WANTED: COMPANY CHANGE AGENTS
By STRATFORD SHERMAN; JON R. KATZENBACH

(FORTUNE Magazine) – The most sought-after person in today's workplace is someone known as a change leader, a new breed of middle manager who's in short supply. Very different from your run-of-the-mill general managers, these mavericks get big results when you need them. They are focused, determined, willing to break rules, and great at motivating their troops.

But how do you identify these people in your organization? How do you build a cadre of such quirky but essential agents of change? McKinsey & Co. director Jon R. Katzenbach has some answers. For the past three years he and a team of six McKinsey partners have been studying middle-manager change agents at organizations from Compaq Computer to Mobil to the New York City Transit. The fruit of this research is the forthcoming book Real Change Leaders, due in January. Katzenbach recently sat down with Stratford Sherman, a member of FORTUNE's board of editors, to discuss what he learned.

Why are midlevel change leaders so important to today's organizations?

For some time now companies have wanted to change the behaviors and skills of large numbers of their employees. They're not, however, very good at that yet. I don't see many victories; I don't think even GE would claim complete victory. You can create a good program--like [former CEO] John Akers's plan in the early 1990s to transform IBM--but it doesn't work. Something goes wrong in the middle ranks of the company, and all the admonitions from the top don't get through. For large-scale transformations, you need a critical mass of change leaders in the middle of the organization.

What is a critical mass?

Roughly one-third of your middle managers should be change agents, depending on your business and what kind of change you face. If you're Compaq, facing really rapid change, you'll need even more. If you're an oil company, you won't need so many. But at most of the companies I've seen, only 10% of middle managers qualify as real change leaders. So there's a huge shortfall.

When exactly do you need these people--and by the way, are many change leaders women?

Actually, more than we expected are women, about one-third of the total. Change leaders also tend to be young, in the 25 to 40 age range. They're more flexible than ordinary general managers, and much more people oriented. You need them when you are going for dramatic performance increases in speed, productivity, or profits.

And what do these change leaders bring to the party?

They have a nice balance of capabilities: They are technically skilled people who are also very capable in personal relationships. They're an odd combination. On the one hand, they're tough decision-makers who are highly disciplined about performance results. But they also know how to get lots of people energized and aligned in the same direction. They find ways to get more out of people than ordinary "good managers" can. In the past you'd have looked for different people to do one piece of that or the other, to be either a tough taskmaster or an effective people person. Today we desperately need middle managers who can do both.

Your team interviewed nearly 150 of these change leaders at 30 organizations. How did you find them?

We approached the top executives and others in each organization and asked them to identify the managers they'd choose for a tough assignment. Our two criteria were: Did these people achieve measurable performance results such as increased sales or market share? Did they demonstrate the determination to get lots of people doing something different to get those results? We'd usually get a short list of names. And we were surprised to learn that this definitely is not the same list you'd get if you asked for the company's high-potential leaders. As one CEO said to me, "These are the funny little fat guys with thick glasses who always get the job done."

What we didn't realize at the start is that these leaders don't come from training programs. Few went to the standard business schools. They are engineers, or they have production-line experience, or they're from accounting. They are people who figured out how to get the job done by themselves. You can find them in organizations where there doesn't seem to be any role model around. They learned by being stuck in a tough situation and fighting their way out. The best have developed skills that most good managers don't have.

Such as?

What's most distinctive is their ability to operate with more than one leadership style. They can shift easily from a team approach to command and control. They do whatever works, depending on the situation. When speed is essential, they'll tell their people what to do; and then when a change in behavior is what they want, they'll change gears and be more of a coach. These leaders are totally focused on results, not methods, so they'll try anything that helps them get more out of their people.

You almost never find them using existing management systems, whether designed by the corporation or by consultants. They will take whatever structure is available and modify it to suit their needs. They redesign online. And then they'll take a system they designed themselves and change that when they think it's necessary.

I gather that the role of top management here is mainly to spot these people and assign them the really brutal jobs?

More or less. In a pinch, many CEOs, not realizing exactly what they need for a big job, go for old-style traditional managers and then don't get the results they want. The place to start: Learn to recognize the mindset of a change leader, and then look for people who have it. You should be looking for that extra set of attributes that differentiates the change leader from the general manager.

Okay, let's hear the list.

It's not a list; it's more of an attitude. Change brings uncertainty, so you don't want people who feel uncomfortable when they aren't in control. If I were interviewing a candidate for one of these jobs, I'd ask how he or she would judge performance. Change leaders aren't satisfied with just financial numbers. To them, the most gratifying aspect of the job is getting their people to do more than they thought they could. So they like to use custom measurements that determine both customer and employee reactions.

They definitely believe that people in frontline jobs--in sales or in the factory--think just as well as managers do. So they instinctively look to these people for help. (If the change leaders have accomplished something they're proud of, ask them how they did it and where the solutions come from--themselves or their people.)

Change leaders also hunger for information from the marketplace. They want the facts, and they don't get them through the organization. Bypassing the system, they go out and get direct feedback from customers and competitors. They have to see things for themselves, feel the merchandise with their own hands.

What do they do with this information?

It's what they use to motivate their people. That's their secret. If I'm trying to motivate you, and there's no more money in the budget to give you, it's so helpful to be able to say, "Look, our customers think our work is second best." Or, "This competitor is beating our ass." A good example is Bob Turko's "quick market intelligence" approach. Turko is one of many change leaders at GE's Industrial Systems business in Fort Wayne. It's a simple idea, apparently borrowed from Wal-Mart, whereby managers get together once a week to share whatever they have learned about competitors or customers in the preceding few days. The information they share is neither scientific nor statistically valid, but it is current and it is motivating. At one point they were able to determine that a competitor's product was giving customers problems and were able to come up with a solution before the competitor. As more than one change leader told us, "Nothing is more compelling than hearing it right from the customer's mouth."

What motivates change leaders themselves?

They are more motivated by the results they get than the recognition they get. That doesn't mean that they don't like recognition as much as everybody else. But what they really like is delivering results, getting their people to stretch--and once they've done that, they want another assignment that gives them an opportunity to do it again.

Over time they develop a confidence in their ability to deliver, so they're less afraid of losing their job. They'll say, "If things don't work out here, I can take my skills elsewhere." That's a very comforting feeling. It frees them to focus on results.

Will change leaders replace general managers?

No. I think it's a mistake to think that everybody should become a change leader. I believe you need a mix. A change agent is someone who shakes things up. But while change is taking place, there are still going to be parts of your company where you need a good manager or steward who can keep things under control.

But if you're one of the people who've got these change-agent skills, you can pretty much write your own ticket.

Absolutely. Your job prospects are extremely attractive. If your organization isn't taking advantage of what you've got and giving you that high-impact opportunity you are looking for, there are probably two or three companies that would hire you tomorrow. I don't know a company today that isn't looking for that kind of capability.