Myths That CEOs Continue To Live By

Posted November 18th, 2011 in Articles, Blogs by admin

There’s some pretty good evidence that Capitalism could be in deep trouble in today’s world. And stereotypical CEOs, business models, as well as workplace practices are in equally deep trouble. One need only look at the increasing income gaps and disappearing middle class, increasing levels of employee disengagement and distrust of leaders, along with the control of almost all wealth in the hands of the few as evidence. We can point to some destructive myths about economic enterprise, leadership and work as feeding those problems.

Tony Schwartz, writing in the Harvard Business Review identifies four such myths. Myth 1: Multitasking is critical in a world of infinite demand. This flies in the face of recent neuroscience research; Myth 2: Anxiety helps you perform better. This often shows up as bosses putting performance pressure on people which inversely affects motivation and performance. Myth 3: Creativity is a genetic trait and can’t be taught. But we know now that creative thinking can be taught and learned; Myth 4: The best way to get more work done is to work longer hours. This has led to workaholism and burnout and evidence of declining productivity.

Another myth is “management efficiency”—of course invented by managers. Tough economic times have produced a flood of management “experts” and many leaders of organizations whose only strategy for dealing with the downturn in the economy is cutting costs, layoffs and more efficiency-based strategies. The mantra for business for much of the last century has been operational efficiency. So leaders look for ways to cut costs and make the operations lean and mean. Yet much of the rationale for and evidence supporting efficiency as a key management strategy is questionable.

Management theory came to life in 1899 with a simple question: “How many tons of pig iron bars can a worker load onto a rail car in the course of a working day?” The man behind this question was Frederick Winslow Taylor, the author of The Principles of Scientific Management and, by most accounts, the founding father of the whole management business. Taylor’s scientific management principles became the Bible upon which management practices have been used to dominate Western business for the past century. The problem is, that Taylor was a better salesman than a scientist.

Mathew Stewart, the author of The Management Myth: Why The Experts Keep Getting It Wrong, describes how Taylor manufactured his data, lied to his clients and inflated his results. He argues that since Taylor, business programs in universities continue to model much of their educaiton, with emphasis on technical knowledge and the scientific management approach. Stewart, who was for many years a management consultant, argues that the study ofphilosophy and ethics would serve society better as a basis for educating business leaders.

This theme is echoed by Tom Demarco in his book, Slack: Getting Past Burnout, Busywork And The Myth Of Total Efficiency, in which he details American business leaders’ obsession with planning and cost saving efficiency based on a mistaken belief that human beings are efficient in the same way that machines are.

In a similar vein, a ground-breaking book by Dan Coffey, titled The Myth of Japanese Efficiency, challenges the commonly held view based on an earlier MIT study that Japanese car manufacturers pioneered a “lean and flexible” production model, which helped to reinforce the cultish devotion to efficiency.

Aubrey C. Daniels, one of the world’s foremost authorities on management and human performance, outlines management practices that are destructive to organizations during boom or bust times, in his outstanding book, Oops! 13 Management Practices That Waste Time and Money (and what to do instead).

Daniels points out that few managers look for behavioral data to affect employee performance because most managers know very little about the science of behavior and recent brain science or neuroscience, and very few business programs in universities teach it. He says another reason why organizations are fundamentally flawed from a behavioral perspective is that they were designed by those people–those with financial expertise–who have only one purpose in mind, to make money. He says that “how employees are paid, appraised, rewarded, and recognized have financial implications,” but when designed without an understanding of human behavior, you can have get contrary results.  For example, there is a mountain of research to show that employees are not primarily motivated by financial rewards over the long term, yet we continue to use that as a management motivational strategy.

Daniels identifies 13 managerial strategies that not only don’t work, but are destructive to organizations and the people in them, what’s wrong with them and what to do about it. Among the most significant of these practices that perpetuate myths about a productive workplace and what leaders should do are:

1.     Employee of the Month [and most other forms of recognition and reward]  What’s wrong with it: It focuses attention on one employee, but most work is a team effort. What to do about it: Acknowledge achievement for everyone the moment it happens.

2.     Stretch Goals. What’s wrong with it: Employees end up overwhelmed and frustrated if they fail to reach aggressive goals. What to do about it: Set achievable short term goals and chart employee  progress month by month.

3.     Performance Appraisal. What’s wrong with it: It’s hated by both managers and employees; it’s done once a year and then appraisal is ignored for  the rest of the year; it’s not motivational. What to do about it: Give immediate management feedback to employees for success or failure.

4.     Promoting People No One Likes. What’s wrong with it: employees perform out of fear rather than commitment and loyalty. What to do about it: Promote people who are liked and have superior interpersonal and emotional abilities.

5.     Downsizing. What’s wrong with it: Many things including the stress placed on those employees that remain, and the costs of new hires after the recovery. What to do about it: Find more creative ways of costs savings, done by many companies.

Traditional management strategies in organizations are based more on animal training than on human psychology and neuroscience. Leaders promise bonuses and promotions (the carrot) for those who go along with the changes, and punish those (the stick) who don’t with less important jobs or even job loss. This kind of managerial behavior flies in the face of evidence that shows that people’s primary motivation in the workplace is neither money or advancement but rather a personal interest in their jobs, a good environment to work in and fulfilling relationships with their boss and colleagues.

Charles Jacobs, author of Management Rewired: Why Feedback Doesn’t Work and Other Supervisory Lessons From The Latest Brain Science, says the brain is wired to resist what is commonly termed constructive feedback, but is usually negative. When people encounter information that is in conflict with their self-image their tendency is to change the information, rather than change themselves.  So when mangers give critical feedback to employees, the employees’ brain defense mechanism is activated because that information conflicts with what the brain remembers and knows.

Brain science has huge implications for the way we manage organizations, and equally significant implications for HR practices. Compensation, benefits, rewards and other current methods of employee motivation are much the same as they were three generations ago, ignoring all the research evidence from psychology and brain science. So too is the evidence about how psychological states and their brain characteristics—for example, happiness–have a direct impact on employee engagement, creativity and productivity.

In my April 26, 2009 article in Psychology Today, I said, ” Leaders can change their own behavior or influence that of other people by focusing on creating new behaviors rather than trying to fix old ones. In a world with so many distractions, one of the biggest challenges is being able to focus enough attention on any one idea. Leaders can make a difference by eliciting attention on only the most important things and focusing their feedback to employees on things that work well. Focusing on solutions and not problems, and allowing employees to generate solutions and developing new positive behaviors become a critical management strategy to increase success.”

Why have the great corporations, both in North America and elsewhere, fallen into such disrepute, and failure? Some very well known and once invincible bastions of our capitalism system have either failed or are in trouble.

Jim Collins, author of Good To Great, and How The Mighty Have Fallen, gives us a glimpse into the reasons for the fall.

Collins outlines the five stages of corporate decline as: hubris born of success (arrogance) the undisciplined pursuit of more (greed), the denial of risk and peril; grasping for salvation (being a victim); and capitulation to irrelevance or death.

Collins poses a critical question: is the U.S. or even North America, on the brink of decline? Is it possible that the predominant paradigm of capitalism practiced so well in the U.S., may actually be the cause of our economic problems?

The kind of leadership we have in organizations is critical to the decline of the corporate world. Collins outlines the characteristics of teamwork that’s gone sideways in organizations as: Leaders asserting strong opinions without any evidence; team members passively accepting decisions but not actively trying to make the decisions work; team leaders asking few questions and avoiding critical input; team members seeking individual credit and self interest rather than the team’s interests; teams blaming someone when things go wrong; and teams failing to deliver results.

In contrast, Collins points to the kind of leadership that has helped companies remain successful even through the recession: the truth is told by everyone in the organization to leaders; evidence supports decisions; teamwork is marked by extensive questioning and feedback; team members make decisions work once they’re made; team members credit each other for success; failures are seen as learning experiences, and no one is scapegoated; each team member is accountable for results and delivers them without excuses.

Survey after survey of employees in a wide range of industries and countries reveal a basic lack of trust for political and business leaders. In the businessworld, at the same time, the gap between CEO compensation and that of the average worker-particularly in the U.S.-is increasing, regardless of the business results of the respective company. We continue to measure our well-being in terms of productivity, GDP and economic output, paying scant attention to other measures of well-being, particularly social measures and levels of happiness. There is more than adequate evidence now that the countries and societies-such as Denmark-that have the highest measures of social well-being, also have less of a problem with income disparity.

One of the most robust findings in political psychology is that liberals tend to explain both poverty and wealth in terms of either luck and the influence of social forces while conservatives tend to explain poverty and wealth in terms of effort and individual initiative. Mark Harmon argued in a paper presented to the MidWest Political Science Association in 2010, tested these conclusions against six U.S. public opinion polls. Secondary analysis found consistent and strong relationships. Conservatives and Republicans overwhelmingly attributed poverty to the personal failings of the poor themselves (lazy, drunk, etc.) while Democrats and liberals consistently offered social explanations like poor schools and lousy jobs for poverty. Later he looked at the inverse question, the reasons respondents give for others obtaining wealth. Generally he found that Democrats and liberals attributed wealth to connections or being born into a wealthy family, while Republicans and conservatives declared wealth comes from hard work. It is clear that in the past two decades, the conservative perspective, while not held by the majority of the population, is one embraced by the media and the people who wield power and control wealth.

When will we wake up to the reality that our current concepts of free market capitalism, the structure of the workplace and how people should lead others in the 21st century no longer works, is based on myths and needs to change?

There’s some pretty good evidence that Capitalism could be in deep trouble in today’s world. And stereotypical CEOs, business models, as well as workplace practices are in equally deep trouble. One need only look at the increasing income gaps and disappearing middle class, increasing levels of employee disengagement and distrust of leaders, along with the control of almost all wealth in the hands of the few as evidence. We can point to some destructive myths about economic enterprise, leadership and work as feeding those problems.

Tony Schwartz, writing in the Harvard Business Review identifies four such myths. Myth 1: Multitasking is critical in a world of infinite demand. This flies in the face of recent neuroscience research; Myth 2: Anxiety helps you perform better. This often shows up as bosses putting performance pressure on people which inversely affects motivation and performance. Myth 3: Creativity is a genetic trait and can’t be taught. But we know now that creative thinking can be taught and learned; Myth 4: The best way to get more work done is to work longer hours. This has led to workaholism and burnout and evidence of declining productivity.

Another myth is “management efficiency”—of course invented by managers. Tough economic times have produced a flood of management “experts” and many leaders of organizations whose only strategy for dealing with the downturn in the economy is cutting costs, layoffs and more efficiency-based strategies. The mantra for business for much of the last century has been operational efficiency. So leaders look for ways to cut costs and make the operations lean and mean. Yet much of the rationale for and evidence supporting efficiency as a key management strategy is questionable.

Management theory came to life in 1899 with a simple question: “How many tons of pig iron bars can a worker load onto a rail car in the course of a working day?” The man behind this question was Frederick Winslow Taylor, the author of The Principles of Scientific Management and, by most accounts, the founding father of the whole management business. Taylor’s scientific management principles became the Bible upon which management practices have been used to dominate Western business for the past century. The problem is, that Taylor was a better salesman than a scientist.

Mathew Stewart, the author of The Management Myth: Why The Experts Keep Getting It Wrong, describes how Taylor manufactured his data, lied to his clients and inflated his results. He argues that since Taylor, business programs in universities continue to model much of their educaiton, with emphasis on technical knowledge and the scientific management approach. Stewart, who was for many years a management consultant, argues that the study ofphilosophy and ethics would serve society better as a basis for educating business leaders.

This theme is echoed by Tom Demarco in his book, Slack: Getting Past Burnout, Busywork And The Myth Of Total Efficiency, in which he details American business leaders’ obsession with planning and cost saving efficiency based on a mistaken belief that human beings are efficient in the same way that machines are.

In a similar vein, a ground-breaking book by Dan Coffey, titled The Myth of Japanese Efficiency, challenges the commonly held view based on an earlier MIT study that Japanese car manufacturers pioneered a “lean and flexible” production model, which helped to reinforce the cultish devotion to efficiency.

Aubrey C. Daniels, one of the world’s foremost authorities on management and human performance, outlines management practices that are destructive to organizations during boom or bust times, in his outstanding book, Oops! 13 Management Practices That Waste Time and Money (and what to do instead).

Daniels points out that few managers look for behavioral data to affect employee performance because most managers know very little about the science of behavior and recent brain science or neuroscience, and very few business programs in universities teach it. He says another reason why organizations are fundamentally flawed from a behavioral perspective is that they were designed by those people–those with financial expertise–who have only one purpose in mind, to make money. He says that “how employees are paid, appraised, rewarded, and recognized have financial implications,” but when designed without an understanding of human behavior, you can have get contrary results.  For example, there is a mountain of research to show that employees are not primarily motivated by financial rewards over the long term, yet we continue to use that as a management motivational strategy.

Daniels identifies 13 managerial strategies that not only don’t work, but are destructive to organizations and the people in them, what’s wrong with them and what to do about it. Among the most significant of these practices that perpetuate myths about a productive workplace and what leaders should do are:

1.     Employee of the Month [and most other forms of recognition and reward]  What’s wrong with it: It focuses attention on one employee, but most work is a team effort. What to do about it: Acknowledge achievement for everyone the moment it happens.

2.     Stretch Goals. What’s wrong with it: Employees end up overwhelmed and frustrated if they fail to reach aggressive goals. What to do about it: Set achievable short term goals and chart employee  progress month by month.

3.     Performance Appraisal. What’s wrong with it: It’s hated by both managers and employees; it’s done once a year and then appraisal is ignored for  the rest of the year; it’s not motivational. What to do about it: Give immediate management feedback to employees for success or failure.

4.     Promoting People No One Likes. What’s wrong with it: employees perform out of fear rather than commitment and loyalty. What to do about it: Promote people who are liked and have superior interpersonal and emotional abilities.

5.     Downsizing. What’s wrong with it: Many things including the stress placed on those employees that remain, and the costs of new hires after the recovery. What to do about it: Find more creative ways of costs savings, done by many companies.

Traditional management strategies in organizations are based more on animal training than on human psychology and neuroscience. Leaders promise bonuses and promotions (the carrot) for those who go along with the changes, and punish those (the stick) who don’t with less important jobs or even job loss. This kind of managerial behavior flies in the face of evidence that shows that people’s primary motivation in the workplace is neither money or advancement but rather a personal interest in their jobs, a good environment to work in and fulfilling relationships with their boss and colleagues.

Charles Jacobs, author of Management Rewired: Why Feedback Doesn’t Work and Other Supervisory Lessons From The Latest Brain Science, says the brain is wired to resist what is commonly termed constructive feedback, but is usually negative. When people encounter information that is in conflict with their self-image their tendency is to change the information, rather than change themselves.  So when mangers give critical feedback to employees, the employees’ brain defense mechanism is activated because that information conflicts with what the brain remembers and knows.

Brain science has huge implications for the way we manage organizations, and equally significant implications for HR practices. Compensation, benefits, rewards and other current methods of employee motivation are much the same as they were three generations ago, ignoring all the research evidence from psychology and brain science. So too is the evidence about how psychological states and their brain characteristics—for example, happiness–have a direct impact on employee engagement, creativity and productivity.

In my April 26, 2009 article in Psychology Today, I said, ” Leaders can change their own behavior or influence that of other people by focusing on creating new behaviors rather than trying to fix old ones. In a world with so many distractions, one of the biggest challenges is being able to focus enough attention on any one idea. Leaders can make a difference by eliciting attention on only the most important things and focusing their feedback to employees on things that work well. Focusing on solutions and not problems, and allowing employees to generate solutions and developing new positive behaviors become a critical management strategy to increase success.”

Why have the great corporations, both in North America and elsewhere, fallen into such disrepute, and failure? Some very well known and once invincible bastions of our capitalism system have either failed or are in trouble.

Jim Collins, author of Good To Great, and How The Mighty Have Fallen, gives us a glimpse into the reasons for the fall.

Collins outlines the five stages of corporate decline as: hubris born of success (arrogance) the undisciplined pursuit of more (greed), the denial of risk and peril; grasping for salvation (being a victim); and capitulation to irrelevance or death.

Collins poses a critical question: is the U.S. or even North America, on the brink of decline? Is it possible that the predominant paradigm of capitalism practiced so well in the U.S., may actually be the cause of our economic problems?

The kind of leadership we have in organizations is critical to the decline of the corporate world. Collins outlines the characteristics of teamwork that’s gone sideways in organizations as: Leaders asserting strong opinions without any evidence; team members passively accepting decisions but not actively trying to make the decisions work; team leaders asking few questions and avoiding critical input; team members seeking individual credit and self interest rather than the team’s interests; teams blaming someone when things go wrong; and teams failing to deliver results.

In contrast, Collins points to the kind of leadership that has helped companies remain successful even through the recession: the truth is told by everyone in the organization to leaders; evidence supports decisions; teamwork is marked by extensive questioning and feedback; team members make decisions work once they’re made; team members credit each other for success; failures are seen as learning experiences, and no one is scapegoated; each team member is accountable for results and delivers them without excuses.

Survey after survey of employees in a wide range of industries and countries reveal a basic lack of trust for political and business leaders. In the businessworld, at the same time, the gap between CEO compensation and that of the average worker-particularly in the U.S.-is increasing, regardless of the business results of the respective company. We continue to measure our well-being in terms of productivity, GDP and economic output, paying scant attention to other measures of well-being, particularly social measures and levels of happiness. There is more than adequate evidence now that the countries and societies-such as Denmark-that have the highest measures of social well-being, also have less of a problem with income disparity.

One of the most robust findings in political psychology is that liberals tend to explain both poverty and wealth in terms of either luck and the influence of social forces while conservatives tend to explain poverty and wealth in terms of effort and individual initiative. Mark Harmon argued in a paper presented to the MidWest Political Science Association in 2010, tested these conclusions against six U.S. public opinion polls. Secondary analysis found consistent and strong relationships. Conservatives and Republicans overwhelmingly attributed poverty to the personal failings of the poor themselves (lazy, drunk, etc.) while Democrats and liberals consistently offered social explanations like poor schools and lousy jobs for poverty. Later he looked at the inverse question, the reasons respondents give for others obtaining wealth. Generally he found that Democrats and liberals attributed wealth to connections or being born into a wealthy family, while Republicans and conservatives declared wealth comes from hard work. It is clear that in the past two decades, the conservative perspective, while not held by the majority of the population, is one embraced by the media and the people who wield power and control wealth.

When will we wake up to the reality that our current concepts of free market capitalism, the structure of the workplace and how people should lead others in the 21st century no longer works, is based on myths and needs to change?