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Covert operations

Few executives have insight into what really goes on in their organizations. CEO Stephen Martin seized a rare opportunity to anonymously ...

By Julian Birkinshaw and Stuart Crainer . 01 September 2009

Few executives have insight into what really goes on in their organizations. CEO Stephen Martin seized a rare opportunity to anonymously discover the nitty gritty of his company. He shares his insights with Julian Birkinshaw and Stuart Crainer.
CovertoperationsThe clean and orderly, even elegant, surroundings of a company’s headquarters bear little resemblance to the sites where products are manufactured or services are provided. Often geographically removed from the workplace, the upper levels of an organization are also distanced from information about worker attitudes, values and priorities. Unfortunately, the higher one rises in an organization, the more difficult it is to know what’s happening on the loading dock, shop floor or sales counter.

While most leaders agree that staying in touch with the day-to-day business is important, they would also agree that it isn’t easy to do. “Management by walking around” sounds like a good idea, but few people can behave naturally when the boss is watching. As experiments at the Hawthorne Works in the 1920’s demonstrated, people act differently and often are more productive when they know they are being observed – the Hawthorne effect.

When Stephen Martin became CEO of the Clugston Group in December 2006, he wanted to know the business inside out. With an MBA from London Business School and extensive experience, including the turnaround of ailing construction company, he felt well prepared to take on the challenge of this £155 million turnover. At that time, Clugston had over 700 employees and an equal number of sub-contractors and suppliers. The company is involved in construction, waste energy and property development and has a specialist logistics arm handling the distribution of steel, a tanker fleet, and a commercial vehicle maintenance branch. Martin’s concern was how to understand the culture of the organization, a necessity before beginning any improvement programmes.

“I came in as the new broom. During the first week I was walking around the building just to meet people and was told that people would think there was something wrong if I continued doing that. It was very much a them-and-us sort of culture. I was at one end of the building protected to stop anyone getting anywhere near me,” Martin recalls. “I’ve done a lot of things in the time I’ve been here. I changed the structure, I changed the strategy, I pushed our promotion and publicity, and I even changed the logo.”

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