Crappy People versus Crappy Systems

Simon Caulkin writes a management column in the Observer, a UK-based paper, and has written a couple columns that draw on ideas from Hard Facts. His first one, back in March, has the kind charming title that you don’t get in the states “Bosses in Love with Claptrap and Blinded by Ideologies.” Caulkin recently wrote a column called “You Could be a Genius - If Only You had a Good System,” which draws a bit on our chapter on talent in Hard Facts. He uses recent examples of failures by British sporting teams to show how coaches and critics focus on “naming and shaming” individual athletes, rather than on problems with the system.

This tendency to look for individual goats – and heroes – isn’t just a problem that permeates the world of sports. It is reflected in many misguided ideologies and management practices, which focus excessive energy on hiring stars and weeding-out mediocre and poor performers, and insufficient energy on building a great system that enables most competent people to succeed.

I agree – and can show you evidence – that there are huge differences in individual skill and ability in every occupation. BUT we’ve also got a lot of evidence that ordinary people can perform at top levels in a well-designed system, and even a superstar is doomed to fail in a bad system. Unfortunately, HR and too many other executives believe the advice in books like The War For Talent. (In fact, one of the authors is now head of HR at eBay.. perhaps another reason to short the stock). This is one of the worst management books ever written in my opinion: There is bad evidence from the authors’ own research, no mention of a massive body of research that contradicts many of their claims, and excessive claims are made that if leaders follow the authors’  advice, they can expect “expect a huge impact in a year.”  

I will focus on just one claim from this bad book. I quote the authors, “We call it the Rule of Crappy People: Bad managers hire very, very bad employees, because they are threatened by anyone who is anywhere near as good as they are.” This claim is bold, but  can’t be supported by any systematic research that I can find.  There is evidence that people hire others like themselves, so a reasonable inference is that crappy people will hire equally crappy people -- but there is no direct evidence on that hypothesis.  I spent weeks and weeks trying to find even a hint that a single article in a peer reviewed journal supported the belief that bad performers systematically hire even worse performers.  It is one of those management myths that don’t appear to have any empirical basis. 

The worst part about focusing on keeping out crappy people, however, is that it reflects a belief system that “the people make the place.” The implication is that, once you hire great people and get rid of the bad ones, your work is pretty much done. Yet if you look at large scale studies in everything from automobile industry to the airline industry, or look at Diane Vaughn’s fantastic book on the space shuttle Challenger explosion and the well-crafted report written by the Columbia Accident Investigation Board , the evidence is clear: The “rule of law crappy systems” trumps the “rule of crappy people.”

Sure, people matter a lot, but as my colleague Jeff Pfeffer puts it, some systems are so badly designed that when smart people with a great track record join them, it seems as if a “brain vacuum” is applied, and they turn incompetent. Jeff often jokes that this is what happens to many business school deans, and indeed, these jobs have so many competing and conflicting demands that they are often impossible to do well.

If you want to see a more chilling and systematic analysis, read the chapter by the Columbia Accident Investigation Board that compares the Challenger explosion with the Columbia accident. Sally Ride, the first American woman in space, comments about the “remarkable echoes” of the Challenger accident that can be seen in the Columbia fiasco. Indeed, there was close to 100% turnover at NASA between the two accidents, but the system was largely unchanged. According to the report (which is more useful and better written than most management books), NASA remained a dysfunctional bureaucracy where, rather than deferring to people with the greatest expertise, administrators believed that “an allegiance to hierarchy, procedure, and following the chain of command” decreased the odds of failure. People with greater power ignored and stifled, and overturned recommendations people with more expertise but less power. As a result, the Board warned “NASA’s problems cannot be solved simply by retirements, resignations, or transferring personnel.”

As we discuss in Hard Facts, an interesting contrast is The U.S. civil aviation system. It is one the safest in the world and has become even safer over time, partly because of its accident and incident reporting system. This system permits pilots (and others) to report incidents to the Federal Aviation Administration such as near misses and equipment problems. The agency follows up on these reports and takes action to repair root causes of problems.

There are smart people in both the FAA and NASA (in fact, people from NASA run key parts of the accident reporting system), but one system is difficult to succeed in because it is crappy. And the other is comparatively easy to succeed in because it is well designed. Again, I still believe that people matter. The very best organizations have both smart people and well-designed systems – Google seem to qualify and so does Cisco. 

Comments

[Randy Harward]

It never ceases to amaze me how much time, focus and resources companies spend on trying to identify the "dead wood" and the "heros" in their companies. Entire HR departments, training sessions for managers and much strategic planning by Sr. Mgmt. teams revolve around some form of this activity. Yet there's little if any evidence that any good comes of it. Companies rid themselves of poor performers and reward their top performers with little impact on their overall effectiveness as an organization. It's not that there aren't poor employees or great employees, it's just that they matter less than whether a company is engaging all of those employees within capable systems. It seems all the time spent weeding out the bad and rewarding the good is always time taken away from improving the whole. It creates an environment of blame and self promotion - exactly the opposite of what is needed to pull people within a system into the work of optimizing it.
So refreshing to see this blog and these posts. Thank you.

[Joe]

Perhaps the best way of creating change would be to make the system the villain. The "Machine" grinds talented people into the ground and causes poor leaders to emerge because they are most willing to act as cogs and aren't attempting to change the machine. If more people thought of the system as either a helpful machine or a cruel, uncaring one you might see more people willing to break the bad ones and improve the good ones.

[Tom Guarriello]

Those new CEO results numbers raise suspisions: any of us who've been in the executive suite of corporations know that there are so many ways to juice numbers. Who's more motivated to do so than a new CEO?

The Toyota data sets have always amazed me. What's that book? "40 Million Suggestions," or some such thing? A real study in patient leadership. Of course, at that time, in that place, they could afford to be patient.

[Bob Sutton]

Tom,

Yes, yes, I should have mentioned Deming's name as this is exactly his point. Your additional point that our love of heroes and villains in stories about organizational perfomance, and how it gets in the way, is indeed, on target. One trick -- as we are both doing with Deming -- is to glorify individuals who glorify systems.

Also, a bit of data to your point. Some research we talk about in Hard Facts shows that CEO changes do affect the performance of automobile companies -- by as much 8 to 10 percent. BUT there is one company that has never been affected, Toyota, because after all, they have a system that (at least historically) allows everyone to succeed.

[Tom Guarriello]

I know Deming's time has come and gone in the world of management ideas, but reading your post reminded me of the first time I read "Out Of The Crisis" many years ago. What an eye-opener that was!

In my opinion, our need to assign individual responsibility for any and all outcomes, despite evidence to the contrary, remains one of the most stubborn barriers to improvements of all kinds.

"Heroes" and "villains" populate almost all our myths and we continue to put people in those buckets. These are very powerful archetypes. "Systems" are impersonal, abstract, remote...and make us feel insignificant, as if we can't make a difference in the things that matter. Internal/external locus of control, and all that.

That's not to say that there AREN'T any heroes and/or villains, of course, only to point out that they aren't ALWAYS the cause of the things we attribute to them.

Of course, that word, "cause" is at the root of a lot of these difficulties...