Lynda Gratton is Associate Professor of Organizational Behavior at the London Business School. She is responsible for the teaching of Human Resource Strategy to the School's MBA students, is Director of the Global Consortium Program and Research Director of The Leading Edge Research Initiative. During 1996 Lynda was responsible for developing and directing the Global Consortium Program, which is a development consortium of senior executives from ABB, BT, Lufthansa, SKF, Standard Chartered Bank and LG. This innovative program aims to increase participants skill in managing complex global businesses by taking participants to China, India and Europe to study global companies.
Lynda has a dynamic research portfolio, at the center of which is The Leading Edge Research Initiative which focuses on identifying and articulating how business strategy is developed through people. Since 1993 a series of in-depth studies of 8 large companies have resulted in increased understanding of this complex issue. The results of this research were published during 1996. Lynda's main field of interest is human resource strategy where she has published widely and is seen as one of the world's leading authorities. She consults actively to a number of multi-national companies including Nortel, Philips, BP, Hewlett Packard, GKN, United Technologies and BAT. Her focus is on helping senior executives consider the people implications of business strategy.
Before joining the London Business School in 1989 Lynda was Director of Human Resource Strategy at PA Consulting where she had responsibility for the world-wide HRS practice development. She is a trained psychologist with a doctorate in individual psychology and worked for some years with British Airways as an occupational psychologist. Lynda is married to a Danish architect and lives in central London with two children.
Preface
People are our most important asset. 'We are a knowledge-based company.' 'All we have is our people.'These are statements we hear more and more. Yet for many people the reality of life in an organization is that they do not feel they are treated as the most important asset, or that their knowledge is understood or used. The reality of working in contemporary organizations was starkly described in Human Resource Strategy; Corporate Rhetoric and Reality which I wrote with the Leading Edge research team. I came away from this research with three messages. First, that in many companies people do not feel inspired, engaged or free to voice their opinion. Second, that there has been no uniform progress in people management over the six years of the study. The longitudinal nature of the research captured clearly that people practices and attitudes are just as likely to deteriorate over time as they are to flourish. And finally, that there are profound differences between companies in both the behaviors, skills and attitudes of their employees and in the rigour and appropriateness of people policies and practices, and that these differences have a significant impact on the long-term health of the company.
This has raised some crucial questions in my mind which I have sought to understand and answer in my research and consulting. This book is the culmination of my thinking. It is based on four propositions:
1 there are fundamental differences between people as an asset and the traditional assets of finance or technology;
2 an understanding of these fundamental differences creates a whole new way of thinking and working in organizations, a shift in mind set;
3 business strategies can only be realized through people;
4 creating a strategic approach to people necessitates a strong dialogueacross the organization.
In essence, then, a new way of thinking and a new way of doing. A way of thinking that places the creation of meaning at its centre. A way of doing that builds a people strategy through visioning, through a deep understanding of reality, and through broad involvement of multi-functional task forces.
My aim is simple - to present an argument about why we need to think and act differently, and to provide a clear step-by-step guide to how we can make this happen. I believe that managers who follow these steps will significantly increase the performance of their business, and create organizations which have meaning and soul.
My journey began with my initial training as a psychologist. My doctoral study in 'Maslow's Hierarchy of Needs' attempted to understand the sources of motivation for people in organizations, and the factors which impacted on their motivation. I finished my dissertation greatly interested in the human side of organizations, with a profound belief that studies of organizations should work at the level of the individual in the organization. The experience also refined my position as a humanistic psychologist, with the belief that people have a soul and a spirit, that they are basically good rather than evil, and that they become engaged and inspired by their dreams. This humanistic perspective places the context as a critical part of the actualization, as Maslow called it, of human potential. As a committed humanistic psychologist, I joined British Airways for five years as one of their resident psychologists. Thus began my corporate life and with it a growing understanding of the challenges and the reality of day-to-day existence for employees throughout the organization. Seconded to the newly formed BA strategy team I worked with a group given the task of developing the policies and processes which began to change British Airways from a moribund public airline to the world-class company it is today.
After British Airways my understanding of corporate life grew when I joined PA Consulting Group, where I led the fledgling human resource strategy team. Again, I was seconded to the business strategy team, and we spent the next year developing an approach to strategy which held people at its core. There followed initial experimentation with business tools such as the risk matrix and forcefield analysis which are described in this book. These early attempts at creating a strategic approach to people were supported by a number of companies, in particular British Petroleum, the Prudential Insurance company, and Philips. In the case of Philips this support was to continue over more than a decade. I have chosen the work at Philips Lighting to illustrate how a strategic approach to people could be taken.
The experimentation with what was now termed human resource strategy continued when I joined the London Business School and engaged in people strategy development for a number of large international companies. Teaching and researching at the London Business School has been an enormously rewarding experience. From the outset I taught a course in human resource strategy to first-year MBA students. Many came to the school to increase their financial and strategic acumen as a prelude to joining a consultancy practice or banking. Like many managers they implicitly believed that financial capital is what really counts in corporations. After all, they would argue, it is obvious from the amount of space taken up in reporting the state of financial capital in any annual report. If human capital is really so important, they would continue, why do we know so little about it? A good point, and as I argue in this book, until that changes an interest in people will always remain simply the two-paragraph statement from the chief executive officer about the importance of people to the business. Working closely with successive groups of MBA students I have had to confront the rhetoric of people and create a personal philosophy about what we really mean. This personal philosophy is described in the three tenets which make up the first part of this book.
The industry experiences described in this book emerge from three sources - from my experience as a consultant to companies, as a member of the Leading Edge Research Consortium at the London Business School, and as a teaching faculty and director of the Global Business Consortium. The visioning and risk matrix work was developed over the past decade through working as a consultant with the senior teams of a number of companies including ABB, BAT, British Petroleum, BT, Northern Telecom, Philips, Unilever and Shell. During this time I was also privileged to work with a number of Shell strategists, in particular Arie de Geus and Jo Jawarski, both of whom reinforced my thinking about the human side of organizations.
My insights into the human side of the organization have been enormously enriched through the Leading Edge Research Consortium which I founded at the London Business School in 1992. Since that date we have collected in-depth data about the rhetoric and reality of people management in the payphones business of BT, Citibank, Glaxo Wellcome, Hewlett-Packard, Kraft Jacob Suchard (a Philip Morris business), Lloyds TSB and a National Health Service hospital. Using extensive survey data,interviews and focus groups, we have explored the human side of organizations. The mission of the research consortium was clear: to create a deep understanding of the reality of people management in contemporary organizations; to share this information, initially throughout the member companies of the research consortium and subsequently with a broader group; and to commit to a longitudinal study, so we could see how interventions played out over time.
The global forces operating in organizations have become ever more apparent. For four years my colleague Sumantra Ghoshal and I have directed and co-taught on the Global Business Consortium. Designed to explore the impact of the forces of globalization, the programme takes participants throughout Asia, South America and Europe. Since its inception we have seen the management teams of the consortium companies ABB, BT, Lufthansa, LG, Standard Chartered Bank and SKF facing up to the immense turbulence in their markets. I have become ever more convinced that the pulse of commitment, trust and inspiration must be the heartbeat of any company attempting to ride out these successive waves of turbulence.
Over the past 20 years I have developed a way of thinking about people in organizations and the central role played by dreams, hopes and aspirations. In this book I want to make the case forcibly that people really matter. I believe passionately that the reality in organizations falls well short of the rhetoric that 'people are our most important asset'. Until we face up to this gap, until we can stare reality in the face, and until we can care as much about feelings as about finance, we are doomed to create organizations which break the soul and spirit of those who are members, and which reduce rather than build human potential. In this book I make the case for the human side of the organization and how we can build processes within organizations which sustain the potential of people.
