Reflecting on Change:
An Interview with Rosabeth Kanter
By Dave Crisp

Harvard's Rosabeth Kanter has for years been observing, helping and writing about corporations. Dave Crisp asked Dr. Kanter to reflect on change and the role of HR.

DC- From Frontiers of Management to your more recent works you have always been in favor of managers developing an ability to change. Do you think that has come to fruition, have a lot of companies developed change capability?

RK- Companies have developed a lot of change capabilities but not necessarily in the human resource function. Consciousness of the importance of people has started permeating the management ranks. In many companies the defacto chief people officer is the CEO. The senior management team may spend more and more of its time discussing people, thinking about how to groom people, how to measure people-so that is success for the idea of human resources.

There is more emphasis on leadership development and leadership skills and more discussion of the fact that managers have to be leaders, so the quality of leadership in many companies is stronger today then it was when I began my career. There is much more sensitivity to the needs of people. There is much more concern about an empowering and attractive work environment. Line managers are doing that.

Again that is a triumph of ideas about human resources but the leadership in implementing those things has been taken by business unit managers. It may seem ironic to talk about better leadership today given the number of scandals and crises facing companies but on average I see more sensitivity, more concern, more knowledge about these domains in the companies that I work with than I would have seen 20 years ago.

I think diversity in the workplace has helped a great deal. There are many more women and minorities in leadership positions and they bring in a certain sensitivity to people because they have had to think hard about how to succeed in a world that once was closed to them.

The human resource function faces many challenges today. Technology threatens to replace the administrative functions and the very success of certain ideas means that line managers do them, not human resource executives, so I think there is a question about the future of the profession.

DC- That is an interesting point of view. Do you think there are ways in which human resource executives are dropping the ball?

RK-There was a time when they definitely dropped the ball on quality. Twelve to 15 years ago human resources could have owned quality, but many companies appointed a "Czar of Quality" who came out of engineering or manufacturing. The human resources profession was not ahead of that issue even though a great deal of quality practice had to do with empowering people to solve problems, training people in new methods, and creating more teamwork. Similarly, knowledge management tended to be led by people from IT rather than HR.

Where the human resource function has sometimes played a significant role is in creating a culture of high performance. Some companies valued the HR executive enough to change the title to Vice-President for People. Southwest Airlines for example, is held up as a role model where the HR executives were really partners with a very entrepreneurial CEO in figuring out how to implement programs. So there have been examples where the culture-building functions of HR has meant that the function has played a leadership role, including questions of change and capabilities for change.

In several companies I work with, human resources is actually leading the change effort. However, in general the HR people feel they need to stay in the background because they say it is a kiss of death to call a program another human resource initiative. It is a funny position to be in; to have expertise and then to hide it, to be staff to the line executives, to be implementers or administrators of ideas rather than the originators, and to lose the opportunity to lead some of the new concepts.

DC- What should HR's role be?

RK- The role of HR may be very different in future. I have worked with an unusual European firm that has won many awards because of a large-scale transformation over 10 years which dramatically reshaped the culture, professionalized management, created innovative products and provided better service to customers. The human resource executive was a partner with the CEO in carrying that out. HR decided that their field was so important it should be a business in and of itself. They set up a service centre and gave it a new name.

Now all of the HR professionals offer themselves as a professional consulting firm selling their services on the market, and the business units tend to buy from them. That is one model for the function. It keeps it very professional. They have to be ahead of the business managers in thinking about what they need. They are taking on change management, knowledge management and other areas in which they can make contributions.

In other cases I am seeing that parts of the HR function, such as administration of compensation and benefits, are getting outsourced. I don't want to sound naïve, but why should compensation and benefits administration be under the same executive as legal compliance, change management and building cultures? If you ask who the customer is you'll see it really is different. The HR function has been schizophrenic. In some cases it is serving management trying to lower costs, while in others it is serving government compliance issues and in yet others it is serving the employees and trying to get great things for them.

DC- I know in my function I tried to distinguish the two by calling one group hygiene and the other group development.

RK- A good example of the problem is the development function; human resources is always struggling with whether to help people with their careers or to evaluate them. A lot of different functions are coupled under one executive and maybe that should be re-thought, re-organized, or restructured. The fact that anything having to do with people got put into one function may some day be looked upon as a historical accident.

DC- In terms of broader company strategy, initially it was a challenge to have companies see that you have to keep changing on a regular basis. Do you think the majority of companies have evolved to the point where they anticipate that change has to occur steadily?

RK- It would be hard to find an executive who doesn't realize now that you must change because the marketplace is changing. The question is whether companies have a culture that allows them to be flexible and responsible enough. That is the part that not every company has embraced. They often want change to mean following orders. "When we say change, you jump." They don't always understand what it takes in terms of the culture, the development of people, the need for multiple leaders.

DC- That raises the question of whether some companies have institutionalized change so much that they have overdone it?

RK- CEOs and top executives are changing rapidly but not for the sake of change. It is because boards are strong and loud and because the job of CEO is tougher than ever. The companies that are in danger of changing for the sake of change are companies that cannot quite get the strategy right, can't quite get the organization right and in some cases believe that if you move people around frequently you get more creativity. Really good change, change that is productive, requires a degree of stability.

It is a paradox because the kind of change that I am talking about, which builds innovation and brings new value to the marketplace, requires confidence that you can take on a risky idea without having the environment shifting around you.

Innovation requires the willingness to commit to a project without worrying that tomorrow all the people working with you are going to be fired and that you'll have to start all over again.

DC- Or that if there aren't instant results the project comes to a crashing halt.

RK-- Exactly. There is a certain kind of change that is just motion, just activity. Productive change requires a certain kind of stable values, a certain kind of confidence that the company has a commitment to you, and that they will be honest about circumstances. Imagine working in a company where you discover the accounting numbers are not correct. How do you have confidence in any of the information you have?

DC- There seems to be an emphasis in business schools on rational decision-making. You are touching on the need to have a real feeling of security on one hand, but an ability to change on the other. Do business schools address that sort of paradox?

RK- I think schools that teach by the case method do. They provide a rich and detailed picture of what actually goes on in companies. This is much more likely to produce students with awareness of the complexities of business decision-making. I don't think there is anything wrong with rational analysis as long as it is informed with knowledge of how people are likely to react. In fact one of the virtues of business schools is the analytic mode, laying out the facts for making decisions. It is why other sectors like public education, health care, etc., are so interested in the business discipline.

However, business schools are sometimes overly analytic and don't emphasize behavior enough. If you make a decision that appears to be rational, say, that we have too many factories, you also have to anticipate that people populate the factories and they will have reactions. They may have power at their disposal to stop you or slow you down. Those are factors you have to take into account.

Recent studies have shown a shift from tangible to intangible assets as the source of marketplace value for a company. I have been working with a big consumer products company that acquired a company then eliminated about 85% of its field service organization. Two years later, when things were not going well, it discovered they had cut out the people who had relationships with the customers in the trade. Those relationships were an asset they threw away. So relationships matter to a company. The human considerations, the decision making also matter and we have to teach more about that.

DC- There are many cases of new managers immediately making dramatic changes to a department-even a well functioning department-because they seem to feel it's the only way to make a mark. What do you think about this kind of change?

RK- I wrote about this a long time ago; one way people establish power is by trashing their predecessor, they say "everything was wrong and now I will fix it." That is a long-standing phenomenon and it is more of an issue when the media demands dramatic action. In a number of my writings I differentiate between bold strokes and long marches.

Bold strokes are those decisions at the top that are dramatic, that appear sweeping, where you can show you have done something. Long marches are often what it takes to really change an organization. Long marches are necessary where you have to redirect many, many people and get them moving in a new direction.

You have to entice, encourage, engage and motivate them. You have to offer them new opportunities. We are living in an age of media visibility and the demands by the capital markets for dramatic actions. I think this a challenge that seems most pressing. If you were a quiet manager and spent time learning and absorbing the issues you might not be praised as much.

We have encouraged more of that power thinking style than is healthy. Remember that decisions like closing a factory or buying a company are things that you can control at the top. Things such as finding new ideas to create products you can't quite control. It depends on people's creativity and it is a slower process. So if you have to show instant results, and if the promotion system of the company, the publicity mechanisms and pressure from Wall Street demand fast results, then managers are encouraged in that kind of power-seeking behavior.

DC- I have always felt that HR plays a role in developing a culture of ethical behavior; which, if well ingrained, makes it difficult for managers to step outside that box.

RK- The kind of power-seeking behavior I was talking about is not necessarily unethical. I was responding to the 'change for the sake of change' approach. That is different from the pressure to cook the books. That is just bad behavior and there are some people in the current corporate scandals who are just crooks. We can't blame it on the system. The system made it hard to find them because things were not transparent enough. In some cases people didn't listen to whistle-blowers. What human resources has to do is encourage an environment in which people feel free to speak up about attempts to cook the books.

DC- In general, is corporate culture changing in the right direction?

RK- Well, we hope so. Right now business is in the hall of shame, but there are still a lot of companies that are really good. Unfortunately businesses are also discredited because the economy is so weak. A really good company like Cisco Systems is not looking good at the moment because people are not buying its technology. That undermines the claim that this is a really good company. I think we are in a period of temporary setbacks. I see that many of the ideas that were seen as radical when I first started writing are at least well understood if not well done.

DC- Do you have any closing advice for the HR function?

RK-- Build a function that people rotate in and out of from line positions. A full-time, long-term career only in HR is not healthy either for the business or the people in it. Some of the best companies I know have people in senior human resource jobs who haven't spent their whole career in HR, they have line management experience. It is also very healthy for line managers to have to grapple with the people strategy questions.

Rosabeth Moss Kanter is an internationally known business leader, best-selling author, Harvard Business School Professor, and adviser to leading companies and governments worldwide. Her most recent best-seller is Evolve!: Succeeding in the Digital Culture of Tomorrow Available from Amazon.com. For more information about her work, see www.goodmeasure.com.

From HR.com Interviews

Dave Crisp