International Trade News: ‘Poor leadership can lead to costly damage’ is the message of your recently published book “The Psychology of Employee Management”. What evidence do you present to back up this claim?
Prof. Florian Becker: Poor management skills can be inferred, for example, from the rate of absenteeism, the number of sick days taken and employee turnover.
International Trade News: How are these things connected?
Prof. Florian Becker: When a new manager takes over a department, the number of sick days taken and the rate of employee turnover changes. When managers switch departments, rates of sick leave and employee turnover go with them.
International Trade News: What other factors influence the behaviour of employees?
Prof. Florian Becker: On average, an employee’s job satisfaction tends to decrease the closer he or she sits to the manager. Even at the median, that does not necessarily indicate good management. People in leadership roles also tend to develop close relationships with particular employees – so-called “in-groups” – while maintaining a more formal relationship with other employees. The bigger the second group, the more problems this creates. This is because members of this group tend to be less productive, call in sick more often and are more likely to leave the company altogether. The way in which managers behave can certainly have a negative effect, and that costs money.
International Trade News: What is the most common mistake that companies make with regard to employee management?
Prof. Florian Becker: Managers often apply stereotypes without thinking to question them or take scientific findings into account. With this as a basis, it is no surprise that they make poor decisions.
International Trade News: Which stereotypes are too clichéd but still allowed to pass without question?
Prof. Florian Becker: Many English-speaking readers will have heard of the management guru Jack Welch. He was the CEO of General Electric for around 20 years and is known for his “20-70-10” principle. He measured the performance of each of the more than 100,000 General Electric employees under him. As a result, the top 20% of the workforce received a financial bonus, 70% of the workforce were told to follow the example of the top 20% and the remaining 10% were fired. Welch’s view of human nature was as follows: I cannot depend on my workers to do what they are supposed to do without external motivation. The vast majority of workers tend to be naturally lazy. They have to be motivated with external incentives in the form of financial rewards or punishments (dismissal) so that they behave in the desired way.
International Trade News: What is wrong with that?
Prof. Florian Becker: It is wrong in its generality. The same goes, of course, for the other extreme: When managers put too much faith in their employees and the belief that their work in itself is sufficient motivation. Both views of human nature probably do numerous people a disservice. Jack Welch’s controlling management style works to a certain extent, for example when the work being done is boring and repetitive. It would probably suit a worker sewing garments in a textile factory. But is such a heavy hand really the way to lead a team of engineers? No, it is at best a demonstration of incompetence. Unfortunately, this view of human nature is still widespread in many companies.
International Trade News: What style of management can we see here?
Prof. Florian Becker: A transactional management style – money in exchange for performance. The employee is told what is expected of him, and targets are set and monitored. The employee is paid a salary – and perhaps a variable bonus on top. But money alone only motivates employees to a certain degree. Far more effective tools are flexible job opportunities and recognition for the effort that has been put in.
About Florian Becker
Prof. Florian Becker is a specialist in business psychology. He is also well known as one of the most sought after business psychologists from numerous television appearances and interviews on radio and in newspapers. For several years, he headed the Market Psychology Laboratory at the University of Munich. At the International School of Management he headed the department of Psychology & Management. At the University College of Rosenheim he was responsible for its Masters in Business Administration (MBA) course. As a consultant and trainer, he has many years of experience working with companies of all sizes and from all sectors of industry.
International Trade News: Where can we see good examples of this?
Prof. Florian Becker: Take a look at Google or Apple. These companies don’t say: “Come and work for us; we pay the highest salaries.” Their strength lies in imparting their ideology to their employees and giving them the feeling that they are part of the best company in the world, one that is constantly “revolutionary,” like Apple. They manage this even though they are perhaps not really as innovative as they appear to be but just very good at marketing ideas that other people have already had.
International Trade News: That brings us neatly to the subject of the digital transformation and the enormous challenges it presents for managers. From the point of view of a management consultant, what would you recommend a company executive do first to avoid steering his company onto the rocks?
Prof. Florian Becker: When work processes change as a result of the digital transformation, then it is a classic change management problem. You have to get your employees fired up about change – that is more or less challenging depending on the corporate culture. It is not enough just to tell them about it. They have to be brought along and accompanied on the way. As the digital world is all about networks and global teams work together in a virtual world, the challenge lies in motivating people, bringing them together and binding them in teams that are not physically together.
International Trade News: Digital transformation involves a steep learning curve. What is your advice for mastering it? There are some people who enjoy learning new things and others who don’t.
Prof. Florian Becker: There is a widely accepted fallacy: When someone knows something, they then automatically change the way they behave. Everyday experience shows us that this does not work. Just look at nutrition. No one can honestly claim not to know what a healthy diet looks like, but their actual eating habits – despite knowing better – frequently look quite different. It is the same in management questions. I would call for a move away from the focus on knowledge impartment when there is a need for change in the workplace. Changing behaviour takes time. Unless it is properly reinforced, it is all too easy for employees to fall back into old habits. We have had good results from the simple trick of providing someone as a helping hand by their side. Not to preach to them from on high but to provide a friendly role model and sounding board. The link between knowledge and behaviour is significantly more tenuous than amateur psychologists believe.
International Trade News: Digital transformation is often implemented under significant time pressure. Allowing people time and a helping hand could put the company at risk.
Prof. Florian Becker: I agree with you. The issue of speed has become important. The problem is that when change is unsuccessful, everything tends to be worse than it was before. That is why a company owner should take the time needed to ensure that everything runs properly. Quite apart from that, it is also the role of the manager to fire up employees with enthusiasm, develop a clear vision and, above all, to create a company culture that welcomes change.
International Trade News: In your book you talk about errors in leadership. You describe how managers often stumble over relatively modest targets. Can you explain this concept further?
Prof. Florian Becker: When we look at the economy, we see a world made up of productivity, sales figures, share prices and GDP. Companies and managers often only look as far as the bottom line and show little interest in the fact that behind the numbers are decisions made by “flesh and blood” people. Successful companies like Google have understood this, for example in the area of innovation. Google owes its success to the fact that its managers tell its young developers, “You can use 20% of your working day to do what you want. You can pursue your interests with us, have fun and live in an interesting world.”
International Trade News: That does not sound like a particularly profound goal.
Prof. Florian Becker: Oh, but it is. Where in your life can you do that? Employees often have very little autonomy. But self-realization is the goal of many. Because Google needs to employ the best of the best, whether that be IT specialists or mathematicians, it meets their needs. Granting them 20% of their work day to “find themselves” is an important tool for promoting successful innovation and employee loyalty. And when the idea is a good one, Google has no problem with throwing a bunch of money at a project. In this way, young employees find themselves in an environment where they can make a difference. That is perhaps more important to them than earning lots of money. This attitude is exactly what Google is trying to achieve from a commercial standpoint.
International Trade News: Google has good products. What good is the best leadership strategy or the greatest possible freedom for employees if the product is no good?
Prof. Florian Becker: Google has good products because it leads well. A large proportion of its products and innovation stem directly from the 20% of the working day that its employees are allowed to do what they want. One is connected to the other – good products do not simply grow on trees.
International Trade News: Is there a dark side to this generosity?
Prof. Florian Becker: The line separating freedom from manipulation is a fine one. Some companies give their employees freedom and fire them up with enthusiasm for their ideology so that the employee feels like he is part of a family and may no longer even want to go home. He starts to neglect his personal development outside work, for example his friends or the opportunity to start a family. The offer made to female managers to freeze their eggs that was widely reported in the press is a symptom of this particular problem. It begs us to ask the question: Can we justify this from an ethical standpoint?
International Trade News: How can a company tell who is really suited to a management role?
Prof. Florian Becker: A good manager is able to lead, regardless of context – even in other cultural situations. In China, a more authoritarian leadership style is favoured. In Germany, by contrast, employees have more say. Having said that, interpersonal relationships are more formal – “schnapps is schnapps and work is work”. Team managers in China know the family situation of the employees under them. The ability to adapt to different conditions is one of the most important leadership qualities today.
International Trade News: What can I do to become a good manager?
Prof. Florian Becker: There are very few managers who give that question a second thought. The day-to-day business of the company is their top priority. The most important thing in becoming a good manager is the desire to improve in the first place and self-awareness. In order to improve, you need to be constantly asking yourself questions. What are my goals? Which management tools do I use? Some people find it easy to give praise while others prefer to ask questions. The best thing is to create your own toolbox with the tools that you are really good at using. Set yourself a different task each week: “This week I’m going to practice listening.” As a result of this mindfulness, you will automatically get better – almost without trying. In my book, I focus heavily on demanding this watchfulness from my readers.
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