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

Management Lessons from Undercover Boss

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Michelle Buck

Story Tools

One of the biggest responsibilities of leaders is to set other people up for success. … Leaders can't do that if they don't understand the experience of people carrying out the work. There was one quote I wrote down from the other night. Carstanjen said, "Spreadsheets only tell half the story. This is a people business. We have to know how people are feeling if we want to run the business well. Decisions are made in the boardroom that affect them, and I've never understood the consequences of our decisions."

Everyone has a story—and everyone's story is different. A CEO can't walk around changing everyone's life. How can management find out what the dreams of employees are when they don't have a rapport, or even a relationship or contact, with these people?

Yes, obviously there is the issue of scalability, especially if you are talking about large organizations. … A CEO or top executive won't be able to go undercover or even do a walkaround to meet all employees. But they can institute and create the organizational culture where the top leader has to be the role model. They have to walk the talk, and this has to cascade throughout the organization.

It's about seeking feedback and input from people. Leaders need to acknowledge and reward feedback or recommendations that employees, especially lower-level ones, might be afraid to offer. That's the whole premise about these [bosses] having to go undercover. [Top management] has to create the environment where they say: "Tell me what I need to know." "What would prevent us from doing our best work?" "What do you need to do your best work possible?"

Workers likely would not have been as open had Carstanjen shown up and said, "Hey, I'm the COO, and I don't know enough about the way the operation works. What's hard about your job?" Even if you create a culture from the very top where this kind of conversation is important, and you want to give people the tools they need to do their jobs well, and you set it up so that cascades down throughout the organization, how do you make it safe for employees to be open with you?

Leadership is a relationship, and like any relationship, it evolves with trust and credibility. So a leader has to be consistent in showing desire for the input and acknowledging the feedback—but there has to be follow-up as well.

Too often people feel, "I made the suggestion, they said thank you and smiled, but nothing ever happened." And that can cause a real decrease in morale ….

Whose responsibility is it to do that? Is it my direct manager's responsibility, for example, to have that conversation with me?

Top leaders have the responsibility for creating this culture. They have the responsibility for being role models themselves and encouraging this kind of behavior in all the managers who report to them. … It has to be localized to be effective in an organization, but ultimately that comes from the culture created at the top.

And though it should start at the top, it should not stop a midlevel manager in an organization from doing it on their own. If I'm in an organization and I feel that culture has not been established at the top, that shouldn't prevent me from doing it on my own with my own work team.

People are often frustrated by what management isn't doing at the upper level, and they feel like they're one individual in a large organization and that they can't make a difference. But like what we're talking about here, with your immediate work team, that is something that an individual manager takes initiative on.

Michelle L. Buck is Clinical Professor of Management and Organizations at the Kellogg School of Management at Northwestern University. She teaches Leadership and Negotiations courses in Kellogg's MBA and executive programs. She also serves as the School's director of leadership initiatives. For more information about the Kellogg School of Management, including its MBA and its executive education programs, visit www.kellogg.northwestern.edu.

The Kellogg School of Management at Northwestern University is widely recognized as a global leader in management education. A regular feature of the BusinessWeek Online Management Channel is Conversations with Kellogg in which Management Channel Editor Patricia O'Connell talks with a Kellogg School faculty member about the management challenges that lie behind the breaking business news stories of the day. Kellogg's faculty members are known for their research, teaching, and practical connections to the world of business and management through the school's MBA and executive education programs.