CASE INCIDENT 1 “Lessons for ‘Undercover’ Bosses” Executive offices in major corporations are often far

removed from the day-to-day work that most employees perform. While top executives might enjoy the

perquisites found in the executive suite, and separation from workday concerns can foster a broader

perspective on the business, the distance between management and workers can come at a real cost:

top managers often fail to understand the ways most employees do their jobs every day. The dangers of

this distant approach are clear. Executives sometimes make decisions without recognizing how difficult

or impractical they are to implement. Executives can also lose sight of the primary challenges their

employees face. The practice of “management by walking around” (MBWA) works against the insularity

of the executive suite. To practice MBWA, managers reserve time to walk through departments

regularly, form networks of acquaintances in the organization, and get away from their desks to talk to

individual employees. The practice was exemplified by Bill Hewlett and Dave Packard, who used this

management style at HP to learn more about the challenges and opportunities their employees were

encountering. Many other organizations followed suit and found that this style of management had

advantages over a typical desk-bound approach to management. A recent study of successful Swedish

organizations revealed that MBWA was an approach common to several firms that received national

awards for being great places to work. The popular television program Undercover Boss took MBWA to

the next level by having top executives from companies like Chiquita Brands, DirectTV, Great Wolf

Resorts, and NASCAR work incognito among line employees. Executives reported that this process

taught them how difficult many of the jobs in their organizations were, and just how much skill was

required to perform even the lowest-level tasks. They also said the experience taught them a lot about

the core business in their organizations and sparked ideas for improvements. Although MBWA has long

had its advocates, it does present certain problems. First, the time managers spend directly observing

the workforce is time they are not doing their core job tasks like analysis, coordination, and strategic

planning. Second, management based on subjective impressions gathered by walking around runs

counter to a research and data-based approach to making managerial decisions. Third, it is also possible

that executives who wander about will be seen as intruders and overseers. Implementing the MBWA

style requires a great deal of foresight to avoid these potential pitfalls.

Questions 1. What are some of the things managers can learn by walking around and having daily contact with line employees that they might not be able to learn from looking at data and reports? 2. As an employee, would you appreciate knowing your supervisor regularly spent time with workers? How would knowing top executives routinely interact with line employees affect your attitudes toward the organization? 3. What ways can executives and other organizational leaders learn about day-to-day business operations besides going “undercover?” 4. Are there any dangers in the use of a management

by walking around strategy? Could this strategy lead employees to feel they are being spied on? What actions on the part of managers might minimize these concerns?

Sources: Based on T. Peters and N. Austin, “Management by Walking About,” Economist (September 8, 2008), www.economist.com ; F. Aguirre, M. White, K. Schaefer, and S. Phelps, “Secrets of an Undercover Boss,” Fortune (August 27, 2010), pp. 41–44; J. Larsson, I. Backstrom, and H. Wiklund, “Leadership and Organizational Behavior: Similarities between Three Award-Winning Organizations,” International Journal of Management Practice 3 (2009), pp. 327–345.

Management by walking about

This is a style of management commonly referred to as MBWA. It is variously lengthened to management by wandering about or management by walking around. MBWA usually involves the following:

• Managers consistently reserving time to walk through their departments and/or to be available for impromptu discussions. (MBWA frequently goes together with an open-door management policy.)

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• Individuals forming networks of acquaintances throughout their organisations.

• Lots of opportunities for chatting over coffee or lunch, or in the corridors.

• Managers getting away from their desks and starting to talk to individual employees. The idea is that they should learn about problems and concerns at first hand. At the same time they should teach employees new methods to manage particular problems. The communication goes both ways.

One of the main benefits of MBWA was recognised by W. Edwards Deming, who once wrote:

“If you wait for people to come to you, you'll only get small problems. You must go and find them.

The big problems are where people don't realise they have one in the first place.”

The difficulty with MBWA is that (certainly at first) employees suspect it is an excuse for managers to spy and interfere unnecessarily. This suspicion usually falls away if the walkabouts occur regularly, and if everyone can see their benefits.

MBWA has been found to be particularly helpful when an organisation is under exceptional stress; for instance, after a significant corporate reorganisation has been announced or when a takeover is about to take place. It is no good practising MBWA for the first time on such occasions, however. It has to have become a regular practice before the stress arises.

By the turn of the century it did not seem extraordinary that managers should manage by walking about. The technologies of mobile communications made it so much easier for them to both walk about and stay in touch at the same time. But in the 1950s many white-collar managers turned their offices into fortresses from which they rarely emerged. Edicts were sent out to the blue-collar workforce whom they rarely met face-to-face. The outside world filtered through via a secretary who, traditionally, sat like a guard dog in front of their (usually closed) office door. Even in the 1980s such practices were not uncommon, as demonstrated in the film “Nine to Five”.

MBWA was popularised by becoming an important part of “The HP Way”, the open style of management pioneered by Bill Hewlett and Dave Packard, the two founders of the eponymous computer company. Many of the practices of The HP Way became widely copied by corporations throughout the United States in the late 1980s and early 1990s.

The idea received a further boost when Tom Peters and Robert Waterman wrote that top managers in their “excellent” companies believed in management by walking about. In his second book, “A Passion for Excellence”, Peters said that he saw “managing by wandering about” as the basis of leadership and excellence. Peters called MBWA the “technology of the obvious”. As leaders and managers wander about, he said that at least three things should be going on:

• They should be listening to what people are saying.

• They should be using the opportunity to transmit the company's values face to face.

• They should be prepared and able to give people on-the-spot help.

Further reading

Peters, T. and Austin, N., “A Passion for Excellence: The Leadership Difference”, Collins, 1985

Secrets of an undercover boss Four top executives decided to shed their identities for a week or two and take jobs

on the front lines of their companies. Among the revelations: Doing an "easy" job

turns out to be a lot harder than it looks. 1 of 5

ï Why I became an 'Undercover Boss'

In late September, CBS will air a new season of Undercover Boss. Executives from Chiquita Brands,

DirecTV, Great Wolf Resorts, and NASCAR swapped pinstripes for overalls, dyed their hair, donned

false IDs, and took jobs in kitchens, race pits, and lettuce fields, and on rooftops. Fortune recently

gathered the four executives to discuss their experiences. Here are their stories.

NEXT: Fernando Aguirre

Secrets of an undercover boss 2 of 5

Fernando Aguirre

Position: Chairman and CEO

Company: Chiquita Brands International

Mission: Aguirre took an undercover job picking heads of lettuce and driving a forklift at this global

food giant.

Being an undercover boss is a good way for a CEO to see the trenches unfiltered. Anytime you visit

your employees as a CEO, everything is staged, well prepared. My advice to other executives: If you

want to find out what's really going on, start dropping into meetings unannounced.

I did a half-day of training and got my license to drive a forklift in one of our food warehouses. I

thought it would be simple to do. Well, what I learned is that it's very hard to do. It was taking me

forever to load the food, and I broke a pallet. My supervisor took me off the forklift.

Next I picked lettuce, and that was a very hard job. The importance of training became clear. My

supervisor had been doing it for many years. We were in the field at six in the morning. He showed

me how to take a big, very sharp knife and pick the lettuce, core it, and put it on a conveyor belt. I

would ask: "How am I doing?" He'd say, "Okay, but you need more training." He started clocking me

and said, "Okay, you did it in nine seconds, but you're missing some heads." You're supposed to do a

head every four seconds with the machine moving at the same time. I couldn't catch up. At the end,

5.5 seconds was my best time.

We made some changes after the show. We decided to reach out more to employees and make sure

they're being taught what to do. I'm not talking about a big formal training program. I'm talking

about creating a culture where each employee helps train others to do their job better.

NEXT: Mike White Last updated September 22 2010: 10:28 AM ET

Mike White

Position: Chairman, President, and CEO

Company: DIRECTV

Mission: White oversees this global media powerhouse, which delivers state-of-the-art technology to

over 25 million customers. He posed as a satellite-dish installer.

Why did I do the show? After 20 years at PepsiCo, I moved over to be a CEO in a new industry, and I

figured, What better way to learn the business? We've got a very complicated business, and I wanted

to know what it was like on the front lines. Second, we put a lot of content on DirecTV, and this was a

chance to see behind the scenes what goes into putting a TV show together.

When I was on roofs installing satellite dishes in Birmingham, Ala., in 98° F heat, I was struck by

how hard these employees work. The very first day I was crawling through an attic and fell and

screwed up my hand. Also, the technology is complex, and you have to make it work in every home,

and every home is different.

The employees I met had incredibly different life experiences than I've had, and yet with every

person I found amazing connections. In this economy, empathy is very important to motivate a team,

and you can't have empathy if you haven't walked in their shoes for a bit.

You have to get as close as you can to where your employees interact with the customers to find out

how things really work, and that takes hard work and lots of curiosity. You've got to create trust

between the front lines and middle management. You have to understand that you're not there to

embarrass anyone or to find out what they're doing wrong. You're there to learn.

I'm now more committed to figuring out how to help the unheralded front line. We're putting on an

appreciation day next spring in honor of one of the techs I worked with. He deserves it. They all do.

NEXT: Kimberly Schaefer Last updated September 22 2010: 10:28 AM ET

Secrets of an undercover boss 4 of 5

Kimberly Schaefer

Schaefer appears on Undercover Boss on October 3

Position: CEO

Company: Great Wolf Resorts

Mission: Schaefer toiled in the kitchens at one of her indoor water parks.

Over the past few years with the soft economy, we've gone through some tough times, and had to

make a lot of changes. The show was a way for me to work at the customer-service level and see

whether those changes had any impact.

What surprised me is that before going undercover, I felt that I knew the jobs and would be really

good at doing them. They were a lot harder than I thought. The amount of personal attention we give

to our guests blew me away. I was a line cook. I was not qualified to do that, although I do

occasionally make food at home and know how to make scrambled eggs. Making food in mass

quantities requires a different level of skill. The last thing I would have thought of is teamwork. The

seven guys on the line worked with precision. How many pancakes are we going to make? How much

fruit should we put in, at the same time keeping costs in mind? All of those things were happening in

this little unit without a supervisor. If you could spread that throughout the company, you'd become

so much more productive.

The takeaway for me was that I am now looking for ways we can engage our line employees in

committees to improve the way we provide personalized service. Management needs to get workers

more involved in what we're trying to do because the employees are the ones who know how to do it.

We just have to ask them what they would do differently and what would make their jobs easier.

It's amazing how much more you can learn when you don't think you're the smartest person in the

room. I've brought it down a notch. My advice for other executives? Why not try going to work in a

department for a week? I think after a while your employees would be comfortable, and they'd let

their ideas out. Just make sure you're not trying to fix everything while you're there. Let them do the

talking.

NEXT: Steve Phelps Last updated September 22 2010: 10:28 AM ET

Steve Phelps

Position: Senior Vice President and CMO

Company: NASCAR

Mission: The marketing chief behind America's No. 1 spectator sport took a job in the race pit.

It was a brand-new experience for me, especially at the racetrack. It gave me a look behind the scenes

I had never seen. I became part of a NASCAR team, and it was a lot of fun. I joined as a member of

the pit crew, and I didn't have an appreciation for how hard these guys work. Tremendous amounts

of training go into what they do, and the specialty knowledge they have to help the cars go fast is

amazing. A tire specialist can look at a tire and tell how it's wearing and know how to adjust it during

the race. One of my jobs was a rear-tire carrier. You're carrying 75-pound tires, and you have to squat

and put it on. And these guys are essentially changing four tires and adding a full tank of fuel in 13

seconds or less. I didn't pass out, but they did have oxygen ready. It was grueling but fun.

I talked to my senior management about the experience, and the thing I was struck by is that it ends

up being about people. But it was also that these people who work behind the scenes had a genuine

love and passion and an enthusiasm for the sport. And they love their jobs. They are great

ambassadors for our sport.

I had always prided myself on listening to my employees and being a people's manager, but it's

difficult in a big organization. You have to get to a place where you understand the needs of the

employee on an individual basis. Let them be themselves, speak their minds. Give them the

opportunity to be excellent. Each individual is an important part of the whole.

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