Discover this excellent article by Jon Katzenbach and Zia Khan, "Leading Outside the Lines: Integrating formal metrics and informal communication can lead to new levels of performance." The focus is on "the power of the informal as an undeniable, emotionally resonant force. Even the most rational managers recognize that the informal organization within a company can create effects that seem like magic, especially in situations of change or transformation."
Drawing heavily from the example of Stockpot, which has enjoyed a strong turnaround since 2007, this is a great exploration of how the right balance of formal and informal measures can lead to high performance.
Here are a few gems from the article:
"Organizations that sustain high performance over time have learned how to mobilize their informal organizations while maintaining and adding formal structures, each in sync with the other. And in general, people appreciate the value of “leading outside the lines”: of balancing formal and informal measures in the pursuit of higher performance. Sports fans know that great coaches pay just as much attention to the emotional aspects of the game as they do to the skills involved. In business, the informal organization is most successfully mobilized when there is also a sharp focus on performance. People want to know how their informal collaboration will lead to an improvement in results."
"If you are interested in creating that balance for your organization, one good place to start is with performance goals and metrics. This means figuring out how to use metrics, which are inherently quantitative in nature, to evaluate and improve the performance of an organization, which is often qualitative. No matter how important the informal organization may be, the company has to perform, and perform up to or beyond expectations. If you can get a feasible approach to metrics under way that does not constrain the organization through the misuse of formal controls, then you can not only accelerate higher performance, but provide employees with a much greater understanding of the results that matter and why they are important."
"Ed Carolan’s success at StockPot was the result of his unrelenting insistence on performance — both individual and group — and his ability to employ metrics in a way that was meaningful to his employees. His approach was neither “all hard” nor “all soft.” Instead, he took the best of both the formal and informal organizations and integrated them to energize people to fulfill a shared performance purpose. The StockPot turnaround could be seen as a story about metrics, but there were many things that Carolan’s team did informally to reinforce the numbers and help to make them meaningful:
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They aligned their decisions and actions with strategic intent. Employees understood how company values translated into their daily work.
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They set up dynamic processes that were constantly improved upon by suggestions from frontline employees as well as managers and leaders. The formal processes were supplemented and supported by informal networks.
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They promoted the constant circulation of new ideas, continually improving the methods of production.
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They supported communities and networks that had grown organically, cutting across more rigidly defined groups and structures.
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They fostered a sense of “institutional empathy” with customers and partners that reinforced coordination, collaboration, responsiveness, and discipline across the StockPot organization.
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They deliberately encouraged pride among employees — pride in the company, in one another, and in the facility’s day-to-day accomplishments."
