Challenging employees to excel: Building a risk-taking culture
According to a recent survey, 41 percent of employees report they have never been asked to take risks by their manager. (1) When the goal is to help your business succeed, risk is often perceived as something to avoid. It is something to be managed, hedged and mitigated. But more and more companies are taking a fresh look at risk -- and discovering benefits -- because not all risk is bad. Indeed, taking risks can be the key to business success.
The bright side of risk"Sometimes, taking risk is appropriate," says Jeff Fix, Ceridian senior vice president of Human Resources. "In fact, it's the only way to succeed in today's challenging marketplace. When employees are empowered to take intelligent risks -- when bright, talented people aren't afraid to fail -- the results can be tangible: company value increases, driving growth and creating the kind of competitive advantage that allows the organization to reach new heights." Companies benefit when employees are empowered to take risks
"Employers aren't after the risks," Fix says. "They're after the results. Companies encourage their employees to take risks because those who do will generate the desired results. This is a different kind of cultural perspective that creates an unusually high-performance environment. When an organization is results focused, it requires a singular dedication to communication, flexibility, honesty and integrity." Fix believes that success depends upon unerring customer focus. "You ask the customer what they want," he says, "and then you deliver it. Nothing moves the needle greater or faster than dedicated customer focus, because it combines results with employee empowerment. The Nordstrom department store chain is an example. Their customer service is legendary, because every employee is explicitly granted the power to take risks. Nordstrom provides very clear direction. They say, 'Rule #1: Use your good judgment in all situations. There will be no additional rules.' (2) To be truly successful, employers must embrace a demonstrated tolerance for risk taking, then take action to recognize the results. It is important to celebrate each success." Success in a risk-taking culture
"For years," Fix says, "companies rewarded employees for their ability to replicate what had been successful in the past. Employees learned to adhere to the rules, to stay away from anything unproven or unknown. So if a company has spent years rewarding risk avoidance and punishing failure, its employees are not going to feel comfortable taking a risk. That's why it's crucial to empower every employee to seek new solutions to customers' problems. Look for people who want to originate bold new services and solutions, people who are willing to change the system for the better. Then you are opening the door to processes and behaviors that really deliver for your customers." Empowerment is personal
"Empowerment," Fix says, "is determining our behavior using our individual values and vision of what we want to become. Empowerment is self-controlled. An employee might think, 'If only my boss would give me permission to take action,' but the boss may think, 'I wonder why you don't act. You're already empowered, because that's what I hired you to do.'" Empowerment is individual and personal. Do you ask for permission or ask for forgiveness? The answer to that question determines your ability to take risk. As you become empowered, you make a shift from being passive to controlling what you can. Fix adds, "risk takers dream up and execute bold new ideas. After all, people can't gain experience from experiences they aren't having." Tools for cultural change
"Creation of a risk-taking culture starts at the top," Fix says. "If you want to create lasting change, you better be crystal clear about exactly which actions, behaviors and corporate values your organization has been rewarding. Then find ways to foster and reward the new behaviors as you go forward. Align expectations -- talk about things clearly and communicate constantly. Old habits are hard to break, but once broken, the entire company is stronger, more flexible and more prepared to meet the future. "When you're serious about changing the work environment so that innovative behavior is rewarded, you will help managers change their thinking. They must understand that it's no longer acceptable to assign blame when a mistake is made; instead, make sure everyone learns from the mistake. Don't place blame, and refuse to tolerate others who do so." Fix doesn't feel that monetary rewards are the only way to draw attention to this kind of cultural change. You can't buy discretionary effort. "Recognition is the best reward," he says. "Publicize examples of innovation and risk taking. Make sure everyone knows when a fresh approach has been taken -- even if it isn't entirely successful. This is about efforts that produce results, so recognize those who take bold and innovative action. Celebrate people who care about identifying customer problems that aren't being solved. Recognition is a powerful way to ensure true cultural change at every level of the organization." Examples of risk taking
What does it mean for an employee to take an appropriate risk in their job? Fix encourages employers to consider this question from a high-potential perspective. "Look for opportunities that will produce meaningful results and sustainable change," he says. "Give employees a stretch assignment, something that challenges them and expands their horizons. Provide them with difficult problems to solve. "Consider forming a small team that focuses on a single problem. That way, you can take the results and put a pilot program into place to see if the new idea works. If it doesn't, the team can make adjustments. If it does work, expand the program to get the most benefit. And make sure to celebrate each success along the way." People will fail, so it is important to demonstrate tolerance. Fix acknowledges, "Mistakes happen when people get creative, when they experiment. The key is learning from the mistakes and moving forward, not condemning or blaming when the effort fails. So encourage results. Encourage success." Five years ago, appliance makers Maytag and Whirlpool faced a recessionary environment, intense global competition and products that consumers could not tell apart. Maytag elected to cut costs. Whirlpool took a different approach and launched an all-out, enterprise-wide initiative to develop a core competency in innovation. Without a model to follow, they experimented with how to reward risk takers and foster a culture where ideas were welcomed, supported and funded. Now the results are in. Maytag, a once-great American brand, cost cut its way to near oblivion. A reenergized Whirlpool grew by 36 percent into a global appliance powerhouse. Whirlpool now is in the final stages of buying Maytag for a fraction of its former worth. (3) Apple Computer created an alternative path to success with iTunes and the iPod. This new technology upended the traditional music retailing business. First, Apple chose to target businesses outside of its own traditional domain, thus reducing the cost to their existing business. Apple was primarily a computer hardware and software company when it entered the music business. Second, Apple created an independent iTunes team to make decisions on the music business that would not be contaminated by the history, culture or business concerns of the computer business. In effect, it created a small, independent company internally, with its own innovative zeal and energy, while preserving the resources of a much larger enterprise. (4) Is there such a thing as too much risk?
Some wonder where to draw the line on risk taking. "That depends on organizational culture, the role of the individual and the processes that are in place," Fix says. "If you're operating a nuclear plant, you're going to want to stay with proven procedures. But for most companies, the appropriateness of risk involves making it clear to everyone in the organization what won't be tolerated: concealing mistakes, failing to learn actively from mistakes and blaming others when things go wrong. Businesses that encourage risk taking create a culture that's destined to be more successful than those that don't, because risk taking encourages innovation. And innovation is a distinct competitive advantage." Sources:
- BlessingWhite 2007, http://www.blessingwhite.com/content/articles/ASTD_AUG_2007
_TD_Risk_Taking.pdf. - Lessons of the Nordstrom Way, eCustomerServiceWorld.com.
- So How Do We Reward Risk-Taking?, Robert Tucker, http://thinksmart.typepad.com/
headsup_on_organizational/2006/04/rewarding_risk_.html. - Strategic Risk Taking: A Framework for Risk Management, Aswath Damodaran.
