The Peer Principle

Years ago, I worked with a financial-services company that boasted an unparalleled return on capital, breathtaking sales growth, and the highest customer renewal rate in the industry. I was eager to meet the leaders.

Unfortunately, in my first meeting with Peter, the CEO, and his direct reports, I committed a major faux pas. I had never met the CEO face-to-face, and we had never spoken by phone. His vice-president of HR had arranged for my participation as a consultant, without a proper introduction. So you can imagine my embarrassment when I discovered halfway through the meeting that I assumed the wrong guy was "Peter."

It was an innocent mistake. One member of the executive team showed up six minutes late to the meeting. The guy at the head of the table (I learned later that his name was Frank) said: "We all agreed to be here at 10 a.m. What happened?" It was a jarring moment. The tardy teammate flushed red, stammered an explanation, and the meeting moved on. I put two and two together—he's at the head of the table and he held the latecomer accountable; obviously, this is Peter. Eager to make my first informal introduction, I smiled and waved at him. He looked confused by my seemingly enthusiastic and random gesture and eventually sent a hesitant wave my direction.

Ten minutes into the meeting, Lydia was reporting on sales in her business unit. Apparently, things weren't going well. The guy next to me asked most of the hard questions about her disappointing performance. His comments were thoughtful and constructive but firm. He concluded by suggesting they reconsider how much capital they were deploying in Lydia's business unit that year. I stared at him long and hard and began wondering if he was Peter.

Safety Study

The best decision I made that day was to keep my mouth shut and refrain from calling anyone at that table "Peter." It turned out Peter was the quietest guy in the room. I could have spent the next two hours playing "Who's Peter?" and gotten it wrong every time.

I remembered my experience with Peter's team recently when we met Ramon.

Few readers of this column will ever replace a commercial gas meter. But in case you ever do, here's some advice: During the brief interval when your gas pipe is not connected to either the old or new meter, be sure to vent the highly combustible leakage outside.

We learned this from Ramon, whose face and arms were covered with thick waxy scarring. The day Ramon changed the fateful meter, he was behind schedule. He knew he should vent the gas. The three co-workers who accompanied him also knew he should vent the gas. But he didn't. And his co-workers didn't make him. Unbeknownst to Ramon, the water heater in the room sported a pilot light. When the gas filled the room, the pilot light caused a fire to erupt around Ramon. Nearby colleagues rushed to open the door but not before Ramon was badly injured.

My colleagues and I met Ramon because we were wrapping up an international study on workplace safety. We wondered what practices separated the best at safety from the merely good. We identified 30 organizations with strong safety records, a few of which were the best of the best.

Accountability's Importance

As we searched for the sources of influence that accounted for differences in safety, we found that on the surface, the best and the rest looked quite similar. All were fastidious in keeping up with signage, inspections, compliance training, and enforcing safety policies. But we kept hearing unusual language in our interviews with the true standouts. It wasn't until we interviewed and surveyed 1,600 safety directors, managers, and employees that we realized we weren't really getting it.

We were so focused on finding the key ingredient to building a perfect safety record that we missed the big picture our interviewees were trying to paint for us. That is, until one safety director used a bullhorn. Mike Wildfong, a general manager at TI Automotive, put it bluntly: "You're missing the point. We lead in safety because we lead in accountability—not only as it relates to safety but as it relates to everything else we do."

His thesis intrigued us. Could it be that the secret sauce in flawless safety records was not only being accountable to safety policies and practices but also holding people accountable for any project, responsibility, or expectation? And if so, could you prove this?

Curious, we dug deeper. We divided 420 supervisors and managers from our original 30 companies into two groups. The first group had fabulous and sustained departmental safety records. The second group's safety records were middle of the road. After comparing the two groups' general safety compliance levels, we then looked at whether differences in safety mirrored differences in other areas of performance.

All About Peers

Not only were there differences but also the differences were profound. Those supervisors and managers with the strongest safety records were five times more likely to be ranked in the top 20% of their peers in every other area of performance. They were 500% more likely to be stars in productivity and efficiency and employee satisfaction and quality, etc.

Just as Wildfong had suggested, the companies best at holding people accountable for safety were best at holding people accountable for everything.

Since accountability appeared to be the key to safety as well as the full trove of corporate performance treasures, we then explored what made accountability tick in the leading teams and companies.

The answer came back to Ramon. Remarkably, cultures of accountability had little to do with bosses. Rather, it was all about peers.

The problem that contributed to Ramon's painful scarring was not just that Ramon violated a safety policy. It was that three others were aware he was violating the policy and said nothing. Our safety research showed this pattern doesn't explain just what happened to Ramon; it also explains what undermines safety in general. And similarly, it doesn't explain just what happens with safety; it also explains what happens with performance in general.

Peer accountability turned out to be the predictor of performance at every level and on every dimension of achievement. The differences between good companies and the best weren't that apparent when it came to bosses holding direct reports accountable. The differences become stark, however, when you examine how likely it is that a peer will deal with a concern.

Performance Impact

Our data further confirm that this peer principle is the holy grail of performance influence. In the area of safety, our study found that 93% of employees say they see urgent risks to life and limb and yet less than one-fourth of those who see concerns speak up about them. Rather, they wait for bosses or others to take action.

The problem is not that we have problems. The problem is that leaders don't ensure employees are motivated and able to speak up about these problems. When concerns about performance, quality, and safety fester until a boss notices them, it wastes an enormous amount of time and money. On the safety front, unaddressed concerns lead to injuries. When these same issues arise in organizations like Mike Wildfong's, they are addressed immediately and directly, usually at the peer level and long before they cause major crises. This rapid horizontal accountability drives quality, safety, productivity, costs, and efficiency

It shouldn't have taken me so long to recognize the peer principle in our safety study. I had seen it years earlier as an incredible competitive advantage not only in Peter's team but also in his entire organization. It was sometimes hard to distinguish bosses in the room because peers were just as likely to deal with accountability concerns as the head honcho. What I saw happen first when a team member showed up late to Peter's executive meeting was repeated hundreds of times in later months.

The bottom line is this: Much of our effort to improve performance in organizations is misplaced. We obsess over "performance management." We try to get the right forms, the right process, the right conversations at the right frequency—all in the name of getting bosses to hold direct reports accountable. We presume vertical accountability is king.

Our research suggests this focus is right on target if your goal is mediocrity. When bosses consistently hold employees accountable, you get "good" performance. But if your goal is stellar performance, peer accountability is the ultimate source of influence.