Paul Willging Says…

It’s all about leading and managing people

The real issue is “how.” Certainly, the curb appeal of the building is not enough to sell it to prospective customers as their primary residence. Whether service-enhanced housing, assisted living, or nursing care, it is the service provided to the resident that eventually will determine the community’s success. Buildings do not deliver services. People deliver them. Sufficient numbers of people. People with the necessary knowledge and skills. And people possessing an attitude oriented toward service, an attitude that focuses initially, continually, and ultimately on the customer’s needs.

Last month I suggested that personnel issues present the greatest ongoing challenge to the delivery of effective long-term care. Communities that fail and communities that succeed invariably can be differentiated based on the manner in which they recruit, motivate, and manage their staffs and on the type of culture within which they perform those functions. As I suggested last month, staff turnover just might be the most critical indicator of a community’s success.

More than enough research suggests a direct link between an employee’s basic attitude about the job and the company where he or she works and the workgroup’s productivity (and, ultimately, profitability). While, individually, the single employee can’t make an appreciable difference in a company’s bottom line, there are not many single-employee companies in seniors housing and care. The typical community, even if independent living or active adult, will have many employees. And, in aggregate, employees make an amazing difference since profitability is the aggregate of all employee activities over an extended period of time.

In sum, a great deal of a company’s value rests with its employees, a fact that more and more investors are beginning to recognize. When the good employee leaves a company, she takes value with her. Consequently, if a company is bleeding people, it is bleeding value, even if management fails to recognize it or doesn’t know how to deal with it. Just the direct cost of turnover, according to a report funded by the Robert Wood Johnson Foundation issued this past October, is at least $2,500 per frontline worker. And that doesn’t even touch the potentially more substantial indirect costs such as lost productivity and decreased customer satisfaction.

So how do we keep them on the farm? Well, it’s not just dollars. In fact, we know that once basic financial needs are met, the talented employee is usually more interested in empowerment than pay and benefits. Consequently, the environment within which (and the pace by which) empowerment takes place is likely to be more critical (at least over the long haul) in retaining employees than simply increasing compensation.

While a company can (and should) establish culture (which, in turn, establishes the nature of the working environment), it is the manager who reflects and operationalizes that culture. A company must be careful, therefore, to extend the reach of its culture throughout the organization, or there can and will be as many cultures as there are managers. Assuming consistency in culture, it is the manager who is responsible for assuring its application to employee responsibilities. He does this through the four critical functions of selecting, directing, motivating, and developing staff.

To repeat, however, the manager must fulfill those responsibilities within the established corporate culture or the results can be disastrous. Fulfilling those functions within divergent cultures produces discordant results, even in otherwise similar communities. Studies have shown that operations possessing the same physical environment and with access to exactly the same resources can demonstrate appreciably different outcomes.

The role of manager in corporate America undergoes constant scrutiny and reinvention-sometimes to the point of elimination. For a time, the focus of management gurus was on replacing the manager with the team. Those who tried it soon regretted it. Teamwork is essential to the successful company. I’ve emphasized the importance of teamwork in most of what I write, especially on the topic of effective quality management. But teamwork requires only that employees function as teams, not as management. But absent management, the team is a corpus without a head-and if it is not given leadership, it will create its own. The issue has not been to eliminate the role of manager. It is to define it.

It’s not really rocket science. Buckingham and Coffman have described management’s primary role as that of a catalyst.¹ As with all catalytic agents, the manager’s function is to speed up the reaction between two or more substances, thus creating the desired product. The authors say, “Specifically, the manager creates performance in each employee by speeding up the reaction between the employee’s talents and the company’s goals, and between the employee’s talents and the customer’s needs.” The successful manager does this by carrying out four responsibilities: selecting appropriately qualified staff, setting performance expectations for those staff, motivating employees to achieve company expectations, and developing the employee to allow him to reach his highest potential.

Buckingham and Coffman report on a Gallup project surveying 28,000 employees across the country who worked for a major national retail chain. Based on responses (on a scale of 1 to 5) to 12 basic questions, the study sought to document the relationship between employee attitude and company success. The results were startling (and extremely relevant to seniors housing and care). Higher scores were clearly related to store performance in areas such as sales, profits, and employee retention. Stores scoring in the top 25% on the survey were, on average, 4+% over their sales targets for the year and 14% over budgeted profit. Those in the bottom quartile were almost 1% below sales targets and missed their profit goals by a full 30%. Each store in the top group retained, on average, 12 more employees per year than stores in the bottom quartile.

The study was based on the premise that development of the productive and satisfied employee is management’s primary responsibility. It is the manager who will structure the environment in which corporate success will be achieved. But it is the leader who determines how success is defined, makes sure the resources are available to staff to achieve it, provides direction as to which of many alternative strategies might be the most productive, and shows by his or her own example how to pursue them.

Both management and leadership are essential to the successful company. There is an ongoing debate as to whether the traits of both can be combined in the same individual. Some might argue that the functions are so dissimilar as to defy combination in one person. Others have suggested that the attributes of either manager or leader are simply separate sides of the same coin and, depending on the situation, can be applied equally well by one practitioner.

Distinctions between management and leadership should not be considered demeaning to either. The most telling difference between managers and leaders is not one of talent but of focus. Managers tend to look inward, within themselves, within the company, within their employees. Their focus, as catalytic agents, is directed toward discovering the inner potential in company staff and to release that potential for the purpose of fulfilling the corporate vision. By contrast, leaders are inclined to look outward: at the future, at the competition, at alternative approaches to achieving company objectives. “Great managers are not mini-executives waiting for leadership to be thrust upon them. Great leaders are not simply managers who have developed sophistication,” say Buckingham and Coffman. It is their activities that distinguish them, not their abilities or value to the corporation. A person might excel at one and not the other, and vice versa. (A few do, of course, excel at both.)

And while one can find that rare individual who can perform both roles with equal dispatch, it would be a mistake for any company to have all its managers aspire to leadership. Leadership should no more be considered an inevitable goal on the managerial track than should every internist aspire to be a surgeon. They can be combined in one person but are, for the most part, different disciplines. Were that principle to prevail, we would be lacking in both good managers as well as good internists (and, in all likelihood, have too many bad leaders and bad surgeons).

As described above, the role of managers is fourfold: selecting appropriately qualified staff, setting performance expectations for those staff, motivating employees to achieve company expectations, and developing employees to allow them to reach their highest potential. Leadership’s role can also be characterized by four distinct functions: articulating a vision and mission for the corporation; providing the structure, processes, and resources whereby that vision can be achieved; creating the environment within which employee functions are most efficiently and effectively performed; and serving as a role model for employees as they aspire to achieve their own professional goals within the corporate culture.

These functions are not of a higher order than those of the manager. Indeed, they are intertwined. The leader’s role can only be fulfilled within the context of managerial competence. The manager can function only if provided the framework produced by leadership. Both are indispensable to the successful company.

Once leadership has set the direction (“pathfinding”), management’s responsibility is to create the working environment (“alignment”) in which employees can operate as they move toward fulfilling objectives, goals, mission, and vision. Pathfinding may identify the road ahead; aligning paves it. Alignment creates an empowering system for the conduct of effective operations. Misalignment creates frustration and ineffectiveness. Effective alignment needs to address a number of essential questions: What are the component parts of the system? How do they fit together? What inputs are required? How will information flow?

With direction set, with alignment in place, it is time to empower staff performance. But while leadership has already stepped back and handed the ball to management, leaders still have critical roles to play as management releases the talent, energy, and contributions necessary to get the job done. Leadership empowers by cultivating an environment where staff can do its best and is committed to the task at hand. Here is where culture comes in, and leadership is primarily responsible for establishing corporate culture (a topic I discussed last March). It is here, also, that the questions of responsibility and authority are addressed. Who does what? How? For what reasons? At what level of accountability?

How these questions are addressed will depend on the level of empowerment allowed within the corporate culture. But the success of empowerment will depend on the “talents” isolated by management in its hiring decisions. More about that next month.

Reference
1.Buckingham M, Coffman C. First, Break All the Rules: What the World’s Greatest Managers Do Differently. New York: Simon and Schuster, 1999.