The Frontline Advantage

Fred Hassan

Here is an excerpt from an article written by Fred Hassan for the Harvard Business Review blog. To read the complete article, check out the wealth of free resources, and sign up for a subscription to HBR email alerts, please click here.

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The managers most responsible for a company’s success or failure happen to be the ones with whom the CEO spends the least amount of time. The people I’m talking about are frontline managers—shop-floor supervisors, leaders of R&D or sales teams, managers in restaurant chains or call centers. They’re at the very first level of management across a company’s business operations and functions. Depending on its size, a company might have anywhere from 1,000 to 20,000 such managers. [Whatever the size of the company, I agree with Hassan that the importance of front line managers is seldom  recognized, much less appreciated.] Typically, they make up 50% to 60% of a company’s management ranks and directly supervise as much as 80% of the workforce.

It is the frontline managers who must motivate and bolster the morale of the people who do the work—those who design, make, and sell the products or deliver services to customers. These managers are central to a company’s business strategy because they oversee its execution. They represent an all-important feedback loop that allows the CEO to stay abreast of the latest developments in the business. For all these reasons, frontline managers are a key CEO constituency, as important and deserving of attention and time as the senior executive team, business unit and functional heads, or major customers or investors.

Yet few CEOs think that it’s their job to mobilize frontline managers. They may give the occasional speech during a site visit or hold a town-hall-style meeting or two. They may even practice some version of “management by wandering around” to stay in touch with different parts of the organization. But they rarely go far beyond such perfunctory measures. What they need to be doing is something altogether different: singling out frontline managers as a critically important group in the management ranks, spending significant personal time in direct interactions with them, and using those interactions to mobilize the entire organization. I call this approach leading through the front.

Leading through the front isn’t easy. It demands a lot from the CEO: making strategic decisions about which frontline managers to focus on as leverage points in the organization, being savvy about when and how to interact with them, freeing up time and attention, and connecting the dots between what may seem like narrow problems facing frontline managers and larger issues facing the company. But it can be done. And when a leader taps into the enormous latent power tied up in a company’s frontline managers, the payoff is a more resilient and more successful organization.

I’m a former CEO, so I’ll talk about what I know: how CEOs can lead through the front. But the lessons are just as relevant to anyone who is heading up a large organization, be it a business unit, a corporate function, or a regional operation.

A Company of Passionate Drivers

I learned the importance of engaging with frontline managers over more than a decade as a turnaround CEO in the pharmaceutical industry. In 1997, I took the top job at Pharmacia-Upjohn, a company in so much trouble that one analyst wrote, “Only a miracle can save this company.” I was able to bring it back from the brink, merge it with Monsanto into a new company called Pharmacia in 2000, and finally merge it with Pfizer in 2003 in a $62 billion deal that represented a 52% premium over Pharmacia’s stock price.

Having worked myself out of a job, I next became CEO of Schering-Plough, a company facing multiple crises that threatened its very survival. In six years, I helped fix Schering-Plough’s immediate problems, took sales from $9 billion to $20 billion, increased the number of late-stage drugs in the firm’s portfolio from five to 12, and upped blockbusters from zero to five, making the company one of the top growth companies among its peers and a leader in relative total shareholder return. Schering-Plough’s business became so attractive that Merck proposed a merger in 2008, which was completed the following year at a value of $46 billion—a 60% gain in Schering-Plough’s stock price from when I had joined the company in 2003.

Both Pharmacia-Upjohn and Schering-Plough faced what looked like insurmountable problems. In both cases, I made engaging and motivating frontline managers a cornerstone of my turnaround strategy.

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Fred Hassan is a managing director at the private equity firm Warburg Pincus and the chairman of the board at Bausch + Lomb.

 

 

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