Conversations with Kellogg March 23, 2010, 2:41PM EST

Management Lessons from Undercover Boss

The new CBS reality show demonstrates that each employee has a story—and the importance of management learning what it is, says Kellogg School's Michelle Buck

By Kellogg School of Management Faculty Members

Michelle Buck

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Are CEOs out of touch? Is top management oblivious to the concerns, cares, and responsibilities of the average worker? That's the premise behind the new CBS reality series, Undercover Boss. Top executives go to work under assumed identities as new employees in their own organizations. "Extreme times call for extreme measures," the show states in its intro. "They will discover the truth."

For all the potential such a premise has to be gimmicky, the idea of bosses trying to understand the reality of their workers' experiences has validity, according to Professor Michelle L. Buck, director of leadership initiatives at the Kellogg School of Management. "One of the biggest responsibilities of leaders is to set other people up for success," says Buck. "Leaders can't do that if they don't understand the experience of people carrying out the work."

After watching an episode in which William C. Carstanjen, chief operating officer of Churchill Downs, worked with three employees in varying capacities at Churchill Downs locations in Florida and Illinois, Buck spoke with Bloomberg BusinessWeek Management Editor Patricia O'Connell about the message of the show and the responsibilities managers have to create a culture of openness. Edited excerpts of their conversation follow.

Patricia O'Connell: Out of curiosity, what did you think of the show, Undercover Boss?

Michelle Buck: I was very interested, not just for our conversation, but as someone who teaches a class in managerial leadership. … It's a look at how important it is for leaders to know what's happening at all levels of the organization. As [William Carstanjen] said, "this is really a people business," and everything is a people business. [Managers need to find out do] people have what they need to do their job? What are their hopes and dreams? Those are the factors that affect their motivation and their ability to get their work done.

If [Undercover Boss] that can trigger conversations and open awareness of these issues to the fundamental business practice, that's a great thing.

What do you make of the idea that clearly a lot of employees have no clue what top management looks like? I realize they are showing situations where there are many, many layers between the workers and the top management. But still, I was struck that employees have no idea who their top people are.

I was at an event at Kellogg with an executive of a large global firm and we were talking about the show, before it had aired. He said the premise was scandalous. The ability of people to go undercover [and not be recognized] at a large organization shows the problem.

In the episode you and I watched, Carstanjen changed things for several employees who he had worked with undercover. One was promoted, one got a job closer to home and a raise, another got more horses to train, and and one saw a race being named for his late daughter. They all seemed genuinely grateful and touched by what had been done for them.

In our Managerial Leadership class we talk about the fact that "everyone has a story." The employee whose daughter had died—he has a very unique story. And when a company or a leader knows that, [he or she] can tailor or customize the work experience. What was done in terms of naming the race for his daughter is going to engender such loyalty, such commitment, such engagement, which is what organizations need.

The Gallup Organization has researched employee engagement, measuring the percentages of employees who are engaged, not engaged, or actively disengaged, in companies internationally. They measure impact, including bottom-line cost to the economy of employees who are actively disengaged. The cost in 2006 was more than $300 billion.

Leadership is a relationship, a partnership, and employee engagement isn't just a soft and fuzzy topic but has bottom-line implications.