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Ten Deadly Firm Management (Mal)Practices.

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September 2006: Of Sailors and Mountaineers: The Inherent Dangers of Internal Competition

by Tom "Bald Dog" Varjan, Organisational Provocateur

Based on Victor Mallett's brilliant article in the Financial Times, entitled "Lost or hurt at sea? Phew!", we can easily distinguish between sailor and mountaineer type firms.

The essence of the article is that the 34-year old British climber, David Sharp dies on the way up to the top of Mount Everest. It turned out that some 40 other climbers saw him in distress, but decided to leave him to die and pursue their own individual glories. Sharp's death is even more tragic that around the same time, Lincoln Hall, a 50-year-old Australian climber was also left for dead, but was eventually rescued.

So, this is how mountaineers operate. But how different are sailors?

It seems that it's perfectly normal for sailors to sacrifice their own glory when receiving distress signals. They jump and go for the rescue of the distressed boat.

In June 2006 Dutch crewman Hans Horrevoets was washed overboard into the Atlantic from ABN Amro Two during the Volvo Ocean Race. Upon hearing about the accident, several boats immediately "quite the race", turned around and started searching for the missing sailor. Finally Horrevoets was found but he was already dead.

One of the most extraordinary recent sea rescues have been the rescue of of Raphaël Dinelli by Pete Goss in the 1996-97 Vendée Globe single-handed round-the-world race. Goss turned back on Christmas Day 1996 and sailed right into a vicious Southern Ocean storm to save Dinelli from certain death. This act earned him the Légion d'Honneur and Dinelli's friendship.

It seems that mountain climbers and sailors operate by different rules.

Mountaineers go for the summit no matter what. They go for individual glory and don't really care who they have to sacrifice to achieve that. In contrast, sailors have a "Never abandon a teammate in distress" attitude. And for them even the opponents are teammates because they are fellow sailors.

Similarly, some firms promote individualistic, hunter type "teamwork." They still call it teamwork because that's the flavour of the month. Nevertheless in reality, it's a cutthroat "mountaineer" approach during which individuals are making their progress at the expense of others in the firm.

When you create a competition for your people, only one can be a winner and all others will be losers. It means you will be the leader of a bunch of losers. However, with this approach, you become a loser as well.

We live in a society that places high value on any kind of competition. This is one way of expressing a person's individuality and personality. And this crazy life-long competition starts right in kindergarten. Then in school it gets even worse. By the time people complete their schooling, they are ready to do everything alone and cut the throat of everyone who tries to get in their ways.

Darwinian evolution theory teaches us the "survival of the fittest" approach to life. However, when we translate this Darwinian approach into practice development, then we are in deep trouble. The workplace becomes a corporate wrestling ring, where we are expected to beat the shit out of our colleagues, so at the end of the day we can stand victoriously and accept a prize for the winner.

And after the announcement of the winner, one winner and hundreds of losers go back to their work, busily developing new strategies for themselves, so next time they can be the winners. And the back-stabbing continues. However, on a subconscious level something else happens too. The one winner is fired up by the prize, and starts working busily like a bee. But when the hundreds of losers go back to their cubicles and offices, they will have one thought in mind: How to be the winner next time? Re-read it: How to be the winner next time? And not how they can advance their firm's success?

And this is where the great competition is backfiring to the firm. You have one winner and hundreds of disillusioned, pissed off losers, many of them don't give a rat's arse about the future of your firm. Many of them are polishing their resumes and ready to jump ship taking many of their clients with them.

Some Management practices Nurture Internal Competition

Since many managers come from an academic background where the necessity of competition was beaten into them, they do their best to sustain this competition throughout the firm. The emphasis is not to improve the client's condition and in doing so advancing the firm to fulfil its strategy, but pass the next evaluation with flying colours or win some kind of fiendish award. So, what are these zero-sum games management plays on people?

  • Forced distributions of performance evaluations
  • Recognition awards
  • Employee-of-the-month programs
  • Forced distributions of individual merit
  • Contests between departments, divisions or individuals
  • Published rankings of individual or unit performance

The problem is that zero-sum games motivate the kind of people to work harder whom you shouldn't even have on your team. They are the individualistic superstars who don't mind harming anyone, even the firm itself, to get their own personal glory. This is why I think compensation with commissions is the ugliest compensation method. It rewards the individual for instant result but it ignores the damage the individual does to the team and to long-term success. That's why in some firms you find superstar "entrepreneurial hunters", and in other firms you find real team players.

Just compare Donald Trump's and Richard Branson's organisations. Trump promotes the superstar "entrepreneurial hunter's" environment. Branson promotes the team approach. Trump's company is suitable for mountaineers, while Branson's company is for sailors.

And while in the superstar game there is one winner and many losers, the biggest loser is the organisation itself because as soon as the superstars exploit their own superstardom at the firm, they move on and start working against their previous firms.

Mistaken Beliefs About Internal Competition

We've all heard the widely used rationale that "competition brings out the best in us." Think for a moment. The army is definitely a place where everyone's "best and brightest" is needed, and there is not much room for errors. The army has even earned the "Ultimate Professional Service Firm" moniker. Yet, what you never see in the army is internal competition. Why? because where there is competition, collaboration dies. That's all.

So, then why is it used in professional firms? Because it's easy to manage. Why practitioners are at each other's throats, practice group leaders can focus on their own personal performance and billability. But if this is the case, who is really managing the practice? The reality is that no one. That's why most professional firms provide pretty haphazard, inconsistent services. Projects are not managed according to specific standards. And since most professionals hate being held accountable for their work, they prefer the competition. This way they know that "the boss" is off their backs.

But, as Alfie Kohn writes in his book, No Contest: The Case Against Competition, explains that people can achieve great goals without competing against each other: "Success and competition are not at all the same thing. Competition need never enter the picture in order for skills to be mastered and displayed, goals set and met."

Can you imagine a violin player in a symphonic orchestra thinking about how to "outplay" the other violin players?

Can you imagine Leonardo mumbling to himself: How can I beat that smartarse Michelangelo and put him out of business?

Can you imagine a rock band where the guitar player competes with the lead singer? Well, in the Mark III line-up of Deep Purple, the egomaniac puffed-up peacock bass player, Glenn Hughes tried to compete with lead singer David Coverdale (Watch the video entitled California Jam) for audience attention, and finally killed the band. They had to stop the concert several times because Hughes unexpectedly took over the singing from Coverdale. There was an area painted on the stage for Hughes, and guitarist and founding member, Ritchie Blackmore told him not to cross the line or he would wallop him on the head with his guitar.

The problem is that so many firms treat their craft as war: There can be only one winner.

Kohn's exhaustive review of the research literature on the effects of competition in organisations and in schools led him to conclude that "Superior performance not only does not require competition; it usually seems to require its absence." The failure of competition to invariably foster superior performance is readily explained: Trying to do well and trying to beat other people are two different things.

but some forms of competition can still be healthy. Although I'm not sure it can be called competition. Imagine a 4 x 100 meter sprint relay team. They run as a team but each participant tries to outrun the others. But all it happens is that it will improve the team's overall time, so this competition contributes to the end result. Relay sprinters are not assessed on personal time but on overall team time. Individual time is one component each runner works on to improve.

What does affect performance, if it isn't competition? It is rather expectation of managers.

In my fitness work with businesswomen I see regularly that a woman who can normally bench press 50lbs, when we work out together, she can press 65lbs or even more. Why? It's expectation. When we get together, I expect her to beat her previous record. And I expect that every time we meet. So, all she does is just to live up to my expectations and does a touch better than she did before. But we don't compare her results to other women's results. We compare her results to her own previous results.

We can call this the Pygmalion Effect. Just think of George Bernard Shaw's story: Eliza Doolittle married Freddy Eynsford-Hill because she realised something vitally important. She realised that in Professor Henry Higgins's eyes she has always been and would always be a cockney flower girl, and would be treated accordingly. She knew that the arrogant Higgins would never be able to accept the positive changes in Eliza. For him, Eliza was merely the subject of a bet, a guinea pig, and item to enhance his superiority as an academic.

Eliza knew Higgins would always treat her the same way regardless of her achievements. As she said to Freddy, "The difference between a flower girl and a lady is not how she behaves but how she is treated. I have always been and will always be a flower girl to Professor Higgins, because she treats me as one. But I also know that I will be a lady to you because you treat me as one."

And here lies the flaw in forced ranking systems and other so-called "merit" ratings, which only destroy inspiration (inner drive "pull") regardless of the level of motivation (outer drive "push"), and can only develop resentment for management.

What the military discovered a long long time ago, is that what you expect of a group of people is what the group will live up to. Business experts preach it as, "Inspect what you expect." This was definitely my own experience too. No one bothered to check my personal performance in anything really. My commanding officers knew that through ongoing practice, all day every day, I was on a trend of getting better and better, thus my unit was getting better and better. There was no competition among us. We didn't get medals for winning over out comrades. We worked on making the team the best it could be. Apparently, one of the reasons why the army is so reliable because it creates "superstar-free" environment, fully embracing teamwork.

Interestingly, the kind of people most firms are looking for entrepreneurial loudmouths, exhibitionists, "look-at-me"s have a pretty hard time in a true team-based environment. In contrast, quiet, soft-spoken, self-effacing and self-contained guys with icy nerves make brilliant teamworkers.

With this in mind, it's a huge mistake to categorise people into categories of "potential winners" and "potential losers". The big hairy truth is that whatever you expect of people, provided the expectation is congruent with their core values, they live up to it. This is normal human behaviour. It is natural that nobody wants to be a loser. And nobody wants to be "merely" average either.

And since the goal is to create a competition-free environment, firm leaders, as quality guru W. Edwards Deming suggested many years ago, have to eliminate quantitative individual performance evaluations. All you have to do is to buy into the notion that performance is the function of emotional drivers, and in an environment of excitement, energy, passion and enthusiasm it's a lot easier to perform well than in an environment of duplicity, back-stabbing and managerial terror.

Deming has taught us that internal competition is created by forced rankings and individual reward (punishment too). Just look at Mary Kay distributors. They don't make huge amounts of money but they love what they do. Why? The environment. They are always so damn busy celebrating something so small and seemingly insignificant, that most firms' people wouldn't even raise a glass of wine to. Attrition rate at Mary Kay? Virtually zero. Avon and Tupperware are pretty much the same.

The sad fact is that the reason why most firms insist on quantitative evaluation metrics is because this gives them a tool to punish their people. No, it's not about reward. It's about punishing people who consistently perform at high level and one day they slip and "underperform." The overall world of business is still more punishment-driven than reward-driven. And TV programmes like Donald Trump's Apprentice create that false believe that managers can terrorise their people into peak performance. And using conventional wisdom Trump is the savvy businessman because he can terrorise his people into compliance, and Richard Branson is a renegade because he uses unspeakable methods to build his business, namely fun. Here is an interesting article comparing the two billionaires.

Similarly, fear-driven, undisciplined high-attrition firms are regarded as normal and business-like, while firms with high level of fun and discipline are regarded as non-business-like mavericks.

Here is Deming's comments about individual performance ratings, "Everyone propels himself forward, or tries to, for his own good, on his own life preserver. The organization is the loser."

In their book, Working Knowledge, authors Thomas Davenport and Laurence Prusak emphasise the importance of rewarding knowledge sharing and collaboration rather than knowledge hoarding and competition. They write, "Knowledge altruism is real and can be encouraged. It flourishes in organizations that hire nice people and treat them nicely."

So How Come That So Many Professional Firms Still Overemphasise Internal Competition?

Based on my experience, most professional firms are erroneously managed as if they were industrial mass production plants churning out tins of paint, boxes of condoms or bags of coffin nails. In most firms professionals are still treated like brawn workers. Hence most firms still employ time sheets. Instead of tracking team achievements, they track individual time inputs, rewarding people for showing up even if they are half-asleep most of the time.

Competition inhibits learning and creativity because people focus their attention too heavily on what the competitors are doing and on the reactions of leaders and peers.

This talk is backed with action. If someone is writing a lot more sales than other colleagues in a store, say 25 percent more, it is taken as a signal that the person is probably not sharing walk-in traffic but rather is hogging business. Particularly if that person is also not writing high volumes of business per transaction, he or she is reminded about team selling and the expectation that in the company success comes only when everyone in the store is successful. If the behaviour persists, the company will fire that individual.

The other way managers can reduce and gradually eliminate internal competition is by ditching measures that measure individual success at the expense of others.

Summary: Ten Ways to Exorcise Internal Competition Once and for All

  1. Acquire talents based on their willingness and ability to work in a collegial and co-operative manner for your firm's long-term welfare, knowing that the better the firm does, the better everyone does.
  2. Weed out people who act in their individual short-term interest.
  3. Make certain your people focus their talents, attention and energy on providing better client work and overall better client experience, instead of getting bogged down with rivalling with each other.
  4. Ruthlessly eliminate every form of individual compensation, and let the team deal with underperformers. Don't try to play the almighty. team member know how to help and support bruised apples and how to eliminate rotten apples.
  5. Create non-financial progress indicators. After all, the money is just the by-product of great client work performed by fired-up, ambitious, energetic, excited and enthusiastic people.
  6. As an owner of the firm, your firm's culture is a reflection of you, so you can set up the assessment of your people the right way. Make sure you assess overall performance, and let the team deal with low performers.
  7. Instead of demanding certain behaviours, leaders must demonstrate that specific behaviours that can me emulated. Leaders must become exemplars of what they want to experience in their businesses.
  8. Make your people understand that being a manager is not the result of promotion, but simply a different position with a different job description and responsibilities. In a professional service firm there are only peers, operating in a flat, hierarchy-free environment, regardless of their so-called titles.
  9. Use your authority as a leader to make certain that all your people co-operate in sharing information and don't compete in any shape or form.

So, if you're hell-bent on creating some internal competition in your firm, then use a singing, running or poet writing competition, but leave your team alone to do what your firms is supposed to do. In the right environment, you don't need to grade people because they naturally do their best and beyond to achieve the firm's objectives.

 

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Copyright 1997-2012 Tom "Bald Dog" Varjan. All rights reserved. You are free to use this article in whole or in part. One favour though: Can I ask you to you include complete attribution, including a live website link. Also, would you mind letting me know where you plan to publish the article?

The attribution: This article was written by Organisational Provocateur, Tom "Bald Dog" Varjan of Dynamic Innovations Squad, a firm specialising in helping consulting firms to sell their expertise at the highest margins. Get Tom's free Practice Management Black Paper when you sign up for his monthly newsletter, Commando Consulting: Lessons And Practices From The Ultimate Professional Service Firm, The Military. Visit Tom's website at http://www.di-squad.com/black-paper.html.


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