What do companies have to do in order to have happy people? How should management manage their employees so that they are happy and perform well?

Pictured left: Hans Lerch

Well-managed companies which are able to create a climate of entrepreneurship and thereby build high levels of motivation, hold a true strategic advantage.

And this is especially so in the tourism industry where more often than not the product is the service people provide for people on a holiday!

However, people have changed. Quantum leaps in technology have brought about dramatic social and other changes.

When I lived in Tokyo 35 years ago we gaijin listened to American Forces Radio, an AM station with poor reception, still is for that matter, and that was it in terms of electronic media in English. When I lived in Hong Kong, there were two English TV channels, Pearl and HKTV, and that, too, was it. And in Thailand – there was no electronic media in English at all. When I travelled around this region during those years, business people like me handed the reception girl in the hotel a hand-written draft before dinner – for her to send out as a telex for US$5, copy of which we then picked up after dinner.

Take Stephanie, my daughter who is 18. She’s got a Mac in her bedroom, a fully stocked iPod which she threw in for an iPhone recently, a weekly iTunes allowance and bunches of friends with the same. Stephanie has never known a world without broadband, cell phones, MP3s, online shopping and the lot. The main effect of this connectivity is unlimited and unfiltered access to anything, to any sort of information - good or bad!

The main difference between Stephanie’s adolescence and mine is simply choice – and access to information.

Do I consider today’s youngsters better informed than we were? Yes, I do, in fact I consider everybody much better informed than we were 30 years ago, and that is why people cannot be managed like we were when we were young.

Hierarchies do not have the same meaning they once had. Respect and position are no longer synonymous. Respect needs to be earned and has nothing to do with somebody’s position in life. It probably never really did but because people were different, had less choices and were not as well informed as today, the corporate world too was different, and very hierarchy-oriented.

People today benchmark you against what they think is right and what they think deserves respect. And their opinions are shaped by unlimited access to information, by bits and tons of megabytes, which in all likelihood make them more competent than you are on some of the issues you are supposed to manage.

Forty years ago the boss did know more about everything, not always but most of the time. But today it’s definitely naïve to believe that anyone could motivate people by telling them something needs to be done because he or she wants it done or by adding the absolute killer phrase – “because I’m the boss!”

There are many things I consider crucial in managing effectively today and they include all those axioms, words like clarity, commitment, credibility, delegation, decision-making, decisiveness, speed of execution, entrepreneurship, teamwork, willingness to change etc. No ground-breaking news and also stuff we read in every management book.

But good managers know the importance of all this and instinctively do the right thing. And my own conviction that one needs to know pretty clearly how to put all these expressions to work, well, this has grown quite significantly over time – grown with my experience in running bigger and bigger groups, departments, divisions and finally companies. And the more the world has changed, the more important it all became.

So, let me then talk a bit about management …

The most important thing in management is – control, control, control and more control – but not the way you might now think. Because the more tightly you control your staff the more likely it is that your organisation is being suffocated and will under-perform! Everybody who is employed needs latitude, we all need room to move and when we realise that this, let’s call it, relative freedom, is granted, we employees tend to overcompensate our employers because we want to do good and want to be seen as achievers, as valuable parts of something bigger, valuable parts of our respective organisations.

People who are economically dependent are like this and are not different anywhere in the world - whatever their race, religion or culture, they are employees and they are all craving to write a story. They are craving to be more than order takers, craving to make a contribution, make an impact – be somebody.

You want to and you have to be in control of the big picture and there are many ways to do that without having to micro-manage. Often people you manage know better than you do anyway. The manager’s job is not to lose sight of what’s going on but, at the same time, to manage for the highest possible level of motivation in his staff, he has to trust his direct reports, period.

In companies with high levels of motivation, people are innocent until proven guilty. Over-controlled companies practise the opposite and this is maybe not always bad for business but most often not the best for business.

In what sort of organisations do you think you will find more criminal energy, more cases of dishonesty or even embezzlement and such things? In very tightly controlled environments or rather in environments which allow for a constructive latitude? I cannot show you empiric evidence but believe me, I’ve seen quite a bit in my life and I dare say – there is no difference! You find criminal energy everywhere, not often luckily but sometimes, and on this score it doesn’t make a difference how you manage, so one better manages for performance and not for an over-controlled bureaucracy.

Let’s talk of clarity. People who sometimes insist that things need to be done because “I am the boss”, ought to change. Because the only thing that’s clear in such a statement is that they are the boss, still the boss, that is.

Clarity is when you explain why you have taken a certain decision. Clarity is when your people say, "well, I still don’t really agree but had I been in his or her shoes, I might have made the same decision – so let’s support the chief". Explaining builds trust and we sometimes want to explain our decisions because we take our staff seriously.

You explain, you are nice, you take your staff seriously but you also expect and you demand - commitment, for instance. Commitment has a lot to do with the attitude of people and however well you manage, you’ll always find under-performance, everywhere. For different reasons and we all know full well what to do with it. We fire the guy, right? Well, maybe, but not necessarily.

I always looked at two things, and they are performance and attitude. A bad performance and a bad attitude are the easiest combination. Fire the person. A good performance and a good attitude get the highest bonus and a promotion, this is equally a no-brainer. A bad performance and a good attitude is more difficult. Firing might not be the best option and often it is not. Do you have another job for this person? Something more suited for his or her capabilities? Better check. Attitude is worth a lot.

Then you have the most difficult one, a lousy attitude but a good performance. What do you do here? Look, you see the numbers but the subordinates of your good performer with a lousy attitude just see the latter. And since it is you who allowed this bad attitude, they stop trusting you! You can’t allow this to happen, such people must go or your own position will be undermined.

However hard it is - managing successfully must include looking into people’s eyes, level with a situation, come to conclusions and act. Implement. To do not only what is nice to do, like paying bonuses, but to also do what is never pleasant, like having to let go somebody.

And if you always act the same way you become predictable and therefore people know you are credible. You mean what you say and you say what you mean, always. What you say is supported by your actions and you are one of those people who stand up and say: “This is me, this is what I believe in and this is what I stand for!”

Your people like that because sometimes you take their side. Sometimes you take the other side. But you are never political and you always act in the best interest of your business. Being credible makes your life as a manager much easier, whether you manage a group of 10 or a company of 10,000.

And since you trust your people, as I argued before, you know how to delegate. You give people things to do as opposed to controlling how they do things.

And never postpone a decision that could be made today, ever. Even if you delegate well, your people will still come back with questions sometimes. You don’t want to answer what they should know themselves. Send them back to do their jobs. But if their queries are justified and if you know the answer – decide right away so that the people can go back to their jobs.

A weak decision maker can never be a good manager. He sits on those decisions, his people are waiting and he, the big bunny manager, doesn’t realize that his business cannot become a better business because it is him who is the bottleneck.

Let me also touch upon another important aspect about decision-making. If you have to change or let go of someone or if you have to re-organise which always concerns people – never waver, decide even quicker and implement immediately. Such changes create a lot of uncertainty because people feel them coming and only really go back to their jobs again once they know what the new situation looks like.

This leaves the important question of entrepreneurship and innovation. An entrepreneurial climate can only come about if management accepts the occasional mistake. Motivated people don’t make them deliberately but they do make them.

To create a climate conducive to entrepreneurship and innovation – let them make mistakes! And let them know that their heads will not be chopped off if something sometimes goes wrong. Let them know too, that if the same thing goes wrong more than once, there might be a problem. But the important issue is to accept that nobody is perfect and to include this infinite wisdom in a management culture.

Let me try to come to a conclusion. Times are certainly not as “happy go lucky” as they were just 18 months ago, not by a long shot.

In conclusion, yes, the news is horrible out there but the world is not about to come to an end. People will continue to travel – albeit somewhat less. Our industry has to face up to these challenges – we are not alone in this. Some parts of our business need to be redefined.

Those whose business it is to act as an intermediary need to re-think their model. Disintermediation is the word and as they have no product and the service they provide is the product, such businesses, more than others, should manage for performance and avoid bureaucracies.

A closely knit and motivated employee base is far better prepared to deal with whatever further challenges the world is preparing for us.

Part 1 of speech: The root of all evil: Greed, trust and sausages