Keep the Contract

The other day I was reading an article about why people steal office supplies from work and reflecting that the author was either missing or deliberately avoiding half of the picture. I’m not disputing that the majority of people make personal use of company equipment or supplies; I’m not even disputing that entirely too many people take supplies home or even sell them. And I’m not in a position to dispute that “shrink” of this type accounts for an average loss of 1.4% of a company’s revenue, although I’d want to take a look at those numbers before I committed to anything. But I’m not sure I agree with the corrective actions the author is recommending…

Writing for the website The Conversation, Professor Yannick Griep of the University of Calgary suggests that people consider (usually minor) benefits and potential (often severe) risks of stealing office supplies, at least for the purpose of “getting even” with their employer for wrongs real or imagined, and instead try to take a more constructive approach to solving the underlying problems. I can’t argue with any of that; even very extensive theft of officer supplies is unlikely to compensate you for any major wrongdoing on the part of your employer, and even very trivial theft may cost you your job, your career, or jail time. What I feel that Professor Griep is avoiding here is the company’s side of the situation…

As the Professor correctly notes in the original article, many employees have some amount of grievance stemming from violation of the implied psychological contract between management and their workers. If representatives of the company promised an applicant that there would be flexible working hours, regular raises, or opportunity for advancement, and what the employee ends up with is a dead-end job with no chance for promotion this side of retirement and a 1% cost-of-living adjustment every other year, then the company has broken that implied contract, and many people will feel that they are no longer obligated to keep up their end of the bargain – e.g. showing up on time, doing the work assigned to them, and not walking off with anything that isn’t bolted to the floor. What I think is unrealistic here is expecting the employees to be the ones to take corrective action…

While it would be facile to suggest that all managers are essentially the villains in a 19^th Century melodrama, it is difficult to deny that most companies do want to get as much work done for as little salary as possible – that’s how expenses work in a free-market economy. The problem occurs when the employees have a different idea of what the implied contract includes than the one from which management is working. Even if you are adhering to the letter of everything you have ever promised an employee, if they feel that they are being treated unfairly they are going to act accordingly – and that may not mean appropriately…

This is not to suggest that a manager couldn’t just wait and see what the employees want to bring to their attention regarding promises they feel you haven’t kept but what I’m getting at here is that they shouldn’t have to. Management is an active process, and a key part of any supervising manager’s job is to know his or her people and their expectations of the job and the company. If your people are underperforming, or if the atmosphere around the office appears to be hostile, or if individuals appear to be disaffected or unsatisfied, it is your job to find out why, and to see what you can do to improve the situation. Or, failing that, explain to your employees why you can’t…

I also don’t want to suggest that thieves aren’t a thing, because they most definitely are. Sooner or later you are going to encounter an employee who has been treated well and given everything you promised them who is stealing from the company because of greed, need, or any of the other common motivations for theft. But given that estimates of the percentage of employees who routinely take office supplies without permission runs from 75% to nearly 100% depending on whom you ask, it is probably worth considering what might be motivating your people to take some petty revenge on your company before you start implementing measures to stop them…

Too Complicated For Me

If you were to ask anyone who studies human behavior – which is all Management scholars really do, when you get down to cases – they will tell you that human motivations are one of the hardest things to definitively identify. You can ask people why they did something, and it is possible that you might an honest answer, but once you start allowing for confirmation bias, self-deception, rationalization, different interpretations of behavioral and cultural standards, and sheer pigheaded stubbornness, just to name a few, it’s not always clear if the people in question even know why they did things. The question of whether humans are rational or rationalizing goes back at least three centuries, and probably for as long as people have been people, and that doesn’t even consider ignorance, bigotry, or outright stupidity…

Take, for example, the actions of a non-profit group calling itself The American Bible Society (hereinafter ABS). The organization has been in operation since 1816, fulfilling the mission of translating the Bible into various languages and distributing copies around the world, so that people who don’t speak English, Latin, or Aramaic can read the Christian scripture for themselves. The ABS has had a core values statement stressing generally laudable principles like integrity which it has asked employees to sign for some years, but the statement wasn’t specifically Christian and failing to sign it wasn’t a termination offense. All of that appears to have changed this year, however…

According to the Philadelphia Inquirer’s website, the ABS has a new policy that they call the “Affirmation of Biblical Community” that, among other things, forbids pre-marital and extra-marital sex, and defines marriage as being limited to one man and one woman. The organization is requiring all of its personnel to sign the new policy statement, and presumably abide by its provisions, or resign from the ABS by the end of calendar 2018. This would effectively prohibit anyone who lives with a partner to whom they are not married, and anyone in a same-sex marriage, from working for the ABS. Whether it would also cause any such people to become alienated from the organization, consider its leadership to be a bunch of small-minded homophobic bigots, or prevent the ABS from operating as effectively is yet to be determined, but according to the Inquirer a number of core personnel have already resigned their posts…

Whether or not this will bring the ABS into conflict with any Federal or state anti-discrimination laws remains to be seen, although it is worth noting that Philadelphia itself has a law that forbids discrimination on the basis of race, religion, or sexual orientation. There are exceptions in the law for non-profits and religious groups, and the ABS might be able to argue in court that they need such a requirement for reasons that escape me at the moment. What I find even more bizarre and inexplicable is what the leadership of the group thinks that such a prohibition – and the resulting alienation, distain, and anger – will do to improve their operations or help them to accomplish their mission…

The president and CEO of the group is quoted in the Inquirer story as saying that this new policy will bring “unity and clarity” to the ABS because it will ensure that their staff has a “deep and personal connection to the Bible.” I’m not sure why they believe that such a connection is necessary in order to translate text into different languages or handle the logistics of getting hard copies of the documents to people around the world who (presumably) want to read them; I’m also not clear on why they think traits like intolerance and bigotry are appropriate to a (supposedly) Christian religious mission. But even if there is any merit in those positions, I still believe that the ABS leadership has their priorities backwards…

As I have noted in posts about for-profit companies with mandatory religious requirements, it might be pleasant for the ABS personnel to work surrounded by other Christian zealots; it might also prevent anyone who works there from questioning the bigotry and intolerance being perpetuated by their leadership. But the purpose of this agency isn’t to reinforce the beliefs of existing Christian zealots or contribute to their upkeep; it is to bring the scripture as they see it to people who do not currently have access to the texts and may not even be Christians at this time. I have to ask, once again, if it wouldn’t make more sense to do good works for people and tell anyone who asks that “I do these things for you because my faith demands it” than to imply than anyone who isn’t an intolerant religious bigot is unwelcome in your ministry?

I’ve spent most of my life watching people, and most of the last three decades studying them, but I still find this sort of behavior baffling in anyone, let alone adherents of a faith that teaches acceptance, love, and universal equality as children of the same creator. Maybe this contradiction makes sense to someone, somewhere, but despite my best efforts it’s still too complicated for me…

Beastly Decisions

There was story on the General Counsel website this week about a Fourth Circuit Court of Appeals decision on a religious discrimination case that was so stupid that I felt it deserves repeating. The original case was about a mining company employee who was refusing to use the company’s new biometric scanner to clock into and out from the job, claiming that this would be the equivalent of accepting the “Mark of the Beast” from the Book of Revelation. By itself this would probably be a non-story – a person’s religious beliefs are what they are, and as long as they aren’t proselytizing on company time or otherwise disobeying their supervisor’s instructions no one else will (or should) care. The company should still offer some accommodation, especially if they can easily do so (they could) and even more especially if the employee has provided long and valuable service to the company (the employee in question has been on the job for 37 years). None of that is what puts this story into the “stupid” category, however…

What is really absurd about this story, and is also the reason that the employee appears to have won his case on appeal, is that the company had already made accommodation for other employees who were unable to use the biometric system. Granted, the other employees were unable to use the biometric scanner because of injuries to their hands, not because of their belief system, but given that the company already had a numeric keypad for the other employees to use, it’s difficult to understand why they couldn’t have added a third identification code to the keypad and allowed the religious miner to use the same accommodation. Or, more to the point, perhaps, why they felt it was worth spending the money on a Federal court case, not to mention risking negative publicity on the Internet and mockery from thousands of scruffy bloggers, just to avoid adding one more identification code…

Now, we should probably acknowledge that we don’t know why the biometric sensor system was considered a good idea in the first place. If it is somehow harder to falsify attendance using the biometric system than it would be using a traditional time-clock system then it is understandable that the company would want its employees to use the new system, and equally understandable that they would not want every employee who wants to be able to game the system asking for an accommodation for various made-up reasons. But unless these problems are very wide-spread within the company, and the economic impact of all of the timekeeping falsification is extremely high, it’s hard to imagine that the benefit of using the system will be that much more effective than just having supervisory personnel verify attendance…

The big problem with making exceptions to any business policy is that once you have done so it becomes geometrically harder to explain why each additional request for an exception should not also be granted, until the rule becomes unenforceable due to more people being exempt from it than are still governed by it. This is why schools have zero-tolerance policies on weapons and drugs, and why companies are obliged to enforce patents and copyrights even in cases when they know the violations will never have any real impact on their business. It’s also why, in most jurisdictions, judges and magistrates are given discretion regarding sentencing for various offenses. But as with any other slippery-slope argument, there’s a real chance that applying one set of rules without exception in every possible case will result in outcomes even more absurd – and even more potentially damaging to the company – than not having those rules in the first place…

Traditionally, the only practical way to deal with the exceptions problem is to have very clear, and very exclusive, reasons for any accommodation being granted. For most businesses, schools, and government agencies, the Americans with Disabilities Act (ADA) spells out exactly what is and is not acceptable – which can be extremely useful in settling this type of situation. Outside of ADA sanctions the supervisory manager on the spot is going to need to establish company-specific and situation-specific exceptions, but this can be accomplished fairly. In this particular case, most people would be okay with an exception being made for ordained ministers from a sect that believes that biometric scanner profiles are equivalent to the “Mark of the Beast,” provided that they have worked for the company for 37 or more years at the time the accommodation is made…

Consider the odds

If anyone out there is surprised at hearing about new and different examples of airline personnel screwing up by the numbers no one has mentioned it to me. It’s possible that this is the result of all of us getting desensitized to these stories because of how often they come up, or perhaps the increasing deluge of horrible and horrifying news is making all of us jaded. For the record, I don’t believe that the world is actually getting worse; I think it’s far more likely that as the world becomes increasingly interconnected we’re getting more information of all kinds, good and bad. I do consider the most recent story, which is being brought to you by United Airlines (the people behind the Dave Carroll episode!) is particularly inept, but I think it speaks as much to the size of the problem as it does to any specific airline or airport…

If you missed the original story you can pick it up off the Washington Post site. It’s another one of those cases of a United supervisor trying to have their own way instead of thinking, in this case continuing to insist that a musician travelling on a United flight had to check her 17^th Century violin despite Federal law that explicitly gives musicians the right to carry their instruments aboard. In this specific case, the musician had informed the airline at the time she booked her ticket that this carry-on arrangement would be necessary, and told the gate agents that she would leave and take a different airline if they wouldn’t let her carry her violin with her. For the supervisor to have continued to insist on checking the instrument at that point is absurd, as well as illegal, but when the supervisor made a sudden lunge and tried to rip the violin case out of the passenger’s hands it crossed the line into a level of stupid that we rarely see even in Airline stories…

Fortunately for the airline their passenger was not permanently injured during the ensuing wrestling match; even more fortunately, she has apparently decided that she has better things to do than suing the airline. Why, exactly, someone in a supervisory position was either unaware of the laws regarding this situation or too pig-headed to obey them (or both) is beyond me, but I think it points up just how complex the customer service function is in this industry. Consider, if you will, that the last time I checked the US airline industry moves somewhere over 2.2 million people a day – on the order of 820 million people per year. That means that even if screw-ups like this one are literally one in a million, there will be a couple of them every day, and over 800 in a year. It also means that the various airlines could get everything perfectly right 819,999,948 time each year and we would still have an atrocity like this one going on somewhere every week on the average. Or, if you like, every company in the industry could get every one of its people certified to Six Sigma standards and there would still be around 2,780 failures per year (about 53 per week), although admittedly not all of them would be this idiotic…

It should come as no surprise to regular readers of this blog (assuming I have readers) that even in the Airline industry, where customer service failures can result in million-dollar fines, billion-dollar lawsuits, and potentially even deaths, customer service is apparently still being regarded as an expensive function that does not generate any income. I don’t know how much longer the industry can go on this way, and I don’t know how many additional companies can go bankrupt before people stop blaming rising fuel prices, uncooperative unions, or fickle customers, and figure out that what is really killing these companies is management incompetence and inadequate customer service…

Or that, at least in this case, those two factors are one and the same…

Strategic Failures: I Am Not The World

In this space I have often mentioned the common strategic failure commonly called the “I am the World” fallacy; it’s the belief that some people have that everyone in the world likes the same foods, colors, clothing, cars, movies, books, television programs, furniture, vacation activities, appliances, climates, landscaping, sports, drinks, weather, building designs, sports teams, cities, states, nations, or many other things, just because they do. But in recent years I’ve started noticing a related problem that I think might be almost as disastrous, and potentially even more insidious. Until somebody comes up with a better name for it (or tells me that they already did), I’m going to refer to this as the “I am not the World” syndrome…

During my time working with entrepreneurs and some of their more problematic new business concepts I saw this kind of fallacy far more often than simple logic would suggest. To many of these people, the fact that dozens (or thousands) of other firms had attempted to launch the same exact business, possibly even on the same exact site, and ultimately failed, was irrelevant to their own plans and would be casually brushed aside. Obviously, those previous failures had been attempted by people far less clever, hard-working, likable, determined or knowledgeable than themselves, and all of the previous attempts to launch such a venture had only needed their input in order to achieve utter triumph. Well, their own input and a six-figure low-interest loan secured by your tax dollars, that is…

The odd part of this concept is that if you look around you there are examples all though our modern world. I don’t mean the people who believe that they can get a million-dollar job right out of college with a B.A. in English, or even the students who seem to believe that they can write a term paper at 4:00 AM for a deadline of 8:30 AM the same day and still receive an A for the assignment. Both of those behaviors are traditionally, really, and can ultimately be solved without more than a somewhat regrettable loss of time or money. The really bad examples are things like people who ignore all of the evidence about texting while driving (or drinking and driving, for that matter) and wind up causing inexcusable harm to others, as well as themselves, because obviously THEY can do these things safely. Evidence to the contrary doesn’t apply to them; only to people who are somehow less special…

Now, I would be the last person to tell anyone that they can’t change the rules of the game, find a different path, or try a more oblique approach to a traditional problem – but then, that’s kind of the point. I’m not saying that all of the previous attempts are irrelevant, nor would I advocate dismissing anyone else’s difficulties or failures. On the contrary, I began studying ineffective strategies and analyzing failed companies precisely because I believe that the best way to avoid making mistakes is to avoid the ones other people have already made. By the same token, I’m not going to tell anyone that their new service, product or strategy will not work just because similar ventures have failed, but I will ask them to explain why they believe their approach is superior – and if their reply comes out to “Because it’s ME!” I’m going to assume that they are suffering from the aforementioned strategic fallacy…

It’s a widely-known, often repeated statistic that nine out of every ten entrepreneurial projects fails – and it’s also true that nearly all successful entrepreneurs have had multiple failures for every project that succeeds. The fact is, creating a new company, let alone a new industry, starting with only a good idea and a lot of hard work really is extremely hard, and even the people who are exceptionally good at it will fail nine times for every time they succeed. The last thing anybody can afford to do is ignore all of the examples of the people who have already tried something and failed. Because if they do, they’re probably going to end up the same way…

Think About It

I didn’t really plan to follow up on my last post. I would imagine that if you feel that education in America has finally taken that last step over the cliff and into irrelevance, or that our culture has devolved to the point where tuning in, turning on and dropping out has really become sage advice, that the opinions of a humble fixed-term instructor teaching business strategy and policy would be of no interest to you. And if you read yesterday’s collection of statistics, business research, and operational strategy, and still are siding with young people who think dropping out of school is courageous and failing your classes “on purpose” (so that you can’t back out and take a mainstream job later, even if you wanted to), then I don’t believe any additional rational arguments will convince you of anything. So perhaps we should consider some theory and/or philosophy instead…

One of the first things that came to my mind is that even in the arts, where we kind of expect people to give everything up to follow their dreams, this kind of behavior makes no sense. Most of us need some kind of day job while we pursue our art, and without a college degree you will be limited to traditional pursuits, such as waiting tables (actors), driving cabs (writers), or dressing up as corporate mascots and playing with children and badly-behaved adults (dancers). Granted, the alternative has its own hazards – faced with having a B.A. in English and no specific training I got a job in the service sector, got promoted into management, got an MBA, and eventually became a management consultant and a management teacher. But throwing any chance of getting a job that does not involve rancid pizza and vomit (which all of the above do) seems absurd, especially if you were only two more weeks from finishing…

In a business context, however, this behavior isn’t just absurd, but idiotic. Business strategy is all about being better than the competition, and one of the key concepts is using the available resources to gain that competitive advantage. I don’t know if having a degree in Computer Science will be of any relevance in whatever entrepreneurial pursuit the self-proclaimed “former valedictorian” is going to begin next – he does not mention it anywhere in his open letter – but just throwing it away because you can isn’t a good policy. Especially when you consider that he (or his parents) have already spent the money on tuition. It’s also not a good demonstration of the mentality you need to be in business, let alone become an entrepreneur with nothing but willpower and a hankering for taking on the world…

I think that the late Sir Terry Pratchett said it best, in his YA novel The Wee Free Men:

‘…if you trust in yourself…’

‘Yes?’

‘…and believe in your dreams…’

‘Yes?’

‘…and follow your star…’  Miss Tick went on.

‘Yes?’

‘…you’ll still get beaten by people who spent their time working hard and learning things and weren’t so lazy.’

Now, I don’t mean to suggest that this particular young dreamer, or any of the others like him, are actually lazy, or that they don’t have every intention of working eighty or ninety hours a week to make their entrepreneurial ventures a success. I’m certainly not the world’s expect on entrepreneurship, as witnessed by the fact that I work for the State of Michigan these days. And goodness knows, I’ve made the mistake of ignoring the evidence of history and assuming that when I try something it will be different. But if I’ve learned anything in the last twenty-some years of bouncing around Corporate America (and studying it, and teaching people about it), it’s that the things we think are unique are often common, and the problems that we believe no one can solve have often been solved many times before…

In the end, all we really have are intelligence and knowledge, as guided by experience, and throwing any of it away so you can thumb your nose at all of the people who are somehow less special than you are doesn’t make you an entrepreneurial genius…

Although it might make you a Computer Science major who needs to read more…

The Truth

If you’ve been following the last two posts (assuming that anyone is reading any of these posts) you may have been asking why the management failures I’m describing keep happening. How could anyone be daft enough to issue contradictory orders to their employees? For that matter, why would anyone treat all of the customers (without whom we do not have a business) as though they were compulsive thieves who routinely steal everything that isn’t nailed down? I could make any number of nasty, sarcastic remarks at this point, but the truth is that like so many other things, operational management of any public-contact organization is harder than it looks…

Spend any length of time in any large retail store, for example, and you will come upon physical traces of shoplifting, such as the boxes expensive merchandise arrived in that have been emptied when the thief stashed the actual product on their person. If the store carries groceries you will find signs of “grazing” – people walking through the store, eating as they go, and then leaving without paying for any of their meal. Check out the back room and you will probably find evidence of employee fraud – all it takes is opportunity and the ability to rationalize the theft; even need is secondary. The only thing that will prevent either problem is an increased chance of getting caught; countermeasures like video cameras are useless if no one is ever monitoring their pictures, and the severity of the punishment threatened is irrelevant if no one will ever have to face those consequences…

It is possible to offset some of the theft problem with security tags and cameras, but the only fail-safe method is simply raising prices to cover the cost of the losses – and as noted elsewhere on this blog, any shoplifter who believes that the company won’t do this is kidding him or herself, and stealing from the community more than the store. You can beat the customer service contradiction by just accepting that some people are going to try cheating the company at the service desk and telling your supervisors to make the customer happy, no matter how absurd the customer’s demands happen to be. But if you want to combat any of these issues without simply shoveling money out the window, the only other choice is to get busy…

A manager who knows his or her employees can develop their people, promote and reward the good ones and eliminate the completely crooked. A good loss-prevention team can catch the most blatant thieves and fraudsters in the act, and thwart many of the others with simple active countermeasures like careful inventory control and locked displays. A management team that is committed to excellence in customer service can support their front-line personnel, take on the worst cases themselves, and never second-guess the unfortunate line supervisor who got stuck dealing with a “screamer” at some obscene hour of the morning. The problem is that all of these things take effort…

Now, no one who has ever done it would ever suggest that customer service management is easy. The hours are absurd, the conditions are terrible, and as the only exempt personnel in the company, the line managers are the lucky ones who get to deal with every extra detail for which the company does not have overtime hours available. Taking the time to walk the aisles and get to know everybody in the building at any given time is a huge drain on time and resources that you probably don’t have. But as I have noted on a number of occasions, if you study the dominant company in any given field it will probably be the firm with the best customer service, and in many cases it will also be listed as the best place to work. The bottom line is that we can blame lazy, thieving employees and greedy, thieving “customers” all we want to, but the success or failure of any company that makes its living off of direct interactions with the public is up to the management team. It’s on us…

It may be an unpleasant truth. But it is still the truth…

Yours

I was wandering around on the always entertaining Not Always Right site, laughing at some of the obviously stupid events (and stewing over some of the injustice) when I ran across one of the frequent comments about companies siding with customers – including abusive, lying and thieving customers – over loyal employees. Regular readers of this blog (assuming I have any) already know that I’ve been on both sides of this issue over the years. Some of you may recall that my hopscotch career has included stops in Retail and Cable Television, both on the Customer Service side, where I’ve seen most of these issues play out. This is where I developed the contention, often expressed in these posts, that people who want you to do things for their benefit that provide no advantage to the company aren’t really customers, and should be treated accordingly. But when I read the most recent examples on NAR, I was struck by the fact that like all stories, the issue of loyalty to the company versus loyalty to the employees has three sides: Yours, Mine, and the Truth…

Consider, for example, the issues inherent in managing a retail store. In any crew, there will be people who will faithfully serve the company in miserable conditions for minimal reward for decades at a time and adhere to every regulation the company applies. Regrettably, the converse is also true: on every store’s roster you will find people who can’t get through a single 8-hour shift without stealing anything that isn’t nailed down. In fact, there are several authorities who will tell you that more theft and damage is caused by the employees than the customers and the general public put together. That doesn’t even count the assets and merchandise that are lost by careless employees, destroyed by ignorant (or occasionally just stupid) employees, or stolen under the noses of oblivious employees. That isn’t the worst of it, though…

In retail, as in most front-line customer service applications, a single mistake can wipe out all of the progress you have made in the previous twenty-seven successful sales. That is, a sufficiently angry customer will generally tell between twenty-five and thirty (it depends on who you ask) other people about how appalling your service and/or product was. That statistic does include psychopaths who will be outraged by what color the sky is that day, and the easily-offended people who will consider the cashier’s hairstyle to be a vicious cultural insult, but it also includes perfectly normal people who happened to ask an employee an unfortunately annoying question on a particularly difficult day. And while a satisfied customer will tell four people about a positive experience (thus lowering the ratio to a still-horrendous seven-to-one), it can be difficult to generate any particularly positive experiences during a simple interaction like a retail purchase. That isn’t the worst of it, either…

For most of the retail managers I’ve worked with, met, interviewed, read about, consulted with, or in recent years taught in the Business College, the worst aspect of running a business that offers insultingly low pay, laughable benefits, miserable working conditions, mind-numbing job duties, and the constant risks and aggravations of working with the general public, is simply the fact that almost no one wants to do the job in the first place. Turnover is a constant problem, with people leaving to take better jobs at their first opportunity, but absenteeism, tardiness, low work performance (or zero work performance), fake worker’s compensation cases, real worker’s compensation cases, disciplinary issues, and abuse of the handful of benefits actually available to the employees makes this one of the most challenging Management roles in any free-market economy. And while the theft issues are not as much of an issue in the Service sector, work avoidance, social loafing, freeriding, and abuse of both company assets and the available benefits are, if anything, even worse…

All things considered, it’s not actually that surprising that the people running the company, who we should remember are responsible for keeping the doors open, the lights on, and the payroll checks from bouncing, might place greater importance on the people who come to their place of business to give them money than they do upon the workers they employ. But this is only Part One of the story…

Finally Out in the Open

I read with great interest an article that appeared on the BBC home page this week regarding open-plan offices. If you’ve never been afflicted with one, the term refers to those arrangements without offices or even cubicles, where everyone’s desks are just sitting out in the middle of the floor. In extreme cases, people aren’t even assigned a specific desk; there’s just a communal work space, and everyone sits wherever they want to. There has been a lot of effort made in recent years to sell the open-plan office as “new” and “innovative,” as a reaction to the common “cubicle farm” arrangement, all of which ignores the fact that open-plan offices were used for decades before the cubicle became common. And, as anyone who has ever had a desk in the middle of the floor can tell you, there’s a very good reason that cubicles did become common…

As it turns out, open-plan offices are based on not one but two common fallacies. The first is simply that people who are sitting together in the shared space will spend their time talking about work-related topics. This can happen, of course, but unfortunately, people aren’t usually that disciplined. This results in a lot of extraneous conversations about whatever the employees happen to be thinking about at the moment, which both wastes time and distracts all of the people around them who are trying to work. Which brings us to the second problem: having people all around you working, talking, and making noise turns out to be really, really distracting…

Modern research on multitasking – some of which is cited in the BBC report – has revealed the very interesting fact that most of us can’t. The average person needs to focus on a single activity in order to have anything like full efficiency; splitting time between two or more activities just makes all of them take longer. This has turned into a perennial problem for college instructors, by the way, because too many of our students believe that they really can write emails, text with their friends, and surf the Internet while also paying attention to lectures. The truth is that, with very rare exceptions, anyone trying to do this will end up with memories of what they were texting about and some of the things they saw online, but not so much about the lecture they were nominally present for…

Now I don’t want to sound as if I am picking on college students in particular. On the contrary, if business leaders with years or decades on the job fall victim to the same fallacy every time they approve of things like the open-plan office concept, what can you expect from undergraduates who have been brought up to believe that they can do everything at once if they try hard enough? The real question, in my mind, is how anybody who has ever tried to get anything done in a noisy environment with multiple people talking and several different people trying to get their attention could possibly believe that having all of their employees sitting around a single table was a good idea in the first place…

Of course, it is possible that since most decisions regarding office furniture and organization are made by managers, who will generally have been given offices with real walls and doors as one of the perks of their position, that no one with the authority to reject the open-plan concept had realized how counter-productive it really was until recently. If this is the case, I think we can expect to see more and more companies going back to cubicle farms as the consequences become clear to those in charge. At least, we can all hope so, right?

Watching Them Watching Us

I stumbled across an article this week – it’s Maureen Dowd’s op-ed piece in the New York Times – talking about how people using the Uber service are rated by the drivers at the same time and in the same ways they rate their drivers. There have already been issues with Uber drivers, who are all independent contractors not employed by the company, not conforming to the same standards of service or safety; there have also been cases of complaints about user ratings that are delivered by mean, spiteful, or simply insane customers that bear no relationship whatsoever to what actually occurred. This kind of thing is to be expected in any customer service position, of course, and it’s one of the primary reasons it is so difficult to maintain staff levels in those positions. But this is the first case I have ever seen where customer service personnel are being allowed to rate their customers – with a similar disregard for accuracy or fairness…

In the article, Ms. Dowd notes that while some of these reviews are based on interactions with the customer – such as people who keep the driver waiting or are rude during the ride – some of them are as simple and petty as people who are not fun, friendly or appealing to drive around, and even worse, there does not appear to be any control in place over these potentially damaging ratings. The author goes on to note that some users recommend paying additional cash tips (ones which will not be reported to the company or the IRS unless the driver wants them to be) and promising to give the driver a 5-out-of-5 rating in return for receiving one as a customer. However, there’s no way to tell how prevalent such methods are, or what effect (if any) they actually have on your desirability as a customer…

Now, we should probably acknowledge that any public-contact job is going to be made more difficult by the tiny percentage of customers who will inevitably end up being horrible people. In the case of Uber drivers, we’ve already had stories about drivers refusing to pick up people with service animals, people who did not appear to be sufficiently clean, or people who smelled bad, and having people throw up during the ride has become so common that the company has had to institute a standard fee for cleaning it up. There haven’t been any confirmed cases of customers using an Uber ride as a washroom or a brothel yet, but it’s not clear whether those things haven’t happened or if those cases just haven’t reached the media. Even the company itself would have no way of knowing about any such incident unless the driver elected to report it…

Given these working conditions, and the fact that Uber drivers have to be able to see a user’s profile before they can offer to pick up that user in the first place, I think we can assume that an ad hoc system of rating customers – and passing notes about which ones to avoid – would probably have come into being by now even if the company hadn’t chosen to provide one. In theory, such a system should help to enforce basic rules of behavior and courtesy for Uber passengers, just as the rating system for drivers should enforce rules about service, safety and upkeep on the vehicles; bad customers will not get offered a ride, and bad drivers will not get taken up on any offers to provide one. What isn’t clear is how often this system will lead to additional abuse – and what the company can be expected to do about the situation…

Imagine someone whose Uber passenger rating gets to be so bad that no one will stop to pick them up, forcing them to use a (generally much more expensive) conventional taxi. Now suppose that a driver does stop to pick them up, but will only agree to provide transportation if given a large cash-only tip – effectively raising the price of the ride. How long would it take before all of the drivers started demanding such tips in return for a 5-out-of-five rider review? Can the riders fight back by threatening to leave a poor driver review in retaliation? Or, more to the point, perhaps, how long is it going to be before all of the ratings are either quid pro quo arrangements or retaliation against the other party, all of which are completely useless to anyone (driver or passenger) trying to use the system?

This issue has always been a problem for sites that offer customer reviews of anything, from Amazon to online service providers, but unless the company has some revolutionary new approach that we haven’t seen yet, the problem has just taken on all new dimensions…

How Stuff Works: Stakeholders

I’ve mentioned the Stakeholder concept a few times before in this space, but it’s one of those evergreen topics that always seems to come up in the news – and occasionally in movies, novels, or real life – and I thought it might be a good idea to review the concept. Everyone knows that a corporation is governed by three groups – the shareholders, who actually own the company, the Board of Directors, who are elected by the shareholders and hire the senior management team, and the senior managers themselves, who in turn hire and manage everyone else who works for the company. But have you ever considered who else might have an interest (or stake) in how well the company performs, and whether or not it prospers?

Clearly, the employees who work for the company do. Although most of them probably don’t fall into any of those three groups (unless the company has an employee stock-purchase scheme as part of its compensation package), in many cases the employees will literally live and die right along with the company. But what about the other businesses from which our company purchases goods, services, or raw materials? If our company is their major customer, purchasing the bulk of their products, their survival may be just as dependent on the success of our company as our employees or shareholders are. And since those other companies have their own employees, stockholders and suppliers, they also have an interest in our success. But it doesn’t stop there…

Suppose there is a company whose business depends on some product that we make in order to stay in operation. Unless they can find another source for that product, the failure of our company will take them down, too, and throw all of their employees out of work (and potentially bankrupt their shareholders). Even if there isn’t, all of the companies that sell things to our employees will be negatively impacted by the loss of our revenue, and this could set up another chain reaction of companies failing and jobs being lost. But just within our own community, the local government depends on the tax revenue paid by our company and all of its employees to fund community services like police and fire protection, education, health, social services, and a host of other financial needs. If we go under, we could easily drag the entire community down with us, as well…

Now, it’s probably worth pointing out that even if our company is a publicly-held corporation, we have no fiduciary responsibility to any of these groups except our shareholders. In theory, the owners of our company could decide to take any number of actions that would benefit their financial interests in the short term at the expense of everyone else; one of the primary reasons the Board of Directors exists is to prevent that from happening (because no one would be willing to work for the company if that was going to be a regular event). But just because we aren’t financially responsible for the community in which we operate or the larger political unit (state or country) in which it is located, that doesn’t mean that our actions will not have consequences far beyond the scope of our annual report…

The truth is that even before the Industrial Revolution, the success or failure of one citizen would have a wider effect on his or her community than just that one person’s fortunes. As time has gone on, all of us have become increasingly interconnected, until today, when the failure of a company on the other side of the world (and of which you have never heard) could cost you your job, or even destroy your entire community. I’ve often said that it doesn’t really matter if you believe in the global economy; the global economy believes in you. The stakeholder effect is one of the more concrete examples of how that works…

Supply and Demand

Quick, name the most basic remedy you can think of for there not being enough of something available in the market. Did you say, offer more money for it? Well, if so, that would indicate that you have a good understanding of how a free-market economy actually works, with the laws of supply and demand stating that anything for which demand exceeds supply with experience a price increase, and anything for which supply exceeds demand you should expect to see prices drop. It would also indicate that you know more about economics, or perhaps business in general, than the American trucking industry, which apparently can’t figure out why there aren’t enough truck drivers available despite lowering wages repeatedly over the last decade…

I got the story from the New York Times online, but apparently this issue has been kicking around for a while now. Adjusting for inflation, the average trucker’s salary is apparently 6% lower than it was a decade ago, despite an increasing demand for people to haul various goods and resources around the country. It seems obvious that this might be having a negative impact on the size of the labor pool – or, as reporter Neil Irwin puts it in the original article, “It takes a peculiar form of logic to cut pay steadily and then be shocked that fewer people want to do the job.” But what I found shocking, and truly appalling, about the facts of this case is the response from the industry, which is apparently complaining about a lack of skilled workers rather than instituting higher pay scales…

Now, I should come out and admit that while I have some experience with both shipping and logistics issues, I have no formal credentials in either of these areas, and I have certainly never run a trucking company. However, this has nothing to do with the issue at hand, because as Mr. Irwin correctly points out, saying that there is a shortage of skilled workers is effectively the same thing as saying we aren’t paying our workers enough. A significant number of drivers who are already qualified to handle these jobs have left the industry over the last decade due to declining wages, and the same factor makes training to be a truck driver increasingly less attractive. It is no exaggeration to say that this whole “crisis” is entirely within the ability of senior management to fix…

Without a great deal of additional research I can’t tell you if this situation is an outgrowth of runaway executive compensation (as Mr. Irwin implies), a decrease in the importance being placed on the role of labor, effects of an global recession, effects of an international economy, or some more subtle cause; I called the situation shocking because whatever the cause the solution is relatively simple. I called it appalling because this mentality – treating the workers like an unfortunate nuisance or an annoying inconvenience – runs counter to everything we have learned about management over the last hundred years, not to mention psychology, sociology and economics. The belief that you can ignore the workers, mistreat the workers, or act against the best interest of your workers and hope to achieve any long-term economic success has been debunked over and over again, and any first-year business student could explain the fallacy to you in detail – but apparently the people being paid multi-million-dollar salaries to run these companies can’t…

I can accept that even highly educated people might have trouble with subtle ideas – like the concept that outsourcing work to another country will throw people here out of work, eliminating the customers who would otherwise have purchased your product. But the idea that if your wages are too low, no one will be willing to take those jobs is another matter. I don’t know how this crisis is going to turn out, or if the Trucking Industry will be able to pull out of this tailspin while there is still time. But I really hope we can nip this kind of thinking in the bud before it destroys anything else…

You Should Get Out More

One of the common errors I keep ranting about is companies – and particularly senior management teams of companies – who have no idea who their customers, employees, suppliers or other stakeholders actually are. This is what gets you silly statements about employees wanting the “prestige” of a promotion that offers more work and longer hours for effectively less money (exempt jobs that pay less than hourly jobs when you include overtime), and tone-deaf comments about people who should just buy what you’re offering and quit asking for what they want. Most recently, it would appear, it has resulted in the CEO of Frontier Communications stating that her customers in Portland are too dumb to understand why they don’t need a broadband speed 80 to 160 times faster than anything they have now…

I don’t know if you’ve been following the development of Google Fiber, but you can read more about it here if you want to. In many parts of the country, including Central Michigan, the prevailing Internet speeds can run as low as 1bps or lower, and even advanced systems rarely exceed 30 mbps. With a limited number of companies competing in each market there isn’t usually any need to upgrade either the systems or the service provided; after all, if your competition is offering a top speed of 10mbps and you can offer 12, you’re 20% faster. There are satellite-based systems that can do better, but most of them are relatively expensive, and you are still limited in where you can get them…

Google is building its own fiber-optic delivery systems and offering to provide speeds in excess of 1,000 mbps in an increasing number of medium-sized cities around the US, which does sound like it would be an advantage over a system operating at 1% or less of that speed. Moreover, Frontier Communications currently has a monopoly on broadband service in Portland, and has therefore never had to worry about the competition in terms of download speed or anything else. But as much as it sounds like Frontier is trying to confuse the issue while running scared, they do have a point: Currently, there is no service or system in general use that requires a speed of 1,000 mbps. In fact, there’s some question as to whether anyone has hardware that could make use of such access even if it existed. And it is also true that Frontier is offering basic service at less than half of what Google Fiber will cost. Unfortunately, both of those contentions are rather missing the point…

First of all, consider that anyone whose broadband use is limited to small and occasional downloads isn’t going to care about a higher access speed in the first place, and they’re certainly not going to go to the trouble of changing providers. But the key demographic for Google Fiber is people who do make use of larger downloads or streaming audio/visual services, and not only do they want the fastest access speeds possible, but they’re not going to take kindly to being told that they are too stupid or too technologically inept to understand how fast Internet connections work. In fact, a lot of power users will probably change providers just because they’re been insulted in such a tone-deaf fashion – but that isn’t even the worst of it…

While it might be true that no one could possibly make full use of a 1,000 mbps Internet connection as of today, I won’t take any bets about that being true for long – especially if such download speeds become widely available. Somebody will find something to do with them, and technology-oriented users are likely to want that capability even before they find out what such new services can do. If technology has taught us anything in the last three decades, it’s that the curve is rising faster than we can keep up with it, and the technology that seemed like science fiction only a few years ago will be available in every big-box retailer by Black Friday if not before…

All of these things would be obvious to anyone who was paying attention to the customer demographics involved, the development of the Technology sector over the past few years, the rise of services like Dish Network, Netflix and Hulu, the appearance of the “Cord-Cutter” movement, or the increasing use of home WIFI systems. In fact, all of this should be obvious to anyone who is actually in touch with the world around them, and not just sitting in their Executive Suite and listening to an echo chamber of yes-people telling them what they wanted to hear. If that is the case, I can only suggest that Ms. Wilderotter of Frontier Communications needs to get out more…

The Ethics of Lines in the Sand

It’s probably important to remind anyone reading this blog (assuming that anyone reads this blog) that I’m not actually that old – I have not yet reached half a century on this increasingly weird planet, despite appearances to the contrary – I’ve just lived through chaotic and rapidly-changing times. A good example popped up this week with the Equal Time crisis in Warren, Michigan, where an atheist group requested equal time at City Hall to present its views along with various religious groups doing the same. Whether you personally agree with atheism or not, it’s impossible to deny that a lot of people do, and that in the US they have the same right to practice and promote their belief structure as anyone else. Unfortunately, the Mayor of Warren apparently doesn’t think so, since he refused to allow the atheists to have their access and stated publically that he would also deny such access to Nazis or the KKK…

Even granted that Warren isn’t exactly one of America’s largest cities, it’s difficult to imagine how anyone could get elected to be mayor of anything and not grasp that people would be offended by the comparison. It’s also hard to imagine what harm the atheists could possibly do anybody in the first place. Faith by definition is not susceptible to arguments of logic or reason; that’s kind of the point. Any true believer in any faith would be no more likely to give it up in favor of atheism than they would to adopt any other religion, and possibly much less so considering that the atheists are effectively trying to prove a negative. But it does raise the issue of what we are supposed to do as managers when two or more people of incompatible belief systems fall under our jurisdiction…

Traditionally, most managers have dealt with this situation by telling all of the true believers in their company, department or work group to just leave it outside of work. This does not give any favor to any one faith or discriminate against any other; it also has the advantage of getting the employees to stop spending their work days trying to prosthelytize each other and go back to work. Increasingly, however, we have seen push-back from people who insist that not being able to display religious iconography wherever and whenever they want to is a violation of their First Amendment rights, and demand to be allowed to turn their personal workspace into a shrine of whatever their faith happens to be. But as bad as that is, the recent fighting between the atheists and the religious groups is taking the whole problem to a new level…

Regardless of what your personal beliefs might be, it’s easy to understand how you might be angered by a demonstrator who is proclaiming that your beliefs are only held by simpleminded, gullible fools – or by people who are comparable to the KKK or the Nazis, depending on which side of this conflict you happen to be. In a very real sense, any form of atheist propaganda is a vicious attack on the beliefs of any person of faith who has to look at them. And increasingly, any overt attempt to prosthelytize someone about your faith, or even display it openly, is becoming just as harsh an attack on the atheists. The question isn’t so much where this is going to end, since that is out of our hands; the question is what we as managers can be expected to do about it…

Which brings me to the question: Do we, as managers, have an ethical responsibility to allow anyone who works for us to practice all aspects of their faith at all times, including the ones that would prevent them from doing their jobs in the first place? Do we have a responsibility to allow people to display iconography, celebrate holidays, or attempt to convert their coworkers if their personal faith demands such things of them? No one wants to be the Grinch who forbids the employees from putting up cut-outs of Christmas trees or pastel eggs, but do we have an obligation to allow such rituals? Or does our responsibility to the owners of the company, the stakeholders in our enterprise, and ultimately the community itself outweigh our responsibility for our employees’ personal happiness and religious fulfillment, and require us to go on telling everybody to keep it out of the workplace?

It’s worth thinking about…

Of Course They Are

This past week a story ran on Huffington Post that surprised a lot of readers and resulted almost immediately in a vast chorus of scorn and derision – as usual. On any given day you can expect to find stories of varying impartiality on every topic from international politics to local sports, some attempting to sound mature and some that are openly incendiary. But what made this story different was that the controversy was arising over food, and specifically about a listing of the 30 best barbeque restaurants in the United States. What made it so controversial is that not one of the 30 restaurants listed are from Tennessee, Louisiana, North Carolina, South Carolina, Mississippi, Alabama, Arkansas, Georgia, Florida, or Missouri, while states like New York, Vermont, Wisconsin and Ohio all had multiple entries…

One might reasonably ask how any such survey managed to bypass the entire region of the United States most associated with barbeque – but only if you had also failed to note the headline of the article, which states that these are the 30 best barbeque restaurants as identified by Open Table, the online restaurant reservation system. To their credit, the folks at Huffington Post do note that these are the top 30 barbeque restaurants that accept reservations on Open Table, and speculate that many of the great Southern barbeque joints don’t take Open Table reservations. Given that a lot of great barbeque is produced by hole-in-the-wall operations with a devoted local following, which therefore do not want or need Open Table, this is likely correct. However, I thought it was a good example of how bias gets into otherwise interesting data – and renders it utterly worthless…

Clearly, there is no practical way for a single reviewer to sample all of the restaurants in a given category in the United States in one lifetime; there’s just too much ground to cover. But unless the same reviewer (or group of reviewers) is doing all of the samples, there is no way to avoid having matters of personal, regional, national, ethnic, professional or other preferences from influencing the data. But in this case we are adding an additional problem in that all of these choices have been filtered by a factor that has nothing to do with how well a restaurant produces food, let alone how well it makes a specialty type of food relative to other providers. Even granting that having the technical ability, knowledge and willingness to use Open Table would allow you to make better barbeque – which seems unlikely, frankly – this sample is automatically excluding everyone else from the survey…

Now, this type of bias isn’t limited to business applications. You can see it in everything from people hiring employees because of pre-conceived ideas about gender, ethnicity, socioeconomic background, or appearance to former Vice President Dick Cheney leading the search for the best candidate for Vice President and discovering (no doubt much to his own surprise) that it was himself. You will sometimes see this referred to in the management literature as Confirmation Bias, which is the tendency to see whatever information is available as proof that your existing opinions are correct. In some cases this will result in bad decisions, when people use unrelated or even negative evidence to convince themselves that the choice they already wanted to make was the best one, while in other cases people will stop gathering information once they find enough to confirm whatever they already believe…

I don’t have any magical way of dealing with this issue – I’m as capable of confirmation bias as the next man. It is only by questioning our assumptions – not just at the start of the project, or at the end of the day, but continuously – that we have any chance of recognizing these errors, let alone avoiding them. But if you need a good example to work from, consider that you may confidently expect that the best restaurants in any category take Open Table reservations – if the only restaurants you are considering are from the Open Table database, that is…

History Lesson

In my last post I mentioned the idea that management is a simple mechanical science – insert this much input here, get that much output there, all things you could do with a basic logic circuit, never mind an actual robot. I am often critical of this behavior pattern, both in this space and in my actual job as a management instructor, but even I have to admit it’s an attractive idea. If all management decisions could be made using basic arithmetic there might be no need for me in either my business or academic professions, but there would also never be another management or policy mistake, all companies would be run perfectly all of the time, and no one would ever have to deal with any of the nonsense masquerading as management that have been a staple of my blog…

Much of this kind of thinking is blamed on one of the first management scientists, whom you may or may not have learned about in school: Frederick Winslow Taylor, founder of the school of thought known as scientific management, or occasionally “Taylorism.” Taylor was the first known researcher to actually study the process of work through scientific observation, and the first to suggest concepts like breaking down work into discrete tasks and training employees to do them the same way every time. It’s probably fair to say that Taylor had as much to do with the development of our modern industrialized culture as Henry Ford or either of the Carnegies. But Taylor was a mechanical engineer, not a psychologist, and much of scientific management breaks down along the exact lines we’ve been discussing for the last couple of weeks…

It wasn’t until the 1950s that the field of Industrial/Organizational Psychology really split off from both psychology and sociology, following the work of pioneers like Herbert Simon, James March, Richard Cyert, and Abraham Maslow. I’m not going to get into those theories in detail – partly because I have already made reference to so many of them in this space, and partly because we’re wandering away from business and off into even softer sciences at this point. I call this to your attention because the idea that all of the many management failures we’ve been seeing in recent years are because we don’t know any better is absolute hogwash…

I had over 300 students over the last academic year, and every one of them could have explained how a policy that rewards stubborn, aggressive and combative behavior and effectively punishes cooperation and courtesy will result in horrible customer service without a moment’s hesitation. Granted, they are exceptional students – they’re Spartans, after all – but this isn’t the only business school around. There are thousands, possibly millions, of people in this country who could easily do the same, and there have been since well before I was born. We have decades of data, hundreds of studies, and quite literally hordes of highly trained people in this field, albeit well-dressed hordes carrying briefcases. Yet still this type of idiocy remains not merely entrenched but unquestioned throughout the world of business…

I don’t actually believe that one passable business teacher and one scruffy blogger can change all of that, even if they do happen to be the same person. I do believe, however, that if I can get even one management professional to avoid making such mistakes, then neither my time as a teacher nor my time as a blogger have been wasted…

Still Not Sure

I have written in this space before about those occasions when it seems impossible to tell whether a given company is actually taking the actions you’ve just read about, or if they are only doing something outrageous in the hopes of attracting media attention. A lot of new product promotions work that way, partly because it is difficult to create a truly ingenious advertisement for even the most superlative product, but also because it is becoming increasingly difficult to cut though the massive amounts of clutter clogging up any potential medium. In addition, there are a far greater number of both media and channels within them appearing every year – reaching all American television viewers was relatively easy when there were only three or four channels being broadcast, for example, but doing so is much harder when many areas have 900 or more possible viewing choices. And that does not even consider the increasing number of people who get all of their news and entertainment online, and don’t ever watch television…

It’s probably also worth pointing out that not all demographics will consider the same things outrageous or shocking, for that matter. Business failures resulting from efforts to market a new product or service to the wrong audience are legion, and it’s impossible to say how many additional ventures have failed because whoever was making the strategic policy decided to pass on a world-beating product simply because he or she didn’t like the idea – there’s no wreckage lying around from ventures somebody didn’t try, you see. Failures of this type are referred to collectively as the “I am the world” fallacy by Scott Adams in one of his non-fiction books about management, and can occur any time a senior manager applies his or her own preferences to a business decision instead of consulting actual marketing data. It is imperative that all managers and business analysts question their assumptions, not just regularly but constantly, before taking action. This is why I held back my first impression of the new Doritos product and took another look…

If you haven’t heard about them yet, the story goes that PepsiCo Canada has just released a new product that they are calling Doritos “Roulette”flavor. Hype aside, these are bags of ordinary nacho cheese corn chips, only every seventh or eighth chip is as spicy as the company has been able to make it, turning each bite into something of an adventure. The idea appears to be that if two (or more) customers take turns pulling a single chip out at random and eating it, sooner or later one of them is going to draw (and eat) one that will be painfully spicy. None of the materials I have seen about this product to date address what the players are supposed to do with the rest of the bag at that point – or why anyone would purchase these chips if they were not intending to play the implied game…

Now, we should acknowledge that this is hardly the first product to play on the apocryphal game of “Russian Roulette” in a food product, let alone the only food product with potential inedible portions hidden in each package. A familiar example in recent years might be the “Every-flavor Beans” created as a tie-in to the Harry Potter books and movies (their fictional counterparts appear in the story), which included such unappetizing flavors as grass, dirt, earthworm and vomit and oddball flavors like toast, popcorn, black pepper and sausage with more conventional candy flavors. Fans of the series would challenge each other to select a bean at random and eat it despite the possibly revolting taste, much as Doritos is suggesting their customers do with the corn chips. Whether or not you could just spit the losing beans out again was a matter of individual preference…

My personal reaction to the Doritos Roulette flavor was to question why the company is bothering to produce them – the Doritos “Flaming Hot” flavor has never been that successful, and the “losing” chips in this product are much hotter and even less appealing. But it important to note that I have now passed out of the key demographic for corn chips (males, 18-36 years old), and I’ve been out of the food wholesale business for over a decade; the fact that this product does not appeal to me is based on behavior patterns and consumer preferences that may well be irrelevant to the target market, rather than any hard data. I’m not sure whether this product has any real potential, or if it will have a brief flare of notoriety and then vanish onto the compost heap of history. I’m just calling it to your attention because that personal gut reaction should not be used to make decisions for a multinational corporation, but reactions just like it often are – and sometimes they destroy entire companies, not just unusual product ideas…

From the Top

I’ve been watching the fallout from the recent Hobby Lobby decision along with the rest of the country, and I have truly been amazed at the amount of scorn and derision being heaped upon the company, its ownership, its management team, and anyone who supports it by essentially everyone on the left side of the political landscape – and a fair amount of the center, as well. So far we’ve heard about how this is indicative of a war against half of our population, how it’s the emergence of a plutocracy that will destroy the very fabric of our country; how it’s the start of a theocratic state in North America, how it is discriminatory, racist, sexist, classist, and generally horrible for anybody who isn’t an ultra-right-wing white male religious fanatic. And I have no difficulty accepting any of these claims; but what strikes me about the situation is that the management policy that started the whole this sorry mess was a bad idea in the first place…

Consider, for a moment, the purpose of offering benefits to your employees. All pious mouthing aside, benefits are part of the compensation package which the company uses to attract the best available workers – or, at least, employees of sufficient quality to suit its requirements. If a given company offers better compensation than others in the same industry, whether that means higher pay, better health insurance, dental and vision insurance, retirement plans or other benefits, then jobs offered by that company will be more desirable, creating greater competition for those positions and giving the company access to a greater selection of possible employees. It is important to note that while access to adequate health care may be considered a basic civil right, having somebody else pay for it generally isn’t, which is why there are so many jobs that do not offer acceptable medical insurance – and why the Affordable Care Act was required in the first place…

Given that this is the primary function of all compensation elements from the company’s standpoint, intentionally degrading any part of the compensation package is counterproductive to the point of idiocy. Any measure which makes the package less attractive – which eliminating coverage for desired services most assuredly does – lowers the company’s ability to attract or retain the best personnel. This lowers productivity, lowers profitability, and generally decreases the overall value of the firm. In this specific case, negative feelings generated by the policy (and the lawsuit to protect it) also represent an excellent chance of angering or alienating employees who already work for the company and do not have the option of quitting – including member of the workforce connected to the issue by politics or ideology as well as by biology. This will lower productivity still further, and that doesn’t even consider the impact the company’s position is having on public relations and customer retention…

Now, as already noted, there are companies that do not offer health benefits of any kind, and from a purely strategic standpoint we can understand why. If employee relations are not a priority – if the labor situation in their industry is effectively a buyer’s market – then a company may not need any advantage to obtain the best employees, and if workers in that industry are considered easily interchangeable there may not be any great pressure to retain them, either. Alternately, a given company or industry may have an operating margin so thin that offering any additional compensation would make their business model untenable; the choice might be between higher wages and other benefits, for example. This is the first case of which I’m aware in which a company has decided to intentionally hamstring itself because of the religious convictions of the ownership, though – even assuming that’s actually what is happening…

Personally, I find the religious argument difficult to accept – especially since nothing the company does can prevent its employees from using the disputed birth control methods if they can find another way to pay the resulting medical bills. If the owners of a business actually support any religious belief, it seems obvious that it would be preferable to run the business effectively and use the resulting higher profits to support whatever ministry or other activities those beliefs require, rather than destroy the business and galvanize the opposition into the kind of action that could actually set back the owners’ religious goals. Or, to put it another way, in addition to the various legal, ethical, political, civil, social, customer relations, community relations, public image, employee relations and financial arguments against this policy, the whole concept is also stupid to the point where I can’t even think of a bad metaphor for how stupid it is. And the worst of the legal implications may be yet to come…

Spite and Ketchup

Every once in a while you will run across a business story that reminds you of small children squabbling on a schoolyard, and you will reluctantly have to acknowledge that no matter how hard we try to be adults, professionals, and leaders of commerce, people don’t always change that much between the ages of five and fifty. This may take the form of business people sabotaging deals that would have earned them billions of dollars because a hated rival would have made millions on the same transaction, or of people refusing to work together because of something one of them said about the other decades before, and this past week it took the form of the world’s largest quick-serve restaurant chain severing ties with a valuable supplier because that supplier’s new CEO used to run a rival company…

If you missed the story on Reuters by way of Yahoo Business you can pick it up on the link, but the story is simple enough. McDonald’s announced this week that they are ending a relationship with the H.J. Heinz company, and will no longer purchase their ketchup, because the new CEO of Heinz is the former CEO of Burger King. Why exactly this would be a bad thing from McDonald’s point of view is not clear; certainly it doesn’t suggest that the executive in question is inexperienced in large-scale food service operations or that he wouldn’t understand how important condiments are to a quick-serve hamburger restaurant. It’s possible that the leadership at McDonald’s is reacting to some of the more outrageous (and stupid) management blunders Burger King has made over the past decade (the advertising debacles come to mind, as does Burger King’s insistence on treating its franchise-holders like crap); it is also possible that the leadership knows the new CEO of Heinz from industry functions and just doesn’t like him…

It’s also possible that someone associated with the McDonald’s organization has, or would like to have, a relationship with the Heinz company’s primary rival in the ketchup field, Hunt’s, which is owned by ConAgra Foods. Or, alternately, that someone at McDonald’s is concerned about Warren Buffet’s Berkshire Hathaway group purchasing Heinz, and wants to keep at arm’s length from the operation. These considerations may not seem all that important in the short run, but once we start considering corporate acquisitions in the $28 billion range it becomes much harder to dismiss these concerns as mere spite or simple defensive posturing...

In any event, the move should have minimal impact on your enjoyment of McDonald’s products within the United States, as only two domestic markets (Pittsburgh and Minneapolis) actually feature Heinz products as of this week. For some years now McDonald’s locations across the US have given out condiment packets marked, simply, “fancy ketchup,” and most of the in-store dispensers make no mention of brand names either. It’s possible that the leadership at McDonald’s has obtained a supplier contract that will lower their ketchup-related expenses outside of the US (which the company has been using Heinz products) enough to make up for any losses associated with dropping the name-brand product; it is even possible that the mention of possible rivalry and/or animosity toward the new CEO of Heinz is nothing more than a ruse to misdirect anyone who might be looking away from the details of that new deal…

And, of course, it’s also possible that the people running a multi-billion dollar company have just make a major purchasing decision on the same basis that you might have used in picking players for a dodge-ball team when you were nine years old. We should probably keep an eye on this one…

Adventures in Supervision

One of the questions we can discuss endlessly – but never actually solve – is the issue of how closely employees should be supervised while on the job, and whether the resulting layers of management are really worth the cost. On the one hand, span of control research is reasonably conclusive that the largest number of subordinates (or subordinate units, when you get to higher levels) any given manager can handle is 5. Or, at least, it’s as conclusive as you can get in a soft science. On the other hand, there’s good evidence that over-supervision, or micro-management, is just as harmful to the company’s successful operations as too little. Personally, I believe that a universal rule isn’t possible, and that the exact amount and degree of supervision will vary enough from one team to another, or even one shift to another, that the only reasonable approach is to hire good managers, train them well, and let them decide case-by-case from then on. But however you do it, there’s a wealth of evidence that supports the contention that someone needs to be watching…

Take, for example, a story that popped up on the DetroitFree Press website this week, about a Muslim customer who is claiming that servers at a TGI Friday’s in Garland, Texas, tricked her into eating bacon. The story goes that the customer requested the bacon be left off of a Cobb salad, and this for some reason offended the wait staff. So one of them decided to stuff a plastic drinking straw full of bacon and serve it to this customer in a glass of tea. When presented with this lapse in judgment, the restaurant’s manager refused to believe the customer, which could only have made matters worse. The company is declining to comment, pending an internal investigation, while the story goes viral and millions of scruffy bloggers repeat it around the world, embellishing just a bit in each telling…

Neither of us were present when these events took place – unless someone who works in that TGIF location is reading this post, in which case please leave me your perspective on the story in the comments. Based on what I’ve heard so far, however, there are only two possibilities in this case: either the customer is telling the truth, or she is not. If not, we should probably ask the obvious questions of how she managed to obtain one of the company’s drinking straws, fill it with bacon, and smuggle it into the restaurant undetected – and what she expects to gain by doing so. Feeding pork to a Muslim is a vicious cultural insult, but no actual physical harm seems to have come to the customer as a result of this “prank,” and I’m dubious about her chances of suing successfully over this, especially in Texas. On the other hand, if she’s telling the truth we have to ask why the TGIF employees thought they would get away with such an insult, or if they are really stupid enough to risk their jobs and a possible lawsuit over a minor practical joke. In either case, however, we need to ask where the line supervisors were when all of this was going on…

Now, I don’t mean to suggest that it would be desirable to observe every member of a busy restaurant’s serving team every minute of every shift, even if that was possible. But a properly-trained, properly-managed employee would know better than to do any such thing, and much more to the point, any good employee would not want to risk damaging his or her own company for a joke. If TGI Friday’s is employing wait staff who are so poorly trained, limited in experience, devoid of people skills, or hostile to the company and desirous of its destruction that they would actually do something like this, both their Human Resources personnel and whoever was supposed to be supervising the staff at this particular store need to be reprimanded, and quite possibly moved to less sensitive duties. And if the manager and/or supervisors of this location are too over-worked or too oblivious to look out for scammers (at least those dedicated enough to bother stuffing drinking straws with bacon) then the company needs to send them more help, as soon as possible…

Because unless the person or persons responsible are identified and dealt with appropriately, I can almost guarantee that the company will have to deal with similar human resources failures and/or scams just like this one again in the very near future…