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Quantum Insights At IHRSA 2011

TUE, NOVEMBER 30, 2010 AT 15:30 | JEAN SUFFIN

Healthy companies produce impressive results, says keynoter Patrick Lencioni

Patrick Lencioni, the founder of The Table Group, a management-consulting firm based in Lafayette, California, and a keynote speaker at IHRSA’s 30^th Anniversary International Convention and Trade Show, believes that American business has it all wrong.

In the final analysis, he says, traditional management principles—regarded as virtually sacrosanct—simply don’t do the job nearly well enough. All too often, by focusing intensely on such things as marketing, sales, strict personnel policies, and the bottom line, companies wind up with employees who are miserable and unimpressive financial results.
Creating an environment that encourages and nurtures qualities such as teamwork, compassion, honesty, and vulnerability, (shall we describe the meaning of each concept?) one in which people are recognized for their contributions and not penalized by politics (read it as warning letters, discount in salary, rejecting vacations, investigations with the legal department)—that’s the key, Lencioni insists, to true corporate health, vitality, and progress.

“Real success is more about hiring and retaining good people than it is about business management,” he contends. 

Lencioni admits that his message is disarmingly simple and should be nearly self-evident, but, all too often, he observes, management theories, systems, and established ways of doing things trump common sense. Executives, he suggests, require gentle reminders about the importance of fostering high morale, individual creativity, and personal achievement.

The best-selling author of nine books, including his most recent, Getting Naked, Lencioni’s philosophy was borne out of his own experiences, as well as his observations of companies and their workers. His interest was piqued as a child when he realized that his father, a wine and spirits salesman for 40 years, was painfully dissatisfied with his job. Earning an economics degree from Claremont McKenna College, in Claremont, California, Lencioni thought he could avoid his father’s fate, but, in a series of positions with three highly regarded firms, found that he hadn’t.

“As I got exposed to companies, I discovered that organizations generally don’t operate in a way that makes it possible for people to like their jobs,” he explains. “I recognized then that my mission, my place in life, was to help companies become healthier.” The realization led him, along with five other consultants, to found The Table Group in 1997. Since then, the firm has worked with thousands of senior executives and corporate teams with a wide range of entities, including high-tech startups, universities, nonprofit groups, and Fortune 500 companies.

Its client list boasts the likes of AT&T, Bechtel, Boeing, Cisco, Sam’s Club, Microsoft, Mitsubishi, Allstate, Visa, FedEx, New York Life, Sprint, Novell, Sybase, The Make-A-Wish Foundation, and the U.S. Military Academy at West Point. 

Today, The Table Group deploys 15 consultants nationwide.

The firm’s principal offering, both in terms of the services and products it sells, is Lencioni’s core intellectual contribution: the Four Principles of a Healthy Organization. The principles, outlined in his book, The Four Obsessions of an Extraordinary Executive, require that companies take the following steps:

1. Build and maintain a cohesive leadership team

2. Create organizational clarity

3. Over-communicate organizational clarity

4. Reinforce organizational clarity through human systems 

In practical terms, this means choosing executive team leaders who personify the company’s culture; ensuring that all employees are clear about the firm’s goals; explaining to each employee how their job fits into the big picture; and confirming their value through the corporate culture and through honest and constructive communication. 

In most cases, Lencioni asserts, there’s a distinct disconnect between most people’s personal lives, where they enjoy a relative amount of freedom and satisfaction, and their professional lives, where, constrained by politics, rules, regulations, conflicting egos, and management’s expectations, they feel out of place and unhappy. The natural response is to adopt a false, but functional, persona. 

The results: minimal job satisfaction; poor morale; hampered productivity; increased turnover; and diluted profitability. 

Conversely, an environment that allows employees to be genuine facilitates outstanding outcomes.

“For years, people have been paying attention to the wrong things,” says Lencioni. “What can transform an organization is eliminating the messiness and the politics, and creating a place where people want to work. The best companies in the world do that, but, because you can’t measure the ROI on creating a functional environment, most businesses don’t. Southwest Airlines, for example, isn’t the best airline because they know more about planes, but because they treat each other and their customers well, and people like to fly them. Business schools have tried to study the company, but can’t—Southwest has a competitive advantage with no numbers to measure or tangibles to pinpoint.

“Healthy organizations,” he continues, “spend little time on sales initiatives to obtain new clients because their reputations speak for themselves, and references and referrals grow their business organically. Surprisingly, this simple concept eludes most executives.” 

A healthy company, he points out, is also much more likely to be concerned about the physical health of its employees, offering fitness incentives, wellness programs, subsidized club memberships, etc.

Proliferating applications

Lencioni’s approach has produced rewarding results not only for clients, but also for his own firm and, even, his family.

Clinton Anderson, the founder of Downunder Horsemanship, a $12.5-million company in Stephenville, Texas, that produces training materials for horse owners, is a contented customer. “Our company was very unhealthy,” he says. “We had the wrong people running it, employees didn’t get along, there was backstabbing, and turnover was very high. After my wife readThe Five Dysfunctions of a Team, we hired The Table Group to come in and teach us their model. 

“Lencioni helped us figure out our core purpose and core values,” Anderson explains. “When you embark on this process, you very rarely have to fire anyone. The people who didn’t fit our core values quit; and, when you hold people accountable, if they’re not doing what’s expected of them, they quit, too. Now, all of our employees are worth their weight in gold.” 

Though Lencioni downplays ROI objectives, Anderson notes that his sales, year to date, are already up 2%.

With respect to The Table Group, Lencioni says, “We live what we preach.  We’re a messy, but honest, firm. We have difficult moments like everyone else, but that’s part of the process. It’s critical for us,” he indicates, “because none of us would want to work where they don’t do this, and, also, because if you’re going to promote these ideas, you have to be serious about them. At each staff meeting, we ask, ‘How healthy are we? How are we doing as a group?’ We argue and debate, but we cycle through the challenges pretty quickly. We’ve gotten very good at this.”

The father of four sons, ages four to 12, Lencioni has adapted his theories to his family life and produced a book on the topic, The Three Big Questions for a Frantic Family. “We’ve developed core values and a core purpose,” he says. “We have meetings, and we prioritize. It helps eliminate some of the chaos.”

Lencioni’s latest book, Getting Naked, adds another layer of insight to his essential canon. Its title suggests that bare, unadorned honesty—being vulnerable, acknowledging mistakes, and moving on—is a freeing, and an incredibly productive, policy. “For managers who have long thought they could succeed only by projecting a tough exterior and hiding their weaknesses, this is a huge departure, a monumental transition,” he reports. “Once they expose themselves, admit to a mistake, and have an honest conversation with their coworkers, they recognize how valuable and rewarding it is.”

The recent recession, he suggests, has made his message more relevant than ever. “Some companies have seen the economic downturn as an opportunity, but others have allowed fear and anxiety to drive them into the ground,” he observes. “Our business has remained steady because a lot of companies have come to realize that it’s time to make their organizations healthier. Times are lean, and they need to get more out of fewer resources. 

“When morale is good, and people are motivated and enjoy coming to work, it’s amazing how much more efficient they are. 

“Now’s a great time for company to invest, not a lot of money, but, rather, time and energy into making their business productive and healthy. They’ll not only come out of the downturn faster, but, also, better.”