CEOs often rely on the latest fad to try to transform their companies -- then wonder why nothing changes

Maybe you've recently taken over a sleepy family business that hasn't changed much since Dad founded it 40 years ago.

Or maybe your company grew too quickly and now seems to be coasting. Maybe you're losing customers or key employees. Whatever the reason, you've decided to shake the business by the lapels. To start some program that will get people juiced up and ready to roll.

Name your poison. If you've been following the fads and fancies of the past decade, you might want to install Theory Z, develop a new corporate culture (good luck), or manage by wandering around. If your tastes run to more modest endeavors, hey, no problem. Start some quality circles or a pay-for-performance plan. Bring back an oldie but goodie, such as management by objectives (MBO). Read a book, hire a consultant, and you're on your way.

Just -- please! -- don't expect much to change.

Sure, you'll get results for a while. Better morale, maybe even better numbers. And if things are really desperate -- as they were, say, at Ford Motor Co. some years back -- you may have a chance to effect lasting change. But for most companies, trying to improve on performance that is uninspired but not yet life-threatening, what comes next is only too predictable. Slowly, imperceptibly, things slide back to where they were before. Enthusiasm falls off, old practices reappear; the new system is quietly shelved.

Why should this be? According to Michael E. McGill's American Business and the Quick Fix (Henry Holt, 1988), conventional explanations are only half the story.

McGill, a business professor at Southern Methodist University, understands that some "fixes" just peter out. The boss gets religion for a while, then later gets caught up in a new-product launch. Visit a company after a sexy new program has come and gone, suggests McGill, and ask, "What are those tapes?" or "Where did you get that hat?" The answer will likely be an embarrassed, "Oh, that's just left over from something we did for a while. It's not important now." Several years ago, when my wife worked in a hospital, management introduced with much fanfare a suggestion program: employees who proposed an idea that would save a "buck a day" got a coffee mug. The program vanished quickly, without visible trace. The mugs -- and the snickers -- lasted for a few more years.

Other fixes run into an immovable object, such as an uncooperative manager. Fortune a couple of years ago reported a researcher's finding that 75% of all participative-management programs in the early 1980s failed for just this reason. Every manager may jump on the quality-circle bandwagon. But they'll get off when they realize they're actually expected to change their behavior.

So far, we're on familiar ground. What sets McGill's analysis apart is a far deeper skepticism, not only about quick fixes but about the art of management itself.

At root, every would-be corporate transformation is an attempt to get employees to behave differently. To work harder, faster, smarter. To be more careful. To waste less and cooperate more. Why would employees want to do something like that? According to conventional thinking, because they've been inspired by visionary leaders or "motivated" by astute executives. The program will provide the message and the techniques. But it's the managers who must keep the workers working by the new precepts.

The only trouble is that most managers are not leaders and never will be. Nor are they very good at motivating employees.

Take leadership. It's a phenomenon that's been scrutinized and analyzed for centuries. Yet no one knows exactly what makes a good leader, and relatively few individuals seem to have whatever indescribable traits are required.

Managers who lack those natural leadership traits -- most of us -- must fall back on motivational techniques to get their employees fired up. That of course is what many of the programs are about. Quality circles are designed to stimulate workers' interest in the output of their work. Pay-for-performance plans are designed to link money and productivity. Managers, for the most part, buy the notion that motivating workers is part of their job description. "If you are ineffective in diagnosing causes of low motivation or in creating positive motivation," says a popular textbook quoted by McGill, "your presence will have little positive impact on the achievement of those around you."

But think about your own experience. Trying to motivate employees is one of the most frustrating jobs around. For one thing, people respond differently. The same job-enrichment program that challenges one worker will terrify another. Then too, people respond to the totality of a company's environment, not just what managers would like them to respond to. Your business may have company picnics, newsletters, and everything else that the experts say makes for a caring, familylike atmosphere. That atmosphere can be undermined by anything from favoritism in promotion to toilets that don't get fixed.

The rocky record of pay-for-performance plans, well chronicled by McGill, shows how tenuous the notion of motivation-by-management really is. Money, you might think, is the universal motivator, and certainly the idea of tying financial rewards to agreed-on goals has a certain elegant simplicity to it. But pay-for-performance is simple in concept only. White-collar performance is rarely measurable. Even where output can be counted, an overemphasis on numbers can lead to low-quality work, high stress levels, or pure counterproductive behavior.

"In a program to monitor telephone operators at a utility company," McGill reports, "whenever a caller had to wait over two minutes a loud buzzer would ring. The operators wanting to avoid the buzzer would answer calls with 'Hello, I'm sorry I can't help you!' -- then rush on to the next call."

Here too, companies can demotivate as much as they motivate. A pay-for-performance plan that gives higher-ups 40% bonuses and line employees 10% bonuses will -- surprise! -- be viewed cynically by the latter. A company that doesn't treat its workers equitably will be regarded cynically whatever it tries to do. "Reserved parking spaces and health club memberships are not invisible to employees," says McGill. "They may not seem like a big deal unless you are a worker who doesn't have them and the manager asking you to work harder and accomplish more does."

In rejecting the claims of the popular let's-transform-our-company programs, McGill isn't arguing that companies can't sometimes use a shake-up. The virtue of a new program is that it turns people on and challenges old habits. The danger is that managers expect the new atmosphere to last more than a few months. When it doesn't, they get disillusioned -- or begin looking around for another new program.

McGill's own approach to running a company is what he calls "managing without myths." It's not an earthshaking program; its appeal lies in a kind of quiet realism, suggesting that he understands the difficulty of improving an organization's performance over the long haul.

Step one is to forget about keeping your employees fired up. "Pep rallies, motivational programs, and sophisticated performance/productivity formulas give managers more and more levers to manipulate, but they result in less and less impact on employee behavior." Since motivation has to come from within, the manager's job is to see that employees understand what they are supposed to do and how they're supposed to do it, then make sure there's nothing standing in their way. If you think managers do that as a matter of course, you've never had an after-hours conversation with workers about their jobs. Managers, says McGill, "must tell less and listen more."

Step two is to redefine your strategic focus. As long as the task at hand is nothing less than transforming a company, people feel helpless; anything they might think of to do today seems insignificant. But if the ultimate goal is broken down into modest, realizable steps -- "small wins" -- then people are automatically empowered. "The psychology of small wins has always been at the core of successful personal-change programs," points out McGill, "whether it be weight loss, a personal savings program, exercise, or Alcoholics Anonymous's 'One Day at a Time.' " Yet business remains trapped in the search for panaceas. The small-wins approach keeps managers focused on results rather than on procedures or organizational charts. Too often, such innovations as quality circles become ends in themselves. The "win" can't be the establishment of functioning circles; it has to be an improvement in the quality of the product.

Tucked away in a concluding chapter, these suggestions are much too low key to build a fancy consulting program around. So McGill isn't likely to get as much attention as the fire-and-brimstone preachers of corporate change. That's unfortunate, because his book is one of the most clearheaded works on management to come down the pike in a long time.


Forty years of fads and fixes

What was the hot topic in managerial circles when people were wearing Nehru jackets? And have any of the business fads in the list below had more impact than the pop-culture fads? Match the fad with its decade. Answers below.

1. Zero-based budgets

2. Pac-Man

3. Theory Z

4. Theory Y

5. Davy Crockett


7. MBO

8. The Twist

9. Downsizing

10. Quantitative methods (PERT/CPM)

11. Rubik's Cube

12. Hula Hoops

13. Matrix management

14. Intrapreneuring/skunkworks

15. One-minute management

16. Tie-dyeing

17. Conglomeration

18. Corporate culture

19. Managerial grid

20. 3-D movies

21. Participative management

22. Trivial Pursuit

23. Portfolio management

24. Psychedelic designs


1950s: Theory Y, Davy Crockett, MBO, quantitative methods, Hula Hoops, 3-D movies. 1960s: the Twist, matrix management, tie-dyeing, conglomeration, managerial grid. 1970s: Zero-based budget, participative management, portfolio management, psychedelic designs. 1980s: Pac-Man, theory Z, MBWA, downsizing, Rubik's Cube, intrapreneuring/skunkworks, one-minute management, corporate culture, Trivial Pursuit

Source: Condensed from American Business and the Quick Fix