the complexity inherent in different jobs? High-performing experts can be penalized for taking on complex assignments.

When you over-objectify or oversimplify the measurement of performance, you risk missing the richness of what makes that job special—or complex—or what makes each person’s contribution unique. Yet, for many managers, this duality is not apparent. Managerial knowledge and skill in applying metrics has not kept up with organizations’ ability to create them. Managers often don’t have the time or knowledge to understand the limitations of the metrics they apply. Instead they rely on easily obtained “objective” data from the system and ignore the less quantifiable and more complex aspects of performance.

Employees will engage in the behaviors easily captured through the system and ignore those aspects of performance that aren’t considered. That’s why organizations need to continually assess whether the data they’re collecting is truly relevant to the broader organizational objectives.

My hunch is that HR is moving toward an era of better data. What do I mean by better data? Take, for example, Sabermetrics and its use in Major League Baseball. Before Sabermetrics came along, few people imagined that the conventional thinking about baseball could be upended by arcane statistics such as wins above replacement.

Before we can develop a metric similar to wins above replacement for employees, we have to define key organizational and employee performance outcomes and determine how they relate to employee behaviors. The challenge is that we still don’t know what these metrics will look like or whether they will fully reflect performance.

Along with better data, we need to develop a more nuanced view of human qualities and human potential. Can we not only accept, but embrace, that some behaviors may not be reducible to easily quantifiable metrics, and that no amount of data can fully capture all of your, or my, best performance qualities? In a world that is increasingly driven by quantitative analyses of employees and performance, we need to find ways to efficiently incorporate both the quantitative and qualitative aspects of performance.

From Data to Action An HBR Insight Center
Richard D. Johnson is an associate professor of management at the business school of the University at Albany, SUNY.

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    Tuesday, December 10, 2013

    Leading in the 21st century: An interview with Société Générale’s Frédéric Oudéa

    From McKinsey Quarterly Nov.2013

    Société Générale’s chairman and chief executive officer, Frédéric Oudéa, reflects on qualities required to lead in turbulent times.

    Frédéric Oudéa is no stranger to crises. He assumed the role of chief executive officer of French banking giant Société Générale in 2008, following significant losses in the US market and a trading scandal that cost the bank nearly €5 billion. In response, Oudéa carried out a series of measures to strengthen the company and reposition it as a leading European bank. In August 2011, he moved swiftly to quell rumors about the bank’s liquidity as the Greek debt crisis washed across Europe. His tenure has also coincided with significant structural evolution in banking regulations, as well as questions about the future of the eurozone and the long-term profitability of banks. In this interview with McKinsey’s Rik Kirkland, Oudéa discusses leadership at a time of crisis, Société Générale’s vision for the long term, and the strategic importance of diversity.
    McKinsey: Most CEOs take charge through a clear succession process. But you, in effect, had a battlefield promotion with no time to prepare. Describe what that was like.
    Frédéric Oudéa: I had dealt with a lot of leadership challenges throughout my career and had 14 years with the bank, serving for some time as CFO. So, on the one hand, I was prepared to take on this responsibility; I felt I had no real choice but to say yes, given the extent of the crisis. But the big difference when you become CEO is that you are permanently exposed. Everyone is looking at you and expecting you to deliver a message. You can’t stand back. In my case, I benefited in the transition from several factors besides my experience: the strong support of the previous CEO, Daniel Bouton, who remained chairman as we went through the worst of the crisis; a great management team; and the fact that my fourth child had been born the day after the trading scandal broke, which helped me keep things in perspective.
    McKinsey: What leadership lessons have you drawn from the recent crises facing Société Générale?
    Frédéric Oudéa: The shock from the 2008 trading loss came early in the year, well ahead of the broader financial crisis. So it was a one-off, where we needed to deal quickly with a big surprise. Here the key was, first, at a personal level, to remain calm, manage your stress, and avoid creating useless turbulence by establishing a solid process to help the team organize themselves to make the right decisions at the right time. Beyond that was the need to project a strong sense of cohesion and confidence and to communicate clearly a few critical decisions, such as our ability to raise new equity. That sent a message that despite our large losses, we had the financial resources to put it behind us.
    Dealing with that kind of sudden crisis, in turn, gave our management team confidence that we could successfully cope with any kind of difficult situation. It also reinforced for me, as a leader, the importance of having the courage to go on stage and expose yourself, despite considerable uncertainty and the lack of perfect information. If you are confident and believe in your message, the greater risk is to say nothing.
    For example, in August 2011, as the eurozone sovereign-debt crisis was unfolding, we had just a few hours to respond to market rumors that our bank had suffered big losses. Here it was simply a matter of the CEO getting in front of the media to declare this was absolutely false. Later in September, with the crisis deepening, the concerns were less about Société Générale, than about the broader banking environment. But again, we decided it was important for me to get in front of the problem and communicate early how, since the summer, we had been decreasing our exposure to these sovereign-debt assets and had started deleveraging the bank. And thus, that our liquidity was sound.
    By the way, while stressing this essential public role for a leader, I want to emphasize that no single individual can bear the full responsibility for managing a crisis. The person in charge must have the support of a strong team. You have to rely on your people and trust that they will deliver. And it’s a great comfort when you see that they’re able to do so.
    McKinsey: So having steered your company through all this turbulence, what does the future look like now?
    Frédéric Oudéa: The extreme scenarios of fear concerning the eurozone have vanished, and the economic environment has started to stabilize. In the banking industry, the task now is to address the deeper challenges to our business models, to refine those models, and to make them palatable to investors again. Doing this well doesn’t require the same speed of reaction, but rather a very clear long-term determination.
    In fact, one of the lessons of adapting well to a brutal crisis and continuing to move forward in a world with a high and sustained degree of uncertainty is that a company needs to have sound long-term objectives. I often think of the analogy of a ship and its sailors using a beacon to guide them when the wind is churning and the rocks are all around. It became very clear to me that we at Société Générale needed a long-term vision that would remain unchanged, regardless of what happened around us—the eurozone crisis, volatility in the markets, changing regulations, political risk. I wanted to align us with a long-term vision that would make sense in any circumstance and make our people proud to be bankers.
    McKinsey: Can you elaborate on your vision for Société Générale?
    Frédéric Oudéa: Our overarching vision is to deliver growth with less risk. And to support this long-term vision, we have outlined four strategic themes as our priorities; these stand no matter what the economic scenario is. The first is client satisfaction. The second is operational efficiency, which includes our approach to risk and daily operations. The third theme is our people and our commitment to making Société Générale a firm where employees are happy to work. And the fourth focuses on communication to convey our long-term vision, both internally and externally.
    McKinsey: Société Générale is a large organization. How have you rallied the firm around this vision?
    Frédéric Oudéa: We have 154,000 employees around the world. Together, we have developed common objectives for each strategic theme. So, we all share the same objectives around client satisfaction, for example. We also launched a number of initiatives to support the vision, such as a corporate university for managers, a series of training sessions, and a social barometer to gather feedback. The objectives and initiatives were developed collectively. Each employee had the opportunity to use her or his individual talents to shape the vision and ensure it represented our diverse perspectives. And last, because we felt that the environment would remain challenging for a while, we needed a shared corporate value to sustain the vision.
    McKinsey: Can you elaborate on this shared corporate value and how you settled on it?
    Frédéric Oudéa: The process was completely open, so we had a number of different groups and managers present ideas. In the end, we settled on the concept of team spirit. And shortly after we decided, I received a note from a retired employee. With his note, he included a letter written in 1964 by the chairman of Société Générale. The chairman’s letter was a reflection on the first 100 years of the company. He concludes the letter by saying that the most distinctive feature of Société Générale’s corporate culture is its team spirit.
    McKinsey: That seems like a strong affirmation that you had chosen the right corporate value.
    Frédéric Oudéa: Exactly. What fascinated me was that 47 years later, using a completely different process and without any knowledge of this letter, we selected the very same value that seemed so distinctive at that earlier time. For me, that means that the culture of the firm—this team spirit—will sustain us through any crisis.
    McKinsey: How has the long-term vision been received?
    Frédéric Oudéa: Internally and externally, the response has been very positive. Because we are a service company, our principal differentiator is our people. I am very happy to see the progress our employees have made around client satisfaction. For example, the branches have decided to close for a half hour to an hour every week to discuss and monitor their progress on client satisfaction. The decision to close was a very difficult one, because obviously it meant less access for our clients. However, the branches are very pleased with the management benefit this time provides them. Some branches only have three or four employees, so they rarely, if ever, had time to meet as a team. In the end, I think this illustrates our people’s commitment to the vision, because their decision involved risk and they were able to see that the benefit outweighed that risk.
    McKinsey: How do you stay connected with your teams?
    Frédéric Oudéa: As we moved on from crisis-management mode, I have tried to reallocate my calendar to spend more time with our people. I travel to certain locations at least once and often twice a year. And I ensure that on every trip, I dedicate time to meet with clients, regulators, and our teams. Also, because sometimes prearranged visits do not reflect the day-to-day reality, I randomly visit the branches. When I work in Paris, I sometimes stop in on a Saturday to get a feel for how things are going. People often feel more comfortable speaking in an informal meeting.
    McKinsey: To what extent has the pace and breadth of change shaped your view of leadership?
    Frédéric Oudéa: I think a leader today must be conversant in many different topics and markets. Every market has its own political context and specificities. At the same time, it is important to remain humble and open, to project confidence but not pretend to know how the future will unfold. And I think diversity—in gender, race, nationality, and sexual orientation—is key to understanding those specificities. Leaders who make diversity a strategic priority and surround themselves with a diverse team of people can better respond to change and position their firms for success.
    About the authors
    Frédéric Oudéa is chairman and chief executive officer of Société Générale. He was appointed chairman in 2009 and CEO in 2008. This interview was conducted by Rik Kirkland, senior managing editor of McKinsey Publishing, who is based in McKinsey’s New York office.

    Disaster in the Workplace: Coping with ‘Hurricane’ Employees

    From Knowledge@Wharton

    They have been called many things: toxic, negative, dysfunctional, narcissistic, territorial, sociopathic, de-motivating, vampire-like. The words describe employees – from CEOs on down to mid-level managers and their subordinates – who tear through an office, disrupting everyone’s work environment and leaving a path of destruction in their wake before finally moving on, like a hurricane.
    Hurricane employees are nothing new: While most people have encountered some version of them during their working lives, HR practitioners and experts alike suggest that today’s business climate is more susceptible to their influence. Studies show that recruiters spend an average of five to seven seconds looking at resumes – focusing mainly on previous experience and salary requirements — while job seekers have learned to game the online application system by using words they know will trigger interest in their resumes. Candid reference checks beyond a person’s name and employment confirmation are rare. In short, it is harder than ever to predict whether the new hire on the block will meet the company’s needs or sabotage the company’s culture.
    Blowing Away Social Networks
    Organizations experience hurricane employees in many different ways, but in general they are employees who “destroy the social fabric of the organization by creating friction, drama, tension and hostility among other employees,” says Michelle K. Duffy, a professor at the Carlson School of Management, University of Minnesota. Research has shown that “strong and healthy social networks lead to better outcomes for employees and organizations alike,” Duffy adds. “Hurricanes damage not only the people in the network, but also the ties among them.”
    Karol Wasylyshyn, a Philadelphia-based clinical psychological and executive consultant, recently looked for repetitive patterns of behavior among the hundreds of people she has coached over the past 25 years. She came up with three common personas, one of which she labeled “toxic” — people “who may be very bright and were hired into the organization because they have certain backgrounds, experiences or technical knowledge. But they are not able to think in an integrated way,” she says. “They are unproductive narcissists who consider only their own needs,” a self-absorption that acts as a “de-motivating” influence on team performance. In short, “they contaminate the system.”
    Tim Withers, president and co-founder of Boston-based Parallel Consult, a management consulting firm that focuses on family-owned and private businesses, describes a hurricane employee as “the antithesis of a team-oriented player…. It takes time, energy and momentum to build a team. It doesn’t happen overnight. A hurricane employee can [undo] a year of teambuilding within a couple of weeks.”
    While some hurricane employees bring varying degrees of difficult personalities into an organization, they can also be people who create havoc because they simply don’t fit into the culture. “When someone who has typically been a high performer as an individual contributor is put into a role that requires working through others, not surprisingly,” it doesn’t end well, says Peter Cappelli, director of Wharton’s Center for Human Resources.
    “An employee who comes from a hard-driving culture of frank feedback, setting tough goals and badgering people to meet them — a culture where conflict is how things get done – will come across as very toxic in an environment where consensus and conflict avoidance are high,” adds Wharton management professor Matthew Bidwell. A company might say it wants people who are candid and straightforward, “but actually it doesn’t. It wants a friendly collegial atmosphere. So it’s important for a [company or team] to be honest with themselves about their culture.”
    Withers points to the “talent model” ethos popular in the financial services industry, among others. “A lot of people in hurricane mode come out of the talent model environment where there is little emphasis on building teams or rewarding groups. It is very much of a ‘me’ culture in which employees don’t mind burning down the bridges as long as they elevate themselves.”
    The source of dysfunctional behavior, however, is not always easy to determine. “I hear people say that a particularly disruptive person is acting out or can’t get with the program, but I think of that person as a symptom,” says Jeff Klein, executive director of the Wharton Leadership Program. “The problem tends to be around alignment within a team: Are we clear about the roles people play, about the norms and expectations, and about the way we work together? If the answer to any of these questions is no … then the problem may be at the group level, or it could between two people. It is rarely the person.”
    Hurricane behavior, whatever its origin, tends to be found these days in large organizations that experience high turnover. “Companies are trying to plug holes so fast that it is challenging to build teams and teamwork,” says Withers. “They don’t get to know people on a personal level.” It becomes especially tricky when a hurricane employee is also the top sales person in the company. “If the organization has a good culture, it will be clear that the primary goal is to create a good team and build efficiencies across groups,” he notes. “Another company, however, looks at the quarterly numbers and sees that this person is producing twice as much as the person next to him.” Consequently, it is slow to act on the dysfunction that the employee is causing. “And once leaders are slow to act, they are crushing the internal culture even more because they are showing that they are willing to put up with the hurricane employee despite the disruptions he brings.”
    Discounting EQ
    Emotional intelligence, or EQ, a phrase dating back several decades, was popularized in a 1995 book by Daniel Goleman titled, Emotional Intelligence: Why It Can Matter More Than IQ. In general, the term refers to one’s ability to build relationships by understanding other people’s emotions and motivations as well as his or her own.
    EQ has gained increasing importance as both academics and management practitioners acknowledge the role that emotions – as opposed to more measurable metrics such as IQ, technical skills or analytical ability — play in the workplace. Research in this area includes analysis of the influence that hurricane employees — or “bad apples” as they are often termed – have on the organization as a whole. Different studies show, for example, that negative interactions have a more dramatic – and long-lasting – impact on individuals and groups than positive interactions. This phenomenon is evident in other kinds of interactions as well, such as performance reviews, in which employees tend to focus on the negative comments made by their supervisors more than they do on the positive comments.
    Sandra Robinson, a professor at the Sauder School of Business, University of British Columbia, suggests that hurricane employees “are more likely to show up when hiring managers pay too much attention to task competencies, formal credentials or experience over seriously weighing and considering the individual’s character or potential fit with the culture…. The former is easier to evaluate and more likely to dominate the decision process.” Robinson has seen two cases where the job candidate raised red flags during the interviews: One involved a top executive “who went out of his way to tell anyone who would listen that he had very high emotional intelligence. Another elaborated upon how he manipulated his way into a corner office in his last position.”
    Wharton management professor Sigal Barsade has spent two decades researching the area of emotions and work dynamics. In a paper titled, “Why Does Affect Matter in Organizations?” Barsade and co-author Donald Gibson of Fairfield University’s Dolan School of Business note that “affect matters because people are not isolated ‘emotional islands.’ Rather, they bring all of themselves to work, including their traits, moods and emotions, and their affective experiences and expressions influence others.” (“Affect” is another word for “emotion” in organizational behavior studies.)
    In another paper titled, “The Ripple Effect: Emotional Contagion and Its Influence on Group Behavior,” Barsade looked at emotional contagion – the way a person or group can be influenced by emotions and/or the behavior of others. A group, she writes, “could unknowingly be affected by a particular negative group member … who causes the entire group to feel apprehensive, angry, or dejected, leading to possible morale and cohesion problems, unrealistic cautiousness, or the tendency to disregard creative ideas.” The better approach is for group members to acknowledge the contagion and “understand its possible ramifications for their group dynamics and decision making.”
    That, of course, is easier said than done. In “How, When, And Why Bad Apples Spoil the Barrel: Negative Group Members and Dysfunctional Groups,” authors Will Felps, Terence R. Mitchell and Eliza Byington study how the behavior of one negative group member “can have [a] powerful, detrimental influence on teammates and groups.” The authors cite three types of destructive team member behavior: “withholding of effort, being affectively negative and violating important interpersonal norms.” Teammates themselves, the authors note at one point, “may not have the power needed to respond to a negative member. In many cases, group members may look to their leader to punish” the offender. A leader or leaders who aren’t up to the task “may allow a negative person to persist in their destructive activity.”
    The authors cite other research suggesting that negative relationships “have a greater impact on job satisfaction and organizational commitment than do positive or neutral associations” – an example of the “bad is stronger than good” effect already noted. In addition, “negative effects are more pronounced in high density, high interdependence situations, [such as] teams.”
    Finally, as the authors note in their conclusion, when an individual in the workplace begins to display negative behavior, “it consumes inordinate amounts of time, psychological resources and emotional energy,” and it may “underlie many people’s reluctance to fully commit to teams.” Management commentators frequently cite a study done by Felps, a professor at Rotterdam School of Management, demonstrating that one negative employee can cause his or her team’s performance to drop by 30% to 40%.
    When Leaders Let Down the Team
    Does the manager who hired a hurricane employee find that his or her staff may no longer trust his judgment, or feel he is not looking out for the welfare of the team? Absolutely, says Cappelli, but “but my guess is that in these situations, the team already knows that, because feedback from the team probably wasn’t part of the hiring process. Often these candidates are brought in with the goal of ‘shaking things up.’”
    Bringing in a person who is “just not getting with the program threatens the leader’s credibility and authority,” adds Klein. “Ultimately, one of the things a group looks for in a leader is stability around how that group is going to function. If a leader is not holding everyone to the same standard, that will erode employee loyalty.” Wasylyshyn agrees. When a manager keeps hiring employees who don’t work out, then the staff will begin to feel they can’t trust the manager’s judgment, she says. “Or they may wonder if the manager really believes in team-based leadership. Because if he does, why does he keep importing hurricane employees?”
    Hurricane employees “cost companies a lot of money in ways that may not be obvious,” says Duffy. “Even if they are star performers … they can be quite damaging to the bottom line through lost work hours, people avoiding the hurricane, talking about the hurricane, being worried about dealing with the hurricane, witnessing others harmed by the hurricane and so forth.”
    The way to avoid this situation, she adds, is for leaders to define their company’s code of conduct as part of the job. “Some companies, like Southwest Airlines, explicitly make it clear that employees who verbally, emotionally or physically damage others are not part of the team and are not welcome.”
    Hurricane Prevention: Avoiding a Category 5
    How does an organization steer clear of hiring, or promoting, hurricane employees? These mistakes “could be avoided with a little more care,” says Cappelli. “They often occur when senior managers buy into the vision of change that the employee presents – the goals – and don’t think through how likely it is to be achieved.” If prospective top-level hires “don’t explain how they are going to go about changing the operation, if they don’t talk about the role their subordinates will play, if they are only talking about themselves” – those are all tip-offs that this person might be a problem.
    Klein, who led teams at AT&T for 10 years before coming to Wharton, says managers can test job candidates’ fit in the organization in several ways. One is to set up a virtual inbox in which the job candidate is asked to review six pieces of information and decide how to respond to and prioritize them. Another approach is for candidates to participate in a half-day simulation where they work in teams on a project, such as building small cars out of paper. “The task doesn’t matter,” Klein says. “What we are looking at is the way these people interact over a longer period of time. Usually the results corroborate what we have already seen, but occasionally there are people who are revealed as potential hurricane employees — destructive, demanding, self-focused as opposed to team-focused. The trade-off for the company is that this approach takes time.”
    Klein points to a colleague who operates a series of climbing gyms. “He won’t hire someone until he has gone climbing with [him or her] at least six times.” Companies with better track records, he adds, pay attention to two things: selection – does the employee’s attitudes toward work mesh with the company’s approach – and training, one way that the company indicates it is willing to invest in the new employee.
    Too many companies “are looking for a certain pedigree, a certain set of experiences, but fail to pay attention to the behavioral side,” says Wasylyshyn. When they write their job specs, they don’t include a section describing the behaviors they would like to see in the candidates, such as interpersonal skills, ability to work in a team-based environment or executive presence. “It’s important to flesh out what it would take for a person to fit into the company’s culture. Doing this is not rocket science.”
    The tip-off that a candidate may not be a good fit, she adds, comes from someone who might present an aggressive profile and who is focused on results, but has little to say about how he or she would get things done, given the nature of the company’s culture. “So they will sound strong on the ‘what’ but not on the ‘how,’” says Wasylyshyn. “Their relationships are primarily transactional, not connective.”
    One company that stands out in the hiring process, in spite of its size, is LEGO, the number two toymaker in the world. According to a November 14, 2013, Wall Street Journal article, the company recently filled several openings for designers by inviting 21 men and women to spend two days (at LEGO’s expense) at headquarters in Billund, Denmark. Rather than go through formal interviews, the candidates were asked “to sketch and build LEGO sets in front of a panel of senior designers.” The men and women were judged not just on their design concepts – including “color schemes, buildability and the elusive element of fun” — but also on “the way they interacted with each other.” After all, as the article pointed out, the town of Billund has just 6,500 inhabitants and “night life is limited to an Irish pub.”