MERITCARE'S LEADERSHIP CHALLENGE

Recent troubles at MeritCare—layoffs, accreditation issues, and revenue shortfalls/expense overrides—illuminate MeritCare’s more profound issue: how to lead an organization in a chaotic and unpredictable world.

Mort Myerson, former chairman and CEO of Perot Systems said several years ago, “Everything I thought I knew about leadership is wrong.”

Throughout the Industrial Era, managers led organizations as if they were great machines. The emphasis was (and often still is) on top-down control with hierarchal and compartmentalized departments with rigid boundaries. Conformity became the first rule. Creativity, initiative, and innovation came from the top or from outside experts. Human potential was ignored (leave your brains at the door) and most organizations were mediocre with life-spans of less than 50 years.
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A leadership revolution exploded over the past 20 years as the marketplace shifted from stable to chaotic and the metaphor of organizations as a lifeless machine was encompassed by one of a dynamic, potential filled living system. The new metaphor requires new leadership talents, hence the Myerson insight.

Have MeritCare leaders, like Mort Myerson, changed their core assumptions about leadership in today’s world? Can MeritCare employees tell an outsider what MeritCare’s vision, values, and purpose are? Do MeritCare managers know how to lead others through change? Does MeritCare have a culture of high accountability? Do MeritCare leaders realize how much human potential has been lost in the mechanistic model of organizations?

Core leadership practices in a dynamic organization:

See reality as it is. “Thirty to 50 percent of what we do doesn’t add value to patients,” said Dr. Roger Gilbertson, president and CEO in a stunning admission of “remarkable inefficiencies.” Do MeritCare executives receive ongoing feedback on their conduct and initiatives? Are they quick to discard failed programs, strategies, and subsidiaries? Do they explore and bring to light the dark side of the corporate culture and receive ongoing feedback on their leadership impact? Have executives been in denial, slow to respond to issues in recent years?
Create an organizational identity that inspires people: a spiritual purpose for why they exist, noble values to guide behavior, and a vision that provides direction and courage to employees. Is MertiCare’s vision bold enough, its goals big enough?
Practice tough love—a high standard for behavior and performance with a deep respect and compassion for others. People thrive in organizations where responsibility and accountability are valued and where the neurotic, mediocre, immature, irresponsible, and passive-aggressive are exposed, confronted, and held accountable. Does MeritCare invest in the quality supervision needed to retain their best employees?
Involve people in change and require empowerment. Leaders understand that people support what they help create. They require people to make decisions about the work they do. People are often lazy and don’t want to do the work of empowerment. Good leaders don’t let them get away with upward delegation. A stated goal at MeritCare is to have “fewer people and pay them more.” I would add “fully utilize the talents of people” to that objective.
Embrace and go into and through the anxiety, uncertainty, and ambiguity of the chaos of today. This is where people find their creative energy. They “plan, do, reflect, and adapt” constantly. They act boldly and decisively and change everything but their identity as they adapt continually to the world around them.

Efficiency is important at MeritCare and the recent discovery of major inefficiencies (Why weren’t they discovered years ago?) gives MeritCare a great opportunity for transformation.

But efficiency is just one element of an overall leadership philosophy for an organization. Enlightened leadership of people, seeing reality accurately, a tough love culture, imaginative and creative vision and strategies for continued development, and the courage to go into the unknown regularly and courageously are even more important.

It’s always all about leadership.

KEEPING JOBS IN NORTH DAKOTA

This commentary appeared in The Fargo Forum on July 20, 2008

North Dakota has 14,000 job openings.

A report entitled “Workforce Policy System Recommendations” commissioned by the North Dakota Legislative Council highlights ideas to attract and retain employees. The majority of the suggestions involve incentives to attract and then retain North Dakota workers.

The report did not focus on improved leadership, management, and supervision by North Dakota employers as a proven way to attract and retain not only employees but quality employees.

Absent the ongoing development of quality supervision, I predict the ideas proposed will prove to be little but cosmetic quick-fixes that give the illusion of progress but, in reality, are disappointments.

Employers first attract good employees with competitive compensation, fairly administered, and with clear guidelines on how to earn increases. Competitive compensation, while necessary, is not sufficient for the retention of great employees. Good supervisors and a culture of engagement are crucial to the attraction and retention of quality workers. Such supervisors and cultures are rare: The Gallup Organization reported that 76% of American workers are disengaged clock-watchers who cannot wait to go home at night. Their discretionary energy—the energy available to them beyond that needed to keep their jobs—is lost to their employers.

Gallup conducted over 1 million interviews and massive statistical analysis to answer the question: “What do the most talented and productive employees need from their workplace?”

Twelve questions emerged from the data. These questions captured the most important information about how to attract, focus, and keep (physically and mentally) the most talented employees. The questions, from the book First Break All the Rules by Marcus Buckingham & Curt Coffman, are:

Do I know what is expected of me at work?
Do I have the materials and equipment I need to do my work right?
At work, do I have the opportunity to do what I do best everyday?
In the last seven days, have I received recognition or praise for good work?
Does my supervisor, or someone at work, seem to care about me as a person?
Is there someone at work who encourages my development?
At work, do my opinions seem to count?
Does the mission/purpose of my company make me feel like my work is important?
Are my co-workers committed to doing quality work?
Do I have a best friend at work?
In the last six months, have I talked with someone about my progress?
At work, have I had opportunities to learn and grow?

High ratings correlate with high productivity, increased profit, employee retention, and customer satisfaction. The data shows that engaged employees miss less work, quit less often, steal less from their employers, have fewer accidents (all by dramatic percentages), and more engaged organizations outperformed the earnings-per-share of their non-engaged competitors by 18%.

A key finding of the study was that opinions are formed by the employee’s relationship with the immediate supervisor, not the overall company, its leader, its structure, or its policies and procedures. In other words, people quit their immediate supervisor, not their company. Therefore, the selection and development of supervisors is crucial to the retention of the best employees.

If North Dakota enterprises want to attract and retain the best employees, make a lot of money, and endure longer than the length of a career; if North Dakota schools want to attract and retain quality teachers and administrators and graduate educated students; and if North Dakota governments want to provide efficient services, then North Dakota employers would be wise to create a well led and engaged workforce.

A SUSTAINABLE MERITCARE

This commentary appeared in The Fargo Forum on July 6, 2008.

MeritCare recently laid off 90 employees. Ninety others had hours reduced, and 120 open positions will be absorbed.

Being laid off is a big deal to people: lives, families, and communities are impacted negatively. When people are laid off from one of the area’s largest employers, a little bit of the community’s vitality and sense of security is destroyed.

I once led a 4,500 employee business unit at a major newspaper. Faced with a revenue shortfall, we had to reduce staff. Serious about our employee engagement efforts, we worked hard to reduce our staff in voluntary ways that built trust.

We offered early retirements, gave incentives to leave, eliminated open positions, retrained people to fill open jobs in other departments, and redesigned jobs and departments to operate more efficiently and with fewer, more fulfilled people. Extra people were used in new product lines that generated new revenues. We made our downsizing goals and grew trust and commitment too.

Dr. Roger Gilbertson, president and chief executive officer of MeritCare, said that cutting costs is the only way to keep the organization viable for another 100 years. “The actions of today are a way of safeguarding the organization,” he said.

I disagree.

The layoffs were a temporary fix to deeper dynamics—within and outside of MeritCare. No organization ever downsized its way to long-term sustainability.

What do we know about sustainable organizations?

Some companies endure for hundreds of years. Sadly, however, the average life-expectancy of a Fortune 500 company is only 40-50 years. This statistic cuts across nations and is even worse for smaller start-up companies—40% survive less than 10 years.

Arie DeGeus, former coordinator of worldwide planning for Royal Dutch/Shell, wrote in The Living Company: “Companies die because their managers focus on the economic activity of producing goods and services and they forget that their organizations’ true nature is that of a community of humans.” Layoffs destroy trust, loyalty, and the strong relationships essential for survival amid change.

How do organizations like MeritCare endure in a today’s turbulent world?

Sustainable organizations:

1. Continually adapt to the external environment. Leaders constantly imagine a better future and rally people to join together to make the vision come true.
2. Have a core identity of purpose (why they exist) and values (guiding principles) that provide stability and continuity as all else changes over time. Most organizations today have vision and values statements. Few make them real by holding people accountable to “walk the talk” of the enterprise.
3. Change everything but the core identity: culture, strategies, operating practices, and products as they learn continually and adapt to the world around them. They experiment with ideas to find what works. Employees do the work of re-engineering and redesign while consultants provide methods, experience, and facilitation.
4. Are inclusive of those who stretch their understanding of what is possible: critics, outliers, risk-takers, and different points of view.
5. Are fiscally conservative. In sustainable companies profits are necessary to sustain the enterprise but they are not sufficient; they are an outcome of leading engaged people. In long-lasting companies researched in the book Built to Last an investment of $1.00 in those companies on January 1, 1926 would have grown to $6,356 by 1994—over 15 times the general market—15 times by putting the “community of humans” first.

The health care industry thinks it is in the midst of transformation. They haven’t seen anything yet. The leadership challenge of the 21st century is to achieve outstanding and sustainable business results by creating conditions for employee engagement that bring forth the vast untapped human potential in organizations—the competitive advantage of our time. Sustainability will go to those organizations whose leaders have foresight, are creative, can engage the talents of all, and can lead others through change.