By Jarek Czechowicz
HEI is a human-resources training organisation and help-desk service. It offers a wide range of corporate services, from leadership training to customer service. It delivers its services on-site, off-site and over the internet.
HEI began in Australia in 1947 with Garth Lorren, a motivational speaker whose main goal was to bring people together by improving their communication skills. His work soon extended into other areas of personal development and, eventually, to corporate services.
Lorren’s early work took him across the United States as a public speaker. This attracted to him several highly motivated people who formed the core and, later, the board of HEI. Over the years, the focus of his contribution shifted to writing and administrative work.
The organisation that grew up around him took up the tasks related to public speaking, professional training, product development and service development. In 1966, Lorren died, leaving a collection of work that included two best-selling books and an extensive catalogue of unpublished works.
Lorren’s choice as successor and president of HEI was Brett Saunders. This was widely known before his death and was supported by HEI’s board, staff and shareholders. Saunders had known Lorren for 20 years and had an unparalleled knowledge of Lorren’s work and his vision for the organisation. He had also headed organisations larger than HEI.
With Saunders as president, one of the few changes in the organisation was the appointment of Otto Ingwe to the board of directors. This was no surprise to anyone, as Ingwe was well known for his leadership skills and dedicated participation in the company.
Ingwe joined HEI in 1963, three years before Lorren’s death. The two had a good rapport. Lorren had told Ingwe that he saw him making great contributions to the organisation’s development but was never specific about Ingwe’s future role. Such comments sat comfortably with Ingwe’s entrepreneurial spirit and fired his creative imagination.
In the early days, before offering a wide range of corporate services, HEI had developed numerous personal training and leadership programs. Before Lorren’s death, Ingwe had managed half of these programs. He generally discharged his managerial duties to everyone’s satisfaction. Ingwe often did more than was expected of him, but he was prone to disappointment when his additional efforts went unappreciated. This could have been attributed to his youthful enthusiasm.
Three years after his appointment as president of HEI, Saunders died unexpectedly. This was a devastating blow to HEI. The board was a tight-knit group and was not about to appoint anyone from outside to replace him. Although Lorren and Saunders had been generous with their knowledge, there was no one left at that level with their first-hand experience.
The choice came down to Sonia Martinez, one of Lorren’s earliest associates, or Gil Barker, who came to the organisation a couple of years after she did. Neither Barker nor Martinez had entertained any idea of taking the presidency. They both expected to offer support to Saunders for many years.
Martinez had strong organisational skills but was less experienced as a leader. She was a close aide to Lorren – on tour and in cataloguing and collating many of his works. Martinez was of the “command and control” management school, which Lorren himself had seemed to support. Barker was more of an academic. He had a great deal of influence in the presentation and dissemination of HEI products. Barker was also a supporter of command and control. As one of the earliest members of HEI, he had considerable influence with Martinez.
After some minor formalities, Martinez was appointed president of HEI.
Although Lorren and Saunders had supported a hierarchical style of management, they knew almost instinctively when to loosen up and had generally held the reigns lightly. Martinez was possibly less confident at the time. Losing Lorren and Saunders was not only professionally challenging but a personal tragedy. She instinctively took a tight grip on the reigns, feeling it necessary in the circumstances.
It was not long before Ingwe rebelled against the application of strict top-down control. He felt that many of his initiatives were being too easily dismissed. He also felt that his authority was being eroded. His entrepreneurial spirit and his complaints soon began to loom like a threat in an already difficult situation. Ingwe believed that it was necessary to start expanding the organisation, as Lorren had intended. However, Martinez and Barker thought it more important to consolidate the work that their former presidents had begun.
Before his death, Lorren had established offices in Europe and intended to set up offices in Asia. After long insistence from Ingwe, Martinez decided to send Ingwe to Asia to look into the possibility of establishing a presence there.
She knew it was something that Lorren wanted and she knew Ingwe was passionate about it. She also thought it might provide some relief from the growing tensions between them.
To everyone’s surprise, Ingwe, who had more determination than experience, managed to make contact with several influential political and business figures. As a result of those meetings, which seemed at the time like a miraculous string of coincidences, Ingwe was able to secure premises for HEI in a prime location at negligible cost.
This was much more than the board expected. Although they had not been explicit about outcomes, they really expected no more than a scouting trip. On hearing the news, the board responded by rejecting the offer of the Asian premises.
Ingwe found himself wondering whether he should leave Asia in complete humiliation or whether he should form his own organisation to pursue Lorren’s vision as he understood it. Those thoughts followed him home, where he knew he would have to face some difficult times.
Price of success
“We want your resignation,” Martinez said in a private meeting.
“I don’t want to resign,” Ingwe responded.
“I’ve done everything in my power to promote the work of this organisation. I believe in what we are offering and I have every intention of continuing this work in the spirit that Lorren and Saunders intended.”
“The board thinks you have been irresponsible, disobedient and self-serving,” Martinez said.
“Well, you’ll have to fire me, because I am not resigning”, Ingwe said. “In my opinion, you are not doing enough to develop the organisation. You are not encouraging the organisation to grow.”
Martinez said: “Our main goal is to see that the products and services we have in place are being implemented and disseminated as effectively as possible; and we think you are hindering that process. We don’t need people thinking up new ideas at the moment. What we really need are people to implement the organisational goals that the board has determined are needed at this time.”
After a number of such heated meetings, Ingwe was fired. There seemed to be differences between Ingwe and Barker and Martinez that extended beyond ideological and professional differences.
There was a mutual lack of trust. Ingwe soon established his own company, People First, largely based on what he saw as a gap in the market, coupled with the principles he had learnt while working with Garth Lorren.
A number of key managers resigned from HEI as a result of Ingwe’s departure. HEI had not expected this. Its operations in the US and Europe took an unexpected downturn and it entered into litigation with Ingwe.
Ingwe responded with public campaigns rebutting HEI and criticising its activities. He developed new products, based on Lorren’s theories, along similar lines to HEI’s products. The management structure he set up was less hierarchical, and People First soon had offices in the US, Asia and Europe.
HEI and People First now have a sizeable customer base. Both are working hard to bring people together through improved communication skills, despite their own wrangling. After years of acrimony, HEI is as determined as ever to put People First out of business.
HEI does not want Ingwe to capitalise in any way on his early association with Lorren or HEI. The disagreeable split has led to extensive legal wrangles, running into millions of dollars in costs. HEI now faces fierce competition from a dissenter who was once one of its most enthusiastic supporters.
How can organisations use differences in management styles to advantage? What techniques can help people ensure that personal differences do not adversely affect long-term organisational outcomes?
How should managers respond to new ideas when going through crucial changes? Is there any way that these two organisations could have moved forward as one? Did either party act unethically? What could they have done to avoid the nasty outcome?
Proposed Solution #1
Ron Webb is managing director of the Sinero Group of companies operating in the manufacturing and service industries. He places a high emphasis on clearly defined goals, open communication and measurement of all key processes. He encourages the establishment of close working relationships with customers and has a strong focus on developing innovative products. The Sinero Group was a winner of an Australian Design Award in 2001 and an Australian Design Mark in 2002. Ron is a Fellow of AIM.
HEI has lost without warning two strong and well-respected leaders within three years. Taking over the leadership of this organisation would be very difficult, even for an experienced leader. As the new leader, Martinez lacked confidence, which caused her to keep within her comfort zone and not take risks. Leaders need to push the boundaries of their comfort zones to enhance their skills and create challenges for their organisations.
Martinez should have studied the leadership team around her to gain an understanding of their skills, experience and character. She should have called a conference of her team to re-identify the goals of the organisation and develop plans to achieve them. This would include putting people into the roles that most suited them. If she insisted on maintaining a holding pattern, the team should have been informed of this. Ingwe, in particular, needed to have been advised of this.
Having identified the goals, Martinez should have set out the processes required and built in a system for measuring the benefits achieved. This avoids dealing only in perceptions and allows a leader to assess performance based on facts. Communication is the key to allowing various management styles to work together in achieving stated goals.
The first thing the board should have done was to recognise the differences in style and character of the management team. The board could have then looked at the key objectives and selected the most suitable people to lead a project team to achieve them. For example, if a key objective was to upgrade the data-collection process on customer information, then the obvious people to include on this team would be those who exhibited great attention to detail and knowledge of data systems. The board would also want to include people who were used to dealing with customers.
None of this happened at HEI. Ingwe’s skills and talent were not recognised, which reflected poorly on Martinez and Barker as the senior leaders.
All leaders should be fully briefed on the expected outcomes and the processes for achieving them. Agreement, or at least an appreciation, and commitment to achieving the outcomes, including the priorities, should be achieved at the commencement of the change process. Leaders should understand their roles and the results they should deliver.
If new ideas can assist with the change process, they should be recognised and adopted. However, if a new idea is going to create a distraction to achieving an objective in an organisation, that idea needs to be delayed or discarded. This move should be fully discussed with the idea generator so that the person understands the reason for delaying or dumping the decision.
The bitterness between HEI and People First has now gone too far. However, the synergies between these organisations would make a joint venture a highly profitable proposition. Ingwe, who may well have special leadership qualities, could provide growth into new regions and new markets while HEI personnel supplied customer support.
The only problem would be in dealing with the personalities in each organisation. First, you have Ingwe who, as evidenced by the fact that he was prepared to set up his own business, is keen to lead. The quality of his leadership may be questioned due to his limited experience, but he had a record in expanding and maintaining an important portion of HEI, then in successfully forming and running his own organisation.
Martinez would have to go – or be prepared to step down to a supporting role – as would Barker. How she handled the leadership role and Ingwe, in particular, was poor. She apparently failed to set clear objectives for her team, she failed to gain full support for her objectives, she failed to support or offer criticism of the ideas of others, and her lack of leadership skills led her to resort to strict controls to achieve her goals. She also allowed personalities to interfere with her team relationships. Leaders cannot deal with staff based on emotion only.
I would recommend that Barker also go, especially if Martinez was nominated and selected to play a supporting role in the new leadership team. On the surface he seemed to be supporting Martinez as leader, but I suspect him of fuelling the dissension between Martinez and Ingwe. In any case, he allowed himself to be involved in the personality clashes.
Martinez was unethical in allowing Ingwe to go to Asia just to get him out of the way, with no real intention of implementing his developments there. It is also unethical for a leader to allow personal feelings to influence decision-making.
Proposed Solution #2
Dr Cheryl Kerr is principal HR officer at Queensland University of Technology. She has worked at an executive management level or professional partnerships or more than 15 years and has taught business and sociology in universities in Canada, the US and Australia. Her research is in leadership training and organisational development. She is a Fellow of AIM.
The board’s approach to the situation regarding its leadership does not acknowledge something that Einstein is often quoted as saying: “No problem can be solved from the same consciousness that created it. We must learn to see the world anew.”
HEI is an organisation mired in the habit of solutions that once worked and that are now inappropriate. The board is struggling with fundamental issues about the company and its future. The board, as a management team, has also failed to share its thoughts, concerns, and strategies with the rest of management and staff.
HEI also is only planning for a world that it expects to remain predictable. Now, while deciding on leadership and policy during stressful changes, the board has only thought in terms of how to manage the culture to facilitate its strategic vision, which is highly conservative. Its reactive view of what the company is about suggests that calling on the historical culture of the founder is, simply put, a lever available for management to pull during crises.
In addition, the changes are affecting policy and implementation, often with vague or unclear rationales. The board, in sending Ingwe to Asia to get him out from underfoot, shows that it has scarcely considered what to do with him. As an employee once revered for his innovation, Ingwe is now left in a dilemma as the directors struggle to resolve competing expectations and conflicting values.
The board’s responses as the company goes through serious leadership change show no recognition that its corporate culture is constructed by the participants, as well as enacted by the leadership. Historically, HEI has a myth of an existing set of corporate values, attitudes and behaviors. These are presented as the “way we do things around here”.
Writ in stone or petrified?
The allegedly consistent personality of HEI, created by the founder, continued by the chosen successor, and now writ in stone in the minds and hearts of the board, has failed to recognise that organisational culture is at least partly constructed on a continuing basis by various individuals and groups in HEI. The departure of Ingwe and subsequent departure of other key managers suggests that the board does not understand the culture of its corporation as it is perceived outside the boardroom.
Structurally, HEI has been a centralised hub with generally tight controls on key strategic decisions. The founder developed knowledge at the centre and controlled the dissemination of that knowledge, albeit with a generous spirit. With the old knowledge creators gone, HEI will need multiple perspectives for the future. HEI and People First could have been one organisation if the board had sat down and re-examined its structure, especially by moving to one based on distributed and interdependent assets and organisational capabilities. A less closed and controlled structure would have better served HEI.
What HEI needs now is a management process that can resolve the diversity of interests and perspectives in HEI and integrate dispersed responsibilities through differentiation. If it were able to differentiate operating relationships and decision-making roles by function, across businesses, and among geographic units, the board could more easily modify its management processes and be able to change from product to product, country to country, and even from decision to decision.
Strategically, issues regarding competitive success eventually need to focus on advantage through innovation. This means new technologies and new ways of doing things. The board, in reactive mode and unsure of its identity, is not comfortable with acting on a new basis for competition or in finding better means for competing using the current products. In addition, the board is not interested in vigorously pursuing ideas, such as expansion into Asia, that have been around for a while.
The board’s choice of a new leader and its relationship with Ingwe show that it is not yet ready to invest in skill, knowledge and assets. It is tentative at best in identifying the radical changes at HEI as an opportunity. It is suffering from failure of nerve and of imagination. This leaves the company vulnerable to competition.
Failure to retain Ingwe as part of the team opened the door to the most obvious threat for competition to develop. Not recognising Ingwe’s entrepreneurial behavior, his passionate belief in the HEI product and his leadership talents is a deficiency that could be seen as evidence of bovine stupidity.
In addition, successful team theory, based on the need for multiple behaviors and talents, could have been better applied in the strategy Martinez used with Ingwe. Dr Meredith Belbin suggests that teams need several different temperaments to play off each other and balance one another. Belbin would define Ingwe as a “Plant” and a “Mover”. As such, Ingwe acts as a prime source of ideas and innovation for his team.
The Plant, however, needs to be careful to present proposals at appropriate moments to assist positive reception, which Ingwe did not do. In addition, a Plant needs to be wary of focusing on personal interests and taking umbrage at evaluation and rejection of his ideas – all of which are behaviors Ingwe displayed.
Martinez, on the other hand, is what Belbin calls a “Co-ordinator and a “Holder”. Co-ordinator behaviors that create problems are: rigidity and obstinacy posing as grit and determination; failure to recognise individual abilities leading to poor use of team resources; competing with team members, especially with a Plant; and refusing to admit superior ability in others. Martinez suffers from not understanding these aspects of her team personality, which formerly worked well when she worked for Lorren without being a leader.
Theory also suggests that consultation and participation enhance ownership and commitment to an organisation. There is no doubt that staff are as shocked by the sudden death of a leader as is the board. Although the board wants to consolidate, the staff want to be reassured that the company will continue.
To buy time and ensure that personal differences do not affect the organisation, Martinez needs to have and communicate a clear vision and create a continuing strong corporate culture that aligns everyone to her vision. Martinez did not provided Ingwe with a clear role and a clear direction, and, finally, treated him with no due process.
Ingwe moved as he did to save his professional reputation, his own interests and the value he saw in the product. If he did not sign a non-competition contract, his was an entirely ethical process. In fact, the legality of non-competition expectations is unclear, as no one can be deprived of their means of earning a living.