How Great Leaders Think

by Lee G Bolman

  Sustaining Power to the People

  Empowerment has become another management buzzword. Like many other corporate shibboleths, it’s easier to preach than practice. At Semco, empowerment is fundamental to the company’s approach to managing people. Democracy is a central theme at Semco. It began with symbolic changes—eliminating the dress code, democratizing the parking lot, closing executive dining rooms, and eliminating private offices. Secretaries and receptionists were moved to other jobs, and managers learned to make copies and answer their own phones. Gone were all the old status markers—how people dressed, how far they had to walk to their car, where they ate, or the size of their office.

  Semco also embraced a philosophy known as “open-book management” that has taken root in a number of progressive companies. The books were open to all employees, and training in financial literacy helped them make sense of the numbers. This approach was another clear signal that management trusted people, and it gave employees a powerful incentive to contribute. They could see how their work affected the bottom line and how the bottom line affected them.

  Over time, the company took democratic decision making to a level few companies have ever contemplated. Workers began to design production processes and products, approve or veto new businesses, set production quotas, and set their own hours and pay. They elected and evaluated their bosses. For big decisions, everyone got a vote.

  The basic organizational units at Semco are small, self-managing groups of roughly six to ten people. These teams are typically grouped in business units of no more than a few hundred people. Ricardo’s theory holds that you can minimize rules and bureaucracy if you keep things small and simple. When groups face a new opportunity or challenge, they start talking about how to handle it among themselves.

  Promoting Diversity

  Believing that companies have a responsibility to combat discrimination, the company initiated policies and projects to promote fairness. One was “Semco Woman,” which began when the company encouraged groups of women at every level to meet and discuss shared concerns. The women started with a push for better locker rooms and office bathrooms, but then moved on to bigger issues such as day care and career opportunities.

  MEN’S WEARHOUSE: GETTING IT RIGHT

  Your circumstances may not be the same as Ricardo Semler’s, and not all the specifics in his playbook will be right for your situation. You’ll need to experiment and learn from experience, just as he did. But Semler’s example shows that following a broad set of principles for managing people, combined with courage and creativity, can produce extraordinary results. Ricardo is not alone. Many other leaders have built teams of talented, loyal, and free-spirited people who will go out of their way to get the job done. Such employees are less likely to make costly blunders or to jump ship as soon as someone offers them a better deal. That’s a potent edge—in sports, business, or anywhere else.

  The Semco case offers a toolbox of ideas for thinking from a human resource angle. To test your ability to apply these ideas, imagine yourself in the situation of another successful business leader. Suppose that after college, you spent a few years selling men’s clothing and discovered that it was fun and you were good at it. You feel you’re ready for the next challenge—launching your own business. You’ll begin with a single store, but you hope to get larger over time. You know you’ll be entering a tough industry with slow growth and lots of competition. So how do you stand out in a crowded, competitive field? One thing you know is that your competitors’ employees typically live with low pay and mediocre management. Maybe if you treat your people better, they’ll make your customers happier.

  How might you do that? You could ask yourself the questions we discussed in the Semco case:

  What philosophy and values will you follow?

  What will you look for in the people you hire?

  How will you keep people once they sign on?

  What will you do to invest in your people?

  How will you empower your people?

  How will you promote diversity?

  George Zimmer developed answers to those questions that worked for him. He founded Men’s Wearhouse in 1973, when he was twenty-four years old. He began with a single store, but a quarter-century later, the company had grown to more than a thousand outlets generating close to $2 billion in revenue, even as the men’s suit business went downhill and many competitors went out of business. You’ve probably seen Zimmer in one of his many television commercials with his signature line, “You’re going to like the way you look—I guarantee it.”

  Our list of key practices for leading people provides a quick guide to Zimmer’s road map for success:

  Develop a philosophy and values Zimmer was clear and succinct about his company’s basic philosophy and values: “We’re not in the suit business, we’re in the people business . . . There has to be a democratization of everything—of effort and the fruits of those efforts. We’re always looking for ways here to share the wealth and really make it win-win.”10

  Hire the right people Hiring at Men’s Wearhouse was more centralized than at Semco—it was a major responsibility of regional managers—but the company knew what it valued. Competitors often looked for retail experience, but Men’s Wearhouse wanted people skills and positive attitude. The company figured that changing personality is hard, but training people to sell suits is easier.

  Keep them Turnover at Men’s Wearhouse is low by industry standards: 10 percent annually for store managers, compared to 25 percent for the industry.11 Men’s Wearhouse promotes almost entirely from within, and many of the senior executives worked their way up from the sales floor. Firing is centralized, and before letting someone go, the company typically moves the individual to another store or job to offer another chance for success. An employee stock ownership plan gives just about everyone a stake in the company, and store employees are eligible for monthly bonuses based on a store’s performance.

  Invest in them Men’s Wearhouse emphasizes coaching and training, mostly conducted by line managers. New sales staff spend a week in California at “Suits University,” where they learn about selling, the product line, and the company’s values and mission. Executives at every level from the CEO down are expected to spend time in stores coaching and selling.

  Empower them A central element of the Men’s Wearhouse philosophy is to hire “wardrobe consultants,” not sales clerks. The consultant’s job is not simply to sell what’s in the store but to understand what the customer is looking for, ask about his existing wardrobe, and help him meet his work and lifestyle needs. The goal is to provide a positive experience and build a long-term relationship with the customer. Managers are told that their number-one customer is the people who work for them and that their job is to provide staff with the tools and resources they need. Men’s Wearhouse also encourages self-expression and having fun; it has built a reputation for great holiday parties.

  Promote diversity A long-term commitment to diversity has produced a workforce at Men’s Wearhouse that is about half female and more than half minority. In Fortune’s 2013 list of America’s one hundred best places to work, Men’s Wearhouse ranked seventh in terms of workforce diversity.12

  In 2011, Zimmer turned the reins over to his chosen successor, Doug Ewert, but after a while the two drifted apart. Zimmer began to worry that the new leadership was departing from the people-first philosophy that made Men’s Wearhouse successful. He criticized increases in executive compensation that violated his egalitarian credo. All that set the stage for the surprising news in mid-2013 that Zimmer had been fired as both executive chairman and TV pitchman for Men’s Wearhouse. The board felt that they had a two-boss problem because Zimmer had not accepted “the fact that Men’s Wearhouse is a public company with an independent board of directors and that he [is no longer] the chief executive officer.”13 Did this embarrassing public spat mean that Men’s Wearhouse was moving away from the philosophy on which Zimmer built it? Or just that Zi
mmer was stronger on people leadership than political savvy? Many leaders have paid a price for just that reason.

  CONCLUSION

  The human resource frame expands leaders’ thinking beyond the rational nuts and bolts of narrow structural thinking to an understanding of how to create conditions that foster high levels of motivation, energy, and effort. Leaders who commit themselves to key practices of effective people leadership—developing a philosophy for managing people, hiring the right people, keeping employees and investing in their future, empowering them, and promoting diversity—have repeatedly built businesses that thrive on the strength of employee talent, energy, and creativity.

  All would be well if leaders understood themselves and others. Unfortunately, that’s not always the case. In Chapter Five, we will examine the roots of interpersonal incompetence among leaders and offer ideas for how they can become better communicators.

  NOTES

  1. Davidson, A. “A Ready-to-Assemble Business Plan.” New York Times Magazine, Jan. 5, 2014, pp. 12–13. http://www.nytimes.com/2014/01/05/magazine/thinking-outside-the-big-box.html?_r=0.

  2. Harnish, V., and the Editors of Fortune (eds.). The Greatest Business Decisions of All Time. New York: Fortune Books, 2012, pp. 200–201.

  3. Ibid.

  4. “James Sinegal, Costco.” Bloomberg Businessweek, Sept. 22, 2002. http://www.businessweek.com/stories/2002-09-22/james-sinegal-costco.

  5. McGregor, D. The Human Side of Enterprise. New York: McGraw-Hill, 1960.

  6. Quoted in Bergman, L., Rummel, D., and MacIntyre, L. “A Dangerous Busi-ness.” Frontline, 2003. www.pbs.org/wgbh/pages/frontline/shows/workplace/mcwane/two.html; transcript at http://www.pbs.org/wgbh/pages/frontline/shows/workplace/etc/script.html.

  7. Semler, R. Maverick: The Success Story Behind the World’s Most Unusual Workplace. New York: Warner Books, 1993, p. 67.

  8. Killian, K., Perez, F., and Siehl, C. Ricardo Semler and Semco S. A. Phoenix: Thunderbird, 1998, p. 2.

  9. Semler, R. The Seven-Day Weekend: Changing the Way Work Works. New York: Penguin, 2004, p. 78.

  10. Pfeffer, J. “The Men’s Wearhouse: Success in a Declining Industry.” Case HR-5. Stanford, Calif.: Stanford Graduate School of Business, 1997.

  11. Lee, L. “Spiffing Up Men’s Wearhouse.” Bloomberg Businessweek, Nov. 1, 2004. http://www.businessweek.com/magazine/content/04_44/b3906112.htm.

  12. “100 Best Companies to Work For.” Fortune, 2013. http://money.cnn.com/magazines/fortune/best-companies/2013/list/?iid=bc_sp_full.

  13. Smith, A. “Men’s Wearhouse: Why We Fired Zimmer.” CNNMoney, June 25, 2013. http://money.cnn.com/2013/06/25/news/companies/zimmer-mens-wearhouse/index.html.

  Chapter 5

  Seeing Ourselves as Others See Us

  One of the most basic and pervasive causes of leadership failure is interpersonal blindness. Many leaders simply don’t know their impact on other people. Even worse, they don’t know that they don’t know. They assume that other people see them pretty much the way they see themselves, then they blame others when things go wrong. A famous example occurred during the 2008 U.S. presidential campaign, after the Republican nominee, John McCain, selected the then largely unknown governor of Alaska, Sarah Palin, to be his running mate. At first, this looked like a smart move, as Palin gave a rousing and well-received acceptance speech at the Republican convention. But Palin was new to the national political scene and lacked familiarity with many of the issues in the campaign. This sometimes got her in trouble when she had to work without a script. A legendary example was an interview on national television with anchor Katie Couric:

  Couric:

  You’ve cited Alaska’s proximity to Russia as part of your foreign policy experience. What did you mean by that?

  Palin:

  That Alaska has a very narrow maritime border between a foreign country, Russia, and on our other side, the land—boundary that we have with—Canada. It—it’s funny that a comment like that was—kind of made to—cari—I don’t know, you know? Reporters—

  Couric:

  Mock?

  Palin:

  Yeah, mocked, I guess that’s the word, yeah.

  Couric:

  Explain to me why that enhances your foreign policy credentials.

  Palin:

  Well, it certainly does because our—our next-door neighbors are foreign countries. They’re in the state that I am the executive of. And there in Russia—

  Couric:

  Have you ever been involved with any negotiations, for example, with the Russians?

  Palin:

  We have trade missions back and forth. We—we do—it’s very important when you consider even national security issues with Russia as Putin rears his head and comes into the air space of the United States of America, where—where do they go? It’s Alaska. It’s just right over the border. It is—from Alaska that we send those out to make sure that an eye is being kept on this very powerful nation, Russia, because they are right there. They are right next to—to our state.

  The interview went viral in the media and on the Internet, and much of the commentary focused on Palin’s lack of foreign policy depth. But note Palin’s genuine puzzlement about the response she got. “It—it’s funny that a comment like that was—kind of made to—cari—I don’t know, you know? Reporters—.” Palin’s comments made sense to her, so she figured there must be something wrong with her critics, those liberal reporters from the “lamestream media” who were out to get her.

  Palin is not alone. She provides only one of countless examples of a lack of self-awareness that chronically bedevils leaders, whether on the world stage or in much more mundane situations. A routine example is a boss, B, who thinks he’s coaching a subordinate, S, whereas S thinks B is constantly micromanaging. Over time, the boss gets more and more disappointed because S doesn’t respond as enthusiastically as he expects. He wonders why S doesn’t want to learn and can’t follow simple instructions. Meanwhile, S becomes more and more frustrated with a boss who constantly interferes, gives dumb orders, and makes it harder for her to do her job. Because the boss has no clue about the gap between how he sees himself and how S sees him, his efforts to coach just make things worse. Why are gaps like this so widespread and persistent? If you look carefully at the following case, you can see how interpersonal blindness can crop up right before your eyes in a routine encounter.

  ELLEN AND DON

  Ellen, a manager in an insurance company, braced for a challenging meeting with Don, one of her subordinates. Don was bright, talented, and willing to work, just as Ellen had hoped when she hired him fresh out of college several months earlier. But his attitude was another matter. Graduating in a year when jobs were scarce, Don had accepted the administrative support role that Ellen offered him, but he wasn’t happy about it. He continually complained that as a college graduate, he was underpaid and overqualified for the job. Now Ellen had an opening for an underwriter and had decided to offer Don a position as a trainee.

  We’ll eavesdrop on an abridged version of their conversation. Note that the right-hand column shows what they said to one another, while the left column shows what Ellen was thinking and feeling, but not saying (based on her recollections after the meeting). As you read, ask yourself how well Ellen is handling the leadership challenge she faced in this meeting. If you were in her shoes, would you do anything differently?

  Ellen’s Underlying Thoughts What Ellen and Don Said

  Ellen: We’re creating a new trainee position and want to offer it to you. The job will carry a salary increase, but let me tell you something about the job first.

  I wonder if his education makes him feel that society owes him a living without any relationship to his abilities or productivity. Don: OK. But the salary increase has to be substantial so I can improve my standard of living. I can’t afford a car. I can’t even afford to go out on a date.

  Ellen: You’ll start as a trainee working with an experienced underwriter. It’s
important work, because selecting the right risks is critical to our results. You’ll deal directly with our agents. How you handle them affects their willingness to place their business with us.

  How can he be so opinionated when he doesn’t know anything about underwriting? How’s he going to come across to the people he’ll have to work with? The job requires judgment and willingness to listen. Don: I’m highly educated. I can do anything I set my mind to. I could do the job of a supervisor right now. I don’t see how risk selection is that difficult.

  Ellen: Don, we believe you’re highly intelligent. You’ll find you can learn many new skills working with an experienced underwriter. I’m sure many of the things you know today came from talented professors and teachers. Remember, one of the key elements in this job is your willingness to work closely with other people and to listen to their opinions.

  That’s the first positive response I’ve heard. Don: I’m looking for something that will move me ahead. I’d like to move into the new job as soon as possible.

  Ellen: Our thought is to move you into this position immediately. We’ll outline a training schedule for you. On-the-job and classroom learning, with testing at the end of each week.

  We owe him a chance, but I doubt he’ll succeed. He’s got some basic problems. Don: Testing is no problem. I think you’ll find I score extremely high in anything I do.

  At first glance, this conversation might seem routine, almost ho-hum. Look a little deeper, though, and you see how far it went off the rails. Don can’t understand why no one recognizes his talents, but has no clue that his actions continually backfire. He wants to impress Ellen, but his obsessive self-promotion reinforces his image as an arrogant candidate bound for failure. Don doesn’t know this, and Ellen doesn’t tell him. Instead, she tells him, “We think you’re intelligent,” at a moment when she’s feeling, “You’re opinionated and don’t listen.” She has good reason to doubt Don’s listening skills, as he doesn’t seem to get the message that she’s worried about his people skills. If he can’t listen to his boss, what’s the chance that he’ll hear anyone else? Yet she leaves the meeting with the intention of moving Don into a new position while expecting that he’ll fail. She colludes in a potential train wreck by skirting the topic of Don’s self-defeating behavior. In protecting herself and Don from a potentially uncomfortable encounter, Ellen helps to ensure that no one learns anything.