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MAXIMUM
PERFORMANCE
This book is dedicated to the visionary pioneers who
created the world we now live in; and to those who are
creating the world we will inhabit in the future.
MAXIMUM
PERFORMANCE
A practical guide to
leading and managing
people at work
Nick Forster
Professor at The Graduate School of Management, University of
Western Australia
Edward Elgar
Cheltenham, UK • Northampton, MA, USA
© Nick Forster 2005
All rights reserved. No part of this publication may be reproduced, stored in a retrieval
system or transmitted in any form or by any means, electronic, mechanical or
photocopying, recording, or otherwise without the prior permission of the publisher.
Published by
Edward Elgar Publishing Limited
Glensanda House
Montpellier Parade

grounded in up-to-date research findings from across the globe. Nick Forster
writes well, with a lively voice and has peppered the text with rich examples
and case studies. The diagnostic skill exercises and inventories offered
throughout are especially helpful. The book meets the needs of both managers
and students alike, across a wide span of experiences. Well worth the invest-
ment.’
– Professor Barry Posner, Dean of the Business Faculty at Santa Clara
University, California and co-author, with James Kouzes,
of The Leadership Challenge
‘Maximum Performance is an essential read for all business owners, managers,
consultants and key decision makers. It is an outstanding and comprehensive
insight into the broad range of managerial and leadership issues which
confront business people today. It is practical and littered with excellent case
study examples and illustrations. Its unique style is easy to read, thought
provoking and demystifies concepts that are easily misunderstood outside an
MBA course. Grasp and digest this book quickly because it’s the smart thing to
do.’
– Barry Smith, Managing Director, the General Management
Consulting Group
‘Nick’s book is an energetic and down-to-earth exploration of the many dimen-
sions of this enigmatic thing we call leadership. It is a distillation of much
knowledge, experience and insightful observation. There is refreshing and
satisfying clarity of discussion; with comment on many management theories,
explanations of evidence and research and the consequences of their applica-
tions in organisations. The pages are brimming with examples, keeping the
messages real, practical and always interesting. Maximum Performance is
thought provoking, and the reader is constantly challenged to assess his or her
own knowledge, experience, attributes, perceptions and behaviour. It is a
wonderful resource for those beginning their endeavours, introducing them to
the complexities of leading people, and a delightful summary of instantly

– Philip Watson, Director and Principal Consultant,
the General Management Consulting Group
vi
MAXIMUM PERFORMANCE
Contents
List of figures viii
List of tables ix
The author x
Acknowledgments xi
Preface xiii
1 The foundations of leadership and
people management 1
2 Personal performance and stress
management 57
3 Communication at work 92
4 Employee motivation, empowerment
and performance 160
5 Leading and managing teams 201
6 Doing it differently? The emergence of
women leaders 224
7 Managing power, politics and conflict 276
8 Leading organizational and cultural
change 298
9 Innovation and organizational learning 347
10 Managing employee knowledge and
intellectual capital 396
11 Leadership and people management in
high-tech, networked and
virtual organizations 429
12 Leadership and business ethics 487

4.2 Semco: tore up the rulebook in the
1980s 196
5.1 Team rules 220
6.1 Confidence in women 244
7.1 The two faces of power and politics 280
9.1 Linear and lateral thinking 352
10.1 Knowledge assets 408
11.1 Out with the old and in with the new 454
12.1 Perceptions of occupations’ ethical
standards 507
12.2 Top five performing ethical
investment trusts in Australia, 2001–2 508
12.3 Transparency International corruption
perceptions index, 2003 523
ix
The author
Professor Nick Forster is based at the Graduate School of Management
(GSM), The University of Western Australia. He has been involved in
postgraduate management education since 1991 in the UK, Australia
and Singapore. At the GSM, he has taught on the Organizational
Behaviour, Management of Organizations, and Social, Ethical and
Environmental Issues in Organizations units on the MBA programme,
and the Managing Strategic Change unit on the Executive MBA. He
has also received ten MBA-nominated commendations and awards for
teaching, and was chosen by his peers as a nominee for the 2000
Australian Universities’ National Teaching Awards ceremony in
Canberra, attended by the Australian Prime Minister John Howard.
He has published four books, written more than 70 articles in a variety
of international academic and professional journals, and has produced
several research and consulting reports for organizations in Australia

Ricardo Semler, Richard Teerlink, Charles O’Reilly, Tom Peters,
William McKnight, Germaine Greer, Joan Kirner, Moira Rayner, Jack
Welch, Winston Churchill, Scott Adams, Paul Robeson, Henry
Mintzberg, Abraham Lincoln, Franklin D. Roosevelt, Edward de Bono,
Andy Groves, Herb Kelleher, Gordon Bethune, James Collins, Jerry
Porras, Fiona Wilson, Charles Handy, Amanda Sinclair, Peter Drucker,
Gary Hamel, Nicolò de Machiavelli, Aristotle, Plato, Socrates, Anita
Roddick, Peter Senge, Ari de Geus and last, but not least, John Cleese
in his Video Arts days. Their insights about effective leadership and
people management can be found throughout this book.
During an academic career spanning 16 years, I’ve been privileged to
be involved with hundreds of able, motivated and creative MBA and
Executive MBA students in the UK, Australia and Singapore. The
contents of this book have been influenced by their anecdotes and
stories about the leaders and managers they have worked under, as
well as their personal experiences of leading and managing others. All
the materials, exercises and self-evaluation exercises contained in this
book have been extensively ‘road-tested’ with well over a thousand of
these men and women and many other groups of professionals and
managers, so their contribution to this has been significant. I’ve also
had a number of high-profile guest speakers on MBA programmes in
recent years. They too have shaped my understanding of what success-
ful leadership and people management is really all about. I’d like to
thank both groups for their influence and inputs to the book.
I’d also like to thank Fenman Limited, the Financial Times and Prentice-
Hall, MCB University Press, McGraw-Hill, Pearson Education, Alan
and Barbara Pease and Ray Kurzweil, for their permission to make use
of the following materials.
xi
Chapter 3: N. Forster, S. Majteles, A. Mathur, R. Morgan, J. Preuss, V.

Walk into a large bookstore in any city of the world, stroll through the
bookshops at international airports, visit university libraries or browse
e-booksellers’ websites and you will find dozens of books on leader-
ship and people management. These will range from highbrow acade-
mic discourses to books written by management consultants, from the
autobiographies of well known political and business leaders to satiri-
cal works on modern organizational life, like those of Scott Adams or
Dennis Pratt. What can one more book add to this extensive and wide-
ranging literature?
First, all of the materials, self-evaluation exercises and questionnaires
contained in this book have been extensively ‘road tested’ in the UK,
Singapore and Australia, over a ten-year period, with more than one
thousand Master of Business Administration (MBA) and Executive
MBA students, on multi-award winning postgraduate management
courses. They have also been tried and tested in dozens of leadership
and management development courses over the last decade. Only those
materials and exercises that have worked for busy managers and profes-
sionals, or have passed ‘The MBA Test’, are included in this book.
Hence it is particularly suited to people enrolled on MBA programmes,
as well as those who may want to update their leadership/people
management skills but are unable to take time off work to attend expen-
sive (and often ineffective) ‘management training’ courses.
Second, many publications overlook essential elements of present-day
leadership and management, particularly those relating to self-aware-
ness and integrity, personal values, personal performance and stress
management, and vision and creativity. This book is comprehensive in
its coverage of all the elements of leadership and people management
that professionals now need to be aware of. This includes traditional
topics, such as employee motivation and performance, communication
skills and leading and managing change, as well as more modern

•a mixture of several kinds of intelligence,
• great self-motivation and the capacity for hard work, combined with
a good understanding of their physical and psychological limita-
tions,
• exceptional two-way communication skills, combined with an abil-
ity to lead, direct and focus dialogues with others,
• the ability to engage with the minds and hearts of others and, as a
result, a capacity to motivate and inspire their followers,
• the capacity to question ‘common-sense’ ways of doing things
combined with the ability to make fast practical day-to-day deci-
sions with incomplete information or knowledge,
• an ability to learn and unlearn quickly, while not discarding good
leadership and people management practices that have stood the
test of time,
•the ability to use power effectively, based on an understanding of
the art of organizational politics,
• increasingly, a hybrid blend of what have been traditionally regarded
as ‘male’ and ‘female’ leadership and people management styles,
• self-confidence and resolve in adverse or uncertain situations, with-
out resorting to autocratic or domineering behaviour,
xiv
MAXIMUM PERFORMANCE
• the ability to think beyond the present and envision the future,
• the capacity to initiate, lead and manage the complex processes of
perpetual organizational change, innovation and learning, without
becoming reactive ‘fad-surfers’,
• an appreciation of the role that employee knowledge and intellec-
tual capital now play as key drivers of organizational success and
profitability,
• an understanding of both the potential and the limitations of new

zations emerge. These developments mean that all organizations have
to think faster and smarter just to keep up with the competition.
Individually, we walk faster, talk faster, sleep less, consume more infor-
mation and work more than ever before. We may have three or four
different part-time jobs or be employed on a succession of short-term
PREFACE
xv
contracts. Jobs for life are rare and job insecurity is a fact of life for
many professionals. Employees can now expect to work for between
five and ten employers in a lifetime. But, as the industrial age’s hege-
mony is challenged, there are also opportunities for entrepreneurs and
for anyone who is willing to challenge conventional management
thinking and embrace, as Tom Peters suggested in the early 1990s,
‘Crazy Ways for Crazy Days’. In the information age (if we have good
ideas, knowledge, energy and persistence) we can become business
pioneers (and, maybe, millionaires) overnight.
The ability to manage the uncertainties that arise from these changes,
developments and trends is now an integral part of the repertoire of
successful modern business professionals, and this book is designed
for leaders and managers working in this demanding, complex, stress-
ful and fast-changing world. As intellectual capital, continuous inno-
vation, organizational learning and new technologies become the main
drivers of organizational success, leader/managers must not only be
able to understand these, they must also find new and more effective
ways of enabling their followers to cope with these new organizational
realities, help them perform to their maximum potential and to aspire
continually to ever-higher levels of performance and achievement.
Getting the most out of this guide to leadership
and people management
Teachers open the door, but you must enter by yourself.

managers of others. Throughout the book, there are a series of optional
questionnaires and self-evaluation exercises that will help you to
develop a unique leadership/management style, and enhance the way
you lead and manage your people at work.
However, it is important to emphasize that this is not a book that sells
instant ‘fads’ or ‘quick-fix’ solutions. Those who claim that you can
become a better leader/manager in just a few days or weeks are
misleading you, or want to sell more copies of their books, or get more
bums on seats at their training workshops. If anyone tells you that you
can become a really successful and effective leader or manager in a
short period of time they are being dishonest. This requires self-belief,
time and commitment. This means that you’ll need to spend some time
working through this book, perhaps try out the self-evaluation exer-
cises, actively reflect on your own leadership and people management
practices, be prepared to unlearn old habits and beliefs and, maybe,
learn some new ones. This is not a ‘self-help book’; it is a guide to
personal lifelong learning and self-development.
By the end of the book, you should have acquired a comprehensive
‘tool-kit’ that you can dip into as and when needed, regardless of the
circumstances that you find yourself in, the quality of the people you
are leading, or the type of problems you are dealing with at work. Of
equal importance, you will be in a better position to decide if you need
to discard old or redundant leadership and people management prac-
tices that no longer work effectively. You will be able to evaluate what
does and does not work for you at present, and decide which new
skills you may need to acquire to enable you to become an even more
effective and successful leader/manager in the future.
This book also contains hundreds of suggestions and opinions, from
business and political leaders, consultants and academics, about how
leadership and people management skills can be developed and

• comparing this knowledge with the supermarket of information and
ideas in this book, and identifying areas where changes or improve-
ments might be made,
• developing strategies to improve your leadership and people
management skills on a weekly and monthly basis,
• putting these into practice at work, by treating this environment as
the principal ‘training ground’ for your development as a
leader/manager.
There are two ways to approach this book. The first is on a need-to-
know basis, where you simply dip into it and have a look at areas of
interest, or review topics that you would like to discover more about.
The second and more rigorous method is to start and maintain a
personal diary. In this, you can reflect on your understanding and
practice of leadership and people management, and compare what you
xviii
MAXIMUM PERFORMANCE
do now with the many insights and suggestions contained in this book.
Included in each chapter are a number of optional exercises that can be
photocopied and included in this diary. A loose-leaf folder or file is
ideal for this. Simply reading about leadership and management is
only the starting point because, as Albert Einstein once observed, ‘All
knowledge should be translated into action.’
There may be a temptation to try and rush through this process. Please
resist this temptation. Work though each chapter gradually, and allow
time for different ideas and new information to sink in, because some
preconceived notions and common-sense assumptions about leading
and managing people in organizations are questioned and challenged
in this book. Make a conscious effort to ‘bridge’ the materials that we
will cover together with your work situation, and think about how you
can apply what you learn in the future. Be open and receptive to new

managers, and how organizational contexts can influence leadership
styles.
To show how followers shape and influence the performance of their
leaders and managers.
To show where our beliefs about leadership come from and how these
influence the way we lead and manage other people.
To look at the roles that coaching and mentoring now play in leader-
ship and people management.
To examine the roles that transformational abilities, charisma and
vision play in leadership and people management.
To explore the dark side of leadership.
To identify the qualities and attributes of leaders you admire and
would willingly follow, now and in the future.
To identify the qualities, attributes, skills and competencies of the
leader/managers that most employees (men or women) want to work
for, and to look at the important role that humour can play in leader-
ship and people management.
1
This opening chapter also acts as the foundation for the remainder of
the book, by summarizing the most relevant and salient aspects of the
20th century literature on organizational leadership and people
management.
Introduction
Of the many decisions an executive makes, none are as important as the
decisions they make about people because they, above all else, determine
the performance capacity of the organization.
(Peter Drucker, The Effective Executive, 1966)
One thing that can be said with confidence about leadership and
people management is that there have been enough books and articles
written on these topics over the last 20 years to bemuse, perplex and

2
MAXIMUM PERFORMANCE
So, how can we move forward from this somewhat inauspicious start?
At the beginning of our journey, let’s look at some definitions. In the
opening to this chapter, you were asked to think about your under-
standing of three concepts that will be used many times throughout
this book: ‘leadership’, ‘management’ and ‘organization’. Please
compare your definitions with these:
Leadership in English-speaking countries is derived from an old Anglo-
Saxon word, loedan, meaning a way, road, path or journey. This ancient
definition of leadership is used throughout the book.
Management is derived from the Italian manaeggio (a riding school),
originating in the Latin word for hand, manus. So, to manufacture
something means, literally, to make things by hand, and in the 19th
century workers were employed by manufactories. Both management
and manufacture may already be outdated terms that should be
replaced by mentoring, mentofacturing or technofacturing. It has been
suggested that these words better reflect the realities of the current
transition from bureaucratic industrial capitalism: from an era when
we did indeed make many things by hand, to a new world where
knowledge management, intellectual capital, innovation and new tech-
nologies are fast becoming the primary drivers of organizational
performance and success.
Organization is derived from the Greek word organon, meaning a tool or
device. So an organization can be viewed simply as a device for getting
things done as efficiently and effectively as possible. However, this is a
static definition. As we will see throughout this book, the leaders of the
most successful companies of the 20th and early 21st centuries under-
stand a basic, but extremely important principle: all organizations are
works in progress. Hence an organization is defined simply as an evolu-