MAXIMUM PERFORMANCE This book is dedicated to the visionary pioneers who created the world we now live in; and to those who are creating the world we will inhabit in the future. MAXIMUM PERFORMANCE A practical guide to leading and managing people at work Nick Forster Professor at The Graduate School of Management, University of Western Australia Edward Elgar Cheltenham, UK • Northampton, MA, USA © Nick Forster 2005 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher. Published by Edward Elgar Publishing Limited Glensanda House Montpellier Parade Cheltenham Glos GL50 1UA UK Edward Elgar Publishing, Inc. 136 West Street Suite 202 Northampton Massachusetts 01060 USA A catalogue record for this book is available from the British Library ISBN 1 84542 000 4 (cased) Typeset by Cambrian Typesetters, Frimley, Surrey Printed and bound in Great Britain by MPG Books Ltd, Bodmin, Cornwall Acclaim for Maximum Performance ‘In my experience a major shortcoming of most “how to” books on leadership and management is that they purport to offer “Silver Bullets” – magical solu- tions that, once revealed, will enrich and transform the reader and his or her organisation. Regrettably, business life is not that simple. Rather, it is charac- terised by uncertainty and lack of precedent and complicated by the different wants, needs and motivations of people. Nick Forster’s practical book, grounded in many years of leadership and management development and MBA education, recognises this complexity and the folly of “one-size-fits-all” solutions. It is a valuable source book, packed full of useful ideas for current and aspiring business leaders.’ – Mr Michael Chaney, Australian Businessman of the Year 2003 and former CEO of Wesfarmers – the Australian Financial Review’s Company of the Year 2002. Mr Chaney becomes Chairman of the National Australia Bank in June 2005. ‘Maximum Performance delivers what it promises. It is practical, useful and well grounded in up-to-date research findings from across the globe. Nick Forster writes well, with a lively voice and has peppered the text with rich examples and case studies. The diagnostic skill exercises and inventories offered throughout are especially helpful. The book meets the needs of both managers and students alike, across a wide span of experiences. Well worth the invest- ment.’ – Professor Barry Posner, Dean of the Business Faculty at Santa Clara University, California and co-author, with James Kouzes, of The Leadership Challenge ‘Maximum Performance is an essential read for all business owners, managers, consultants and key decision makers. It is an outstanding and comprehensive insight into the broad range of managerial and leadership issues which confront business people today. It is practical and littered with excellent case study examples and illustrations. Its unique style is easy to read, thought provoking and demystifies concepts that are easily misunderstood outside an MBA course. Grasp and digest this book quickly because it’s the smart thing to do.’ – Barry Smith, Managing Director, the General Management Consulting Group ‘Nick’s book is an energetic and down-to-earth exploration of the many dimen- sions of this enigmatic thing we call leadership. It is a distillation of much knowledge, experience and insightful observation. There is refreshing and satisfying clarity of discussion; with comment on many management theories, explanations of evidence and research and the consequences of their applica- tions in organisations. The pages are brimming with examples, keeping the messages real, practical and always interesting. Maximum Performance is thought provoking, and the reader is constantly challenged to assess his or her own knowledge, experience, attributes, perceptions and behaviour. It is a wonderful resource for those beginning their endeavours, introducing them to the complexities of leading people, and a delightful summary of instantly recognisable experience to those who are well on the journey. It is hugely valu- able to all, whether for new knowledge or a welcome refresher. And, there is just a touch of irreverence, adding an enjoyable balance to a serious subject.’ – Dr Penny Flett, CEO of the Brightwater Care Group and Telstra Australian Business Woman of the Year, 1998 v vi MAXIMUM PERFORMANCE ‘We all seem to know when we are receiving good or bad leadership, yet for many of us being a good leader seems to be so elusive. Why is this so? The fact that we are human and sometimes trapped by our wants, needs and motiva- tions inevitably gets in the way, and leadership within Local Government is fraught with complex problems and competing forces both internally and externally. Maximum Performance will be an extremely useful aid for all who are looking for a practical, sensible and thought provoking insight into manage- ment and leadership issues. Nick provides an excellent insight into the myster- ies of management and leadership with this very practical and useful book that I am sure will be a great resource for current and emerging leaders.’ – Ricky Burgess, CEO of the Western Australian Local Government Association and the Australian Institute of Management Business Woman of the Year, 1997 ‘As consultants working with small to medium sized businesses, we are always searching for practical resources to recommend to our clients that can help them put their activities into a broader perspective, and help raise their understanding and expectations of what their businesses and employees are capable of. Maximum Performance is such a resource. Not only does it demon- strate the true value of good leadership, people management skills and the role of organizational culture in developing, motivating and retaining good staff, it also juxtaposes these with broader issues such as managing change, creativity and innovation, managing employee knowledge and intellectual capital, and the impact that emerging technologies will have on business and organizations in the near future.’ – Philip Watson, Director and Principal Consultant, the General Management Consulting Group Contents List of figures viii List of tables ix The author x Acknowledgments xi Preface xiii 1 The foundations of leadership and people management 1 2 Personal performance and stress management 57 3 Communication at work 92 4 Employee motivation, empowerment and performance 160 5 Leading and managing teams 201 6 Doing it differently? The emergence of women leaders 224 7 Managing power, politics and conflict 276 8 Leading organizational and cultural change 298 9 Innovation and organizational learning 347 10 Managing employee knowledge and intellectual capital 396 11 Leadership and people management in high-tech, networked and virtual organizations 429 12 Leadership and business ethics 487 Conclusion: leading and managing people at work 536 Appendix 1 The business case for emotional intelligence 548 Appendix 2 The benefits of health and wellness programmes 551 Bibliography 556 Index 576 vii Figures 1.1 Would you invest in this company? 38 3.1 The spider 131 4.1 Content theories of motivation compared 166 6.1 Male and female brains 237 6.2 Masculinity and femininity 248 8.1 Kolb’s learning cycle 316 9.1 Picture puzzles 356 11.1 The exponential growth of computing, 1900–1998 434 11.2 The exponential growth of computing, 1900–2100 434 viii Tables 1.1 The origins of our ideas and beliefs about leadership 21 1.2 Desired leadership qualities compared 45 3.1 Communicating with the whole mind 133 4.1 The satisfaction–dissatisfaction process 171 4.2 Semco: tore up the rulebook in the 1980s 196 5.1 Team rules 220 6.1 Confidence in women 244 7.1 The two faces of power and politics 280 9.1 Linear and lateral thinking 352 10.1 Knowledge assets 408 11.1 Out with the old and in with the new 454 12.1 Perceptions of occupations’ ethical standards 507 12.2 Top five performing ethical investment trusts in Australia, 2001–2 508 12.3 Transparency International corruption perceptions index, 2003 523 ix The author Professor Nick Forster is based at the Graduate School of Management (GSM), The University of Western Australia. He has been involved in postgraduate management education since 1991 in the UK, Australia and Singapore. At the GSM, he has taught on the Organizational Behaviour, Management of Organizations, and Social, Ethical and Environmental Issues in Organizations units on the MBA programme, and the Managing Strategic Change unit on the Executive MBA. He has also received ten MBA-nominated commendations and awards for teaching, and was chosen by his peers as a nominee for the 2000 Australian Universities’ National Teaching Awards ceremony in Canberra, attended by the Australian Prime Minister John Howard. He has published four books, written more than 70 articles in a variety of international academic and professional journals, and has produced several research and consulting reports for organizations in Australia and the UK. He has been a regular contributor to WA Business News, and was also a guest management columnist for Corporate Relocation News, the biggest selling corporate relocation magazine in the USA, from 2000 to 2002. Outside the GSM, Nick has been involved with the Australian Institute of Management (AIM) Leadership Centre in the delivery of leadership and management training workshops to several of WA’s largest companies and public sector organizations, including the Office of the Premier and Cabinet and the City of Perth Executive. From October 2003 to March 2004, he was a Principal Facilitator for WesTrac and the Water Corporation in AIM’s Action Learning Programs, run in conjunction with the Harvard Business School. He has also collaborated in numerous research and consultancy projects with UK and Australian companies, and was on the national judging panel for the 2003 and 2004 Australian Human Resource Management Awards (for further information, see www.wamcg.com.au).