- Democracy and Profit Shine at Solar Company
- Deciding Success or Failure in Org Change
- A Nuclear Horror Story of Poor Management
Some of the loudest voices calling for American-style democracy overseas have been leaders of large corporations. None, to my knowledge, have been eager to introduce it where they have the power to do so: in their own corporations. “Decision by committee” and “consensus building” are derided as taking too long and producing inferior results, despite the fact these are exactly the methods a democracy uses. Does this mean if you want efficiency, dictatorship is the way to go? Why, then, are those who are benign dictators in their businesses so eager to overthrow similar regimes in foreign countries?
My point is not to attack those business leaders, most of whom try to treat their people right as they understand it based on their backgrounds. Instead I want to suggest that the best way to do that is to extend their political ideals into their workplaces. And for those who argue democracy can’t work in business, I have two words: Namasté Solar.
That is the name of the largest rooftop solar power company in Colorado, in terms of kilowatt capacity installed. The company is as close as one could imagine to a consensus-driven democracy in a business environment. With some logical exceptions, every employee carries the title of “Co-Owner” beside their job title, as you’ll see. Early on, decisions were made by the company as a whole. A “storybook” about their culture explains the current process. Individuals are empowered to make most decisions, and if uncomfortable with one, they pass it to their team or a cross-functional committee of volunteers. Some decisions still go to the company as a whole for a vote, or to a board of directors elected by the co-owners from amongst all co-owners. The decision may take longer, Co-Owner and Vice President Amanda Bybee told me, but in traditional companies getting buy-in takes even longer.
Other aspects of their culture help this to work. Bybee and Stephen Irvin, Co-Owner and CFO, both spoke of the concept of “Frank, Open, and Honest” or FOH. I heard Irvin at a Green Economy conference in 2010 sponsored by the SJF Institute, and interviewed Bybee by phone later. “I need to be FOH about this,” people will say to each other, pronouncing it “fuh.” Bybee said FOH comes up regularly and sets the expectation that the speaker may speak freely, though respectfully, and the listener will listen with an open mind.
Namasté (the word means “a bow to you” in Sanskrit) practices a form of open book management as radical as it gets. Every bit of financial information is shared, including salaries. Bybee remarked that when they discuss their culture publicly, that last fact is the one that garners the most surprise. But I operated in that environment in government service, and frankly found it less taxing on everyone. Given the research indicating people are more invested in “fair” pay than in high pay, what better way to cut down on those concerns than to set pay openly? “If we hid it,” Bybee said, “that would mean we had something to hide.”
To a degree the company, founded in 2004, was a still work in progress. Bybee said they are still trying to work out a performance appraisal system focused on measurable ratings and 360-degree reviews, with changes every year so far. The current one went by the acronym HAPPY HIPPY, which stands for “Holistic Appraisal of Person’s Performance, Yo, Hence Influencing Positive Performance, Yo.” They had to let go of the idea that everyone would be an owner, because some employees were just looking for a summer job or a quick career step. “There was a lot of concern with how the hourly workers were going to feel” where everyone else was a co-owner, said Ben Griffin, Co-Owner and Sales & Design Specialist, by phone. Initially everyone in the company was paid the same, but now there are some pay grades. One noble experiment had everyone choose their own profit-sharing bonus after input from others.
Attendance is down at the all-hands “Big Picture” meetings. Griffin said regarding decision-making that sometimes “people want to participate but may not be able to because of the confines of the job,” meaning the demands of meeting client needs. The company does not track labor hours. Yet, Bybee said, “We’ve battled workaholism more than slackerism.” Attempts to push people out the door met resistance, so they look for other ways to encourage work/life balance.
Clearly, this is not the kind of company all would be comfortable in. Bybee said, “Our hiring process is, how shall I say, extreme!” In addition to multiple interviews, the company has used “field interviews” in which the person put in part of a day’s work. The team someone is joining votes on new applicants along with the HR team.
Irvin made a point of stating, “We hire the person, not the job.” As I would remark in my team leadership class, hire for the things you can’t easily change. Skills and knowledge can be taught; character can’t.
The bottom line is, of course, the bottom line. Bybee, the company’s fifth employee, said they have always assumed “running our business this way should lead to as good if not better profitability.” The company remained profitable throughout the Great Recession. Not only were there no layoffs, employment grew, to 78 people when we spoke. Turnover of permanent employees was only 6%.
There is a pile of research data on the positive effects of empowerment on individual and team performance. Managers who claim to govern based on evidence cannot without hypocrisy refuse to consider democracy’s place within their companies and teams. Namasté Solar proves, yes, that it takes a lot of work and dedication to both ideals and experimentation. It also proves, however, that money follows those efforts. If American democracy is part of the reason for the country’s economic strength, as American business leaders often argue, logic suggests it would contribute to a company’s success as well.
Most folks prefer to talk about their successes rather than their failures. I had fun during speeches shocking people with admissions of mistakes I’ve made. Once at the end of a talk about accepting our mistakes, I counted up the mistakes I had made in the talk. Afterward someone came up and said, “You made another mistake: you admitted your mistakes.” Fortunately, his friend was there to tell him he had completely missed my point, so I didn’t have to.
Scientists and consultants are human and thus want to cover their failures, too. On these pages I have praised scientists for admitting when the results of their studies go against what they expected. But I can’t know how many studies were never submitted for publication, or were not accepted, because they went entirely wrong. Business stories in magazines and books are even worse because they are almost always success stories. Even then, they usually make big assumptions that the changes occurred for the reasons the authors propose. In contrast, every study article in a journal lists other possible explanations for a study’s results.
Given all this, I was intrigued when I found an article in Organization Development Journal that claimed to report on a failure. Author Bill Kahnweiler has been an organizational development (OD) professional “for over 35 years in corporate, consulting, and academic settings” and is an associate professor at Georgia State Univ., the article says. In it, he mentions various studies providing evidence of a bias toward reporting success even in the “hard sciences” like physics.
He then delves indirectly into a favorite complaint of mine, that change management success is rarely judged using measurable outcomes. Kahnweiler says “the most obvious and widely employed indicator of O.D. success is that the goals and objectives of a particular project have been met or exceeded.” However, I have found those objectives often fall short of the SMART criteria (specific, measurable, assignable/actionable, realistic, time-bound). Kahnweiler notes that less direct indicators are often used, such as client satisfaction, resource investment in the project by clients, and repeat business. Indirect indications of failure include underfunding of projects by clients, lack of needed time and access to personnel, and obviously, cancellations of projects.
He then reports on a project for a major unit of an international Fortune 50 company based in the U.S. The head of human resources engaged Kahnweiler’s consulting firm to “assess the internal equity of its nonexempt pay system,” in part as a catalyst for culture change throughout the unit. For my non-American readers, “nonexempt” refers to a U.S. law that among many other provisions attempts to define managers and nonmanagers for purposes of regulating issues like pay and work hours. Generally, for example, those exempt under the law (professionals and managers) do not have to be paid extra after they have worked 40 hours within a week.
In this business unit, Kahnweiler points out, almost every manager was a white guy and almost every nonexempt employee was female. Increasing the diversity of the management team was a long-term goal of the project, as well as decreasing silos and changing the top-down decision-making that dominated the unit.
Kahnweiler says he and a colleague received plenty of support from the head of the unit in terms of money and participation. Conforming to a number of OD best practices, they formed a committee of five managers at different levels in the company and 10 nonexempt employees from various functions. They began training the group on how to evaluate nonexempt jobs, to level pay among them.
To try to break down the manager-employee dynamic and get committee members “to know one another as people,” the consultants sent them to a day-long outdoor adventure teambuilding session. Despite saying it “was difficult to assess the precise outcomes of the day,” Kahnweiler asserts that it helped level the playing field. I was about to put this into the tiny category of “Evidence I Have Found that Teambuilding Activities Work” when later in the same article I saw the following: “During the initial job evaluation committee meetings, the consultants observed that the managers on the committee (all males) interrupted the nonexempt members (all females), finished their sentences for them, and often came across as condescending to them. These behaviors were more or less eliminated during the one-day outdoor session, only to re-emerge once the committee began its work in earnest back at the work site.” The behaviors were reduced only through the ongoing work of the consultants in the meetings over five months.
The primary goal of the project was achieved: “feedback from managers and nonexempt employees suggest that the new system was more equitable, defensible, and more aligned with the (unit’s) goals and strategy compared to the previous system.” As for the larger goal, interviews with the female committee members as part of a follow-up six months later “concluded that harassment and other offensive behavior from male managers… were reduced but not eliminated,” and the hierarchical culture remained. A new HR director was pleased with the consultant’s follow-up work, but never asked them back for other projects (and never explained why).
I applaud Kahnweiler’s openness. He leaves it to the reader to decide whether the project succeeded. My take is that it succeeded on the only goal it could have succeeded on, the primary one of a fairer pay system. As he no doubt knows, you cannot impact the culture of a large organization by working with 15 people in it. A “culture” is nothing more than a pattern of behaviors, and behavior must be addressed individual by individual.
Thus I think Kahnweiler failed to write about a failure (other than the teambuilding not working, in my biased opinion). That’s unfortunate, given the lessons we can learn from failure. People who fail spectacularly do so because they were willing to take a spectacular risk. Every technological advancement we enjoy today came from the work of people willing to fail. If you want your team to succeed, follow Kahnweiler’s example by admitting your own mistakes and failures. Making it safe for them to do the same will create an environment where risk and therefore success can flourish.
Source: Kahnweiler, B. (2010), “Organization Development Success and Failure: A Case Analysis,” Organization Development Journal 25(2).
I read a horror story made all the worse because it is a true story involving failure to protect nuclear weapons secrets, lost management—and indirectly, me.
The story is told in a book, Implosion at Los Alamos: How Crime, Corruption and Cover-Ups Jeopardize America’s Nuclear Weapons Secrets, by Glenn Walp, Ph.D. Walp’s credentials are impeccable: former head of the Pennsylvania State Police, a master’s degree in criminal psychology and doctorate in human services, national police awards, and national media appearances. The latter were mostly about one other job he held: Office Leader of the Office of Security Inquiries at Los Alamos National Laboratory, the home of the atomic bomb. Walp did not hold the job long. He did it too well.
The Lab hired him as part of an agreement with the U.S. Department of Energy, which oversees it, to professionalize the Lab’s criminal investigations. Almost immediately upon arriving, he began to uncover massive problems. Walp details how employees’ refusal to follow equipment management procedures left many items missing and untraceable, including computer equipment that might have held nuclear secrets. A mini-Mafia ran free at one facility, buying spy equipment with federal money and protected by a thug who threatened potential whistleblowers with violence. Walp describes rampant abuses of a system that allowed any Lab employee to purchase items at various stores by showing a Lab badge. From another source, I know that one year, more Leatherman tools were bought than there were employees at the Lab. Walp criticizes an internal delivery system that dropped off packages, including high-cost equipment, in open areas without anyone signing for them. He points out numerous lapses regarding both nuclear weapons information and “special nuclear materials,” raising the very real specter of terrorists getting at least enough of the latter to create a “dirty bomb”—a regular bomb that would irradiate people it didn’t kill outright.
The most shocking discovery was that upper managers had known about these problems for years. Furthermore, when Walp tried to do his job, those same managers began interfering with his investigations. When he tried to call in the FBI, he almost immediately received pushback from above. Eventually the chief lawyer at the Lab inserted himself between Walp and the FBI, to the point that Walp warned him of violating “obstruction of justice” laws. Every incident of missing computer memory devices brought the standard Lab refrain that no classified material was compromised, even though there was no way to be sure. The constant message was that Walp’s first loyalty must be to the Lab and the Univ. of California, which had managed the Lab from the start, in 1943. Protecting the UC contract clearly was more important to top managers than protecting U.S. property or nuclear secrets. Walp and others had to resort to DOE’s formal whistleblower process. Despite the extra protections this gave them and outstanding written performance appraisals, Walp and an associate were fired because they “did not fit” with the Lab’s culture. They were quickly escorted off the property by armed guards. The “Mafia” don and his thug had only been placed on administrative leave initially (though they eventually went to prison).
All of this has been corroborated, by DOE and FBI investigators, many journalists, public interest groups, and the U.S. Congress. As a result, two Lab directors in a row and some managers were fired. Walp was rehired as a UC consultant and won a $1 million settlement for his firing, clearly retaliation for his whistleblowing.
I wish I could report things are much better since then, but they are not. The university was forced to team with defense contractor Bechtel and compete for the contract for the first time in 2005. Unbelievably, they won. No surprise, then, that Walp lays out yet more problems and continuing Lab denials through 2009.
One exchange in the book leapt out at me. Walp is talking to his boss. “Glenn, have you ever worked for a corporation before?, Falcon responded. It’s much different working for a corporation than it is for a government or for a governor, continued Falcon. The lab has a certain corporate philosophy and certain corporate rules that the employee must abide by…” Walp himself misses the massive problem with this statement. Los Alamos Lab is not a corporation! It is a federally owned facility managed at the time by a state government entity. This is the most egregious example of management denial I have ever read.
I was relieved to see, however, that Walp did not criticize the Lab’s written procedures for managing equipment (called “personal property”), but the failure to follow them. “Relieved” because, I wrote them.
The lab hired me as a contractor in 1994 to rewrite their equipment management manual (that’s how I know about the Leatherman issue). Realizing instantly the manual was an antiquated mess, I started over from scratch. When it became clear the only way to do this quickly was to get four groups of stakeholders working more efficiently, I requested permission to create self-directed work teams (SDWTs). It worked. Within a few months, we had a 350-page draft. In two years, these dedicated people had raised the property management system’s rating by outside auditors from failing to “Outstanding.” Four of the people I served are named, favorably, in Walp’s book.
However, I saw the rampant cultural problems he mentions, especially after I became a manager. My introduction of “management by walking around” was taken by many employees as micro-managing because they weren’t accustomed to any oversight. Most people in our group were treasures, but a significant number would have been fired by private industry years earlier. Upper managers gave little material support to best practices, clearly more interested in smooth sailing. The property SDWTs eventually had their empowerment taken away despite their successes. I heard the refrain about protecting the UC contract often. After three years in management I had enough, and I started TeamTrainers.
This topic has been painful. I still love the Lab, both for many of the people and for much of the work it does. Walp praises the Lab’s science, which helps prevent the spread of nuclear materials, ensures U.S. weapons still serve as a deterrent, and has led research in a surprising array of topics from computer modeling to alternative energy sources to quantum physics.
I want to call the leaders in the book “blind,” but that would be an insult to blind people. “Lost managers” is a better term. They lost sight of who they really worked for. They lost sight of the real source of damage to the Lab, greater than PR problems. Some of them lost their jobs over it. If you as a manager make any effort to squelch reports of ethical violations, policy violations, and especially legal violations, you may be a lost manager. Let this hypertext help you find your way, lest you destroy what you are trying to protect—even if it’s only your own backside.
Source: Walp, G. (2010) Implosion at Los Alamos: How Crime, Corruption and Cover-Ups Jeopardize America’s Nuclear Weapons Secrets. Justice Publishing, LLC: Gold Canyon, Ariz.