Listening to staff key to successful business

By SELWYN PARKER

If there are any New Zealand companies that have a "Stupid Hour" or an equivalent, go to the top of the class.

A Stupid Hour is the ultimate exercise in corporate democracy, the time when staff tell the boss how to run the organisation better.

This 60 minutes of managerial humility is practised weekly by Home Depot, a giant specialist American retailer which has more than $US30 billion in revenues and $US1.6 billion in profits.

More important, turnover among the retail chain's 140,000 staff is a third of the industry average, which suggests that employees like helping their bosses.

At the Stupid Hour, staff courteously point out to managers all the silly things they have done that week. The managers then have 24 hours to fix their mistakes.

So this isn't just a get-the-boss exercise; it's a creative tool that formalises the distribution of profitable information from those who are closest to the customers to the people at the top.

Home Depot's Stupid Hour must be one reason the chain is easily the top-performing specialist retailer in America and achieved a 1998-99 total return to investors of 45 per cent, which New Zealand retailers would die for.

For American management adviser Dorothy Marcic, Home Depot illustrates the link between healthy staff relations and healthy profits. In fact, it was the only way to get profits, she said on a lecture tour of New Zealand and Australia last week.

"If you look at all the literature on the subject, obsessing on the bottom line all the time definitely does not make a profitable company," the author of Managing with the Wisdom of Love says.

"Staff don't get up in the morning and say: 'I've got to increase shareholder wealth'."

Marcic is a corporate surgeon, if you like, who identifies the cancers in an organisation and proceeds to excise them. She does this for a wide variety of organisations including ATT&T Bell Labs, Ford, Coca-Cola and the American Medical Association.

Her usual procedure is to get people who work together to sit down for a few days under video cameras. Everybody has their say, nobody is allowed to dominate, and they all have to watch the tape later. This can be highly cathartic.

At one of these exercises with medical staff of Nashville's 658-bed Vanderbilt University Hospital, a particularly arrogant and domineering senior surgeon was shocked at how he appeared on tape. After three days, he stood up to make an apology to his colleagues for his behaviour over the years.

Most of an organisation's ills start at the top, according to Marcic, who also teaches leadership, communication, team-building and empowerment for women at Vanderbilt University.

"People who get into high levels of leadership have trouble giving up control," she explains. "They have to be made to see their problems first. But [to them] it's always somebody else's fault. We all have our defence mechanisms when we're criticised but the bigger a person's ego, the bigger the defence mechanisms they have. These people tend not to be self-reflective."

And superior performance starts with loyalty. Start to win loyalty, she says, by being a great listener.

For her, it's a giveaway when a manager refers to staff as "they" and not as "us." It usually means the manager is autocratic, tends to tell them what to do ("nothing is more demotivating"), and is definitely not a listener.

In her experience, fake listening doesn't work either.

"If I had a dollar for every manager who says, 'I'll make the staff think it's their idea ... '," Marcic says.

When staff are on your side, a lot of good things happen, like profits.

Marcic is an admirer of The Loyalty Effect, by Frederick F Reichheld and Thomas Teal, which mounts a statistical argument in favour of the organisation that puts its people first. That's not just employees, but customers and owners.

According to The Loyalty Effect, one of America's top-selling business books, a 5 per cent increase in measured loyalty can translate to a 45 per cent jump in profits. That's surely worth having.