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Published: April 26, 2010
 / Summer 2010 / Issue 59

 
 

Leading Outside the Lines

Integrating formal metrics and informal communication can lead to new levels of performance.

Ed Carolan knows a lot about making soup. He also is a master at using performance objectives to motivate frontline workers. From early 2007 through 2009, Carolan was the general manager for StockPot, a business group within the Campbell Soup Company that makes fresh refrigerated soup for the food-service industry. (He has since moved on to become senior vice president and general manager for the snacks division of Pepperidge Farm, another Campbell Soup brand.)

We met Carolan at a visit to the StockPot facility in Everett, Wash., in early 2009. We entered the sun-drenched lobby of the new 200,000-square-foot (18,600-square-meter) plant; we checked in at reception and were told that he would join us in a moment. We waited, expecting that he would conform to our admittedly stereotypical image of a general manager of a manufacturing facility: clean-cut, uniformed, sobersided, technically oriented. Then Carolan appeared, with a goatee and in black motorcycle boots. He bounded down the stairs, pumped our hands, and said, “Ready for a plant visit?” In a moment, we were off on a fac­tory tour like none we had ever experienced before — so detailed, delightful, and colorful that we felt as if we were in a Sesame Street episode.

As we walked and talked, we learned that Carolan had become vice president and general manager of StockPot in January 2007. At the time, StockPot was in need of a turnaround. In the two years before Carolan had arrived, profitability had dropped significantly and sales had declined. The subsidiary had ranked near the bottom of the Campbell global supply chain in safety and other key operational metrics, and employe engagement scores had trailed those of the overall company.

But Carolan and his team had achieved a turnaround. In his first year, profitability had stabilized, and then, in the midst of the recession of 2008–09, it had shot up by 50 percent. One of the toughest metrics to improve in a down market is overall plant efficiency. Improvements are generally made in tenths of a percent, and even those require a lot of sweat and persistence. Here, under the new team, overall plant efficiency jumped 23 percent. Employee engagement scores in­creased by 14 percent. And the workers had surpassed their United Way campaign goals and raised 27 percent more than the previous year. In fact, they had won the United Way Community Partner Award for the top company making a difference in their county (Snohomish County), while driving phenomenal performance improvements the whole time.

During our tour of the plant, the strong morale was palpable — and it remained evident in our interviews with workers throughout the facility. People obviously felt a sense of pride in their work. The place surged with purposeful energy.

How did Ed Carolan’s team create such a remarkable transformation in such a short time? They focused on a limited number of measurable performance objectives. They did so in a way that was personal, spontaneous, and full of positive feeling. Most important, they connected the two together. They found a way to lead with balance, drawing together formal mechanisms and the informal community.

Balancing Hard and Soft

In every company, there are really two organizations at work: the formal and the informal. The formal organization is the default governing structure of most large companies founded in the past century. Businesspeople recognize the formal organization as that rational construct that runs on rules, operates through hierarchies and programs, and evaluates performance by the numbers. If you have been trained in the “hard” disciplines like finance, technology, or operations — as so many senior managers have — you have probably learned to operate naturally in the formal domain, deploying tangible factors like job descriptions, organization charts, process flows, and scorecards.

 
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Resources

  1. Andrea Gabor, The Capitalist Philosophers: The Geniuses of Modern Business — Their Lives, Times and Ideas (Three Rivers/Crown, 2000): Introduction to business thinkers on the hard (Taylor, McNamara), soft (Maslow, McGregor), and integrated (Deming, Drucker) sides.
  2. Jon R. Katzenbach and Zia Khan, Leading Outside the Lines: How to Mobilize the Informal Organization, Energize Your Team, and Get Better Results (John Wiley & Sons, 2010): More ideas and tools for helping both sides of an organization work together well.
  3. Zia Khan and Jon R. Katzenbach, “Are You Killing Enough Ideas?s+b, Autumn 2009: Making innovation more effective by rethinking your informal and formal practices.
  4. Harold J. Leavitt, Top Down: Why Hierarchies Are Here to Stay and How to Manage Them More Effectively (Harvard Business School Press, 2005): Formal structures exist because they fulfill basic human needs — and thus we’d better learn to manage them humanistically.
  5. Douglas McGregor, The Human Side of Enterprise, Annotated Edition (McGraw-Hill, 2006): The classic on escaping the tyranny of the formal — and reconciling the two sides of the corporate personality.
  6. For more thought leadership on this topic, see the s+b website at: www.strategy-business.com/organizations_and_people
 
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