Manage Knowledge Workers

Copyright © Karl-Erik Sveiby 1997. Extract from The New Organisational Wealth - Managing and Measuring Knowledge-Based Assets, Berrett-Koehler 1997.

INDEX

Meet The Four Power Players	Develop Professionals
The Professionals - The Knowledge Workers	The Creative Career
Focus on the Job	When Experts Plateau
A Pride in their Profession	The Professional´s Three Life Cycles
A Dislike of Routine	Tandem Leadership
The Expert - a Law unto Himself	Security as a Managerial Tool
The Managers	Vertical Division of Labor
The Support Staff	Skewed Age Distribution is Dangerous
The Leader	Alternative Career Patterns
Recruit on a Competitive Personnel Market	Deloitte-Touche: Solving the Status Problem
Manage Professionals	Intangible Rewards for Motivation
The Moment of Tension	Decrease the Dependence on Experts
	Summary

Meet The Four Power Players

Companies consisting largely of skilled professionals who use their creativity to solve complex problems for their customers, operate in a special way that reflects the forces which influence and control such organizations, and which the management must be learn  to deal with.

These same forces act in all organizations that employ highly skilled  people, and their strength increases, the closer one gets to the archetype of the knowledge organization , the consultant firm. Such firms function in similar ways regardless of whether they´re in the public or private sector.

Many putative “leaders ” fondly imagine they are running their organizations when all they are doing is allowing them to run themselves. They do not understand the power  play at work and are measuring the wrong things.

As mentioned in the chapter Two Traditions: Professional and organizational , the power  play generally takes the form of representatives for two knowledge traditions competing with each other.

 

Figure 12 . The four personnel categories in knowledge organizations .

This chapter discusses the four "players" in the organizational power games; the professional, the manager , the support staff, and the leader. Let us look at the agendas of each of them in turn, beginning with the star player.

The Professionals - the Knowledge Workers

The professionals are the specialists, the authorities, or whatever they are called. If you happen to meet the elite professionals, the experts, you can´t miss them. . . They are the knowledge workers - in extreme.

. . .One strolls in past the reception desk in the morning without giving the receptionist a glance, because he does not remember her name. He walks, not to his own office, but into that of the top professional .

A lively debate ensues. There is much laughter, a quick foray to the kitchen for cups of coffee, the door closes, more loud voices, more volleys of laughter, someone rushes out, grabs a document, and rushes back. Lots of activity on the other side of the door.

The receptionist gazes sadly at the closed door and sighs. "A normal morning" she thinks. "Everyone having fun, except me."

The expert  and his mentor emerge, sharing a broad grin. They have just solved an important problem for a customer. It was that problem which had been occupying the professional ´s mind, when he walked through the door that morning. He had been thinking about it all night; didn´t get a wink of sleep. The answer had come to him in the morning. That was why he ignored the receptionist. He was totally preoccupied with the problem and his elegant solution. Nothing else mattered, except what his colleague thought of the idea, and whether or not he held the last pieces needed to complete the puzzle.

Focus on the Job

You concentrate so hard when you get out on the rink, it´s as if you had a wall around you. You don´t think about the spectators, just about what you´ve got to do. (Thomas Gradin, ice-hockey player in NHL)

 Experts focus on their jobs and their professions . Everything else is subordinated to the task at hand; finding a solution to the problem. On another day, our ill-mannered expert  might not have come to the office at all, because the answer to his problem would have lain outside the company, with a friend in another firm, in a library, or maybe at home, in a couple of hours” contemplation, or interfacing with his PC.

Naturally he forgets to call the office to say he will not be coming in. So the receptionist who takes his calls, does not know what to say. And our expert  receives lots of calls, for he is widely respected outside the firm. When customers call, it is him they want to talk to, not the CEO. He is in demand as a speaker at symposia, and has contacts with professional  colleagues all over the world.

In short, our stereotype expert  is a leading light in his profession  and a highly intelligent, and creative  person. But he is hopeless at planning his time, lacks even a smidgen of administrative ability , has no sense of time and place, is rude to those he regards as ignorant, and sometimes his supreme self-assurance comes over as sheer arrogance, like for example when the head of the accounting department asks him about the holiday rota, or his chargeable time for the past week.

"It isn´t the time the job takes that matters" he snarls, "it is the result!" He is blithely unaware of the frustration he causes in those around him, when he ignores matters crucial to proper functioning of the organization.

A Pride in their Profession

Self-assured, skilled  professionals can be found in all walks of life; lawyers, police officers, physicians , art directors, architects, strategy consultants, computer programmers, cost accountants , electronic engineers . And they´re equally common in craft trades, many of whose practitioners enjoy the status of respected experts on plumbing, painting, carpentry, etc..

They tend to organize themselves in professional  associations, like the Law Society, the Society of Chartered Accountants, etc., and to see themselves as upholders of the law, or guardians of freedom, or the language , with a duty to protect the profession  from attack, and to maintain standards of professional ethics.

And professions  subdivide themselves. The medical profession , for example, includes hundreds of different specialists. This often results in heated territorial disputes, and battles to secure resources for their own specialist areas. One of the least attractive habits of these professional  bodies is their constant effort to restrict recruitment  to their own fields, in order to preserve their scarcity. They have been doing it since the medieval guilds (from which unions and professional associations both evolved) complained, in the language  of the time, about “cowboy” operators.

The behavior of experts is so familiar and natural that even those who are not experts, copy it. A survey of physicians  in England found medical students start acting like "doctors" as soon as their applications for medical school are accepted!

A Dislike of Routine

What a professional  enjoys most is getting to grips with a thorny problem, whether it be an intricate electrical wiring system , a sophisticated roofing structure, a complicated process  of reorganization, a challenging problem of communications, or a difficult diagnosis. What he or she enjoys least is solving a problem the same way as last time.

In their constant efforts to escape the drudgery of routine , professionals surround themselves with assistants. In the research laboratory, for example, "test-tube shaking" is delegated to the “lower” occupational category of laboratory technician, and it goes without saying that "senior" research scientists , consultants and law firm partners all need secretaries.

Professionals are endlessly ingenious in finding rational arguments for this kind of vertical division of labor: assistants are cheaper, they leave professionals free to concentrate on more vital tasks etc.. The problem is, this stratifies the organization, causing needless conflicts.

Furthermore, the assistants require direction and if there is anything professionals are bad at, it is managing other people, so this just creates another source of potential conflict. As a result the modest gains of delegation are invariably consumed by energy-intensive conflicts of interest and administration.

The Expert  - a Law unto Himself

Experts like:

·complex problems,

·new advances in their profession ,

·freedom to seek solutions,

·well equipped and funded laboratories,

·public recognition of their achievements.

Experts dislike:

·rules that limit their individual freedom,

·routine work,

·bureaucracy (which they see everywhere).

Experts care little about:

·pay,

·time off,

·the organization that employs them,

·people who are ignorant about their specialization.

Experts can seldom:

·work through other people,

·lead an organization.

Experts admire:

·people more expert  than themselves.

Experts despise:

·power -oriented people (i.e. traditional bosses).

Very few professionals are like this of course and not experts, either. There are very many caring and humane doctors, chimney-sweeps who clean the floor when they have finished, and plenty of conspicuously mercenary experts in areas like finance, and American law.

But although this caricature of the expert  is mercifully rare in real life most display some of these characteristics, so it is essential for leaders  of companies who employ professionals to be on the look out for them. For it is those professionals, with their distinctive qualities and motivation, who determine how a company dominated by professionals or creative  people will behave, when it lacks the right kind of leadership.

The Managers

I define managers  as people appointed by superiors to lead an organization towards a defined goal, within a given frame of reference and with given resources. There role is constrained within parameters defined by a higher authority.

Managers are, in many ways, the opposite of professionals as I have used the term in this book. While professionals work solely with customers using their professional  competence , managers  oversee the work of others They are capable of managing and organizing , and have learned to work through people, and enjoy working with different sorts of people. (As we have seen, professionals enjoy working with other professionals). Their main task is to lead activities, with the help of others and they are often functional heads.

Managers work through other people, as opposed to professionals who work with other people.

The team  manager  or project manager role is a very important one in knowledge organizations , but there are few dedicated team managers with no expert role at all. Managers tend to regard their leadership role as ancillary to their professional function, mostly as leaders of teams of professionals.

Traditional industry managers run functional departments, sections or groups. You find them everywhere in industry and the civil service but in knowledge organizations, people who are simply functional managers, are relatively scarce.

This playing down of the functional manager role is a fundamental difference between the traditional manufacturing company and the knowledge organization.

For example, the financial controller of a knowledge organization  tends to be the only member of his or her profession  in the place, and thus has no fellow-professionals to share thoughts with. In private sector knowledge organizations, moreover, they are often the only upholders of "law and order", which means they are frequently coming into conflict with the professionals.

In leaderless  knowledge organizations  the accounting function gets a low status and the controllers tend to be isolated downwards because of their police function and ignored upwards because their methodology is based on the manufacturing company and only measures the “tip of the iceberg”.

They know little about advertising, law, computer programming or architecture and the professionals know little about performance measuring or administration, and care even less, because they are totally focused on their own professions. Although they live on fees charged for their services, many professionals fail to see why they should bother filling in forms to bill customers or draw their holiday pay.

Controllers and experts seldom have much serious “shop” to talk about; the dialogue risks being reduced to holiday rosters, time sheets, etc.., which is scarcely an auspicious beginning to a mutually meaningful dialogue.

The only option open to a controller  In leaderless  knowledge organizations  that are totally dominated by the values of the experts, is often to leave the company and go to work for a larger industrial organization.

The Support Staff

The support staff  are the book-keepers, personal  assistants, secretaries, receptionists, and switch-board operators. They know little about advertising , law, architecture  (or whatever the object of the organization´s business idea is), compared to the professionals. Their function is to assist the professionals and managers . They have no special qualifications of their own to give them status in the knowledge organization .

A well motivated and qualified support staff  is essential for the efficiency  of the organization and of the professionals. They are essential for servicing the customers. They are also an important element of the “glue” that keeps the knowledge organization  in at least some kind of law and order.

In a leaderless  knowledge organization , however skilful a typist or letter editor a secretary is, her or she will not be properly appreciated in a knowledge organization, because the only knowledge that counts, is knowledge relevant to the business idea. A computer wizard, in an advertising  agency, may be on the in-house computer system , but will have no more power  than a secretary. Experts are without honor in foreign countries.

The situation is very different if the secretary works for an agency. In this case, secretarial skills are integral to the business idea. Experienced secretaries, in such firms, belong in the professional  square of the organizational  matrix.

Support staff in leaderless  knowledge companies  have to put up with bad bosses; perhaps former experts who don´t take their management functions seriously, or are not qualified to perform them, or discontented financial controllers, who feel left out of things.

How do people who work for incompetent managers , in companiesthat do not appreciate them, behave? How will the receptionist in the little tale (see The Expert  above) react? She probably gets together with the other support staff , forms groups of malcontents, and develops "underdog" symptoms. The support staff are usually the only ones who take regular coffee-breaks - a quarter of an hour each morning and afternoon, during which shop talk is banned.

They often make modest demands: "We want ergonomic chairs; we need radiation filters for our computer screens; nobody ever tells us anything. Why can´t we have an in-house bulletin?"

Even in well managed knowledge companies  such complaints are often justified. They are, indeed the least well-informed group in the organization not because of any ill-will on the part of experts or deliberate attempts to exclude them, but – as was discussed in the chapter “What is information?” – simply because informing people is such an inefficient way of communicating knowledge.

The “real” exchanges of information occur in conference rooms and corridors, in a language  only the initiated understand. When two architects meet in a corridor, a thumbs-up gesture is enough for one to let the other know he has won the order they talked about earlier.

The gesture will trigger a number of connotations in the mind of the colleague, like “if we clinched the deal, I will have to reschedule tomorrow´s work plan”, “oh, I never believed we would, because we were competing against company XX and they are so strong in this field, did we price it too low?” “our competitiveness must have improved!”, etc.

The gesture means nothing to the receptionist, who was not privy to the previous dialogue.

 Both get the same message, but only one is informed. For the receptionist to understand the full implications of the gesture she would have to be given a lengthy explanation of what went on in there behind closed doors, which will take too much time to do.

Years of mismanagement in this area have left a potential for improvement in many companies.,

The Leader

Experts are often “creative  personalities”, with all that implies about themselves, and those around them. Such people are not easy-going, uncontroversial types; that is not in the nature of the creative personality. It is hardly their fault, if they do not fit into moulds that were not made for them. Perhaps the fault lies not in them but in the moulds instead?

But one thing is abundantly clear: they do not make life easy for leaders . Theatrical directors, for example, are always accusing actors of being neurotic, stupid, impossible to deal with, complicated, egotistical, insecure or just plain weird. But they say good things, too, about their actors ; that they have strong personalities, independence of mind, and artistic creativity . Musicians  are said to be unbalanced, and childish personalities, but also proud, and self-assured. When musical and theatrical directors speak of musicians and actors, they seem to speak of wilful children, they both love and detest. They regard this as quite natural, make allowances for it and even take advantage of it, when exercising their leadership.

There are those who say creative  people can´t be led; that it is impossible to manage companies composed of insufferably egotistical, self-assured people, who do not know the meaning  of the word "loyalty ". But such companies must be led if they are to move in intended directions, and not align themselves, like compass needles, within the force fields all knowledge organizations  spontaneously generate.

Leadership involves two tasks: knowing  where one wants to go, and persuading other people to go along.

The first task requires analysis of options and an ability  to form a concrete picture of the goal, often called a “vision”. The second task requires rare communicative ability, empathy, and energy. ABB ´s chief executive, Percy Barnevik , claims the first takes 5-10% of his time and the second takes the rest.

I believe altruism is an integral part of leadership. A good leader ´s desire to lead springs, from a desire to better the lot of those he leads.

Leadership also implies movement (guiding groups of people inparticular directions), and thus change. Simply put:

A Leader  changes - a Manager  preserves.

There are many managers  who are Leaders, but most are probably not.

Leaders are important people in a knowledge organization , and there are often more than one. A Leader  must be:

·motivated by a genuine desire to lead,

·inspired by a vision of where the organization is heading,

·able  to unite people in the effort to realize the vision,

·totally emotionally committed to his or her task,

·action-oriented

Leaders in successful knowledge organizations  are usually former experts themselves. They belong to the same profession  as the experts but they need not be outstanding professionals. It is like in an orchestra or a theater. The conductor is seldom a virtuoso on any instrument, and the director  may not be a great actor, but professional  competence  is essential, if the leader  is to bring out the best in the performers.

Leadership in a knowledge organization  is largely a matter of giving experts creative  freedom within a frame work  devised by the Leader . To do that, Leaders must, of course, know enough about the field or fields of specialization to be equipped to judge performance in relation to their framework.

The art of leading knowledge organizations , therefore, is the art of handling professionals, particularly the experts, and the task of leadership, in such organizations, is:

Leaders who are not initiates of the profession , will be at the mercy of the key people, and powerless to get them to do anything they do not agree with it.

In a knowledge company  with a “leader ” not accepted by the experts the internal forces are given free rein, and the firm spontaneously aligns itself in accordance with its own internal power  structure; in other words, the experts assume control. The result is that the official executives spend their time attending "important meetings", where they make equally important "decisions", while the rest of the company carries on, regardless.

The leaderless  company will speedily turn not only inefficient, but a terrible and neurotic place for most people to work. A leaderless knowledge organization  can often be identified by the degree of negative strains in the culture  that were described above in the chapters above.

If an organization has no customers, because it´s an in-house department of a large organization, or because, like so many public-sector bureaucracies, it is shielded from the ultimate customer, other pressure groups move in to fill the vacuum. In some cases it may be the experts and in others, the trades unions.

In many European countries for example, trades unions have taken advantage of the power  vacuum in leaderless  public bureaucracies to become the most potent power centers.

All true Leaders are deeply committed people. They love their work, they love to lead, they love their profession , and they love the people they lead. Their emotional commitment rubs off on their followers, whose greatest wish is often to share the Leader ´s enthusiasm.

Recruit on a Competitive Personnel Market

Recruiting new employees is the management´s most important investment decision, and perhaps its most important strategic tool. A knowledge company ´s recruitment  of new staff can be liked to an industrial company´s investment in new machinery. By strategic recruitment, the management can both modify the company´s business idea and increase or reduce its competence  and other intangible assets .

The problem of recruitment  is accentuated by the fact  that capable new recruits are so hard to find.This is actually a universal problem, not one peculiar to the peak of economic cycles. Even during the slump of the early nineties, many companies complained of the shortage of qualified personnel. It can thus be noted that many acquisitions of knowledge companies  are actually made to get hold of the people in those companies, and are thus a form of recruitment.

Experts and professionals with a potential are always in short supply and choose their places of work with great care. Wise knowledge organizations  treat them more like customers than employees because they have to compete with other knowledge organizations to attract them in the same way they compete to attract customers.

Professionals are so important for knowledge organizations  that they can be said to compete on two markets. The normal customer market and the personnel market. What makes the competition particularly fierce is that they probably encounter the same competitors on both markets.

So knowledge organization  managers  need a strategy  for “personnel markets”, just as much as they need strategy for customer markets. (I prefer the term “personnel market”, to “labor market” because it is the competence , not labor, that a knowledge organization seeks.)

Managers need a clear idea of what people they want, and must be ready to compete for them with other companies. They must therefore, have a plan for making their company as attractive as possible to the people it needs. They needa “personnel strategy”, which must always, of course, be consistent within the “normal” strategy.

When you are interviewing potential recruits with a knowledge perspective  in mind, your key selection criteria are the candidates´ knowledge or qualifications, and their ability , to enhance their own knowledge, and that of the firm´s other employees. A salary buys access to a person´s time, and his or her potential to enhance the firm´s ability to increase the yield from all its knowledge. This means that a person´s salary is less important than the knowledge he or she can contribute, the revenues he or she can generate, and the customers he or she can bring to the organization.

See people as revenues – not costs.

Manage Professionals

The Moment of Tension 

There is something special about performing, for an audience. Both conductors and directors emphasize the importance of the audience. Some even claim the audience participates in the performance, by releasing the creativity  of the players, and that when the magic works, players and audience together can lift a performance to sublime heights. This moment of tension  is what actors live for, and the same feeling is experienced by a consultant when making an important pitch to a customer.

The moment of tension  plays a vital role in creative  problem-solving.

The results of creativity  are sporadic, and unpredictable, so leaders  who want their organizations to be creative, must be prepared to put up with unpredictable lurches, first this way and then that, in moods and emotions. And, because flops, and failure are inevitable, leaders of creative people must learn  to see them as educational experiences. A friend once told, after one of my less successful efforts:

Don´t look on it as a failure. You can always cite it as a cautionary tale.

Other examples of tension  are those generated by the power  play of professionals and managers . One of the keys to successful leadership of knowledge organizations  is to use these tensions as fuel for moving forwards.

The power  of the organization lies primarily in the fact  that its representatives control the purse-strings. The power of the professionals, on the other hand, derives from their own skills and (in the private sector) their ability  to earn revenue for their companies.

The struggle between creative , and administrative forces goes on in all organizations dependent on professionals. Theaters  and orchestras  are two extreme examples. Other organizations that display similar traits range from film and TV companies , to churches , monasteries  and circuses .

Although it is true that the differences between managers  and professionals, administration and profession , have the potential to explode into literally disastrous conflict, skilful leaders  can channel these same tensions into controlled explosions of creative  energy.

In the theater , the administrative organization headed by the manager  or chief executive is the visible one; what we regard as a "normal" organization. But it is not the organizers who are responsible for creative  production; that is the business of the actors and directors. Both groups are necessary. If an organization consists entirely of professionals, the only result is total chaos, and nothing is produced. As in a battery, there is no spark, unless the two poles are bridged by a conductor .

Tandem  Leadership

Enterprises such as theaters, orchestras and newspapers , that employ creative  people, have developed various techniques for channeling tension  constructively.

One way is to employ a system  of tandem leadership . A director, conductor, or editor is appointed to run the "artistic" side, while a producer , manager , or publisher takes charge of the administrative staff. This tandem leadership, with one leader  running the professionals and the other running the business, would not have evolved in so many otherwise unrelated businesses, if it did not have a lot going for it.

The combination  of the creative  genius of Charles Saatchi  and the business acumen of his younger brother Maurice, propelled their advertising  agency to a position of short lived world leadership. When the withdrawal of Charles Saatchi destroyed the intimacy of the link between the creative and business leaderships, it was only a matter of time before the business fell apart.

Hans Mellström  and Thord Wilkne , the founders of WM-data, the only remaining independent major computer consultancy firm in Sweden, are a similar tandem leadership  couple.

If, as many observers believe, all organizations are becoming more like knowledge organizations , those who wish to enhance the creativity  of their companies, should look closely at the tandem leadership  systems that evolved in publishing , and the performing arts , which have much more experience  in managing creative prima donnas.

Security as a Managerial Tool

Professionals work hard and are often plagued by anxiety . They have to turn in first-rate creative  performances, year after year. They often lack security  of employment, they find it hard todevelop well-rounded personalities, they expose themselves to public criticism, they compete fiercely with each other, they work in constantly changing organizations, and their worth is only judged by what they produce.

When there´s a lot of anxiety  in the air, security  becomes an important tool of leadership. People feel secure if they haveconfidence in their ability  to cope with what lies ahead.

Security is thus, both the antithesis of, and the antidote to anxiety .

Artistic leaders  can, deliberately or unwittingly, foster, or destroy this sense of security  in players and actors. Swedish film director, Ingmar Bergman, has always been acutely aware of how vulnerable actors are, in their lonely encounters with their audiences. His method is to imbue with such confidence in their technical performance that they do not have to think about how to move.

Others, like the deceased German conductor, Herbert von Karajan , deliberately cultivate a state of insecurity, in order to maintain high levels of anxiety  among their creative  people.

Both methods seem to foster creativity , the latter hardly being recommendable.

Vertical Division of Labor

Professionals loathe routine  tasks, and often succeed in persuading management to introduce vertical specialization: the research lab. hires test-tube-shakers, for example, or the consultancy recruits number-crunchers.

Observera -Grey  tried to solve the problem, by making its low-status unit a separate company. Another solution is simply to abolish all assistants, replace them with professionals, formulate the business mission in such a way, as to minimize the number ofroutine  tasks and then require the professionals to perform the routine tasks that remain.

Yet another solution is to use the system  that evolved in the traditional craft trades, and assign the work according to age – employ young people, with potential, as "journeymen" to undergo training, on low-status, routine  jobs. This is common practice in the accountancy and legal professions , and in the larger management consultancy firms.

Develop Professionals

The Creative Career

Jesus ´ disciples called Him, Master . Rising to be the master of a trade is a dream of achievement probably as old as human history. The earliest descriptions of the creative  career  can be found in the annals of medieval gilds, for in those days it was the craftsmen , and particularly the smiths, who earned their living from knowledge.

Although the ranks of “master ” and “journeyman ” are no longer formally recognized, their equivalents survive in many modern professions , particularly those in which special skills must be cultivated, as in music. Thus, a student at a conservatory is an “apprentice ”; a graduate from a conservatory becomes a “journeyman”; securing a place with a famous orchestra is the next step in a musical career , and the few who develop their skills to the utmost, will go on to be soloists and virtuosos and will hold “master classes” for young prodigies.

Developing into experts is the natural and preferred career  for professionals. Very few want to be executives, with responsibility for managing others, such as head consultant. The reason why so many professionals nevertheless welcome "promotion" to executive rank, is that they regard it as a recognition of their worth.

The Leader  and soloists in an orchestra are musicians, first and foremost but, as the “master  class” institution implies,virtuosity carries with it a responsibility for the artistic development of others. The natural career  path for an expert  culminates, by virtue of his or her skill  and experience , in the role of teacher, and mentor. In an accountancy firm, for example, the Chartered Accountants wear two hats as executive and teacher of junior colleagues. Experienced barristers at the English "bar", have "pupils"; newly qualified lawyers, to whom they impart their wisdom, and skill.

When Experts Plateau

Many people and much knowledge go to waste as a result of the stress to which the professional  is subjected. Creative people, who constantly stretch themselves to the limits of their ability , can be found in most walks of life. They live, like Damocles, in constant greatness, and constant danger. Their lives, like the lives of great artists and of virtuosos of all kinds, can be tragically short. Their light shines brightly, for a while and is then extinguished.

If goals are defined as narrowly, and in such concrete terms, as those of athletes, for example, the only road left open to those who have reached the top, leads downhill.

The research world is battle-ground for kudos. Recognition is unreliable, and arbitrary. Scientists can never be sure how their work will be judged by other scientists . What is hailed as a triumph by one group, is viciously attacked by another. The researcher usually stands alone, without allies. No holds are barred, in the struggle to secure resources for one´s own projects. The struggle is bitter, because the contestants are individuals, not institutions, as in the corporate world.

Psychosis and drug abuse are common among artists, and public performers, but even more everyday creative  professions  like journalism , wear their practitioners down.

A survey, by the Swedish Central Bureau of Statistics, showed that journalists  die younger than other occupational groups. Of a total of 7,780 professionally active Swedish journalists alive in 1970, 514 had died before the age of 65, a mortality rate 20% higher than average. The most common cause of death is cancer but the death rate among journalists from cirrhosis of the liver (usually caused by excessive drinking), is three times the average for other occupational categories.

Almost all consultants and creative  people go through one, or more crises during their careers. They come at intervals of 5-10 years, and can take any form. They afflict consultants, advertising  people, architects, stockbrokers, physicians , and senior civil servants .

When matters have progressed that far, it is usually too late to do anything about the problem. The person may resign, and start over in a new firm, taking a customers, and colleagues with him or her. The remarkable thing is that the new company is often an instant success. Everyone works hard, assignments pour in, and enthusiasm is sky high - until the next creative  crisis.

Various psychological models have been constructed to explain this phenomenon. One common view is that people go through a biological life cycle . The phenomenon is not so noticeable in "ordinary" companies, except at the top management level. The management of a knowledge company , on the other hand, must live with the varying life cycles of its creative  people, and plan the whole organization accordingly.

People generally want to feel that they are building up their skills, and they generally want to gain experience  by working on challenging projects with other skilled  professionals. The young new employee is an apprentice , who probably costs more in supervision, training, and assistance than he or she earns for the company. On the other hand, these young people do not demand much in the way of encouragement, because the prospect of a rapid accumulation of skills provides all the motivation they need.

The ability  of professional  people to create value, increases rapidly as they acquire experience , but so do their costs, in the form of salaries, secretaries, fringe benefits and so on. The rapid growth of experience provides motivation in itself, but creative  work is very demanding and, eventually, even the best professional will reach a creative plateau .

Management has three options for dealing with such a plateau :

1. Do nothing – which will create an overpaid underperfoming professional ..

2. Fire the person - the cost cutting option. It is quick and simple. It costs severance pay, but saves future losses.

3. Find alternative employment for the plateaued  person. This is to see the person through “knowledge perspective ”. People can create revenues with their competence  in various ways; as a mentor, teacher, salesperson or ambassador. As mentioned earlier, this is the natural culmination of the professional ´s career  path.

The heads of most companies choose the first or second option as a solution to the plateau  problem, very rarely the third.

Another common situation is that the professional  recognizes he, or she is approaching a plateau , and blames it on the leadership of the company. This often leads to a personal  crisis, and in extreme cases, to alcoholism or even suicide.

If a company´s reputation has faded, or if it has not allowed its people to develop their capabilities, or if it has become an organization in which employees feel alienated, the mobile key people will be susceptible to offers from rival firms, or sign-up with head-hunters.

 The abilities of a firm´s employees are assets which, though not owned by the company, can add lustre to its reputation if used properly. Customers are aware of how the reputations of outstanding employees are developing, so one way to boost the company´s reputation is to hire "high flyers" who are visible and can solve problems more creatively than customers expect.

The Professional´s Three Life Cycles

The life cycles  and crises of key persons come as no surprise to successful knowledge companies , because they have already planned their organization for such contingencies. They know the kinds of professionals they have and the types of life cycles they are following. At least three types of life cycles can be distinguished:

The superstar ´s life cycle  is up like a rocket, and down like a stone. It is characterized by a restless, almost explosive creativity , often coupled with poor judgement. Superstars can accomplish magnificent feats, but their spectacular flops can make even the most hard-bitten executives tear their hair out in desperation. Executives are usually thankful there are not too many superstars in the firm. Two is often too many.

A statesman ´s life cycle  is quite different. He gets steadily better, as the years go by, and is very good at establishing personal  relations. The archetypes are people like Kissinger , Thatcher, or Carter or business leaders  like Marvin Bower  of McKinsey  and David Packard  of Hewlett-Packard. They do not turn in the most outstanding professional  performance any more, but they are wise, and can be relied on to generate a growing amount of revenue, because of their extensive networks. There are not many statesmen around either, which is also a blessing, because they are self-centered and can seldom tolerate rivals.

 

 

Figure 13 . A professional  can go through several life cycles  during a career .

The “normal” professional  lies somewhere between these two extremes and is apt to tilt one way, or the other. The real curves are not, of course, as smooth as those in the Figure 13; they´re apt to resemble a series of small staircases piled on top of each other, representing a recurring succession of cycles.

Physicians , consultants, and art directors  are usually at the peak of their profitability to the organization just before, or at the top of their curve or staircase, so they are liable to take the first downward step, just when the big assignment comes in, and they are at their most indispensable.

A scary thought? Not unless you think all careers must follow a pre-set pattern. It is at this point that many managers  go wrong, because, in a business world still conditioned by the outlook of the industrial age, they find it hard to grasp the notion that the career  path of a professional  need not resemble a constantly ascending staircase, and particularly not one that involves, as the industrial model prescribes, an increasing responsibility for managing the work of subordinates.

Skewed Age Distribution is Dangerous

In periods of crisis, organizations often make the mistake of imposing recruitment  bans which saddle them with large groups of competent , older employees with no plans for their further development, and thus leaves no opportunities for advancement for the “young Turks”. This causes dissatisfaction among old, and young employees alike, and it is becoming commonplace in public sectors throughout the Western world, as organizations respond in the least painful way to demands for cost cuts.

Such organizations acquire a "spare tyre" around their waists that creeps up a notch, each year. This has a major impact on the organization´s business idea because older people are not interested in doing the same things, as younger people. Thus the business idea “ages”, too, which is very dangerous in the long term, and profitability is also affected.

Skewed age distributions can be contrived for good, strategic reasons, but they have negative and unexpected consequences.

Thanks to rigorous cost controls, a certain European bank  has managed to maintain an above-average profitability for many years, but has, in the process , created a staffing situation that could cause it grief later on.

In 1975, the bank  had five employees in the 25-29 age bracket for every one aged 55-59. Since it persisted with its policy for such a long time, and there has been little change in total numbers, the ratio has become reversed in 1997. The bank is now experiencing a serious shortage of young managers  to groom for higher posts.

By disregarding the age structure, the bank ´s management has set the scene for a period of troublesome shifts, when a new generation of managers  has to be schooled and installed.

Maintaining the right age structure is an important issue for the management of any company, but particularly for knowledge companies . The management must plan recruitment  well ahead of time and regard each new hire as an investment in the future, rather than a cost that reduces profitability. And one cannot look to the Experts themselves, for ideas in this area; it is management´s job.

Alternative Career Patterns

Leaders with a knowledge perspective  can see alternative career  patterns for professionals, often involving new experiences, travel and changes of work, and often causing them to change tracks. The successful knowledge organizations  know their professionals so well, they can plan this kind of career for them.

This is not to say firms should offer life-time employment to everyone. Some firms deliberately build short life cycles  into their strategy. The reason why so few tour guides  are over 30, is that tour operators base their operations in sunshine resorts on young, extrovert, adventurous, low-paid people who will only stay for a few years. Cleaning firms run labor-intensive operations with very high rates of personnel turnover, by recruiting immigrants. Fast food restaurants do their recruiting primarily among high school students.

Lifetime employment is the exception, even in consultancy firms. Most aim to keep new recruits for an average of 10 years (equivalent to an annual personnel turnover rate of 10%). The large management consultancy firms and accounting firms often adopt the “up-or-out” principle made famous by McKinsey , thereby maintaining a turnover of around 10%.

 Many of the big firms see an advantage in letting consultants come, and go. An employment period of 5-7 years may be agreed on at the time of hiring. That way, the management avoids the responsibility for coping with the employee´s many crises and yo-yo life cycle . If management gets its timing right, it can employee people just when they do their best work and so earn the maximum of money, with the minimum of effort.

Managers of advertising  agencies are used to “creatives”, who flit from agency to agency, seeking the next creative  kick or life cycle . That life cycle crises have nothing to do with a shortage of money is evidenced by the fact  that they occur in the financial markets, too, where the most avaricious professionals of all work.

What can knowledge companies  do, to avoid these problems with their professionals? The first step for managers  is to decide whatkind of careers to offer and the younger the professional , the more important this is. Short, medium or lifetime careers are all feasible, as long as managers know what they want, and adapt the company accordingly. Their chosen strategy becomes part of the knowledge company´s personnel idea.

Unfortunately, many knowledge companies , especially new ones, ruthlessly exploit their best creative  talent, without being aware they are doing so. It is all too easy to overextend people at the top of a life-cycle curve; the management works them hard in production and forgets their need for further development. After a very short time, often no more than a year or so, in extreme cases, the expert  collapses. It may not be a creative crisis; just plain fatigue can cause harsh words to be spoken and irrevocable decisions to be made.

It does not take much creativity  to find solutions that avoid crises. Instead of high salaries, that are just taxed away in any case, a better inducement for a professional  may be a "further education  account", or a part-time research job, or a writing job, or maybe a course in painting.

Deloitte-Touche: Solving the Status Problem

Big customers are status symbols for an accountancy firm, and becoming a "plc" auditor is thus a major career  milestone. So young associates compete to work with senior partners, in the hope of eventually "going public". The trouble is, auditing the books of a big public limited company is not particularly exciting; the work consists mainly of simply checking figuresand ploughing through voucher files, and computer print-outs.

It is actually more educating to audit small companies, because the problems are more varied and challenging but, given a choice, most young accountants  go for status. How can this problem be solved?

The international Deloitte-Touche  Group of accountancy firms has a mixed bag of companies, both public and private, as its customers. To persuade young accountants  to take an interest in the problems of small firms, a special small business unit was established in the US, as a separate profit center. After a while, the small business unit could show it was producing more added value, and more profit, than the "public" practice. The status of the small business auditors was thus enhanced, and as a result of a profit-sharing scheme, they were paid at least as much as those working for the major corporations.

Intangible Rewards for Motivation

Many knowledge companies  identify and deliberately exploit the “chemistry ” between their key people and customers, as a part of their marketing strategy, because the better the relationships, the easier it is to win new assignments.

This makes the knowledge of such persons so valuable, that it is very hard to price, which immediately raises the delicate issue of rewards.

Fortunately, according to my experience  professionals are generally not motivated by money. Some readers might argue against this assertation, and there are certainly exceptions in some industries and some geographic areas.

Professionals and experts in particular are best motivated by intangible rewards, that is learning opportunities, opportunities to be more independent etc. The list in the chapter above Experts – a Law unto himself, can be used for ideas.

Also when professionals seem to be motivated by money like some in the finance industry and in Silicon Valley, one must recognize that money usually is the substitute for something intangible, like prestige or independence.

As regards money rewards, how much should a key person be paid? I believe the best way to answer this question, is to think in terms of value added, and to pay key people a reasonable proportion of the value they create. (In any event, they should not be paid a fixed salary).

Decrease the Dependence on Experts

Most heads of knowledge companies  can identify a few key people who they feel are crucial to the company´s survival: skilled  and experienced experts who solve the most intricate problems, bring in the biggest fees and have the widest network of contacts outside the organization. Most of the key people are very skilled professionals. In this book they are called “Experts”.

The company´s whole business can also often be traced back to just such an Expert . In smaller organizations he or she has the greatest professional  expertise  and the most experience , and is therefore often also the undisputed managing director, entrepreneur, marketing manager  and personnel manager all in one.

It is the professional  competence  of such key people and their ability  to generate revenue, that determines whether or not aknowledge company  prospers. They are a free resource, because compared to the income they generate, they cost nothing.

The dependency is clearest in consultancy firms, because the relationship  between client and consultant, is often closer than that between consultant and the consultancy. Consultants spend most of their time with clients and build close working relationships with them. Moreover, consultants receive more of the praise and approbation, which is the spice of life for creative  people, from clients than from their own companies, for the simple reason that the latter often have only a vague idea of what they have been doing.

The reduction of that dependence is one of the chief executive´s main tasks. The degree of dependence obviously varies with the type of business. The link between the business and key people can never be entirely eliminated in knowledge companies , because the work itself is a creative  process , in which individuals are deeply involved but in most service companies there is considerable scope for reducing dependency.

Improving the knowledge transfer ability  of the organization has the advantage of both leveraging knowledge and reducing dependence.