The Human Side of Business: Traumatized but Ready for Recovery

Huffington Post

June 8, 2010

by Marshall Goldsmith

I often hear business leaders relate how difficult it is to motivate their organizations during this difficult economic recovery period. In discussing this with noted consultant and author Jon Katzenbach, senior partner at Booz & Company, we agreed that the economic crisis left the human side of many organizations traumatized and ill-equipped for recovery.

In his new book, Leading Outside the Lines: How to Mobilize the (in)Formal Organization, Energize Your Team, and Get Better Results, co-authored with Rockefeller Foundation Vice President Zia Khan, Jon argues that harnessing the human side of the enterprise can make the difference between either eking out incremental improvement or roaring back to life. And he points out that harnessing the human means engaging and mobilizing the “informal” dimension of the organization — doing it from the bottom up.

We had a conversation with Jon Katzenbach on this subject, and here are some excerpts:

Q: Why did you write Leading Outside the Lines?

A: To help leaders gain a powerful performance “boost” from their informal organizations. In our years helping leading organizations improve performance, we’ve learned that leaders at all levels have a difficult time with, or don’t realize they need to address, a key avenue to success: balancing two distinct dimensions of human behavior and organizational performance — the formal and the informal elements.

Q: What is the “informal organization”? And what is the “formal”?

A: The informal unlocks the emotional side of behavior; the formal is the rational side. The informal organization is a bundle of organizational elements that are often hidden from view, but exert strong influence on people’s decisions and behaviors. It includes values that drive decisions, networks that guide personal interactions and the spread of information and emotional feelings that drive the amount of effort and commitment that people put into their jobs. The formal organization, on the other hand, includes the codified elements of organization that are usually disseminated on paper.

Q: You say that if the informal isn’t working for you, it’s working against you. What do you mean by that?

A: Informal forces are always at play — you cannot simply turn them on and off by command. It either resists and derails what the formal is trying to accomplish, or it supports and accelerates it. So, the chances that the informal organization is working for you without any deliberate attempt to mobilize it in the right direction are fairly low.

Q: What are the results when leaders successfully balance the informal with the formal?

A: Overall, leaders can accelerate performance results by combining the best of both the informal and the formal, without having to make tradeoffs. They get the efficiency of the formal with the creativity of the informal; the focused execution with the responsiveness to new opportunities; the accountability with the emotional commitment.

Q: What kinds of leaders are best at “leading outside the lines”?

A: Those who have learned the power of the informal through trial and error — and realize they don’t have all the answers. They spend time with people at any level, particularly the frontline, and not just with a select few at headquarters. Most importantly, they believe that while the informal organization may appear to be unruly chaos and resistant to control, they know it can be mobilized to generate real performance results.

Q: What are the biggest mistakes leaders make when trying to manage and maximize the informal organization?

A: The biggest mistake is to try and manage the informal like the formal. It can’t be told what to do; it must be convinced, influenced and energized. It’s a big mistake to think that top-down communication will keep the informal interactions positive.

Q: Your book mentions “master motivators” and “pride builders.” Who are they, and what do you do with them?

A: They are people in supervisory situations who know how to make others “feel good” about the work that has to get done every day; they instill pride in the work itself. We urge leaders to listen and learn from them, and get them into networks and communities where they can spread motivational skills experientially among peers and colleagues.

Q: What can leaders do to get better at actively leveraging the informal and balancing it with the formal?

A: Keep working at it; if at first you don’t succeed, try and try again. The first thing is to get an understanding of your current informal organization — the values, the networks and sources of pride. Front line leaders can seek out peers who are natural pride-builders; leaders at the top can find ways to connect with them, learn from them, and spread their behaviors; leaders in the middle can do both.