Showing posts with label fear. Show all posts
Showing posts with label fear. Show all posts

Sunday, March 15, 2015

The Price of Fear

"Drive out fear so that everyone may work effectively for the company." - W. Edwards Deming

What does fear cost businesses each year?  Thousands? Millions? Billions?  It’s something that obviously can't be measured accurately, but when I think about some of the organizations I have worked with in the past, I'm guessing the figure is extremely high.

Although the type and extent of fear differs for every organization, it affects virtually all companies in one way or another.  Since much of the cost related to fear is indirect and difficult to measure, though, most companies don't think about it or put forth the effort to reduce its existence.

The Effects

Okay, fear is not necessarily a bad thing for the human race.  It is an emotion designed to lead us to take action when we sense danger.  As a fundamental instinct, fear is a short-term behavior that motivates us to avoid or escape from dangerous situations.  In this sense, fear can lead to bursts of energy and creativity to assure safety and survival.

Within the workplace, however, fear tends to be a chronic condition that wears people down over time.  Although chronic fear affects different people in different ways, most psychologists agree that it is destructive.  Any positive effects on motivation and action are short-term.

The fears that commonly exist within organizations include fear of layoffs, disagreeing with decisions and opinions, asking questions, and taking risks.  In business, the areas that are negatively affected by these fears include the following:

  • Creativity & Innovation: When people are stressed, the conscious mind blocks creativity and innovation.  Fear prevents people from relaxing to the point where they can access the right brain and develop creative solutions to problems;
  • Goals & Objectives:  People will avoid committing to stretch goals and objectives when they feel there will be repercussions if the goals are not met.  Fear also leads people to do whatever is necessary to meet a goal, whether or not it actually helps the organization meet its objectives;
  • Customer Focus: A culture of fear and blame causes people to focus on meeting the needs of their boss rather than the customer;
  • Learning: Effective learning requires the freedom to study the facts and test ideas in real situations.  Some ideas will fail, which is okay because of the learning that results.  Fear of failure blocks people from taking the time to clearly understand problems and test ideas;
  • Health Issues: There have been numerous studies on the negative effects of stress and fear on personal health.  Chronic stress suppresses the immune system, leading to an increase in colds and flu, in addition to a host of potentially more serious conditions.  At best, fear can drain energy and lead to indifference and mediocrity.
Taking Action

So what should business leaders do to address the problem of fear?  I have talked with senior leaders in the past who don’t see fear as a big problem because they don’t see it.  Company leaders unfortunately don’t commonly have the perspective to accurately judge the level of fear within the organization.

Since fear can greatly impede transformation, however, organizations pursuing lean thinking need to understand the level of fear that exists and begin to address it immediately.  I’ve seen this done with focus groups and surveys, but the most effective method is to increase visits to gemba.  Although go-and-see visits to the workplace can initially increase the level of fear and suspicion among team members when done well, the level of trust that results can significantly improve the situation.


Developing plans from the highest levels of the organization to reduce fear greatly improves the chances of success with lean.  Developing an army of problem-solvers throughout the organization requires that people feel comfortable enough to work toward what’s best for the company and its customers rather than what they think is important to the boss.  As the situation improves, the release of human potential to improve the organization can be staggering.

Tuesday, May 11, 2010

The Revolving Door at GM

General Motors CEO Edward Whitacre is at it again.  Apparently frustrated with the company's lack of U.S. market share growth (it has actually fallen 0.4% since January), Whitacre replaced VP of Marketing Susan Docherty with ex-Nissan and Hyundai marketing chief Joel Ewanick [story link].  Ewanick now becomes the fourth person to lead marketing for the company in the last 12 months.

Besides the obvious effects on motivation created by demoting or firing someone, the fear that can ripple throughout the organization when it occurs over and over again can be immense.  The rapid pace of changes in leadership positions can cause significant damage to an organization that is in desperate need to pull together and focus on rebuilding its health.  It's important to note that executive-level replacements are the only ones reported - there may (or may not) be turnover in other positions that did not make the news.

The Destructive Effects of Fear

The potential effects of the fear created by this type of situation can include:
  • Teamwork:  When people fear for their jobs, they tend to shift into survival mode and focus more on their own survival than the company, as a whole.  When this happens, the level of political gaming within the company often significantly increases;
  • Risk:  People tend to be much less willing to take risks if they feel that failure can cost them their jobs.  And a careful approach to business and markets is definitely not what GM needs right now to resotre its competitiveness;
  • Creativity:  People need to feel relaxed and comfortable in their jobs to develop and use their creativity, while prolonged periods of stress has been shown to have the opposite effect.  Survival and growth in today's highly competitive auto industry will require GM to become much more creative and innovative in its products and processes;
  • Speaking Up/Voicing Concerns:  Fear can crush the willingness to disagree with or questions someone higher in the organization.
I understand that Whitacre is trying to create a sense of urgency in a company that has apeared lethargic for many years.  Developing a clear vision with aggressive objectives, getting in front of people to build enthusiasm and urgency around them, and removing the barriers that interfere with success, however, is much better than firing people to get this point across.

Short-Term vs Long-Term

Ewanick is apparently a highly talented marketing professional with an impressive resume.  However talented he is, though, I wonder it it is possible to develop programs that will quickly increase GM's share of the U.S. market.  A clever ad or marketing campaign may increase sales in the short-term, but sustaining sales and market share increases can only occur by getting close to customers and developing products that meet their needs and wants better than any other automaker.  This is not something that can happen within a few months.

Don't Ignore the Culture

I once worked in an organization where the CEO regularly fired senior leaders (among others) for "underperforming."  As a result, fear and backstabbing became the norm as people worried more about preserving their own jobs than they did about working together to improve the company.  It was a truly bad experience.

GM has suffered from a compromised immune system for many years, and to become competitive again, it must restore its health, which requires improving its strategies, systems, processes, and culture.  These things can't be done without a certain amount of stability at the top.  Continuing to hire, fire, and demote senior leaders can frighten and confuse the organization, something that GM really can't afford to let happen in its current weakened state.

Monday, November 16, 2009

The True Cost of a Layoff

The world of business has become increasingly dependent on layoffs as a response to a downturn in business. There are layoff announcements virtually every day by companies, along with statements about the expected benefits of a reduced headcount.

Does a layoff really result in the savings to an organization that we think it does?

There are hidden costs that are often not considered (or are ignored) when making the decision to institute a reduction in force. These costs are difficult, if not impossible, to measure, but exist whether they are recognized or not.

Besides the severance and social charges associated with a layoff, the hidden costs show up in areas like productivity, customer service, and absenteeism. Since they are not measurable, however, they are easy to debate and not considered relevant in the number-obsessed world of business.

The hidden costs of layoffs include the following:

Increased Fear: Nothing can increase the level of fear within an organization like a layoff. Fear leads to a host of problems including reduced creativity, safe goal-setting, increased health problems/absenteeism, and a lack of willingness to take risks.

Loss of Teamwork: A layoff forces a person to worry more about his or her own situations than that of a co-worker. The atmosphere becomes more competitive as people do as much as possible to demonstrate their personal value to the company.

Loss of Customer Focus: When a layoff occurs, people turn their focus toward pleasing the boss instead of the customer. After all, it is the boss, not the customer, who makes the decisions regarding who will be released.

Drop in Morale: Layoffs make people feel expendable which, along with the loss of friends and coworkers in the organization, leads to a drop in morale. As a result, dedication is lost, and people will be less likely to contribute ideas for improvement or go the extra mile to help the company succeed.

Increased Employee Turnover: Because remaining employees will begin to worry about their own jobs, those who can find other work elsewhere will do so.

Loss of Trained/Experienced Employees: Losing employees means the loss of trained and experienced people to handle the increase in work when business returns. New employees lack experience with the process, systems and customers, and result in increased hiring and training costs (in addition to a higher incidence of quality problems).

What to Do Instead of Layoffs

Many business leaders have come to the conclusion that layoffs are necessary during a downturn in business. There are steps that companies can take to reduce the need for layoffs - even during a recession as deep as the one we've experienced over the last two years. These actions, which equate to cost management as compared to cost cutting, include the following:
  1. Shorten the workweek and adjust pay accordingly;
  2. Offer unpaid vacations/holidays;
  3. Eliminate overtime;
  4. Freeze all hiring;
  5. Eliminate all bonuses and associated accruals;
  6. Cut dividends;
  7. Focus continual improvement activities on cost reductions.
In addition to the potential savings from the above actions, imagine the loyalty and dedication a company would earn from its employees if it manages to survive the recession without reducing headcount.