GMJ: You used the word "soul" a lot in Human Sigma, and you emphasize the essential humanity of business. Why is humanity important in business? And how can companies control the emotional reactions of employees and customers?

Asplund: A company can't control people's emotional reactions -- but let me step back for a moment. The reason a company must understand the essential humanity of its customers and employees is because they are people first and customers and employees second. They're living, breathing, real people. Before a business can manage them effectively, it must understand how customers and employees think and how they react; it must understand their psychology and their emotional infrastructure.

Another thing to consider is that most companies treat people as rational in their decision making when they really are not. The vast majority of human decisions aren't made strictly through rational thought processes; they're made in many other ways, including intuitively. Habits and simple rules that developed in cultures thousands of years ago can predispose us to behave in certain ways. More of our reasoning is based on emotions than you would suppose.

Fleming: The employee-customer encounter is fundamentally emotional, and it must be measured and managed locally. We've found tremendous variation in performance and profitability from store to store or from workgroup to workgroup. But you won't see the variation at the business unit level, much less at the individual level, if you examine the operation too broadly. And we've found that telling employees to behave in exactly the same way with customers can actually increase variation.

GMJ: How? Doesn't outlining the procedural steps, essentially telling irrational humans exactly what to do, lead to better outcomes and higher profits?

Fleming: No. If you standardize everything, then everything becomes standard.

GMJ: Well, that's good, right? Standard is better than variation, isn't it?

Fleming: No. It just creates mediocrity. There's a paradox here that is important to recognize. What we're suggesting is that companies that have concentrated on creating consistency of execution have failed to create consistency in the outcomes that execution is intended to produce. Most are trying to control the process through which employees are delivering service by mandating the steps.

We flip that by telling companies to clearly define the outcomes, which include establishing emotional connections with customers. Companies should allow employees a much greater range of flexibility -- within clearly defined boundaries -- to achieve those outcomes and to establish and maintain connections with customers.

GMJ: Because customers aren't engaged by processes but by people.

Fleming: Exactly.

GMJ: But this seems very risky. Most companies are loath to give frontline staff that much responsibility.

Asplund: It's actually less risky than you might think, because your employees are doing it their way anyway, and they're not channeling their efforts effectively. They're people, and they're behaving like people. Trying to control their behavior just won't work.

Fleming: Instead, what you should do is understand their behavior and what makes them tick. Then try to use that understanding to manage them more effectively. Ultimately, that may mean you should exert less control over the execution to achieve more control over the outcome.

GMJ: But ceding control chips away at the power structure, and that's going to be hard for some executives to swallow.

Fleming: I think we're talking more about the control structure than the power structure. Terminator Management is really about a need for control. This approach sacrifices real service quality in favor of the illusion of control.

What we're advocating is for executives to let go of some of that control. You know, it's like the old adage: It's hard to reach for the future when you're holding on to the past. Sometimes you have to open your hands and let go of old ideas in order to grasp new ones.

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