By AMA Staff
Scott Cawood, coauthor of Destination Profit, has spent his career thinking about what makes a company succeed: its people. As a senior executive at W.L. Gore & Associates—legendary for its culture of teamwork—and then as vice president of the Great Place to Work Institute, the organization that chooses Fortune magazine's annual "100 Best Places to Work" list, Cawood has seen firsthand the best practices that align a company's workforce with its strategy. Cawood is now president and cofounder of Modern Think, a consulting company that helps companies put those practices into place. Performance and Profits spoke with him about his thoughts on what makes a company a place where people want to work.
The core concept in your book is what you call the optimum people-profit opportunity. Can you briefly describe this concept?
People are the business and everything else that you do is the outcome. Core competencies tends to focus just on the business side. We add this element to say that an organization's core competencies are not just the business elements of theorganization, but also the people and the culture. It’s looking at the main competencies of your people and and of your business model and merging those two together and figuring out what you’re really good at. When you find that magical blend that works for the business, for the stakeholders, for the employee and for the culture, that really is your optimum people-profit opportunity. It’s just factoring in the people element more than we traditionally have.
You’re careful to distinguish between goals and destinations in the book. How are the two different?
We were looking for something that really pulled everyone in the organization together. Goals sometimes do that, but sometimes they’re so lofty that they’re just not real enough. A destination is different in that it speaks to where you’re going and where you’re leading this organization to. A great example is Starbucks. Their destination is creating a third place between home and work to hang out, have a meeting or check e-mail. That destination has been very clear to them, and it’s helped the average employee decide where and how to spend his or her time.
An average employee in an organization has to make a choice every single moment about what to do, and if the organization has a well-defined destination in mind, it acts as a guiding force. It creates a clear focus for everybody inside the organization. We would argue against a destination around profit. Profit should be the outcome, not the focus—the focus is the destination.
You suggest that one of the practices organizations can engage in to form a mutually satisfying relationship with employees is “the financial equation,” which involves sharing details about the company’s financial performance with all employees. Why is that an important part of the connection?
Leaders tend to have very high expectations of employees. They have all these preset notions of what they want them to deliver on, but they withhold the very data that employees need to help the organization perform. One major facet of critical information is how the organization performs financially. Southwest Airlines is a great example of a company that understands that. Every person in Southwest knows what it costs them when a plane goes out late, the per-minute cost of rescheduling flights, how much it will cost them to add a new plane and so on. They’re acutely aware of how their behavior directly impacts the business.
It’s one of those commonsense kind of things, but oftentimes, organizations just don’t share financial information or don’t disclose how it is the organization makes money. Because again, I’m going to have a choice every single day to do this or do that, and having an understanding how my behaviors contribute to the bottom line is just a great way to do business. You have to care for the organization in many ways like it’s your own. If you’re going to do that you’re going to have to understand really how it makes money.
When we were researching the book, one of the organizations we looked at was Baptist Health South Hospital in Florida, where any employee can schedule time with the CFO to review the books and see how the hospital is making money. They’ve had housekeepers and parking lot attendants participate in the program. They’ve devised about a 30-minute overview with the CFO to say, “Here’s how a hospital makes money.” Having that understanding helps the people in the hospital make different choices about where to save money and how to make money. But it all starts with that understanding.
Another of the “pathways to profitability” you’ve identified is creating an equitable experience. What does that mean?
It’s OK to treat people differently in an organization. You don’t have to get the same experience, but fundamentally you have to be treated with a certain level of fairness. Take for example the perks some groups get. If you’re going to, say, give executives their own parking spot, be very transparent about why that’s good for the business and not just good for the executive. Because in the absence of sharing that transparency, people will just assume it’s a fairness issue. I think there’s lot of valid reasons why you can treat people differently. For example, I would always give a CEO her own spot, because I don’t want her driving around for 30 minutes spending valuable company time looking for a parking spot—I want her leading the business.
You say that the secret to building a resilient company is what you call the 4-A process: awareness, alignment, accountability and adaptation. How does the 4-A process work?
The 4-A process is a focus tool. People ask how long does it take to change the culture of an organization. Five years? Three years? You need to do it much faster than that. You need to do it in under one year. We looked at companies like Southwest Airlines or SAS Institute that had faced a lot uncertainty and were able to adapt to change smoothly. We were curious about how they were able to do that. We traced it back and found it consists of really building change in to the culture, so that the organization is constantly adapting and making slight adjustments instead of changing overnight.
That’s really what we’re speaking about in the 4-A process. Let’s say you want to be a “great place to work”—that’s the organization’s destination. So you go through the awareness, which means you define the great place to work. Next is the alignment: What does your organization have in place that will help it get there? After that is accountability: how the organization rewards people and really makes the destination happen. Once you reach that “great place to work” status, that destination can go away, but the organization continues to make slight adjustments. It’s just slight tweaks as the business changes.
You advocate creating “value descriptions” instead of job descriptions. Why?
I’m not a big fan of job descriptions. I don’t inherently like them because they omit such critical pieces of information. I don’t necessarily need to be told what I’m supposed to, but I do need to be told why what I’m supposed to do matters to profitability, or customer service, or saving lives, or whatever business you’re in. And most job descriptions don’t tell me what the value is to the business. You really have to know that if you want to perform at the highest level possible.
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