Schaffer Consulting NEWS BLOG

by Nadim Matta, Markus Spiegel and David Whitehead

Leadership development is generally seen as a long-term investment, but this doesn’t have to be the case. It can deliver short-term business performance improvements.

Most management and leadership training programs focus on helping participants gain new insights, skills and tools that they can use to become more effective managers and leaders. Conventional wisdom suggests that leadership development is a long-term investment that eventually yields dividends in terms of improved business performance. But this pay-now, gain-later dynamic leaves leadership development programs vulnerable to budget cuts.

This doesn’t have to be the case. Leadership development programs can be designed with a fundamentally different premise in mind — the pursuit of short-term business performance improvements. When companies do this, they gain two benefits: better business performance and leaders who can execute more effectively. This changes the economics of leadership development programs; it can transform leadership development from a cost to a profit center in the annual budget. Here’s how Ascom, a global Swiss-based communications company, took steps toward doing so.

Results in 100 Days

Adrian Jakobsson, research and development manager at Ascom, is part of an internationally diverse group of 16 high-potential managers going through an innovative leadership development program. These candidates were drawn from a high-potential pool of managers targeted for further advancement in the company. Each program participant takes on the challenge of shaping and leading a project that aims at making significant progress in 100 days in a strategically critical area assigned to him or her by an executive sponsor — typically someone at the C-suite level. Each of these projects is referred to as a “rapid results initiative.” The program is in its third year.

Jakobsson’s project involved developing a new software package for enhancing mobile phones, and negotiating and closing deals with partners and customers. “My aim was to learn about leading cross-functional teams,” Jakobsson said. “The structure of the program gave me a roadmap and cadence to fall back on. People were so focused on achieving the nearly impossible goal that they put aside the usual bickering about turf and protocol.”

The program’s participants go through all the traditional elements of leadership development programs, including leadership tools and assessments, self-awareness programs, individual coaching and strategic conversations with business leaders. They then go through the following processes:

1. Before the initial workshop, Ascom’s business leaders shape specific business challenges that they ask participants to work on as part of the program. These challenges are contained in the program invitations that participants receive. Each participant is accountable for one challenge. These are real challenges with significant consequences for the company.
2. At the first workshop, leaders seek to inspire their teams and organizations to commit themselves to daunting 100-day goals. With guidance provided at the initial workshop, program participants choose their teams, and along with these teams they choose their own 100-day goals.
3. Participants are organized into peer learning groups of four participants. Each group has a conference call every three weeks to reflect on their experiences leading their teams, and to discuss and learn how to lead these teams to success.

Avoid Multiple Definitions of Leadership

There are thousands of books written on leadership. Each management guru defines effective leaders in his or her unique way — asserting that these attributes are the ones that matter. Leadership development programs are then designed to align with the particular attributes and competencies advocated by the program manager’s favorite guru.

While no one can know for certain the attributes that make leaders effective, there are a number of foundational activities that leaders engage in, such as mobilizing, organizing and inspiring others to perform at levels that surpass their own expectations. Instead of focusing on abstract leadership attributes in the hope that these will lead to better leadership performance, Ascom has participants perform such foundational leadership activities.

Participants in the program jointly examine their performance in leading their teams during peer review sessions. They search for clues on what they did that was particularly effective and what they failed to do in spite of knowing that it was important. They help each other identify and confront their own limitations and hold each other accountable to experiment with new behaviors. This not only helps participants advance their projects and their own development, it also creates a culture of peer coaching and support and fosters cross-boundary collaboration.

Leadership development programs can benefit from the pursuit of real, urgent and compelling business results. Companies that make this shift may find that the payoff is higher in terms of the development of aspiring leaders and they get the side benefit of bottom-line impact on their project investments.

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Nadim Matta is managing partner of Schaffer Consulting, a management consulting firm specializing in strategy execution, leadership development, merger integration and culture change. Markus Spiegel is a senior consultant at Schaffer Consulting. David Whitehead is the head of leadership development at Ascom.

http://clomedia.com/articles/view/how-to-design-leadership-development-for-immediate-gains/1

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Ron Ashkenas' blog post on Harvard Business Review

Innovation may be an organization's life blood, but still its success rate in most companies hovers at just 17%. Even innovation leader P&G succeeds less than 50% of the time.

What prevents companies from innovating better? One possibility is that managers don't really want their people to innovate, no matter what they say otherwise. Take time utilization: How many hours per day, week, or month are you encouraged to think creatively, or work on innovation? Companies like 3M and Google that allow employees to carve off a certain percentage of their paid time for innovation are rare. Most other firms want their people to stay focused on today's business — and only work on innovation in their spare time. So in the end, it's a mixed message: "We want you to innovate, but only after you've done your real job."

Based on my experience, there are at least three (largely unintentional) reasons why managers send mixed messages about innovation.

First, managers need immediate results, often reinforced by short-term incentive plans or the regular expectation of earnings improvements. Innovation may take a long time to produce returns, which conflicts with these short-term requirements. So even though managers know that innovation is necessary, most do not have the patience to wait years for results. Consequently, they say that innovation is important, but they don't back it up with time or resources.

Managers may also fear that innovation will cannibalize current business. I've seen managers slow down investments in new products because customers might switch to something less expensive or longer-lasting, or otherwise impact existing results. In other words, while managers might want to disrupt their competitors, they are less comfortable disrupting themselves.

Additionally, managers are often schooled in slow, continuous improvement. Approaches like Six Sigma have helped companies squeeze out inefficiencies, but also tend to reinforce existing processes with an eye towards doing them better. On the other hand, innovation requires messy experiments instead of methodical analysis. As a result, managers who have grown up in a continuous-improvement culture may be uncomfortable with change that doesn't happen step-by-step.

If you recognize these mixed messages in your organization, here are a couple of ideas for picking up the pace of innovation:

Talk about how innovation is avoided. Politely and respectfully ask your manager or senior team about their commitment to innovation. Share the mixed messages you've perceived and provide examples of missed innovation opportunities. Remember that most managers are not intentionally trying to prevent innovation — so discussing the dilemmas will make decision-makers more conscious of them.

Work on innovation with colleagues. Instead of working alone, partner with co-workers to achieve an explicit innovation goal. For example, one divisional leadership team decided to spend every Friday morning focusing on how they could develop business for "the year after." By carving out the time, and reinforcing to each other the legitimacy of working on something without a short-term payoff, they were able to make more progress than any of them could have made alone.

Obviously, trying to change your company's innovation culture won't be easy. But that's what innovation is all about.

To what extent does your company really want to innovate?

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by Wes Siegal

Last month a colorful and unusual photo of potatoes circulated on Facebook, linking to a story about a ten-year ban on genetically modified ingredients in Peru passed last year by that country’s congress. The story explains that the congress’s motivation was to protect the country’s native and unusual food species, including giant white corn, purple corn, and dozens of native species of potatoes.  The photo shows a beautiful array of startlingly different spuds – each one fascinating on its own, and stunning when viewed together.

Monsanto and other purveyors of genetically modified foods of course maintain that their techniques increase farm productivity and reduce hunger.  But trade-offs between large-scale production and local diversity are not confined to agriculture: consider the impact that Wal-Mart stores have on local businesses, Starbuck’s on coffee houses, or the global trends toward consistency and predictability in education, fashion, television, or music.  

This pattern is not only happening in agriculture and the economy.  Increasingly, large organizations are struggling with the same lack of diversity and variety within their own walls.  Enterprise resource planning systems have codified processes that limit flexibility and agility.  Country operations are increasingly expected to be consistent from one market to another.  And global messages about culture and leadership often crowd out change efforts that would make more sense in local environments.

Similarly, organizational leaders seem to lack imagination about how to improve. Almost every call to move into new strategic territory, improve operations, or solve a problem starts with an assignment to “benchmark the competition” and identify “best practices.” These calls lead to incremental changes that make competition and differentiation even more challenging, as large global players mirror one another’s strategies and tactics.

And all too frequently, changes in how a company gets its work done are introduced with methods like six sigma or kaizen, which are consistently and scientifically applied.  As a result, the experience of working on an organization’s most exciting, leading-edge work becomes more mechanical, predictable, soul-less and ineffective – just one more activity in the daily portfolio of work.  

The increasing global trend toward monoculture is accompanied by costs – in the form of reduced beauty and variety – and risks, as our food system becomes increasingly vulnerable to disease and disruption. And just as we need to balance these costs and risks with the advantages of a food system that operates on a global scale, the leaders and managers of organizations also need to recognize the costs of their own drives toward standardization and predictability.  While leaders are responsible for reducing complexity and introducing predictable systems, they also need to preserve their organizations’ abilities to change and adapt, as these are the keys to differentiation and survival.

So what should leaders and managers do?  They can start by trusting and respecting the abilities of their own people to develop solutions to an organization’s most important challenges.  And they can take responsibility for identifying a red line where systems that are meant to stabilize organizations actually start to stifle agility.  

At Schaffer Consulting, we find that the most dramatic and durable changes happen when leaders challenge people to make dramatic progress in a strategic opportunity area like growth or operational improvement, without dictating either the solution or how it is to be achieved.  Framing challenges in this way opens the door to experimentation and adaptation, allowing stakeholders to develop changes that are effective and appropriate to the organization’s unique situation.  

Two of the most important things employees need from leaders is coordinated focus on important challenges, and a license to innovate as they respond to these challenges.  Just as the Peruvian congress has opted to protect its country’s potatoes, leaders need to protect and nurture variety within their organizations.

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Wes Siegal is an organizational psychologist who designs and leads organizational transformation efforts that drive improved performance, innovation, and leadership development.  Wes has developed and delivered these programs in dozens of top-tier organizations in the pharmaceutical, financial services, manufacturing, and education sectors – most notably at Merck, Pfizer, Bausch and Lomb, ING, Avery Dennison, and the Haas School of Business.

Wes helps leadership teams transcend the organizational dynamics that so often frustrate the realization of strategic goals. In his role as Schaffer Consulting’s practice development leader, he has developed approaches that help clients create more adaptive cultures while achieving breakthrough results – in areas as diverse as product development, channel development and sales growth, operating and manufacturing efficiency, certification of renewable energy sources, and HIV mitigation in developing countries.

Ron Ashkenas' blog post on Harvard Business Review

To retain high-potential employees, the conventional wisdom is deceptively simple: Identify, develop, and nurture them. By paying special attention to the very best people, they will stay with the firm and eventually emerge as key leaders.

But translating this into action is much more difficult. As the former head of executive development at GE used to tell me, "There's a difference between doing it and really doing it." Many firms have trouble keeping their best people, despite their investments in talent management. In fact, a study last year by the Corporate Executive Board indicated that "25 percent of employer-identified, high-potential employees plan to leave their current companies within the year, as compared to only 10 percent in 2006."The study also found that 40% of the internal job moves for high potentials ended in failure.

So despite the focus on high potentials and the importance of effectively managing them, why do so many organizations struggle to do it well? Let me suggest two reasons.

Discomfort with Differentiation: In order to focus on high potentials, some employees need to be singled out. And, truth be told, most managers hate to differentiate. They would prefer to treat everyone the same, avoiding the uncomfortable process of sorting people by levels of performance. As a result, managers will identify certain employees as "high-potential" simply because they don't want to tell them that they're outperformed by their colleagues. And others, who are appropriately selected, are not told because it would create an uncomfortable two-class system. In other words, managers avoid declaring who the high potentials are, for fear of upsetting people who were not selected.

Discomfort with Developmental Dialogue: Even if high potentials are identified properly, bringing them to the next level requires a continual, complex dialogue. Managers need to stretch, challenge, and coach their high-potential employees and make sure their assignments push them beyond their comfort zones. To do so, they have to work with senior business leaders and HR to clarify assessments, identify opportunities, and coordinate possible moves. Without multi-dimensional dialogue about these issues, managers tend to hold on to their high-potential people instead of helping them along an intentional developmental pathway. High-potentials then may interpret this as a lack of company support and will be inclined to look elsewhere.

Unfortunately, engaging in this kind of developmental dialogue is foreign to many managers and can cause just as much anxiety as the need to differentiate. In fact most managers avoid coaching discussions, particularly with employees who have more potential in their careers than they do.

Taken together, the twin discomforts of differentiation and dialogue hinder high-potential programs, even when senior line and HR executives do a good job of centrally structuring assessments, rotations, and training. This may at least partly explain why so many company-identified high potentials don't remain with their firms.

To increase the odds of success, senior executives need to focus not just on the high-potential programs, but the underlying anxieties of managers who have to execute them. One way to do this, for example, is to require managers to mentor one of their high-potential direct reports. Not only will this approach be good for the chosen employees in the short-term, but also it will force managers to get more comfortable with performance differentiation and developmental dialogues. As anyone who has done it can attest, mentoring benefits the mentor as much (if not more) than the mentee.

How well does your company retain and develop its top talent?

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We may talk about eliminating hierarchy, but most organizations still have one. Frankly, it's very hard to mobilize limited resources and diverse skills without someone taking charge. That's why hierarchies have existed for thousands of years — from the days of the Pharaohs to the modern corporation.

Yet there's no doubt that hierarchies can be dysfunctional and make it difficult to get things done. As such, we blame them for slowing things down, lowering morale, and choking off innovation.

You would think the key to a healthy hierarchy is a well-drawn organization chart, but it has more to do with company culture and behaviors. That's why reorganizing alone doesn't create a more effective hierarchy in a useful or permanent way. If you don't address the ineffective behaviors, nothing will change.

But how do you know when those behaviors are off track? Let me suggest three common warning signs of an unhealthy hierarchy, and what you can do if you see them:

Hierarchical Mirroring: This is the subtle notion that meaningful discussions only occur between people of equal rank across the organization, like a diplomatic negotiation. For example, I worked with a financial services company that was trying to improve coordination between the product groups and the client relationship teams. On the product side of the house, the key experts were "managers" who reported to vice presidents. The client relationship managers, however, were all vice presidents, and only wanted to deal with their vice presidential (but less knowledgeable) counterparts. As a result the meetings included more people than necessary, the experts had less influence, and everyone was frustrated with the pace.

Decision Churn: This occurs when decisions continually need to be revisited because someone of sufficient rank in another part of the hierarchy raises an objection. In the financial services example, after many weeks of discussion, the relationship team and the product managers had seemingly reached an agreement about how to go to market together. But at that point, a vice president of finance (who had not been in the meetings) expressed some concerns and sent the team back to the drawing board.

Invoking the name of the boss: This is when people tend to make decisions based on what they presume the most senior person wants. In the financial services case, one of the common expressions in the team meetings was, "The division president won't let us do that." Of course the division president wasn't in the room. But invoking her name gave weight to people's arguments, even if no one had asked her what she thought of the idea.

Given that these are deeply embedded cultural behaviors, there's no way to change them overnight, even if you are the CEO. However, anyone — regardless of organizational level — can call them out and make people aware of them.

Often these behaviors are subtle and unconscious, which makes them seem impossible to deal with. But if you spotlight them, especially in a humorous way, their absurdity and dysfunctionality will become more apparent. For example, in one organization a colleague created a "decision churn diagram" that portrayed the long and winding journey of a typical decision. When the Executive Committee saw the chart, it sparked a good discussion and the beginnings of a more conscious approach to decision-making.

As a manager, you have the authority — and the responsibility — to constructively highlight behaviors that don't make sense, no matter where you stand in the hierarchy. It's not easy to do, but if you don't try, you'll be a passive contributor to an unhealthy hierarchy.

Have you seen these warning signs, or others?

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Buying a lottery ticket has an extremely low chance of paying off. Yet many people, at least in countries where it's legal, do it anyway. In the United States alone, it's estimated that almost half the population plays the lottery; and recently Americans spent an estimated $1.46 billion buying tickets for the Mega-Millions game, even when the odds of winning were 176 million to one.

Why do so many people play such long odds? The answer is: It gives them an opportunity to dream. People are willing to invest in dreams, even when they know the odds are against them. But what if the odds were much better than one in 176 million? Would you double your investment? Would you put in time and effort in addition to the cost of a lottery ticket?

I ask these questions because, like the lottery, organizations can shape their employees' dreams; and when the dreams are exciting and the odds are believable, employees will dramatically increase their investments in making them come true. Conversely, when the dreams are mundane and lack credibility, employees disconnect and pull back on their investment.

Some dreams, of course, are about money. In many professions, people are willing to work eighty-hour weeks and travel non-stop at least partially because they expect to receive large bonuses or payoffs. But for others, chasing this kind of financial dream alone is not enough. There also needs to be some deeper and more personal aspiration.

Not long ago I listened to a senior executive in a pharmaceutical company talk to a team of managers about the limited availability of a particular medicine. Most people in the room knew that a number of inter-connected problems were causing the firm to miss its targets, such as inaccurate forecasting, inadequate IT systems, materials shortages, and more.

However, what they didn't fully appreciate was the human cost. In just a few short sentences, this executive reminded everyone that the purpose of this medicine was to reduce the mortality rate of a specific disease; and that four million people would die unnecessarily in the next few years unless they received the company's product. Suddenly every person in the room was willing to put aside other priorities and work to solve this problem. The executive had tapped into their dream to create a healthier world.

While not every company delivers services that save lives so directly, all organizations create value for their customers, stakeholders, and society. Part of a leader's job is to help employees connect to and relate to that value so that the company's mission becomes part of their own dream. Without that connection, employees will at best go through the motions — and at worst become demoralized and detached.

As the lottery demonstrates, most people are willing to place long-shot bets in the service of a personal dream. Great leaders help their people understand how those personal dreams can be aligned with the organization's goals, and why upping their investments will improve the odds of success.

How have you seen leaders tap into their people's dreams?

Ron Ashkenas' blog post on Harvard Business Review

There are few experiences more painful than being rejected. We vividly remember the hurt of not being picked for a sports team, not being invited to a social event, or not being accepted to university. Our basic human need to belong causes these incidents to stick with us through the years.

Even as adults, at various times in our careers we're not selected for jobs, promotions, or projects; or even less significant benefits such as parking spaces, preferred offices, or new computer equipment. Whether it's fair or not, the hard reality is that everyone cannot have everything.

Accepting rejection however is not an easy process — for children or adults — and many of us handle it poorly. When this happens repeatedly, it often leads to two types of dysfunctional patterns in organizations: entitlement and resignation.

Entitlement is when someone feels that he deserves certain benefits, no matter the reality of the situation. For example, I recently worked with a company that reduced costs by moving staff members into smaller offices and having them share meeting rooms, printers, and other services. A few people refused to accept the new standards, arguing their unique needs for privacy, space, and administrative support. They felt entitled to these benefits and considered anything less to be a rejection of their status and personal self-worth.

At the other extreme is resignation, when people avoid situations where they might be rejected. In the example above, some people resigned themselves to the reduced space by not engaging in conversations about how the design of the office would work. By passively accepting the new constraints, they made sure that none of their ideas were rejected (because they didn't offer any). This may have been psychologically comfortable, but the organization didn't benefit from their contributions and their buy-in to the new facility was minimal.

In light of these behaviors, leaders need to encourage a more conscious and healthy toleration of rejection. While all employees should feel comfortable offering ideas, raising issues, and making observations — they should do so with the knowledge that they may be rejected. If they get discouraged or angry about not having their ideas accepted, they might shut down and stop contributing. Similarly, if employees feel so self-important that the organization should never turn them down, their sense of entitlement will make it difficult to drive constructive change.

It's easier to talk about learning from rejection than to actually experience it. Rejection often triggers painful emotional doubts about our own competence and self-worth, so we either try to avoid it or pretend that it doesn't matter. A more constructive approach is to remember that rejection can be beneficial: It can force us to come up with more ideas, redirect us to different paths, and keep us humble and open to learning.

How has rejection helped or hindered your career?

Author's Note: The original draft of this post quoted the Rolling Stones song "You Can't Always Get What You Want," but my editor deleted the reference because she thought it "would detract from the ideas." It seems that even regular HBR bloggers get rejected from time to time.

Ron Ashkenas' blog post on Harvard Business Review

Like it or not, most of us think about career success in terms of moving up the hierarchy. Let me illustrate with a story:

I once worked with the new CEO of a well-known global firm which was barely breaking even. The CEO's mandate from the board was to improve profitability. To do this, he planned to institute global manufacturing platforms so that product "families" would have the same core design no matter where in the world they were sold. The reduced-cost savings would be in the tens of millions of dollars.

This initiative would take a couple years of hard work, so the CEO tapped the president of the North American Division to take the lead on a full-time basis. This person, let's call him Bill, had been with the company for many years, understood the engineering and supply chain issues, and was well respected by everyone.

The only problem was that Bill thought the assignment would be personally embarrassing. "Look," he said, "I currently have 10,000 people reporting to me and responsibility for the largest P&L in the company. If I ran a task force, everyone would think I was being put out to pasture. It would be better if you just fired me."

The shocked CEO stood his ground and argued that Bill was the perfect fit for this assignment, and how critical it was to the company. Eventually Bill gave in and his new position was announced. Sure enough, in the days that followed, Bill received dozens of emails and calls offering consolation on his "demotion" and help in finding a new job elsewhere. The head of Human Resources even asked the CEO whether Bill's job-grade and performance bonus should be reduced. Not one person congratulated him.

What's going on here? Why do people assume that a big title trumps a value-creating initiative? The answer is that hierarchy is more than just a way of designing the organization: It drives how we think about relationships, contribution, careers, and success.

Most of us have grown up assuming that career success is vertical. We climb the ladder and move from junior positions to senior ones. As such, we implicitly compete with others because there are fewer positions as we advance. It's like a reality show where people get kicked off the island.

The problem with this powerful paradigm is that today's work is no longer divided up into small tasks that require higher and higher layers of management to put together. Instead most work is accomplished through horizontal processes that cut across different functions, geographies, and specialties. Therefore real success comes less from controlling people that report to you, and more from the ability to align stakeholders who surround you.

Given the hierarchical structures of most organizations, we will still have upward career paths. More and more however, the real contributors will be the process owners and project leaders that are able to provide horizontal leadership. To support this shift, organizations will need to reward and recognize horizontal contributions as much, if not more, than hierarchical positions. At the same time, each of us will need to overcome our personal assumptions about moving up the career ladder, and think more about how we add value across. When that happens, everyone will congratulate "Bill" about his promotion to the task force leadership role.

What's your view about career progression — should it be "up" or "across"?

Ron Ashkenas' blog post on Harvard Business Review

Perhaps the most difficult part of any manager's job is telling a subordinate that he can no longer stay with the company — that he's been "fired," "let go," "dismissed," or otherwise taken off the payroll. It's a gut-wrenching conversation, knowing how this simple act affects a person's career, self-esteem, and livelihood. Firing an employee also affects everyone else on your team. Not only does it change work assignments, but it also makes people wonder about your judgment as a manager and their own job security.

Given these emotional undercurrents, many managers let anxiety drive the firing process instead of intellect, making a difficult moment even worse. For example, I know of a senior manager who walked unannounced into his employee's office, junior HR person in-tow, and declared: "You've been fired. Our HR associate will answer your questions and then escort you out of the building." The manager then exited, leaving the shocked (former) employee and the ill-prepared HR person staring awkwardly at each other. What made this situation even worse is that the senior manager had given no previous indication of the employee's performance difficulties and had given him nothing but positive feedback in the previous six months. Now, suddenly, the reason for the firing was "lack of teamwork." And because it was "for cause," no severance was offered and pay was terminated immediately.

From the manager's perspective, this approach avoided the anxiety associated with firing. He didn't have to engage in any difficult performance discussions or justify his actions. He also avoided any kind of emotional scene and (temporary) budget impacts. Of course, he also probably generated a major lawsuit that left the company liable for far more than the cost of a severance. And once the story got out, he likely lost the respect of his team.

Clearly this may be an extreme example,but there are too many stories like this one. Because firing is so emotionally charged, it's easy to act counterproductively. To avoid that, here are some guidelines for those times when firing an employee becomes a necessity:

First, make sure that letting your employee go is the last step in a careful, thoughtful, fair, and transparent process that started long before the actual firing. In other words, if the dismissal is for poor performance, then it should occur after a series of performance discussions, plans, and documented actions. If it's due to reorganization or job elimination, it also should follow conversations, announcements, and a reasonable "fair warning." The key is that, if possible, firing should not come as a surprise. In most companies, the HR function has guidelines for how this process should unfold.

Second, come to the "firing meeting" prepared to address the practical logistical questions that the person will have about leaving her job: When is the official end date? Are there severance arrangements? Are there opportunities elsewhere in the company? Is career counseling available? What happens with benefits? You may need help from HR to make sure that these answers are available.

Third, at the meeting be ready to listen but not react. Losing a job can be traumatic, and your employee may display a range of emotions, which he might direct towards you. Try not to get caught up in responding. Listen with respect and then direct the person towards the practical realities of moving on. Offer to talk again later when the emotions are not so raw, or ask a trained HR counselor to join you.

Finally, after the firing, talk to your team about the process, the reasoning, and the implications for them (within the limits of confidentiality). In some cases, they will fully understand the decision. In others, they may have a very incomplete picture. In either case, you need to be sensitive to their emotions, and then help redirect their focus back on work.

Firing a subordinate is one of the most difficult and painful tasks you'll ever have to do as a manager; and for most of us it never gets easier. Unfortunately, avoiding the anxiety associated with firing only makes things worse. So if you have to do it — do it right.

What's been your experience with firing — or being fired?

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Ron Ashkenas' blog post on Harvard Business Review

Often when an organizational problem occurs, the typical response is to create regulations to prevent that problem from happening again. For example, in a machine shop where safety gloves often went missing, the company centralized access to new gloves; required request forms for new gloves, with supervisor approval; and had auditors check for compliance. As expected, the number of lost gloves was significantly reduced. However, the new rules cost more than the gloves themselves, negatively affected morale, and reduced productivity.

In many cases "controls" imposed to fix a problem become so complex that they create new problems. This eventually leads to an increasingly bureaucratic cycle of further breakdowns, more complex fixes, and more breakdowns.

The Dodd-Frank Financial Reform Act, passed in the wake of the financial crisis, has the potential to be a classic example. Its various sections deal with bank bailouts, regulating derivatives and swaps markets, mortgage reform, consumer protection, and a number of other issues. In other words, it's a well-intentioned attempt to fix what went wrong in the years leading up to 2008.The problem with Dod

d-Frank is that it's 1,000 pages of legislative guidelines, all of which need to be interpreted. So now as various regulatory agencies move into action, the complexity of implementation is generating outcries of concern in the financial industry, and defensive reactions on the part of the regulators.

JPMorgan Chase's CEO Jamie Dimon has been one of the most vocal critics of the process, citing not only the cost of compliance, but also the difficulty of actually making the regulations work effectively. With the chart below, he implies that regulatory complexity was one cause of the financial crisis. Regulators didn't talk with each other or coordinate their responsibilities. And Dodd-Frank only adds to this complexity:

Another vocal critic is Karen Petrou, managing partner of a firm that analyzes bank regulations. She says that Dodd-Frank's implementation is creating "complexity risk" for the financial system. As she explains in a NY Times column by Joe Nocera, "If we don't understand the cross-cutting effects and inherent contradictions in all of the stringent standards now being written into final form, we risk doing real damage to the sound, stable and — yes — profitable financial industry regulators say they support and the economies sorely need."For example, the legislation requires bank board

s to be responsible for 184 additional activities, which may be unnecessary — or even impossible.

Responding to these and many other criticisms, Treasury Secretary Geithner argues that Wall Street is suffering from amnesia about the recent financial crisis. In his view, if the banks and other financial institutions don't follow the regulations, we'll have another meltdown.

We do need controls to close the gaps that allowed the financial system to fall apart. But if the regulations are unreasonably complex, they will not only create unnecessary costs, but are likely to be unenforceable and eventually ineffective.

What's clearly needed is something in the middle — simple and practical controls that banks can understand and that regulators can enforce. Getting there requires dialogue, compromise, and coordination. Wall Street institutions, government regulators, and other parties need to get together in multiple forums and co-create workable practices that fulfill the spirit and intent of the Dodd-Frank guidelines. And leaders on both sides should convene key parties to map out and streamline the regulatory processes. The alternative is the continuation of dueling op-ed pieces and a financial system that runs a higher risk of another breakdown.

How can we create regulations that work without being overly complex?