Here are two new articles I wrote that will appear shortly in publications in India and the US. As with all of the articles I write they relate to leadership and employee engagement. Email me at mstallard [at] epluribuspartners [dot] com if you have any comments or suggestions. Thanks – Michael

The Competitive Advantage of Pixar’s Environment  

By Michael Lee Stallard

At the Technical Academy Awards ceremony in Hollywood, the Associated Press reported that it wasn’t the host, actress Jessica Beil, who attracted the most attention.  Instead, it was an understated, bespectacled, computer engineer named Ed Catmull. When Catmull’s name was announced to receive an Oscar for his lifetime of work in computer animation, the crowd went wild, whistling and whooping. And rightly so. The impact of Catmull and his collaborators on Hollywood may last for decades to come. I’m not referring to his contributions in computer animation though. More lasting will be his contribution to improve corporate cultures.

Catmull, of course, is the president of Walt Disney and Pixar Animation Studios. He has rejected the Hollywood star system and replaced it with a community environment. Catmull described it this way in a Harvard Business Review article he wrote last year: “[Pixar has] an environment that nurtures trusting and respectful relationships and unleashes everyone’s creativity…the result is a vibrant community where talented people are loyal to one another and their collective work, everyone feels that they are part of something extraordinary, and their passion and accomplishments make the community a magnet for talented people…”(italics mine).

What is it about Pixar’s environment that attracts talented employees and helps them produce outstanding movies such as the blockbuster hits Toy Story, Finding Nemo, The Incredibles, Ratatouille, and WALL-E that have made Pixar the envy of Hollywood?

The element that Pixar’s environment that sets it apart is its intentional inclusiveness toward all employees. In most organizations only 20 percent of employees – managers and the stars — feel included. It Pixar the percentage of employees who feel included is certainly much, much higher than the norm.

Inclusiveness begins with what management says about its employees. Catmull says that great movies are made from the tens of thousands of ideas that go into them from beginning to completion. As such, everyone needs to contribute their ideas and opinions, everyone’s work matters and everyone makes a difference in the quality of a film. Pixar employees know senior management values their contributions whereas in most organizations the overwhelming majority of employees feel their contributions are not valued by senior management. As a result, Pixar employees are more engaged in their work than employees of the average organization. And because they are more engaged Pixar employees put more effort in their work, they are more trusting and more cooperative, all factors that affect productivity, quality and innovation.

Another aspect of Pixar’s environment that contributes to inclusiveness is the Pixar University. It offers numerous courses related to filmmaking, the arts, health and other topics of interest to Pixar employees. Employees can take up to four hours of classes each week. In class participants develop acquaintances across the firm that strengthen their ties to the organization.

Pixar’s office design also contributes to developing loose ties across the organization. The cafeteria, meeting rooms, employee mail boxes and restrooms are centralized to make it more likely Pixar employees will interact with one another.

As a leader and advisor to leaders I have learned that practices, such as those above, are not sufficient to produce an environment that will help make an organization great. It’s more than just what leaders do that matters. Just as important is who leaders are. Ed Catmull doesn’t just talk and act inclusive. He deeply believes in it. His business partner John Lassiter, Disney and Pixar Animation’s Chief Creative Officer, does too. They in turn select leaders who embrace these values such as director Brad Bird and his business partner, the producer John Walker (who worked together on “The Incredibles” and “Ratatouille”).

Late last year I met John Walker at Pixar’s headquarters in Emeryville, California. Listening to Walker it was clear to see that he embodies the values of inclusiveness. He has a the sort of bridge-building personality that helps people amicably resolve conflict and keep them feeling like a part of the community. During the course of our conversation, Walker told me how he insisted on gathering the entire team of more than 200 people who worked together on a movie at least once a week so that the extroverted artists and their more introverted technical counterparts came together as a community. In the meetings, Brad Bird, Walker and others keep team members informed about the film’s progress get them thinking about how to solve the present set of issues facing the team.

So long as Pixar’s leadership preserves its environment, I would expect it to continue leaving the rest of Hollywood in its wake. In time, Catmull and Lassiter will return the magic to Disney Animation too.

Sadly, research shows that approximately 75 percent of employees are not engaged in their jobs, which clearly indicates that the importance of the work environment is not on the radar screens of most leaders. That’s tragic. Work environments need to be healthy today, perhaps more than ever. In the current economic downturn and shakeout that it will result, leaders will need the best environments in order to survive. Pixar’s example has awakened Hollywood’s leaders from their slumber. It should be a wake up call to leaders in other industries too.

What are you doing to make all of your organization’s employee feel like a valued member of your organizational community?

Improving CEO Selection

Michael Lee Stallard

The present deep recession, hyper-competitiveness of markets, anxiety of employees and general distrust of business leaders makes this an especially challenging time to lead an organization. And yet, it is precisely times like this, when the headwinds of adversity are blowing hard, that truly great leaders are necessary if an organization is to thrive. The right leader inspires his organization to see an appealing future and then leads it there by assessing the current situation based on present realities, identifying a set of strategic priorities to move the organization forward, appointing the right leadership team to execute the strategy, communicating and establishing accountability to assure alignment, and securing the necessary resources to make it all happen.

Having served as a leader, a board member, and an advisor to leaders, I’ve learned from experience that boards of directors are much more likely to select the best CEO when they understand a few key issues that are not always obvious. Astute heads of human resources will help their boards by laying out these considerations and working closely with board members to understand and apply them to the CEO selection process.

It probably goes without saying that all boards understand the importance of a CEO candidate’s reputation in the industry as well his industry knowledge and connections. These considerations can be easily gleaned from a candidate’s resume and media appearances, internet searches and conversations with industry participants.

Less obvious is how a candidate uses hard and soft power, his leadership giftedness, how his personal identity and values will fit with the organization’s desired identity and values, and his degree of moral maturity.

Ability to Employ Hard and Soft Power

In most organizations, only 20-25 percent of employees feel included and committed to the organization’s success, typically management and those perceived to be stars. The remaining 75-80 percent do not feel the same sense of connection and they are likely not giving anywhere near their best efforts at work. The key to unlocking this potential in organizations lies in a leader’s use of soft power.

Political scientist Jospeh Nye first coined the terms “hard power” and “soft power” to name concepts that have been around since the dawn of humankind. Hard power involves the use of rewards (“carrots”) and punishment (“sticks”). Hard power moves people to do what you want, but it fails to inspire them. Soft power is the leader’s ability to attract people so that they are emotionally engaged and want to help the leader and achieve the leader’s strategic priorities.

Here’s one of my favorite examples. Admiral Vern Clark was appointed the Chief of Naval Operations (CNO) for the U.S. Navy in 2000. The CNO is on the Joint Chiefs of Staff, reports to the Secretary of the Navy and advises the American President on the conduct of war. At the time of Admiral Clark’s appointment, the Navy was not meeting its sailor retention goals, which is a problem when you consider that the Navy needs people with the right skills to run its sophisticated navigation, monitoring and weapons systems. Admiral Clark made winning the war for talent his number one priority. He pushed through an increase in pay for sailors. In other words, he used hard power in the form of an inducement or carrot.

In addition to the pay raise, Admiral Clark traveled worldwide to meet with the Master Chiefs who lead the enlisted sailors. Over the years, the Master Chiefs have at times felt like second-class citizens to the officer class.

When Admiral Clark met with them, he told them a story about when he was in officer candidate school.

“I didn’t know the pointy end of the ship from the blunt end, it was scary really. But about week into school, a Master Chief named Leedy put his arm around my shoulder and said, ‘Mr. Clark, I like you and I’m going to help make you into a fine officer.’”

Admiral Clark told the Master Chiefs that the advice and encouragement of Master Chief Leedy helped him become a better officer. He appealed to the Master Chiefs and said that these young sailors promise to support and defend the U.S. Constitution and that as leaders they, himself included, needed to promise the sailors that they would give them the training and jobs so that they could learn and grow and have the opportunity to show the Navy what they were capable of doing. He told the Master Chiefs that he needed them and was counting on them and that their country needed them to do this too because it was imperative to achieve the Navy’s mission.

Following Admiral Clark’s talks with the Master Chiefs, they knew that he appreciated them and was trusting them to mentor the sailors under their command. What stunned the Navy was just how fast the Master Chiefs made a difference. Within a little more than one year, the U.S. Navy was breaking all-time sailor retention records.

Admiral Vern Clark is a talented leader who effectively used hard power (the pay raise) and soft power (the talks with the Master Chiefs). His sincere, candid nature and steadfast dedication and commitment to the U.S. Navy helped him gain the trust and respect of the Master Chiefs. The former head of all of the Master Chiefs recently told me that he often heard Master Chiefs say they didn’t want to let “old Vern” (Admiral Clark) down. Rewards and/or punishment alone would never have motivated them like Admiral Clark’s sincere praise and appeals did.

CEOs need to be able to discern when to use hard power and when to use soft power. They also need to know how to employ hard and soft power in an effective manner. Interviews with individuals who worked alongside CEO candidates and multiple interviews with the candidate himself over time will provide some insight into the candidate’s ability in this critical area.

Leadership Giftedness

Another perspective that boards should consider when selecting a CEO is a leader’s giftedness. Typically, we are naturally gifted and more developed in some areas than in others. It’s part nature and part nurture that develops our giftedness. I think of giftedness in three ways, based on the works of Sigmund Freud and my friend, the anthropologist and psychoanalyst Michael Maccoby. The first type of giftedness is in knowledge accumulation, “integrative thinking” (as Roger Martin has described it), and inspirational communications. The inspiring strategic leader has this cluster of gifts. The second type of giftedness is in the organization and oversight of tasks. The task leader has these gifts. The third type of giftedness is in empathizing with and gaining the trust of employees, aligning employees’ goals with those of the organization, helping employees connect with one another, and resolving conflicts that arise. Connector leaders have these gifts. They tend to be culture carriers and have significant influence on the informal network, prevailing attitudes and culture in organizations.

There are a couple of points you should know about leadership giftedness. First, no organization can thrive for long without leaders who have these three types of leadership giftedness. Second, oftentimes when an individual is extremely gifted in one of the three areas, he is largely deficient in another. For example, Steve Jobs of Apple is a remarkably talented visionary leader but considerably lacking in his ability to connect one-on-one with employees. Fortunately for Apple, there are other members of the senior management team with complementary strengths to offset Job’s weakness. Finally, leaders may have more than one of these forms of giftedness but rarely do they have all three.

Wise boards view the leadership team as a human system that requires several individuals with complementary leadership gifts and the ability to work well together. Heads of Human Resources need to see themselves as human systems engineers who understand what mix of people with the three types of leadership giftedness are required given the context the organization operates in, the strengths and weaknesses of the present leadership system, how the leadership system might change in the years ahead and what type of CEO is required to optimize the leadership system in the years to come.

Identity and Values Fit

The CEO should embody the attributes that make up his organization’s desired identity. Consider Richard Branson and his company, Virgin. From an identity perspective they are identical: innovative, customer-oriented, fun and, at times, outrageous.

I’ve seen newly hired leaders utterly fail simply because they were too different from the organization’s identity and values. The people in the organization didn’t accept them and isolated them relationally. It gave the leaders two options: leave or replace a significant number of people.

I’m not saying that you shouldn’t hire a CEO who represents an identity and values you aspire to. I’m merely cautioning you to be aware that if the new CEO’s identity is too far from that of the organization’s, then the risk of acceptance by the organization is low indeed.

Moral Maturity

Another important factor to consider when hiring a CEO is his moral maturity. I’ve seen leaders who make a great impression and yet were morally immature. Put in a position of leadership, these individuals may thrive for a time but eventually they make expedient decisions that are damaging to others and ultimately to the organization’s longer-term health.

The mark of moral maturity is demonstrated when an individual values the interests of his family, organization, community, nation and humankind rather than myopically focusing on self-interest alone. Psychopaths and sociopaths are extreme examples of moral immaturity. Sometimes experiencing adversity in one’s life – e.g. illness, death of a loved one, etc. — leads to self-reflection and moral growth.

In recent years, management writers have been picking up on this theme. Michael Maccoby wrote in The Leaders We Need about the moral journey from unproductive to productive leadership personalities. Bill George described a shift from a “me” to a “we” mindset in Authentic Leadership. Jim Collins wrote in Good to Great about adverse events as helping to shape the character of the Level 5 Leader. In Fired Up or Burned Out, my co-authors and I pointed to the universal character strengths of leaders who helped develop healthy work environments. Many of these character strengths reflect moral virtue.

The Role of the Head of Human Resources

The considerations I’ve touched on above will be familiar to some board members and alien to others. The head of human resources can add a considerable amount of value to the CEO selection process by framing these issues and weighing in on their application with respect to each candidate. The risks of selecting a poor CEO are far too high to leave it to chance.