Your People Are Not Equal

The Times recently did a great interview with Anne Mulcahy, chairwoman and chief executive of Xerox. Mulcahy started her career in sales, but then took an unconventional path to the corner office through the HR department, eventually running human resources for Xerox worldwide. She led the company from losing $300 million in 2002 to making over $1 billion by 2006.

The interview is worth reading in full, and a few comments stood out as particularly useful insights.

Mulcahy speaks to the idea of overvaluing “fairness” in organizations – and the price it can exact from culture and performance. Fairness has earned the right to be a cherished value, but it is often misinterpreted.  When it shows up as similar treatment for all people, regardless of their contribution, it undermines your ability to unleash a true meritocracy:

Not everybody is created equal, and it’s important for companies to identify those high potentials and treat them differently, accelerate their development and pay them more. That process is so incredibly important to developing first-class leadership in a company...

Companies get confused with egalitarian processes that they think are the fairest, and that is not what companies need. Companies need to be very selective about identifying talent and investing in those leaders of the future.

And yet most organizations don't have good systems for telling people where they truly stand. From Mulcahy’s perspective, this is the real definition of institutional fairness – giving people clear signals about their value.  It may also be at the root of Xerox's exceptional performance:

You discover quickly how little honest feedback people get in companies, and how important it is for people to have a sense of candid assessment. It became very much a mantra for me, to kind of influence a culture that assessed people accurately and really dealt with people fairly.

This type of system sends a more powerful signal, as well.  By paying close attention to the performance of individuals -- by showing your people that you care enough to judge them accurately -- you're  making it crystal clear that what they do matters in a very serious way. You're affirming the power of individuals to shape the company's future, which increases the chance that they will. As Mulcahy notes:

There’s nothing quite as powerful as people feeling they can have impact and make a difference.

Monday, March 23, 2009