Editor's Note: In today's Classic, Margaret O'Hanlon uses the saga of Toyota's sticking gas pedal recall (circa 2009-2011), which became a case study for (some would say how not to do) crisis management, to examine the intersection of crisis response and performance.
I was linking my way through some of the recent posting on Harvard Business Review’s Blog Network, wondering if there were any references there that could help me tell my story today. I want to talk about Toyota’s woes and what they can teach us about our job in compensation.
I was pleased when I ran into the sentence, “What is it about a crisis that causes people and organizations to step up to new levels of performance?” The sentence comes from a piece written by Ron Ashkenas called, “Using Crisis Response Factors in the Absence of a Crisis.” I think it comprises the essence of pay for performance, so it deserves close attention.
Many of our companies have been hit with serious crises in the last two years that have required people to step up to new levels of performance. Have we tried to distill what we have learned so we can use it to help us in the future? Let’s see if Ron's ideas fit your experience.
Three factors that bring out the best in all of us
Ron tells us that there are three factors that are always present in human response to crises:
1. “Urgency is the realization that time matters – there are clear goals and even clearer consequences if they are not achieved quickly.”
2. “Empathy is the identification that people feel with the crisis, the sense that we are connected . . .”
3. “Innovation, of course is the freedom to respond in ways that are out of the ordinary, that don’t get caught up in red tape, approvals, and complex decision making.”
What would our companies be like if our employees could deal with everyday challenges not as a crisis, of course, but as a way to apply these three factors? As we all know -- intuitively and through recent experience -- they bring out the best in all of us.
What can we learn from Toyota?
Think about their performance on each of these three factors. Notice how confused and ineffective actions can be if they are executed without sober consideration of the human reaction or the larger consequences. Notice how quickly misunderstanding grow and trust erode if you aren’t willing to jump in and deal with the reality of a difficult situation -- even if you start from a position of "unassailable" strength. Years of carefully honed customer relations can be overrun via Twitter and then the Media in just a few hours.
I hope you're not thinking NIMBY at this point (Not In My Backyard!)
Crises happen inside companies, too, and the same kind of disastrous consequences would emerge. What would have happened if you had handled a bad news announcement in the way that Toyota has? Let’s say, a year when there will be layoffs and no bonuses.
1. Would your company communicate as if time mattered to the outcomes of the crisis? Would they face up to the consequences if the communication strategy didn't meet its goals? Would they circle back quickly and fix the problems?
2. Would your managers tell you that you had treated them and their employees in a balanced way? Would they feel like you were trying to connect with their experiences?
3. Would your company immediately adapt your processes to make things simpler, more open to new approaches?
If you have faced real communication crises like these in the last two years, do your employees say that your company has done its best in each of the three factors? As I mentioned, for me at least, urgency, empathy and innovation represent the essence of pay for performance -- and the essence of the design and communication roles for executives, managers, employees and human resources. What do you think?
Margaret O'Hanlon, CCP brings deep expertise to discussions on employee pay, performance management, career development and communications at the Café. Her firm, re:Think Consulting, provides market pay information and designs base salary structures, incentive plans, career paths and their implementation plans. Earlier, she was a Principal at Willis Towers Watson. Margaret is a Board member of the Bay Area Compensation Association (BACA). She coauthored the popular eBook, Everything You Do (in Compensation) Is Communications, a toolkit that all practitioners can find at https://gumroad.com/l/everythingiscommunication.