Built to Change: How to Achieve Sustained Organizational Effectiveness

355 Pages·2006·1.31 MB·English

by  Edward E. Lawler III

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BBuuiilltt ttoo CChhaannggee
How to Achieve Sustained
Organizational Effectiveness
Edward E. Lawler III
Christopher G. Worley
foreword by Jerry Porras
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ffirs.qxd 12/9/05 2:12 PM Page i
BBuuiilltt ttoo CChhaannggee
How to Achieve Sustained
Organizational Effectiveness
Edward E. Lawler III
Christopher G. Worley
foreword by Jerry Porras
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Copyright © 2006 by John Wiley & Sons, Inc. All rights reserved.
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Library of Congress Cataloging-in-Publication Data

Lawler, Edward E.
Built to change : how to achieve sustained organizational effectiveness / by
Edward E. Lawler III, Christopher G. Worley ; foreword by Jerry Porras.—1st ed.
p. cm.
Includes bibliographical references and index.
ISBN-13: 978-0-7879-8061-0 (cloth)
ISBN-10: 0-7879-8061-7 (cloth)
1. Organizational change. 2. Organizational effectiveness. I. Worley, Christopher
G. II. Title.
HD58.8.L379 2006
658.4'06—dc22 2005031021
Printed in the United States of America
FIRSTEDITION
HB Printing 10 9 8 7 6 5 4 3 2 1
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Contents
Foreword by Jerry Porras v
Preface xiii
Chapter 1 Why Build Organizations to Change 1
Chapter 2 A Dynamic View of 23
Organizational Effectiveness
Chapter 3 Strategizing 54
Chapter 4 Structuring for Effectiveness and Change 88
Chapter 5 Developing the Right Information, 118
Measurement, and Decision-Making
Pro cesses
Chapter 6 Acquiring the Right Talent 153
Chapter 7 Managing Human Capital 179
Chapter 8 Meeting the Leadership Challenge 213
Chapter 9 Designing Reward Systems 236
Chapter 10 Rewarding Performance and Change 256
Chapter 11 Creating a Built-to-Change Organization 283
iii
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IV | Contents
Notes 313
Acknowledgments 319
About the Authors 321
Index 323
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Foreword
During the past decade, scandals at Enron, Tyco, WorldCom,
and others brought into sharp relief difficulties in governing
organizations in a world fraught with unbounded greed and
abundant opportunity to satisfy it. Driven by technological
innovation, new industries sprouted with few rules or norms to
guide the behavior of their leaders. As we face the next decade,
organizations will become even more global, with flatter hier-
archies, faster information flows, and increased interdepend-
ence. New competitors from exploding economies such as
China and India will change the economic landscape, causing
some U.S. industries to fight for their lives while others face
limitless opportunity.
What migh t organizations do differently to respond more
quickly and effectively to this increasingly chaotic environment?
What might leaders do differently to build their organizations
for change?
I will explore two themes as the basis for dealing with these
questions. First, leaders must understand their organization’s
values, and work to shape them in such a way that those values
guide and sustain needed changes rather than undermine them.
Second, leaders must architect their organizations to embrace
V
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VI | Foreword
rather than resist change. In Built to Last, Jim Collins and I
found that the enduringly great (visionary) companies we stud-
ied held a small set—between three and five—of values so fun-
damental and long-lasting that they could be thought of as core.
These core values helped to guide behavior in the company
over the very long term and kept it from engaging in practices
detrimental to its essence. As such, core values can play a pos-
itive role in change by defining what’s “in play” and what’s not,
that is, change everything in the organization except the core
values. Ed Lawler and Chris Worley agree, and use the concept
of identity to recognize the importance of stability.
The notion of values is a tricky one, especially when we
think about the ways values become imbedded in an organiza-
tion or, more important, changed. Increasingly, leaders attempt
to define new values for their organizations and then go about
“selling” them to employees, only to find out that the selling
doesn’t always work as well as expected. Often, the breakdown
occurs when leaders attempt to convince their employees to
accept and internalize the new values as core. I don’t think any-
one can convince adults to adopt a core value not previously
held. Core values exist deep in a person’s belief system and gen-
erally develop a s a result of early childhood experiences and
learning. Once embraced, changing them just doesn’t happen.
Here, too, Lawler and Worley agree, and build their change-
able organization approach around the idea of stability.
So, what are leaders to do? Well, first and most obvious,
leaders must seek to discover those values truly core for the
organization. Unfortunately, in my experience, few organiza-
tions succeed in this search because the vast majority of them
don’t have core values. For a value to be core it must pass three
tests: it should (1) have existed in the organization since its ear-
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Foreword | VII
liest days; (2) still be around 100 years from now; and (3) have
evidence of events in which the organization lived the value and
paid some cost or suffered in some meaningful way for doing so.
Most organizational values come and go as CEOs change or
strategies change, or fall by the wayside when a significant ben-
efit can be gained by ignoring them. Bottom line, all organiza-
tions have values, but few have any that meet the corestandard.
So, if no core values exist for the organization, an alterna-
tive for a leader is to identify a set of values that the organiza-
tion aspires to make core. (Important to note: when
communicated, these values must be clearly labeled as aspira-
tional. Failing to refer to them as such risks cynical reactions
from organization members who may well possess numerous
examples of their leaders not living them.) As aspirational,
these values provide a future to strive for, and hopefully, in ten
to twenty years, the organization can provide concrete evi-
dence of actually having lived them. People won’t follow lead-
ers who espouse core values but don’t live them. More likely,
they will follow leaders who aspire to live a new set of values
they wish to make core and who want to be held accountable
when they don’t.
Once identif ied, core or aspirational core values must guide
hiring and firing decisions (“If you fit, join us!” “If you don’t fit,
leave.”), reward and promotion decisions, and generally the
architecture of the organization. I’ll speak more about this point
later, but for now, let’s turn to a second recommendation on
how leaders can use values to enhance the organization’s abil-
ity to effectively change.
Leaders must understand the difference between core val-
ues and all the other values floating around in an organization.
Not all organizational values are core or aspirationally core, and