We must give up the idea that competence must exist within the person and expand our view that whenever possible it should be built into the situation. What workers need to do their jobs - information, rules, and knowledge - is often spread all over the place. - Gloria Gery, Learning Innovator

The failures - and subsequent missteps to both diagnose the failures and the attempts to correct them - at the people end tend to be driven in part by chronic misunderstandings about performance. It's pretty hard to consistently get results (or diagnose and fix problems) when managers don't understand how to produce good performance in people. Five misperceptions are common in most organizations - so common that they've become myths:

  1. Smarter is better.
  2. The right behavior is key.
  3. The ends justify the means.
  4. Good people mean good results.
  5. Incentives are key.

Let's consider why each of these is a myth.

Myth 1: Smarter is better

IQ does not separate the star from the average performer. Every job has an IQ hurdle that people have to jump over, but whether you jump it and just barely clear it or whether you jump it and clear it by 30 extra points doesn't seem to make a difference. People get mistakenly fixated on IQ as a predictor of success. There is data that says that when you look at the whole IQ range from zero to 180, that the better the IQ, the better the performance, but that's because you are looking at a wide range of people. Once you get into a certain profession, that's where the theory falls apart. Within professions - where you are talking about people who already have at least average, and more than likely above average IQs to start with - then IQ seems not to play a role. - Robert E. Kelley, Management Consultant

People in most organizations tend to believe that smarter employees make a better organization. As a result, organizations often do things, such as measure how many hours of training the average employee gets per year (with an increase in that average being perceived as a good thing) or provide tuition reimbursement programs so that workers can take college courses. To be fair, some of these programs are really more about rewarding people. But many programs don't even restrict what degree program or courses a person can take. In addition to for-credit courses, there are plenty of corporate open-enrollment programs where attendees sign up for courses they find interesting (even if there is no connection to their job responsibilities).

The basic premise behind such efforts is that smarter people lead to a better, more productive organization. It's hard to argue with the premise that it's better to have smart people than dumb people working for your organization. And an organization can often achieve competitive success because of very small margins, so a business that has a smarter executive or a better-trained workforce would seem to have that edge. But there are fundamental problems with this premise.

For one thing, too many organizations have simply equated knowledge with performance - if Jack is smarter than Jill, then Jack will outperform Jill. This assumption is wrong. Chris Argyris has coined the phrase "learned incompetence" to refer to instances where individuals and especially organizations acquire coping mechanisms that effectively result in stupid decisions - despite the collective intelligence or learning levels of the organization's members. This is a critical point: The overall intelligence level of an organization is not a function of the intelligence of the individuals employed there. Businesses with many well-trained and highly educated people are capable and often guilty of very poor analysis and decision making.

Smarter people don't equal smarter performance

A team or an organization is much more than the sum of its parts. If you doubt this, just look at any business or governmental entity (such as the senior White House staff and presidential advisers). The collective individual expertise and credentials of such organizations is very impressive, yet their performance can be underwhelming. The sum of the parts isn't equal to the sum of the whole when it comes to organizations. Too many other factors - such as the culture of the organization, the decision-making process, the assumptions embedded within senior leaders, and the degree of trust and information sharing - can result in an organization that is effectively dumber than any of its participants.

Others (for example, social psychologist Irving Janis 1972) have pointed out how very intelligent individuals or organizations are still capable of very poor and consistently myopic performance. Simply put, being smarter, better trained, or more skilled is usually not a bad thing - but it is rarely the solution to getting better results.

Furthermore, there are plenty of examples of organizations that have had workforces of first-class intellects with outstanding credentials (such as a number of investment firms with employees boasting MBAs from Top 10 schools - thus, lots of smart individuals), yet the collective intelligence of the business hasn't apparently matched that of the individual talent. To put this another way, collecting smart individuals doesn't result in a collectively smarter business. And hiring smarter people can actually become a negative for the organization if the assumption is that smarter individuals are sufficient for a smart business - good recruiting can create false confidence and discourage the firm from building the processes and institutional elements that produce wise actions.

Thomas Gilbert identified what he called the Cult of Knowledge. In this instance, organizations become guilty of treating knowledge as if it is an end in and of itself. This is an important distinction. Businesses that typically claim to value brighter or more highly skilled personnel often treat this factor as if their final goal was more knowledgeable people. The stated goal is that being smart is the desired end state, when the reality is that the real target is probably unclear and unstated - but one that assumes that if people are smarter, having to rework things will go down or sales will go up. There are very few businesses (schools and some research firms are probably the exceptions) where it is realistic to argue that having smarter or more skilled employees is the desired result - nothing further is expected other than being knowledgeable or skilled.

Decoding the cult of knowledge

If you believe that hiring smarter people is critical for your business, what's the reason? You'd probably list considerations like more accurate decisions, more incisive analysis, fewer mistakes, or less costly mistakes. If any or all of these are right, then what's important for you to recognize is that knowledge (or credentials) isn't the end result you're seeking in your hiring. You're actually looking for better performance - with the assumption that someone with better credentials will get you there.

Again, the point here is not that investing in learning or knowledge is a bad thing. But unless this is a tactic aimed at addressing a specific organizational problem (such as an inability to execute a specific sales program because the salesforce lacks a particular skill), the generic process of getting smarter people is as likely to help the organization as having better work stations. Smarter or more skilled people may be a means to an end, but they are rarely a meaningful end for most organizations. And if "smarter and more skilled" is the means, it isn't generic but rather a focused initiative to deal with specific knowledge or skills gaps that prevent the execution of a particular program.

Myth 2: The right behavior is key

A bad manager confuses activity with performance. - Anonymous

A tremendous amount of literature and many management fads focus on how employees behave. The basic thesis is that if a company can get people who have particular skills or behave a certain way, then success is assured. This belief is incredibly widespread in most organizations.

If you doubt this last statement, then go look at the standard evaluation or appraisal form your employer uses. What you'll almost certainly see is a form that assesses someone's worth on the basis of how they behave. Showing teamwork, communicating well, working hard, strengths and weaknesses - all these are widespread appraisal categories for many firms. All evaluate behavior (or attributes and traits - not quite the same as someone's actions, but clearly an effort to judge how someone will behave). And if you feel that performance appraisals aren't a fair standard, then go look at a few rsums. Odds are that the ones you look at will describe behavior such as "manages projects, directs staff, writes budget analyses," and so on.

What's wrong with focusing on behavior? Behavior is certainly a critical aspect that contributes to individual and organizational results. The problem is that too many executives and managers treat employee behavior - much like knowledge - as if it is the desired end result. But very rarely is a specific behavior the desired result for an organization. Instead, the behavior usually matters because it helps produce a specific result or output by the employee. And this result or output - which is what's really important - tends to get lost when organizations focus first on behavior.

There are several reasons why this is true. For starters, employees can do most of the "right behavior" and still not accomplish what is important. And by focusing on behavior, managers fall victim to the assumption that there is only one right way to do a particular job. Instead, as work evolves to require more decision making and mental thought, there is also more variability in how the job can be done effectively. Even relatively unskilled blue-collar or service work is increasingly more demanding of employees and their ability to make decisions or judgments on the job. Thus, it is becoming harder to accurately and fairly dictate how an employee must do a particular task to produce a particular result.

Try not. Do or not do. There is no try. - Yoda, Jedi master

Finally, one of the basic traits of organizations that fail at execution is their focus on behavior. Execution involves getting things done or producing results. A focus on behavior deemphasizes the focus on results. Managers may "try" and employees may "work hard," but these are not the same things as accomplishing what they set out to do. Gilbert (1978) labeled this the "Cult of Behavior" because of its overemphasis on how people act or what they do rather than its focus on the results they produce or their accomplishments. Dwelling on behavior is an organizational culture component that tends to retard results by emphasizing activity rather than accomplishments. Now this is not to say that behavior is unimportant. The behavior that employees exhibit can (but not always) contribute to their success. But it is critical to remember that to focus primarily on how employees act is to lose sight of what they produce and how successfully they perform. It makes far more sense to focus on what matters - what employees are expected to produce, and whether or not they execute effectively - rather than their behavior.

Myth 3: The ends justify the means

Almost the antithesis of the Cult of Behavior is the management school that believes that good execution involves doing whatever it takes to get results. This is somewhat akin philosophically to the infamous Leo Durocher quotation "Nice guys finish last." The assumptions behind this approach basically center on the belief that executives and managers who are good at getting results will do whatever is necessary to get those results - even if it means being tough or perhaps crossing a few ethical boundaries. This is sometimes used to justify behavior excesses or problems (abuse of staff, ethical lapses, failures to perform in other areas) by arguing that to "get good sales" or "hit the numbers," the organization must tolerate poor performance in other areas that would otherwise be considered unacceptable.

The problem with the assumptions behind this approach is that, ironically, it's a very naive understanding of performance and getting results. The first point is that the distinction between ends and means is often a false once. In other words, it's often not possible to draw a line between the result and the method used to get the result because the means is the end. For some people, how they do the job (the means or the process) may be their critical accomplishment.

Here's an example to clarify this point. For a CFO, one overall expected accomplishment would be books that have been balanced using generally accepted accounting principles. Any sharp accountant can produce financial records that balance - the challenge for a good CFO is to do so but by using these professional principles. Thus, the means (using generally accepted accounting principles) is part of the end (or desired result) for this particular performer. This is not an atypical example. In many jobs, how someone does the work is the standard for the success of the person's performance. As a result, a manager or an organization that claims that the ends justify the means not only doesn't understand how to get results but probably has a poor record of achieving consistent and long-term objectives.

In addition, too many executives who claim that the ends justify the means end up cutting corners or managing in ways that produce short-term results at best and have long-term negative consequences. This is a great example of the "fixes that fail" issue mentioned in chapter 1 [what chapter] - where short-term fixes (expedient behavior, driving employees harder) may produce quick results but have negative long-term effects (employee burnout and turnover, distrust of management, failure to grow organizational capacity, and worse performance).

Ironically, although this approach to managing (the ends justify the means, or nice guys finish last) seems to imply that it's all about results, it's not. Organizations that manifest this approach are actually falling victim to Gilbert's Cult of Behavior because they are espousing a philosophy of how to treat people to get performance that implies that being rough, making threats, cutting corners, or being a hard person are elements of what succeeds. Perversely, however, this is just another case of emphasizing behavior, with the belief that if one behaves this way, then the desired results will automatically follow. Thus, it's not just an effort at expediency but also a belief about how to get people to produce and what gets them to function best. It's an overly simplistic approach to getting results that ignores the sophistication within both people and modern organizations.

This approach of cutting corners or behaving ruthlessly to get things done is also rarely effective beyond the short term - if that far. An organization that legitimizes such behavior produces abusive managers and burned-out employees, which of course are ultimately counterproductive to good performance. And even in the short term, this approach tends to produce a brutish implementation of initiatives that are often wasteful and imprecise, as things tend to be done in a hurry and whatever is expedient is considered justified. But because those who use this approach believe that the ends and means are distinct and different, they are ultimately incapable of producing consistently because they cannot deal with ends (or results) that have process elements.

Myth 4: Good people mean good results

The best evidence indicates that natural talent is overrated, especially for sustaining organizational performance. - Jeffrey Pfeffer and Robert Sutton, Management Consultants

Somewhat similar to Gilbert's Cult of Knowledge, there is a strong movement that argues that if an organization recruits or hires good people, then that organization will be successful. It therefore follows that the organizations that perform the best are the ones that do the best job of attracting talent - especially people talented at getting results. The assumption behind this approach is that a collection of talented individuals will usually perform collectively to that level and thus produce a successful organization. "The War for Talent" by Charles Fishman (Fast Company, December 2007) probably epitomizes that position as well as any source or advocate. According to one of the coauthors of the original McKinsey & Company study of this "war," Ed Michaels, "All that matters is talent. Talent wins."

Many of the flaws inherent in the Cult of Knowledge are applicable to this approach as well. There are many examples of organizations with numerous talented individuals who, despite their individual talents, appeared to be organizationally inept or performed poorly. Organizations can do a great job recruiting talent but fail to provide the processes and resources that would allow that talent to flourish. And talent does not ensure good performance (and in some ways may work against it). There are certainly many examples of organizations with less individual talent that out-execute their more talent-rich competition. Finally, good talent is at the mercy of a host of organizational issues such as culture, internal systems, and alignment (so people don't work at cross purposes). As the performance consultant Geary Rummler wisely observed, "Pit a good person against a bad process and the bad process will win nearly every time."

None of this means that organizations shouldn't seek to hire and retain talented people. But it's important to note that having talented people not only does not guarantee success; it isn't even the most important factor in getting good results. There are simply too many organizational variables for performer talent to be capable of driving performance.

Another version of this philosophy of organizational success is the belief that most work is done by star performers. This is a variation on the Pareto Principle - an argument that 80 percent of the work is produced by 20 percent of the people. As this particular approach to managing people goes, the key to organizational success is not only to attract and keep talented performers; it's critical to get the top of the heap - the very best talent. What is usually part of this belief is that talent tends to be innate, that some performers in their respective endeavor just have God-given talent that others can never hope to achieve.

Organizations that follow this approach tend to be based on a star system. The stars receive different compensation and treatment. There is a tendency to believe that because a star performer is a unique personality, management has to tolerate eccentricities or differences. Thus, star employees are given a longer leash than the rest of the staff, and actions that would be grounds for dismissal with others are more likely to be tolerated or forgiven when a star is involved.

Those managers who use this star system are guilty of all the assumptions pointed out above about the Cult of Knowledge. Putting good people together doesn't mean getting good results. The dynamics of a successful, well-performing organization are driven by much more than individual talent. But this star system also is uninformed about how outstanding performers develop. Research on a diverse range of professions and circumstances now shows that innate talent is mostly a myth. Instead, outstanding performers (including apparent child prodigies such as Mozart or great athletes such as Tiger Woods or Michael Jordan) are primarily a function of their practice habits (Anders Ericsson 2006).

More specifically, talent is shaped and developed through practice and work - in particular something called directed or deliberate practice, in which there are specific goals for each practice. Natural talent or aptitude appears to have little impact on ultimate success, and there appear to be very few individual limiting factors that preclude the possibility of becoming talented at something. As Ericsson notes, "The traditional assumption is that people come into a professional domain, have similar experiences, and the only thing that's different is their innate abilities."

There's little evidence to support this. With the exception of some sports, no characteristic of the brain or body constrains an individual from reaching an expert level." The important insight from Ericsson's research is that it's dated to believe that great performers are innately talented and that outstanding performance can't be grown or developed. It is just as wrong to operate on the belief that because talent is so rare, organizations need to tolerate behavioral excesses by their best performers (such as a creative researcher who abuses staff, an executive who's a screamer, or a leading sales rep who cuts ethical corners) because having talent means also having some excesses that must be tolerated as part of the talent package.

Myth 5: Incentives are key

A widely held belief by many boards and executives is that compensation is critical to performance. This had partially contributed to a wide range of "pay for performance" systems across diverse industries. It has been used as partial justification for better pay for executives, better compensation systems for managers or salary levels for performers. Yet increasingly, data seems to disprove this approach. The noted business consultant Jim Collins, author of Good to Great, concluded that "what our research showed us, is that how much you paid the managers and executives in the good to great companies, and how you paid them, whether it be stock options, bonuses, or any of that, had virtually no explanatory power as to whether the companies performed well or not." There can be many appropriate reasons for boosting pay or increasing incentives but generating better results doesn't seem to correlate strongly with these strategies.