The Productivity Paradox: How Sony Pictures Gets More Out of People by Demanding Less

by Tony Schwartz

Human beings don’t work like computers; they can’t operate at high speeds continuously, running multiple programs at once.

People perform at their peak when they alternate between periods of intense focus and intermittent renewal.

Employees can increase their effectiveness by practicing simple rituals that refuel their energy, such as taking a daily walk to get an emotional breather or turning off e-mail at prescribed times so they can concentrate.

If companies allow and encourage employees to create and stick to such rituals, they will be rewarded with a more engaged, productive, and focused workforce.

The way most of us work isn’t working. Study after study has shown that companies are experiencing a crisis in employee engagement. A 2007 Towers Perrin survey of nearly 90,000 employees worldwide, for instance, found that only 21% felt fully engaged at work and nearly 40% were disenchanted or disengaged. That negativity has a direct impact on the bottom line. Towers Perrin found that companies with low levels of employee engagement had a 33% annual decline in operating income and an 11% annual decline in earnings growth. Those with high engagement, on the other hand, reported a 19% increase in operating income and 28% growth in earnings per share.

Nearly a decade ago, the Energy Project, the company I head, began to address work performance and the problem of employee disengagement. We believed that burnout was one of its leading causes, and we focused almost exclusively on helping individuals avoid it by managing their energy, as opposed to their time. (See “Manage Your Energy, Not Your Time,” HBR October 2007.) Time, after all, is finite. By contrast, you can expand your personal energy and also regularly renew it.

Once people understand how their supply of available energy is influenced by the choices they make, they can learn new strategies that increase the fuel in their tanks and boost their productivity. If people define precise times at which to do highly specific activities, these new behaviors eventually become automatic and no longer require conscious will and discipline. We refer to them as rituals. They’re simple but powerful. They include practices such as shutting down your e-mail for a couple of hours during the day, so you can tackle important or complex tasks without distracting interruptions, or taking a daily 3 PM walk to get an emotional and mental breather.

What we failed to fully appreciate in our early work was that once we finished our sessions with employees and sent them back into the workplace, they often ran into powerful organizational resistance to the very principles and practices we’d taught them. We still believe that enduring organizational change is possible only if individuals alter their attitudes and behaviors first. But we’ve come to understand that it’s not possible to generate lasting cultural change without deeply involving an organization’s senior leadership.

In this article, we’ll describe the transformation we helped initiate at Sony Pictures Entertainment, a company that has embraced energy-building and -renewing rituals at all levels. Based in Culver City, California, Sony Pictures produces, markets, and distributes movies and TV shows. So far, more than 3,000 of the company’s 6,300 employees worldwide have gone through our energy-management program. This summer we’ll reach another 1,700 in Europe, Singapore, and Latin America.

To date, the reaction to the program has been overwhelmingly positive. Eighty-eight percent of participants say it has made them more focused and productive. More than 90% say it has helped them bring more energy to work every day. Eighty-four percent say they feel better able to manage their jobs’ demands and are more engaged at work. Sony’s leaders believe that these changes have helped boost the company’s performance. Despite the recession, Sony Pictures had its most profitable year ever in 2008 and one of its highest revenue years in 2009 (though an industrywide collapse in DVD sales forced the company to do a round of layoffs early in 2010).

The Energy Project

Leaders can easily underestimate how their attitudes and behaviors affect the energy levels of their teams. Because energy is contagious, both the quality and quantity of a leader’s energy can drain or galvanize a team. In addition, the leader sets the tone for the organization. If people see their company president making it a practice to take a walk every afternoon, they feel safer taking time out for their own efforts. To measure your own energy management effectiveness as a leader and get more tips on how to increase it, go to theenergyproject.com/hbr.

As we have done at many other organizations, we encouraged Sony to make two fundamental shifts in the way it manages employees. The first was to stop expecting people to operate like computers—at high speeds, continuously, running multiple programs at the same time—and to recognize that human beings perform best and are most productive when they alternate between periods of intense focus and intermittent renewal. The second was to move from trying to get more out of employees and instead to invest in systematically meeting their four core needs, so they’re fueled and inspired to bring more of themselves to work every day. These four core needs are physical health (achieved through nutrition, sleep, daytime renewal, and exercise), emotional well-being (which grows out of feeling appreciated and valued), mental clarity (the ability to focus intensely, prioritize, and think creatively), and spiritual significance (which comes from the feeling of serving a mission beyond generating a profit).

GREAT PEOPLE DECISIONS: WHY THEY MATTER SO MUCH, WHY THEY ARE SO HARD, AND HOW YOU CAN MASTER THEM, by Claudio Fernández-Aráoz

Executive Summaries


A Resource for You
Executive brief chapter 1

Claudio Fernández-Aráoz begins his book with an intriguing and provocative question: what makes a person successful? Although luck undeniably plays an important role, it is by no means the only factor defining an individual’s professional advancement. Based on over 20 years of experience in recruiting for high-level positions and analysing great leaders, the author identifies the formula for career success, which has four elements. The single most powerful contributor to career success, however, is the ability to make great people decisions. Are strong people choices basically down to gut instincts, as common wisdom would have us believe? Not according to Claudio Fernández-Aráoz

Making people decisions is a craft and a discipline that can be learned and should be learned for your success, argues the author. And a little learning goes a long way. You don’t need deep expert knowledge of competencies to become much better at people decisions, as this chapter illustrates. In fact, making people decisions is a disciplined process that involves identifying, checking key indicators and assessing their importance. Yet most of us receive very little formal training to help us make such judgements. This book is primarily a tool to help readers improve their people decisions, enabling them to recognise and recruit high-performers. Great people decisions not only foster individual success. They also provide the key to sustained organizational performance, as shown in the second chapter of the book.

A Resource for Your Organization

Executive brief chapter 2

What drives organizational performance? In the second chapter of GREAT PEOPLE DECISIONS, Claudio Fernández-Aráoz provides a detailed review of top academic research into this question, including the work of best-selling author Jim Collins and Harvard’s Nitin Nohria. Their work clearly demonstrates that strong people choices are the foundation of almost all great organizational performance. It is great people decisions that make the difference. This research perspective is also fully supported by the best practitioners on the front lines of business, including Jack Welch, the former General Electric leader, in interviews with the author.

So just how valuable are great people decisions and how can we quantify a return on investment in them? Studies show that the leader effect can account for up to 40 percent of the variance in corporate performance or value. In many cases it is also the largest actionable source of company value. Looking ahead, the author clearly shows why the importance of making great people decisions is set to grow. In summary, great people decisions not only determine individual career success, as shown in chapter 1, but are also the key to outstanding organizational performance. Yet such decisions require active management to achieve their full potential. In chapter 3 the author goes on to discuss why great people decisions are so hard.

Why Great People Decisions Are So Hard

Executive brief chapter 3

Why is it so tough to pick winners? This chapter begins by describing four major barriers to making people decisions and offers general principles for avoiding these traps. According to Claudio Fernández-Aráoz, the statistical odds are against any company looking for a leader because top talent is rare. Moreover, senior managers are often distinguished by their soft skills, which are very difficult to assess objectively. On top of these factors, the author identifies over ten psychological biases and emotional traps that sabotage people decisions. These pitfalls include overrating capability and making snap judgements.

It is not easy to combat such biases, but building awareness and getting the right advisors to support people decision-making can help, argues the author. According to best-selling author Jim Collins, great leaders make a series of good decisions that are supremely well-executed over a long period of time. Building true greatness into a company calls for managers with the discipline to analyze and implement every important decision, including people decisions. Avoiding the traps described in this chapter is just the first step towards that goal. To pick winners consistently you need to master all stages of the people-decision process described in the following six chapters of the book.

Knowing When a Change Is Needed

Executive brief chapter 4

Figuring out when a change at the top should happen is a major challenge, warns Claudio Fernández-Aráoz. Executive turnover is often precipitated by poor performance, but this should not be the only driver of change, he adds. Unfortunately, many companies tend to postpone making key people decisions until it is too late and need to adopt a more proactive attitude to upgrading their senior talent. This chapter focuses on identifying the kind of situations that call for change. These situations can be driven by macro and industry-level forces, as well as discontinuities. Discontinuities include: launching new businesses, M&As, developing and implementing new strategies, dealing with performance problems and coping with growth and success.

Closer examination of these scenarios reveals that strategy changes often catalyse people changes. The bottom line: in a rapidly changing world, organizations must periodically look to the future and decide whether they have the right people in place to tackle the challenges ahead. But even when people changes are justified, they can be tough to implement, warns the author. Rigour without ruthlessness and honesty without brutality are excellent watchwords when making such changes, he adds. Once the difficult decision to replace a manager has been made, chapter 5 explores the next stage - defining what exactly you are looking for in a new leader.

What to Look For

Executive brief chapter 5

The realisation that a "people change" is needed opens up a new path in front of you. The first step along that path is figuring out what to look for, explains Claudio Fernández-Aráoz. Although this first step is rich with potential, it also involves many pitfalls, warns the author. The first challenge involves prioritising the best predictors of successful performance in a job. In other words, you need to know exactly which competencies you are looking for. The ideal candidate for the job probably doesn't exist, meaning that trade-offs will be required. To make such trade-offs successfully, it is crucial to identify both critically important strengths and weaknesses that aren't fatal.

Based on his extensive experience of global executive search, the author identifies a key skill set for top leaders. These characteristics - a high IQ, relevant experience, emotional intelligence, potential and values - and their impact on successful recruitment are discussed in detail. Above all, a highly disciplined search process must be followed, stresses the author. This involves confirming managerial priorities, identifying the key competencies required, clearly defining them in behavioural terms and agreeing on the relative weight of each key competence. After establishing a clear consensus about what you are looking for, the next step is deciding where to look for suitable candidates. This question lies at the heart of chapter 6.