Next Generation Workplace

Jerks on the Job

2007-08-08T05:57:00.001-07:00

Is your workplace spoiled by a few narcissistic nabobs, haughty honchos, dysfunctional divas, shameless shysters or obnoxious opportunists? Is there a Miranda Priestly running your organization? A David Brent in the office down the hall? A Bill Lumbergh roaming the cubicles? A Vince Downey prowling the floor?

The personalities and interpersonal dynamics of the workplace are garnering more attention in the entertainment and news media, if not the executive suite, as the concept of "collaboration" among workers across different teams, businesses, and national cultures has emerged as the latest holy grail of business. But getting people with diverse views, experiences, styles and skills to work harmoniously together is no mean feat, even for the best of leaders. It requires not only the right blend of skills but a compatible group of individuals. A few misplaced jerks can spoil things for everyone - torpedoing teamwork, crippling collaboration and pauperizing productivity.

How Jerks Poison the Workplace

According to Professor Robert Sutton of Stanford University and author of the book, http://rs6.net/tn.jsp?t=g9a4tccab.0.0.wcqjsnbab.0&p=http%3A%2F%2Fwww.amazon.com%2FAsshole-Rule-Civilized-Workplace-Surviving%2Fdp%2F0446526568, what we will more politely refer to as "jerks" are a bane to the workplace. He defines them as nasty and demeaning people and asserts that they are a widespread problem. Sutton cites various studies to demonstrate how pervasive abuse and mistreatment is within the workplace. Some industries and professions such as health care are particularly bad. Apparently physicians are the most frequent abusers of their co- workers.

Before you start thinking this is all a bunch of cry-baby complaining suitable only for the group hug crowd, you should know that Sutton points out that jerks cause real economic damage to their organizations and that there is a strong business case to not employing them. They make it harder to recruit and retain the best and the brightest, cause higher turnover, increase client churn, damage the reputation of the business, diminish investor confidence, decrease innovation and creativity and impair collaboration and cooperation. Convinced yet?

In case you're not, Sutton even offers a way to calculate the "Total Cost of Jerks" to a business - using an extensive list of the direct costs and negative effects of jerks. In one example, management at a high tech company calculated that the extra costs generated by their star sales person who happened also to be a jerk totaled $160,000 for a single year.

So jerks can certainly hurt the bottom line of a business. But aren't we really talking about a few mean, nasty connivers? Surely, hard-driving competent people are a positive force in the business, aren't they? Well, according to another in-depth research study of workplace personality types, maybe not.

Likeability Trumps Competence

Research by professors Tiziana Casciaro of the Harvard Business School and Miguel Sousa Lobo of Duke University asserts that most people prefer to work with a "likeable fool" rather than with a "competent jerk". Not surprisingly, the most preferred co-workers are "likeable stars". But in situations where people can choose or influence whom they work with, they are more likely to pick someone who is likeable even if they are not the most competent rather than work with someone who may be extremely competent but is difficult to get along with.

Writing in "Compete nt Jerks, Lovable Fools, and the Formation of Social Networks", (Harvard Business Review, June 2005), the authors discuss the importance of informal networks in the workplace; how they take shape and how people choose those they work with. They assert that two criteria above all affect this choice - competence at the job and likeability. The authors collected data on more than 10000 work relationships and from this concluded that likeability more often determined who people picked to work with than competence. In the author's terms - people preferred to work with lovable fools (people who were easy for them to get along with who were not necessarily the most knowledgeable or able) rather than competent jerks (people who were difficult to get along with even though they were very knowledgeable and skilled).

This research suggests that people are more willing to accept or try to make up for deficiencies in the skills of people they can work well with than they are to deal with the unpleasant personality of an highly-skilled person who is a jerk. Thus, a little extra likeability goes a longer way than a little extra competence in making someone desirable to work with. But if likeability is a preferred trait, then why do there seem to be so many jerks in the workplace?

Blame it on the Overachievers

In their article, "Leadership Run Amok: The Destructive Potential of Overachievers", (Harvard Business Review, June 2006), a trio of Hay Group consultants argue that the plague of workplace jerks is a consequence of the achievement obsessed ethos of many large corporations and the people that populate them, especially those in leadership positions.

They claim that "too intense a focus on achievement can demolish trust and undermine morale, measurably reducing workplace productivity and eroding confidence in management." There are simply too many leaders driven by a "results, results, results" mentality who are quick to rationalize the means used to achieve them.

Citing work of the Harvard psychologist David McClelland, the authors assert that achievement is one of three personal "social motives" that explain how people behave. The other two are affiliation and power. All three of these motives are present in people and drive their behavior.

According to the authors' empirical study of the motivations of over 40000 leaders and managers, achievement has been rising among these respondents since the 1990s compared to affiliation and power and is now the dominant motivator of corporate exeuctives.

On the positive side, measures of innovation and performance such as patents filed have been increasing steadily for two decades. On the negative side however, the obsession with achievement has pushed many to rationalize all manner of selfish and inappropriate behavior and pushing many to cheat and cut corners and to go after goals at all costs.

Jerk-Proofing the Workplace

It is an understatement to say that creating a jerk- proof workplace is not easy. It requires a commitment from the top and explicit measures and actions to enforce civilized behavior at all levels and from all staff. Sutton suggests making "No Jerks" an explicit rule and having leaders and managers adhere to it through what they say and do, including weaving the rule into hiring and firing policies. Interviewers look for and disqualify people who exhibit jerk tendencies. This behavior standard is also embedded into performance appraisals. Jerks that don't play by the rules are asked to reform or leave. Jerks unable to reform are shown the door. He recommends that the rule also apply to customers and clients. Equally helpful in Sutton's view is instilling a culture of "constructive confrontation" in which people can challenge policies, ideas and viewpoints in an open, non-personal and productive way - and managing the little moments - handling the small, subtle stuff before it escalates into big problems.

Casciaro and Sousa Lobo exhort leaders to "leverage the likeable" and "work on the jerks" Likeable people need to be identified and protected by leaders. Because likeable people get along with almost everyone, they can be used to bridge gaps between diverse groups of people that might not interact otherwise. The contribution of jerks should be reassessed in light of how their behavior affects the whole organization. They should be rewarded for good behavior but punished for bad behavior. It is also important to socialize and coach them. If these measures fail to reform a person that's too valuable to let go, then the authors suggest repositioning them to work independently to minimize their contacts with the rest of the organization.

The Hay Group consultants offer an "achievement-lite" formula that tempers the downsides of achievement focus while keeping the positives. Their research found that the most successful groups had a strong drive to achieve but were led by people who could work through others, create strong teams, provide coaching and focus on increasing the capability of the whole organization, not just their group or department.

All this advice is no doubt worthwhile, but none of it seems to address the most difficult obstacle that exists in many organizations - jerks at the top and in other key positions. How in the world do you jerk- proof an environment when the people in charge are the most egregious offenders? And when the Board of Directors overseeing the jerks leading your company is loaded with jerks from other organizations? Good luck. Short of a workplace revolution, perhaps the best that most of us can hope for is working in an environment led by a competent jerk. Or maybe you prefer a likeable fool?

Corporate Social Responsibility - Burden, Sham or Golden Opportunity?

2007-05-31T05:43:00.000-07:00

Corporate social responsibility (CSR) is an up- surging trend that has taken corporate boardrooms by storm. Government regulation in some countries along with pressure from myriad interest groups around the world is driving an increase in social responsibility initiatives and reporting. According to Professor Michael Porter of the Harvard Business School, in 2005, 360 different CSR-related shareholder resolutions were filed on issues ranging from labor conditions to global warming. And 64% of the 250 largest multi-national corporations published CSR reports, either within their annual report or in separate sustainability reports.

Is CSR a good or bad thing? Does it represent an opportunity to recognize the many ways that business and society are interdependent and to help make the world better while creating economic growth? Or does it place unfair and unrealistic obligations on corporations? Or is it a façade that businesses can hide behind to protect themselves while continuing to engage in activities that harm the environments and societies in which they operate?

These are important questions and some eloquent voices have emerged to debate them. Here we examine the key arguments of three distinct schools of thought about CSR.

Killing the Goose That Laid the Golden Egg

Advocates of the minimalist view of corporate social responsibility argue that capitalism does enough for society by generating economic growth and creating jobs. They subscribe to the belief espoused by Nobel economist Milton Friedman that beyond playing by the legal and ethical rules of society, a business only needs to pursue and deliver profit to be a positive contributor to society. In their view, it is the role of government to make and implement social policy, not corporations.

Clive Crook, writing in The Economist Survey of Corporate Social Responsibility, provocatively states that most permutations of CSR are not worth the cost. He berates corporate philanthropy as "borrowed virtue" because managers are giving away shareholder's money. He asserts that most CSR is "probably delusional" - in that its private costs likely exceed the public benefits produced.

The main beef of the minimalist camp with CSR is that it seems to intimate that capitalism is fundamentally flawed. Crook nails this when he states: "the basic set of attitudes that it (CSR) represents undermines support for capitalism and enterprise and the prospects for further economic advance". He argues that profit serves the public good and demonizing it only jeopardizes the benefits it delivers to society. Nor he says is it smart to use CSR to "privatize public policy". Governments should be making and carrying out public policy using regulation and taxes, not corporations. He states, "public policy is the proper role of government, accountable to citizens through the ballot box, not of company bosses accountable to nobody but their shareholders and too often not even to them." Thus, CSR can unleash loose and dangerously uncoordinated cannons that will often do more harm than good.

A Wolf in Sheep's Clothing

Proponents of this view argue that CSR is nothing more than public relations and warn all not to trust any CSR initiative, because in the end, all it represents is a ploy to distract attention away from otherwise rapacious behavior that is detrimental to society. Joel Bakan, a legal expert and author of the book, "The Corporation: The Pathological Pursuit of Profit and Power" asserts that businesses are legally required to do everything in their power to make money, and that more often than not, their financial interests will conflict with the broader interests of society, and they will always act in their own self- interest.

As a result, no one should be fooled by CSR, and deluded into thinking that business can be trusted to do what's right for society of its own accord. They won't, unless governments force them to. In this view, government has a substantial role to play in constraining and channeling the actions of the entity that it creates, namely the corporation, and holding it accountable. As environmentalist and writer Bill McKibben colorfully puts it, "Corporations are the infants of our society-they know very little except how to grow (though they're very good at that), and they howl when you set limits. Socializing them is the work of politics."

A Diamond in the Rough

In his Harvard Business Review article, "Strat egy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility", Professor Michael Porter casts CSR as "an inescapable priority for business leaders in every country". That's an attention-grabbing statement, to say the least, considering that Porter is the man who literally wrote the book on competitive strategy.

He tells businesses that rather than avoid, fight or pay lip service to CSR, they should instead "analyze their prospects for social responsibility using the same frameworks that guide their core business choices. They will discover that CSR can be much more than a cost, a constraint, a charitable deed - it can be a source of opportunity, innovation and competitive advantage."

Porter asserts that a healthy society ultimately creates expanding demand for business, as more human needs are met and aspirations grow. Any business that pursues its own ends at the expense of the society in which it operates will find its success to be illusory and ultimately temporary. He argues that the mutual dependence of business and society implies that both business decisions and social policies must follow the principle of shared value - that is, that the choices made must benefit both sides. If either a business or a society pursues policies that benefit its interests at the expense of the other, it will find itself on a dangerous path.

For CSR to really work in Porter's view, it must be viewed from a strategic standpoint and rooted in a broader understanding of the inter-relationship between a corporation and society, while at the same time anchoring it in the strategies and activities of specific companies. The article presents an analytical framework for identifying what Porter calls the 'points of intersection' between business and societal interests. Two main categories are identified - inside- out linkages and outside-in linkages. Inside-out linkages involve how the company affects the society in which it operates through its operations in the normal course of business. Outside-in linkages involve the ways in which external social conditions influence corporations for better or for worse.

In the typical business, each of these categories can provide numerous opportunities for socially- responsible actions. The challenge for businesses is to choose which social issues to address, and Porter advocates that they select the issues that intersect with their own particular business. "The essential test that should guide CSR is not whether a cause is worthy but whether it presents an opportunity to create shared value - that is, a meaningful benefit to society that is also valuable to the business."

Sparking Change in Corporate Values and Culture

While all three schools of thought about CSR make valid points, I ultimately come down in Porter's camp. His 'enlightened interdependence' view of CSR recognises that business and society have a huge amount of shared interest that managers with foresight will recognize can be developed in a long- term and mutually beneficial way.

CSR represents a set of societal values that companies ignore at their peril. Society has a right to set expectations of businesses but these don't necessarily have to kill economic growth and jobs. There is no reason why business can't be socially responsible and commercially successful. Just go into any Whole Foods Market to experience this concept in action.

But few organizations have embedded CSR so deeply into their cultures - in most instances, it's merely an initiative to be run on the side of the business, or bolted on to it at best. Truly integrating social responsibility into the business will likely demand a radical transformation of the culture, values and operating systems of most large corporations. This level of change doesn't happen overnight and will require that all stakeholders, including employees, push for open dialogue on what CSR means and should be in their organization.

A practical step forward lies with Porter's framework for focusing on the interdependencies between business and society. It is a tool that can help companies redefine and more completely understand value - a concept at the heart of free market capitalism - by identifying opportunities to provide more valuable (with value defined by their customers) products and services. As a result, they will profit and so will society overall - because the greater good is not being compromised and may in fact be enhanced. With some work, society and corporations can live together in harmony - they don't have to be at odds or engaged in self-defeating behavior.

Media-Savvy Workers: A New Front in the War for Talent

2007-05-08T05:40:00.000-07:00

A new front in the War for Talent is opening up. Tens of millions of people adept at using interactive technology and media are set to join, or are already in, the workforce - bringing expectations, skills and ways of working that will revolutionize the workplace. Those organizations that can inspire the passion and harness the skills of these "media-savvy" workers will have an edge over their competitors. Here's why.

Until recently, workers of all levels could gain access to the most powerful computers, the fastest network connections, and the most sophisticated applications of information technology only at work.

No more.

Now, a large and growing number of people across the age, gender and socio-economic spectrum own or have access to all manner of gadgets, gizmos and Internet services that far exceeds, in variety and sophistication, much of the technology they use at work. Increasingly, it is these experiences using technology outside of work - e.g., playing online games, engaging in social networking, collaborating on projects - that are shaping the standards of what workers expect to use on the job.

The good news is that the knowledge and skills that workers are gaining outside of work can be put to good use on the job. The bad news is few organizations yet recognize or are doing anything to engage and leverage the skills of media-savvy workers.

Research recently conducted by a team of researchers and thought leaders brought together by QuestG suggests that the emergence of the media- savvy workforce may be a golden opportunity to transform organizational culture and performance that many companies seem to be missing so far.

Ready or Not, Here They Are

QuestG has just published the findings of a year-long research study - called the Media-Savvy Workforce and Learning Project. It links together two often discussed but rarely associated trends - the changing demographics of the workforce and the growing proliferation and use of interactive media such as social networking services like MySpace and Facebook and on-line role playing platforms like World of Warcraft and Second Life.

The study collected comprehensive data on the workplace expectations, learning habits and personal technology usage of close to 3000 workers. Analysis of this data strongly suggests that the combination of dramatic differences in the attitudes and technology skills of these workers and their exploding use of interactive media are together creating the conditions for the transformation of business and work as we know it.

"Media-savvy" individuals were identified from this global respondent base by measuring how frequently they used over thirty different personal technologies and Internet applications. A majority demonstrated at least moderate media-savvy (regularly using 11-15 different technologies and applications), with almost a third high media-savvy (regularly using 16 or more different technologies and applications).

Sending Up the Stereotypes

Our research identified some significant and rather counter-intuitive findings about media-savvy workers:

It's not only the young that are media- savvy. Nearly half of respondents under 30 years old were high media-savvy - no surprise there. But here's the shocker - one third of respondents 30-45 years old and one fifth of those over 45 placed in the same high category. This is a very significant finding because it challenges the conventional wisdom that only the young are adept at using the new technology. And it means that a substantial number of media- savvy workers are already in the workplace.

Media-savvy workers are more learning- oriented. Media-savvy workers spend up to 80% more time than their low media-savvy co-workers on different types of learning activities in and outside of work; and up to three times as many find electronically-enabled ways of learning like Internet searches, computer simulations and on-line courses valuable. They are also more likely to want their learning to be fun and entertaining, to choose what, when and where they learn, and to favor learning through experimentation.

Interactive games are setting a higher standard for corporate e-learning experiences. The study showed strong parallels between what people say the characteristics of their best learning experiences at work are, and what they value most from playing online role playing games. These included interaction with others to share experiences, interactive content, engaging challenges, immediate feedback, learning from peers, learning by doing, and immersion into an environment via role playing.

Corporate learning executives have a huge opportunity to harness the power of interactive media and the unconventional learning styles of media- savvy. This means making e-learning offerings as engaging and interactive as electronic games. Standard e-learning approaches are a total turnoff for this group.

Media-savvy workers are the least happy with the IT they use to do their jobs. Depending on age, they are up to three times more likely to believe their job performance is inhibited due to a lack of suitable technology, with the youngest the most dissatisfied with the IT they use at work. Many also believe their technology at home is superior and they often work there to circumvent hardware, software and security restrictions.

This finding suggests that IT departments need to rethink their IT design, provisioning and access policies. Does this mean letting workers use and do whatever they want? Of course not - but many IT executives and staff need to stop viewing media-savvy users as nuisances, and even enemies, and start proactively forging close working relationships with them. The media-savvy represent a core group of "lead users" that can be a valuable resource in identifying innovative and productive ways of using new interactive technology for the benefit of the entire business.

The media-savvy are also some of the organization's best performers and most learning-oriented workers. Understanding how technology can be used to enhance their productivity stands to reap large bottom line benefits and can pave the way for more effective uses of IT to increase the productivity of the whole organization. Improving knowledge worker performance is now critical in the current business cycle where the productivity of high value intangible assets - especially people - is a key business performance measure and success factor.

Senior Leaders Take Note

The double whammy of increasingly powerful and pervasive interactive media and changing workforce skills and attitudes challenges corporate leaders to adopt new business and management models that harness the power of the new technology and the advanced capabilities of workers. The responsibility for dealing with these changes goes beyond just IT and learning organizations.

Victory in this new theater of the talent war requires a total organizational commitment. HR leaders will need to direct the redesign of the entire work experience to better match the workplace preferences, learning styles and performance needs of media-savvy workers. And business unit heads and CEOs will need to champion the transformation of their business and organizational models to attract, leverage and retain this high performing, motivated and skilled segment of the workforce.

Is Technology Making Us Anti-social?

2007-04-11T06:31:00.000-07:00

This short article on silicom.com makes me wonder about this question. It suggests that people are spending so much time using computers that their interpersonal skills are beginning to suffer. This has long been suspected of programmer, IT support staff and other geek-types who seem so much more comfortable dealing with objects governed by binary logic than human beings governed by complex emotions. But the article suggests that the diminution in social skills caused by computers is affecting all workers, not just techies.

Sometimes things are given names that get to the heart of what they really are. "Personal Computer" is one such spot on designation. What makes it really interesting is how long it took before many people, certainly business people and especially IT managers, began appreciating how personal computers, and increasingly other electronic gadgets really are to people.

Computers are not just tools of self-expression, they are themselves a form of self-expression and identity. Look how people customize them. What they do with them. And as we are seeing with other electronic gadgets like cell phones and i-Pods, they can be fashion statements and vital pieces of one's identity. So is it really surprising that people are relying too much on technology to communicate with each other? Or that it may be having an adverse effect on our interpersonal skills?

If It's Broke, Fix It

2007-04-06T08:51:00.000-07:00

We may have reached a subtle turning point in the debate about the health care system in America.

As this article in today's NY Times shows, the debate is no longer about whether there is a problem, or even whether employers should be the main provider of health insurance in America.

There seems to be a growing recognition that employer-based insurance alone isn't working - for example, according to the article the vast majority of the approximately 40 plus million people in this country without health insurance are working.

So the question now is what to replace our current system with - i.e., what mix of private and public programs and initiatives will increase coverage, keep up quality and manage costs?

In the private sector, people from different ends of the idealogical spectrum such the service workers union and big companies like GM and Wal-mart are joining forces to push for change.

When will the politicians at the Federal level get off their butts and take the lead? This is one problem that demands a holistic, national solution. And everyone needs to assume their fair share of the burden - no more of the cost shifting mentality that permeates the current system.

Shades of Gray – Working Out the Business Impacts of the Aging Workforce

2007-03-31T05:55:00.000-07:00

Up in the sky. It’s a bird. It’s a plane. It’s super hype – able to leap tall buildings of apathy and denial in a single bound. Indeed, lately the media has been saturated with stories about the coming skills shortages that are sure to result from the mass exodus of Baby Boomers from the workforce.

Many of these press accounts would lead one to believe that this trend and its impacts on businesses are black and white. But the reality is gray (pun intended). Population statistics leave little doubt that the workforce is aging and reports of skills shortages and the difficulties companies are having recruiting replacements for retiring workers are increasing. But not every industry or company is being affected equally. Nor is every organization moving at the same rate to identify and address how these trends will be impacting their businesses.

Things Are Graying All Over

It’s not your imagination - the number of “older” people is increasing. According to projections based on the US census, an average of 4.6 adults will turn 65 each minute this year. By 2025, an average of 8 adults will turn 65. The workplace is no different. According to research published in the Monthly Labor Review, the share of 55 and older age group will increase from 14.3% (2002) to 19.1% (2050) of the labor force and the percentage of workers 55-64 and over 65 will grow by 48% and 40% respectively between 2002 and 2012.

And it’s not just the US that is experiencing the graying workforce. Some countries in Europe are already feeling the effects. Recent media reports assert that a shortage of workers with technical skills is becoming acute. Germany’s Siemens for example, has been struggling to fill 2500 open positions and has begun bringing employees out of retirement to work on specific projects.

Even China, seen by many as an endless source of cheap (and young) labor is starting to feel the effects of an aging population. According to one account, the country is experiencing an aging workforce problem that is predicted to become acute in the near term. In Shanghai for example, twenty percent of the city's people are at least 60, the common retirement age for men in China, and retirees are the fastest growing segment of the population. According to a study by the Shanghai Academy of Social Sciences, 100,000 new seniors are being added to the rolls each year and from 2010 to 2020, the number of people 60 or older is projected to grow by 170,000 a year.

In aggregate, this data suggests that the aging of the workforce is only just beginning and will be with us for decades to come. Are companies aware of, and prepared for, this impending sea change in the makeup of their employee base? Apparently not enough, according to the findings of a couple of research studies issued by two leading think tanks.

A Delayed Reaction

Despite the aging trend and the increasing signs of its impact on different countries and industries, many organizations have been slow to respond. The just- released National Study of Business Strategy and Workforce Development, a survey of 578 organizations of varying industries in the United States conducted by the Boston College Center on Aging and Work, found that 56% of respondents had only analyzed their workforce demographics to a limited extent or not at all. It also found that a mere third of respondents had made projections about the retirement rates of their workers to a moderate or great extent.

Sixty-one percent of the 53 global employers participating in a soon-to-be released benchmarking study conducted by UK think tank Career Innovation said that the quality of the workforce planning data in their organizations provided to business managers was poor to fair. (In the interest of full disclosure I led this study). Furthermore, many respondents said they were anticipating a significant negative impact on their businesses – almost 65% indicated that the aging workforce would have a great or dramatic impact on their businesses or is already a problem.

What are employers doing to identify and mitigate these impacts on their businesses? According to these two studies not a lot, at least yet. The BC study found that only about ¼ of respondents had established formal programs and policies to hire back retirees and only about 1/3 had adopted strategies to encourage late career employees to continue to work past retirement age. The Career Innovation benchmarking study showed that the aging workforce is not yet high on the executive agenda. It found that less than 15% of senior managers and less than 25% of HR managers were making large investments in time and resources to address this issue.

This finding is particularly troubling since replacing people with extensive know how, rich organizational knowledge and critical skills can’t be accomplished over night. That’s why companies getting a head start on identifying the specific skills areas in which they will be impacted most will have an advantage over others competing for scarce replacement talent. Many organizations are racing to do this, but for some it may already be too late.

Why Workforce Planning Matters

Until recently, few organizations seem to have had the foresight to look ahead at the impending risks they face as a result of the aging workforce. One such forward-looking company was Valero Energy Corporation, a Fortune 500 company based in San Antonio, Texas. Valero operates in the capital- intensive oil refining business, an industry in which convincing corporate leadership to pay attention to recruiting and people issues is extremely difficult. Yet, trends in its workforce, particularly the impending retirement of significant numbers of talent with critical skills, portended a potentially huge negative impact on its future growth and financial performance.

Employing a mix of workforce planning capabilities to gather and analyze data, Valero’s HR group conducted a predictive “needs” analysis that mapped yearly labor needs by location, department, position, and skill set, projected out up to seven years forward. Trend line analysis was used to help the operating officers of refineries and other business units identify the potential impact of upcoming high-volume retirements. This allowed managers to identify future vacancies for both replacement purposes and knowledge capture before retirement.

According to the company’s head of staffing, Dan Hilbert, “We have lived through 1% to 5% rates of retirement, but we're now looking at 20% for an entire industry. When our executives saw the impact, they were stunned”. So much so, they immediately approved the necessary programs and improvements to start retaining key talent and training replacements ahead of when they would be needed.

Doing Something Before Time Runs Out

Big employers don’t have much time to gauge and start responding to the potential consequences of the aging workforce on their businesses. First, relevant workforce planning data will need to be collected and then productive conversations started with business leaders about when and how their operations will be affected. Areas of the operation and job groups that are at risk of losing key staff due to retirements will need to be identified and their impacts assessed as specifically as possible. Actions will then have to be quickly agreed and started.

A mix of two basic strategies – replacement and retention – will likely be needed. Replacing large numbers of skilled workers will neither be quick nor easy. Recruiting and training programs will have to be focused at key skills groups most at risk. This is why the second strategy of retention will need to be carried out in parallel. Employers will have to work hard to understand what kinds of ‘employment deals’ that older workers need and want to stay working full time or on a part-time or contingent basis. Many companies will likely be forced to make substantial changes to their workplace and HR policies to accommodate older workers.

In a future article, we will discuss more research findings on how the aging work force will impact businesses and what actions employers can take mitigate the risks and negative effects on their organizations.

Great Companies Don't Treat Workers Like Disposable Objects

2007-03-29T06:56:00.000-07:00

How ironic. And sad. Circuit City, one of eleven "Good-to-Great" cases cited in Jim Collin's mega-influential book, "Good to Great: Why Some Companies Make the Leap and Others Don't...", announced yesterday that it would be firing 3400 store workers and replacing them with lower-paid new hires.

The company asserts that these people were "earning well above the market-based salary range for their role." According to news reports these workers average about $10-$11 per hour while their replacements will be paid about $8 per hour.

Sadly, Circuit City is doing the same as many other companies in replacing cheap labor with cheaper labor. What's unusual is how open and euphemism-free they are about the rationale for the moves. I suspect a gaggle of class action suit lawyers is already on its way to Richmond as I write this.

Many would argue its good business. Wall Street seems to like it - Circuit City's stock price rose almost 2% after the announcement.

Only time will tell whether this turns out to be a painful, but necessary financial restructuring of the company or a shortsighted tactical attempt to fix problems caused by management mistakes.

In the meantime, Jim Collin's might want to think about dropping them from his list or maybe putting them on a new one - "From Good to Great to Goofed" along with some of his other "great" companies like scandal-ridden Fannie Mae and sell out Gillette.

Patagonia: Why Principles and Profits Are NOT Mutually Exclusive

2007-03-27T06:10:00.000-07:00

Not long ago, most American big corporates laughed at the notion of going green. Now there is a stampede to become environmentally responsible, not just because its good PR, but because it's finally becoming recognized that unsustainability is NOT commerically viable.

Thus it is heart warming to see the April 2, 2007 issue of Fortune magazine great cover story, "The Coolest Company On The Planet". Patagonia has been on our radar screen since the late 1990's as a principles-based company and exemplar of the the Next Generation Workplace attributes of Meaning and Harmony.

The article focuses on Patagonia's legendary founder, Yvon Chouinard and is peppered with several of his provocative and salty quotes:

On the future of humankind..."I don't think we're going to be here for 100 years from now as a society, or maybe even as a species......"

On the typical corporate modus operandi of unsustainable growth, an "out-of-control tumor...."

On his philosophy of running a business......"I wanted to distance myself as far as possible from those pasty-faced corpses in suits I saw in airline magazine ads......" and ....."If you're not pissing off 50% of the people, you're not trying hard enough......"

On the gap between the principled and the possible...."Patagonia will never be completely socially responsible. It will never make a totally sustainable, nondamaging product. But it is committed to trying......."

On why he would never take the company public in the capital markets....."I don't want a Wall Street greaseball running my company......"

How Best Buy Said Bye Bye to Being There

2007-02-28T15:00:00.000-08:00

“For years I had been focusing on the wrong currency. I was always looking to see if people were here. I should have been looking at what they were getting done." – John “J. T.” Thompson, Senior Vice President, Best Buy.

It’s about time. A large corporation with a strong workaholic and face-time culture and without a vested interest in flexible working (such as those selling IT and/or consulting services) has gone against its own grain and introduced flexible working on a large scale. The company that broke out of its traditionalist workplace mode is Best Buy, a leading specialty electronics and appliances retailer.

And surprise, surprise – Best Buy's flexible working initiative has so far been a great success - although not without stirring up intense controversy and strong opposition from status quo defenders in the organization. How Best Buy did it and what they’re planning next makes for a fascinating story.

Revolutionaries in an Unlikely Place

Best Buy’s journey toward adopting wide-scale flexible working - chronicled in a couple of excellent articles that recently appeared in Business Week and Workforce Week - began in an unorthodox way. The idea for it came out of the HR department - a function not usually known for initiating radical ideas and changes on its own. But that’s exactly what happened thanks to two visionary and courageous people – Jody Thompson and Cali Ressler, who at the time, respectively headed up organizational change and work-life balance programs at the company.

This duo exhibited an “attitude” about flexible working as evidenced by this comment of Ressler, "Flexible work arrangements usually turn out to be a con game (my italics). It's only for certain jobs and you have to apply to your supervisor to get them, so often there's favoritism involved." How refreshing to hear such a statement from anyone; let alone someone in HR! While the vast majority of HR professionals are good, competent people, sometimes they reflexivley tow the corporate line, even when these policies are unambiguously counterproductive.

Best Buy’s workplace environment had all the hallmarks of the typical corporate Bataan Death March culture. Getting in the earliest and leaving the latest was a ticket to the executive fast track. All nighters, weekends in the office, broken marriages and disrupted families – were seen in a positive light as evidence of unwavering commitment to the company. Virtual working was virtually unheard of – managers wanted their charges to be on the premises where they could be seen at all times. Promotions depended on regular face time with the right people and was often more important than getting the work done.

No More Keeping Up Appearances

It was about six years ago, when Thompson and Ressler decided they had seen enough and set out to change Best Buy’s workplace culture by devising a program called the Results Only Work Environment (ROWE). It would allow salaried employees at their headquarters facilities to choose how, when and where – at home, in a coffee shop, on a lake, etc. - they got the job done. The same would apply to hourly workers except they would have to work a minimum number of hours to comply with federal regulations. Attending meetings would be optional – the only measure of performance to be used would be whether employees met productivity goals and delivered expected results.

One of the most fascinating things about the ROWE program is how it was introduced. It didn’t come down from on high. There was no “executive sponsorship” in the beginning. In fact, the CEO learned about the program TWO YEARS AFTER it was rolled out. It was instead, introduced on a small scale at the grassroots level in a single part of the business - the retail operations group. It grew organically: as people started working flexibly and their productivity, engagement and job satisfaction shot up, other parts of the company began taking notice and introduced pilots of their own.

It helped that the program was not implemented timidly – unlike most flex-work programs that are only offered to a select few, everyone in the retail operations division was eligible for the program at its inception – no one had to ask permission or could be turned down.

Another critical factor in its successful introduction was offering training to managers in how to lead in the new flexible working environment. Flexible working on this scale demanded that managers be truly comfortable with measuring performance on results, not presence in the office or work hours put in. Baseline metrics of performance were also established before implementing the program so that its subsequent impact could be gauged.

All affected teams were also trained in the new way of working and in how to interact with each other to anticipate and counter the inevitable cultural backlash that was sure to ensue. The flexible way of working was tested for six weeks and then a round of reviews was performed to flesh out problems and reinforce productive behaviors. The biggest challenge was establishing trust – workers having faith that they would be judged soley on their performance and managers ignoring where or when their staff worked as long as they got the job done.

It’s All About Results

Since ROWE was introduced at Best Buy, 2,400 employees, or 60 percent of the 4,000 people at its headquarters campus, have converted to the new way of working. The payoffs have been both tangible and positive. For starters, the company reduced turnover in the divisions where the program has been introduced by 3.2 percent, saving it millions of dollars. And the productivity of the workers participating in the ROWE program has risen 35% on average.

Best Buy’s large scale foray into flexible working proves that the conventional bias of most managers toward requiring people to spend most if not all their time working in the same location is not only out of step with what many workers want and need, it is also impeding their productivity. Initiatives like ROWE help leaders and individual staff to confront and dispel the myths surrounding high performance in the workplace. Having everybody work long hours in the same physical location often detracts from high performance instead of contributing to it. This doesn’t mean however that 100% of workers should spend 100% of their time physically away from the office and their colleagues. Far from it. Rather, it says that face time should be reserved for things that demand it most – developing and maintaining relationships, coaching, brainstorming, collaborating on new ideas, getting to know each other better, building camaraderie, etc.

Next: Taking It to the Stores

Now Best Buy is really getting brave – the company is reportedly planning to introduce the ROWE program into its retail stores this year. Skeptics and nay sayers abound and indeed, the company recognizes that this will be tricky. But annual turnover rates in the stores are so high (over 65%) and replacement costs so great (estimated at six figures per employee) that Best Buy feels it is worth the risk. It will be interesting to see what the company does, and particularly, how it compares to rival Wal-Mart, which recently imposed its version of flexible scheduling on its long beleaguered employees. Under the Wal-Mart plan, its managers, not employees, determine when, where, and how much staff work. Not exactly a win-win.

I’m rooting for Best Buy to succeed with its flexible workplace strategy because if it does it may become a catalyst of real and long-overdue change for the rest of Corporate America.

Family Values, Valuing Families

2007-02-01T05:55:00.000-08:00

According to an article in USA Today, the US lags the rest of the world in government support for family oriented work policies.

For example, the U.S. is one of only five countries out of 173 in the survey that does not guarantee some form of paid maternity leave; the others are Lesotho, Liberia, Swaziland and Papua New Guinea.

Truth is, the US leaves it up to companies to decide what kinds of benefits, including family-oriented ones, to offer to workers. The belief is that in a free market, if perks like these are really desired by enough workers then companies will offer them.

Many big companies in the US offer lots of family-friendly benefits, but this study shows that in the aggregate we lag way behind the rest of the world.

Risk and Reward in the CEO Suite

2007-01-31T14:53:00.000-08:00

“Take the money and run. Like a thief across a neighbor’s yard. Take the money and run. Like a ghost out in the night. Take the money and run. `Cause you found out that it wasn't hard. To take the money and run." - Excerpted from, “TAKE THE MONEY AND RUN”, words and music by Graham Nash, 1975.

It happened again. Another imperious and embattled CEO was forced out of the top spot – sent packing with a tractor trailer load of severance pay. This time it was none other than Bob Nardelli ex-GE superstar and CEO of Home Depot. He exited the company awash in money - some $210 million worth of cash, stock and benefits. Astonishingly, these figures were disclosed by the company via a press release announcing his departure. I know --- the media has covered this story ad nauseum and you are sick of hearing about it. So I won’t yammer on anymore about Nardelli’s Everest- like severance (although there is an ironic symmetry between his $210 million pile and the latest lottery mega jackpot of $254 million).

How Big is Your Slice of the Pie?

Bubbling beneath the surface of this latest “CEO receives excessive compensation” story is the long running saga of the dynamic relationship between capital, management and labor. With stock prices and profits climbing to record levels throughout this decade, both managers and shareholders have been making out like bandits, although there is continuous squabbling between the two over whether each is getting their deserved share of the spoils. The odd man out has been the rank-and-file worker who has received mostly crumbs from the growing economic wealth pie.

Globalization is mostly to blame – with markets expanding and labor pools growing, investors and corporate managers have been having a field day. Profits have zoomed. Share prices have jumped. Shareholders and leaders of companies in the developed world have for the most part cleaned up. Their employees on the other hand have seen their compensation levels barely tick up. The biggest winners of all, it would seem, have been CEOs.

Too Much Reward, Too Little Risk

With CEO average pay now at levels not seen since Internet boom days and gargantuan payouts such as Nardelli’s $210 million and ex-Pfizer CEO Hank McKinnell’s $213 million making the news, some are wondering whether the game is rigged in favor of the boss. The latest Economist Survey on Executive Pay provides some research-based evidence to suggest that it may very well be. Among the research it cites is a paper, “Agents With and Without Principles” by Marianne Bertrand of the University of Chicago and Sendhil Mullainathan of Harvard. They argue that many CEOs are paid extremely well whether they succeed or fail. For example, in the oil industry they found that CEO pay always benefits when the oil price is high, but does not necessarily suffer when the price is low. Their study of the effects on CEO pay of changes over which managers have no control (such as currency fluctuations) concluded that CEOs are often rewarded as much for luck as for good performance. And it’s not just in the value of shares – these researchers found increases in compensation and bonuses – factors controlled by boards of directors. They concluded that many CEOs are in effect setting their own pay by manipulating the compensation committee, and hence the pay determination process itself, to pay themselves what they can.

As for labor, the game seems to be tilted against it. According to Stephen Roach, Chief Economist of Morgan Stanley, writing recently in the Times of London, workers in high-wage industrial countries have been getting the short end of the risk-reward stick. He states that economic theory holds that workers are paid ultimately in accordance with their “marginal productivity contribution”. Yet in the US – the leader in the so-called productivity revolution– gains in real compensation per hour of 1.4% over the past five years have been less than half of the 3.1 percent average rate of productivity growth over the same period. During the period from 2002 to 2006, labor compensation in the G7+ economies dropped from 56% to 53.5% of GDP while corporate profits soared from 10% to slightly under 16% of GDP.

Setting the Wrong Example

A critical characteristic of the best leaders is that they serve as role models through their values, beliefs and actions. By this standard, what kind of role model was Bob Nardelli and the other CEOs acting like him? They negotiate the biggest and most favorable contract possible, one in which they can’t lose regardless of their performance. They win if they succeed, they win if they fail. What kind of credibility do leaders like these have when they preach values like “accountability”?

A leader can devise a brilliant strategy for his/her company but the workforce must successfully carry it out. If employees don’t execute or otherwise do whatever it takes to succeed then chances are the company will not succeed. And if the CEO fails to inspire employees or worse alienates them, then disaster can result. This is apparently what happened to Mr. Nardelli. He instituted changes that alienated and angered many Home Depot workers – for example, replacing knowledgeable full time workers with less savvy part-timers, implementing rigid standardized processes and operating procedures and ultimately diminishing customer service. The company was a leading exemplar of customer service and perennial best place to work list leader but dropped in prestige on both of these fronts under Nardelli. According to Barry Hendersen, an equities analyst at T. Rowe Price who tracks Home Depot, “He damaged morale and he was seen as a real threat to the Home Depot Culture”.

Indeed, as author Jim Collins brilliantly showed in his best-selling book, “Good to Great”, the leaders of the great companies he studied were not only focused on getting results but were also very humble in everything they did. They put the company’s interests first and their employees followed this example. What kind of role model is a CEO that acts like a walking min-max equation, with a ‘can’t-lose’ contract, that manipulates numbers and plays games with customers, workers, board members and investors? Not much of a CEO in my view.

Blame It on the Board?

Capitalists demand steady growth to ensure that the return on their investments constantly increases. CEOs respond to this pressure, doing everything they can to generate growth and profits. It is up to the Board of Directors to make sure that CEOs deliver performance in sensible and ethical ways. But the Boards of Directors of many companies are frequently lacking in independence, beholden to the CEO and subject to manipulation by him/her. Boards are also frequently insular – approving compensation based on the recommendations of compensation consultants who are often the chief purveyors of CEO self-fulfilling interests. Like the residents of the fictitious town of Lake Wobegon, everyone wants an above-average CEO and seems to be easily persuaded that they must pay far above average compensation to get one.

Whatever the reasons, the balance of power between management, shareholders and workers is out of whack and needs to be righted. Companies would be wise to take actions on their own now before their hands are soon forced by governments. CEOs and Boards of Directors have to set a better example by demonstrating the principles and behaviors on which their organizations should operate. There is a fine line between healthy pursuit of self-interest and destructive selfishness and greed. Good leaders should no doubt be well-compensated. But no leader should be able to craft sweetheart deals, avoid the risks of failure, or push their own rewards to stratospheric levels just because they can. Actions like these corrode trust among shareholders and employees. Organizations with these types of leaders eventually falter and fail. And if this kind of behavior becomes pervasive enough so may our system of capitalism.

Can a Talent Market Work Inside the Organization?

2006-11-29T14:46:00.000-08:00

“I'm free to do what I want any old time. I'm free to do what I want any old time. So love me, hold me, love me, hold me. I'm free any old time to get what I want. I'm free to choose what I please any old time. I'm free to choose what I please any old time. So hold me, love me, love me, hold me. I'm free any old time to get what I want, yes I am.” Lyrics from “I’m Free” - (M. Jagger/K. Richards)

Lately, I’ve been hearing this old Rolling Stones standard from the Sixties as a part of a T.V. commercial for some brand of financial services targeted at Boomer’s with bloated bank balances (regretably only a half-accurate description of me). While this ad is aimed at helping people achieve their retirement dreams, it also aptly describes the attitude of talented individuals that many HR and business executives are increasingly facing within their organizations. Talent is freer to do and get what it wants “any old time” than it has been in many years. Some companies find this hard to take – exhibiting a “let ‘em leave” attitude while many just shell out more money and perks to keep top performers. But maybe what many talented people really want isn’t necessarily more money (although it doesn’t hurt) but to move to new roles and learn new things. If they can’t do this within their existing employer then they’ll find a new job that suits them better. So if you want to keep ambitious workers then why not let them change jobs more freely inside the company?

Indeed, consultants McKinsey & Company have recently published a paper, “Making a Market in Talent” which argues for establishing open markets for talent inside of organizations. It argues that internal markets will lead to better allocation of skills and knowledge than traditional hierarchies.

Freeing Up Talent

Despite all of the attention that many companies pay to recruiting ‘top talent’, it’s amazing to see how little some of them pay to how that talent is used once they are on board. Millions are spent on recruiting efforts, but relatively little is allocated to making sure their skills and knowledge are continuously developed and agilely deployed to the most appropriate opportunities throughout the organization. Instead, people get stranded on functional islands – finance, IT, marketing, or out in a business division or regional unit. Little information is shared across these boundaries; indeed no one at all may have an enterprise view. As a result, talent get stuck where they are or poorly redeployed. Performance drags and people leave throwing the ball back to that well-oiled but costly recruiting process.

McKinsey argues (as do others) that a different approach to talent should be taken, one that frees up people from many of these constraints. By implementing internal talent marketplaces, companies can give managers the best opportunity to mobilize the talent they need for success while giving the most talented people better opportunities to utilize and develop their talent. In their view, relying on individual self-interest rather than top down mandates and job rotations is a better away to achieve productive enterprise-wide collaboration and resource synergy. The company gets work done more efficiently while individual workers expand their company-specific knowledge.

Top-down talent development and deployment models are often ineffective especially in today’s talent intensive businesses. Worker mobility is constrained to within departments and business units. Information about opportunities and skills is limited and not widely accessible. Too much development focus is on moving people vertically up the ladder into leadership positions rather than laterally across the organization. Attempts by HR departments to develop ‘high potentials’ are usually confined to grooming a small group of people for specific management positions rather than applied to a wide group of talent to take on a broader set of roles.

McKinsey says these models that ‘push’ talent to where companies deem they are needed most should be replaced with models that ‘pull’ knowledge and talent.

Bringing the Market Inside the Hierarchy

Talent marketplaces already exist in many legal and professional services firms as well as in academia and within the R&D units of large corporations. According to McKinsey, they operate following informal rules of conduct and generally work best when relatively small (under 100 people). They also tend to involve high potential and elite performers within the organization. Managers try to woo these individuals to work for them while the performers seek out the most attractive assignments.

McKinsey however recommends that organizations create formal and managed internal talent marketplaces that “bind the interests of individuals to the interests of the company and ensure a fair exchange of value to both parties in the transactions.” They believe that talent marketplaces are not for every company or worker but work best in large, growing, knowledge-driven companies with individuals doing complex, judgment-based work.

McKinsey recommends implementing systems to make all pertinent information about the jobs and the candidates visible and consistent so that open and fair comparisons can be made and hiring decisions are transparent. The terms of employment should be formalized – laying out a specific contract for a job that spells out the role, duration, responsibilities, travel etc. Contracts should be time-based, usually from 1-3 years. HR plays the role of talent broker to promote the process and the interests of both parties.

Talent participating in the marketplace should be treated as ‘restricted free agents’ and competition for jobs should be non-price based because this would go against the interest of the company which is to maximize profits. Instead, enterprise standards of pay for performance should be established and competition centered on other non-monetary factors such as the nature of assignments, opportunities for growth, duration etc.

To make the market work consistent definitions of roles and qualifications as well as standardized and comparable performance evaluations are needed. The authors cite the US military as an organization that has implemented a system of standardized role and qualification definitions that allows it to rapidly shift its people and skills mix around.

McKinsey asserts that talent marketplaces are especially suited to the most highly-talented, self- directed people. They will see greater demand for their services and have more mobility because bosses won’t be able to block their movement and career progression. They will develop faster and build better knowledge of the organization and a network of contacts by moving around. In addition, “such self- directed and talented people are the very ones an enterprise is most at risk of losing since they are the most likely to be actively testing external talent markets to find more attractive opportunities.” Leaders across the organization will have a bigger pool of internal talent to tap for important roles. The company wins because presumably the best people will always be in the roles best suited to their skills and credentials.

McKinsey admits that internal talent marketplaces are very difficult to create in companies with “well- established organizational silos”. So organizational structures will need to be redesigned and corporate culture changed for this approach to have any chance of working.

Why Not a Free-For-All?

Although not easy to implement even in the best of circumstances, the potential benefits of internal talent marketplaces make them worth piloting and more companies should try them. It’s always been mystifying to me how easy it is for the typical worker, let alone top performers, to jump from one employer to another yet how difficult it is for many to move to another department on the next floor. This 'stay put or leave the company' approach may be all well and good if you are in a business with little change and lots of cheap, easy-to-replace labor.

But if you are competing, as most companies increasingly find themselves doing, on skills and brain power, then allowing talent – all of your talent - the freedom and mobility to move into new roles and different parts of your organization makes a lot of sense. People will be more motivated to stretch and grow and their skills better developed and deployed than in static models. And staff will be more likely to accept and thrive in new roles for which they actively compete and qualify than those they are assigned to from higher ups or HR.

But why limit talent marketplaces to only ‘top talent’? Why should only certain classes of workers have greater levels of freedom to pursue jobs and careers than others? This simply reinforces the caste system that already exists in many large hierarchically structured organizations. Opportunities for job and development mobility should be determined only by a person’s skills, experience, knowledge, performance, ambition, enthusiasm and potential not whether they are part of the elite or a special group.

So make sure your organization's theme song for talent is “I’m Free” because anyone hearing “You Can’t Always Get What You Want” will sure to become a "Ramblin Man" (and woman).

The Misguided War for Talent

2006-11-09T14:42:00.000-08:00

Here we go again. Just when HR executives were getting used to having a brisk wind behind them in the race to find and retain talent, the demographic and economic winds reverse – blowing back against them and at gale force no less. As scores of articles in the press and reports issued by various associations, think tanks and consulting firms all seem to be urging, it’s time to fire up the recruiting machine because ‘talent’ will soon be (if it isn’t already) in very short supply. No more leisurely cherry picking of the best and brightest. Forget about gearing up for the next RIF (a dreadful euphemism) program, it won’t be needed, at least for awhile. The battle for brainpower is here. The war for talent has resumed. Companies appear to be again frantically chasing after top talent and showering it with all manner of perks and riches. As one HR executive from a super-sized energy company recently told me, “All we’ve been doing for the past several years is downsizing but now we are gearing up to recruit several thousand people.”

The Battle for Brainpower

The October 7th-13th, 2006 issue of The Economist contains a special report focused on the new battle for brains. It asserts that talent has become the world’s most sought-after commodity and that a shortage is causing serious problems. To support this claim, the article cites findings from a recent international survey of HR executives by the Corporate Executive Board indicating that “attracting and retaining talent” was their top priority and that over six out of ten respondents were concerned about company-wide talent shortages.

This Economist survey is written by the usually brilliant Adrian Wooldridge. Although high level and intellectually stimulating, it ultimately proves to be a somewhat disjointed collection of facts and ideas – with one critical contradiction. In the beginning of the piece, ‘talent’ is referred to as a commodity while in the latter sections talent is portrayed as an elite group of highly-skilled and highly-accomplished people.

The author mentions the usual suspects – the growing value of knowledge, skills and intellectual capital, the aging population and the diversity of the workforce - as the key structural changes that are making talent more important. No surprises here but Wooldridge smartly argues that these trends call for new levels of leadership acumen. Eyebrow-raising evidence is cited such as NYU Professor Baruch Lev’s study showing that talent-intensive assets ranging from skilled workers to patents and know how now account for over fifty percent of the market capitalization of America’s public companies and Accenture’s assertion that intangible assets constitute 70% of the value of the S&P 500. These data points provide rather dramatic quantification of the enormous economic value of brain power and suggest that driving gains in shareholder value now demand talent management skills perhaps more than financial engineering ones.

The author insightfully points out where the aging population will hurt companies the most. He quotes a finding from a report by RHR International that America’s 500 biggest companies stand to lose half of their senior leaders in the next five years while many of these companies have decimated the ranks of middle managers who would have been in line to replace them. He also explains that a less loyal and less standardized workforce means that managers will not only need to deal with lots of different types of people but also manage workers spread out in different regions and across different functions. This will lead to even more competition for scarce leadership talent.

Wooldridge argues that the “talent war” must be taken seriously but that talent is often too narrowly or too broadly defined. The author defines talent as “brainpower – the ability to solve complex problems or invent new solutions.” He argues that the need to gather talent is prevalent among all companies, that the search is now global with even governments getting involved, and that there has been a general shift from a talent buyers market to a talent sellers market. Lastly, the survey discusses the inequalities of how talented people, particularly top managers, are rewarded compared to the rest of the workforce and how well the concept of meritocracy is working in business.

The Pros and Cons of Meritocracy

The dictionary defines meritocracy as a system in which advancement is based on individual ability or achievement. While the Economist strongly supports the concept of meritocracy, it also expresses strong concerns about it leading to compensation inequality and elitism. Wooldridge points out that America has the freest market in talent but is seeing the most dramatic increase in income inequality. He cites an academic study of income distribution showing that the share of income going to the highest earning 1% of Americans doubled between 1980 and 2004 and the share of the top .1% tripled. Despite these concerns, the author concludes that these income trends are sensible citing statements from Google and Microsoft executives extolling the disproportionate contribution and value of the talent elites working within their organizations.

The article also praises the widespread use of “up-or- out” practices by most successful professional services firms that emphasizes competition by the many for a few top spots as a sign that this kind of winner-takes-all competition among talent is the best approach to ensuring high performance.

Wooldridge concludes by stating that “the success of advanced economies is increasingly dependent not on their physical capital but on their capacity to mobilize their citizens’ brainpower.” He asserts that the rise of global meritocracy is the most beneficial way to achieve this. The author concedes that there is likely to be a backlash against talent but that the way to prevent it is to make sure everyone gets a fair chance in the game.

Not everyone agrees that meritocracy is good. One particularly elegant dissenting opinion is offered in the article “The Natural Basis of Competition and Meritocracies”, appearing in the blog Slow Leadership. It argues against meritocracies as a way to organize people in business by pointing out their significant downsides such as the risk of bias and subjectivity, pitting people against each other by creating winners and losers, and making people fear failure and thus diminishing their appetite for taking risks.

Meritocracy is Good but Winners Take All is Divisive

Many American corporations and workers embrace the principle of meritocracy – that people are individually recognized and rewarded for their accomplishments and contributions to their employers. Yet policies that allow a few winners to reap most of the rewards seem to be pervasive in many large organizations and are responsible for creating ambition-driven, money-obsessed elites. It seems to me that in the era of competing on brainpower, it’s just as important to leverage the broad range of knowledge in an organization as it is a few brilliant individuals. It therefore may be better to divvy up performance rewards more broadly and equitably rather than concentrate a big pile of money for the elite few.

Providing more opportunities to more people to reap relatively few big payoffs as the Economist recommends won’t eliminate income inequality and elitism. This doesn’t promote meritocracy in my view but another form of hierarchy, albeit one much flatter and with far more wealth concentrated at the top. Indeed, with layers of middle managers removed and companies making increased profits, there has been far more to go around to a smaller group of people. This elitist approach is one reason why there are so many overpaid CEOs while the compensation growth of the majority of workers has remained flat.

The issue then is not whether meritocracy is good or bad but how to do it right. What should the logic of meritocracy be – that the most talented receive the lion’s share of rewards or that all performers are rewarded commensurate with their contribution? There is no doubt that top talent is important but leaders should be seeking to leverage and reward the contributions of all talent, not an elite few. They would be wise to forget about fighting and winning talent wars and instead strive to create a meritocracy of the many rather than an autocracy of the elite.

An Upside Down View of the Future

2006-10-11T14:40:00.000-07:00

New Zealand. Lush, green and blessed with majestic mountains, fertile valleys, sulfurous lava fields, and breathtaking water views. Oh, and a couple million sheep. After a day-and-a-half on airplanes (thank God I was able to fly business class), my weary, Northern hemispheric-orientated body touches down in another world. This is definitely not Kansas Frodo; in fact, it’s Auckland, on the north island of New Zealand. After dashing through customs I am back on a plane, this time headed to my final destination – Wellington the capital city of New Zealand.

Wellington sits on a peninsula at the very bottom of the North Island. It is reminiscent of San Francisco with it surrounding hills specked with houses and overlooking a picturesque harbor. The city is home to the New Zealand government as well as Peter Jackson of Lord of the Rings film fame. It is difficult for me not to get a fresh perspective on things here. Wellington is located at the serious end of the Cook’s strait which appears to be one of the world’s biggest natural wind tunnels. I’m told it is absolutely howling here much of the time – winds sometimes so fierce that it difficult to walk against them. These winds blow like a southern hemisphere “Mistral”. They also make an apt metaphor for the type of climate in which businesses seem to be operating today. The onslaught of globalization, technology advances and demographic changes are creating howling winds buffeting nations and businesses. It’s tough going for anyone heading directly into them, but an almost effortless glide if they are directly behind your back.

A Glimpse into the Future?

On the phone with my family, I jokingly tell my teenage son that I am calling from the future. He thinks for a moment and then asks me whether his favorite football team held on to win the game!

But New Zealand actually provides an interesting glimpse of what’s in store for many developed countries. It has an aging population and full employment. Its young people possess a different ethic about work and life than their parents. A rite of passage for young Kiwis is to go abroad to study and/or work - but as many as 25% of these youths does not return. Sounds a lot like many smaller cities and rural parts of America, doesn’t it? Losing some of the best and brightest talent has always been a problem for New Zealand, but now it’s exacerbated by a shortage of workers throughout the country. It has no choice but to find creative ways to make its current workforce more productive, keep people in the workforce longer and lure back people that have left - both those out of the labor market as well as working abroad. A tough challenge.

A Cross Generational Perspective on Work

I had the opportunity to take in some of the other sessions at the HRINZ conference. One of the most interesting ones involved a panel discussion with representatives of the four generations in the workplace which provided a fascinating look at their different workplace perspectives and career aspirations.

The “traditionalist” was a 59-year old woman who had recently retired from an executive career in business to “spend time with the old man” on their farm. A straight-shooter, she was delighted to be tending her garden rather than caring for knowledge workers. But she hinted a comeback to the corporate world could easily be in the offing if she were offered the right challenge and allowed a great deal of flexibility in defining her role and working arrangements. This is representative of the attitude that many talented workers nearing or in retirement exhibit. Old-style employment deals are unlikely to keep these individuals in the workforce or entice them back if they’ve left.

Next we heard from the Boomer who is a partner in a large consultancy. She raised four children, the last of which just left for university. After years of juggling the push and pull of job and family this individual was now looking forward with renewed energy to devoting herself more fully to her work. She noted however that many of her male contemporaries were now “burned out”. This suggests an interesting paradox affecting the Boomer generation. Some like our panel participant who detoured off the fast track are embracing opportunities to jump back on it while many who have been in the mainstream of careers and organizational responsibilities want to downshift or get out altogether.

Next was a thirty-something GenXer who had left her full-time job to engage in a “portfolio” of activities such as helping her husband establish his law practice, working part-time for a restaurant group and doing volunteer work helping organizations pursuing causes in which she strongly believes. This individual explicitly stated that she recognized that working this way didn’t produce as much financial rewards as working full-time in a single career would, but she cherished the flexibility, variation and control over her work and her life. This was a tradeoff she and many other GenXers are happy to make.

Last on the panel was a Millennial in her mid-20’s – who came across as bright, ambitious, agile, and impatient for stimulation and experiences. She had started her career working for an accounting/consulting firm and had become a transfer pricing expert. But she left the company because in her words, “I was bored, there were times when I didn’t have anything to do”. So she took a job producing events for a company running conferences and learning seminars. This move involved a pay cut but in return she took on a job that gave her a huge amount of responsibility and autonomy – in effect allowing her to run her own little business. She loved it, particularly traveling to different countries and negotiating deals to establish her company in new markets.

But like many other younger workers, where she lives is as important to her as what she does. She told the audience that she recently accepted a new job with an international consulting firm that would base her in Chicago. Her explanation for the switch: “I really loved my job, so much so that I even tolerated not getting any raises for 12 months (this brought the house down). But it was time for me to move on because I really want to live in a big city.”

A Rush of Blood to the Head

Maybe I’m just a little dizzy from my time at the bottom of the world but in looking back it was especially compelling to spend time in a place where many of the demographic, labor market and generational changes that have been predicted for so long are already writ large. What’s happening today in New Zealand may very well be coming soon to a theater near you, if it hasn’t already arrived.

The impacts of these changes could be severe and the solutions not easy. How well prepared is your organization to deal with them? Do you have a plan for retaining and attracting older workers? What are you doing to lure and motivate ambitious and agile younger workers? What steps have you taken to ensure that GenXers don’t opt out of your organization? And what opportunities are you providing to your Boomer employees who are burned out and looking for a new deal that renews their enthusiasm and energy?

The winds of workforce change are gusting – are your talent policies and practices designed to withstand them?

Workplace Flexibility: Give and Take or Tug of War?

2006-09-06T14:38:00.000-07:00

The calendar may say its still summer, but for workers the lazy, hazy, crazy vacation days are over. Its back to work - physically and mentally. So now that we are all rested and relaxed, what kind of situation are we returning to in the workplace?

Well, actually neither workers or the workplace seem to be very relaxed. While there are few signs of outright conflict and strife between management and workers, real tensions exist just beneath the surface. In this decade, productivity continues to grow apace. Corporate profits have reached record levels. The compensation of top managers has raced ahead, but most workers have seen their pay stagnate. And despite the work-life balance happy talk that characterizes many corporate communications, working Americans are putting in longer hours and taking fewer vacations than ever before.

What gives? Corporations seem to have the upper hand and are taking advantage of their relative power over individuals to manically pursue ever improving productivity and faster cycle times while keeping costs down. A recently published report by Oxford-based think tank Career Innovation showed worker dissatisfaction going far beyond work-life balance. A majority of the 2000 plus knowledge workers responding to a survey indicated they were also unhappy with their levels of achievement, the way their skills are being used, their ability to gain new experiences and their pay levels. More than half indicated that they would like to change not only their jobs but their careers and more than 60% placed self employment at the top of their career wish-list.

Changing the Conversation from Balance to Agility

The debate regarding work-life balance is letting down both individuals and their employers. What’s needed is a new conversation that focuses not merely on flexibility and balance but on reconciling individual preferences and organizational requirements for agility. The Career Innovation report suggests that companies and individuals start a dialogue focused on three key dimensions of agility:

Scalability entails the ability to change the amount of work that can be performed by varying the number of resources and time worked. Some organizations with sharp peaks in demand are now imitating the military idea of ‘reservists’, having an on-call workforce to meet urgent needs. This is particularly attractive to workers seeking to downshift either temporarily (e.g. for family) or permanently (e.g. retirement). Reservists are better than contract labor because their organizational affiliation is much stronger, justifying greater investment in training and development. Pioneers in this area include the accountancy PricewaterhouseCoopers and global disaster relief and development organization Oxfam.

Versatility involves the ability to change the types of work performed. Companies and workers both benefit by constantly evolving their skills and know-how to meet shifting competitive demands. Potential responses include re-training (just-in-time training), multi-skilling (‘just in case training’), and above all instilling a culture of learning, development and mobility. Bell Canada initially started its Bell People First initiative to pay for needed retraining of surplus employees to take on new jobs in other parts of the company. Today, its chief goal is career mobility for all employees - not just those losing jobs and to instill the ethos that the way to grow professionally in Bell Canada is through different job experiences. According to the most recent data, the program netted the company $39 million in cost savings.

Flexibility addresses the ability to change when and where work is performed. While many companies now offer flexible working options, few make it the norm across the organization and many miss huge opportunities for hard business benefits as a result. For instance Sun Microsystems saved $24 million in IT and power costs and $71 million on its property portfolio in one year alone through a program allowing staff to work ‘wherever they happen to be’. And 60% of the time saving was translated into extra working time.

New Principles for a New Dialogue

For the agile workplace to be realized, employers must significantly broaden the types of relationships they have with people and increase options to enable not only flexibility but also scalability and versatility within their talent pool. At the same time, workers must take the initiative to negotiate the kinds of deals they want – making the business case for the benefits to their employers. Each side can benefit by embracing the following principles:

1. Define Work in Projects Not Weeks or Years - Most work - and most customer needs - can be divided into projects or customer requirements that have little or no connection to the working week. In tomorrow’s agile workplace more people will choose to divide their work into output-based chunks, gaining control over when, where and how they work.

2. Fit Work Commitments to Life Phase - Growing numbers of workers are moving in and out of employment for personal or family reasons, to spend time in the voluntary sector, or to become self-employed. Most – especially women – are not happy to sacrifice career progression for flexibility and thus never return to their original employer. To halt this brain drain, organizations like consultancy Booz Allen allow professionals to continue to develop their experience and credentials and keep on meaningful career paths while working reduced hours and remotely.

3. Let People Choose Where They Work Most Productively - Today’s agile workers expect flexibility of location as the norm. As one Ci Survey participant eloquently expressed it, “Get real buddy, this is 2005”. By allowing people to judge the most efficient location for different types of work, they can minimize distractions and wasted commuting time. And employers can reap tens of millions in cost savings and productivity gains.

4. Define Work in Roles that Play to People’s Strengths - In tomorrow’s agile workplace, roles defined by behavior and outcomes (not jobs defined by tasks) will form the basis for flexible delivery of work, and will be adapted to fast-changing requirements of the business, the individual and the environment.

5. Get Over the Need for Exclusive Control – In the future, more companies will gain by openly releasing their workers into other organizations, to return with renewed knowledge and broader experience. One innovative program – Midlands Engineering Industries Redeployment Group – provides the means for players in the UK aerospace industry to share information about their labor and skills needs and surpluses and work cooperatively to move people across organizations and jobs where requirements and skills fit best.

6. Design Learning Into Work - Agility can best be built through long-term, trust-based relationships between people and organizations. Traditional hire-and-fire approaches (including outsourcing) can be wasteful and expensive, destroying morale and depleting knowledge. These actions are sometimes necessary, but companies need to devote far more attention and resources to providing ongoing learning and development and allowing employees to shift roles and acquire new skills as business requirements and opportunities change.

It’s time for employers and workers to stop the narrowly focused tug-of-war between corporate productivity imperatives and individual demands for work-life flexibility and to engage in a broader dialogue over the kinds of agility that will serve each side’s interests. It won’t be easy, but the present situation is causing unsustainable levels of burnout, turnover and voluntary exile from the workforce. Redefining working arrangements and employment relationships around the broader dimensions of agility is a potentially more productive route for both sides to get what they want. It’s time for both sides to stop pulling on that rope and sit down and talk.

Geezers, Grungers, GenXers and Geeks: A Look at Workplace Generational Conflict

2006-08-08T14:33:00.000-07:00

Let me admit right off that the title of this article is deliberately misleading. It feeds into the popular misconception that the workplace is populated by a bunch of generational tribes engaged in rivalries and conflicts with each other. Unquestionably there are real differences, misunderstandings and tensions among workers born in different eras – but the assertion of great division and conflict is overblown in my view.

Recently, I had the opportunity to take a structured look at generational relationships in the workplace while leading a workshop with about 70 knowledge workers from different companies in the same industry. The group was made up of people ranging in ages from 21 to over 60. While this sample is too tiny to form an all-encompassing picture of how generations are getting along in the workplace, it nonetheless provides some clear and hopefully valuable perspectives on intergenerational relationships at work.

A Generational Phony War?

Drawing on questions from a survey of generational issues in the workplace conducted by the Society of Human Resource Management, I asked the workshop attendees prior to the session to fill out a brief online questionnaire asking them how frequently they’ve observed each of 10 different types of intergenerational interactions in the workplace. Half of the statements described positive interactions and half described negative ones.

Surprise, surprise - the overall picture emerging from the data was consistently positive – workers of every generation in the group saw the positive aspects of intergenerational relationships far more often than the negative ones. In fact, the top 5 most frequently observed aspects of intergenerational working relationships were all positive:

Workers of different generations working effectively together (61% frequently observed; 37% sometimes observed)
Workers from different generations learning from each other (43% frequently observed; 46% sometimes observed)
Perspectives of workers from two or more different generations balancing one another (24% frequently observed; 52% sometimes observed)
Better quality of work due to variety of generation perspectives (21% frequently observed; 69% sometimes observed)
Intergenerational mentoring - formal and informal (21% frequently observed; 51% sometimes observed)

These responses indicate that workers of different generations are working together extremely well - taking advantage of their different perspectives and skills to get the job done more effectively and learn from each other in the process.

Not Everything is Hunky-Dory

While the positives significantly outweighed the negatives, there was nonetheless some evidence of tensions and frictions among the generations. For example:

Conflicts regarding acceptable work hours between workers of different generations (19% frequently observed; 37% sometimes observed)
Communications breakdowns between workers of different generations (15% frequently observed; 52% sometimes observed)
Employees stating that co-workers from other generations are over- or under-reliant on technology (12% frequently observed; 39%sometimes observed)
Employees taking co-workers from different generations less seriously (10% frequently observed; 34% sometimes observed)
Employees feeling that co-workers from other generations do not respect them (9% frequently observed; 30% sometimes observed.

Work values, communications styles and attitudes toward technology seem to be the major points of intergenerational friction. But they don’t appear to be getting in the way of how intergenerational teams get along and perform together.

Younger Workers See Intergenerational Differences More Acutely

When we analyzed these responses by age, a slightly different picture emerged. We broke down the data by three age groups: Under 35, 35-44 and 45 and older. We consistently found that younger workers saw positives and negatives in the intergenerational picture to a far greater extent than their counterparts from other generations.

In several cases, the younger workers saw a much rosier picture of the workplace. For example, 56% of workers under 35 frequently observed intergenerational mentoring versus only 21% of workers 35-44 and 12% of workers 45 and older. Forty-four percent of workers under 35 frequently observed the perspectives of workers from two or more generations balancing one another. By contrast, 24% of workers 45 and older and 17% of workers 35-44 observed this frequently.

And 67% of the youngest workers frequently observed colleagues from different generations learning from one another while 46% of 35-44 year olds and 36% of the 45 or older group observed this frequently.

On the negative side, there were a couple stark contrasts between generations as well. For example, 44% of workers under 35 frequently observed employees stating that co-workers from other generations were over-/under- reliant on technology. By comparison, only 9% of workers 45 and older and 4% of workers 35-44 observed this frequently.

Twenty-two percent of workers under 35 years old frequently observed employees taking co-workers of different generations less seriously while 12% of workers 35-44 years old and 6% 45 and older did so frequently.

And 22% of workers under 35 frequently observed employees feeling that co-workers of different generations don’t respect them. Only 9% of workers 45 and older and 4% of those 35-44 observed this frequently.

Don’t Let Friction Turn to Conflict

So while the workers of different generations seem to be working well together there are nonetheless very real tensions among them. Managers should make sure they are building on positive intergenerational differences while taking steps to neutralize the negatives. Be aware of and sensitive to any differences that may exist in the perspectives and experiences of the respective generations in your workforce. Our survey showed that the younger the worker, the more sensitive they were to generational differences both positive and negative. So make sure you know and are publicizing the positive aspects of intergenerational relationships in your workplace and rooting out the negative ones before they breed resentment that impacts engagement and performance.

Don’t be afraid to do an honest assessment of your workplace. Is there a dominant view at work in your organization that is shaped by one generation of workers? Is that dominant generational view insensitive toward the perspectives of individuals from different generations? Our survey showed that the more experienced the workers, the less aware they were of negative interactions between the generations in the workplace. This could be a sign of complacent and entrenched attitudes and working practices. Embracing the perspectives and styles of all the generations is the best way to ensure your organization’s culture gets refreshed and continues to grow.

Growth Through the Eyes of GE’s Immelt

2006-07-13T14:28:00.000-07:00

GE is a world-class company and object of emulation for many. It is also a unique organization. The company is a true conglomerate, but one that is more than an investment portfolio. It operates in a diverse set of businesses ranging from aircraft engines and massive power-generating turbines to financial services and broadcasting. It is huge - $150 billion in revenues. GE is knowledge intensive in all its businesses and global in its markets and operational scope. The company is a crucible of management talent and a producer of CEOs that rivals universities. GE is a true innovator in management practices going back to the 1950’s when it created the concept of strategic planning. Given all of these characteristics – its size, diversity, knowledge-intensiveness, global scale etc., one might argue that GE is America’s most advanced corporation.

Ecomagination and Organic Growth
Now GE is embarking on a new challenge – generating organic (internally-generated) growth. CEO Jeff Immelt, who succeeded America’s toughest CEO act to follow Jack Welch, is now trying to build an innovation engine that is equal to GE’s vaunted productivity process.

What even a premier company like GE has discovered is that productivity leadership is merely a table stake in today’s game of global business. More is needed. The best companies are also able to generate organic growth. So GE has set an aspirational goal of growing 2-3 times the growth rate of world GDP through organic growth.To achieve this, GE is attempting to break new ground. As Immelt recently told his senior managers, “The business book that can help you hasn’t been written yet”.

Led by its CEO, the company engaged in a tough self-examination of its strategies, thinking, ways of operating, and management practices to assess whether they could enable growth. It recognized it needed to change some its focus and upgrade some key capabilities if it was to become a consistent generator of organic growth. As a result, GE has set out to create a process for making experimentation and collaboration as engrained in the company psyche as productivity and fiscal accountability.

GE’s Growth Approach
The company’s new growth “process” is actually a set of different focus areas each with its own special initiatives and practices. The approach is not generic – rather there is a unique, GE-specific spin to each of these six areas of focus:

Great Technology emphasizes GE’s long focus on product leadership through its pursuit of the best products, services and content. According to Immelt, “The thing is you can be Six Sigma. You can do great delivery. You can be great in China. You can do everything else well, but if you don’t have a good product, you are not going to sell much”… “We fund (product) leadership”. It’s no accident that companies with leading products are willing to invest the resources and patience needed to ensure that they come to fruition.

The Customer domain focuses on using GE’s process expertise to satisfy its customers and drive their growth. It is employing a “Net-Promoter Score” which adapts a metric developed by Professor Fred Reichheld of the Harvard Business School. It uses a simple measurement – the percentage of customers who say they would recommend GE to other companies minus those who wouldn’t. Also used is “At the Customer, For the Customer” which blends GE’s own internal ways of working and expertise into its customer offerings – bringing its best practices, management tools, and training programs to help customers solve their own problems.

Innovation emphasizes systematically generating new ideas and developing the capabilities needed to make them real. One practice used is “Customer Dreaming Sessions” that involve assembling a group of the most influential and creative people in an industry to envision its future and provoke interchange to inspire new plans.

Another practice employed is “Imagination Breakthroughs”. These focus top management’s attention and resources on promising ideas for new revenue streams emanating from anywhere in the organization. Ideas that make the cut get Immelt’s blessing and don’t have to go through the normal budget and approval process. These are longer-term big potential projects and dedicated program managers are assigned to each of them.

Globalization focuses on developing market-specific products within the region/country in which they will be sold. This is especially important to developing countries where new products need to be inexpensive. Success requires products designed from scratch in and for the local market, not stripped down versions of those sold in the developed world.

Commercial Excellence puts emphasis on what the company acknowledges has been a weakness. The goal is to develop world-class sales and marketing talent and to demonstrate the value of “one GE” (putting a single integrated to the market).

Lastly, Growth Leaders emphasizes developing leadership traits that drive innovation and growth. GE bench marked companies with exemplary track records of organic growth such as Toyota and Dell to find out the key traits of their leaders and culture that enable and drive growth. It identified five key characteristics that have now been incorporated into training and development management programs for the top 5000 people in the company: external focus; imagination and creativity; decisive, clear thinking; inclusiveness; and deep domain expertise.

A rating system is used – green for strong, yellow for satisfactory and red for needs improvement - to evaluate all their leaders on these traits. The goal is not to pick out winners and losers but to get everyone working on improving their weakest trait. Even Immelt himself is working on a red trait (decisive, clear thinking).

Of this he says, “One of the things I’ve learned from experience is that you can run a productivity company and not give a lot of straight ‘yes’ or ‘no’ answers. You can make your base costs by cutting everybody by 10% and you can do okay for a long time that way. But you can’t drive a growth company by cutting everyone by 10%. You have to make higher level moves and take clear, decisive decisions.”

Now there’s a rarity – a CEO that admits to needing to improve his/her decision making ability.

GE’s approach to leadership development has also shifted to allow executives to stay in positions long enough to gain the domain knowledge needed to see through growth initiatives. As Immelt puts it, “The focus of organic growth is going to require people to stay in jobs longer. You can’t plant a tree and see it grow in a year. This is very counter-cultural in our organization where building a career has always meant packing your bags every 18 months. Going forward, you will have more jobs that last five years…The places where we have churned people, we’ve failed.”

If you want to achieve growth the old fashioned way then take heed - continuity counts.

Getting Personal
In the end, Immelt believes it’s his responsibility to help the organization forge a deep connection to GE’s organic growth goals. He says, “Achieving this kind of growth depends on making it the personal mission of everyone here. If we want, we can cloak ourselves in the myth of the professional manager and hide any problem in the process flowchart. But if I want people to take more risks, solve bigger problems, and grow the business in a way that’s never been done before, I have to make it personal”.

Are Top Performers Born or Made?

2006-06-27T06:05:00.000-07:00

Expert performers. Pavarotti hitting the high C. Lance Armstrong vanquishing the Tour de France field. Yo Yo Ma becoming one with the cello. Wayne Gretzky piling up the points. We’ve all seen these stars in action, reaching the penultimate in their fields, doing things that no one else has done in a seemingly effortless manner. But how did they reach their top-echelon skill levels? Were they simply born to be great or was there something more at play?

The work of academic researcher K. Anders Ericsson and his colleagues sheds welcome light on the question of what matters most in producing high performance. Is it natural ability or hard work? Both are certainly important but which one matters most? For business and HR executives this is not merely an academic question. There is a great deal at stake in terms of how investments in recruiting and developing people are made and the kinds of payoffs they yield. Should you hire only the best – people at the top of their game or with sterling smarts and credentials? Or should you develop unproven but passionate people?

If you believe innate talent matters more, as many large corporations do, then you will build a talent management system that is geared toward finding the brightest minds, attracting them and keeping them motivated and happy in your organization.

However, if you believe that hard work matters more than natural ability then you will take a different approach, not necessarily looking at people with the best credentials, but rather those who exhibit a passion and a commitment to excel at something. You will create a work environment that helps people discover what they love and enables them to become excellent at it.

Experts Are Made Not Born

Professor Ericsson and his colleagues have spent years studying top performers from many different fields – science, mathematics, sports, the arts, business, etc. The team analyzed reams of performance statistics and biographical data as well as volumes of data produced from years of their own experiments with expert performers.

The verdict - experts and high achievers are made far more often than born and the driver of their performance is deliberate practice. The researchers found that deliberate practice develops expertise when it incorporates specific goal setting, gives immediate feedback and focuses on technique equally with results.

These research findings raise significant questions about how organizations recruit and develop high performers. If expert performers are made, then what is your organization doing to manufacture them? Is this even an explicit goal? Is your learning and development capability up to the task? Is it strategic – focused on the future and on a long term vision of competency and performance or tactical – focused on today’s performance goals and requirements?

Practice, Practice, Then Practice Some More

Practice is something that we all know from personal experience playing sports or a musical instrument, pursuing hobbies, learning a second language, and so on, is critical to developing skills and performing at peak. Yet in the business world, the concept of conditioning and honing of skills and abilities is not viewed in the same way. It is much more common to learn and develop through the actual work – which certainly has some merits. But few organizations structure jobs and work environments to allow people to systematically improve their performance, for example providing staff with opportunities to develop and hone their skills through offline practice and repetition or allowing them to experiment and take risks to move to the next performance level.

Ask yourself these questions about your organization: What are you doing that helps staff to perform at peak when it counts most? Ironically, here’s where play – specifically games - have a valuable role. They promote the critical driver of performance – deliberate practice. Take flight simulators for example – these allow pilots to hone their abilities by confronting extreme conditions and emergency scenarios. In the process, they practice intensively; get immediate feedback on their performance; and master technique.

Help Workers Discover Work They Can Love

One consequence of the finding that people can master anything as long as they have the motivation to work hard at it is that corporate talent management approaches need to support workers in their quest to find things they really want to do. Does your organization have job design and career progression policies that allow workers to discover and develop the skills and the work they love? Do your talent management and development policies encourage changes to jobs and career paths throughout an employee’s tenure with the organization not just in the early years?

It appears that old dogs can indeed be taught new tricks if they have the motivation to learn them. Focusing development and retraining resources on people, even older workers allegedly past their prime will pay off if these individuals are highly motivated to learn new skills.

Deliberate practice drives expert performance and passion provides the motivation necessary to practice rigorously. According to Professor Ericsson, top talents are able to practice long and hard and apply themselves more intensely than also-rans precisely because they are doing something that they love. If you don’t love what you do then chances are goodthat you will never put in the time needed to master it.

According to Ericsson, “..a lot of people believe there are some inherent limits they were born with. But there is surprisingly little hard evidence that anyone could attain any kind of performance without spending a lot of time perfecting it”.

Forging The Passion-Practice-Performance Chain

The link between passion, practice and performance suggests two fundamentally different kinds of talent recruiting and development approaches. One strategy is to focus recruiting efforts on attracting talent that has already discovered and demonstrated what they love and excel at and to provide them with a compelling place to stay at the top of their game. This is analogous to the New York Yankees approach of acquiring the best talent available – but it requires deep pockets to sustain.

The other approach is to create an environment that helps people find work they can love and develop the skills and expertise to become top performers. This is likely to be less costly than the first approach but will require more time to show results.

Regardless of which of these strategies they pursue, leaders seeking performance excellence would be well-advised to create workplaces in which passion for work and the deliberate practice of skills are the defining hallmarks.

Work-Life Imbalance – A Global Problem Getting Worse

2006-06-24T12:00:00.000-07:00

“Society is changing but the way we think about work life isn’t. Everyone knows the present organization of work does not work, but nobody is ready to translate this into actual practice, despite this having serious implications for gender equality and life satisfaction.”

This quote by a Dutch man is taken from a paper by Rhonda Rappaport, Suzan Lewis and Richenda Gambles entitled, “Work-Personal Life Harmonization: Visions and Pragmatic Strategies for Change”. It presents a consensus view of multiple organizational and work- life experts on what’s driving and what could potentially solve the imbalance between paid work and personal life. The authors argue that this is a global problem affecting workers in both the developed as well as developing worlds. In their view, the work-life balance movement seems to be sputtering across the globe despite much attention and some progress coming to grips with this issue.

Things are bad all over

According to the authors, the main culprit for the growing gap between work and life is globalization and the “productivity” pressures it’s causing that are undermining progressive policies and a focus on equity in the workplace. “The global economic climate perpetuates and exacerbates notions of efficiency that involve fewer people doing more work as well as myths and assumptions that characterize 'ideal' workers as those who can work as though they have few or no outside responsibilities outside of paid work.” As a result, there seems to be a pervasive underlying belief in business that harmonizing personal life and work requires a tradeoff between profits and people and the profits are more important.

The authors argue that individuals, employers and societies around the world feel generally powerless to do much about this situation because the changes that would improve things seem to go against global economic trends. They go on to describe the situation in several countries. In Norway for example, the problem of work-life imbalance still largely exists despite all the support for work- personal life harmonization offered by the Norwegian state and companies.

In the Netherlands innovative government measures have also been implemented but global pressures seem to be undermining them because of the perception that competitiveness rests on ‘commitment’ through working long hours and the general intensification of work.

In Japan, the workplace is still heavily dominated by males and long hours are the norm. In India, work-life balance is seen as a luxury issue for a growing middle class of professional workers and economic development is perceived as more urgent than social well being and people issues. In industries like IT and business process outsourcing, the pressures and work intensity rivals anything in the US and UK.

In the UK, systematic change has been slow despite a slew of initiatives aimed at this problem. Long working hours and intensification of work seem to be getting more acute. Flexible working arrangements are often associated with more work not less. “For all the debate about work-life balance there is the feeling that the debate is feminized and stuck”.

In the US, there has been a “hands off” government policy toward this issue, leaving it completely up to the private sector to handle. So called “flexible working” practices are widespread but in the cases where policies and initiatives exist within companies, the intent is to increase the amount of work. And in many cases, even these limited policies get undermined by the intensive working conditions and high pressure cultures.

What’s holding back change?

The consensus of the experts is that an overemphasis on economics has led to an overall decline in well being when viewed in terms of social and human capital. Excess individualism and consumerism is eroding community and social well being across the world. The rise of new forms of globalization and technology add a super boost to work-personal life tensions.

Compounding these problems is the limited thinking currently about:

Alternatives to current implementations of market economies that also value people
Changing men-women relationships at all levels of society
Valuing those who ‘want a life’ outside the workplace
Thinking beyond quick fixes and the actual processes of change

With so many factors driving this problem one is compelled to ask whether work-personal life harmonization is even possible in a world of relentless global pressures to keep down costs and raise productivity at an ever increasing rate. The authors believe it is, but that it can only be achieved through the development of new ways of working that are both socially and economically sustainable. This means breaking the iron grip of dogmatic economic thinking regarding the ways market economies are implemented. Vexing gender equality issues must be sorted out. Experiments in workplace cultures, organizational structures and working practices will need to be creatively implemented. Quick fix mentalities must be abandoned. And lastly, all stakeholders must face up to the complex reality of change processes.

Toward a solution

The paper suggests changes at several levels. To create the right ethos government must set the proper tone both through policies and legislation that addresses the broader issues related to the needs and equity of society such as care giver support, the minimum wage and working conditions and terms of employment. While basic principles must be articulated, freedom to experiment and innovate must be encouraged rather than constrained.

In the workplace, persistent myths and outdated assumptions about ideal employees need to be tackled head on. Right now those seen as the most committed and effective workers are also the most dysfunctional, obsessively ambitious or willing to sacrifice their personal life. The workplace talks balance but acts workaholic. This must change or nothing will happen. It must also be recognized that workers and employers have separate agendas but these need not be mutually exclusive. Tradeoffs are possible that can satisfy both sides. Serious attempts must be made to find them. Policies that respect both personal life and workplace effectiveness are possible, but we must do more to discover and implement them.

All together now

In the end, the paper’s authors provide a good discussion of the problem but fail to provide any detailed solutions. This is to be expected - there are no easy or quick answers to these complex issues. But building awareness of the problem and recognition of its significant societal costs – burnout, health problems and social discord in the developed world and inequity and poverty in the developing one - is an essential first step in the right direction. But more must be done. It will be slow to happen however until businesses, governments, communities and individuals join efforts to make paid work and personal life harmonization a top priority for all.

Are There More Enron’s Out There?

2006-05-31T11:55:00.000-07:00

Ken and Jeff’s not-so excellent adventure is entering a new phase. Both are headed to a jumpsuit jamboree courtesy of the U.S. Federal Government. It took nearly four years but the ex-heads of Enron – Ken Lay and Jeff Skilling - were found guilty as charged last week by a thoroughly non-gullible jury of their fellow Houstonians. The duo will soon be sentenced before heading off to prison to serve time for their crimes.

When Creative Becomes Criminal

It is easy to get caught up in the flawed personalities and ethical shortcomings of Skilling, Lay and Fastow - the main players in this American business tragedy. But the company they led was once highly regarded by academic researchers and the business media for its “out of the box” thinking, deal-making acumen, game changing strategies, intense internal competition, and a performance culture that gave outsized rewards for over-the-top performance. Enron may now be kaput, but these principles and practices are not only still prevalent but remain at the ideological and emotional core of American business. Proponents argue they fuel the innovation and growth that keeps the US economy on top. Critics point to Enron and dozens of other scandals as well as to over-the-top CEO pay as evidence that these principles and practices are leading to the wrong kinds of outcomes.

What changed Enron from a company of full of innovators to a cell-block’s worth of inmates? Did its demise result solely from the moral and ethical failures of its leaders? Or was its collapse also caused by a defect in the corporate American business system which causes some organizations to push the ethos of individual achievement and financial self-interest too far?

What Path to Profit?

A significant body of sociological research shows that groups and communities that are long lasting actively enforce rules against selfish behavior in their members. These studies show that punishment is a key to a group’s ability to profit - groups of people engaged in cooperative endeavors fail and go out of existence unless they have clear methods of punishing people who become selfish or exploitive.

In one of these studies, researchers at the University of Erfurt enrolled 84 students in an investment game. Each were given 20 tokens (redeemable in real money) to start. The object of the game was to maximize profit. This could be done either by pooling and investing the group’s tokens collectively which would yield everyone a guaranteed level of profit or by opting out of the group pool and acting alone to maximize one’s individual profit. Players were free to switch groups after each round of play. In the beginning, many players joined groups where individualistic strategies could be pursued without punishment. But by the fifth round, half of the players switched to groups in which players were penalized for not participating in the collective investment strategy. By the 20^th round the vast majority of players were in these groups. In the end, the groups in which members acted cooperatively instead of individualistically made the most profit.

Enron illustrates what happens when selfish individualistic behavior is not properly sanctioned and controlled within organizations. Its demise was spectacularly tragic, but everyday smaller implosions and meltdowns occur in businesses caused by many of the same forces that spiraled out of control at Enron.

Is Your Organization a Little Enron?

Here’s a test to help you gauge whether your organization is heading down the wrong path. How many of these seven Enron-like characteristics reflect your culture and environment?

Gonzo for Growth – Growth is a vital piece of any business equation – but constantly pushing for unsustainable levels of growth is a recipe for disaster over the long run. Ambition and stretch are good – obsession and overstretch eventually destroy empires whether national or commercial.

Deal Makers are Deified - The ‘bigger is better’ mentality rules in your organization and the rock stars are people who bring in the most revenue or sign the biggest deals. Your organization is fixated on size and gets easily caught up in large numbers and ‘big deals’.

Rationalizing Reigns – There is no room for straight talk – problems and deficiencies are never openly acknowledged or discussed. Questioning leadership only provokes censure or dismissal. Reality is what the top executives say it is. Certain questions and ideas are not talked about publicly. Dissenters are vilified and driven out. Leavers are devalued.

Only the Numbers Matter – Compensation and careers hinge in huge proportions on “making the numbers”, be they stock price, cost or sales targets. “Gaming the system” and accounting chicanery are common.

Inequity Abounds - The spin from the top is meritocracy but the on-the-ground reality is a caste system. Those who “perform” best are seen as deserving of preferential treatment and the lion’s share of rewards. After all they “add the most value”.

Intramural Warfare Rages - Competition among internal groups and individuals is often more fierce than with competitors - whether it’s Marketing and Engineering going at it; Sales thumbing their noses at Finance; one business unit competing against another for the same customer; or executives jockeying for positions of power and status.

Ethics Taught By the Book Not by Example – Ethics are something that employees need to have instilled in them through training and courses rather than the real deeply held values and natural behaviors of the organization.

How does your organization rate? Even if it strongly exhibits only a few of these traits, it could be headed for some trouble.

So, are there more Enron’s out there? My guess is that there are – and hopefully laws such as Sarbanes-Oxley and the regulators enforcing them will expose anymore of the Enrons in our midst before they do the kind of damage done by Mssrs. Lay, Skilling, Fastow and company.

Even Some CEOs are Criticizing CEO Pay

2006-05-16T08:34:00.000-07:00

CEO's in the U.S. have been taking a public relations pounding over their excessive levels of compensation. While many have spoken out against this situation - not surprisingly few critical voices have been heard from mahagony row. Until now.

Ed Woolard, former CEO of chemical giant DuPont, gives a wonderfully folksy and straight-to-the-point critique (see the video) of excess CEO pay and what should be done about it.

His key idea is to institute what he calls "internal pay equity". This practice links the amount of CEO compensation to what the other key executives are paid, not to what CEOs in other companies get.

Other companies like Whole Foods Markets limit CEO pay to fixed percentage of average pay within the company.

By the way, many thanks to reader Broc Romanek for telling me about the Woolard video.

How France and Sweden Are Coping With the Changing Workplace

2006-05-11T16:45:00.000-07:00

How should countries cope with the effects of the globalization of business and labor?

Two articles relevant to this question appeared in consecutive issues of the New York Times this week. They highlight some of the workplace policies and practices of Sweden and France respectively.

"4 Hours a Day, 3 Days a Week" examines the growth of temporary workers in France. It presents a different perspective on the French workplace than what we've seen lately as students and unions forced the government to back down from implementing a new law making it easier to fire entry-level workers.

Apparently temporary working is growing at a rapid clip in France. Some of this trend is driven by the fact that it is so hard to fire people so company's are extremely reluctant to hire anyone on a permanent basis. Instead, many rely on temporary workers. But in some industries this is not such a bad thing. The article describes one temporary worker who has turned down offers of full time work because she'd rather work for multiple "clients" than a single employer. "You lose your edge."

"An Economy With Safety Features, Sort of Like a Volvo" discusses how Sweden deals with the social impacts of downsizing and corporate restructuring.

Both articles highlight aspects of each of these countries that go against each countries national stereotypes. Sweden is viewed as a crade-to-grave welfare state with high taxes on business, but it turns out to be one of the more dynamic and resilient economies in Europe. According to the article, the Swedish economy is set to grow by 3.7 percent this year — almost twice the rate forecast even for Germany, the only one of the big Continental European economies showing signs of confidence.

Sweden's official unemployment rate of is only 4.8 percent, but many economists say, is distorted by the omission of people in government-financed retraining programs. This may actually be a good thing, especially if they are being trained to take on tomorrow's high value, good paying jobs. After all what wrong with making investments in developing a country's human capital?

Behind its economic prosperity is Sweden's collective toward dealing with disrupiton and change.

Says a labor union leader, "Our job is to create a society where people are protected and suffer as little as possible and get new chances in society with education and training. There's a social charter, a social contract. There's a general peace contract in Sweden. There's a general culture of problem-solving instead of fighting."

Why such a cooperative attitude about dealing with problems instead of shifting them to the other guy?

Joakim Palme, a leading expert on Nordic welfare systems is quoted in the article as saying, "I think the fundamental aspect of the Scandinavian model is trust.....the Scandinavian experience has been to be positive to this change, because it is producing more wealth in the end."

This is obviously a contrast from the "every man (and woman) for themselves" mentality that's prevalent in the States.

Sweden and France - two countries grappling with the downside of competing in a world of global business. Sweden seems to be coping better it's not nearly as difficult to fire people there than in France, but employers and the government work in partnership to provide generous benefits and training to displaced workers. France is struggling more with this problem, but temporary work seems to be a default, albeit imperfect solution.

The situations each of these countries is facing highlights the need to rework the employer-employee 'deal' or contract to one that apportions risk more fairly and allows people to be more agile in dealing with changes in industries and the demand for skills.

According to Raymond Torres, a top labor economist at the O.E.C.D., "The best way would be to reform the permanent labor contract...The more rigid the requirements are for a permanent contract, the more employers tend to recruit temporary workers....It's not just a social issue, it's a waste of human capital, a waste of productivity, and it divides the labor market."

I agree with Mr. Torres that change is needed, but perhaps moving to a system that allows individuals employers to negotiate contracts on relatively level playing field based on individual needs and the tradeoffs each side is willing to make would be better than any one-size-fits-all laws or regulations. It won't be easy to do this, but we'll certainly never get there unless we try.

Learning to Swim in the Global Talent Pool

2006-05-08T06:03:00.000-07:00

Global trade has been around since the days of Marco Polo, if not well before. It started with goods - at first raw materials and then progressed to finished products. Next came financial capital. In more recent times, trade in services and increasingly labor and knowledge work have gone global. What’s different today from the past is the immense scale, scope and dynamism of global business. The perceived opportunities are vast but there are downsides as well, in particular the fear of many knowledge workers of losing their jobs to lower-paid counterparts in other countries.

Factory workers have faced this dilemma for many years, and now it’s the turn of knowledge workers. Advances in technology and dynamic business practices ensure that the movement of capital, goods, services and now knowledge work will only intensify in the years to come. The key issue is not whether to stop these forces, but how to best adjust to them to reap their advantages and minimize the downsides.

How’s the Water?

There is no doubt that some are prospering in the global labor pool but others are struggling. A key attribute of the global market for knowledge workers is mobility – whether its workers moving to where the jobs are or the jobs migrating to where the workers are located. There are three key drivers of this phenomenon:

Commodization – Standardized components and processes have been well-established in the computer industry and many other manufacturing businesses. As standards and common components and processes spread it enabled manufacturing to move quickly and cheaply around the world. The same thing has been happening with all manner of services and knowledge work from the back-office to call centers and now technical and scientific work.

Componentization - Whether its products or services, many businesses are increasingly organized around well-defined sets of activities that can be pulled apart and reconfigured. This has helped to accelerate the movement of work around the world via outsourcing and captive operations. In theory, componentization means work will move to those parts of the world where talent is located that can do the job best at the most competitive cost.

Connection - With processes and activities spread around the world, connecting the dots becomes a critical activity. Much knowledge work is electronically enabled. Global communications are increasingly ubiquitous and cheap. Air travel makes it easier for workers and managers to physically move across national boundaries and time zones. These developments make it easier than ever to hire people in other countries, outsource work, and import workers. It also means having the ability to connect all these groups together and coordinate their activities on a global scale.

How To Stay Afloat

For better or worse, globalization of business and knowledge work is here to stay. A key challenge for many is how to avoid being stranded without a life preserver in the deep end of the global talent pool. I certainly don’t have the complete answer to this question, but in my view there are at least three things on which individual knowledge workers (and governments and companies as well) need to focus to survive and thrive in the world of global business.

Customers - Know Those You Serve

Everyone talks about this – so much so that it’s a cliché. But the hard truth is that anyone can be supplanted if they don’t develop and maintain deep knowledge about their customers and strong relationships with them. In the dynamic global market, customer knowledge becomes a key asset for standing out from the rest of the pack. This ‘customer intimacy’ requires making a commitment to continuous learning, relentless experimentation, unflinching risk taking, and rock- solid focus on the values, goals and interests of customers. None of this will be built easily or quickly. But for those who can develop in-depth understanding of their customers, the pay-off will come in the ability to always stay ahead of the competition in anticipating and responding to opportunities.

Competence – Know What You Can Do Best

What can I really be good at? Sounds like a simple question but companies and knowledge workers often find it difficult to answer in a pragmatic way. It must however be addressed and understood in order to effectively compete in the global talent marketplace. The right mix of skills and the ability to deliver higher quality results is the only sure way to stay viable. This requires investment in learning and the development of skills and knowledge. Building experience and developing expertise and acumen is no mean feat. None of this is quick, easy or inexpensive. Companies, government, and individuals must work together to ensure that learning is not only a priority, but a reality, whether in our schools or in our workplaces. Governments and companies have a responsibility to provide ample learning opportunities, however individuals must be accountable for their own learning.

Collaboration – Know How to Work Well With Others

To be effective, knowledge workers must be open not closed to new ideas, new influences, and new people. Not exactly an easy thing to do when individuals, organizations and indeed entire countries feel overrun by outside forces. But success hinges on being able to work across geographies, cultures, businesses and organizations. Interestingly, many companies have cultures and management practices that inhibit collaboration both among internal staff and with outside parties. This must change. In the future, collaborative networks will become the norm of how companies operate. Knowledge workers with deep collaborative skills will have an edge whether as employees or service providers.

Staying in the Swim

Customer intimacy, deep competence, and collaborative capability are key assets in competitive global markets. Individuals should strive to develop all three capabilities. If globalization delivers the growth that economists predict then it’s in the interests of governments and even companies to help them as much as possible. Because they are going to need all the talent they can get.

It’s Not What You Say But What You Do – Talent Management Practices That Matter

2006-04-18T06:03:00.000-07:00

Competing in a "flat world", a term popularized by columnist Tom Friedman, requires (well) rounded people. Becoming a well rounded talent requires continuous learning and development of knowledge and skills. Organizations that want to succeed in flat world competition better be creating enriching workplace experiences if they wish to attract and retain the high-caliber talent they need.

How can you create an enriching workplace? It isn’t easy and doesn’t happen overnight. But with some planning, a lot of persistence and adept execution of seven key practices, any organization can create an enriching workplace.

1. Job Stretch and Mobility

Feel like you’re stuck in a box at work? If you do you’ve got plenty of company. Many organizations define jobs narrowly and allow little or no movement across organizational boundaries or even within them. But to grow, talented people need to be constantly challenged and stretched. This means the ability to take risks, to try new things, and yes, even to fail – whether by doing something differently in an existing job or tackling an entirely new one. If experience is indeed the best teacher how much are we learning if what we do rarely changes?

SEI Investments, a leading global provider of outsourced investment business solutions, has created an environment that provides continual challenge to staff and enables them to regularly move around the organization and to frequently take on new tasks and responsibilities.

2. Mentoring Not Just Managing

Nothing speeds up the transfer of knowledge and know-how or enhances individual development more than a quality one-to-one dialogue between an experienced person and an up-and-comer.

W.L. Gore, creators of GORE-TEX® fabrics, is mentoring-intensive organization. Managers are called “Sponsors” and act as advocates for their assigned staff. They commit to being knowledgeable about their activities, well being, progress, accomplishments, personal concerns and ambitions. Each associate has at least one sponsor and some have more than one.

3. Freedom and Stimulation

Often the environment in which people work can make a huge difference to the speed and quality of people development. Two ingredients essential to making a workplace conducive to learning are stimulation – through frequent exposure to a wide variety people and ideas and the freedom to explore and pursue individual ideas and passions.

Google is a nirvana for the best and brightest technical talent in the world. The company’s commitment to human capital is strong and was a core principle expressed in its now famous IPO filing in 2004. Staff are given huge amounts of freedom to determine when, where, how and on what they work. Each is allowed to spend 20% of their time each week working on personally initiated projects.

4. Deep Immersion

Nothing frustrates talented people, particularly young up-and-comers, more than being asked to wait their turn before getting the opportunity to contribute to important projects or initiatives. This is not only demotivating to people but counter-productive to performance as opportunities to contribute depend more on tenure and pecking order than merit.

Trilogy, a software company based in Austin Texas not only avoids this problem, but has created a fast- track, merit-based process that starts with every new hire. Its induction program is on steroids - goals are not only cultural induction, bonding and skill development but to create the company's next generation of ideas, products and leaders. The program is led and run by Trilogy's top executives, including its CEO.

5. Teaching and Coaching

This means having people in the organization – both managers and specialists – whose role it is to help others to grow, learn and realize their potential. Many organizations have de-emphasized this key task as pressure to meet quarterly performance targets have cascaded down to every level of the organization.

Schools provide an inspiration and model from which other organizations can learn. They have teachers whose only job is to develop their student’s skills and learning. While few organizations are positioned to employ full-time teachers, many should encourage and help managers and staff to take on this role. They can do this by explicitly acknowledging the value of teaching and coaching and including these responsibilities in the expectations and measures of performance set for managers and staff.

6. Diversity of Talents and Personalities

The value of diversity in business seems obvious to most observers, but few leaders really know how to leverage the differences that people bring to the workplace. As Ricardo Semler, head of the innovative Brazilian conglomerate Semco puts it – “I prefer Coq-au-Vin to Chicken McNuggets”. He is not talking about food but rather cultures that blend diverse talents and perspectives (like the ingredients in a slow-cooked Coq-au-Vin) versus those that impose numbing conformity on their people (like the industrial-style sameness of Chicken McNuggets). And believe me, many companies have Chicken McNugget talent – mass produced, standardized and consistently mediocre. Far better to blend diverse ingredients into a rich and unique tasting stew – ala coq au vin!

Semco backs up its words with actions. It regularly pairs younger and older workers together. Its “Lost in Space” program affords young staff the opportunity to move around the company on a regular basis during their first few years. This helps them to both develop new perspectives are well as inject their own fresh ideas throughout the business. Their “Trading Places” initiative let’s people trade jobs as a way of gaining new experience and skills.

7. Horizontal Growth Paths

Flattening of hierarchies in recent years has severely curtailed growth paths in many organizations. But growth shouldn’t just be up the ladder or depend purely on acquiring managerial skills. Another productive growth path is horizontal and progressive organizations have created lateral paths that allow people to broaden their skills and knowledge within their disciplines and jobs.

Companies like IBM, Texas Instruments and Intel have instituted technical mastery programs to allow individual contributors and specialists to develop their knowledge and learning and to be paid and recognized for it. This means talent can advance based on their learning pace rather than have to change jobs or be promoted to get ahead.

Hype or Reality?

So how does your workplace stack up on these seven practices that matter most to creating an enriching workplace? Are job stretch and mobility, freedom and stimulation and horizontal growth paths the exception or the rule at your employer? Are mentoring, teaching and coaching rare or pervasive throughout your organization? Is diversity merely an overused word in your company’s communications or a real principle on which your organization operates every day?

Who Will Win The Battle To Redefine The Workplace?

2006-03-30T06:31:00.000-08:00

There is a largely unseen battle now raging in the workplace. It pits incumbent powers against emerging upstarts. On the one side are managers who covet the traditional employment deal – money, career progression and status - in return for a total commitment to playing the organizational game by traditional rules, e.g., long hours in the office, grueling travel, and an otherwise unquestioning willingness to do whatever the business requires. Only Type A's need apply.

On the other side is an emerging group of workers who are also highly ambitious but they are seeking a new kind of workplace deal that combines opportunities to perform at high levels, grow their careers and achieve financial rewards with an extensive array of flexible working and non-traditional employment arrangements.

The winner of this battle will determine whether the rules and mores of the workplace change dramatically or remain largely the same.

How is this battle currently unfolding? A newly released study, “Manifesto for the New Agile Workplace” describes the players in this fierce fight to define the workplace rules of engagement. It provides new insights into what different groups of knowledge workers think about their current “employment deals” and the changes in their working and employment arrangements that they seek most.

Drawing on research conducted by an international team of experts from Career Innovation, a think tank based in Oxford, United Kingdom, and Next Generation Workplace, the study findings turn some of the conventional wisdom about knowledge workers on its head.

The executive summary of the report is available free. The full report, written by yours truly and Jonathan Winter, Managing Director of Career Innovation can be purchased for US$110.

The report findings draw on several streams of research including an online survey entitled ‘Redesigning Work’ that attracted responses from more than 2,000 ‘knowledge workers’ – employed, self-employed and not currently working – across 32 countries. Unlike many previous studies of flexible working, this survey asked respondents to indicate not only their preferred and ideal ways of working but the trade-offs and compromises they would be willing to make in order to achieve this.

Unhappy to Be Here

The Redesigning Work survey revealed shocking levels of dissatisfaction among the knowledge workers polled. Over fifty percent were dissatisfied with their ability to achieve work/life balance (56%), their sense of achievement from their work (55%), the way their skills are being used (54%) and their ability to gain new experiences (52%).

Not surprisingly, many of these frustrated knowledge workers see significant changes in their employment situations as the only hope of fulfilling their unrealized expectations. In total 55% rated a complete change of direction attractive, with “working for yourself” universally the most popular employment option.

These survey findings are startling, given the fact that the respondents are knowledge workers, many of whom are managers and/or working in a professional capacity. But there's more. When we ran regression analysis of the survey responses, five distinct groups of knowledge workers emerged, defined by their shared expectations about work and preferences for flexible and non-traditional working arrangements. Among these groups are the key players in the battle to redefine the workplace. These segments of the workforce also represent more precise targets for organizations to engage in developing more effective talent management strategies and devising new kinds of employment deals.

Traditionalists – Rulers of the Roost

Representing 20% of the survey sample, Traditionalists are the most willing to meet employers’ expectations of how they should work - they are highly motivated and many of them work long hours. Bucking somewhat the conventional wisdom that younger workers are not attracted by traditional corporate environments and employment deals, 57% of these individuals are under 40 yearsold and 23% are under 30. Traditionalists have high drive and ambition and have little need for flexible work options. They also have low interest in alternative employment options. Not surprisingly – Traditionalists are predominately male, mid-career managers. They are also the group most likely to stay with their current employer.

Careerists – Opportunists in Traditionalist Clothing

Another 20% chunk of the survey population is what we call Careerists. These individuals have moderate to high drive and ambition for their careers, but are not nearly as keen to meet their employer's expectations as their Traditionalist colleagues. They too are not attracted by flexible work options and even less to alternative employment options. Careerists appear to a large extent to be pursuing their own career agendas, typically within a large corporate context.

Flexers – Desperately Seeking Balance

As is apparent from their name, Flexers are highly attracted to flexible working and work-life balance. Representing one-fifth of the survey population, individuals in this group covet flexible work options and look favorably on alternative employment options as well. But they demonstrate a lack of willingness to meet employer expectations. Flexers have low to moderate levels of drive and ambition. Overall, this group is not happy - 36% are planning to leave their employers within the next twelve months.

Agile Performers – Role Models But The Most Likely To Leave

Agile Performers represent the biggest cluster of survey respondents (25%). This group is highly attracted to flexible working and alternative employment options. Agile Performers have very high drive and ambition and are very willing to meet employer’s expectations yet they are the most likely to leave their employers (43%). And contrary to the popular perception of older workers lacking ambition and willingness to change – 43% of agile performers are over 40 years old.

Fringers – Stuck Outside the Mainstream

About 15% of the survey respondents showed low interest in work and a distinct lack of career-orientation. We refer to these individuals as Fringers. They are neither attracted by flexible work or alternative employment options. Fringers have low to moderate willingness to meet employer expectations and low drive and ambition.

Will An Agile Workplace Emerge?

Despite all the rhetoric about continuous change and the dismantling of corporate hierarchy, traditionalist ideology still predominates the workplace cultures of many organizations. But almost half of the respondents to our survey can be characterized as part of what we call the emerging agile workforce – highly attracted to non-traditional working arrangements. These individuals are also the most dissatisfied with traditional employment deals and the most likely to leave their employers. This presents a potentially damaging situation for employers. Many of these workers, particularly the Agile Performers, exhibit a healthy mix of ambition and agility that is precisely what many companies desperately need to thrive in today’s highly volatile business environment. However, this situation also represents a tremendous opportunity because many of these workers would stay and become more engaged if they were allowed to work in a more agile manner. In fact, 48% of Agile Performers and 46% of Flexers say they would be willing to give up some of their pay to achieve their most desired flexible employment option.

Can a way be found to create more attractive deals for Agile Performers and Flexers while keeping more traditional high performers happy? That’s the challenge that corporate leaders and emerging agile workers must meet head on. It can only be tackled successfully through honest dialogue, good faith negotiations and willingness to experiment with new kinds of employment deals that trade off commitments to increased performance in return for greater worker flexibility and freedom.

Those organizations and individuals savvy enough to do these things will lead the way in creating tomorrow's high-performing workplaces. Businesses win by retaining a greater number of motivated, diverse and high performing agile workers. These same workers win by attaining the employment deals they desire most to pursue their career and personal aspirations.

Retraining After Layoffs - Does It Work?

2006-03-26T14:08:00.000-08:00

The New York Times ran this article a few weeks back - Retraining Laid-Off Workers, but for What? - by Louis Utichelle who has just written a book on layoffs.

Retraining is touted as the cure-all for the downside of globalization and industry restructuring that is rife today. But this article sheds some light on just how difficult it may be to 'repurpose' people who have spent most of their lives doing one thing to learn something completely different.

Despite the difficulties, retraining must be undertaken and supported by government. It represents an investment in human capital that smart societies must make.

Colgate Acquires Tom's of Maine - Sell Out or Smart Deal?

2006-03-24T10:24:00.000-08:00

A couple weeks ago, Tom's of Maine announced it was being acquired by health and beauty products giant Colgate.

Tom's, a private company owned by Tom and Kate Chappell, reportedly fetched $100 million.

Why did the couple with it's decidedly uncorporate mission and style sell itself to a big conglomerate?

According to Tom Chappell, teaming up with Colgate enhances Tom's growth potential by pushing its products through Colgate's national and global distribution channels. It also ensures that Tom's business and the staff that have helped to build it will have their futures better secured by entering the Colgate family.

But will this really be better for Tom's workers and customers? Despite the announced intention that Tom's will run as a standalone business within Colgate, precedent shows that when giant companies swallow up little ones they eventually digest them completely. It will be very hard for Tom's to "preserve" it's unique culture and autonomy in the long run.

In the end, what Colgate may be buying is a brand and a set of patented product formulations. Hopefully, the employees of Tom's will serve a longer term purpose than a momentary gargling of natural ingredients within the gaping corporate maw of Colgate, only to be spit down the drain after a brief rinse.

Are Science and Engineering Enough For Innovation?

2006-03-24T09:12:00.000-08:00

Americans are worried about falling behind other countries in math and science and afraid that this will hurt us economically in the future. This is a real issue and there has been much debate about it. Often cited is how many more engineers and computer scientists India and China are producing compared to the U.S.

While this situation should be cause for concern, my sense is that it's a bit overblown. Today, Tom Friedman, NYTimes columnist and author of the best-selling book, "The World is Flat" provides an interesting point of view in his op-ed column, entitled "Worried About India and China's Boom? So Are They".

The piece points out the innovation requires a blend of art and science and that the Indians and Chinese are concerned that they may have mastered rote learning and are producing legions of left-brained programmers and engineers at the cost of art, literature, music and the humanities. They fear that this is the reason they have not yet mastered innovation, as evidenced by the absence of new products and services emerging out of these countries.

The key to innovation is nuturing creativity in people. Math and science tend to encourage rigorous and structured thinking and compliance to logically designed processes. This is valuable but not necessarily the kind of thing that sparks innovation and creativity.

What I take away from Friedman's piece is that the most important task for educators - whether in India, China, here or elsewhere - is educating the population in a balanced and well-rounded way. What good are brilliant engineers and programmers if they can't communicate or envision anything beyond their algorithims? What value are philosophers, artists and political scientists if they can't think rigorously and logically when necessary?

Is it Women or the Workplace?

2006-03-20T06:38:00.000-08:00

A couple weeks ago an interesting article appeared in the Sunday New York Times yesterday, "Why do so few women reach the top in law firms?".

The article provides various points of view as to why so few women achieve partner status in law firms. And of course, there is the broader question of why women are underrepresented at the top echelons of most organizations.

I wrote about this from a different perspective last summer (Why Corporate Culture Counts) and called attention to an excellent paper by Lauren Stiller Rikleen, a Boston-based lawyer. She led a Boston Bar Association task force tasked to study why flexible working wasn't working in the legal profession. Put simply, what she found is that the legal profession is a crucible that demands 'total commitment' to get to the top. This includes complete and utter subjugation of one's personal life to the needs of the firm. Rikleen pointed her finger directly at the 'billable hours' mentality as one of the chief drivers of the legal profession's dysfunctional culture.

In a telling excerpt from the Time's article she elaborates further on this:

"ONE of the main bugaboos in this debate — and one that analysts says is increasingly cropping up as an issue for male lawyers as well — is the billable hours regime. Billing by the hour requires lawyers to work on a stopwatch so their productivity can be tracked minute by minute — and so clients can be charged accordingly. Over the last two decades, as law firms have devoted themselves more keenly to the bottom line, depression and dissatisfaction rates among both female and male lawyers has grown, analysts say; many lawyers of both genders have found their schedules and the nature of their work to be dispiriting.

'I see a lot of people who are distressed about where the profession has gone,' Ms. Rikleen says. 'They don't like being part of a billable-hour production unit. They want more meaning out of their lives than that.'"

Regrettably most industries with their emphasis on 'process management' and 'performance based management' are heading in the same direction as the legal profession - i.e., becoming all-consumed by the same individual measurement logic. Unfortunately we can expect and are indeed already seeing the same negative consequences, not only for women, but for anyone not happy to embrace 'total commitment'.

What Makes A Best Place to Work?

2006-03-02T06:17:00.000-08:00

What makes a great place to work? There are many ways to assess a workplace but in my opinion, a great place to work is one that inspires the passion of workers and unleashes their talent. Emotional hot buttons are pushed. Workers are turned on by what they do and who they work for or with. They work in a job or an organization for more than the usual reasons - for something deeper and more meaningful than a good salary and generous benefits. While engendering passion and emotion are of course vital, a great place to work is also a place where people are able to apply their talent to the fullest. Where they can grow, nurture and apply their skills and knowledge in ways that enable them to consistently produce excellence. Every day. And in every way.

That’s a great place to work.

Last summer, Madison Magazine asked me to help them to identify the best places to work in Madison based on these criteria. Our methodology had three components: an employee survey, open-ended essay questions, and interviews with top leadership. Using the Next Generation Workplace framework, we created a set of questions to determine what employees valued most along six key dimensions of their workplace experience and the extent to which they experienced these coveted aspects of the job and working environment.

We developed six awards to honor organizations that excelled at delivering these key dimensions of the workplace experience:

Most Enriching

This award went to the organization that provided employees with the best opportunities for achievement and learning. Many people value learning and development above any other aspect of work. Companies that provide rich environments for workers to grow their skills and knowledge, not only perform better but keep their people because they don’t have to leave to progress their careers.

Deforest Area Middle School edged out some tough competition to win the Most Enriching Workplace award. Its teachers are supercharged about their jobs, their students and their mission to make the school an outstanding learning environment for everyone. Their dedication is so strong that teachers are not afraid to take risks or try new things in pursuit of learning.

Most Rewarding

This award was given to the organization that did the best job of making employees feel valued through the types of rewards and recognition they receive.

The tendency of most awards competitions is to pick a winner based strictly on the amount of financial rewards it offers its workers. But showing appreciation involves more than paying bonus checks. It also demands leaders that communicate up close and personal with their staff. We focused on all the ways companies conveyed how they valued their workers – with an emphasis on recognition as well as reward.

Brownhouse Designs took this award because of its leadership’s strong and consistent communication with employees regarding their value to the organization and its performance. In the wordsof Laurel McManus Brown, owner of Brownhouse Designs, "I really feel that people instinctively want to feel valued. I think people want to be appreciated in very simple ways, like very sincere acknowledgements and very sincere thank you’s, a pat on the back, recognition in front of their peers. You can see what that does to somebody just by looking into their eyes."

Most Participative

This award was given to the organization that went the furthest in giving staff a say in key decisions related to their work, jobs and careers as well as involving them in the governance and management of the organization.

Many executives talk about concepts like ‘empowerment’ but few back them up by giving employees real decision authority in their jobs. Nor do many organizations share vital performance information with all of their workers. And the overwhelming majority of companies are run as autocracies, even if they are benevolent ones. Yet, many workers want a say in their career and financial destinies, and when they are given it, they reciprocate with high levels of commitment and performance.

The winning organization was M3: Mortenson, Matzelle & Meldrum, an insurance solutions business. It took an extraordinary step toward becoming a participative workplace. When it was facing a critical business restructuring decision, it reached out to involve ALL staff in the decision rather than hatch a plan with far-reaching impacts on everyone behind closed doors without consultation with the rest the organization.

Most Socially-Cohesive

This award was given to the organization that did the best job in the eyes of its employees of building morale, camaraderie and social capital. Many organizations have outstanding work teams, but they are often islands in an corporate sea of distrust and contention. More rare is an enterprise wide feeling of community and affinity with each other.

The winner, First Choice Dental is a text book example of social cohesion in the workplace. Its workers are ùnfailingly upbeat and enthusiastic about their employer. They consider each other family and thrive in an egalitarian culture and management style. Everyone is treated as an equal. Most telling say staff is that the doctors do not act as if they are superior or more important than anybody else.

Most Meaningful

This award went to the organization with a purpose and mission that resonated strongly with employee beliefs and values.

Corporate social responsibility is taken very seriously today in many companies. But in most cases, being a good corporate citizen is an adjunct to the core business. This award however honored organizations whose mission and purpose fused both a commercial and a broader societal or individual purpose that reflected deeply held principles and values of employees.

Madison Environmental Group and Community Car won this award because of how well it melds its business mission and purpose with a bigger social and environmental agenda that connects deeply with the personal values and ideals of its workers. Everyone in the organization feels strongly about its mission to bring people together by helping them to realize that they have a common interest in and shared caring about their community and environment. Says CEO, Sonya Newenhouse, "It's not just ideas on a piece of paper. You're making a connection."

Most Balanced

This award was given to the organization that best provided employees with the flexibility, programs and support to achieve sustainable work-life balance and quality. The AIDS Network provides its workers with a harmonious physical workspace and lots of flexibility to work the hours and locations that fit each staff member’s lifestyle, and most importantly, an workplace environment that allows workers to meld their personal and professional pursuits and priorities in ways that make them mutually reinforcing.

For the full stories of each of these outstanding organizations, be sure to check out Madison Magazine's coverage of the awards winners or view video reports.

Every Organization Can Become A Great Place to Work

The city of Madison is a great place in many ways, but it has one more thing to be proud of – some incredible human-centered places to work. Each one sends the message and acts as an example for other organizations regardless of their industry, business or size – that any employer can be a great place to work if it develops the same attributes as the Madison Magazine Best Places to Work Awards winners. Creating a great place to work is worth the effort - it shows in your employees, your customers and your business results.

What Color is Your CEO’s Parachute?

2006-03-01T08:54:00.000-08:00

Okay, before I get all lathered up about the latest outrages in the CEO suite, let me assure you that I recognize completely that the majority of top executives are honest and good people trying their best to lead their organizations to success. And that the CEO's I will be talking about represent the extreme of executive limit pushing. Still, these are people who work the system to their great benefit and represent a type of leader that can easily lead even the most successful company to ruin.

These executives are not criminals, nor are their employment deals considered unethical by regulators (at least not yet). But make no mistake - to the average Joe and Jane toiling throughout corporate America, they are jerks with a capital ‘J’.

At least four kinds of "Jerks" can be observed prowling about the CEO suite:

The Slick Messiah

These are leaders with superb platform and elocution skills who are so charismatic that they mesmerize their boards and employees and have Wall Street and the media eating out of their hands. But at some point their mystique wears off.

The most recent high-profile example of this type of CEO is Carly Fiorina the ex-head of Hewlett-Packard. Carly was a controversial figure within HP throughout her reign, er...I mean tenure, who achieved rock star status with the media and apparently other executives. According to a Boston Globe article published last February:

“When Fiorina, for example, joined HP as chief executive in 1999, she knew she had to re-energize the old computer company or lose ground to nimble competitors. She engineered the 2002 acquisition of Compaq Computer Corp. for $24 billion but it backfired. Said Judy George, chief executive and founder of home furnishings retailer Domain, who sits on several boards: 'She knew the game, and I loved that she took the risk. I love that she walked away with $21 million.'"

Excuse me – did you say risk? What risk? That her ‘bet-the-ranch’ deal would fail and she would have egg on her face and lose her job? Twenty-one million (plus pension and other perks) is one hell of a safety net and goes a long way in the wound licking department as well.

The Sell-Out Swami

In the interest of gender equal time - Mike Capellas, the former CEO of Compaq who co-engineered the ill-fated HP-Compaq merger was less charismatic than Carly but just as loose in taking high stakes risks that lined his pockets but left scores in unemployment lines. He left the combined firm with a overstuffed packet well before the post-merger integration was completed to join Worldcom (for a hefty salary) as CEO to clean up the mess made by Bernie Ebbers. Slick Mike immediately changed the company's name to MCI and then sold it to Verizon a few years later, raking in a couple more piles of gold in the process.

But Carly and Mike are small time operators compared to Jim (King) Kilts who orchestrated the sale of Gillette to P&G last year. Kilts stands to walk away with $150 million plus as his payoff for doing the deal. Even if P&G's stock price takes a huge hit, he is still likely to make over $100 million. Not bad, huh?

And just this week, it was announced that Wachovia’s vice chairman Wallace D. Malone Jr. is stepping down just 15 months after selling SunTrust Bank (where he was CEO) to Wachovia. His platinum parachute is reported to total a Kilts-like $135 million. Combining Gillette's products with P&G's global marketing and distribution system or SunTrust’s customers and operations with Wachovia’s may be compelling strategies to Wall Street wonks, but Kilt’s and Malone’s platinum parachutes are suspiciously difficult to ignore as a drivers of these sell-outs, er...I mean deals.

The Mahogany Machiavelli

The Phil Purcell soap opera that played out at Morgan Stanley in 2005 was as ugly as it gets. Following the merger of Morgan Stanley and Dean Witter in 1997, Purcell angled himself into the CEO role and ruled like a corporate version of Kim Jong Il, obstinately pursuing a failing synergy strategy as the company lagged and fell behind its rivals. Rather than admit a mistake and change course, Purcell instead engaged in inside power politics – stonewalling his critics, stroking his board cronies and pushing all opposition out the door. Amazingly, Purcell forced so much high-profile talent to leave the firm that shareholder and media pressure ultimately made him walk a gold-inlaid plank to the tune of $44 million.

The Bankruptcy Bloodsucker

Glenn Tilton of UAL Corporation, parent of United Airlines was recruited from the oil industry allegedly to save the company. He took it into Chapter 11 bankruptcy three years ago, and has slashed and burned pay, benefits, pensions and people ever since. A reorganized UAL is expected to emerge soon from bankruptcy with a new stock offering. The bankruptcy court is allowing company management to receive about an 8% of the newly floated shares. Tilton’s cut is estimated to be worth about $40 million (this does not include the millions he’s already received in salary). Not exactly chump change for destroying a company in order to save it.

Who's At The Controls?

Each of these situations is disturbing enough in its own right, but when we think of the challenges that global competition pose to the American economy and workforce, it's hard to feel any sense of comfort in knowing that these sorts of leaders may be making critical decisions that affect us all. Can they be trusted for example to invest in this country's human capital and the communities in which they do business? Or will they instead maneuver, wheel and deal, stonewall, sell out and seek only short term gains (for themselves)?

There is a world of difference between leaders who are deal-makers and operators and those that are stewards of the total asset and representatives of the interests of all stakeholders. The former, fly by the seat of their pants, confident in the knowledge that regardless of the outcomes of their decisions, they can gently glide to their next gig or a country-club retirement hanging from a golden or platinum parachute. The latter however, wear the same flimsy white parachutes as everybody else.

What color is your CEO’s parachute? If it's gold or platinum, maybe you should bail out first before they do.

A Wry Look at Boomers

2006-02-03T06:10:00.000-08:00

I don't normally read the columnist Ellen Goodman, but I did today and really got a chuckle out of her column in this morning's Boston Globe.

She presents a humorous angle on the schizophrenic view of the boomer generation's imminent shift to retirement and its implications for business and society. I strongly agree with her assertion that people make too much of age and generational differences and that it is not really possible to meaningfully characterize an entire generation - after all as she points out polar opposites such as Bill Clinton and George Bush are of the same generation.

Which reminds me of a generational quirk in America's popular culture that I find slightly mean-spirited. For some reason we love to build up the image of people, so that we can knock it down. This behavior plays out strongest in the entertainment field where for example today's musical star becomes tomorrow's object of ridicule, at least to the contemporary generation. The Rolling Stones present an interesting example. To people of my generation growing up in the 60's they are legends. Yet to many younger people they are an odd freak show type of spectacle - old geezers still trying to get it on. Although I must admit Keith Richard at any age seems the perfect specimen for a freak show.

Harnessing the Passion and Skills of the Emerging Media-Savvy Generation

2006-02-03T04:54:00.000-08:00

You’d have to be living someplace as remote as Easter Island to escape the networked, digital and media-saturated world in which we now live. Yet many corporate executives and front-line managers have been slow to awaken to the implications of the omnipresent new media. Even fewer are actively leveraging the opportunities it’s creating to change the workplace for the better. So far, there has been little downside for executives who have ignored this trend. But that’s about to change – new and rapidly proliferating media and long-predicted demographic changes are combining in ways that will create a seismic shift in the landscape of the workplace.

A Media-Savvy Generation of Workers is Emerging

It is now possible for every person within (and outside of) organizations to instantly connect with everyone else via a smorgasbord of electronic communications devices and options – cell phones, SMS, IM, iPod, iTV, Internet, PC gaming, console gaming, multiplayer gaming, broadband access. Masses of information – databases, articles, books, videos, TV programs, music, educational material – indeed any information or entertainment in any form is or will soon be digital. This means people can access these resources anytime, from anywhere and in whatever form they wish.

How are all these media options affecting the workplace? Well for one thing there is growing evidence that a “media-savvy” generation of workers is coming to the fore. At first glance this appears to be a trend rooted in young people. According to the latest usage figures from the Pew Internet & American Life project, 77 percent of the people between the ages of 13 and 29 use the Internet on a regular basis. What's more, people between the ages of 13 and 24 live in a seemingly continuous state of media interaction. Every week they spend an average of 16.7 hours online, 13.6 hours watching television 12.0 hours listening to the radio and 7.7 hours talking on the phone.

While this behavior may be prevalent in young people growing up with interactive technology and video gaming experience, it is also centered in media experience and therefore spans generations. According to the Entertainment Software Association, fifty percent of all Americans play video games, spending approximately seven hours a week glued to some type of screen. But its not just kids – 43% of 18-49 year olds play video games.

The presence of many of these media-savvy workers in the workplace is being felt. Regardless of their age, these individuals are cut from a different cloth than their traditionalist peers. They are hungry for self-directed learning, favor performance-based rewards, have very specific short-term expectations and goals and want more technology enabling at work not less.

Play to Learn

According to Henry Jenkins Director of Comparative Media Studies at MIT and cofounder of the Gaming and Learning Research Initiative, The Education Arcade, playing video games has positive learning consequences. He asserts that gaming promotes rapid decision making on limited information, exactly what’s demanded in the increasingly real time workplace. Multi-player games can actually enhance social skills such as the ability to collaborate by requiring players to work with other people over distance, to share knowledge, to resolve disputes quickly, and to stay on task – all critical skills in the emerging global and virtual workplace.

Jenkins believes games can spark learning in the corporate setting, something that is desperately needed. According to research firm IDC, companies spend close to $24 billion on e-learning capabilities and programs but many executives question the pay off in improved business performance resulting from this investment.

According to John Beck and Mitchell Wade, authors of “Got Game: How the Gamer Generation is Changing Business Forever”, people who play video games are developing all the critical skills needed in today’s world of pervasive interactive media. Games help players to learn to become really good at what they do by mastering the skills and the mindset to perform at peak. Players learn that practice pays off. Games teach that failure isn’t the end of the world, in fact, trial and error is the best way to learn and advance and that persistence pays off. And they promote global perspectives by teaching people to bond around shared experiences not simply national or cultural backgrounds.

Progressive organizations are already introducing gaming technology to support their learning initiatives. Companies like IBM and Nokia are using gaming to test workers' knowledge of rules and regulations. Pfizer has built a simulation of its drug-development process that is used to train new recruits. PricewaterhouseCoopers has created an elaborate simulation to teach novice auditors about financial derivatives. And of course, pilots have been trained using flight simulators for years, and simulators are now used by soldiers and surgeons too.

Got Game Yet?

Despite these inroads in using new interactive technologies, many companies remain trapped by outdated thinking and obsolete methods. The learning and performance strategies that worked in traditional corporate settings are woefully ineffective with the emerging media-savvy generation. In order to catch up, many organizations will need to make serious attempts to understand the emerging media-savvy generation – what motivates them, what they expect in the workplace, what they need to excel at their jobs, how they learn and how interactive media can be used to supercharge their performance and learning. Harnessing the passion and skills of the media-savvy generation will require significant changes in the mindsets of managers and the culture of corporations. So if you’re a manager wanting to engage the emerging media-savvy generation, here’s one quick recommendation: buy an Xbox - it’s time to get game.

Are You Ready For The Next Workplace Revolution?

2006-01-05T08:50:00.000-08:00

You say you want a revolution... Well, you know... We all want to change the world... You tell me that it's evolution... Well, you know... We all want to change the world... But when you talk about destruction... Don't you know that you can count me out?

“Revolution”, John Lennon and Paul McCartney, 1968

December 8 was the 25th anniversary of John Lennon’s death but his words about the destructive aspects of revolutions echo as strongly as ever. Indeed the contemporary workplace in the midst of revolution. Technology and globalization are wreaking havoc – sweeping up jobs and workers in their destructive wake. Practices such as reengineering, automation, outsourcing and offshoring have combined to relentlessly squeeze out productivity gains from labor and ruthlessly eliminate jobs and workers. These are painful and depressing trends for the majority of workers not securely ensconced in the executive suite.

The New Workplace According to McKinsey
But take heart. New research by those Barons of the Boardroom at McKinsey & Company offers new positive insights on job growth in developed countries. While their research confirms that many jobs have disappeared, they point out that most of these involve low-value and relatively low-paying work. More encouraging, is that new jobs are being created. Many of them are high-value and high paying.

Professor Joseph Schumpeter would be surely smiling at this report. As he wrote in his 1942 book, “Capitalism, Socialism and Democracy”:

"The fundamental impulse that sets and keeps the capitalist engine in motion comes from new consumers, goods, the new methods of production and transportation, the new markets, the new forms of industrial organization that capitalist enterprise creates. The same process of industrial mutation - if I may use that biological term - that incessantly revolutionizes the economic structure from within, incessantly creating a new one... This process of Creative Destruction is the essential fact of capitalism. It is what capitalism consists in and what every capitalist concern has got to live with."

Out With Routine Jobs
Yes, creative destruction apparently is alive and at work in the economy today according to the paper, “The Next Revolution in Interactions”, just published in the McKinsey Quarterly. The authors state, “Companies in many sectors are hiring additional employees for more complex interactions and fewer employees for less complex ones.” What this means is that jobs like designers, nurses and front-line managers that require lots of ‘interactions’ – tasks demanding great amounts of expertise and judgment to perform - are growing at a greater rate than those requiring routine ‘transactions’.

Tacit interactions are at the heart of jobs in which people have to think and make decisions and take actions based on their deep expertise or “what economists call tacit knowledge”.

New Complex Jobs Are Growing At A Faster Rate
To support their contention, the authors offer several statistics drawn from their study of the US labor market since 1998. They claim for example, that since that time, the number of US jobs that include tacit interactions as an essential component has been growing 2 ½ times faster than the number of so-called ‘transactional’ jobs and three times faster than employment in the entire economy. According to the authors, 70% of all US jobs created since 1998 – 4.5 million jobs require judgment and experience. These jobs make up 41 percent of the labor market in the US and the growth is the same in most developed nations.

Another interesting insight from this work is how different industries and job categories are being affected. While all industries employ tacit workers, this type of work dominates fields like health care, financial services and software. As time goes on, this trend will steadily increase its impact on traditional industries such as retail, manufacturing and transportation. Transformative and transactional jobs in these sectors will gradually be automated or eliminated and replaced by tacit ones.

Are Managers Ready?
The McKinsey authors predict this shift toward organizations doing complex interactions will cause a revolution in how companies organize and operate. Raising the performance of workers undertaking complex, high value work will be the critical management challenge. Companies have perfected automation and labor substitution. They are quite good at process streamlining and standardization to drive efficiency and productivity. Few however, have a clue how to improve and sustain the productivity of high-value knowledge workers. For the past two decades, many managers could get away with half-hearted and clumsy attempts to nurture knowledge workers because there were relatively few of them and so many juicy cost-cutting targets on which to focus.

But those days are coming to an end. If McKinsey’s predictions are correct, this class of implicit knowledge worker will increasingly dominate organizations. The good news is that companies that crack the code on how to make them happy and productive will gain significant competitive advantages that will be very difficult to copy.

The burden of accomplishing this falls squarely on the shoulders of managers. They will need to learn how to shift from automating or eliminating lower-skilled or routinized labor to improving the performance of highly-skilled labor. This is no mean feat and the majority of managers are not prepared for this shift nor will many be capable of making it.

How many managers in your organization are prepared to lead this next workplace revolution? Is your organization dominated by downsizers, outsourcers and reengineers or people developers, collaborative experts and inspiring leaders? The answers to these questions could well determine whether your workplace revolution proves to be ultimately destructive or creative. Let’s hope that John Lennon was right when he sang in the refrain to “Revolution”:

Don’t you know it’s gonna be... Alright?

GM's IT Outsourcing Strategy: Rad Ride or Creaking Clunker?

2005-12-20T09:01:00.000-08:00

The media loves big deals. Doesn't matter what they involve - mergers, outsourcing, star athlete contracts, movie box office - whatever. If the numbers are big enough they will write about the deal and undoubtedly find a way to assert that the mega numbers mean ground breaking strategies and tactics are somehow involved.

Often this is nonsense and one need only be patient for it to be exposed as such. Take the AOL-Time Warner merger for example. The media fell all over themselves to write about this at the time of announcement only to tear it apart a couple years later when the numbers-induced intoxication of the deal's size had worn off.

GM's Spotty IT History
The numbers game is alive and well in the IT outsourcing sector and few can resist it. The latest mega-deal to come down the pike is none other than GM. Lest we forget, back in the ancient eighties the company made a bold foray into the IT area by acquiring a computer services provider -Electronic Data Systems - and turning over its computer operations to the company.

It also brought a plain-spoken Texan by the name of Ross Perot, the founder and CEO of EDS, onto its Board of Directors. The results of this gambit were shall we say 'disappointing'. GM ended up paying ol' Ross a gazillon bucks to take a hike because they got tired of the fuss he kept making about how poorly run the company was. GM ultimately spun EDS off but awarded them a long-term contract for a huge chunk of IT services.

This contract is now about to expire and outsourcing providers and industry consultants can hardly contain their excitement over the prospect of GM awarding the $15 billion it has to spend on IT services.

Now Outsourcing's Latest Sugar Daddy
A recent article in Business Week - "GM's Way or the Highway" asserts how GM is taking a new and innovative approach to awarding and managing outsourcing IT outsourcing contracts. Ralph Szygenda, GM's CIO, is portrayed as the IT industry's biggest Sugar Daddy. After billions of dollars spent and years of frustration with EDS, Szygenda is portrayed as someone about to reinvent how companies contract and manage IT outsourcing. According to the article:

"Under Szygenda's scheme, the company retains more control, breaks big contracts into smaller pieces, and imposes standard ways of doing things that mean one supplier can quickly pick up where another leaves off. 'This is revolutionary,' says George F. Colony, president of market researcher Forrester Research Inc. "If it works for both sides, in a couple of years you'll see a lot of other companies doing it."

I'm no fan of George Colony (he onced predicted 'smart' tubes of toothpaste that would reorder themselves when they were nearly empty - just what the world needs). But in this case, he is right when he notes that if the approach works for both sides you'll see lots of companies emulating it. But revolutionary? I'm not so sure. GM's approach appears to build on the lessons learned from an earlier IT outsourcing pioneer - British Petroleum Exploration (BPX)

BPX Tried This Before
About 10 years ago, BPX attempted a similar multi-process, multi-vendor approach. John Cross, then CIO of BPX wrote an article describing their outsourcing strategy that published in Harvard Business Review! It was also ballyhooed as 'revolutionary'. Trouble was it didn't work. It was simply too complicated to coordinate across multiple vendors on a global scale. Despite professions of partnerships and 'market-based and performance-benchmarked' contracts, the providers were unable to act in the integrated and seamless manner envisioned when the deals were signed. Like GM, BPX thought it had the problem licked when it required the competing providers to attend a one-week brainstorming and negotiation marathon in which vendors were encouraged to collaborate to address BPX's requirements and to develop joint bids for an integrated and seamless service.

An in-depth description and analysis of BPX's outsourcing alliance management experience is contained in a scholarly work by Tom Kern and Leslie Willcocks entitled, "The Relationship Advantage", (Chapter 5, pp. 172-216) published in 2001 by Oxford University Press.
Despite it innovative aspects, BPX's multi-vendor alliance was ultimately scrapped. According to Kern and Willcocks:

".... the increased costs of coordination and the difficulties of making competitors work together as partners was found to be disadvantageous to the otherwise successful approach. Faced with recontracting as the Alliance neared its five-year contract completion point, BP decided against the approach as it had proven to be too management intensive and complex...."

The company decided to further break up the contracts by region and award them to multiple vendors. It also took more responsibility for overseeing and managing the outsourced services and the relationships with each of the vendors.

Can GM Learn From the Experience of Others?
GM's approach seems to have adopted the learnings from the BPX experience with outsourcing to multiple vendors. It claims that it will retain control over the outsourced processes by managing them with internal staff. But for this to work, GM needs to have smart managers who understand how to make IT processes hum and multiple vendors dance together like the Rockettes.

Like BPX it is seeking shorter-term contracts of five years. This is supposed to "keep service providers on their toes". This remains to be seen - BPX signed five-year contracts and still struggled with the performance of its vendors.

GM believes that by using several suppliers it can "play them off against each other", meaning the encumbent vendors will be pressured to perform by the fear of replacement. BPX tried the same thing and even included a contract clause that allowed it to benchmark vendors and replace them if a competitor could beat their performance. But it never invoked this clause. It's belief that a replacement vendor could somehow be easily 'plugged in' to the arrangement with the other suppliers was also questionable.

Regarding this last challenge, GM believes its ability to easily switch vendors will be further enabled by imposing a single set of operating rules for all providers which any new vendors would be required to adopt. Perhaps, but this means the rules were sensible and effective and that there is a process in place for bringing the new provider quickly up to speed. This is plausible in theory but remains to be proven in practice.

Let Us Pray
So there we have it, GM, the beleaguered giant, is taking some big risks to fix what it rightly sees as some of the fundamental weaknesses of outsourcing. GM is right to use its clout in negotiating deals but if it pushes too hard on its outsourcing providers it could find itself faced with a revolving door of poor performing outsourcing relationships. It needs to create positive incentives for vendors to go the extra mile - to take risks, innovate and share knowledge with GM and each other. Compliance-heavy contracts however are not known for stimulating such behavior on the part of outsourcing providers.

I hope GM succeeds in its approach but I fear it could be headed for trouble. Indeed, Ralph Szygenda, a brilliant career CIO and IT management innovator - seems to realize just how risky this outsourcing gambit could ultimately be. He is quoted at the end of the Business Week article saying, "Pray for me". I will Ralph - something tells me you are going to need it.

Here's an update as of Feb. 2, 2006 - GM has reported broken up it's IT operations into 40 pieces and has begun awarding several contracts. EDS claims to have been awarded a big chunk of the business (4 out of 15 billion - okay big but only about 25% of the total awarded).

Who Pays for Wal-Mart’s Low Prices?

2005-12-12T07:49:00.000-08:00

Low prices. Always low prices. When it comes to consumer goods,

America

is addicted to them. And with its one-stop-shop product selection and fanatical commitment to low prices, Wal-Mart is the biggest pusher around. We like our “stuff” cheap, and Wal-Mart is the place to get it.

The company that many Americans hate to love is getting loads of unfavorable attention lately. Union and activist groups have successfully derailed its growth plans in certain parts of the country. And a new documentary film casts the company in a decidedly unflattering light. The title of Robert Greenwald’s, “Wal-Mart: The High Cost of Low Prices” suggests, there is more to the cost picture than what one sees on the checkout receipt.

Driving Down the Cost of Employees
Wal-Mart’s single-minded focus on driving out costs applies to everything it does including, as we are now learning, how it treats employees. Recently, a confidential internal memo prepared by a team led by its head of employee benefits and sent to Wal-Mart’s Board of Directors got leaked to the media. The memo presents a rare inside look at the company, and in particular, how it views the tradeoff between costs, employee satisfaction and public reputation.

Not surprisingly, Wal-Mart sees labor as a growing cost to be rigorously controlled. And its juiciest target is health care – the company’s insurance costs are rising at a substantially higher annual rate than its sales (15% versus 11.9%). Refuting its skinflint image, Wal-Mart claims it provides coverage to a greater percentage of its employees than other retailers - 81% of Wal-Mart employees are eligible for health insurance while the retail industry average is 56%. But because it’s expensive – only forty-eight percent of its employees are actually enrolled in its health insurance program. The retail industry is worse though – an average of only 36% of workers are enrolled.

Wal-Mart would like to get more credit for the benefits it already offers workers but admits its health care offering is “vulnerable to at least some of their (critics) criticisms, especially with regard to the affordability of coverage and Associates’ reliance on Medicaid.” The memo acknowledges that 24% of employees and 46% of children of employees have no insurance or are covered by government Medicaid programs.

Is Working At Wal-Mart Hazardous to Your Health?
There’s more sobering news about Wal-Mart’s workforce: “Our workers are getting sicker than the national population, particularly with obesity-related diseases. For example, the prevalence of coronary artery disease in Wal-Mart’s population grew by 6 percent compared to a national average of 1 percent, and the prevalence of diabetes in our population grew by 10 percent compared to a national average of 3 percent.” These statistics are sadly ironic given that the company is the country’s largest seller of the kinds of cheap unhealthy food whose consumption is directly linked to these medical problems.

The memo goes on to note the negative impact of its workers' poor health on Wal-Mart's bottom line. "The cost of an Associate with 7 years tenure is almost 55 percent more than the cost of an Associate with 1 year tenure yet there is no difference in his or her productivity"; it continues, "Most troubling, the least healthy, least productive Associates are more satisfied with their benefits than other segments and are interested in longer careers with Wal-Mart.”

Cheap Disposable Employees
Instead of proposing initiatives to help these workers become healthier and more productive, the team calls for redesigning Wal-Mart’s benefits package to better appeal to younger, healthier workers who are paid less and have shorter tenures. It hopes to weed out expensive, unhealthy workers by requiring more rigorous physical activity for jobs like cashier. Should anyone be surprised that a company that has built its business around selling cheap disposable products wants a cheap disposable workforce?

It's Past Time to Reform the Healthcare System
Wal-Mart deserves to be criticized for these types of initiatives but the situation they and other businesses face illustrates how urgently our system of health care funding and delivery needs reform. The premiere quality of our healthcare system is often touted but what good is this if fewer and fewer people can afford it? This is not a new problem and it’s getting worse - when are we going to finally do something about it? Who in business and government is courageous enough to tackle the challenge of making healthcare widely available and affordable? What kind of country – let alone business and workplace environment – are we going to have if large and growing numbers of people cannot afford health care?

I’m not letting Wal-Mart off the hook – it certainly can and should do more. For example, you would think it would use its buying clout to negotiate the best health care deal for workers of any company in the U.S. But there is no denying that our biggest company and many other large corporations are struggling to keep pace with rising health care costs for their workers. Healthcare is the hot potato that no one wants to hold – not businesses, not government, not individuals. We should be collectively trying to solve this problem, instead of seeking to shift the burden to the other guy. Several state governments are now attempting to come to grips with this problem because they, and ultimately the tax payers/voters (us) must foot the bill for the growing number of people who can’t afford health care.

Just as Wal-Mart is evaluating the tradeoffs that best suit its interests, Americans need to start thinking about the bigger societal tradeoffs between price, individual quality of life and collective welfare. What good are businesses with “always low prices” on toothpaste if it means that neither they nor their workers can afford the cost of dental insurance? Are we really in favor of low prices at all costs? What kind of communities, workplaces and environments do we want? It is time for everyone – politicians, business leaders, workers, citizens – to get our heads out of the sand and rethink our priorities. Our health – physical and economic – depends on it.

Hey Wall Street Journal - Stay Out of the Kitchen!

2005-11-25T09:17:00.000-08:00

I hate it when business publications take it upon themselves to diagnose issues of culture, politics, religion, art, etc., from a business viewpoint. In my opinion, this is a case of sticking your nose in where it doesn't belong.

Last weekend I accidentally received a copy of the Weekend edition of the WSJ. The cover story of its "Pursuits" section was entitled, "An MBA Thanksgiving". I thought it was surely a spoof, but upon reading through the article it was hard to tell. The piece contained too much tongue and not enough cheek. It's satire was tepid and the focus on practical advice was more serious than humorous. It left me to conclude that at an MBA Thanksgiving, turkeys get to design the dinner not just star on the menu.

Reading through the absolute nonsense presented in this article was enough to put me off even the best of Holiday dinners. Everything about it made my blood boil. The fact that preparing holiday dinners is seen as a 'problem' rather than a pleasurable event. That preparing food is a chore to be made as easy and efficient as possible rather than an act of joy, love and family bonding. That preparing and cooking a feast is a 'process' that needs to be 'reengineered' rather than a ritual that should be protected and cherished at all costs!

This kind of domineering projection of the business/corporate ethos on everything and anything really puts me off. It so happens that I have an MBA, but I am also an avid home chef and food and wine enthusiast. If you've read any of my other blog entries you will know that I do not look kindly on the process management/reengineering zealots that prowl the corporate environment. While these concepts have their place in business, they often do more damage than good in my view. And they certainly have NO place in the home kitchen, especially applied to the one day of the year that the majority of Americans make food and dining together the focal point of their lives.

The WSJ decided to call in the killjoys from five consulting firms, Bain and Company, PricewaterhouseCoopers, The Boswell Group, Katzenbach Partners and The Monitor Group. Their analysis and suggestions vascillate between the mundane and uncreative to the outrageous and ridiculous.

Bain & Company talks about a California-based fast food chain In-N-Out Burger as a model of best practices that the Thanksgiving chef should adopt. Right... In-N-Out - does this refer to the speed at which one can purchase food there or the digestive effects of eating it?

PricewaterhouseCoopers provides some half thoughtful although largely impractical advice centered around not inviting "family members known as troublemakers simply out of guilt or obligation". Nice idea but how many people are prepared to endure 364 days of yearly aggravation as a result of omitting overbearing, pain-in-the-butt relatives from the guest list one day a year?

The Boswell Group (not sure where they dug these guys up), a firm that specializes in applying psychoanalysis to businesses and their leaders recommends that Mom's need to be more controlling at Thanksgiving dinner. "When you have a clear task at hand - in this case getting a meal on the table - creativity is really counterproductive". The implication is that Mom should simply dictate the menu and make no pretense of trying to placate or satisfy warring relatives. I can hear the legions of people with a controlling matriarch at the top of the family hierarchy saying, 'HELLO - welcome to the real world.....".

Katzenbach Partners jumps in with both feet, advising an 'employee empowerment' stratgy and 'pride-building'. "Give your helpers a chance to exercise their judgement and truly run their own tasks." They recommend taking a page out of Southwest Airline's book by giving crews "a great deal of latitude to create a quirky, fun experience for customers". Are you kidding me - taking advice from an AIRLINE about how to prepare a quality meal? Heck, Southwest doesn't even serve food!

Michael Porter's Monitor Group weighs in last. It recommends segmenting the market to see what different groups of guests want and creating products (in this case dishes) that please each of your audience groups. Then, find out what each segment wants and make sure there is something for every segment at the dinner. This bit of advice contradicts the 'complexity reduction' theme of the article. But Michael Kinst of Monitor, to whom the article refers as a "foodie who thinks cooking might be a good second career", offers a useful tip for the culinary clueless - buy turkey wings and thighs and use them to make your gravy on Wednesday night. He claims this will save the cook from a distracting and time-consuming task that "can make all the difference in your product perception". My advice to Michael - stay in management consulting.

The article concludes wih three 'reduced-complexity recipes' for dishes named 'rapid-results sweet potato soup', 'overall-equipment efficiency onions and peas' and 'guest-sourced sausage and apricot stuffing'. Too-bad they didn't include any remedies for buzz-word induced indigestion.

The Call of the Valley

2005-11-17T05:48:00.000-08:00

Silicon Valley is critical to America's innovation-led economy. Tech leaders meeting there warned that we are losing our edge and exhorted the government to do something about it. This is interesting and ironic coming from free-marketeers - all the more reason we should listen to what they have to say. An article in Business Week reports on the Nov. 16 summit in San Jose, Calif., hosted by the bipartisan political-action network TechNet and moderated by public-television personality Charlie Rose. Here are a few excerpts and my take on them:

The need for broadband. Venture capitalist John Doerr chides the government for failing to agree on how to promote much faster broadband to the home. Jerry Yang, co-founder and chairman of Yahoo! (YHOO), points out that the U.S. remains far behind some Asian countries in broadband. Reed Hastings, CEO of the DVD-rental service Netflix (NFLX) fears the next phase of web services won't arrive here until our broadband networks are upgraded.

These are all valid points. But who is going to pay for implementing infrastructure in US? We've been deregulating our telecommunications industry since the Ma Bell divestiture in 1984. At that time we had the most advanced telecommunications network in the world. Now we don't. What happened? I thought free markets were supposed to spur innovation. Why is it that we have the most deregulated telecommunications markets in the world, yet we are now BEHIND the leaders in implementing the latest technology advances? We deregulated because it was supposed to keep us ahead - what went wrong? I worked for tech consulting firm Arthur D. Little at the time of the AT&T breakup. I remember one expert predicting that the U.S. would eventually lose its technological lead in communications as a result of deregulation. It appears he was right.

Not enough of the right talent. John Chambers of Cisco and others are concerned that "we", meaning the government, have cut back our R&D spending and that we are not doing enough basic research. But what about the commercial sector? They've been cutting back even more - they won't make long term investments in basic R&D but they expect the government to do it.

They also rail against immigration limits that they believe are beginning to drain the pool of talent in the U.S. America needs to be a magnet for the best and brightest minds from all the world to not only come for education but to stay and contribute to our economy. This is a fair enough point. The public sector has big role in making this happen. But what about Silicon Valley companies - what are they doing?

The unpopularity of science and math in America. John Chambers of Cisco pointed out that if top talent cant' stay here then companies will have to go overseas to hire them (and they already are). "Rose responded more passionately than he did with just about any other question he asked: "You guys are leaders," he nearly bellowed. "Are you doing enough?"

Go for it Charlie. Apparently the leaders offered little more than mumblings and generalisms about what the government can do to increase the pool of engineering and technical talent in the U.S. But they blamed the shortage on the mindset of American society at large that apparently discourages people from going into scientific and math-based careers. Gee, I guess these companies are doing all they can to make people want to go to work in the industry and for their organizations. The fact that they commit to no one or nothing for more a quarter at a time, I guess has nothing to do with why some people may not be attracted to working in their industry.

How to respond to China. According to technology guru Esther Dyson, "The country (US) has grown lazy and complacent...We've created a country where we've outsourced the intellect to other countries." Instead of trying to figure out how to beat the Chinese, she said, we need to try to "beat ourselves and help the Chinese" succeed, so that the U.S. has that huge market to sell to, she said."

The differences between how we are responding to China today and how we reacted to Japan in the 1980's are stark. Japan was viewed as a competitive threat. China doesn't appear to be. American companies have knocked each other over to get a foot-hold in China to both source product and to sell it. We did neither with Japan - although we couldn't because it was so closed to outsiders. China on the other hand is relatively wide open. Okay, that's one opinion.

Rose asked an excellent question about whether the concern about China's rise was as mistaken as similar concerns about Japan 20 years ago. "Japan was very different," responded Doerr, who noted that Japan's economy was much more closed. Moreover, the U.S. in fact did respond, with initiatives such as the Sematech chip-manufacturing consortium that strengthened the domestic semiconductor industry." Nothing of the sort seems to be happening now.

The innovation solution. In the end, the executives all seemed to agree that the only solution is to continue to innovate. Google was on everyone's lips as an example of the kind of pioneering attitude more companies need to adopt for the U.S. to stay in the lead.

These kinds of statements from executives anger me because they illustrate how business executives wash their hands of all responsibility and obligation to any country or community. "Can't do anything unless we can make the case to shareholders". True enough, but it still burns me up. What made this country an economic power was the freedom and support to innovate. Free markets don't seem very good at promoting long-term investment. Governments and educational institutions are the key players. And with this current crowd in Washington, I'm worried.

Who Moved the Workplace?

2005-10-26T11:18:00.000-07:00

It was bound to happen. In a country that invented take out food, that is in love with automobiles and cruising down the highway and that is perpetually in motion, it was inevitable that work and indeed the workplace itself would become mobile as well. Over the past five to ten years, the place where knowledge work happens has shifted from primarily office type facilities to literally anywhere – on your back deck, in a subway car, walking down the street or of course, hanging out at a coffee bar.

Many people, especially the technology-savvy among us (exclude me), take this fact for granted. Sure people have been working at home or on trains and planes for decades. But until recently most work outside the traditional office setting involved activities that were peripheral or certainly not critical - mostly people catching up on calls, e-mail or administrative tasks. Today however, because of advances in information technology and communications, all manner of high value work can be performed routinely almost anywhere. This means that people don’t really have to ‘go to the office’ unless there is a good reason. With the high price of fuel, hassles of commuting and general desire for more balanced work and personal lives, pressure is building to accommodate work that takes place wherever workers happen or want to be.

A recent survey released by the International Telework Advisory Council (ITAC) http://www.workingfromanywhere.org/ and The Dieringer Research Group demonstrates the extent to which flexible and mobile working is now happening. They conducted a national survey this past summer of U.S. workers to find out where people work.

Respondents were asked to indicate up to 13 locations where they conducted work during July. The survey found that among the estimated 45.1 million Americans working from home—known as telecommuters—26.1 million do so at least once a month and 22.2 million at least once a week.

Other results from ITAC’s survey show that respondents worked at an average of 3.4 locations outside their employer’s offices. These included:

• 24.3 million working at a client’s or customer’s place of business. That’s a lot of people working onsite with customers. Relationships are the grease that keeps the wheels of business spinning and there is nothing like face-time to build good relationships with customers. I wonder however, how many of these people prefer working on their client’s premises to their own offices because they are better places to work. Or how many clients would prefer their vendors/suppliers worked somewhere else, instead of taking up expensive space in their own facilities.

• 20.6 million working in their car. One shudders to think how many of these people are working in MOVING cars while DRIVING. The hazards of talking on cell phones behind the wheel are well known. The thought of people using computers or PDAs as they barrel down some highway on their way to wherever is scary!

• 16.3 million working while on vacation. What a sad commentary on the state of American workers. It’s bad enough that we take the least amount of vacation of any country in the developed world – must we continue working while we’re on holiday as well? Although given how many hours people seem to be putting in these days, it's surprising there were so many people on vacation in the first place.

• 15.1 million working at a park or outdoor location. It should be noted that the survey was administered in summer time (July 2005), so this may be an inflated number. Still, I wonder how many managers would be comfortable with their staffs working under a tree somewhere or at the beach.

• 7.8 million working on a train or plane. This figure seems a bit low to me. But given the dismal and tortuous experience of business travel today, perhaps many workers are opting for a little entertainment and relaxation to reduce the inevitable stress and hassles instead of working while in transit. Indeed, some people might even argue that traveling on business IS working.

The ITAG's survey findings suggest that tens of millions of Americans are now routinely working everywhere and anywhere but the traditional office. In the future, companies and people will be driven by strong cost and productivity pressures to adopt even more flexible and mobile working. Real estate is expensive and there are substantial savings to be had from reducing its use. Sun Microsystems for example saved over $70 million in facilities and infrastructure costs last year by providing workers with an array of home and mobile working options. Not exactly chump change. And with the costs and hassles of commuting rising due to skyrocketing fuel prices and roads under perpetual construction in many parts of the country, more workers will no doubt demand alternatives to the 5-day commuting grind.

The economic and social consequences of work happening everywhere are only now emerging and are still largely not understood. Perhaps most challenging is the task of management when work can be performed anywhere. Many managers are still comfortable only with daily face-to-face encounters with staff and are loathe to allow their charges too much time out of their sights. But continued advances in technology, unrelenting cost pressures and strong demand for more work-life balance will ultimately force the hand of corporations to allow more flexible and mobile working.

Smart managers however see these trends as an opportunity to redefine the workplace for the better. Work happening anywhere, anytime is no longer the exception. In some cases this will be because the business requires it, in others, because people want it. Regardless, isn’t it about time more organizations changed their policies and practices to allow workers to decide when and where they work in ways that strike a more productive balance between their professional and personal commitments? Instead of asking who moved the workplace – now's the time to take advantage of it.

Process or Practice - Two Paths to Innovation

2005-10-11T11:15:00.000-07:00

Every organization wants more innovation – but how to best produce it? Some believe innovation results from creating the right environment to enable inspiration and invention among employees. Innovation is left up to individuals to create in their own unique ways. But few managers are comfortable with this hands-off approach to creativity. Surely, many managers ask, the key steps in the innovation ‘process’ can be executed in a consistent and repeatable manner? They believe that if you create the right process, support it with the right measures and incentives and innovation can be produced just as an assembly line spews out widgets.

John Seeley Brown, ex head of the famous Xerox PARC refers to these competing approaches to innovation as process and practice. Today, two of the most prominent companies in the IT marketplace – Microsoft and Google are embracing these opposite innovation strategies. Microsoft is pushing hard to increase its innovation capacity through the introduction of a process to manage and coordinate its new product development. Google on the other hand drives innovation through selected practices designed to motivate and enable individuals to innovate as they best see fit in the belief that smart creative people will naturally collaborate and innovate if left to their own devices.

In its early years, Microsoft was known for a free-wheeling and entrepreneurial style. But once it became big and dominant, it has slowed up. Now it has introduced processes to help speed things up and make new product development and other innovation-related activities more consistent and productive.

But this move to embrace process is apparently causing much frustration and some dissension among employees. Some feel that they are spending too much valuable time complying with the innovation management process instead of innovating.

One Microsoft employee puts the situation bluntly in a posting on his blog entitled “Satan’s Process Excellence” :

“We spent so much time filling out forms, creating reports, and attending meetings to explain what we were doing and to learn how we should be filling out forms and formatting our reports, that it took twice as much effort to accomplish anything. Process is killing Microsoft. Don't get me wrong - the old days were a bit to loose and wild out here in the field, but things have swung so far the other way it is ridiculous. There is no room for individual ingenuity. The Process Beast (in the field its goes by the name Seibel) is all about sameness and oneness so that managers can spend less time leading and directing and more time staring at spreadsheets. And it sure as hell has nothing to do with customer focus or doing right by our customers. The smart, energetic go-getters Microsoft used to hire are being replaced or forced out by ‘process drones’. Microsoft will look in the mirror someday very soon and see a circa 1980s IBM staring them in the face.”

The root of Microsoft’s current challenge may be found ironically in its incredible commercial success. Last year it made approximately $13 billion in profit on just under $39 billion in revenue. That’s a nice 33% profit margin – most of it generated by its legacy Windows platform and Office products suite. Radical change seems hardly necessary when you’re making these awesome numbers. But dark clouds are on the horizon. Growth has slowed to single digits for the first time ever. In its efforts to coordinate and extend its own products and platforms Microsoft has become increasingly slow and ponderous. New products take half decades to develop. As a result Microsoft is starting to lose some of its best talent and many in the company are concerned for its future.

Google on the other hand seems designed for speedy innovation. It emphasizes experimentation over regimented processes to spur innovation. Like a university, its key executives hold open ‘office hours’ every week so that staff can bring issues to them and be mentored. It also allows individuals to work 20% of company time on their own personal projects. Google’s approach to innovation seems to be a critical differentiator in this battle to attract and keep talent. The company is on a roll attracting the best and brightest programmers and computer scientists – even poaching some of these individuals from Microsoft.

Google and Microsoft provide a stark contrast in their approaches to innovation. Microsoft is older, bigger and operates in more mature markets. Given its profitability, many would say it is natural and indeed smart to focus on its cash-making businesses. A process-approach to innovation makes a great deal of sense for them.

Google is smaller, younger and still finding its way in emerging markets. A practice-approach to innovation fits it perfectly. But as the company gets bigger it will begin to experience more pressures to adopt repeatable processes and measurements.

In the battle for market dominance, Microsoft is the aging champion and Google the young
talented upstart. Both companies have battalions of brainy, dedicated people. The winner of
this tussle between tech titans could very well be determined by which innovation approach –
process or practice - better engages and channels the passion of talent into the best
performance.

Hiring in the Name of Talent

2005-09-13T11:04:00.000-07:00

Hiring talent is a serious business. Many companies maintain battalions of HR professionals dedicated to every aspect of matching the right person with the right skills to the right job. Tens of millions of dollars are routinely spent on all manner of testing and diagnostic services designed to profile and analyze the thinking styles, psychologies and talents of potential hires. Countless hours are expended in endless meetings to judge job candidates, decide promotions or evaluate succession candidates. Years are consumed building and maintaining competency models and skills inventories. Server farms are groaning with gargantuan Gigabytes of data that these efforts have produced. Gallons of bad coffee and cases of stale donuts are consumed everyday poring over analysis and reports of this information.

Despite the enormous amount of time, effort and resource expended on these activities, a great debate rages over how much data-driven tools and techniques contribute to the effectiveness of hiring and matching talent. I can recall one colossal failure in the hiring of a top executive by a large retailer not long ago. The CEO told me afterwards that the results of the psychological and other testing of his top candidate were off the charts. Yet this ‘can’t-miss’ hire did in fact miss horribly - lasting all of 4 months before being asked to resign. This is not to suggest that scientific techniques don’t have a role in choosing job candidates, but instinct and intuition remain a vital part of the hiring equation.

There is however, a third and much simpler approach to hiring - find a person with a name that fits the job. That’s right – look for someone with the right name. After all, Ecclesiastes 7:1 states, “A good name is better than precious ointment.” Or at least it’s better than enduring endless rounds of repetitious and boring interviews. And with a little luck this approach has been known to actually work.

Take 7-Eleven Corporation for instance. The company needed to search no further after Mr. Edward MONEYPENNY applied for the job of CFO. Now there’s a man who can undoubtedly be trusted to control the purse strings. Or how about Longs Drug Stores - it knew straight away that Mr. BILL GATES was the right person to run its IT department. I bet his problems get solved in a hurry whenever he calls Microsoft’s help line.

Then there’s International Truck. It brought Art DATA on board as its CIO to drive its effort to use information strategically in its business. BT Conferencing couldn’t have hired a better person to head up its sales department than David SALES. CBS knew what they were doing when they handed their top field research job to David POLTRACK. Arch Wireless could be confident its problems would be solved when it hired Frank BRILLIANT as VP of its Business Solutions Group.

Too bad Jim TALENT, a congressman from Missouri, didn’t get the Labor Secretary position in the first Bush cabinet. That job was made for him in my opinion, or rather he was named for it.

Okay, perhaps finding people named for the job might be a lot harder than I’m suggesting. But if you can’t find someone with the right name to hire, you can at least be on the lookout for people with the wrong name. For example, back in the 1990’s a leading computer services company appointed Chauncey HACKER to head up its Y2K program. Call me superstitious, but there’s no way I would hire someone with that name to muck around with my company’s software code. And in the world of Sarbanes-Oxley, I wouldn’t trust anyone with a name like Jack SWINDLE to be my corporate ethics director. But a name brand electronic components manufacturer did exactly that.

When I moved to Carlisle Massachusetts in 1994, Ann VANDAL was our Town Tax Collector. It didn’t stop me from moving here but the fact that our tax rates were the highest in the state did make me wonder if there was a connection. And what in the world were the National Association of State Auditors, Comptrollers and Treasurers thinking when they elected someone with the name of JESSE JAMES, the Texas State Treasurer no less, as their President in 1951?

Like it or not, some HR departments have a reputation for being filled with soft and fuzzy types. So what kind of credibility do you think you would have running this function if your name was Gary WIMP? Yes that’s the real name of a VP of Human Resources, for a computer software company. On the opposite end of the spectrum, a global telecommunications manufacturer has a VP of Business Human Resources named Billie HARTLESS. Sounds like he’s just the person you would want to handle the next round of massive downsizing.

While names like these should make you think twice, they don’t necessarily guarantee a job misfit. For example, the recently deceased Father Jaime SIN rose to become the Cardinal of the Philippines. Of course, had his name been different he might have been Pope.

So please be sure to pay attention to names, the next time you have an important job to fill. In the spirit of Car Talk’s Click and Clack, the Tappit Brothers, I leave you with this final advice. If productivity is a problem in your organization then you may want to hire Amanda Sol de Werk and Carrie Dowt to get the job done. Who better to bring on board than Carrie Oakey to head up employee entertainment, Imelda Czechs as your Accounts Payable clerk, Jenna Rossity as your chief fundraiser, Justin Case as your risk manager, Luke Over as your report editor, and Minnie Mumwage as your compensation analyst. But you may want to take a pass on Howard Ino as your research manager and Lou Pole as your tax adviser.

Is Google’s Cafeteria A Competitive Weapon?

2005-08-30T10:57:00.000-07:00

If you’re a Google fan, here’s yet another reason to love this provider of really useful, reliable, and not to mention free computer tools – they feed their employees well! This fact recently came to light a few weeks ago when the Internet was full of reports that Google is seeking to hire two gourmet chefs to prepare meals (free to employees) for its brainy staff. It turns out that the incumbent chef, Charlie Ayers, will soon be leaving to start a chain of natural foods restaurants. Google is seeking two executive chefs to replace him. The search has even garnered the attention of Google co-founder Sergey Brin who is quoted remarking, "These two chefs will play an important role in managing the company's growing appetites.”

The company posted sample dishes from the cafeteria menu on its web site that job finalists will need to prepare in an upcoming cook-off competition to be judged by a team of Google taste testers. A review of these menu items indicates that the tastes of Google’s employees are as diverse as their national and ethnic backgrounds. The company is known for employing some of the best and the brightest people in the world and its menu offers no less of a global all-star lineup.

It includes scrumptious-sounding dishes such as Ahi Tuna & Avocado Poke, Eggplant Ratatouille, Pollo en Huerto, Seared Day Boat Scallops in Green Coconut Curry Sauce, Arugula with Dried Apricots, Sautéed Wild Mushrooms, Spinach Lentil Dal and Tropical Shrimp Bisque soups, Hazelnut Shortcakes with Plum Compote, Chocolate Coconut Cheesecake and Creamy Lemon Macadamia Nut Cookies. Not exactly your typical corporate cafeteria fare!

At this point, you may be thinking, this all sounds nice and is even making me hungry but how in the world does offering such a menu of meals to employees confer a competitive advantage to a company? Well, let me assure you that this is by no means just another example of a big successful company heaping largesse on its lucky employees, but one with a solid business rationale behind it.

Now, I admit I’m a bit prejudiced on this topic since I am known for going to great lengths to sample gastronomic greatness. But the business researcher side of me has observed many seemingly unorthodox business practices that drive high performance in employees. In my view, feeding employees well is good policy and more companies should do it.

Providing good food in a corporate setting is not unusual. The executive dining room has been a fixture in many companies throughout this country for decades. What Google is doing is simply providing all its workers with the same top quality cuisine that other companies lavish on their top executives. If it’s good for the top brass why not do it for the rest of the company?

Food and dining in fact have long been a part of savvy competitive strategies. I have seen this work first hand on several occasions at two different consulting firms at which I was employed. Each one had their own kitchen, dining room, chef and wait staff. Lunches and dinners with prospects and clients proved to be quite an effective tool for building relationships. Sure we could have taken VIPs out to a restaurant, and sometimes we did. But there is nothing more intimate than dining in a person’s home. So, inviting clients, prospects and potential business partners to dine with us at our offices was like inviting friends to a dinner party at home. This rarely failed to seal a deal or jump start a potentially lucrative new business relationship.

Feeding rank-and-file employees in company cafeterias has long been a part of Corporate American life. But the fare offered at many of these facilities is more institutional than inspiring, greasy than gratifying, belly-busting than brain-building. Indeed, one suspects that most in-house eating establishments are deliberately designed to encourage diners to grab a quick bite and return to work. One poll by career Web site Vault.com found that one in four workers skip their lunch breaks daily and quickly eat a sandwich or snack at their desks.

But Google uses a strategic approach to feeding its employees. Its people-based business strategy makes sure that the company’s stable of big brains is literally well-fed and nurtured. This is not pampering – it’s a high-performance maintenance strategy. Would you think of filling up a Formula One race car with 87 unleaded? Of course not! Then why let your Formula One-type talent nosh on institutional food? Google’s big brains need healthy, natural and delicious food and lots of it. And the company makes sure they get it.

Food is even a part of Google’s recruiting strategy for top engineering talent. Google Lab’s for example, includes a witty two-page primer in its recruiting kit entitled, “How to Care for Your Big, Wonderful High-Performance Brain”. At the top of the list of recommendations it makes is eating foods rich in amino acids such as salmon, mackerel, walnuts, green leafy vegetables and cold-pressed sunflower oil (all regularly found in the Google Lab’s cafeteria).

Other tips offered include avoiding exposure to brain-cell killing lead (Google is a lead-free work environment), wiggling your toes frequently to activate nerves that stimulate the brain (sandals are de rigueur fashion at Google Labs), taking short naps to enhance the information processing capacity of the brain (Google Labs’ engineers can take cat naps whenever necessary as long as they “refrain from drooling on their keyboards”), exercising to increase blood flow to the brain (Google’s campus offers a weekly “Wetlands Walk” among other exercise opportunities) and sharing your big brain with the world (Google Labs allows staff to spend 20% of their time working on projects of their own).

So if you’re a CEO of a company whose competitive success is reliant on the brain power of your talent you would be well-advised to spend some time in your cafeteria and kitchen facilities if you have them. Do an eating tour of the local food joints and convenience stores as well. If food is fuel for the brain then make sure your best and brightest have ample opportunity to eat like champions not chumps.

Is Outsourcing Reaching Its Limits Or Simply Pausing For Breath? – Part II

2005-08-09T14:57:00.000-07:00

In my last column, I reviewed some of the key findings of a study conducted by Deloitte Consulting of the experiences of 25 of the largest practitioners of outsourcing in the world. In this article, I discuss the findings from another study conducted by the consulting firm DiamondCluster of over 400 buyers and providers of IT outsourcing services. The complete report can be downloaded at:
http://www.diamondcluster.com/press/PressRelease.asp?src=pressreleases331.asp.

This is the third consecutive year that DiamondCluster has polled companies about their IT outsourcing experiences. The results of their latest survey were released in June 2005. Like the Deloitte study, the findings from this survey present an intriguing snapshot of outsourcing practices and experiences that shed welcome light on some of the popular beliefs and thinking about this latest business mega-trend. The DiamondCluster report suggests that overall IT outsourcing activity is robust and seems poised to continue apace for the foreseeable future. But a closer look at the benefits and costs of IT outsourcing provides insights that challenge some conventional wisdom about this pervasive practice.

Take offshore outsourcing for example. It has aroused enormous passion among workers, stirred up much controversy in the media and engendered a great deal of criticism of top managers of corporations. The practice even emerged as a political issue in last year’s presidential election and was addressed in numerous state legislatures - a number of which passed laws to limit its growth, at least in the public sector.

The lead headline of DiamondCluster’s study is that “growing numbers of companies are dissatisfied with offshore outsourcing providers.” The percentage of companies dissatisfied rose from 21% last year to 38% this year. And for the first time since the survey was started in 2002, a small number of respondents (7%) indicated that they would decrease their level of offshore outsourcing.

Before you think about writing obituaries for offshore outsourcing, read on. The report also suggests that this silver cloud has a dark lining. It attributes the main cause of increased unhappiness to the explosion of demand for offshore services. Apparently so many companies are sending work offshore that the providers simply have not been able to keep up with the demand and thus service and quality have suffered. Overblown expectations may be a contributing factor as well – providers said that one of their greatest concerns is meeting unrealistic or immeasurable buyer expectations. Despite these difficulties, 70% of respondents indicated they intend to increase their levels of offshore outsourcing over the next twelve months, up from 32% in 2002. And forty percent of respondents indicated they expect to outsource some IT functions to China in the next 3-5 years.

So offshore outsourcing presents a paradox - overall growth is expected to continue even though the number of problems and level of dissatisfaction with this practice are forecast to increase as well. I guess all the companies planning on sending IT work and jobs overseas feel that the potential benefits to be gained outweigh the risks. Or perhaps they think they are smart enough to avoid the problems and pitfalls that a growing number of companies are expected to encounter.

Other key findings of the DiamondCluster study also present a mixed picture of outsourcing experiences. The number of buyers that have ‘abnormally terminated’ an outsourcing relationship soared to 51% from 21% last year. The primary reasons for these mass terminations were poor provider performance (36%), a change in strategic direction of the buyer (16%), deciding to move the function in-house (11%), and not achieving cost savings (7%).

But once again, opponents of outsourcing shouldn’t get too excited by these findings. Despite this growth in contract terminations, 81% of respondents indicated that they were still satisfied with onshore outsourcing, up from 74% last year.

The Deloitte study reported great disappointment over the level of cost savings actually achieved through outsourcing. The DiamondCluster study shows similar results. It found that the benefits of reallocating resources freed up by outsourcing IT overwhelmingly trumps the amount of cost savings that companies have actually been able to realize through this practice. Less than 50% of respondents say outsourcing either exceeded (9%) or met (37%) their expectations regarding cost reduction. But, 83% of respondents cited re-allocation of internal resources to more critical functions as the main benefit of outsourcing.

Risk is a critical issue for IT outsourcing. The top three risk factors associated with it were increased management complexity, reduced operational effectiveness and lower quality of output. And employee backlash remains a big concern for 88% of the outsourcing buyers polled.

The bottom line take away of the DiamondCluster study is that IT outsourcing will continue to grow despite all the hiccups (or chronic indigestion depending on your point of view) associated with this practice. The good news is that companies seem to be learning something from their experiences. They are getting smarter about what, why and how they outsource and are more realistic about the benefits they expect and the challenges they must overcome if they are to achieve their goals.

These conclusions about IT outsourcing will of course provide little comfort to the legions of IT workers across the country hoping their job isn’t the next one to get a one-way ticket overseas. If you are one of them, take heart. There are several things you can do to avoid being put out on the street as a result of the growth in outsourcing activities that companies indicate they intend to continue. Work to ensure your skills are not generic. Take time to learn about the business. Take a user to lunch. Make some customer visits with the sales force. Take calls in the customer care center. Visit the distribution center. Have a stroll around the factory floor. The more you know about how your company uses IT, and what it needs to do to get more value from it, the better off you’ll be. Learn to speak the language of the business. Appreciate the problems that your co-workers in other departments face and how IT can solve them or make them worse.

Doing these things will not only diminish the chances of your job being outsourced in the first place, it will also help you become one of the critical resources that so many companies in these studies say they intend to redeploy to more critical activities as a result of outsourcing.

Is Outsourcing Reaching Its Limits Or Simply Pausing For Breath?

2005-07-25T17:17:00.000-07:00

Outsourcing is a management tool that is taking the business world by storm, or so it would seem from reading much of the dedicated coverage of outsourcing topics featured in business and IT publications and websites. Thus it was very surprising to me to come across two recently released studies on outsourcing published by leading consulting firms – Deloitte Consulting and DiamondCluster - that accentuate the negative aspects of this management practice. Both of these studies inject a welcome dose of reality into the hype-saturated subject of outsourcing. They present insightful perspectives on the advantages and disadvantages of outsourcing that counterbalance some of the biased treatment of this topic emanating from those media, research and consulting firms with a vested interested in seeing the outsourcing trend grow.

Deloitte Consulting’s study, “Calling a Change in the Outsourcing Market” (http://www.deloitte.com/dtt/research/0,1015,sid%253D45635%2526cid%253D80376,00.html) was released at the end of April 2005. It presents data collected from twenty five of the world’s largest and most sophisticated companies and draws valuable insights from their substantial experience with outsourcing – both the good and the bad.

The report asserts that outsourcing is not delivering its expected value to large organizations. For example:

Seventy percent of participants have had significant negative experiences with outsourcing projects and are now exercising greater caution in approaching outsourcing.
One in four participants have brought functions back in-house after realizing they could be addressed more successfully and/or at a lower cost internally.
Forty-four percent of participants did not see cost savings materialize as a result of outsourcing.

In addition to these attention-grabbing findings, the study uncovers several hidden truths about outsourcing:

Outsourcing relationships add complexity to the business. “Instead of simplifying operations, outsourcing often introduces complexity, increased cost, and friction into the value chain, requiring more senior management attention and deeper management skills than anticipated.” Many companies outsource because they think they can manage vendors more easily and effectively than they can employees. Indeed, managing anything for excellence whether internally or through a third party is not a trivial challenge. Outsourcing adds complexity to any process simply by increasing the number of players involved and by introducing a third party to the frequently strained user-support group relationship of many organizations.

Outsourcing does not insulate buyers from operational and financial risks. Often buyers of outsourcing services think that they are transferring risk to the outsourcing supplier. In truth, they are transferring responsibility for managing the risk associated with the outsourced process to the vendor but they are not insulating themselves from the downside of poor management and decisions of their outsourcing providers. “Outsourcing has allowed organizations to transfer financial and operational risk to vendors, but organizations are discovering that their contracts will never fully protect them against customer damage and business losses caused by service disruption.”

The outsourcing of services requires a complex series of trade-offs. This finding will really get the goat of sales and marketing executives in outsourcing services vendors. It suggests that “cheaper, faster, better” actually should read, “cheaper, faster, better – pick one”. According to the report, “The outsourcing of services requires a complex series of trade-offs: cost versus growth; speed versus quality of service delivery; and maintaining organizational cohesion versus knowledge and innovation.”

The structural advantages of vendors do not always translate into a better deal for buyers. The Deloitte study points out that really big companies like those it surveyed often have greater economies of scale opportunities than most of their vendors. Indeed the notion of outsourcing as an effective tactic for reducing costs takes a pounding in this report. Very few respondents indicated that outsourcing saved them any substantial costs. Instead, the main benefit was allowing companies to refocus their internal resources on more productive activities.

Before we get too carried away by these negative findings, it is important to point out that the report showed significant positive experiences with outsourcing as well. It must be noted that less than 50% of the companies surveyed were unhappy with or experienced significant problems outsourcing. Despite the problems it reports, most participants in the study indicated that they intended to continue outsourcing and will simply apply the lessons they’ve learned from any disappointing experiences and failures.

The report concludes by recommending that large organizations pursue outsourcing only in these cases: when substantial additional efficiency gains can be squeezed out from already centralized and standardized processes; to transform and stabilize processes before transferring them back in-house; to offload true commodity functions such as mailroom and web hosting services; to provide back up facilities and infrastructure; and to shift fixed costs to variable costs in areas where demand for resources is highly volatile.

So, is outsourcing reaching its limits or merely taking a digestive pause before devouring more corporate activities and processes? The Deloitte report suggests that there are indeed clear limits to outsourcing. The sheer volume of problems it identifies should give serious pause to any manager currently engaged in outsourcing or considering it. However, don’t bet on the growth of outsourcing to slow anytime soon. There are simply too many companies with inefficient processes and ineffective managers that are under constant and intense pressures to improve their performance. For these organizations, the perceived benefits of outsourcing, and particularly offshore outsourcing, will likely be too hard to resist.

Why Corporate Culture Counts

2005-07-05T13:55:00.000-07:00

Researchers and consultants often point out that real change in how things are done inside a corporation cannot happen unless its culture is changed first. But corporate culture is a difficult thing to pin down and even harder to change because it reflects the implicit values, norms and behaviors of an organization.

When culture drives positive and value creating behavior it can give a company a distinct leg up on the competition. Just ask anybody working for an organization like Southwest Airlines or eBay. This can be a virtuous cycle – positive values and productive behaviors continuously drive and reinforce how employees act. But when the culture has significant negative aspects, it can create a reverse, destructive cycle driven by conflicted values and dysfunctional behaviors.

While both the media and the courtroom seem to be full of stories these days about the most egregious examples of corporate cultures and executives gone astray, there is little in-depth treatment of the causes of this phenomenon. It is for this reason that I found a working paper produced by the MIT Workplace Center entitled, “From Here to Flexibility in Law Firms: Can It Be Done?”, available at http://web.mit.edu/workplacecenter/, a fascinating read. Written by Laura Rikleen, head of a Boston Bar Association task force that studied the legal industry’s disappointing attempts to implement flexible working practices, it provides an eye-opening inside look at the culture of the legal profession and the high cost that its predominant behaviors and values wreak on the industry.

According to Rikleen, “Law firms provide the perfect vantage point for a study of the overworked American. What we have in law firms, essentially, is an increased demand for billable hours and decreasing partnership opportunities. This combination leads to high attrition, poor morale and a variety of other problems.”

Her task force points a finger directly at the profession’s emphasis on ‘total commitment’ as a basis to enter the partner ranks as the key debilitating factor affecting the work environment, attraction and retention of talent and work-family balance within the industry. It found that the profession’s concept of total commitment translates to pushing all non-work obligations aside on a regular basis as a symbol of one’s commitment. The task force concluded that this predominant ethos triggers a series of ‘vicious circles’ in the industry - where solving one difficulty leads to another problem which in turn creates new difficulties.

In the legal profession, revenue growth is the key performance imperative and billable hours is the most important metric of performance. Attracting top talent to drive growth is a priority and salaries and bonuses go up every year in the competition for the best and brightest. Higher starting salaries necessitate revising the rest of the salary structure upward. As salaries rise, growth targets are increased. There is greater pressure to bill more and thus work longer hours. Stress levels increase, morale plunges, people leave. The greater the attrition, the greater the number of new associates needed each year to replace the attorneys that leave. And so, a vicious circle spins on and on.

But that’s not all. The task force also identified what it terms the ‘myth of meritocracy’. While law firms promote the idea that they provide environments in which “excellent lawyers will excel”, the reality is frequently different. Not surprisingly, the small number of people who survive this marathon of work and progress up the ranks tend to be the most ambitious, money-driven, workaholics. This simply perpetuates the negative working environment.

And even if the cream rises to the top, the rest of milk seems to get spoiled. The level of attrition resulting from this system is both high and costly. The task force cites a research study involving more than 10,000 associates in 154 law firms. The findings revealed that 43% of associates leave their firm within 3 years, two thirds leave within 5 years and three quarters are gone by their 7^th year. This study pointed out that it generally takes at least 3-4 years before associates even begin to return the firm’s financial investment in them. An associate’s primary return on the firm’s investment occurs in years 5-10, but by then, over half have left.

The task force believes that the current system not only makes work-life balance unachievable, but will in the long run hurt law firms because it alienates large numbers of employees and potential employees while requiring unsustainable levels of growth in billable hours. They describe the situation bluntly, “We are in danger of seeing law firms evolve into institutions where only those who have no family responsibilities — or, worse, who are willing to abandon those responsibilities— can thrive. This is not an exaggerated perspective; it is a description of where many think we are heading and where others think we have already arrived.”

Do you believe vicious circles and meritocracy myths exist only in the legal profession? Think again. Many of the same debilitating characteristics of the legal profession’s culture and working environment can be found throughout corporate America today, particularly in the upper echelons of the organization.

This is one key reason why work-life balance is largely not yet a reality for most workers and isn’t likely to become so until more companies begin the difficult work of changing their culture in ways that create circles of virtuous behavior and make merit the actual basis of reward and advancement.

Agility: The Next Talent Management Imperative

2005-06-24T08:41:00.000-07:00

Competent businesses are adept at hiring and firing workers. Great businesses however are skilled at developing and deploying talent in ways that continuously grow their experience, stretch their abilities and enable their achievements. Creating work environments that promote people agility across jobs and organizational boundaries is the next imperative for companies seeking competitive advantage through their talent.

It is surprising how few companies develop and move their talent around the organization. They know how to recruit stars, fire failures and replace leavers – but few seem to know how to provide one of the most important factors in retaining talent – opportunities to achieve, move and grow – within the company. Ever hire a star only to see them leave in frustration 9-18 months later because they felt stuck? Or experience shock when an outstanding performer leaves your company after 5 years because they were ‘too valuable’ in their current job to be allowed to move to a different position or department? So instead, they moved to a different company.

There are many organizational and cultural reasons why companies constrain talent. Performance obsessed managers are often reluctant to give up the people resources they feel are needed to achieve ever more challengingly goals and performance objectives. This short sighted behavior is reinforced by management and incentive systems that reward business results but not development of people.

HR and line managers often lack the tools and information to understand and manage the supply and demand of people and skills dynamically. Thus they are likely to be slow and reactive in responding to shifts in skill requirements and opportunities to grow new competencies. They may also be prone to rely on traditional hiring and firing processes as a means of matching skills demand and supply rather than more complex retraining and redeployment of existing resources.

Some leading edge companies however are beginning to tackle the talent agility challenge. For example, in “Cisco Systems: Developing a Human Capital Strategy”, California Management Review, Winter 2005, http://www.haas.berkeley.edu/News/cmr/contents.html, Jennifer Chatman, Charles O’Reilly and Victoria Chang describe how this Silicon Valley legend has refocused its approach to talent from external acquisition to internal development and deployment.

For years Cisco was the poster child for how to identify, attract and hire talent. But beneath the surface, it was buying talent through acquisition and keeping it through high-priced equity stakes distributed to employees. Not much talent management acumen was required. But when the company’s marketplace and stock price tanked, Cisco had to learn a different set of skills for attracting and keeping talent. It also realized that it needed to better utilize the talent it already had.

According to CEO John Chambers, “We made progress in developing employees, but in our industry, I want the majority of us not to be in the same job – or even the same function – three to five years from now. I want us to create an environment of continuous learning and challenge, that will allow us to move from one business unit to another in engineering, or from sales to customer advocacy, or from financial to IT.”

Companies like Cisco that compete in dynamic industries, where technologies, products and markets are in a continuous state of change must learn how to develop and redeploy their talent in an agile manner. The company recast its Pathfinder software application originally developed to support external recruiting and used it to create an internal job matching system. Pathfinder’s corresponding online database, I-Profiler, allows employees to voluntarily enter their resumes for consideration. The profiles capture employees’ work and educational experience, skills, and technical qualifications and detail their career aspirations for development discussions with their managers. Line managers have access to each of their employees’ profiles to assess existing skills on their teams.

But these moves represented only part of the solution. The company also chartered Cisco University to lead a company-wide cross-functional effort to create a ‘development culture’ within the organization. The university does not operate as a centralized place to go for learning, but as a set of distributed capabilities for everyone to tap across the organization. This learning and development capability is built upon the ‘3E Model’:

Experience through assignments, on-the-job learning, and traditional learning

Exposure developed through on-line learning, mentoring, shadowing, periodic forums and talent reviews

Education through a series of customized and focused programs that include significant teaching and involvement of senior Cisco executives as well as outside faculty

The impetus for shifting Cisco’s talent management strategy came from the top of the organization. John Chambers asked in a company meeting prior to starting these initiatives, “How many people think we are good at moving resources (people) and retraining? (No hands were raised). It’s not even in our vocabulary. But we’ve got to get dramatically better at moving resources around the company. Our top leadership….I keep moving them around. We’ve got to learn how to retrain people effectively as a part of our culture, to keep up with the market transitions.” This is good advice for any company.

How good is your organization at moving and retraining staff to anticipate and respond to changes in your business? Not very good you say? If so, it’s time for a change. Because companies that find ways to grow and move their talent within their organizational boundaries will not only substantially reduce recruiting and termination costs but will better attract and keep top talent as well. Indeed, those companies that can master talent agility will have a leg up on their competition in both the quality of their people and their performance.

Four Steps To Making Talent Management A Core Competence

2005-06-01T14:01:00.000-07:00

According to a study reported in the June 2005 issue of the Harvard Business Review, ‘people-driven’ businesses are now predominant. But many companies, even in people businesses, don’t yet have the talent management processes they need to excel. While organizations have perfected sophisticated techniques for managing capital investments, suppliers and the production and flow of goods and services, their capabilities in managing people seriously lag.

In their article, “The Surprising Economics of a ‘People Business’”, (available for purchase at http://harvardbusinessonline.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=R0506D), consultants Felix Barber and Rainer Streck argue that people are now the most significant cost in many industries when compared to spending on capital, R&D and suppliers. In industries like advertising, IT services, financial and brokerage, engineering, telecommunications and health care, personnel represents the largest component of total spending (40%-70%). These are what the authors refer to as people businesses. They have high overall employee costs, a high ratio of employee costs to capital costs and limited spending on activities like R&D.

Another category they identify is ‘people-oriented’ businesses. These are companies where spending on personnel, while not the largest component of total spending, is nonetheless significant because it exceeds capital costs. Companies in this category include software firms, airlines, restaurants, pharmaceutical and chemical companies, consumer goods and automotive. Only industries like utilities and oil spend more on capital costs than on people.

The authors assert that in people and people-intensive businesses, the performance of talent drives the overall performance of the company. And the distinct economics of people-driven businesses call not only for different business performance measures but also different management practices. In these businesses, where even “the slightest changes in employee productivity have a significant impact on shareholder returns, ‘human resource management’ is no longer a support function, but a core process for line managers.”

I agree with these assertions but would go one step further to say that in people-driven businesses talent management must be a core competence for the entire business. Not only should line managers be adept at managing people but the corporation needs to have a robust people management capability that is clear, coherent, and applied company wide.

Many companies are only beginning to appreciate the importance of enterprise wide talent management. For example, I recently spoke with an HR executive in a large services organization who indicated that her firm was finally waking up to the importance of managing their talent in an integrated fashion across the enterprise. The company realized it was losing tens of millions of dollars a year in unnecessary recruitment and termination costs and lost productivity. Its approach to recruitment was fragmented and not connected to other key talent management activities. It did not have an enterprise view of vacancies and surplus people across the organisation. Development and deployment of people were separate and non-integrated activities. Lastly, there was no organizational focal point to oversee the process.

The result was that for several years hundreds of people were laid off in one part of the business while hundreds of others, often with similar skills to those departing the organization, were hired in other parts of the company.

Regrettably, this situation is not unusual in many organizations today. Indeed, many companies are missing substantial opportunities to save costs and improve performance by upgrading their talent management capabilities. There are four steps that companies can take to quickly assess their talent management process and begin improving their talent management competency:

Step 1 – Identify Key Roles. Analyze the key steps in each part of the talent life cycle (identification and attraction, hiring and inculcation, motivation and development, appraisal and reward, building and sustaining relationships) and map the key players and their roles and responsibilities to each stage. Are there gaps in responsibilities – key activities that no one is directly accountable for? Are there overlapping responsibilities – multiple people responsible for the same activity? Are the right people in the right roles? Are line managers provided with consistent and effective processes, guidelines and tools for managing talent?

Step 2 – Take an Inventory of Your Talent Management Skills. Identify the critical skills needed to play the key roles in the talent life cycle effectively. To what extent does your company employ people who possess them? What might you do to improve or develop them? What are you doing in-house that might be better outsourced? What have you outsourced that you should be doing in-house?

Step 3 – Measure the Right Things. Assess the measures you use to evaluate the performance of your talent management process at each life cycle stage such as offer-to-hire ratios, average tenures of new hires, performance ranking, skill fit to job requirements, etc. What data are you capturing and reporting? Does it feed directly into a enterprise talent scorecard? How do these measures align with your overall talent management strategy?

Step 4 – Set Up a Process-Wide Feedback Loop. Everyone managing talent needs to understand the big picture and to connect their role and responsibilities to the overall objectives of the process. How is data captured in each stage of the life cycle reported and communicated? How are knowledge and experiences shared across the process? Where are the information gaps and missed communications? How much feedback is formally captured and communicated versus informally discussed among staff? What key actions might you take to improve your feedback mechanisms?

With so much of the costs and performance of a business now dependent on people, isn’t it time managing them became a core competency of your organization?

The Future of Work II: Standard of Working Up, Quality of Work Life Down

2005-05-16T14:04:00.000-07:00

Humans love to keep score. Nowadays there seems to be a scorecard or measurement index for just about everything from the cost of living to the cost of dying and everything in between. The problem with many of these measures is that they take a pure economic view of whatever is being measured. But conclusions about the economy or business can often be misleading when drawn from only those indicators that are easy to quantify.

As Albert Einstein noted, “Not everything that can be counted counts and not everything that counts can be counted.”

Yet many people, particularly economists, remain fixated on the numbers. A widely tracked numerical economic indicator is the standard of living. Economists are fond of pointing out how advances in technology and the globalization of business are driving increases in our standard of living in America. Some economists equate standard of living and quality of life as the same, but they are not.

Standard of living has to do with the degree of prosperity in a nation, as measured by income levels, quality of housing and food, medical care, educational opportunities, transportation, communications, and other measures. Quality of life on the other hand, refers to an individual’s satisfaction with his or her life and general sense of well-being. It is often measured as physical, psychological and social well-being.

Economists argue that increasing the standard of living is a good thing. The cheaper the cost, the more of a product or service we can buy, the higher the standard of living, the better off we are. Right? Not necessarily. Take food for example - today Americans enjoy plentiful and cheap food. We consume more calories for less cost than ever before. Everywhere you look portions sizes are getting larger. “Ventis”…”Supersizes”…”Jumbos” or in the words of Dave Barry “Mega Grandissimaximo Giganto de Humongo-Rama-Lama-Ding-Dongs” are everywhere. Need a six pound jar of pickles? You can get it at Wal-mart, for a mere $2.39! (What ever happened to mini-sized products like six-ounce ‘pony’ bottles of Rolling Rock beer?) Our cost per calorie is at an all time low and odds are good it will continue to drop.

In the eyes of economists this is irrefutable evidence of our increasing standard of living. But what about our quality of life – does consuming these products improve that as well? Nearly 70% of Americans are overweight and at health risk. Almost thirty percent are obese (more than 30 pounds overweight). Obesity is classified as an illness linked to all sorts of health problems. Our standard of living may be up as a result of an overabundance of cheap food but our quality of life seems to be diminished from consuming it.

This situation is not confined to food. Choice inflation is pervasive – in shops, at the movies, on TV, in restaurants. Impact on the standard of living? Unarguably better. How about quality of life? It’s not so clear. There are two cars for every three Americans. More cars mean a better standard of living. But traffic congestion, gridlock, and road infrastructure are all bad and getting worse. Quality of life – better or worse? It certainly didn’t feel better to me the last time I was stuck in traffic gridlock.

The concepts of standard of living and quality and life have parallels in business. I refer to these as “standard of working” and “quality of work life”. The standard of working (degree of productivity) is on a roll. Technology is making workers more productive than ever. Everyone has information at their finger tips. Lean manufacturing practices and automation means we can produce more per person than ever before. But what about our quality of work life – is it rising or falling? Well, it depends on where you sit in the organization. Some might argue that the quality of work life for CEO’s – given their astronomic levels of compensation and perks - has never been higher.

How about the average worker? Pay has been flat or rising at modest levels. Many benefits have been pared and some even eliminated. Workloads continue to increase. More flexibility has been given to workers, but many are working in the evenings at home, on the road and on weekends. Satisfaction, engagement and commitment are down by most measures. Is the quality of our work life getting better or worse?

The disparity between standard of working and quality of work life, just as the imbalance between standard of living and quality of life, needs to be redressed. One cannot continue to increase while the other diminishes. The knowledge economy depends on engaging talent and leveraging their passion. For the growing ranks of these workers, quality of work life is critical, not only to how they feel but to the quality of the work they produce.

If the future of work is to remain bright, we must find ways to increase the standard of working AND the quality of work life.

The Future of Work is Now

2005-05-02T16:02:00.000-07:00

I just returned from attending the 2nd Annual Future of Work World Congress (see http://www.thefutureofwork.net/what_congress.html), an energizing two-day forum in which people from business, government and community economic development came together to envision the future workplace and develop action plans to make it real.

The historic Society Hill district and Independence Mall area of Philadelphia where the conference was held includes an attractive mix of the old, the restored and the new. This part of the city is the cradle of liberty – home to the site where the U.S. Constitution was signed and Liberty Bell still resides. It provides a wonderful example of how a community can preserve its heritage and character while allowing for change and growth.

Contrast this with the state of work and the working environment in corporations today. How well have they changed and adapted to the times? On the surface many things seem updated or new. Facilities, furniture and furnishings, computers and support technology often reflect the latest advancements in their respective fields. And of course management practices and policies are always evolving, products and services are constantly changing and organizations seem to be in a perpetual state of restructuring.

But beneath the facade, is the workplace a better and more fulfilling place than it was 10 years ago? The prevailing view of the Congress attendees was that it is not, and much time was spent discussing how to accelerate positive change - remove obstacles to improvement, make work more flexible and environments more human-friendly and harness the power of technology to free workers to be more creative and productive rather than hold them tethered to the electronic equivalent of pick axes.

Today, the majority of workers still go to offices everyday even though information and communications technology increasingly allows them to work from anywhere. They still work in facilities that are designed to minimize operating costs and preserve hierarchy and status not inspire creativity and fuel collaboration among workers.

Their level of satisfaction with their jobs and work environments continues to slide downward. According to the latest Conference Board report, (for headlines from the report see http://www.conference-board.org/utilities/pressDetail.cfm?press_ID=2582) only half of all Americans say they are satisfied with their jobs, down from nearly 60 percent in 1995. The largest decline in overall job satisfaction occurred among workers 35-44 – dropping almost 12 percentage points. The second largest decline took place among workers aged 45-54, with the satisfaction level dropping just under 10 percentage points. Additional results from the supplemental survey conducted by TNS showed that 40% of workers feel disconnected from their employers; two out of every three workers do not identify with or feel motivated to drive their employer's business goals and objectives; and 25% of employees are just “showing up to collect a paycheck.”

The cube farms of America are not happy places in which to toil. Many are seeking escape. For example, a study of workers across the U.S. recently conducted by Spherion Corporation and Harris Interactive indicated that 7 out of 10 workers are ready to change jobs. But if a large number of them work for companies that do a lousy job of engaging them, what are the odds of finding a better opportunity and a more fulfilling environment? Regrettably, most of these individuals may be jumping from one proverbial frying pan to another or worse. Some workers will find better jobs and more fulfilling places to work, but simple math suggests that many will end up not much better or even worse off than before. The only alternative for these workers is to stay put and face up to the challenge of making the job and work environment they already occupy better.

To ensure that the future of work is a compelling one, the largely negative workplace momentum of the past two decades must somehow be reversed. What can individuals and managers do to make this happen? The challenge at hand is in many ways an individual one - to create the future one person at a time. The next generation workplace will be built from the ground up far more than by top-down interventions. It will evolve through experimentation - trying new things, implementing new practices, doing work differently, interacting with colleagues in innovative ways and managing people with the vision and belief that companies can be places where passion is inspired and talent unleashed. It might begin in a few cubicles, with the odd team, workgroup or perhaps even in a department or business unit of a company. Talent can change the workplace for the better if enough people devote their hearts and minds to making it happen. The most important thing is to make a start because the future of work begins now.

Are Women Opting Out or Shut Out From Career Tracks?

2005-04-19T16:04:00.000-07:00

When it comes to flexible work practices women are the proverbial canaries in the coal mind. If the disappearance of females from many corporate career tracks is any indication, the air must be pretty bad.

A new Harvard Business Review article, “On Ramps and Off Ramps: Keeping Talented Women on the Road to Success” (available for purchase at http://harvardbusinessonline.hbsp.harvard.edu/b02/en/common/item_detail.jhtml?id=R0503B) , by Sylvia Ann Hewlett of The Center for Work-Life Policy and Carolyn Buck Luce of Ernst & Young sheds much needed light on this disturbing trend. The article describes the results of a survey of 2443 women ages 28-55 conducted in the summer of 2004. It found that nearly four in ten highly-qualified women report that they left work voluntarily at some point in their careers. The biggest reason was family time (44%) although elder care (24%) and health issues (9%) were also cited by respondents. The authors refer to the above as ‘pull factors’; they also cited ‘push factors’ such as jobs not satisfying or meaningful (17%); they relocated (17%) and they changed careers (16%).

Among women who take ‘off-ramps’, the overwhelming majority (93%) say they intend to return to the workforce, almost half of these for financial reasons. But many (43%) cite enjoyment and satisfaction from their careers as an important reason for wanting to return to work.

These findings are interesting but not surprising. But there’s more. The survey also found that only 40% of women who wish to return to the ranks of full-time, professional jobs actually succeed in doing so. The authors assert that while off-ramps are plentiful, on ramps are ‘few and far-between and extremely costly’. Indeed, the article claims that the longer a woman stays out the greater the financial penalty – on average women lose 18% of their earning power and in business sectors it rises to 28%.

The most troubling statistic from the survey – only 5% of highly qualified women looking for on-ramps back into the career mainstream are interested in rejoining the organizations they left. It was zero for respondents working in the business sector! The authors surmise that these women felt they were not appreciated or well-utilized by their previous employers.

Indeed the authors assert that women in the business sector are pushed off track more by dissatisfaction with work than pulled by external demands. Fifty-two percent of respondents with MBAs in the business sector indicated they left work because they no longer found their careers ‘either satisfying or enjoyable’. It is not surprising then, in the view of the authors that a majority (54%) of the women looking for on-ramps wants to change their profession or field. And in most of those cases its women who formerly worked in the corporate sphere hoping to move into the not-for-profit sector.

The authors assert that corporations are failing to deal with the needs of highly qualified women – to their own detriment. “Like it or not, large numbers of highly qualified and committed women need to take time out.” How then can this problem be addressed? The article suggests that “the trick is to maintain connections that will allow them to come back from that time without being marginalized for the rest of their careers.”

In other words, better on-ramps are needed. Companies like Pfizer and Johnson and Johnson have engendered high commitment in their female workers by offering them part-time work but without reducing their training and advancement opportunities. These workers stay in the mix and are able to move forward as their personal situations change again.

Booz Allen provides what the author’s call a ‘ramp up, ramp down’ program that allows its professionals to balance work and personal life and still do work they find interesting. Participating professionals are either part-time employees or alumni who work on a contract basis. Many of these women eventually return to Booz on a full-time basis and keep their skills sharp in the meantime. According to one Booz Allen executive, “Flex careers are bound to be slower than conventional ones…..The point here is to remain on track and vitally connected.”

So are high-caliber professional women opting out or being shut out from the career track? This article suggests both may be true. And neither situation bodes well for corporations who are squandering the potential of some of their best talent. American business needs to start taking flexible working arrangements more seriously. They are not merely conveniences for a minority of workers but will soon be necessities for the majority. While most large companies offer non-traditional working arrangements, their adoption has been slowed by managerial resistance and the stigma that still surrounds flexible working in many organizations. This situation is a pity, especially given the intense rhetoric in executive suites about performance-based management. Indeed, companies really serious about sustainable high performance do whatever it takes, including making flexible working the norm, to keep their talent (female and male) engaged and productive.

Financial Transparency is Good, Performance Transparency is Even Better

2005-03-29T16:07:00.000-08:00

It’s barely spring but the temperature is already getting hot in CEO suites throughout the corporate world. Thanks to the creative accounting shenanigans cooked up by the End Run’s and World Con’s (a.k.a. Enron and Worldcom) of the world, companies are now required to be far more transparent in their financial reporting and operating processes than ever before. Sarbanes-Oxley (in the U.S.) and Basel II (in Europe) are at the head of a cavalcade of legal and regulatory requirements enacted to protect shareholders, employees and customers from financial fraud and accounting sleight of hand.

Some executives, academics and consultants feel these measures are too draconian particularly those that they believe place top executives and board members in jeopardy of going to jail if the financial statements on which they sign off are the slightest bit inaccurate, let alone intentionally fraudulent. While the typical CEO is only too happy to pocket the lucrative financial rewards that come with the mantle of leadership, some seem reluctant to accept this degree of accountability - especially if it means personally taking the rap for non-compliance with the law. I guess not many corporate heads are convinced that a minimum-security sabbatical in an orange jumpsuit will be as good for their careers as it seems to have been for Martha Stewart’s.

While many might argue that passing laws like Sarbox is overkill, few would disagree that the principle of financial transparency is a good thing for all corporate stakeholders.

But there is another kind of transparency that is also enormously important for organizations. I call it 'performance transparency'. Companies with performance transparency know explicitly what they must do to excel with customers and to outperform their competitors. Most importantly, everyone in the organization knows this as well. Indeed, individual employees can connect what they do in their jobs to the bigger picture of how the organization performs overall and how their customers are affected.

Want to know how performance transparent your organization is? Below are some questions to help you make this determination. Be forewarned – these questions are devilishly difficult to answer precisely. They are also likely to generate heated debate if addressed in a group context. So much the better in my view – stimulating a passionate debate about what drives your organization’s performance should be the first order of business in the quest to discover what really matters.

1. How do we make money? This may sound like a dumb question to be asking but I’ll bet in the majority of organizations surprisingly few people can answer it accurately. In the performance transparent organization no one has to guess how the company makes money or how what they individually do in their jobs affects bottom line performance.

2. Why do our customers do business with us? What are the reasons customers buy from your company and not your competitors? Price? Convenience? Quality? Fit to need? Aesthetics? Habit? Lack of choice? In the performance transparent company customer traits and behaviors are deeply understood and the value proposition to them is continuously assessed and improved, not merely to keep pace with customer expectations but to stay ahead of them.

3. What determines the best performance of our employees? What factors inside your organization have the greatest impact on the individual performance of workers? In the performance transparent corporation the specific skills, attitudes and behaviors needed to produce excellence are visible and well understood and the organization and people management practices of the company are explicitly designed to create, nurture and sustain these drivers of performance.

4. What characteristics and experiences make the best leaders of our organization? Do we know who the best leaders are and why they are best? Performance transparent companies do and they go out of their way to encourage, develop, assess and reward leaders at all levels of the organization based on the qualities of their most successful leaders.

5. What are the keys to getting promoted? What factors drive promotions within your company? Is the process fair, objective and merit-based? Does everyone understand how it works? Do the most qualified and deserving people advance? In the performance-transparent organization, no one is left wondering how or why people are promoted or terminated. These decisions are based on well known and well understood performance parameters and metrics.

6. What makes our organization truly different from others? What’s in your organizational DNA that makes your company unique? Is it a source of pride and advantage? If it isn’t, why not? These differences should matter positively and if they do, they should be the focal point of resource investment and management attention.

7. What is the one thing about our organization that we must protect at all costs? This may be the hardest question of all to answer. Is it something your organization possesses? Something it knows? The way in which people think and act? A combination of all three? Indeed if it’s more than one thing – so much the better. It will be that much more difficult to copy.

One possible downside of the increasing trend toward regulatory-driven financial transparency is that CEO’s may be even less inclined to share important information about financial and operating performance with employees. That would be a shame. Organizations that are intent on achieving marketplace excellence are far more likely to succeed if they practice performance transparency.