July 3, 2022

Article 6.5


To paraphrase Tolstoy from Anna Karenina: successful firms (families) are all alike; every struggling firm is unsuccessful in its own way. A performance drain for all firms, however, is the collective fear amongst its employees; there are just more types and greater degrees of fear within struggling firms.


The costs of fear to a firm can be significant. Because of the fears of - failure, criticism, exploitation, political maneuvers, etc. - many employees don't offer good suggestions or take effective initiatives. They do their job on auto-pilot, then race home to use their initiative and energy with their hobbies and household budgets. Most would like to do the same at work.

Firms with enough resident fear are unable to adapt to changing times. W. Edwards Deming, the quality guru, believes that quality of products and services cannot improve in spite of best intentions if fear exists in the workplace. Assuming that about 20% of all firms have switched to democratic methods which have allowed them to: reduce fear; attract and keep better employees; and steadily improve quality and costs, then the fear-frozen competitors are in trouble.


Most managers contend that they don't manage by fear and that fear is not a problem at their firm, but we all have blind spots. The central fears that hobble many firms start with management's false assumptions. Many still believe the traditional myths that "good managers" should- understand what is going on; be in control; be experts in most matters; and that employees are prone to coasting and not completely trustworthy.

All of these assumptions are more false than true. Like economists trying to forecast the economy, no manager can begin to totally and correctly comprehend a business and its ecosystem; Murphy's law disproves our working theories everyday. It is impossible to control an increasing, independent-thinking, U.S. workforce who is listening less to bosses and more to customer and associate needs while they demand more democratic rights on the job. If managers want to pretend that they are in control, then they must determine where the team is headed and get to the front and hope that the team will indulge them.

As for expertise, whomever is doing a specific job will have unique expertise about it, and a team of people who must interact to make a process or a program work will always know collectively more than anyone person. Finally, too many high-performance, high-trust firms have been covered in the business media to prove that employees can be energetic and trustworthy. Treat people well and expect the best from them, and they respond accordingly.

The false assumptions above are aggravated by managers with low self-confidence. If an insecure manager is always trying to prove competence, control, and special intelligence, than they are apt to shoot messengers who tell them the painful truth about their unbrilliant decisions which they have made and forced upon others. Instead of listening to others, they demand to be listened to and congratulated for their cleverness. So, out of fear for job security and raises, everyone tells the boss what they want to hear (informational obeisance) which reinforces the manager's self-delusions of personal competence and of open communication within the company. The fairy tale of the "Emperor's Clothing" lives on.


Because employees must worry about their economic security, some will stay with the firm and comply with dysfunctional management behavior and policies built upon mistrust of them. The best work-ethic people will, today, physically leave for high-performance firms while the rest just psychologically leave.

Those who stay become half of an interdependent, parent-child relationship. Managers play the authoritarian parents who know best while the employees become passive dependents who, like teenagers, complain to each other about their parental treatment and company policies. But, loyal dependents do get benefits. They do not have to be responsible for thinking or showing initiative, and they used to be economically secure and provided for out of the firm's rising profits that use to come from an ever expanding economy.

This authoritarian, co-dependent game is now failing because the economy no longer lifts the profits of all the boats. Firms must make employees responsible for new levels of productivity, quality and adaptability to survive and prosper. But, management must initiate this transformation starting with themselves; or, they will eventually have to liquidate, sell out, or give way to new enlightened management.


Assuming we can drop mythical assumptions and have the self-confidence to admit past mistakes and ask for everyone's help in transforming the business, here are some key steps to take:

  1. Get everyone to switch from pleasing the boss to pleasing the customer. Explain exactly: what target customer(s) are to be pursued; what they have defined as perfect goods and services desired; and what measurable standards have to be achieved to be distinctively better than the competition in the customer's eyes. If we can meet these needs, then we will be happy and proud, and we can keep and grow our jobs as we retain good customers at a greater rate than the competition. The customer will pay our wages in the future, not a rising economy and parental management.
  2. Then ask the team how we can rethink our systems, jobs and ourselves to achieve what the customer wants. Participation yields whole-brained, whole-process solutions and team commitment. Point out that whomever will be affected by a decision should have input into that decision, and if not, protest.
  3. In case anyone does speak up and gets rebuked or intimidated in anyway- install a "due process, open-door" policy. This will allow front-line people to challenge a supervisor's unfair treatment with "do you want to go through the CEO's open door to get a judgement on both sides of this story?" Down the line, this will keep bullies and their fear creation at bay.
  4. Share all of the general financial numbers with all employees to let them know that they are on the team and trusted. Repetitious teaching will be necessary for all to conceptually understand that: wages are set by the labor market and not by profits; profits are necessary for a return on shareholders' investment and to substantially reinvest back into the firm as growth capital to support everyone's future growth expectations.
  5. If we don't share and explain the numbers, the average employee thinks that: profits are 4 to 10x greater than they are; all profits are excess funds paid out to shareholders and management; and they are being exploited and not trusted. Turning vicious cycles of growing mistrust between management and employees into virtuous cycles of expanding trust and cooperation is a key objective during this transformation.

    Once numbers have been revealed, then each employee should have daily access to how they, their department, etc. are doing on quantity, quality, timeliness, and customer satisfaction measures. Everyone must be responsible for experimenting against these "database scorecards" to improve productivity to secure a better future for everyone.

  6. Because experiments are necessary for progress and most experiments fail, explain to everyone what "good and not-so-good" mistakes are. Then share and role model good and bad ones to give them perspective and courage.
  7. Explain that receiving positive and negative feedback is part of progress. Because 80% or more of what a person does is good, conscientious and correct, we should give everyone 4 praising statements for every one short, sweet constructive criticism. Invest some time in teaching everyone the skill of designing and delivering both praisings and criticisms.

There are more techniques that would help to reduce fear and free hobby-energy for a high-performing, adaptive environment, but the six above are important and necessary. Traditional managers can raise many objections to these recommendations, but most are excuses for not wanting to admit past personal weaknesses and for wanting to stay in the past which isn't working. Confirmed passive dependent employees will object too, because they want to remain naive, unresponsible and cared for. They must change or go too.


Management must quickly get in touch with their own fears and insecurities and release them before they work on reducing the fears of the rest. There will be risk, failures and frustrations during the transition, but the risk of staying in a fear-frozen state are greater than trying something.

By shifting everyone's focus from pleasing the boss and playing defensive politics to pleasing the customer as an interdependent, have-a-say team, many benefits accrue. Energy and commitment soar; people work together for the customer instead of at cross-purposes; resources that were wasted on politics and policing are positively redirected; learning, community-building, dignity, pride, creativity, and instant conflict resolution all increase. With lots of ways to score the game, more questions and spontaneous experiments occur which spark learning, innovation, adaptation and excitement. Survival and prosperity become possible.

Merrifield Consulting Group, Inc., Article # 6.5