Newsletter – February 2011

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  • Newsletter – February 2011

The disaster events of January in Australia were confronting and serve as a wake-up call for all business owners when it comes to the issues of planning and risk management. Reports coming out of Queensland after its most recent flood devastation point to many instances where businesses are struggling to recover from the environmental and emotional impact of this disaster.

Insurers are starting to report and note that many business owners did not have contingency, disaster recover, I.T. backup or risk management plans in place. In some cases those that did were found wanting by the unplanned magnitude of the disaster event. It is the norm that businesses get told to “plan for success” but it is equally true that businesses need to plan for risk, and that means to identify the possible causes of risk to the business, and then quantify the impact on the business if that risk is ever realised.

This important aspect of managing the business is often overlooked as business owners and leaders focus on the operational imperatives which show up daily in any business. It is a risk in itself that the business owner or leadership team take their eyes off the wheel of the longer term view of their business, and get distracted with what is urgent rather than what is important.

When I engage with businesses I often ask to see their Strength, Weakness, Opportunities and Threats (SWOT) analysis document. These rarely exist, or were done at company start-up and have never been revisited. Likewise a risk management register which identifies, quantifies and tracks risks is a rarely seen document is many businesses I attend. The mitigation strategies and plans of action to reduce these risks are therefore unlikely to be imbedded and operational in the business.

In one company I worked with in W.A. there was an expensive piece of machinery that was at the heart of the core business process, which related to fabrication. There had been no SWOT analysis done, nor a Risk Management register nor strategy enacted in the firm. This piece of machinery required maintenance every 1000 man hours of use but the technical manual cited that service and maintenance at 700 man hours was the “recommended” benchmark for servicing, as breakdown or errors were found to occur in the last 300 man hours of usage of the equipment.

The cost of doing maintenance at 700 man hours versus 1000 man hours worked out to cost an additional $6000 per quarter of cost and lost output. However it protected $450,000 of output in the same period. When I reported and documented the risk in a resulting SWOT analysis and Risk Register as part of a company review of operations, the company was surprised but took on the additional risk.

Four months later the core equipment broke down. They had trouble sourcing the replacement part from Germany as the GFC had put the importer/supplier out of business in Germany. The replacement supplier supplied the wrong part as they had no prior relationship with the company and did not fully understand the model they used. The part was found to have worn out due to an error that would have been identified and fixed at the servicing. The machine failed in the 844th man hour.

The company carried the risk and was caught out. Three months later the company was on the verge of bankruptcy due to cash flow problems and only by virtue of the company owner using the funds from his recently sold Holiday home was the company able to hang in and recover.

Every company operates in the midst of changing environments and dynamics which expose the business to risk all the time. Not all risk will ever be realised or occur.  Prudent planning allows the company to be a conscious business around risk, to identify and track it, and understand which risks to mitigate against, and which to carry as either they are very unlikely to occur, or which have minimal impact when they occur.

Machinery, intellectual property and I.T. systems appear to account for many of the most risk prone aspects of a modern business. In the Information Age a business may under-estimate the impact of a crashed server and its held information, the theft of a information via hackers or an employee with a USB key, or the destruction of systems, data and business activity via virus, Trojan horse or other computer or software threats.

If your business does not have a SWOT analysis and associated Risk Register, that is a “living document” which gets used in the strategy and planning process, and occupies some conscious mind space of the senior people of the business, you may be living with a business unconscious to the threats that could one day create a crisis that may threaten its integrity and financial viability.

Leadership Matters – The Communication Loop

Last month we looked at how the leader of a business must both personally and in the business culture create trust and respect. We noted how this is an embodied process where words and actions are aligned. In this reality we should focus in on the need for the leader and the business culture to have a healthy and open communication style and set of channels across the business.

Communication lies at the heart of human behaviour. We communicate not just with words but with bodily postures and gestures, inflections and intonations with our voice, and with emotional expression. Great leaders have always known this and have used this knowledge to great effect to influence staff, customers, peers and the public. Just think of Adolf Hitler’s ability to mesmerise a nation and lead them to war through the powerful speeches at Nuremburg rallies.

Leaders must practice congruency between words and actions. Employees are always looking to their leaders to see if they can be trusted and if they are authentic. Much of the employees’ perception about the believability of their leader comes from their communication style. Psychological studies have shown that if a leader remains aloof or withdrawn, or communicates with brevity or a formal stiffness then it is likely to be received and perceived by different employees in different ways.

Psychological studies have repeatedly shown how employees tend to unconsciously view their leaders and authority figures in the workplace with reminders of their parents. In fact the mannerisms and communication style of the leader may trigger employees to “project” the reality of how their parent(s) communicated or behaved onto the leader as if the leader was behaving that way. The leader is unaware of this while the employee is also consciously unaware also, but unconsciously influences that employee’s reality to make that it a fact for them.

This dynamic has implications. Let’s say a new leader shows up at the workforce and at first displays a communication style and embodied behaviour that is aloof, brief, withdrawn, or formal. From the side of the new leader they may be feeling nervous, watchful and unsure of themself, all of which are understandable and not harmful behaviours.

Research has shown that employees may typically “project” the following conclusions onto the new leader based on their own unconscious beliefs, and mirrored behaviours from parents when they were growing up. The employee may conclude the new leader is:

  • Cold
  • Arrogant
  • Dismissive
  • Judgemental
  • Heartless
  • Distrustful or not to be trusted
  • Depressed
  • Weak
  • Has an agenda
  • Secretive
  • Hates me
  • Thinks they are better than me
  • Incompetent
  • A poor leader

While none of these conclusions could objectively be said to be true, they are true to the employee and once taken root the leader now has a job on their hands to overturn the initial summation or conclusion about themself that the employees hold about them.

It is an important emotional intelligence concept for leaders to understand how they must enact a confident and clear communication style right from the start of their engagement in the workplace to create and instil positive perceptions in the minds of employees. As a general rule leaders should try to over-communicate with employees if in doubt and seek to communicate information in terms and in ways that reinforce positivity, hope, vision and confidence about the business and the employees’ future in it. That is not always possible but the tone and message in communication can make bad news less so if handled skilfully.

Another key problem is the senior management and leadership roles can tend to isolate the role holder from their employees, customers, suppliers and other key partners. We tend to place our senior people in offices dislocated somewhat from the employees. We may keep our office door closed, project power through a large imposing desk and executive chair, and position a Personal Assistant between us and the employees.

While much of this can be unavoidable the onus is on the leader to leave this sanctuary and regularly get out amongst the employees. Good leaders understand that the upward communication chain from workshop floor to the CEO desk involves multiple layers of filtering, summarising and revision. Unwittingly leaders live with a sanitised view of their business if they live from these forms of communication and stay distant from the wider reality of life “at the coal face”.

The best approach I can recommend to leaders to go about the operations of the business and take an active part in those operational areas for up to a day at a time. This may be done perhaps one day a fortnight or month on a rotational basis through each key area of the business and over time will allow you to reach all the touchpoints of your business where employees, customers and suppliers all show up in some way.

Leaders who “show up” create a powerful embodied form of communication that says “I care”. If the leader can actively engage with the employees, customers, and suppliers in this time spent at that place, then the emotional life of these people will have a positive resonance and start to emotionally buy-in to the leader, and to the business.

Many people spend their lives feeling unseen, uncared for, insignificant, overlooked or unloved. When a leader shows interest, concern, empathy, and asks questions, and gets their hands dirty in the operational process, the employee can have a profound emotional experience of at first disbelief, and then a shift of beliefs about themself, their leader, and their job. The leader may hear some negative feedback, home truths, and anger from especially customers and suppliers, but if taken on with empathy and interest, they can win the emotional battle for their hearts and minds.

Once the employee believes in the genuine intent of the leader they need to see that this is a constant and not just an event. The leader cannot use a tokenistic visit to staff to attempt to portray genuine concern for their business and staff. “Walking your talk” has always been a catch cry for the leader and is no glib throw-away line. Enthusiasm will soon turn to cynicism when the employee feels manipulated by a placating leader who shows up for no genuine reason other than to “be seen to be concerned”. We communicate loudly when we manipulate others in such a way.

Communication upwards from the employee to the leader needs to be installed as part of this attempt to reach out to employees. Once the employee sees the leader show up and keep showing up, and taking concern by active involvement in their part of the business, then employees will tend to utilise a communication channel direct to the leader when it exists.

We have already noted how leaders already suffer from the formal communication channels undergoing filtering, revision and summarising on the way upwards through management layers. Having an open communication channel direct to staff can allow needed issues to surface and put pressure on middle management not to suppress incidents, issues and information that may have context in the senior levels of the business.

The bottom line for the leader is to keep in touch with both the employees, customers and suppliers. Responding to their direct communications is also key as many will try to talk to the leader once, and if nothing is heard back, will lose trust in the process and the genuine intent of the leader.

Once these communication channels and leader visits are in place then the leader can utilise these to further shape the workplace culture in a positive direction. Once accepted by the employee as genuine the leader can then seek to uncover, highlight and even reward achievement and demonstrated actions that reflect the workplace culture that the leader wants to encourage as the norm.

A morning tea as part of the shop floor visit, where excellence is pointed out and celebrated, staff achievements, and an update on the business health and direction, and questions from the employees present, can further imbed the connectedness between the leader and the employee group. This may be possibly circulated beyond this group to the wider organisation by a company newsletter, intranet email, or company website update.

All of these are about communication of a positive and inclusive message. The leader must embrace the notion of “staying in touch” if they are genuine in their vision of taking their business from good to great.

Please contact us for more information about the psychology of communication in the workplace and how it can drive productivity, enhanced morale, and motivation in your business.  Refer to Conscious Business Australia for further information and articles on other leadership and business psychology topics.

Have a profitable and successful month!!


Richard Boyd

Director, Conscious Business Australia

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