Leading Human Resources: An Analysis (part 13)

In discussing effectiveness, we have concentrated on evaluating the results of individual leaders or managers. These results are significant, but perhaps the most important aspect of effectiveness is its relationship to an entire organization. Here we are concerned not only with the outcome of a given leadership attempt but also with the effectiveness of the organizational unit over a period of time. Rensis Likert identified three variables---causal, intervening, and end result---that are useful in discussing effectiveness over time.


Causal Variables

Causal variables are those factors that influence the course of developments within an organization and its results or accomplishments. These independent variables can be altered by the organization and its management; they are not beyond the control of the organization, as are general business conditions. Leadership strategies, skills, and behavior; management's decisions; and the policies and structure of the organization are examples of causal variables.


Intervening Variables

Leadership strategies, skills, behaviors, and other causal variables affect the human resources or intervening variables in an organization. According to Likert, intervening variables represent the current condition of the internal state of the organization. They are reflected in the commitment to objectives, motivation, and moral of members and their skills in leadership, communications, conflict resolution, decision making, and problem solving.

Output, or End Result, Variables

Output, or end result, variables are the dependent variables that reflect the achievements of the organization. In evaluating effectiveness, perhaps more than 90 percent of managers in organizations look at measures of output alone. Thus, the effectiveness of managers is often determined by net profits; the effectiveness of college professors may be determined by the number of articles and books they have published; and the effectiveness of basketball coaches may be determined by their win-loss records.

Many researchers talk about effectiveness by emphasizing similar output variables.. Fred E. Fiedler, for example, in his studies evaluated "leader effectiveness in terms of group performance on the group's primary assigned task." William J Reddin, in discussing management styles, wrote in similar terms about effectiveness. He argued that the effectiveness of a manager should be measured "objectively by his profit center performance---maximum output, market share, or other similar criteria."

There has been a move away from singly-measure assessments of effectiveness. For example, Peter Vaill noted that organizational stakeholders are increasingly looking for "winning" in five categories of values.

• Economic values. Reflect what the firm's bottom line should be.
• Technological values. Reflect how the firm will do what it chooses to do.
• Communal values. Reflect the kind of "home" the firm will be for its employees.
• Sociopolitical values. Reflect the kind of neighbor the firm will be to its external constituencies.
• Transcendental values. Reflect what the firm means at a deeper level to its external constituencies.

These five categories reflect a growing emphasis on organizational values.

A similar set was developed by professor Robert S. Kaplan and business consultant David P. Norton writing in the Harvard Business Review. They suggested that businesses should concentrate on four perspectives in setting performance measures.

• The customers' perspective. How your customers see you.
• The internal operations perspective. What you must excel at.
• The change perspective. How you continue to improve and create value.
• The financial perspective. How you look to shareholders.

A third example is Fortune magazine's annual Corporate Reputations survey. The criteria Fortune uses are quality of management; quality of product or services; financial soundness; value as a long-term investment; use of corporate assets; innovativeness; community or environmental responsibility; and ability to attract, develop, and keep talented people.

Returning to the Likert model, we might visualize the relationship between the three classes of variables as stimuli (causal variables) acting upon the organism (intervening variables) and creating certain responses (output variables) as illustrated in Figure 1.

Figure 1 

Relationship among Likert's Causal, Intervening, and Output Variables

The causal variables largely produce the level or condition of the intervening variables, which in turn influence the end result variables. Attempts to improve the intervening variables directly will usually be much less effective than will attempts to improve them by changing the causal variables. The end result variables, also, can be improved most effectively by modifying the causal variables rather than the intervening variables.

Long-Term Goals versus Short-Term Goals

Intervening variables are concerned with building and developing the organization, and they tend to be long-term goals. This is the part of effectiveness that many managers overlook because it emphasizes long-term potential as well as short-term performance. This oversight is understandable because most managers tend to be promoted on the basis of short-term output variables, such as increased production and earnings, without concern for long-run potential and organizational development. This oversight creates an organizational dilemma.

Organizational Dilemma

One of the major problems in industry today is that there is a shortage of effective managers. Therefore, it is not uncommon for managers to be promoted in 6 months or a year if they are "producers." The basis on which top management promotes is often short-run output, so managers attempt to achieve high levels of productivity and often overemphasize tasks, placing extreme pressure on everyone, even when it is inappropriate.

We probably all have had some experience with coming into an office or a home and raising the roof with people. The immediate or short-run effect is probably increased activity. We also know that if this style is inappropriate for those concerned and if it continues over a long period of time, the morale of the organization will  deteriorate. Some indications of deterioration of these intervening variables at work may be turnover, absenteeism, increased accidents, scrap loss, and numerous grievances. Not only the number of grievances but also the nature of grievances is important. Are grievances really significant problems, or do they reflect pent-up emotions due to anxieties and frustration? Are they settled at the complaint stage between the employee and the manager, or are they pushed up the hierarchy to be settled at higher levels or by arbitration? The organizational dilemma is that, in many instances, a manager who places pressure on everyone and produces in the short run is promoted out of this situation before the disruptive aspects of the intervening variables catch up.

There tends to be a time lag between declining intervening variables and significant restriction of output by employees under such a management climate. Employees tend to feel things will get better. Thus, when high-pressure managers are promoted rapidly, they often stay "one step ahead of the wolf."

The real problem is faced by the next manager. Although productivity records are high, this manager has inherited many problems. Merely the introduction of a new manager may be enough to collapse the slowly deteriorating intervening variables. A tremendous drop in morale and motivation leading almost immediately to a significant decrease in output can occur. Change by its very nature is frightening to a group whose intervening variables are declining, it can be devastating. Regardless of this new manager's style, the current expectations of the followers may be so distorted that much time and patience will be needed to close the now apparent "credibility gap" between the goals of the organization and the personal goals of the group. No matter how effective this manager may be in the long run, senior management in reviewing a productivity drop may give the manager only a few months to improve performance. But as Likert's studies indicate, rebuilding a group's intervening variables in a small organization may take 1 to 3 years, and in a large organization it may take up to 7 years.

This dilemma is not restricted to business organizations. It is very common in school systems where superintendents and other top administrators can get promoted to better, higher paying jobs in other systems if they are innovative and implement new programs in their systems. One such superintendent brought a small town national prominence by putting every new innovative idea being discussed in education into a school. In this process, there was almost no involvement or participation by the teachers, or by community administrators, in the decision making that went into these programs. After two years, the superintendent, because of these innovations, was promoted to a larger system with a $50,000-a-year raise. A new superintendent was appointed in the "old" system, but, almost before the new superintendent unpacked, turmoil hit the system with tremendous teacher turnover, a faculty union and a defeated bond issue as things become unglued, people were heard saying that they wished the old superintendent were back. And yet, in reality, it was the old superintendent's style that had eroded the intervening variables and caused the current problems.

Most people tend to evaluate coaches on win-and-loss records. Let's look at an example. Charlie, a high school coach, has had several good seasons. He knows if he has one more good season he will have a job offer with a better salary at a more prestigious school. Under these conditions, he may decide to concentrate on the short-run potential of the team. He may play only his seniors and have an impressive record at the end of the season. He will have maximized his short-run output goals, but the intervening variables of the team will have been neglected. If Charlie leaves this school and accepts another job, a new coach will find himself with a tremendous rebuilding job. Because developing the freshmen and sophomores and rebuilding a good team take time and much work, the team could have a few poor seasons in the interim. When the alumni and fans see the team losing, they might soon forget that old adage "It's not whether you win or lose, it's how you play the game" and consider the new coach a loser. "After all," they might say, "we had some great seasons with good old Charlie." They might not realize that good old Charlie concentrated only on short-run winning at the expense of building for the future. The problem is that the effectiveness of the new coach is being judged on the same games-won basis as his predecessor's. The new coach may be doing an excellent job of rebuilding and may have a winning season in 2 or 3 years, but the probability that the coach will be given the opportunity to build a future winner is low.

Problems do not occur just when leaders concentrate on output. For example, in Twelve O'Clock High, a classic World War II movie about the Air Force, Frank Savage (played by Gregory Peck) is asked suddenly to take over a bombing group from a commanding officer whom everyone loved and respected. But his overidentification with and concern for his men result in an outfit that is not producing and is hurting the war effort.

This is not an either/or process. It is often a matter of determining how much to concentrate on each---output and intervening variables. Let's look at a basketball example. Suppose a woman's team has good potential, with a large number of experienced senior players, but as the season progresses it does not look as if it is going to be an extremely good year. There comes a point in this season when the coach must make a basic decision. Will she continue to play her experienced senior players and hope to win a majority of her final games, or should she forget about concentrating on winning the last games and play her sophomore and juniors to give them experience, in hopes of developing and building a winning team for future years? The choice is between short-term and long-term goals. If the accepted goal is building the team for the future, then the coach should be evaluated on those terms and not entirely on the season's win-loss record. The art of achieving a balance is essential to effective leadership.

Although intervening variables do not appear on win-loss records, balance sheets, sales reports, or accounting ledgers, we feel that those long-term considerations are just as important to an organization as short-term output variables. Therefore, although difficult to measure, intervening variables should not be overlooked in determining organizational effectiveness. 

In summary, we feel that effectiveness is actually determined by whatever the manager and the organization decide on their goals and objectives, but they should remember that effectiveness is a function of:

1. Output variables (productivity/performance)
2. Intervening variables (the condition of the human resources)
3. Short-range goals
4. Long-range goals

*SOURCE: MANAGEMENT OF ORGANIZATIONAL BEHAVIOR: LEADING HUMAN RESOURCES, 8TH ED., 2001, PAUL HERSEY, KENNETH H. BLANCHARD, DEWEY E. JOHNSON, PGS. 131-135*

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