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Consultant Frank Rohde describes a system for evaluating frontline workers' interactions with customers.

Workplace incivility can be as costly as sexual harassment, reports HBR senior editor Gardiner Morse.

Surveys indicate that when new rules on expensing stock options take effect, many companies are likely to limit the number of employees who can receive equity compensation. But companies that reserve equity for executives are bound to suffer in the long run. Study after study proves that broad-based ownership, when done right, leads to higher productivity, lower workforce turnover, better recruits, and bigger profits. "Done right" is the key. Here are the four most important factors in implementing a broad-based employee equity plan: A significant portion of the workforce--generally, most of the full-time people--must hold equity; employees must think the amounts they hold can significantly improve their financial prospects; managerial practices and policies must reinforce the plan; and employees must feel a true sense of company ownership. Those factors add up to an ownership culture in which employees' interests are aligned with the company's. The result is a workforce that is loyal, cooperative, and willing to go above and beyond to make the organization successful. A wide variety of companies have recorded exceptional business performance with the help of employee-ownership programs supported by management policies. The authors examine two: Science Applications International, a research and development contractor, and Scot Forge, which shapes metal and other materials for industrial machinery. At both companies, every employee with a year or so of service holds equity, and employees who stay on can accumulate a comfortable nest egg. Management's sharing of financial information reinforces workers' sense of ownership. So does the expectation that employees will accept the responsibilities of ownership. Workers with an ownership stake internalize their responsibilities and feel they have an obligation not only to management but to one another.

When looking for help with a task at work, people turn to those best able to do the job. Right? Wrong. New research shows that work partners tend to be chosen not for ability but for likeability. Drawing from their study encompassing 10,000 work relationships in five organizations, the authors have classified work partners into four archetypes: the competent jerk, who knows a lot but is unpleasant; the lovable fool, who doesn't know much but is a delight; the lovable star, who's both smart and likeable; and the incompetent jerk, who...well, that's self-explanatory. Of course, everybody wants to work with the lovable star, and nobody wants to work with the incompetent jerk. More interesting is that people prefer the lovable fool over the competent jerk. That has big implications for every organization, as both of these types often represent missed opportunities. Lovable fools can bridge gaps between diverse groups that might not otherwise interact. But their networking skills are often developed at the expense of job performance, which can make these employees underappreciated and vulnerable to downsizing. To get the most out of them, managers need to protect them and put them in positions that don't waste their bridge-building talents. As for the competent jerks, many can be socialized through coaching or by being made accountable for bad behavior.

Oil and energy corporation BP was well aware of the importance of its work group managers on the front lines. Their decisions, in aggregate, make an enormous difference in BP's turnover, costs, quality control, safety, innovation, and environmental performance. There were about 10,000 such supervisors, working in every part of the company--from solar plants in Spain, to drilling platforms in the North Sea, to marketing teams in Chicago. Some 70% to 80% of BP employees reported directly to these lower level managers. Yet, until recently, the corporation didn't have a comprehensive training program for them. For their part, the frontline managers felt disconnected; it was often hard for them to understand how their individual decisions contributed to the growth and reputation of BP as a whole. In this article, BP executive Andreas Priestland and Dialogos VP Robert Hanig describe how BP in the past five years has learned to connect with this population of managers. After one and a half years of design and development, there is now a companywide name--"first-level leaders"--and a comprehensive training program for this cohort. The authors describe the collaborative effort they led to create the program's four components: Supervisory Essentials, Context and Connections, the Leadership Event, and Peer Partnerships. The design team surveyed those it had deemed first-level leaders and others throughout BP; extensively benchmarked other companies' training efforts for lower level managers; and conducted a series of pilot programs that involved dozens of advisers. The training sessions were first offered early in 2002 and, since then, more than 8,000 of BP's first-level leaders have attended. The managers who've been through training are consistently ranked higher in performance than those who haven't, both by their bosses and by the employees who report to them, the authors say.

Describes the leadership challenges involved in managing strategic innovation and change in a highly mature business unit. Allows systematic exploration of organizational structures, incentives, competencies, and culture that impede innovation. Pivots on a new leader's dilemmas in shaping both his team and larger organization to initiate both incremental as well as radical innovation.

Supplements the (A) case.

Supplements the (A) case.

Scholars and practitioners have long suggested that smaller teams perform better teamwork, yet it is surprising to find that many organizations are using teams of 10 and more members. Explains how large team size affects teamwork and suggests four ways to keep teams small: (1) Create a multiteam project; (2) create a core team and an extended team; (3) outsource tasks and define team-external contributions; and (4) keep members on the team only for specific project phases.

Tracks Merck's efforts to adapt to changes in the pharmaceutical industry. Key challenges include adapting Merck's internally focused, science-led culture to a more open environment, where marketing performance has become increasingly important. Examines Merck's efforts to adapt to the external changes without compromising its internal values and capability architecture.

The unwillingness of autonomous teams to monitor members' work can depress performance, finds Washington University's Claus Langfred.

Managers with different jobs in the same company are more likely to have similar leadership styles than managers with similar jobs in different companies, report Thomas Kell and Gregory T. Carrott of Heidrick & Struggles.

Organizational change has traditionally come about through top-down initiatives such as hiring experts or importing best-of-breed practices. Such methods usually result in companywide rollouts of templates that do little to get people excited. But within every organization, there are a few individuals who find unique ways to look at problems that seem impossible to solve. Although these change agents start out with the same tools and access to resources as their peers, they are able to see solutions where others do not. These positive deviants are the key, the authors believe, to a better way of creating organizational change. Your company can make the most of their methods by following six steps: Make the group the guru--the members of the community are engaged in the process of their own evolution. Reframe through facts, which entails restating the problem in a way that opens minds to new possibilities. Make it safe to learn, creating an environment that supports innovative ideas. Make the problem concrete; the community combats abstraction by stating uncomfortable truths. Leverage social proof; here the community looks to the larger society for examples of solutions that have worked in parallel situations. Finally, confound the immune defense response; solutions are introduced organically from within the group in a way that promotes acceptance. Throughout the steps, the leader must adopt a facilitatory role. The positive-deviance approach has unearthed solutions to such complicated and diverse problems as malnutrition in Mali and human trafficking in East Java. This methodology can help solve even the most extreme dilemmas.

Employees are the backbone of every organization, and as you might expect, research shows that happy employees are more motivated, productive and committed. While considerable research has explored the link between an organization's long-term success and motivated employees, much less has been said about what actually makes employees happy. The author sets out to do this, arguing that three key drivers affect employee happiness: i) being a valued member of a community, ii) that is valued by you, iii) and that others outside the community value. Business leaders who want to benefit from the productive power of happy employees must think systematically these three drivers of happiness. Only once all three are functioning smoothly will they have harnessed the full power of happiness.

What do exhilaration, stereotyping and poor table manners have in common? What do embarrassment, the advantage younger siblings enjoy over older ones in understanding others' mental states, and the complexity of Supreme Court justices' decisions have in common? The answer is simple: power. Power is a basic force in social relationships and the dynamics and structure of personality. But as central as it is to social life and to theoretical inquiries in the Social Sciences, it has received only sporadic attention from psychologists. The authors show that we are beginning to understand how power influences cognitive processes such as stereotyping, complex social reasoning, moral judgment, and inferences about non-verbal behavior. They also look at how power influences social behavior, including emotional display, behavioral confirmation, familial aggression, hate crimes, sexual aggression, and teasing. Our understanding of how power shapes situations, groups, and cultures, they argue, ultimately rests on a formulation of how power - and powerlessness - shape the psychology of the individual.

Describes IBM's decade of transformation. Provides background on the company's history and the factors that led to its near death in the early 1990s and to its remarkable turnaround during Lou Gerstner's reign as CEO. A rewritten version of an earlier case.

At a March 2004 annual shareholder meeting, 45% of Walt Disney Co.'s shareholders withheld their support from CEO and Chairman Michael Eisner, producing a large no-confidence vote in the company's leader. The company had struggled financially in recent years and the board was widely believed to be beholden to Eisner. Two directors, Roy Disney and Stan Gold, resigned in protest of Eisner's leadership and the board's unwillingness to change. The two began to wage a PR battle calling for Eisner's removal and asking all shareholders to withhold their support from him at the upcoming shareholder meeting. Traces the history of Eisner's reign at the company and the events leading up to the March 3, 2004, shareholders meeting.

Organizations struggle when trying to manage a mature business and a related new venture simultaneously. The endeavor is fraught with contradiction and paradox. To succeed, the organization's leaders must deal with two conflicting pressures. The new venture must forget much of what has made the mature business successful, which argues for isolating the new venture from the mature business. However, the new venture also must borrow resources from the mature business, which argues for integrating the two units. Based on in-depth field research at 10 organizations, this article shows how to identify what to forget and what to borrow and describes an organizational design that facilitates both.

Professional services firms were once great models for corporations--until they started to resemble them.

The trend is to downsize corporate headquarters--but sometimes a bigger HQ is better.