Viewpoint: Engage Front-Line Employees to Drive Growth

One of the more shocking bits of research I have come across was a study by the Boston Research Group that showed close to 97% of employees felt they operated in top-down, command-and-control systems.

More than half of the thousands of employees responding to the survey said their leadership attempted to be motivational -- a carrot-and-stick approach to getting tasks done.

Yet, we know from plenty of experience that incentivizing the implementation of top-down strategy is no substitute for growing a business through actively engaging managers and employees who operate on the front line -- the actual point of a company's engagement with customers, employees and the other stakeholders.

Why, despite the reams of data and case studies, and incalculable numbers of management attention, is there still such a detachment between top management and the front line? What does it take to overcome this disconnection?

One clue to the scarcity of fully engaged companies is the Darwinian nature of the business environment. Capitalism produces lots of businesses. But the survival rate, even among the biggest, is relatively brief. In a study performed by John Stubbart and Michael Knight in 2006, of 6 million firms surveyed, only 10% reached their 40th anniversary.

A plurality had disappeared after 10 years.

Missing Growth Opportunities

Longevity, of course, is not by itself a measure of success. Shareholder value, at least for public companies, is the principal goal. As an example, the pioneering companies of web browsing -- firms such as Netscape -- existed a few years and were acquired, making excellent returns for their investors.

Many household names of the past few decades have been acquired and merged under the assumption that a financial exit was an acceptable alternative to stimulating further organic growth.

Unfortunately, mergers rarely achieve significant returns for shareholders. As many as 80% fail by this criterion.

Equally shocking is the failure of financial engineering to stimulate economic growth in key sectors. Take the manufacturing sector, in which mergers and acquisitions changed the terrain of Tier 2 and 3 suppliers to the automotive, transportation, technology and energy sectors among others.

During two decades of nearly consistent GDP growth -- from 1985 to 2005 -- that sector actually contracted nearly 50% as a percentage of the U.S. economy, from about 22% to 11.7% of GDP.

The traditional excuse that this erosion occurred based on competition from more productive, lower-cost global providers only tells part of the story. A fuller picture is one which recognizes the impact of short-term financial thinking leading to nonproductive business consolidation, coupled with an inability to maintain an innovative edge.

As we have discussed elsewhere, innovation may percolate in many locations in a company. It is unpredictable and based often on unplanned connections among people within a firm.

Some people have great ideas for products and services; others may be more adept at thinking through how to bring those new ideas to life within the firm.

Often the networks that connect thinkers and doers within a firm are informal and cut across the boxes on the organizational table.

Stimulating those networks is not an automatic function. It takes a very engaged top-management team that actively seeks out ideas and input and maintains open dialog. This type of engagement is time consuming for any CEO because it requires a steady involvement with people on the company's front line.

On the Battlefield

An interesting comparison can be made with an organization that seems on the surface the most hierarchical of all, the U.S. military.

Anyone who has looked at a field organizational chart would see a top-down table of ranks and units structured by size. These organization charts simplify the reality large numbers of men configured for combat tasks in complex environments, such as the mountains of Afghanistan and the deserts of Iraq.

The actual leadership and management of these forces, however, is absolutely the opposite of top down. Instead, top commanders are invested in bottom-up communication and continuous learning from front line troops and commanders.

The military utilizes new cyber-technologies to provide front-line commanders with direct and regular access to the top. The quintessential example comes from Afghanistan where the U.S. armed forces fight an elusive enemy in harsh terrain under sharp resource constraints.

There, creativity and adaptability are prized by Gen. John Allen, the top commander of U.S. and international forces in Afghanistan.

According to Bing West, one of the nation's foremost military analysts, Allen spends 30% of his time on the battlefield.

"I learn something every time I visit a line unit", Allen says. "Truth be told, visiting troops in the field recharges my batteries."

Allen's leadership style has been described by retired Col. Mike Killion, in a wonderfully expressive phrase as "progressive elaboration."

In other words, says Killion, Allen establishes an operating framework where good ideas are actively solicited.

"When a better idea comes along he'll grab it and refine his framework," Killion says. "He doesn't get stuck due to pride of ownership."

CEOs fully committed to the longevity and growth of their organizations tend to fit the profile of a John Allen.

More CEOs and their key managers should make this type of engagement their principal job focus.

Boards should make this type of leadership a priority when evaluating CEO performance. Leading from the front line may be burdensome and time consuming.

But it is also necessary to stay innovative in a ferocious, complex business environment.

Andrew Goldberg serves as executive vice president of public relations firm Makovsky & Co. Inc.'s Corporate Advisors division,which counsels CEOs and other C-suite executives in restructuring, change management and M&A situations. Goldberg was previously the president of WPP-owned Pivot Red and chairman of the corporate practice at Burson-Marsteller. He earned a Ph.D. at Columbia University in international affairs, specializing in the psychology of decision-makers under stress.