Leadership Impact

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Learning by Managing

Chapter 1.2  (Next Step)

Draft 4/1/09

 “In the last analysis management is practice.  Its essence is not knowing but doing.  Its test is not logic but results.  Its only authority is performance.” – Peter Drucker

I once held a management position where I “wasted” a few million dollars every year – on schedule, like clockwork.  As VP for Human Resources at United Health Services in Binghamton, NY, I oversaw the merit compensation program that covered our 2,400 employees.  At the time our total payroll was over $100 million, and our compensation system provided annual increases averaging over 4%.   Therefore, on the day our merit increases were announced, we incurred new wage and salary expenses of approximately $4 million. 

You might think that type of an increase distributed according to observable performance would generate good feelings and improve morale – but you would be wrong.  In fact, merit pay announcement day was normally accompanied by an increase in employee complaints, team disharmony, and organizational dysfunction.  I used to say to my Director of Compensation: “If I wanted to make everyone in the organization angry and upset, I bet I could do it for less money than $4 million.  Heck, I could probably do that for free.”

The problem was not that we had a poorly designed system.  In fact, it was technically the best merit pay system I have seen.  The criteria were clear and as consistently applied as is feasible in a large organization.  The system rewarded performance and supported the organization’s primary objectives.  It had self-corrective mechanisms built in, so that it could be improved each year – but it did not work as intended to reward and motivate employees.  It was the wrong plan at the wrong time.

I came to realize that the test of a compensation system is neither the logic of its design nor the elegance of its implementation.  The test, as Drucker says above, “is not logic but results.”  The question is not whether the system is good in principle but whether it is good in practice.  That is, does it work?

The same assessment applies to managing as a whole.  Although it can be relatively easy to identify bad ways to manage (e.g. demeaning others and destroying their confidence), it can be very challenging to learn the best ways to manage or to lead.  What works well in one situation may not in another with different personalities, environments, obstacles, goals, resources, etc.  You need to be continually willing to test your assumptions and try new approaches.

Try thinking of it this way.  There are three main, classical tasks of management: planning, organizing and allocating resources, and monitoring results.  Additionally, there are three main focuses of management: improving processes, maintaining systems, and fixing problems.  Most people are relatively better at some of these responsibilities than others, and they usually prefer those for which they have more aptitude.  Also, on average managers prefer maintenance and problem solving over improving, and organizing and monitoring over planning, because those activities have less inherent uncertainty.

Consider a three by three table like the following:

You will have learning opportunities in each cell on the table.  As you engage in these tasks, you will achieve better results in some than in others.  In some cases, as was true for my experience with compensation, you may discover that an area of relative strength may not work as successfully as anticipated.  The outcomes you achieve will provide you feedback on your skills and strengths and provide direction for further development as a manager. 

You will discover that managing others creates constant learning challenges and opportunities.  More than in many other endeavors, you will experience multiple tests of your skills and achieve varying levels of success.  If you are not defensive or complacent, you will find the practice of management to be among the richest of the educational experiences of your life.

Application:  Assess yourself using the chart above.  Where do your strengths and preferences lie?  Do your outcomes match your expectations?  To grow from your experiences in managing, be proactive in allocating some of your time to each cell of the chart.  Do not just react to the management demands of the moment.