A Summary and Review of Management Reset by Edward E. Lawler and Christopher G. Worley

This summary and review of the book, Management Reset: Organizing for Sustainable Effectiveness, was prepared by Amanda Lowery while a Business Management student in the College of Business at Southeastern Louisiana University in Hammond, Louisiana.

Executive Summary

Management Reset sets out to argue and prove that the time is now for the third reset to take place.  The first two brought about CCOs and HIOs, but have recently become almost obsolete in the current business environment.  Sustainable management organizations are capable of quickly and efficiently adapting to the constantly changing world we live in.  This book shows how organizations can be sustainably effective.  It is vital to the success of an SMO to create social value and ecological value while maintaining economic value.  Management Reset is filled with checklists of how to implement strategies and different principles to guide each step of the transformation process to becoming an SMO.

The act of “futuring” is the act or process of looking to the future in order to help prepare for any obstacles that may arise.  This is part of developing a strategy for an SMO.  The board of governance is also discussed.  It is important to consist of members that are both independent, as well as employees in order to gain the best overall perspective when making decisions.

There are three different organizational structures that coincide with sustainable effectiveness; sustainable functional organization, ambidextrous organizations, and network organizations.  Transparency is vital in all three because it is what ensures that information concerning the organizations is readily and easily accessible.

The book also states how important of an asset talent is to SMOs.  More important is the proper utilization of the talent to guarantee sustainable effectiveness.  Aspects of the talent included leaders, managers, and followers.  Leaders motivate and influence other employees positively.  Managers provide feedback to individuals.  It is important to know that not all leaders are managers, and not all managers are leaders.  However, good leaders must also be good followers.

The Ten Things Managers Need to Know from Management Reset

1. Managers need to know about the strategies for sustainable effectiveness.  Creating value socially and ecologically, while maintaining economic value is imperative to the survival of an SMO.

2. When developing a strategy, managers must implement the act of “futuring”.  This gives the organization the opportunity to look to the future to prepare for possible obstacles instead of only focusing on the present.  ”Inattentional blindness” should be avoided in order to not lose sight of the environment as a whole.

3. The governing board of an SMO should have both independent and employee members who represent all of the organization’s stakeholders.  The leader should be independent.

4. There are three structures for sustainable effectiveness.  They are sustainable functional organizations, ambidextrous organizations, and network organizations

5. There are six principles that characterize sustainable work systems.  They should be based on activities, not jobs, and guided by shared goals.  Multiple stakeholder teams should perform work systems.  They are temporary, should be supported by the physical space and technology, and should be managed strategically.

6. Managers of SMOs should manage performance by establishing a balanced scorecard and setting talent development objectives.  Appraisals should occur more than once a year and should include team performance.  Managers should also use web-enabled technology and have review discussions online.

7. Managers should create and implement a reward system.  The system may include tangible, recognition based, or intrinsic.  Individual are more likely to perform better when they’re expecting a reward.

8. It is important to the success of the organization to be able to manage talent.  Talent is often considered the most important asset to sustainable effectiveness.

9. Managers should know that not all leaders are managers, and not all managers are leaders.  However, all good leaders must, at times, be good followers.

10. In order to transform to an SMO, organizations need to redefine existing relationships.  It is also important for employees to accept that strategies, policies, practices, and organization’s identity will change.  Clear and consistent communication will assist in accelerating the transformation.

Full Summary of Management Reset

Time for a Reset

This book begins by stating that, in order to stay relevant, it is time for a management reset to take place.  This basically means that with the ever-changing economy, companies and managers need to also change.  In doing so, not only will managers become more effective, but also organizations will have restructured their goals and what is necessary to achieve them.  With this reset, environmental and social issues will become a priority.

Two resets have already taken place.  The first occurred with the development of command and control organizations (CCOs).  This was brought about when a shift in consumer demand helped combine bureaucracy and mass production.  The second reset is responsible for the creation of high involvement organizations (HIOs).  This came about when higher levels of education became more accessible to workers, and the work itself became more complex.

Lawler and Worley argue that both CCOs and HIOs have become obsolete in today’s business world.  This is due to the environments, social and business, constantly changing.  CCOs and HIOs perform best with stable environments.  The rapid pace of globalization and the increasing rate of environmental degradation are two other factors affecting the relevance of CCOs and HIOs.

Sustainable management should be flexible to change while being environmentally conscious, supporting the well being of all people involved, and still generating profits.  Organization effectiveness is influenced by the way the organization is managed.  Four of these ways are:  the way value is created, the way work is organized, the people are treated, and the way behavior is guided.

Sustainably effective organizations must possess agility and produce outcomes that are beneficial to the stakeholder.  Being agile means to be flexible to the complex changes that may present itself; especially those involving the workforce, technology, and globalization.  According to Lawler and Worley (2011):

Sustainable management is an evolving management style that we believe is the right one for many companies because of how well it responds to today’s stakeholder demanders as well as the demands of the future.  We have chosen to call it sustainable management because it is focused on creating organizations that consistently perform well financially, socially, and environmentally. (p. 20)

Sustainable Management

In order to be relevant in the business world while maintaining sustainable effectiveness, sustainable management organizations (SMOs), must be comprised of multiple ideas and procedures that satisfy the wants and needs of the stakeholders.

Going back to the ways the organization is managed.  When dealing with the way value is created, it is necessary to realize that without value an organization cannot exist.  Value creation consists of identity and purpose.  Identity, which is basically the “how”, represents the long-term strategy and what the organization hopes to accomplish.  Purpose, on the other hand, is representative of the main goal, such as achieving sustainable effectiveness.  The way value is created differs amongst CCOs, HIOs, and SMOs.  Each has a different identity, which results in differing strategies.

The way work is organized deals with the structure of the organization, as well as how the work is divided and coordinated.  In SMOs there is, like with most organizations, a corporate board that overlooks the practices of the organization.  It is their job to insure that such practices coincide with sustainable effectiveness.  It is important for employees to understand and relate to the external business environment.  This is where the structuring of an organization comes into play.  Broader spans of control and flexibility within teams help the structure continuously evolve.  In an SMO, work is organized according to its purpose (Lawler & Worley, 2011, p. 29).

The way people are treated includes that talent within an organization.  Often considered the most important asset, it is crucial for SMO managers to know whom their biggest assets are and to see to it that their skills are utilized most effectively.  To achieve this, the talent and their performance must be managed and rewarded.  It is also critical for managers to recognize how to manage a diverse workforce.  With many companies expanding globally, and with the increased diversity of the workforce in the United States, it is an organization’s responsibility to manage and respect employees of different cultural backgrounds.

Leading and transforming are the two main ways behavior is guided.  SMOs generally need more employees who possess leadership qualities than CCOs or HIOs typically would.  The leading is shared throughout the organization, which helps to establish a new identity, and thus helps guide behavior.

Strategies for Sustainable Effectiveness

Currently, it should be equally important to create value socially and ecologically along with the pre-existing economic values of an organization.  Economic value, is of course, imperative to an organization’s survival seeing as that’s where profits are earned.  The goal of SMOs is to successfully have strong economic values without overlooking the effects to the ecological and social environments.

Just as with any other strategy, there are risks associated with sustainable effectiveness.  Managers of SMOs tend to be aware of more types of risks than those of CCOs or HIOs.  Along with the typical financial or strategic risks, SMOs also take into consideration that competitive advantages are not permanent or guaranteed.

Creating ecological value consists of being aware of the carbon footprint an organization will leave on the environment.  Not only should organizations do their best to preserve the existing environment, they should also utilize natural resources available to them in the most productive way possible.

Another strategy for sustainable effectiveness surrounds the human aspect of an organization.  SMOs need to focus on the positive treatment of their workforce.  Encouraging a strong social value will in turn encourage creativity, innovation, and an overall happier and healthier workforce.  This can also be implemented through an organization’s culture and brand.

Developing a Strategy

When developing a strategy for an SMO, the process of “futuring” gives organizations the opportunity to look to future to help prepare for any uncertainties that may arise.  Futuring prevents organizations from focusing all of its attention on the present, which may cause it to overlook or neglect important details that will affect the future.  A similar problem facing organizations is “inattentional blindness”.  This happens when someone becomes fully engulfed in a particular situation or task, becoming completely blind to his or her surroundings.

To help avoid this problem, futuring processes need to focus on time and goals; short-term, medium-term, long-term, and the expectations for each.  SMOs should also focus on the organization’s social value, natural environment, and financial performance.

Board Governance

The purpose of a board is to ensure that the owners of an organization are represented.  SMOs believe that part of maintaining sustainable effectiveness means also representing the major stakeholders of the organization, such as the customers, employees, investors, and the community itself.  The board is responsible for ensuring that all of the organization’s goals and strategies fit it with sustainable effectiveness.

The members of a board play a huge role in how well it successfully represents its stakeholders, how credible and knowledgeable it is, and how effective it is overall.  Independent (not employed by the company) members are often considered the most important part of any board.  They are more likely to be less biased when it comes to decision making.  This doesn’t mean that there shouldn’t be any employees on the board, though.  Insiders can often bring a different perspective and necessary information to light that those outside of the company may not have access to.  Representatives from each of the stakeholder’s groups, as well as those who add diversity and expertise to the board are key to sustainable effectiveness and its success.

SMO boards must also have a position of leadership.  While previous CCOs and HIOs looked to the CEO of an organization to fill this role, SMOs typically do not.  SMOs understand the importance of having an independent chair to lead the board.  This prevents conflicts of interest and excessive time demands, while reinforcing objectivity, accountability, and strong corporate culture.

Boards may also consist of many different committees that oversee the various areas of the organization.  These committees may include:  sustainability, social responsibility, human resources, and organizational effectiveness.

Structures for Sustainable Effectiveness

There are three different organizational structures that coincide with sustainable effectiveness.  Sustainable functional structures start with managing resources and deciding what issues to focus attention on.  One focus is to maximize its surface area by gaining feedback from multiple stakeholders by implementing flatter structures.  This also makes this type of structure better equipped to change easily.  Coordination and resource allocation is another objective of functional structures.  Coordination can be considered what keeps the organization running; the more complex the business, the more complex the coordination process.  Flexible resource allocation is essential in SMOs.  As the business environment changes, SMOs must be able to move their resources around to get the most value out of them.  Also, the decision-making processes of SMOs must possess a high level of transparency.  Because SMOs strive to be financially, socially, and environmentally effective, they face the complexity of having multiple bottom lines.  Transparency ensures that individual stakeholders associated with an organization are kept informed and up to date on the organization’s corporate social responsibilities and decision-making processes, including who is making the decisions and what they are based on.

Ambidextrous organizations must balance innovation and efficiency.  Innovation is commonly driven by the creative talent available within an organization.  Technology, the external environment, and organizational culture also play a role in the aspect of innovation.  Efficiency may play a factor in sustainability if it is focusing on being environmentally efficient.  Network organizations must execute effective outcomes while still possessing the flexibility to change.

Sustainable Work Systems

According to Lawler and Worley (2011), sustainable work systems should be:

  • Based on activities, not jobs

  • Guided by shared goals

  • Performed by multiple stakeholder teams (they can be virtual)

  • Temporary and iterative

  • Supported by the physical space and technology

  • Managed strategically (p. 162)

SMOs are based on the fact that our environment is constantly changing.  Because of this, there is no place for fixed jobs or job descriptions.  By not being characterized by fixed jobs, employees are granted more flexibility in their job.  It is common for employees to rotate projects or responsibilities for each project.

When work is guided by shared goals, it is common for there to be a difference of opinion when it comes to each goal’s importance.  One person may be concerned with customer service while another is more concerned with the legalities of the project.  This characteristic of SMO work systems intends to gain perspective from multiple stakeholders.

SMOs usually partake in mostly group work.  Groups bring a higher level of innovation, creativity, and sustainability to an organization.  Each individual possesses his or her own perspective and insight on how to proceed with a project or how to resolve a conflict.

Now, agility comes back into play.  Work systems are temporary.  When it is no longer productive, effective, or relevant it must be changed to adapt to the new business environment.  SMO work is also iterative, meaning “productivity is achieved and sustainable effectiveness supported through small and frequent improvements in the product or service” (Lawler & Worley, 2011, p. 169).

Another characteristic discussed is the importance of the SMO being supported by the physical space and technology.  By creating a complementary workspace, employees will have a higher level of job satisfaction, which will increase overall productivity.  If a company chooses to use various forms of technology, it is imperative that they then provide the necessary training and support to their employees.

Lastly, work must be managed strategically.  This seems like a no-brainer.  Planning, leading, organizing, and controlling must be implemented strategically while managers ensure that they are being sustainably effective.

Managing Performance

Organizations manage performance in many ways.  This doesn’t mean that organizations carry this out the right way.  There is a huge need for effective performance management.  SMOs lack fixed job descriptions, making it more difficult to carry out performance evaluations.  Having an effective performance management system helps counteract this problem.  This system would set goals and provide a basis for rewarding employees who accomplish their goals.  As part of the SMO performance management system, there are six principles that support sustainable effectiveness.  They are:

  • Establish a balanced scorecard

  • Set talent development objectives

  • Don’t assume an annual appraisal is often enough

  • Use web-enabled technology

  • Appraise team performance

  • Have review discussions online (Lawler & Worley, 2011)

Reward Systems

Individuals are more likely to achieve higher goals when they expect a reward in return for their performance.  Most organizations have reward systems that attract potential employees and motivate current ones.  Rewards can be tangible extrinsic, based on recognition, or intrinsic.  Tangible extrinsic rewards possess some form of economic value, such as monetary bonuses, stock options, etc.  Those based on recognition range from praise from your boss to a ceremony commending an individual’s performance.  Intrinsic rewards are those that are internal.  Excitement over completing a project is an example of that.  Managers of SMOs must be sure that all rewards are based directly on an individual or team’s performance.

When designing a reward system, there are twelve principles that should be implemented.  The first five are considered universal reward principles, and the following seven are SMO reward principles.  Together, all twelve are key to an SMOs sustainable effectiveness:

  • Create rewarding work assignments

  • Forget merit increases, give bonuses

  • Pay for team performance

  • Give people a piece of the action

  • Don’t be satisfied with a once-a-year reward cycle

  • Pay the person, not the job

  • Define fairness strategically and ethically

  • Individualize rewards

  • Don’t base rewards on hierarchy

  • Don’t base rewards on seniority

  • Be transparent

  • Use identity and purpose as rewards (Lawler & Worley, 2011)

Managing Talent

Employees are an important asset to every organization.  SMOs prove this by treating their employees as stakeholders in the organization instead of just employees.  The talent possessed by an organization has the potential to create a competitive advantage within the industry, and therefore must be managed effectively.  SMOs use the travel-light approach when managing talent.  This consists of temporary employment, outsourcing, virtual employment, etc.  SMOs face the challenge of maintaining the flexibility necessary to be sustainably effective while also having a committed workforce.  It is more cost effective and easier all around to change the employee when situations change versus retraining that employee.  This is where the travel light approach comes into play.  In order to effectively manage talent, there are nine principles that should be considered:

  • Use competencies to drive talent management

  • Use targeted talent management

  • Use contract labor

  • Outsource nonpivotal work

  • Create career diversity

  • Build a sustainable management brand

  • Make career management the individual’s responsibility

  • Make executives the primary talent managers

  • The HR function plays a strategic role (Lawler & Worley, 2011)

Leading, Managing, and Following

Leadership is an important aspect in the success of any organization.  Not all managers are leaders and not all leaders are managers.  Leaders are those individuals who motivate, positively influence, and guide other employees.  Strong leadership is important in SMOs since the structure is more flexible.  SMOs should encourage leadership to be shared throughout the organization.  Good leaders must also know how and when to be a follower, especially in an organization that has many leaders.  To create and promote leadership an SMO should establish a sustainable leadership brand; senior management must support building the leadership capability; develop managerial and leadership skills; and commit to transparency.  (Lawler & Worley, 2011)

Transforming to Sustainable Management

Overall, it seems obvious that the constantly changing environment calls for a complete management reset.  Factors such as globalization, increased diversity, and ecological forces further support this theory.  For an organization to transform into an SMO it must first redefine the existing relationships within the organization.  The governing board and top management must agree on objectives necessary for sustainable effectiveness.  Appropriate targets should be set, along with reasonable growth expectations.  Organizations must maintain transparency especially when dealing with ecological and social concerns.  Once these steps have been takes, there can be a new value creation.  Other dilemmas associated with being an SMO include the knowledge and awareness dilemma and the capabilities dilemma.

To manage the transformation process, many aspects of the organization must change.  Strategies, policies, and practices are just a few areas where change will be necessary.  The organization’s identity will also require change.  The sequence of change begins with the work system.  Once that is done, a reinforcing system should be created to help restructure the organization.  To accelerate the transformation requires a high level of leadership and the willingness to learn.  It helps the process if the members involved understand the need for change.  This information should be shared.  Learning through experience, as well as taking the initiative to drive change will further accelerate the transformation.  Consistent communication of what is expected is also vital in the transformation process.

The Video Lounge




This clip discusses the adaptable organization and how change occurs naturally in the environment.  The claim is that organizational change has not been managed effectively due to the idea that change is not easily accepted.  It is important to put people in touch with the environment so they understand the nature of the change.

Personal Insights

Why I think:

  • With business conditions today, what the author wrote is true – because:

The focus and main idea behind sustainable effectiveness is that the social and business environments are ever changing, and to be successful your organization must also be flexible to those changes.  With globalization and constant advances in technology, change is occurring, at times, faster than books can be printed about it.  SMOs are the obvious next step in business organizations.

  • If I were the author of the book, I would have done these three things differently:

1. I would have avoided the redundancy found throughout the text.  This caused it to be a bit boring at times, because although the authors went into more detail, I felt like I was rereading the same things over and over again.

2. I think that the book could have been organized better making it easier to read and follow along.  Some topics were introduced in earlier chapters and revisited in later chapters.  I think I would have liked it better to keep information on the same topic together.

3. The division of the book into parts and chapters caused it to be more of a complicated read than I think it should have been.  It added an unnecessary sense of confusion that, in the end, took away from the reader’s experience.

  • Reading this book made me think differently about the topic in these ways:

1. I can’t say that it made me think differently about the topic since the topic itself was new to me.  I can say that this book opened my eyes to the concept of sustainable effectiveness and its importance in the business environment of today.

2. This book made me realize the importance of implementing strategies that focus on and utilize such things as social and ecological value.  Organizations that are concerned with practices that promote social well being and sustaining and protecting our environment will have a better opportunity at long-term success.

3. I feel like I further understand the importance of diversity within the organization.  Creating social value puts a focus on using talent to the advantage of the organization.  Knowing who is an asset and successfully using their talents in the correct positions are crucial to the success of sustainable effectiveness.

  • I’ll apply what I’ve learned in this book in my career by:

1. Researching every organization I may be interested in working for in order to check for sustainable effectiveness.  In doing so, I’ll know that the organization is concerned with its responsibility to the stakeholders and the environment over just turning a profit.

2. I believe I will research the board of the organization to see if all of the stakeholders are efficiently represented.  This book made me realize the importance of that factor.  If there is no representation, I will have some information to bring to the board supporting that belief and hopefully can influence a positive change.

3. Being open to change inside and outside the workplace.  The world is constantly changing and success is dependent on being capable of changing with it when necessary.

Bibliography

George, J. (2011, June 26). Living in Groups: Management Reset – Organizing for Sustainable Effectiveness – by Ed Lawler and Christopher Worley. Living in Groups. Retrieved April 15, 2013, from http://groupsarelife.blogspot.com/2011/06/management-reset-organizing-for.html

Jones, D. (2011, April 12). Book of the Week: “Management Reset” by Ed Lawler and Christopher Worley | | Jossey-Bass Business. Jossey-Bass Business | Bringing together the best minds in business.. Retrieved April 16, 2013, from http://www.josseybassbusiness.com/2011/04/book-of-the-week-management-reset-by-ed-lawler-and-christopher-worley.html

Lawler, E. E., & Worley, C. G. (2011). Management reset organizing for sustainable effectiveness. San Francisco, CA: Jossey-Bass.

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Contact Info

To contact the author of this article, “A Summary and Review of Management Reset by Edward E. Lawler and Christopher G. Worley,” please email Amanda.lowery@selu.edu.

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About the Publisher

David C. Wyld (dwyld@selu.edu) is the Laborde Professor of Management at Southeastern Louisiana University in Hammond, Louisiana. He is a management consultant, researcher/writer, and executive educator. He also serves as the Director of the Reverse Auction Research Center (http://reverseauctionresearch.org), a hub of research and news in the expanding world of competitive bidding. His blog, Career News 24/7, can be viewed at http://wyld-about-careers.blogspot.com/.

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