Some of my favorite recent reads include The Messy Middle by Scott Belsky, The Hard Things About Hard Things by Ben Horowitz and even this great classroom presentation by Keith Rabois, all of these mentioned being influenced by Andy Grove’s 1982 management book, High Output Management. Written by Intel’s legendary CEO during its most transformative years, it seemed that this book was the granddaddy of recent management minds and worth exploring.

I’m amazed how relevant the book still is, and how forward-thinking it must have been at its time. While there are parts that show some age (such as a lack of email communication or some chapters with a manufacturing focus), its 227 pages are dense with great management tools for any organization leader. There are so many well constructed, tested and articulated models for managing teams, that I’ve made this book mandatory reading for all our company’s current and aspiring managers.

I’ve also compiled a summary of some of the most important portions of the book, with the hopes that the entire company invests the time to go through it. Even if you don’t aspire to be a manager, executive or lead a team in some way, understanding how Helcim looks at management will help you better perform and better communicate with your leader as well as your teammates. The bulk of the contents below are direct quotes and passages from the book, with some alterations and additions for context. The summary is organized in the following sections:

  • Managerial Leverage
  • Training
  • Motivation
  • Meetings and Decisions
  • One-on-One Meetings
  • Delegation and Task-Relevant Maturity
  • KPIs
  • Performance Reviews
  • Interviews
  • Promotions and Recycling

I strongly recommend reading Andy’s book in its entirety.

-Nic




Managerial Leverage

  • Andy’s formula for high output management is: 

A manager’s output    =    The output of his organization
                                                                          +
                                             The output of the neighboring organizations under his influence

 

  • The principle is that a manager’s output should not be focused on how much work he is able to produce, it should be measured on how much output his organization (team) and any neighboring team he influences outputs. This is accomplished by focusing on the tasks that have high-leverage – an activity that generates a high level of output. Andy sees motivating and teaching as high-leverage activities, as they have a long-term outcome of high-output from your team.

  • By spending a certain amount of time in advance of the planning activities, the manager will help eliminate confusion and ambiguity over an extended period of time. Consequently, their work contributes to the productivity of the entire organization and clearly has great leverage, leverage that depends, however, on when it is performed. Work done in advance of the planning meeting obviously has great leverage. If the manager has to scramble later to help another manager define guidelines and milestones, their work will clearly have much less leverage.

  • For Andy, paying close attention to customer complaints constitutes a high-leverage activity. Aside from making a customer happy, the pursuit tends to produce important insights into the workings of your own operations. Such complaints may be numerous, and though all of them need to be followed up on by someone, they don’t all require your personal attention. Which one of the ten or twenty complaints to dig into, analyze, and follow up is where art comes into the work of management. The basis of that art is an intuition behind this complaint and not the other deeper problems that may be lurking.

  • An example of high negative leverage is waffling, when a manager puts off a decision that will affect the work of other people. In effect, the lack of a decision is the same as a negative decision: no green light is a red light, and work can stop for a whole organization.


Training is the Boss’ Job

  • Andy was once asked by a middle manager at Intel how he could teach in-plant courses, visit manufacturing plants, concern himself with the problems of people several levels removed from him in the organization, and still have time to do his job. He responded with “What do you think my job is?”

  • If you accept that training, along with motivation, is the way to improve the performance of your subordinates, that what you teach must be closely tied to what you practice, and that training needs to be a continuing process rather than a one-time event, it is clear that the who of the training is you, the manager. You should instruct your direct subordinates and perhaps the next few ranks below them. Your subordinates should do the same thing, and the supervisors at every level below them as well.

  • There is another reason that you and only you can fill the role of the teacher to your subordinates. Training must be done by a person who represents a suitable role model. Proxies, no matter how well versed they might be in the subject matter, cannot assume that role. The person standing in front of the class should be seen as a believable, practicing authority on the subject being taught.


Motivation

  • When a person is not doing his job, there can only be two reasons for it. The person either can’t do it or won’t do it; he is either not capable or not motivated. To determine which, we can employ a simple mental test: if the person’s life depended on doing the work, could he do it? If the answer is yes, that person is not motivated; if the answer is no, he is not capable. This insight enables a manager to dramatically focus their efforts. All you can do to improve the output of an employee is to motivate and train them. There is nothing else.
     
  • How does a manager motivate his subordinates? For most of us, the word implies doing something to another person. But motivation has to come from within somebody. Accordingly, all a manager can do is create an environment in which motivated people can flourish.
      
  • A great deal of a manager’s work has to do with allocating resources: manpower, money, and capital. But the single most important resource that we allocate from one day to the next is our own time. In principle, more money, more manpower, or more capital can always be made available, but our own time is the one absolutely finite resource we each have. Its allocation and use, therefore, deserve considerable attention. How you handle your own time is, in Andy's view, the single most important aspect of being a role model and leader.
      
  • Self-actualization stems from a personal realization that “what I can be, I must be.” Personal Best, captures what self-actualization means: the need to achieve one’s utter personal best in a chosen field of endeavor. Once someone’s source of motivation is self-actualization, his drive to perform has no limit. Thus, its most important characteristic is that unlike other sources of motivation, which extinguish themselves after the needs are fulfilled, self-actualization continues to motivate people to ever-higher levels of performance.
      
  • Output will tend to be greater when everybody strives for a level of achievement beyond their immediate grasp, even though trying means failure half of the time. Such goal-setting is extremely important if what you want is peak performance from yourself and your subordinates. Moreover, if we want to cultivate achievement-driven motivation, we need to create an environment that values and emphasizes output.
      
  • Imagine how productive everyone would be if managers could endow all work with the characteristics of competitive sports. To try to do this, we must first overcome cultural prejudice. Our society respects someone throwing themselves into sports, music, arts, but anybody who works very long hours is regarded as sick, or a workaholic. So the prejudices of the majority say that sports are good and fun, but work is drudgery, a necessary evil, and in no way a source of pleasure.
      
  • The role of the manger here is also clear: it is that of the coach. First, an ideal coach takes no personal credit for the success of his team, and because of that, his players trust him. Second, he is tough on his team. By being critical, he tries to get the best performance his team members can provide. Third, a good coach was likely a good player himself at one time. And having played the game well, he also understands it well.


Meetings and Decisions

  • Every meeting needs to have a chairman. This person is typically the one that called the meeting and has the highest stake in the outcome of the meeting. Thus, the chairman must have a clear understanding of the meeting’s objective – what needs to happen and what decision has to be made. The absolute truth is that if you don’t know what you want, you don’t get it. So, before calling a meeting, ask yourself: What am I trying to accomplish? Then ask, is a meeting necessary? Or desirable? Or Justifiable? Don’t call a meeting if all the answers aren’t yes.
     
  • Once the meeting is over, the chairman must nail down exactly what happened by sending out minutes that summarize the discussion that occurred, the decision made, and the actions to be taken. And it’s very important that attendees get the minutes quickly before they forget what happened. The minutes should also be as clear and as specific as possible, telling the reader what is to be done, who is to do it, and when. If this seems like too much trouble, then the meeting was not worth it and should not have been called.
     
  • If a decision needs to be made, ask:
    • What decision needs to be made?
    • When does it have to be made?
    • Who will decide?
    • Who will need to be consulted prior to making the decision?
    • Who will ratify or veto the decision?
    • Who will need to be informed of the decision?
       
  • Remember that by saying “yes” – to projects, a course of action, or whatever – you are implicitly saying “no” to something else. Each time you make a commitment, you forfeit your chance to commit to something else. This, of course, is inevitable, the inescapable consequence of allocating any finite resource. People who plan have to have the guts, honesty, and discipline to drop projects as well as to initiate them, to shake their heads “no” as well as to smile “yes.”
     
  • There is an especially efficient way to get information that is neglected by most managers. That is to visit a particular place in the company and observe what’s going on there. Why should you do this? Think of what happens when somebody comes to see a manager in his office. A certain stop-and-start dynamic occurs when the visitor sits down, something socially dictated. While a two-minute kernel of information is exchanged, the meeting often takes a half hour. But if a manger walks through an area and sees a person who he has a two-minute concern, he can simply stop, cover it, and be on his way. Ditto for the subordinate when they initiate the conversation. Accordingly, such visits are an extremely effective and efficient way to transact managerial business.


One-on-One Meetings

  • One-on-one meetings are between a supervisor and a subordinate, and it is the principle way their business relationship is maintained. The meeting's main purpose is mutual teaching and exchange of information. A key point about a one-on-one: it should be regarded as the subordinate’s meeting, with its agenda and tone set by them and provided ahead of time so the manager has time to prepare. The subordinate should then walk the supervisor through all the material. The meeting should cover anything important that has happened since the last meeting, future plans, general problems – and very important – potential problems. Issues that preoccupy and nag at the subordinate. These are often obscure and take time to surface, consider, and resolve.
     
  • How often? These should occur once a week up to once every few weeks, depending on how quickly things are changing in the environment, and the task-relevant maturity of the subordinate. Ideally, the meeting should take place in the subordinate’s office or place work.
     
  • What is the role of the supervisor in a one-on-one? He should facilitate the subordinate’s expression of what’s going on and what’s bothering him. The supervisor is there to learn and coach. Peter Drucker sums up the supervisor’s job here very nicely: “The good time users among managers do not talk to their subordinates about their problems, but they know how to make the subordinates talk about theirs.” How is this done? Ask one more question. When the supervisor thinks the subordinate has said all he wants to about the subject, he should ask another question.


Delegation and Task-Relevant Maturity

  • How much experience does a given subordinate have with the specific task at hand? This variable is task-relevant maturity (TRM). This is not the same as the experience he has in general or how old he is. For example, someone can have high-TRM at their current position, but be placed in a new role and have their TRM drop significantly. This can also happen while maintaining the same role, where the company or role is changing rapidly in complexity and the individual no longer has the task-relevant maturity he used to have.
     
  • Is it better to be a hands-on or hands-off manager? Your management style should change based on your subordinate’s task-relevant maturity:

    • Low:
      Management style should be structured; task-oriented; tell “what,” “when,” “how”

    • Medium:
      Management style should be Individual-oriented; emphasis on two-way communication, support, mutual reasoning

    • High:
      Involvement by manager minimal: establish objectives and monitoring
       
  • Given a choice, should you delegate activities that are familiar to you or those that aren’t? Before answering, consider the following principle: delegation without follow-through is abdication. You can never wash your hands of a task. Even after you delegate it, you are still responsible for its accomplishment, and monitoring the delegated task is the only practical way for you to measure a result. Monitoring is not meddling but means checking to make sure an activity is proceeding in line with expectations. Because it is easier to monitor something with which you are familiar, if you have a choice you should delegate those activities you know best.
     
  • Monitoring the results of delegation resembles the monitoring used in quality assurance and its principles: Monitor more at the lowest value-added stage of the process – it is more cost-effective to catch something early when fewer resources have been already invested. For example, review rough drafts of projects that you have delegated; don’t wait until your subordinates have spent time polishing them into a final form before you find out that you have a basic problem with the content.
     
  • “But he has to make his own mistakes. That’s how he learns!” The problem with this is that the subordinate’s tuition is paid by his customers. And this is absolutely wrong. The responsibility for teaching the subordinate must be assumed by his supervisor, and not paid for by the customers of his organization, internal or external.

KPIs – Focus on Output

  • The first rule is that a measurement – any measurement – is better than none. But a genuinely effective indicator will cover the output of the work unit and not simply the activity involved. For example, marketing should focus on sales (output), not ad spend (activity).
     
  • When dealing with indicators (KPIs), you should guard against overreacting by pairing indicators, so that together both effect and counter-effect are measured. Joint monitoring is likely to keep things in the optimum middle group. A good indicator should first have a physical, countable thing, and be paired with the quality of work. Examples:

    • Software Capability vs. Completion Date
      If we just focused on making perfect software, we would miss timelines and therefore business opportunities.

    • Fraud Prevented vs. False Positives
      If we just focused on fighting fraud, we would be too restrictive to genuine business and stop good business (and revenue) from flowing.

    • Tech Support Calls Answered vs. Customer Satisfaction
      If we just focused on answering as many calls as possible, the quality of our technical support would most likely suffer.


Performance Reviews

  • Performance reviews are the single most important form of task-relevant feedback we as supervisors can provide. It is how we assess our subordinates’ level of performance and how we deliver that assessment to them individually. It is also how we allocate the rewards – promotions, dollars, stock options, or whatever we may use. The review will influence a subordinate’s future performance – positively or negatively – for a long time, which makes the appraisal one of the manager’s highest-leverage activities.
     
  • The fundamental purpose of the performance review is to improve the subordinate’s performance. The review is usually dedicated to two things: first, the skill level of the subordinate, to determine what skills are missing and to find ways to remedy any shortcomings; and second, to intensify the subordinate’s motivation in order to get him on a higher performance curve for the same skill level.
     
  • To make an assessment less difficult, a supervisor should clarify in his own mind in advance what it is that he expects from a subordinate and then attempt to judge whether he performed to the expectations. The biggest problem with most reviews is that we don’t usually define what it is we want from our subordinates, and, as noted earlier, if we don’t know what we want, we are surely not going to get it.
     
  • Should you be judging his performance or the performance of the group under his supervision? You should be doing both. Ultimately, what you are after is the performance of the group, but the manager is there to add value in some way. You need to determine what that is. You must ask: Is he doing anything with his group? Is he hiring new people? Is he training the people he has, and doing other things that are likely to improve the output of the team in the future? The performance rating of a manager cannot be higher than the one we would accord to his organization. 
     
  • It is very important to assess actual performance, not appearances; real output, not good form. You do not want to signal to the team that to do well, you must “act” like a good manager, talk like one, and emulate one – but you don’t need to perform like one.
     
  • When delivering the assessment (review), there are three L’s to keep in mind: Level, listen and leave yourself out.

    • You must level with your subordinate – the credibility and integrity of the entire system depend on your being totally frank.

    • You must employ all of your sensory capabilities. To make sure you’re being heard, you should watch the person you are talking to. Reminder, the more complex the issue, the more prone communication is to being lost. Does your subordinate give appropriate responses to what you are saying? Does he allow himself to receive your message? If his responses – verbal or nonverbal – do not completely assure you that what you’ve said has gotten through, it is your responsibility to keep at it until you are satisfied that you have been heard and understood.

    • It is very important for you to understand that the performance review is about and for your subordinate. So your own insecurities, anxieties, guilt, or whatever should be kept out of it. At issue are the subordinate’s problems, not the supervisor’s, and it is the subordinate’s day in court. Anyone called upon to assess the performance of another person is likely to have strong emotions before and during the review, just as actors have stage fright. You should work to control these emotions so that they don’t affect your task, though they will well up no matter how many reviews you’ve given.
       
  • Keep the reviews focused on the most important items that will have the most leverage, and not provide the subordinate’ a laundry list of unrelated observations. The key is to recognize that your subordinate, like most people, has only a finite capacity to deal with facts, issues, and suggestions. You may possess seven truths about his performance, but if his capacity is only four, at best you’ll waste your breath on the other three. At worst you will have left him with a case of sensory overload, and he will go away without getting anything out of the review. The fact is that a person can only absorb so many messages at one time, especially when they deal with his own performance. The purpose of the review is not to cleanse your system of all the truths you may have observed about your subordinate, but to improve his performance. So here less may very well be more.
     
  • A poor performer has a strong tendency to ignore his problem. Here a manager needs facts and examples so that he can demonstrate its reality.
     
  • Give your subordinate the written review sometime before the face-to-face discussion. He can then read the whole thing privately and digest it. He can react or overreact and then look at the “messages” again. By the time the two of you get together, he will be much more prepared, both emotionally and rationally.
     
  • For a poor performer, the supervisor tends to concentrate heavily on ways he can improve performance, providing detailed and elaborate “corrective action programs,” step-by-step affairs meant to ensure that the marginal employee can pull himself up to meet minimum requirements. But often little or no attempt is made to define what a great performer can do to improve. Andy thinks that we have our priorities reversed. Shouldn’t we spend more time trying to improve the performance of our stars? After all, these people account for a disproportionately large share of the work in any organization. Put another way, concentrating on the stars is a high-leverage activity: if they get better, the impact on group output is very great indeed.
     
  • On whether you should be friends with the people you manage: Everyone must decide for himself what is professional and appropriate here. A test might be to imagine yourself delivering a tough performance review to your friend. Do you cringe at the thought? If so, don’t make friends at work. If your stomach remains unaffected, you are likely to be someone whose personal relationships will strengthen work relationships.


Interviews

  • The purpose of the interview is to:
    • Select a good performer
    • Educate him as to who you and the company are
    • Determine if a mutual match exists
    • Sell him on the job
       
  • We know how hard it is to assess the actual performance of our own subordinates even though we spend a lot of time working closely with them. If a performance appraisal is difficult, interviewing is just about impossible. Here we sit somebody down and try to find out in an hour how well he is likely to perform in an entirely new environment. The fact is, we managers have no choice but to perform the interview, no matter how hard it is. But we must realize that the risks of failure are higher.
     
  • The applicant should do 80 percent of the talking during the interview, and what he talks about should be your main concern. So when things go off the track, get them back on quickly. Apologize if you like, and say, “I would like to change the subject to X, Y, or Z.” The interview is yours to control, and if you don’t, you have only yourself to blame.
     
  • Some good subjects/questions to bring up during the interview:

    • Describe some projects that were highly regarded by your management, especially by the levels above your immediate supervisor.

    • What are your weaknesses? How are you working to eliminate them?

    • Convince me why my company should hire you.

    • What are some of the problems you are encountering in your current position? How are you going about solving them? What could you have done to prevent them from cropping up?

    • Why do you think you’re ready for this new job?

    • What do you consider your most significant achievements? Why were they important to you?

    • What do you consider your most significant failures? What did you learn from them?

    • Why do you think an engineer should be chosen for a marketing position? (vary this one according to the situation)

    • What was the most important course or project you completed in your college career? Why was it so important?

  • The information to be gained here tends to fall into four distinct categories:

    • Skills
      First, you’re after an understanding of the candidate’s technical knowledge: not engineering or scientific knowledge, but what he knows about performing the job he wants – his skill level.

    • What He Did with His Knowledge
      Second, you’re trying to assess how this person performed in an earlier job using his skills and technical knowledge; in short, not just what the candidate knows, but also what he did with what he knows.

    • Discrepancies
      Third, you are after the reasons why there may be any discrepancy between what he knew and what he did, between his capabilities and his performance.

    • Operational Values
      Fourth, you are trying to get a feel for his set of operational values, those that would guide him on the job.
       
  • Don’t worry about being blunt; direct questions tend to bring direct answers, and when they don’t, they produce other forms of insight into the candidate.


Promotions and Recycling

  • We must recognize that no action communicates a manager’s values to an organization more clearly and loudly than his choice of whom he promotes. By elevating someone, we are, in effect, creating role models for others in our organization. The old saying has it that when we promote our best salesman and make him a manager, we ruin a good salesman and get a bad manager. But if we think about it, we see we have no choice but to promote a good salesman. Should our worst salesman get the job? When we promote our best, we are saying to our subordinates that performance is what counts.
     
  • There are times when a person is promoted into a position so over his head that he performs in a below-average fashion for too long of a time. The solution is to recycle him: to put him back into the job he did well before he was promoted. Unfortunately, this is a very difficult thing to do in our society. People tend to view it as a personal failure. In fact, management was at fault for misjudging the employee’s readiness for more responsibility. Usually, the person who was promoted beyond his capability is forced to leave the company rather than encouraged to take a step back. This is often rationalized by the notion that “It is better that we let him go, for his own sake.” I think it is dead wrong to force someone in such circumstances out of the company. Instead, I think management ought to face up to its own error in judgment and take forthright and deliberate steps to place the person into a job he can do. Management should also support the employee in the face of the embarrassment that he is likely to feel. If recycling is done openly, all will be pleasantly surprised how short-lived that embarrassment will be. And the result will be a person doing work we know from past experience he can perform well. In my experience, such people, once they regain their confidence, will be excellent candidates for another promotion at a later time – and the second time they are likely to succeed.

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