Friday, June 29, 2007

“Rules are Rules!”

No, they’re not. How many times have you been confronted by this brain-dead excuse for why the person you’re talking to can’t (or more likely doesn’t want to) comply with your request? Folks, please believe me on this one. The Law of Gravity is a rule. Freedom of Speech (at least in the U.S.) is a rule. General relativity will be a rule until somebody comes up with a way around it, and it is a rule that purchasing a new vacuum cleaner for your wife for Valentine’s Day is a Bad Idea. The general company policies that people like to quote as a reason for avoiding work are not rules, and even if they were, they would not override the First Rule of Business or the Second Rule of Business (see my posts under those titles).

In fact, one could quite reasonably argue that any company rule that costs the organization more than it saves is stupid, counter-productive, and should be stricken as soon as humanly possible. In his seminal work on customer service, “Hey, I’m the Customer!” Ron Willingham tells the story of a dry cleaners that insisted on charging him separately for two very small alterations, even though their sign implied that the price quoted was per garment. By doing so, the company was able to gain $9.50 and stick to their “rules” – and lose at least $2,000 per year for the next decade, as Mr. Willingham was sufficiently annoyed to take his business elsewhere.

They gained $10; they lost $20,000. Clearly, following the rules is not doing this business any good. For that matter, when American Airlines would not let me purchase tickets for my wife and myself because it was less than 72 hours before flight time (they wanted each of us to purchase our own ticket, with our own credit card, with our own name on the card – but with no guarantee that we could have seats together!), they lost $1,000 on the spot – and probably ten times that overall, because I’ve never flown them again, and I’ve told everyone I can (including all of you) about the incident. God alone knows what benefit they think they were getting by adhering to that rule, but I have to question if it’s really worth the loss in revenue they’ve incurred.

So how does this happen? I regret to say, the fault lies not with our stars, but with ourselves. That is, it is the management team of each company that must take responsibility for these issues. On the positive side, we need to recognize good customer service, reward employees who go out of their way to take care of the customer and make the sale, and look at the big picture – not try to save $10 today at the cost of $20,000 over the next ten years. On the negative side, we need to supervise our people, make sure they actually explain what they can and can not do for the customer (and why), and keep them from using regulations, red tape or rules to avoid actually doing their jobs…

And we need to immediately fire, with extreme prejudice, anyone who uses the phrase “Rules are Rules!”

Thursday, June 28, 2007

Annual Review Nightmares

I could probably write an entire post just about the mistakes I’ve seen managers make in trying to review me. Well, actually, I could probably write a book about those errors, and maybe someday I will. The fact is, you can learn a lot about an organization just by examining its annual review process. In particular, you can learn which mistakes are being made because the management team doesn’t know any better, and which ones are being made because the organization’s entire structure is rotting…

All too often, management personnel regard these reviews as a useless drain on their time, and put as little effort into them as possible. They don’t keep track of the employees’ performance, make no note of their subordinates’ accomplishments, and conduct annual reviews only because their own superiors require them to do so. In fact, on one job I did not receive a review for nearly 30 months – and then got one only because the company was being sued, and had been required to produce their internal records. I’ve even seen cases of managers having subordinates write their own reviews, and then signing them and putting them in permanent files still unread.

I’m not sure “management apathy” is actually a term. But I’ve watched it kill any number of otherwise worthwhile organizations, and this is a clear case of it.

Then we have inappropriate rating systems. On one past job, our division President decreed that since no one is perfect, no one could receive a “5” on the 1 to 5 performance scale on their review. Most of the division’s managers interpreted this to mean that no one could receive a “5” ranking on any part of the review. Since our review had 20 ranking questions, this made the highest possible score an 80, although it was still alleged to be 100. Even worse, these rankings determined the size of your annual raise; so while there was a percentage given for those who got a “5”, no one EVER received that amount.

Then we have the raises themselves. In the company I just mentioned, a “5” meant that you got a 3% raise; a “4” meant that you got a 2% raise; a “3” meant 1%, a “2” meant that you did not get a salary increase, and a “1” meant you were fired. Leaving aside for the moment the fact that no one ever got a “5” and very few people ever saw a “4”, this practice is stupid for at least two other reasons. First, the low salary increase completely ignores the employees’ level 4 (Recognition) needs and may actually ignore their level 1 (Survival) needs as well, if the increase is lower than the prevailing rate of inflation. Even worse, however, is the fact that you can not discipline someone by threatening to withhold their raise if you are not giving them one in the first place. “Behave, or you won’t get your 1%!” is just not effective.

Finally, there was the case of management telling us that there would be no raises this year because it had been a difficult year for the company, financially. Unfortunately, every employee in this company was also a stockholder, since we received stock as part of the retirement plan, which meant that every one of us had received a letter three weeks earlier bragging that the company was having its best year ever and would be paying record dividends. I stapled together the stockholder letter, the memo from senior management saying they couldn’t afford to give raises, and the Dilbert cartoon where exactly the same thing happens, and gave it to my boss at my annual review that year, right after he told me I was getting 1%. It probably didn’t help… But then it’s hard to imagine that anything would have at that point.

Wednesday, June 27, 2007

THAT Time of Year Again…

No, not the “Holidays.” I refer here to the season when most companies, and many other employers, begin the Annual Review process, one of the most universally hated rituals in the working world. I’ve never met anyone who doesn’t have at least one horror story to tell about annual reviews, and I’ve met very few people who’ve ever had a completely positive experience with the process. Even allowing for the fact that the review is intended to address long-term bad habits, it still seems outrageous that a basic function of day-to-day management has devolved into this sort of quagmire. It makes you wonder if anyone out there remembers what these reviews are supposed to do, doesn’t it?

First off, an annual review is supposed to provide the employee with feedback about their overall performance for the previous year. Unfortunately, this requires managers to keep track of how their subordinates are performing over the course of the year. Since management personnel for the most part believe that they will receive the same salary whether they do this or not, many of them don’t; they will just use whatever vague memories they have of the year, often colored by the last interaction with the employee they can remember. As a result, many people have learned that all they have to do is perform well in the first few weeks of June each year, and their review is a breeze.

Second, the review is supposed to correct long-term bad habits. Not actual mistakes or infractions, which should be dealt with as they occur, but simply things that either irritate fellow workers or lead to lower efficiency. Too often, a review will turn into a “slam session” as the manager vents his or her anger regarding everything the employee has done wrong over the previous 12 months. One manager of my acquaintance was actually keeping a “secret discipline file” in which he would catalog everything his subordinates did that he felt was wrong or annoying. However, he only mentioned this file when trying to bring people into line (“That’s going in the file!”), and only shared the contents during the annual reviews. Or sometimes, at a review two or three years later.

Third, the review is supposed to deal with any discrepancies between the employee’s written job description and what they are actually being asked to do. Job descriptions are another in a long list of business documents that, like mission statements, operating philosophies, and the like, are more often ignored or misapplied than actually used correctly. In many cases, a job description is only used during the hiring process or when an employee is refusing to do something. When used properly, however, a set of job descriptions should tell the reader everything the unit does, and which employees are responsible for which tasks – in other words, everything you would need to know to operate or even reproduce the unit in question. It in turn forms the basis of operating plans, company regulations, strategic planning cycles, and orientation for both the management personnel and those they supervise.

All too often, however, these descriptions are simply rubber stamped by both management and the employees, and completely ignored. Done properly, a review should include a statement written by the employee detailing their current duties and the procedures they follow to complete those duties, which should then be compared to the written job description during the meeting with their supervisor, and either the duties or the description modified to bring them into agreement. An employee should also have the opportunity to comment on their own performance and any other relevant issues during the written and verbal review process. The manager should read this self-assessment before starting the actual review meeting, and be prepared to address the employee’s concerns as well as voicing their own.

Finally, the employee and the manager should discuss any improvement in performance that appears to be necessary, and any changes in job description that appear to be needed. The manager needs to use this process to provide recognition for good work (see my posts on the Hierarchy of Needs and Level 4: Recognition) and, if at all possible, reward for good performance where applicable. At least, that’s how this process is supposed to work. Next time we’ll go over some examples of what happens when it doesn’t…

Tuesday, June 26, 2007

Second Rule of Business

At the start of this month, I set down in this space what I have always seen as the First Rule of Business: “When someone comes to you and says, ‘Hello, I would like to give you a lot of money now,’ you say, YES!” It continues to amaze me how often one encounters situations in which a company will literally make it impossible for you to do business with them, especially when (as is usually the case) the competition will usually be only too happy to take the business being blown off. But as several of you have pointed out, most business mishaps are not quite so blatant; in general, you are more likely to encounter situations in which a company merely makes things difficult for the customer.

This brings me to the Second Rule of Business: Do Not Annoy The Customer. Again, you would probably think this is obvious. If we annoy the customer, he or she may well decide to go elsewhere and do business with a company that is not, currently, annoying him or her. Consider, for example, the case of a retail store with multiple cash registers, but only one person available to operate them. If there are two people in line, you might decide to wait in line until your turn comes up; however, this possibility becomes increasingly smaller as the line grows. If there is another store nearby that sells the same merchandise, you may decide to go there instead, especially if you become aware that there are additional cash registers (and additional employees) available but the store is making no effort to use them to speed up the line. If the competitor does have adequate staffing (and reasonable checkout lines) you may not, in fact, ever return.

Admittedly, this is a difficult situation to manage properly, and retail managers spend a lot of time learning how to run these operations smoothly. I will also concede that when a store (or a company) is operating at capacity (e.g. all check stands open and ten people in line at each one) there is very little the manager on duty can do about the situation. However, there are many related issues. In retail, stores that are consistently out of stock of what you want to purchase; on the Internet, web sites that are consistently down when you want to make a purchase; in food service, empty restaurants that can not seat you because they don’t have enough staff on duty; by telephone, tech support that can not diagnose your problem, or tell you how to fix it; all forms of telephone-based customer service with wait times measured in hours or days instead of minutes – all of these are simple cases annoying the customer. Of, in effect, inviting the customer to take their money and go elsewhere.

It would be nice to believe that this behavior occurs only in large companies, where customer service is not made a priority, and customer service personnel receive the same salary regardless of how often they break the Second (or First) Law of Business. Regrettably, in the consulting practice we saw examples of this sort of idiocy in small business ventures and even non-profit organizations. By the same token, I can refer the reader to any number of large organizations that appear to have taken these ideas to heart – Nordstrom being only the most famous example. The key factor will always be the importance placed on customer service, not just at the point-of-contact level, but at all levels (and by all levels of management). Because unless you make this an absolute priority, I can almost guarantee that you or someone who works for you has already broken the Second Law of Business – and will again…

Friday, June 22, 2007

The Audience is Listening…

Well, actually, they’re probably not. Anyone who has spent any time at all in Corporate America has probably complained that management isn’t listening to the employees at least once. Let me say up front that you should not take this personally; I was once the senior business analyst of a $450 million dollar wholesale unit, and my division President refused to listen to me, despite the fact that I had been consistently accurate. Unfortunately, even people who do, in fact, know better will sometimes refuse to listen to input from their subordinates, either to establish how important they are, put the subordinate in their place, or just because thinking about input requires work, while a knee-jerk rejection does not.

That this type of behavior is stupid should be obvious; if you do not listen to your subordinates, how will you know what is going on within your unit? What is less obvious is that in addition to being poor management practice, this also fails to address the needs of the employees at level 4 of the Hierarchy of Needs : Recognition.

No one wants to feel like a faceless cog in the machine, especially if they are. So once their survival and security needs are met, and they begin to form social connections to the employees around them, most people will begin looking for recognition of the quality of their work, their importance to the organization, and the fact that their input matters to higher levels of management. This may or may not have a competitive element, depending on the psychology of the individual, but even those people who do not feel any need to compete with their peers still like to feel appreciated.

The most obvious form of recognition, monetary reward, is harder to utilize than most people believe; even if your department has the budget to do so, it is not practical to be constantly handing chunks of money to the employees. Many companies make use of non-monetary awards, such as certificates of appreciation, but these are ultimately little more than adult versions of the gold stars we received in Kindergarten; unless the award itself is of value/prestige to the employee, the piece of paper itself will have little value.

The first step in providing proper recognition for your workforce is simply listening. Make it clear to your people that you want their input, and if you find their ideas sound, you will act on them. When you do implement an employee suggestion, make sure their peers (as much of the company as possible, in fact) know that you have done so. If someone has achieved high levels of productivity, make sure that everyone knows about that, as well. A token of your esteem (like a certificate) can work if it fulfills the employee’s fourth-level needs; so can an extra perk like an afternoon off with pay, or tickets to a sporting event, so long as they come with “bragging rights” – recognition from the rest of the group that the individual is being rewarded for their high performance.

One of the best variations of this idea I have ever seen was the “Lunch with the CEO” program. The idea was, each month the CEO of a large corporation would select the Employee of the Month from a list of candidates forwarded up through the Vice Presidents, Directors, Managers, Supervisors and Team Leaders. Instead of a nice certificate, however, what the Employee of the Month got was a one-on-one lunch meeting with the CEO, in the Executive Lunchroom. The meeting was a “no ranks” conversation; the CEO made a point of getting the employee’s first name and calling him by it, and asking for the employee’s input on the direction of the company (and any other issues the employee felt were important).

It’s debatable whether the CEO ever actually learned any deep, dark secrets this way – although these lunches undoubtedly gave him a look into life on the factory floor, in the warehouse, and down on the cubicle farm that he would otherwise never have gotten. The effect on morale, on the other hand, was quite obvious. Every time this happened, the employee would go back to the floor and tell his (or her) peers about having lunch with the CEO, and how the head of their company wanted the employee’s input and how he LISTENED to everything he/she said.

And this cost the company… One lunch. Usually a nice lunch, something a CEO wouldn’t mind eating, but still less than $20 for a boost in morale that thousands of dollars in company-sponsored social events could not have equaled. It’s worth thinking about…

Thursday, June 21, 2007

Building a Team

“So if company picnics and similar events are usually failures because they don’t address an employee’s Belonging needs, how can the company address this level of the Hierarchy?” I hear some of you asking. “Should we just give up and let the social interactions in our workgroup go where they will?”

Surprisingly, that doesn’t work well either. If the personnel assigned to you are professionals, who are able to form relationships based on mutual respect and collaborate on projects because the understand the value of pooling skills and experience, then it may be unnecessary to foster better interactions in the group. But most of us will not be so fortunate; the average line manager will face the task of trying to develop a team out of many diverse elements.

The first thing to keep in mind is that people are not as stupid as senior management would like us to think. Trying to manipulate them into doing something is generally not going to work; trying to manipulate them into doing something counter to their own best interest is so likely to fail that I can’t really understand why people keep trying it. To create a meaningful event, we need to begin by figuring out what our people really like to do – and one of the best ways to do this is to ask them. If you are fortunate enough to have an entire group (or even a large majority) of golfers, or bowlers, or baseball fans, those events might be worthwhile. If your group is diverse in its interests, there is always the option of taking them to lunch, or an after-work beer call.

Which brings us to the second thing we need to be mindful of: do not schedule events during evenings, weekends or other unpaid time unless absolutely unavoidable. If the activity you’ve chosen is a sporting event, and the sport is only played on Sundays and Monday nights, for example, then this can’t be helped. But events held on the employees’ time will be seen as unpaid overtime, and resented as usual, particularly if the event itself is unpopular. Similarly, try to avoid events that use up other employee resources, such as money or equipment, as these will also conflict with first-level (Survival) needs. Where possible, schedule these events on company time, or use comp time (where available) to make up for it.

Also, keep in mind that activities that build team interaction do not have to be off-site, extraneous activities. Involving the employees in problem solving activities, and particularly in forward planning cycles, can get them to work together and recognize the different assets each team member brings to the table. Probably the simplest team-building exercise ever invented is what is known as the “No Ranks” discussion. Developed during the Second World War by the British Army’s technology research establishment, these conferences are discussions in which ranks are expressly not observed; in which a humble line employee should have no fears about telling a senior VP that his idea will never work. Whether any useful information will be revealed in such discussions is highly debatable; it is also completely irrelevant. Even if senior management does not learn anything new this way (and they almost always will) the effect on morale, and the cohesion of the team involved, is more than worth the effort.

Of course, part of building a good team is convincing the employees that we are listening to them, and that we value their input and consider them to be an important part of the process. This, however, also takes us into the realm of Recognition, which is level 4 of the Hierarchy of needs…

Wednesday, June 20, 2007

A Place Where We Belong

The other day somebody asked me “Why do companies keep having company picnics if all of the employees hate these events so much?” The question highlights the commonly-held belief that company picnics and similar events (holiday parties, golf outings, beer calls and the like) are intended as a benefit or service for the employees, albeit a relatively lame one. Unfortunately, such events are not actually held for the benefit of the employees, or at least not directly. Instead, they represent efforts of the part of management to deal with yet another motivating need of their employees: social acceptance.

Let’s return to the Hierarchy of Needs and talk about level 3: Belonging. Maslow notes that human beings are inherently gregarious, and that belonging to social groups is important to us. It’s not an immediate need like food and water (Physiological or Survival needs) or continued safety, but once we are reasonably sure we’re going to make it through the week alive, the next thing most people start looking for is other people to hang out with. In a job context, this might take the form of water cooler buddies, lunchroom cliques, or gossip partners, but the resulting structure is not likely to mirror the management structure of the company itself.

In order to give a work group or department the same cohesion found in a social group, the management personnel will have to persuade the employees within that unit to bond, interact more closely, and (if at all possible) identify with the unit as their own. It is attempts to create this artificial social identity that result in company picnics; the theory being that the employees are more likely to identify with someone they’ve shared food and leisure activities with, and are more likely to consider themselves part of a team (e.g. “us”) if they have collaborated to defeat another group (e.g. “them”) in some competition.

Unfortunately, social dynamics is a bit more complicated than just organizing a picnic. To take only the most obvious example, if the employees involved do not enjoy picnics, or do not enjoy the enforced jocularity of the games and events scheduled by the company at the picnic, or worst of all, if the event is held on a weekend (forcing the employees to give up their own leisure activities in order to attend a mandatory company function) the entire exercise may become counterproductive. The same problems will apply to any similar events (e.g. paintball games, white-water rafting, team-building courses) if these same issues exist.

What management is generally failing to take into account is that these events do not actually address the employees’ needs for social interaction. They are designed to encourage the employees to interact in ways that benefit the company and meet its needs, not those of the employees. Even worse, most employees are intelligent enough to realized that this motivation exists, and many of them will resent being manipulated in this fashion. But the very worst cases occur when the company events themselves conflict with the lower-level needs of the employees (e.g. using up resources such as time off, or subjecting the employees to situations where they do not feel safe) or the employees’ own social activities.

The most egregious case I’ve ever seen personally was a company outing scheduled for the same day as the local high schools’ graduation ceremonies. Since many of the employees had children attending school locally, and a number of them were graduating, this left the affected employees with the choice of missing a mandatory company event (and being fired or disciplined for “attendance problems”) or missing their child’s high school graduation. Curiously, excusing those employees directly affected did not help; everyone else resented them enough for not having to show up that the event ended in total failure. My suggestion at the time (that they reschedule the event for later in the summer – and hold it on a weekday) was ignored because the executive management felt that their prestige would be damaged by having to respond to employee demands…

Tuesday, June 19, 2007

Playing It Safe

All right, so we’ve established that low pay is a bad idea, and that people generally want money more than any other potential benefit from working – at least initially. In the 21st Century, health coverage has become so important (and so stratospherically expensive) that medical benefits are no longer really a perk, and must be considered part of the compensation package equal to the equivalent cost to the employee. That is, a job paying $40,000 with full health benefits will be equivalent to a job paying $45,000 without benefits if those benefits cost the employee $5,000 per year, and so on. But a job that offers no pay, just benefits, will not draw many applicants.

Let us assume for the moment that we have a workforce that is being provided with adequate wages and benefits – if at all possible, compensation levels well above the industry average and relatively high for the geographic and social conditions. We’ve gone a long way towards ensuring high job performance, but there is still room for improvement. Let’s return to the Hierarchy of Needs and consider the next level: Safety.

In an employment context, Safety needs are usually focused on so-called “job security”, or the employee’s confidence that they will be able to retain their current employment for the foreseeable future. There are a number of ways the company (and we as management personnel within the company) can help to satisfy an employee’s Safety requirements, but not all of them will be practical in every employment situation. For example, a work contract that specifies two year’s employment, with the employee’s salary held in escrow by a third party would constitute an almost perfect level of job security for as long as the contract lasted. Unfortunately, it is rarely possible to identify an employee or even a position that will be essential for any lengthy period.

Safety needs can also center on health care, secure working conditions, and an eventual chance for retirement, all of which are much easier for the company to provide (decent health benefits, on-site security, and a retirement plan are all easier to obtain than a reliable view of the future). These factors may not convince the employees that their jobs are secure, but they do help: most people will believe that the company is not going to spend the money to keep them healthy, keep them safe, and provide for their retirement if it intends to jettison them in the near future. Company-provided training, education and cross-training programs work the same way; by investing in its employees, the company shows that they are valued (and not likely to be casually discarded).

Also critical to meeting the employees’ Safety needs is the opportunity for advancement. If the company consistently promotes from within, the employees will be less concerned about being replaced by newer (lower-paid) personnel. When combined with training and education opportunities, such a policy will help to convince the employees that the company expects them to grow and advance along with it – and wants them to be able to find other suitable work when they leave.

Ideally, of course, we would prefer to have the employees come to understand their role as Stakeholders in the company, and associate their own future success with that of the company. To do that, however, we need to make them part of the process by which our company is run – to make them part of the team, part of our working environment, something we are better and more capable with than without. This, of course, goes beyond simply using people as tools to accomplish the tasks at hand; it requires the social integration of the company and brings us to the third level of the Hierarchy: Belonging…

Monday, June 18, 2007


It has come up a couple of times recently, and enough times over the years since I got my MBA, that I think it’s worth addressing the issue of why low pay is really such a bad idea – from the company’s point of view. For the employees, of course, the idea of being paid less is understandably bad, but what exactly does the company have to lose? Even granted that morale will suffer if the employees’ first-level (survival) needs are not being met, doesn’t the savings in salary make up for whatever loss in productivity is incurred?

To understand the answer, you need to look at all of the costs associated with low pay, not just the obvious worker dissatisfaction. First, keep in mind that people who feel they are underpaid, particularly if they are underpaid by industry standards, are going to be likely to leave as soon as a higher-paying position becomes available. Therefore, we have all of the costs associated with turnover: recruiting replacements, hiring new personnel, training the new employees, and the loss of productivity incurred while these new people fight their way up the learning curve to become fully proficient in their new jobs.

Second, the employees who are most likely to leave the company are those with the best skills, the most experience, and the greatest initiative – in other words, the best employees present. This is actually harmful for two independent reasons: not only will the company continuously lose its best people, but also those people will migrate to jobs that offer better pay elsewhere in the industry. Not only are you constantly losing your best people, you are effectively providing free recruiting services for your competitors, and increasing their competitive advantage over you.

Third, the remaining personnel (e.g. those who remain working for you despite the low wages) will most likely resent the situation, including both the low pay and the fact that their traitorous former colleagues are being rewarded for leaving the company. Performance WILL suffer as a result – it can not fail to, since you are deliberately equipping your company with the worst available workforce and then motivating them with the worst possible morale. If the company is also skimping on benefits (e.g. poor quality health benefits, no pension or retirement plan) and perks (e.g. low vacation days or vacations cancelled to increase production, no free parking or transportation allowance), or worse yet attempting to make up the loss in productivity at the expense of working conditions (e.g. mandatory unpaid overtime, no air conditioning in the summer, no heat in the winter), the company can expect an additional fall-off in production.

Considering all of these effects, the benefit to the company hardly seems worthwhile. It may be possible to save a few dollars (or a few thousand) on each position each year, but the benefits are unlikely to outweigh the potential hazard. And who’s even mentioned the idea of organized labor, strikes, sabotage, or government regulations yet? Remember, the employees are the tools by which management does the job at hand, and it ALWAYS pays to buy the best tools – and then keep them sharp and well maintained.

Wednesday, June 13, 2007

What Drives People?

In order to figure out how to get the best performance out of our people, we as managers need to begin by understanding what motivates people in general. If this topic fascinates you, there are entire seminars on this subject in business school, or in any good psychology or sociology degree program, but today I’m just going to bring up one of the giants of management theory, Abraham Maslow, and his famous Hierarchy of Needs.

At the heart of Maslow’s theory is the idea that all people have a series of needs that can be arranged in ascending order; that is, you can not advance to the next higher level if you have not met all of your needs on the level below it first. The classic example starts with breathing; if you can’t breathe, the fact that you are hungry isn’t really important just at that moment. If you haven’t eaten in several days, the uncertainty of how you will find food next month is not really important compared to eating now, and so on. Issues like social belonging (e.g. friendship, family, love) and esteem (e.g. the respect of others, recognition for the quality of your work) are not going to matter to you if you are lying awake every night wondering how to pay the rent.

For the management professional, all efforts to motivate the workforce must begin with a basic understanding of this theory. If your employees are concerned about feeding their families, assuring them that their jobs are secure will not really help; and if they are convinced that they are all going to be fired next week, a company picnic on Saturday won’t do any good. We must understand the needs of the workers, and try to figure out which of these needs are not being met – and what we can do about it.

Low wages are always going to be the first level; most employees are working to make a living, not because they enjoy the activity. If your people are unable to support themselves (or worse yet, their families) on the wages you are paying them, they are unlikely to perform well, and quite likely to quit in order to take the first better-paying job that they encounter. In the 21st Century compensation has grown to include benefits such as health insurance (employees are unlikely to perform well if they or their families can not afford needed health care), and the management team must take these into account as well.

Safety (or Security) is generally the next concern. This refers to job security as well as personal safety while on the job. Very few people are willing to put up with the lack of either factor; one is constantly hearing of people looking for more job security and better working conditions. Depending on your industry, difficult working conditions may be standard, and it may be impossible to guarantee long-term employment for every member of your staff, but the management team must still attempt to deal with these issues, at least on a relative basis (e.g. our company is relatively safe and offers quite good job security for our industry).

My point in dragging out all of this dusty B-school theory today is that there is no getting around the hierarchy. We can argue for days about what factors belong on what levels, and whether the hierarchy should have the traditional 5 levels or some larger number, but there is no way to avoid the fact that if these basic needs are not being met, all of the attempts to use Social, Recognition or Self-Actualization measures to motivate the workforce are a waste of your time and your company’s money. That many companies continue to use team building exercises, meaningless performance acknowledgements and unpopular social events to attempt to compensate for low wages and low job security is an indicator that the people in charge of such organizations are not paying attention; that such measures continue to fail is an indicator that Maslow was right…

Tuesday, June 12, 2007

The Manager’s Toolbox

In one of my earlier posts (May 23, 2007), I mentioned the idea of a manager “using” his or her employees the way a carpenter uses a hammer. Since then, the question of “How, exactly?” has come up a couple of times, and I thought I’d devote the next few posts to some practical details. Keep in mind that the management of people (human resources in the original sense) is always going to be subjective, not to mention context-specific.

That said, the first task for the line manager is always to learn as much as possible about the employees for whom he or she is responsible. Some of your people may have better attention to detail, and can be employed for those tasks requiring precision; others may be able to handle only the gross details of a project, but at an extraordinary rate of speed; still others will excel in people skills, or forward planning, or record-keeping, or any of a thousand other specialties. There’s an old saying among engineers that “No tool is so useless that you can’t find something to fix with it,” and that applies to management scientists, too. Everyone working for you has something to contribute to the task at hand; your job as the manager is to figure out what that is.

Blaming the employee because you can’t figure out how to make use of their skills (a behavior that often shows up on complaints about managers from the workforce) is like blaming a circular saw because you can’t drive nails comfortably with it. It’s possible that a given employee does not have the skills you need to complete a task (a carpenter’s file won’t help you rewire a light socket), but that means we need to consider what we can get that person to do (can we use a file to make the socket fit better in the wall? How about making a guide groove for the wires?) and how that fits into the larger picture.

Let’s take an example of a familiar business type – a retail store. Suppose I’m the manager on duty, and I have five people working for me on this shift. One needs to be on the floor, helping people find what they are looking for – I’ll need the employee with the best people skills. One needs to run the cash register – look for someone with a good eye for detail and decent math skills (to make sure the right prices are applied and the correct discounts are given).

Someone needs to work the loading dock and check in our shipments, as well as packing up things we’re sending to customers – I’ll need someone who can handle heavy lifting and does not get bored easily (try checking in a shipment for a general merchandise store with over 60,000 different items in inventory). Someone needs to unpack the incoming goods and set-up displays on the sales floor – ideally, someone with attention to detail and a good eye for color, contrast, and appeal. And finally, somebody needs to process our paperwork, pay our invoices, run our payroll, send out bills, handle our bank deposits, do our filing, and a dozen other back office functions – hopefully, somebody on the crew has some accounting background.

Generally speaking, people tend to enjoy those job tasks they excel at – and excel at the job tasks they enjoy. Just understanding your people, and knowing what kind of work each of them would be happiest doing, can go a long way toward getting the best performance from each of them. Explaining that this is why you are making those assignments (telling someone that you are putting them in charge of the books because they are the best accountant you’ve got, for example) will go even farther; everyone likes to be appreciated. Of course, some people may not agree with your assessments, or prefer some other task to the one you’ve assigned them, and it pays to accommodate those requests when doing so will not jeopardize overall performance.

Getting people to give you the best possible performance in the roles assigned to them is another story, of course – but we’ll take that one up tomorrow.

Monday, June 11, 2007

A Short Example

Here’s a short example of the difference I was going on about – between taking care of your customers, and not. Last week I had two different dining out experiences that I think demonstrate the extreme ends of the spectrum.

One night on the way home from work, my wife and I decided to stop for dinner at a local Islands restaurant location. This particular restaurant is located on a busy street in Los Angeles where there is no parking on the street during rush hour (e.g. 4 pm to 7 pm every day) because the parking lane is used as an extra traffic lane. The restaurant has a valet parking service available during the evening, because the surrounding streets are permit parking only and there is no public lot nearby. On the night in question, however, we arrived shortly after 5:00 pm and discovered that the valet service did not start until 6:00 pm. In other words, between the hours of 4 and 6 every day, if you want to have dinner at this Islands, you’d better be walking…

This would be a bit less preposterous if the restaurant’s “Happy Hour” wasn’t also from 4 to 7 pm every day. However…

A few days later, we decided to get take-out from a Daily Grill restaurant not that far away from the Islands referenced above. Pulling up to the curb in front of the restaurant, I was not surprised to see a loading zone; a lot of restaurants have one in front for people dropping off dinner companions. What was unusual about this one was the large sign with the Daily Grill logo and telephone number, which indicated that if you were picking up a take-out order you could just call the number indicated, and they would bring your order out to you at curbside.

All right; so this isn’t really a fair comparison. Daily Grill is considerably upscale compared to Islands, and the placement of the loading zone is up to the city; the restaurant is just taking advantage of it. What I want to call your attention to is the difference in attitude; between calling one business and being told “That’s when our valet comes on duty; there’s nothing we can do about it,” and being told “Sure, we’ll bring your order out to the curb; no problem.” There’s a reason Daily Grill can charge more than twice as much for a meal, and not all of it is food quality…

Taking care of your customers isn’t just a state of mind – but that is where it starts.

Thursday, June 7, 2007

Doing It Right

As this blog continues, anyone reading it is going to be treated to a large number of posts of me ranting about companies making customer service and product development or selection mistakes that a five-year-old child would know better than to permit. Not that this is intended to be a discussion of management incompetence; it’s just that these are two areas that are critical to the success of any business, and yet are the two areas most often totally ignored by senior management.

Customer service is a case in point. If you are dealing with a large corporation by telephone (as in the case of trying to make airline reservations, purchase something out of a catalog, or obtain technical support for a malfunctioning product) and the customer service representative (or CSR) is rude, unhelpful, or just stupid, you are likely to hang up and call a competitor (if one is available). The success or failure of the entire corporation can turn on the job performance of these personnel – who are, in many cases, the lowest-paid members of the company. Think about that for a moment. A company could easily lose thousands of dollars in sales just because a single employee making minimum wage fails to handle a call in a professional manner. Which can easily happen, considering that in many companies, the CSR will be paid the same wages regardless of how many transactions they are losing…

As we go along, I’m sure there will be plenty of opportunity to discuss specific cases of this sort of failure. Today, however, it gives me great pleasure to tell you about a company that is doing it right. Some years ago, I bought a leather swivel chair from Plummer’s Furniture, a chain of about a dozen stores located in California. Plummer’s sells some quite nice mid-range furniture at decent prices; better quality than say Ikea products, but less pricey than what you might find in some upscale stores. I’d purchased the chair from them because I’d had three of the Ikea versions break on me (or, more accurately, under me) in ten years, and I wanted something that would last a little longer.

Unfortunately, it didn’t. That is, my Plummer’s chair lasted nearly five years, instead of three and a half, but that’s not good value considering it was four times more expensive. When we took the broken chair apart to see if we could fix it, however, we discovered that the base (which had broken) had not been assembled correctly; instead of six large wood screws, the manufacturer had used three – and three small bolts that didn’t actually connect to anything. With less than half of its intended strength, the base had snapped.

I was a bit annoyed at this discovery, and took the broken base back to the Plummer’s location where I had purchased the chair. I didn’t really expect them to do anything about it (it had been over four years since the purchase, and any warranty would have long since expired), but I wanted to show them the problem anyway. To my surprise, the supervisor on duty that afternoon took down all of the information, including taking pictures of the base and the faulty manufacturing problem. She and her manager then contacted the manufacturer and got them to send me a replacement base.

As a result, I must say that my opinion about their entire operation has changed for the better. That I’m getting a replacement for the part that failed is nice; that I’m getting my favorite chair back makes me quite happy. But the reason I’m telling all of you about this is that they did it right. If the part required wasn’t made anymore; if the manufacturer had gone out of business in the interim because people got fed up with their shoddy construction methods; if they had tried their best to help me and been unable to, I would not be quite as happy, but I would still consider that the folks at Plummer’s had made the right call, done their best to take care of their customer, and probably kept a bad situation from turning into the permanent loss of a customer, plus the loss of everyone else I could tell this story to.

It’s a truism in customer service circles, but it still bears repeating: “If you take care of your customers, they will keep coming back; if you don’t, someone else will…”

Wednesday, June 6, 2007

Advertising from Outer Space

Let me state up front that I’m not a advertising specialist; I’ve done some time as a salesman and spent a few years helping people figure out how to position a new product and what marketing channels would be most effective in reaching their key demographic segment or segments, but I don’t write copy or design ads. Nevertheless, I find myself wondering more and more often what planet the people writing some of these ads are coming from. Because on my planet, Earth, it doesn’t work this way…

Let’s take a few recent television ads. I’m not going to comment on the fact that on some cable channels you can see the same 30-second spot up to 8 times per hour (15 times if you are watching sports), but I can’t understand why the ads themselves have to be so annoying to watch. For example, one of the cell phone companies is running a series of ads in which the call drops at a critical moment during the conversation, and one of the people on the phone begins reacting as if the other person (who has been disconnected) is still on the line, but just refuses to say anything.

If you’ve had a cell phone for more than, say, a minute or two, you have experienced a dropped call. The idea that any adult user, no matter how stupid, would fail to notice that the call has ended and fly off the handle isn’t even funny the first time; after four or five hundred rotations in a single week, the urge to slap the actor (or better yet, the writer responsible for this crap) becomes overpowering.

Even worse, as far as I’m concerned, is a beer ad in which a guy arriving at a party grabs a large container of beer from another arriving guest (under the guise of “helping” him get through a door) and starts carrying on as if he’s the one who brought the beer. In most circles, if you behave like that even one time, you’re probably not getting invited to any future parties. Assuming, of course, that the person whose beer you’re taking credit for bringing does not beat you senseless for doing so. If you did something like that back when we were in college, you’d be lucky to make it out alive…

And I’m not even going to discuss the idea that showing up at a party with several liters of (stolen) beer in a special new container would make all of the women present want to sleep with you…

Let’s just move on to a series of commercials for what are described as “natural male enhancement” products, whatever that means. For reasons unexplained (and probably inexplicable) these ads all seem to feature men who use these products picking up (and presumably having sex with) some of the least appealing women on the planet. They also feature people discussing sex aids in public, but after twenty years of ads featuring women discussing feminine hygiene products in public, this is not actually remarkable. Nor is the message of “buy our product and women will sleep with you,” which is, after all, the central message of car ads, clothing ads, furniture ads, grooming product ads, housing ads, oral hygiene ads, food ads, travel ads, and every beer commercial ever produced – at least, where these products are targeting a male demographic.

What is remarkable is that even if you find the cast of these spots attractive (there’s no accounting for taste, after all), I can’t think of a more tasteless way of presenting the product. It’s not funny or sexy; it’s just annoying. And the more times you see the spot, the worse it gets. In fact, that goes for the cell phones and beer products noted above. I have to ask if the people who wrote these spots even considered that their potential customer would have to sit through dozens or hundreds or viewings before making a purchasing decision.

For a good contrast, let’s consider the ”Happy Cow” ads put on by our California Dairy boosters. These were/are genuinely funny, they were visually interesting and made good use of the “talking animals” gimmick, the advertisers made a large number of different spots and rotated them regularly, and made sure the ads were never put on anything like an “every six minutes” rotation. Or, for that matter, consider the ”Most Interesting Man in the World” series being used by another beer advertiser. Funny, droll, and the basis for an entire integrated campaign, they seem to have created a whole new marketing figure out of thin air – and creative thinking.

“Why does he tell me this?” I hear some of you asking. Because local cable advertising can be invaluable to a new business; because national cable advertising can put an emerging business on the map; because national television advertising can make or break a company. But most of all, because you can do better – and because someday, you might have to…

Tuesday, June 5, 2007

Mission Statements

From time to time, people ask me why anyone bothers writing mission statements, given that these documents usually serve no purpose beyond making senior management feel as if they are accomplishing something. If you’ve ever seen one of those corporate mission statements that goes on for two or three pages and does not actually say anything, you already know what I’m talking about. Scott Adams does a really good riff about this in ”The Joy of Work”, one of the Dilbert non-fiction books. During the development of the book, Mr. Adams actually masqueraded as a management consultant (under the name “Ray Mebert”) and tried to get a major American company to write a new mission statement comprised entirely of buzzwords and nonsense.

Needless to say, he succeeded.

The truth is that starting in the early 1990s business schools (and people from them) came into vogue in the United States, and a lot of executives facing increased pressure from the competition began looking to formal management practices in an effort to gain an advantage, or at least convince their corporate board that they had one. One of the “magic bullets” to emerge from this period was the mission statement. Many companies became convinced that if they just wrote the perfect mission statement, everything else about their business would fall into line.

Unfortunately, the mission statement is just a tool, and like most tools, is not much help unless you know how to use it. A hammer will not help you to drive nails if you just purchase it and then leave it sitting on the porch, and a circular saw can’t cut planks and timbers to the right length if you never buy any planks or timbers. Similarly, it’s not that mission statements have no value; the problem is that the people promoting them have no idea how to use them. Or even what they are…

For the record, a mission statement is simply the answer to a question; that question being “What are we doing?” If our mission is to make the best available lawn frog (like a lawn gnome, only it’s a frog) at the best price, then our mission statement should say that. “Our mission is to offer the best possible lawn frogs at the best possible price.” Or perhaps we ought to be a bit more general: “Our mission is to offer consumers the highest quality lawn statuary and the greatest possible value.” Simple, isn’t it? Something anybody should be able to grasp, and even people with expensive business degrees and really tiny brains should be able to come up with.

In my business plan writing classes, students would often ask me if they had to write a formal mission statement, and if so, did they have to include it in the business plan? My response has always been that you don’t have to write a mission statement down anywhere; you don’t have to publish it or even share it with the public. But if you can’t answer the question, “What is it that our business is trying to do?” you’re going to have difficulty accomplishing much of anything, and if you can’t explain what you’re trying to accomplish, no one is likely to give you capital to start up or expand a company…

Monday, June 4, 2007

Reality Television

I was watching the reality series ”The Next Food Network Star” last night when I realized that this program is more than just another reality show/endurance contest; it’s actually a complete paradigm shift from the average reality show – to a highly superior business model.

Now, let me state for the record, I don’t watch reality shows; I feel they have a level of bogus-ness normally associated only with Disney theme parks. I mean, how can a person (or a group of people) actually be experiencing “dangerous, wildness survival conditions” when there are three cameramen, two sound guys, a producer, and a helicopter following them around? The Jungle Ride at Disneyland was more realistic than that, and you could see the hydraulic actuators on the hippos!

I also don’t watch cooking shows. Or, as I like to call them, “shows about people who can cook way better than you.” The fact is that, like most Americans, I could probably go to culinary school, practice cooking for decades, and invest the Gross Domestic Product of Sweden in appliances and equipment, and I still couldn’t produce anything that would look (or taste) like what you see on cooking shows. I lack the talent, the patience, and the small army of assistants, producers, special effects technicians, and stagehands that goes into one of these shows.

But last night my wife was watching the above-mentioned Food Network show, and I was too unmotivated to go work watch something else, so I amused myself by watching the show and making snide, MBA-graduate-type comments about the planning, organizational and management problems that the team leaders were having on the show. “That’s another place where having one less cook and one more management scientist on their team would have come in handy!” I would chuckle; when one of the cooking teams failed to put half of the items they needed on their shopping list before their one allowed trip to the market.

My wife just smiled and went on watching the show. God only knows how she puts up with me, and frankly, I don’t care as long as she does…

But the point is, the contestants in this public humiliation are not just competing for money, prizes, or even future earnings. The winner of this show gets their own cooking show on the Food Network, and if that pans out well, possibly additional series and specials for the Network as well! Think about that for a minute. When any of the other networks broadcast “reality” shows, all they get out of it is ratings, and then only if people turn in to watch. Once the show is over, the network gains no other benefit, because the winner will just go off to enjoy the prizes while the losers write tell-all books and plot bloody revenge. There’s even another cooking-based reality show (”Hell’s Kitchen” on Fox), and the winner of that gets to be the Executive Chef of their own restaurant – still no benefit to the network.

Food Network is getting all of the benefit of any other “reality” show – competition, backbiting, cat-fighting, name-calling, public humiliation, and so on, but they’re also recruiting their next on-air personality. If the winner is a success on television they could quite possibly earn millions of dollars, launch their own restaurants and consumer product lines, become famous, be invited to the White House, run for Pope, or whatever it is they want to do – certainly a much better prize than a million or so pre-tax dollars, and they get to do the whole contest in a nice, clean, professional kitchen instead of some rat-infested hellhole of a tropical island. But the real winner is the Food Network, which will make millions every week selling advertising time on the winning contestant’s new show, plus the revenue from tie-in merchandising, promotional appearances, and whatever else they decide to use their new on-air personality for.

It’s brilliant thinking, and I hope that the people at the Food Network have rewarded whoever came up with the concept appropriately. Maybe they could give him or her a show on their network…

Friday, June 1, 2007

The First Rule of Business

For many years, I have contended that the first rule of Business can be summed up in the humorous phrase, “When someone comes to you and says ‘Hello, I would like to give you a lot of money now,’ you say, YES!” Obvious, one might think. And yet, I find myself constantly confronted with cases of people who do not want me to give them my money; who tell me that I can’t give them any money unless I am willing to inconvenience myself for no apparent reason.

Case in point: a few years ago, I needed to make airline reservations for my wife and myself, because our travel plans had changed unexpectedly. I called a national airline (whose name I won’t specify, except that it’s also my national origin) that used the city we wanted to fly out of as their hub, and asked to book two tickets to Los Angeles for the day after next. The ticket agent told me I couldn’t. I asked why, and she told me that because it was less than 72 hours before departure time, each of us would have to make our own reservation, using our own credit card, with a different name on each card. Unless I wanted to drive to the airport in the departure city (about 800 miles way, at that moment) and purchase the tickets in person, at the counter.

When I asked “why?” the ticket agent told me “Oh, lots of reasons. Identity theft, security, yadda yadda yadda.” Note that I’m not making this up; she actually said “Yadda yadda yadda.” Wondering how I had wandered into a “Seinfeld” episode, I hung up and called Delta Airlines. The city we wanted to leave from wasn’t their hub, but they had three flights to Los Angeles that afternoon, and their agent booked two tickets for me in about three minutes, including the time it took to pitch me on their frequent flier program.

To this day, I still have no idea what that first airline was thinking. I only know that Delta got quite a lot of my money, and they didn’t…

Makes you wonder how they stay in business, doesn’t it? Whether it’s a failure of inventory and ordering (like the bookstore yesterday that didn’t have any of the books I wanted), unrealistic staffing and scheduling (like the restaurant full of empty tables that still couldn’t seat us because they didn’t have enough people on shift that day – we went elsewhere), or bloody-minded adherence to regulations that make no sense (like the airline example listed above), people are forever telling me that I can’t give them my money. And every time they do this, I know that their competition won’t mind taking my money, and I go away to find them…

Are you telling people they can’t give you any money? Maybe you should reconsider. Because I can tell you one thing for sure: whether you believe in the first rule of Business or not, the first rule of Business believes in you…