A Point of View

B m RICHARDSON

IN PURSUIT OF THE “X FACTOR”

According to the generally accepted theories of aerodynamics, bumble bees cannot fly. Their bodies are too heavy for their wings. And anyone who has studied economic theory knows that in a free market environment business firms cannot sustain productivity advantages or exceptional prof- its over time. Competition will squeeze out these differentials. Yet, reality tells us that both these theories are questionable-bumble bees do fly and some firms do, year after year, make extraordinary returns. How do these businesses do it?

First, none of the exceptional firms I’ve studied is theoretical or aca- demic in its orientation. The top managers do not quote Maslow, Vroom, Drucker. They are all highly pragmatic, yet rooted in a philosophy that emphasizes integrity in all dealings with customers, employees, suppliers, and competitors. These firms rarely fudge on their values.

The second thing these firms have in common is a long-term commit- ment to employees. Employees are seen not as interchangeable parts, but as uniquely valuable individuals who are called on to participate in improving productivity, safety, quality, and the working environment. At JohnLewis Partnership, a British merchandiser, the “managers are account- able to the managed.” The same theme is recurrent in all the high- performing companies I’ve studied.

The third thing these firms have in common is the effective use of the “X factor.” In War and Peace, Tolstoy presents the “X factor” concept in the following fashion:

. . . military science assumes the strength of the army to be identical with its numbers. . . . large battalions are always victorious.

In military affairs the strength of an army is the product of its mass and some unknown x.. .

. . . we recognize this unknown quantity in its entirety as being the greater or lesser desire to fight and face danger. That unknown quantity is the spirit of the army.

Barrie Richardson is Samuel Gay Professor of Business Administration and Dean of the School of Business at Centenary CoIIege ofLouisiana in Shreveport, Louisiana.

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What Tolstoy is saying about military affairs-that, despite a complete inventory of all the inputs (machines, materials, and people), we still may not be able to predict what the actual output will be-is true in other fields. Quality and productivity require more than tools, techniques, skills, mate- rials, standards, and systems. They also require the “X factor”-“the spirit of the army”-which is one of the few variables that competitors can neither purchase in the open market nor easily emulate.

How do organizations get the voluntary commitment of each employee to give his or her best effort? Obviously there’s no single or simple answer to this question. But managers who are pursuing the “X factor” might wish to consider the following points.

First of all, the oft-used slogan “We are all in the same boat” is not a motivating argument. For example, assume that you are manning an oar on a large rowboat. A hundred other people are also pulling on oars. You want to get to shore, but rowing is hard work. Your hard work will only make a tiny difference in the speed of the boat, Everyone will arrive at the same time. Why not fake it? It is quite rational to coast and let the others do the work. This is known as “the free-rider problem” in economics, or “the shirker problem” in human resources. Even in the high-performing organi- zations I’m familiar with, one-third of employees report that they are not highly motivated.

Over the last ten years I’ve conducted workshops with thousands of employees from all levels who work for a variety of firms in this country and England. Early in the sessions I ask the participants: “Assuming you are given no new tools or skills, how many persons in this room believe- right now-that you have the capacity to reduce cost and improve quality and service by ten percent?” I ask them to shut their eyes, think for a second, and raise their hand if they believe they can do this. When they open their eyes they are surprised; nearly everyone has his or her hand raised. The second question I ask has an equally dramatic response: “How many of you want to contribute more?” Almost everyone raises his or her hand. And this is true not only at companies in the vanguard but also at firms that are not doing well.

Isn’t this a fascinating paradox? Everyone wants to contribute more and they believe they have the capacity to do it right now, but often they don’t.

Along with setting high standards, establishing an environment of mutual trust, and emphasizing mutual commitment to excellence in all areas, firms that want to boost their performance levels must stimulate the “X factor.” They can do so by using all or some of the following ideas.

Why?

Assign Employees to Small Work Teams. Workers who are in large groups (over fifteen) find it difficult to see the significance of their con- tributions. Their shirking seems to have no discernible impact on

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A POINT OF VIEW

company productivity or profits. “What difference does it make if I don’t do my little job perfectly?”

In small groups, shirkers are under pressure from their peers, which is moreconstant and possibly moremeaningful thantheboss’s eagle eye. The small group learns that with good management it can become a team in which everyone’s contribution is not only noticed but also viewed as significant.

Replace Competitive Systems with a Team Approach. The goal is to try to make everyone a winner, since in most competitive systems there are few winners and many losers. Workers need to become part of an interdependent group. The group may compete against outside groups-other shifts, departments, or companies-but team spirit must prevail within the group. Red Auerbach, general manager of the Boston Celtics, never kept statistics on individual scoring. He was concerned with the “big W-winning games, which requires teamwork.

Have Teams Participate in Setting Objectives and Standards. When management asks production workers to participate in establishing output goals, both in terms of quality and quantity, they are, in effect, saying, “You are mature, competent adults who are interested in doing a superior job. You also know and have pride in quality workmanship of your group and the organization as a whole,” Managers should never abdicate their responsibilities, but they should ask for help and advice on production goals.

Give the Team Clear and Frequent Feedback. Providing regular updates on how far you’ve come in reaching pre-established goals is a sure way to motivate workers. In the John Lewis Partnership department store chain, every employee receives a weekly newspaper that includes a complete breakdown of sales for every department in every store in the country. At the Bath, England, facility of office furniture manufacturer Herman Miller, production workers receive a weekly report on their team’s output, quality index, and profit contribution.

Require Teams to be Accountable to Meeting Standards. Work teams and their leaders are required to meet or surpass the standards they have agreed to. They have both the authority and responsibility for high-level performance. The General Motors truck plant in Shreveport, Louisiana, is run on a work team basis. Each team’s productionis assessed eachday, and detailed computer print-outs let them know precisely where and when problems occurred and who was working on the job at the time.

Ask the Team Not Only to Do a Job, But to Come Up with Ways to Reduce Cost and Improve the Product. Teams are given more respon- sibility than individual workers. Since they know more about the jobs they are doing than anyone else, they are asked to come up with cost- reduction and safety-improvement ideas. Frequently a specific goal is set, and they are given time to think and talk about this on company time.

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Every employee at Herman Miller has two jobs: The first is to be highly competent at the assigned job; the second is to generate cost-saving ideas with the whole team.

Encourage Team Participation in Hiring, Training, and Evaluating New Team Members. One way to build pride is to let employees know that their jobs are difficult and that management values their team efforts. The team may be asked to meet with a potential new team member and to help train this person. The team should have a sense of ownership in both the problems and the successes of the company.

Share Profits and Bonuses. The results of high performance should be shared through profit-sharing schemes or bonuses. There should be a sense that we-& of us together-have accomplished something significant.

High-performing organizations have first-rate inputs-systems, tech- nology, materials, and staff. But without the “X factor.” this is like one hand clapping. Truly outstanding organizations sustain competitive differentials in cost and quality by creating an environment in which ordinary people choose to give their best effort.

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