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Management by Objectives? Or Leading with Goals?

Allen Slade

Here is a simple recipe for a post on a leadership blog:

Are you doing bad things too much? Do good things more. You and your employees will prosper. Your comments welcome below. And follow us on Facebook!

Here are some leadership contrasts that fit the recipe:

Bad Things:          Good Things:
Managing Leading
Controlling Empowering
Commanding   Engaging
Reacting Anticipating

If today’s topic is “Management by Objectives? Or Leading with Goals?” we probably agree that it is better to lead people than to manage objectives. As a society, we value leaders and leadership. That’s one reason I am a leadership coach, not a management coach.

Hang on, it’s not that easy. The best leaders are good managers, too. Empowerment requires controls (like accounting and scorecards). You need to engage, but in a fire, you need to command. And, you need to react to what no one could anticipate.

Bottom line: If you are a leader, you may need to use Management by Objectives. And, as a manager, you should Lead with Goals. Let’s take a closer look: 

Leading with Goals is a powerful tool for influence. As a leader, have a goal setting conversation with each employee at the beginning of the year. Encourage them to set SMART goals. Use those goals for continuous improvement throughout the year. And use those goals as the focus of the performance review at the end of the year. Make sure each employee has at least three goals but not so many goals they are overwhelmed.

Management by Objectives is a bit different. In MBO, managers assign every individual a specialized set of objectives or goals. Performance reviews are conducted periodically, and rewards are given to individuals based on performance against goals.

MBO combines the motivational power of goal setting with the coordination power of strategy formulation. MBO systems create a cascading set of goals.

Interlocking Goals

The CEO has goals that cascade to the VPs. Their goals cascade down through their functions. If all goals are met at one level (meet quarterly sales quotas), you should meet the goals at higher levels (sales growth of 20%).

So, which is better? Management by Objectives or Leading with Goals?

Research indicates that goals increase performance. When employees participate in setting their goals, they have higher commitment to the goals. So, with MBO, the top-down goals may undermine motivation somewhat. Leading with goals, so long as you use participative goals setting, will increase performance a bit more more. Still, top-down goals are better than no goals, so MBO is better than nothing.

Furthermore, MBO is better at cross-group coordination than purely participative goal setting. At the extreme, set-your-own-goals can lead to organizational chaos. If Marketing sets stretch sales goals, but Manufacturing sets quality goals rather than capacity goals, you may sell more than you can make. MBO provides the advantage of linking all goals to each other and to the organization’s strategy.

My advice to those at the top: Don’t think either MBO or Leading by Goals. Do both well. Maximize coordination power of MBO by linking goals throughout the organization while maximizing the motivational power of goal setting by engaging employees fully.

One way to do this is the double cascade. Strategy formulation starts at the top and is cascaded down. Then, all levels give feedback on the strategy. Next, preliminary goals are cascaded down. At every level, employees and managers sign up for SMART goals and give feedback up the chain. This extra round of two-way communication and coordination increases the quality of the decisions made and ensures that the resulting goals will gain traction throughout the organization.

For managers in the middle, your company either has management by objectives or it doesn’t. You probably have little say in whether goals are going to be cascaded down to you.

In an MBO organization, your key move as a leader is to act with integrity as you engage your employees. If you have been assigned goals by your leadership, let your team know. Empower them to help you find the best way to accomplish your goals. Find areas of wiggle room for them (often in the how and when of performance) so that they fully commit to your plan.

In a non-MBO organization, get your people as coordinated on goals as need be. If there is a high level of interdependence, do team goal setting. If there is some need for coordination, be the communication linchpin for goals. If there is little need for coordination, don’t waste your time.

MBO or not, you can lead with goals – SMART goals, goal-driven continuous improvement and goal-focused performance reviews – to maximize the engagement of your employees and the success of your organization.

Coaching for the Long Hill of Change

Allen Slade

Last May, I rode my bike in a century. I had completed 50-mile rides before, but I had never ridden 100 miles in one day. I trained hard, but not hard enough. About mile 60, I boinked. My energy reserves were depleted, and my speed dropped five miles an hour. Halfway up a long hill, I stopped. I had to catch my breath and decide if I was going to finish. I completed the hundred miles, but it was a close thing.

Like the long distance cyclist, leaders must be internally motivated. External praise is rare. The cheers of the crowd are too distant to carry you up the hills. You cannot afford to boink at the 60 mile point.

There are signs of leadership fatigue everywhere. At a leadership conference last week, one of the keynote speakers suggested we give up trying to change large organizations. Several panelists talked about the loneliness of leadership.

Leadership lite is about prestige and power, personal glory and personal gain. Regular readers of this blog know that I do not prescribe leadership lite. In my experience, the challenges of true leadership are large. Change leaders must master the four C’s: commitment, competence, capacity and character. In general, change leaders have to work longer, harder and smarter than the people around them.

I don’t intend to discourage true leaders. You need to have realistic expectations of the leadership challenges you face. But you also need support. You probably will not find encouragement from the people you lead. You may not find support from your peers, especially if you are competing with them for budget, talent or promotions. And, if your own leaders are fully engaged, they may be more discouraged and stressed than you are.

There is hope. You are not condemned to a life of lonely leadership. You simply need to gather the support you need.

Use the support you already have. Reach out to your close friends and family. Engage your circle of trusted advisors. Talk about your challenges and your discouragement.

Once you become an executive, you probably should hire an executive coach for yourself. Even before then, if you are leading change, investigate whether your organization will provide a leadership coach. A good coach will provide real and present encouragement. A coach will also help you find the support you need in others. And, a coach will help you develop the commitment, competence, capacity and character you need to lead change.

Leading change requires you to climb the long hills without much encouragement. Get coaching so you can keep pedaling.


Pivot to the Center

Allen Slade

When incumbent presidents run for re-election, they usually win. Of the last 14 reelection bids, 10 were successful. Since 1996, every president has been reelected. Franklin D. Roosevelt’s perpetual reelection led to a constitutional amendment to limit presidents to two terms.

Non-incumbent politicians must capture the partisan base in the primaries. To win the general election, most  politicians have to pivot to the center to capture non-partisan votes.  The most effective politicial leaders govern for the common good, usually requiring a second pivot even further to the center.

In this presidential election, Obama was able to stay near the center politically. Romney had to execute a difficult pivot to the center. Jacob Weisberg describes Romney’s campaign as a failed pivot to the center:

Romney is not a right-wing extremist. To win the nomination, though, he had to feign being one, recasting himself as “severely conservative” and eschewing the reasonableness that made him a successful, moderate governor of the country’s most liberal state. . . . Romney’s pandering to the base made it possible for the Obama campaign to portray him as a right-wing radical from the start of the campaign. Fear that he didn’t have the base locked down kept Romney from moving smoothly to the center once he had secured the nomination.

A move to the center is difficult. Politicians who espouse extreme views in the primary but switch to more moderate views for the general election are accused of flip-flopping. They appear to be inauthentic.

As a leader, you have to practice principled moderation. As you advance to functional manager, you have to pivot to center, starting to address issues like budget, efficiency and change management. Many of your former peers will resent you.

If you move from functional manager to general manager, you have to broaden your perspective yet again. You will focus on the bottom line, not just functional excellence. You will balance operations, finance, marketing and human resources. Your peers from your former function will resent you.

These pivots to the center will open you to charges of arrogance, lack of authenticity and selling out. As you pivot to the center, you may appear to be, well, a politician.

To ease your pivot to the center as a leader, I offer three suggestions:

Expand your horizon. You will alienate a few people to serve many people. You will sacrifice your personal comfort to serve the greater good. Just as the best politicians move past partisan appeal to win a general election and govern for the common good, you need to move past beyond a limited perspective and your old peers to lead at the next level. Decide to make the sacrifice before you accept the management position.

Take time for sense-making. A pivot to the center is a major career change. Give yourself time to make sense of the transition.

Get coaching. Get objective, independent advice on how to make a successful pivot to the center. Mentors may help a bit, but coaching is better. Get a leadership coach for the change from technical specialist to functional manager. Get an executive coach for the pivot from functional manager to general manager.

A pivot to the center is one of the toughest moves you can make. Growth and change are always tough, but often rewarding. When you have the opportunity, make your pivot to the center to become the best leader you can be.

Principles of Leadership Are Outdated

Allen Slade

When I teach leadership to business students, I often open the first class by asking students about leaders they respect. Mahatma Gandhi, George Patton, Martin Luther King, Jr. and Steve Jobs are often mentioned. Some students talk about their athletic coach or a former boss.

Then, we get to the heart of leadership. To save you the cost of tuition, here are the highpoints:

The “Great Man” theories of leadership don’t work.

There is no one best way to lead. The best way to lead depends on the situation.

The best leaders are not students of leadership.

There are no simple rules. I discourage imitating role models. I attack leadership trait theories. I undermine leadership style theories. Being the best leader you can be is difficult and complicated.

Those who look for simple answers are understandably disappointed.

Yet, there is a straightforward approach to leadership in my class. Be a student of followership and collect lots of data.

Be a student of followership. Don’t waste time studying leaders or leadership. Study the people you lead. The best leaders have incredible curiosity about the people around them. They ask people what’s important to them, then they think hard about the implications. They check for understanding by asking more questions. The best leaders shape their leadership behavior for their followers.

Collect lots of data. To understand people, the best leaders are hungry for information. They collect data with direct observation of the words, tone and emotions of others. They ask lots of questions. And they suck every bit of value out of any quantitative data they can get, through surveys, 360 reports, attrition data, customer data, etc.

For the visually oriented like me, here is how I capture this vision of leadership:

With a commitment to know the people you lead and a hunger for more data, you can bootstrap your leadership. You can create mini-experiments based on your tentative knowledge of people, and then correct your actions based on their feedback. You will develop a personal, flexible leadership style. And, I suspect, your impact as a leader will expand well beyond what you would achieve if you had simply tried to imitate the great leaders of the past.

Leading in Stormy Weather

Ben Slade

In the early 1980s, the Bell Telephone Company was convicted of antitrust violations and broken up into several “Baby Bells.” Frequent reorganizations, constant rumors, and a lack of job security took a toll on the workforce. Many employees were overwhelmed by the stress. They experienced physical, mental, and emotional strain at work and at home. However, some employees emerged from the deregulation with an increased sense of energy and vitality. These hardy survivors proceeded to make meaningful contributions both inside the company and out. What distinguished the overachievers from the overwhelmed?

Prolonged or intense stress can put employees at increased risk of illness, marital problems, and reduced productivity. However, some individuals emerge from very stressful events relatively unscathed. Understanding stress vulnerability can help identify opportunities to create pathways to resilience.

One pathway to stress resilience is hardiness. Hardiness has three components: commitment, control, and challenge. Hardy individuals are committed to their organization, finding meaning and stimulation from the work that they do. They believe they can exert control on the world around them, and that their fate is not predetermined. Finally, they interpret difficult experiences as challenges that lead to growth and maturity, and are willing to persist in a difficult environment rather than flee for temporary comfort.

If you are a hardy leader, you will typically excel in stressful circumstances. Although you can sometimes reshape your environment to reduce this stress, you are often surrounded by challenges that are difficult or impossible to change. Your own responses will probably not change the technological limitations, economic recessions, or government regulations that boost your stress levels.

Hardiness is like a rain jacket, deflecting the rain without changing the intensity of the storm. You may not be able to control the environment, but a predisposition towards positive thinking and action can protect you from getting wet. By reframing hard times as an opportunity to excel and conquer, you actually boost your own resistance to stress.

As a leader, your hardiness may even be an umbrella for your team. This hardy leader influence is driven by social sense-making. You can increase your team’s stress resistance with your own behaviors and attitudes.

Transformational leaders inspire and motivate their followers by reframing obstacles as opportunities. Often, you cannot eliminate stress in the workplace. Instead, you can reinterpret stressful circumstances as opportunities to excel. Emotions which can interfere with performance (such as anxiety) can be translated into excitement. When you motivate your team to commit to achievable goals, help them believe that they control their own destiny and demonstrate how obstacles are challenges instead of threats, you have extended your umbrella of hardiness. You bolster individual resilience and improve organizational performance in the face of uncertainty and change.

Do you interpret events in a hardy manner? Do you convey the right messages to your subordinates in the face of uncertainty? You can’t avoid the storms of change, but you can use commitment, control and challenge to help you and your team stay dry.

What to Expect from Executive Coaching

Allen Slade

Promising athletes who want to reach the top almost always have a coach. When they reach the highest level of competition – the Olympics, the NFL, the World Cup, the PGA/LPGA – coaching is even more important.

Coaching is valuable for leaders also. Leadership coaching increases your ability to achieve results, build healthy relationships and stretch into your best self as a leader. Leadership coaching is better than training or mentoring at developing leaders. To get to the top of any field – executive management or professional golf – is hard. To stay on top is even harder. If leadership coaching is good early in your career, then executive coaching is absolutely necessary to stay at the top.

Executive coaching builds on leadership coaching in many ways. Executive coaches help you continue to polish your leadership skills while they help you build skills in strategic thinking and leading from a distance.

Strategic thinking is the seeing the big picture of organizational success. As an executive, you must be look for dynamic systems and complex interactions. You cannot master only functional strategy. You must have a general management perspective that integrates all functions – operations, marketing, finance and people – to create bottom line success. You must grow the business: competitive strategy to maximize your market positions and corporate strategy to manage your mix of businesses. You may have had a business class with business growth strategy models like this:

I have taught strategy (using diagrams like this). I have also managed strategy. Trust me, strategy is more complicated in practice than in the classroom.  An executive coach can be your thinking partner as you stretch into new levels of strategy formulation, implementation and evaluation.

Leading from a distance is the ability to lead with or without substantial personal contact. As an executive, you may have mastered interpersonal leadership, but now you must also be influential with people you hardly know. Leading from a distance requires broadcast communication skills like speeches, all-hands email and other mass communication. With hundreds or thousands of employees, you must also become expert at listening at a distance – getting upward feedback from the managers who work for you, from employee surveys and from town hall meetings. Executives may also need to move beyond interpersonal leadership presence to true charisma. A coach can help you jumpstart your broadcast communication, feedback and charisma.  

An executive is a competent leader, and more. An executive coach should be a competent leadership coach, and more. An executive coach should have a proven track record as a leadership coach (including accreditation by the International Coach Federation), real-world strategy experience and facility with large group communication and feedback. Executive coaches should have experience as an executive or C-suite consultant. They may have graduate education in strategy or organizational psychology.

Being at the top can be lonely. Executives stand out from the pack in performance, but they also stand out because they have passed by their peers and almost all potential mentors. As the CEO, you truly have no peers in your organization. Your board has to balance helping you succeed with its fiduciary responsibility to evaluate your performance. An executive coach is a safe partner to discuss your strenghts and weaknesses. Your coach can help you turn your failures and shortcomings into learning opportunities without imposing judgement on you.

Chemistry between you and your executive coach is important. I recommend working with a firm that has a stable of proven executive coaches. Then, if you and your coach do not have the right chemistry, there are other coaches who can step in to give you the help you deserve. At Slade & Associates, we have a range of coaches, including our own associates and executive coaches at Healthy Companies International.

As an executive, you should have experts to help you maximize the financial and operational performance of your organization. You should also have an expert to maximize your own performance. If you need an executive coach, get one.  If you have an executive coach already, throw yourself into improving your executive performance. If the chemistry with your executive coach is not right, get the executive coach that fits your needs. Do whatever it takes to get the coaching you need to stay at the top of your game.

The Leader’s Tipping Point

By Allen Slade

Leadership is about creating sustainable performance in your team.  Jim Clawson points out that effective leadership is “managing energy, first in yourself, then in those around you.” In a post on The Tipping Point of Performance, I talked about managing energy in others to create sustainable performance. As a leader, you have a proven track record of results. You combine competence, capacity and committent to success, so people are willing to follow you. But is your performance sustainable?

Bottom line: As a leader, you have to manage your own energy. Know your performance curve, watch for signs of an impending performance crisis and take dramatic action as needed.

The performance curve is just as true for you as it is for the people you lead. We all experience this inverted-U relationship between stress and performance. A straight line relationship between your level of stress and your performance holds, but only in the green zone.

If you are in your own green zone, you adjust your effort level to the demands of the situation. Stress triggers higher performance. If you face higher demands, you stay longer, work harder, decide faster. All is well until you reach your tipping point. Then, more stress equals less performance. Further pressure for performance, from yourself or from external demands, drives you into the red zone. You become the red marble accelerating down the performance curve. As a leader, a stress-induced performance crisis not only hurts your productivity, it can undermine your credibility as a leader.

Bottom line: Push youself, but know your own tipping point. As Bob Rosen says, lead with just enough anxiety.

Manage your own stress wisely, especially on the dangerous part of the performance curve.

Stress reduction strategies. Whether you are at the top of the green zone or at the tipping point, try stress management strategies. Simplify your life. Practice centering. Off load non-essential work. Get help from your boss, in terms of more people, more resources or more time.  Ask your colleagues for support. Delegate to your team.

Develop yourself. Long-term, grow your capacity for performance to avoid a stress-induced performance crisis. Develop new skills. Practice skills to the point of mastery. Practice for speed, not just completion. If you can write methodically, practice writing under a deadline. (Blogging three times a week is speeding up my writing!) Coaching can help, whether you are an executive, leader or golfer. At Slade & Associates, we coach executives and leaders to maximize their performance. There are certain things we don’t do, so you would do well to find your own golf coach.

Your urgency in reducing your stress depends on your position on the performance curve:

Top of the green zone. If you push harder but don’t see much improvement, you may be approaching the top of your green zone. Be careful, because you could hit your tipping point. Be alert for further stress, and consider strategies to reduce stressors or increase your performance capacity.

The tipping point. Approaching your tipping zone is dangerous.  If familiar tasks become harder, if your inbox is overwhelming, if you snap at reasonable requests or if you work longer with fewer results, you may be at your tipping point. At the tipping point, you still have time. You can think. You can experiment with one stress reducer at a time. Take action now to reduce your stress. Climb back down into the green zone while you can still think clearly.

The red zone. Passing your tipping point is catastrophic because of the accelerating downward spiral of performance. To get out of the red zone, aggressively implement stress management strategies. Make a plan that combines at least two or three big stress reducers – simplify, center, get support from your boss, delegate, etc. Make smart requests ask your boss for support or delegate. Whatever the details, take dramatic action. In the red zone, you must act now.

A lifeguard. I must confess: This red zone advice may not work. The downward spiral of performance undermines your decision making and behavioral flexibility. If you are drowning, sometimes you can’t save yourself. You need a lifeguard who will know you need help and step in during a crisis. Your lifeguard could be a friend, a mentor, a coach or your family. Before a red zone crisis, build strong relationships. Be transparent, accountable and open to constructive feedback. Then, if you are drowning in stress, you will have someone willing to dive in to save you.

Being mindful of the performance curve can help maximize sustainable performance for yourself and for the people you lead. So go lead with just enough anxiety. 

The Tipping Point of Performance

Allen Slade

I love sports movies, especially about underdogs. The critical moment is when the coach or loved one gets the underdog fired up. I love Rocky II, when Talia Shire lights Rocky’s fuse from her hospital bed and Remember the Titans, when Denzel Washington gives a moving call for unity in the Gettysburg cemetery.

As a leader, do you try to fire up your team? Be careful. If you play with fire, you can get burned.

Clearly, there are times when you need to establish a sense of urgency. But asking for extraordinary effort can backfire. As the performance curve below shows, there is an inverted-U relationship between stress and performance. A straight line relationship between stress and performance does hold, but only in the green zone.

A leader who operates in the green zone can increase performance with stress. A complacent team may benefit from getting fired up.  Stress triggers higher performance. The leadership situation has to be right: sufficient trust, basic equity and the capability to perform better. Given those things, adding some stress adds some performance. More stress creates more performance. This straight line relationship is a simple recipe for success: up the quota, accelerate the deadline, give the locker room speech or crack the whip and the underdog becomes the champ.

The problem hits at the top of the curve. When a person reaches the tipping point, more stress equals less performance. Further pressure for performance leads to a downward spiral in the red zone. People become anxious. They act indecisively, work slower or make more mistakes. As their performance decreases, their anxiety increases, further decreasing their performance. Notice the red marble at the top of the performance curve. In the red zone, the marble accelerates down the curve of poor performance. As a leader, if you push a person too far, their performance drops. And, their performance will continue to get worse because of the downward spiral.

Bottom line: Push for performance, but avoid the tipping point for stress. As Bob Rosen says, lead with just enough anxiety.

Aim for high performance, not peak performance. I coach leaders to avoid pushing people to their tipping point. If the tipping point is at 100% performance, aim for 90 or 95%. Then, your team member has a stress buffer. If there is a coffee spill that wipes critical data or a car wreck going to the big meeting, they will have the psychological reserves to get through it. If you push to get the full 100%, your people may tip into the red zone.

Develop your people. If you wish to increase performance, but a person is near the tipping point, think development first, motivation later. Increase their competence and capacity, so they can perform better while maintaining an essential stress buffer.

Be a lifeguard. Your people can drown in stress. The downward spiral of performance undermines decision making and behavioral flexibility. If someone is in the red zone, you may need be their lifeguard. Watch for signs of stress in your team members, watching for people at the tipping point or in the red zone. Then, throw them a life line. Offer more resources, renegotiate deadlines, offer them time off to refresh and rest. Be creative – think of the rousing speech that fires up the underdog, then do the opposite.

Know your team. Everyone is different. The people you lead have different capabilities and stress tolerances. They will show different warning signs of a stress-induced performance crisis. Get to know your people before a crisis. Have regular dialogue with every team member. Seek insight about their performance patterns, personal stressors and individual signs of overload. This will equip you to be a stress lifeguard.

Being mindful of the performance curve can help maximize sustainable performance for the people you lead. So go lead with just enough anxiety.

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