December 4, 2010

The Human Capital Multiplier Effect

We all know that people respond better to some managers than others—for some, people will go “the extra mile.”

University of Virginia professors teaching a leadership class that I was fortunate to participate in shared lessons on this.

Essentially, studies show that leaders that treat their people with trust, caring, and respect—what I would call the basic elements of human dignity—are able to achieve the multiplier effect.

In simple terms, what you give as a leader is what you get back.

Multipliers—leaders that are “multipliers” believe in their peoplethat they are smart and will figure it out. Multipliers guide them, invest in them, give them the freedom to debate the issues and do their jobs, and they challenge them to be their best. Multipliers are "talent magnets"--people want to work for them, and employees that work for multipliers tend to contribute 200%!

In contrast, those managers that are “diminishers” believe that their employees will not figure it out without them. They are empire builders and micromanagers, who typically act like tyrants, displaying a know-it-all attitude, and they have to make all the decisions. In an un-empowered and disrespected role, employees who work for diminishers withdraw and give less than 50%.

When it comes to motivating our workforce and achieving a multiplier effect, while money and recognition are important, providing genuine autonomy and empowerment to “own the job” and get it done has been found to be the #1 impact on their productivity.

Hence there is a big difference between using technology as a tool to perform a task and doing it in a very directed way (by rules, algorithms, assembly lines, etc.) versus working through real people who have important human needs to work with some autonomy to add value and achieve not only the respect of their manager(s), but also self-respect as well.

When we create a multiplier environment for our employees—one where they can flourish as human beings—they give back rather hold back, and in a highly competitive environment that’s exactly what every organization needs to thrive.

There are two major challenges here for leaders.

One is that leaders who have attained power tend to be reluctant to relinquish any of it to their employees. They don’t see the difference between “empowerment” and their own loss of stature.

The other challenge is that there is always the chance that if you give somebody the tools to build the house, that they will either take a nap in the hammock in the backyard or even try to throw you off the roof!

In the first case, the leader has to have enough confidence to make room for others to succeed. I once heard that Jack Welch said of great leaders that they surround themselves with people who are even smarter than they are.

In the second case, I believe that we need to “trust but verify,” meaning that we provide autonomy and tools to people to do the job, but then if they don’t do it appropriately, that is addressed through individual performance management.

Managing people well is not a favor we do them, but is something that is required for the success of enterprise.



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