GMJ: Why are people so hard to fix?

Asplund: There are a couple of good reasons. If you buy a tractor or a furnace, you know what you're going to pay for it, how it'll depreciate, what the maintenance costs are likely to be, and roughly when it will quit working. If it pulls a load or melts steel at a given rate today, it'll perform the same or very close to it tomorrow.

But people don't work that way. They're unpredictable, both in ways that you might appreciate and ways that you don't. So because people -- employees and customers -- are much more unpredictable than machines, they can't be managed or directed in prescribed ways.

GMJ: You open the book by discussing "Terminator Management" as a failed way to cope with human unpredictability. Tell me what that is and why you think it's flawed.

Fleming: In the movies, the Terminator is programmed to accomplish a task, and he doesn't know how to do anything other than accomplish that task. He has no discretion, no learning capacity -- he just goes. What we call the "Terminator School of Management" deals with the difficulty of managing people by ignoring or squashing their humanity. We use it as a metaphor of how organizations squeeze human initiative and responsiveness from the service delivery system by scripting the range of behaviors that an employee is allowed to execute.

It's essentially a conventional way of thinking, the idea that "It would be great to get rid of all my employees; I'd be much happier if they were machines." But it's not effective in driving real organic growth and real change.

GMJ: How do you create real organic growth and change?

Fleming: When a company scripts employee behaviors, telling people exactly how to do the job rather than having them focus on the outcomes they should achieve if the job is done well, it creates automatons. It might reduce variability in how the job is done, but it also increases variability in the desired outcome. The result is service with no soul: bland, soulless, and undifferentiated.

The paradox here is that to achieve the desired outcome -- emotional engagement -- companies may actually need to increase the variability in the steps to create it. Executing bland, undifferentiated service will not create engaged customers, and it won't get you organic growth. Customers who buy more and shop more often create organic growth. Engaging them emotionally will create organic growth. Machines may execute tasks flawlessly, but they can't engage customers. And customers want more than transactions; they want relationships. Only people can build those.

GMJ: In your book, you said the employee-customer encounter is the new factory floor. What did you mean by that?

Fleming: If you contrast manufacturing environments with service economy environments, you need a new definition of value creation for a service economy. The definition that we landed on was that value is created when an employee and a customer come together and they interact.

That's different from manufacturing, where you create value by making a product that is ready to be sold. Creating value in a manufacturing context is fairly straightforward -- if you have a lot of broken products, you have problems; if you have no broken products, no poor-quality products, then your business can flourish.

In a service economy business, so much more is riding on the interactions that your employees have with your customers. You need a new set of tools to evaluate how well you're doing.

GMJ: Does HumanSigma apply to employees who don't interact directly with customers?

Asplund: Yes. Think of the guy on the loading dock; he may never talk to a customer. But if he drops a TV before he loads it on the truck or if he takes an extra three days to get it to the store, it affects customers regardless of whether he ever talks to them.

GMJ: You say in the book that companies should manage the employee and customer experience in tandem. But doesn't that require massive reorganization, all new integration of departments, different foci for leadership? How should you do it and why do you say it's worth doing?

Fleming: I'm not sure that bringing those two things together is all that radical a proposition. It doesn't happen very much today, but that doesn't mean it can't. HumanSigma has to be conceptualized and managed holistically. For example, one of the recommendations we make in the book is that if your company is not going to reorganize and create new human systems, the very least it can do is create a steering committee. That group should be responsible for HumanSigma initiatives and include representatives from all areas that are affected by them. Just getting your marketing and operations and human resources departments talking to one another and working together could create fundamental change.

Copyright Ó 2008 The Gallup Organization, Princeton, NJ.  All rights reserved.  Reprinted with permission.  Visit The Gallup Management Journal at http://gmj.gallup.com/

Article from The Gallup Management Journal