Tuesday, March 30, 2010

France Telecom & Employee Motivation

France Telecom announced last week that it plans to begin basing up to 30% of a manager's bonus on social criteria, including job satisfaction of the people on the manager's team.  The change was implemented as part of a plan to address the company's rash of suicides over the last two years. [story]

Many of the people at the company who committed or attempted to commit suicide blamed their actions on working conditions, forced transfers, or fear of job loss.  In response to the problem, France Telecom's leaders have implemented training programs for managers and supervisors, and hired additional physicians, psychologists, and human relations personnel. Last week's decision to tie bonuses to worker satisfaction, absenteeism, and other people-oriented measures was the latest effort to deal with the problem.

Why Wait for Suicides?

My initial thought about this latest action was that it was a good move to improve the environment and working conditions at the company.  In addition to stopping the suicides, it can result in improving productivity and quality of service.

Upon further consideration, however, I wonder why it would take a rash of suicides for a company to understand the need to hold managers accountable for the satisfaction of those who report to them.

It is the responsibility of anyone in a supervisory position to create a positive environment for those on his or her team.  This includes coaching, motivating, and developing people, as well as creating an atmosphere that continually challenges people to improve.  A good leader also has to truly like people.  Although liking people does not necessarily make someone a good leader, disliking people definitely makes for a bad one.

Also, senior leaders must accept the responsibility to promote and hire only people with leadership capabilities into management positions, and commit to regularly develop the abilities of these people to become better leaders.

Remember Maslow?

Those who learned in management classes about Abraham Maslow's theory of motivation will undoubtedly remember his hierarchy of needs.  In his book, Motivation and Personality (HarperCollins, 2006),  Maslow theorized that people have five levels of needs, ranging from the most basic (physiological, safety, and love/belongingness) to the highest (self-esteem and self-actualization).  Maslow further stated that people cannot be motivated by appealing to higher level needs when they feel their basic needs are not consistently met.

When applied to the workplace, it becomes clear that fear and other aspects of poor leadership keep people at lower levels - specifically, the need for safety and security.  Change, innovation, and improving productivity, on the other hand, require people to be at higher levels.  In other words, we will never achieve the type of environment that fosters quality, improvement, and dedication necessary for long-term success and growth without helping team members satisfy their lower level needs.

Unfortunately, France Telecom is learning this the hard way.  Other companies can learn from their misfortune and create the type of environment that values employees.   The results of such an effort will be rewarding, not only for workers, but for all stakeholders.

Monday, March 22, 2010

Is Change Management the Missing Link?

I recently had lunch with a financial executive who expressed frustration with his company's lack of success with strategic initiatives.  He told me that the initiatives tended to evolve from high expectations to disappointment to - in the most drastic instances, being abandoned altogether.

Among the initiatives he mentioned that had disappointing results over the last couple of years included projects related to reducing the product development cycle time, implementing lean manufacturing, and upgrading the company's ERP system.

It was very clear that the company's lack of success was not due to a lack of desire or interest.   The management team spends a significant amount of time each year developing the strategic plan and creating initiatives to improve competitiveness.  A manager or director is always assigned the responsibility to lead projects and a fairly detailed plan is developed for each initiative.

So What's the Problem?

The inability to successfully complete high-level initiatives is a fairly common problem for companies.  Like many organizations, this company tended to approach strategic initiatives from a purely technical perspective, while ignoring the behavioral factors involved in change.

For most organizations, strategic initiatives involve a significant level of change.  Whether it is a change in behavior or method of operation, success requires respecting and validating the human complexities involved, no matter how insignificant the change appears to be on the surface.

There are barriers to change in virtually every organization that interfere with successful completion of initiatives.  These barriers can be personal (related to an individual's personal fear of change), political (resulting from the interactions and culture of the organization), or organizational (caused by policies and systems within the company).  Recognizing the existence and extent of the barriers can greatly improve the chances to succeed with the desired change.

Planning for Change

It is important to include steps to address the barriers as part of the planning process for change initiatives.  For example, if there is fear within the organization, steps must be taken to identify the causes and actions to reduce its effect on the initiative.  The types of fear often associated with change include fear of job loss, fear of appearing ignorant for asking questions about the change, fear of retaliation for questioning the approach being taken, and others.  Although it is virtually impossible to completely eliminate fear within any organization, it is important to understand where it can interfere with the change and minimize it as much as possible.

An Example

A global company with factories in several countries around the world created an initiative to implement a best practices process throughout the organization.  The initiative included a kick-off meeting attended by the company's plant managers where the process was introduced and expectations communicated.  Throughout the following year, though, very little sharing was done between plants and everyone pretty much operated as they had before the initiative was announced.

When I was called in to help with the initiative, I began with a series of interviews to identify barriers that existed within the company that could interfere with the sharing and adoption of best practices.  From the interviews, it became clear that despite the importance surrounding the initiative, the company's culture actually discouraged sharing of information and accepting suggestions from people at other plants.  The plant managers had been in their positions for many years and were regularly rewarded by acting independently.  Many were selected for the position because of their strong, independent personalities, and had always been expected by senior leaders to be experts on pretty much everything related to the factories they led.

It quickly became obvious that the plant managers did not accept input from each other because of the fear of appearing less knowledgeable than one or more of their peers.  Also, since the company's culture was highly competitive, people did not want to share information that would help improve another plant's results.

Resolving this problem required modifying the behavior of the senior leaders, coaching the plant managers, and changing the company's systems of measurements and rewards.  It required a lot of effort and consistency at the senior level but eventually the initiative began to visibly progress and result in significant productivity improvement across the company.

In the above example, the process for sharing best practices and visible commitment from the top was excellent.  All that was missing was a change management approach to the initiative.  Once the barriers to change were identified and addressed, implementing the process became much easier.

Whether a company is implementing a best practices process, pursuing lean, or integrating an acquisition, it is vital that a change management approach is used to make sure the people issues (i.e., the barriers to change) are adequately addressed.

Change as a Competitive Weapon

As we slowly emerge from the worst economic period since the Great Depression, those companies that are able to adapt quickly to changing market conditions will be the most successful.  Organizations cannot afford to waste time with initiatives that move too slowly or fail to achieve desired results.  Making the effort to identify and remove the barriers to change within the company will greatly improve the level of success with initiatives while simultaneously creating more a flexible, adaptive, and profitable company.

Thursday, March 18, 2010

The Future of Television

Earlier this month, a number of viewers in the northeast missed the first 15 minutes of the Academy Awards broadcast because of a dispute between Disney and Cablevision Systems.  The contract between the two had expired and, as the negotiation process got ugly, Disney pulled its signal from the system.  After issuing statements characterizing the other party as greedy and not caring about its customers, both sides finally came to an agreement that allowed the signal to be returned just after the Oscars began.

This was the second high profile dispute between a television broadcaster and a cable provider.  Fox and Time Warner had a similar battle late last year regarding the price of News Corp channels included in Time Warner subscriptions.  From all indications, this is just the beginning as broadcasters watch revenue from advertisers shrink and look for ways to make up for the loss.

Is the Business Model Obsolete?

As tensions between the broadcasters and subscription providers grows, I can't help but think that the current model for the industry is quickly becoming obsolete.  Broadcasters want more money for programming - subscription providers want more money for delivery of the programming - consumers want access to entertainment without paying more for their subscriptions.  Something has got to give . . .

I'm definitely not a media visionary, but I'm guessing that, now that internet bandwidths are increasing, it won't be long before we start downloading our television programs from the internet and sending them to our televisions wirelessly.  Although it's possible that we'll continue to pay companies like Comcast for subscription packages, it's also possible that we could end up paying the broadcasters directly through a monthly subscription or individually by the download.

The next five years will be very interesting to watch as another industry's business model becomes profoundly altered by the internet and the innovative and flexible companies take advantage of the opportunity to grow while those that don't significantly shrink or completely disappear.

Monday, March 15, 2010

Union vs Management: Who's At Fault?

According to a story in Friday's Wall Street Journal, the airline industry is beginning to face another challenge to their survival.  After years of concessions, union members are demanding wage and benefit increases which, according to airline executives, are going to seriously damage their ability to recover.

Same Old Story

Here we go again . . . union and management, each charging the other with being greedy and self-centered.  We've seen it again and again and will unfortunately continue to see it in the future.

So which side is at fault in this situation?  Who is driving down the organization's competitiveness by ignoring the other group's needs.  In my opinion . . . it's both.

I'm not close enough to the airline negotiations to talk about their situation directly, so I'm going to approach the issue in a much more general sense.  I have been intimately involved with several companies throughout my career that were unionized and, on one occasion, led a company where all but a very few of the workers belonged to a union.

In most cases, I have noticed that people on each side tend to approach negotiations with the objective of getting as much as they can rather than working toward an agreement that benefits both parties - in other words, the company as a whole.  Throughout the process, each side tries to win while the other loses.  Whatever happens in the negotiations, when the company doesn't win; everyone ends up losing.

It Doesn't Have to Be This Way

There are companies that resolved this issue and, as a result, have been very successful.  After all, one of the most basic premises in business is the idea that an organization can only succeed over the long-term if everyone is focused on the same objectives.  When one group is focused on its own interests, the other tends to follow suit and the company is never truly successful.

Whenever I worked in a unionized company, I spent a great deal of time on the relationship between union members and white collar workers.  When I led an organization that was  unionized, I invited a union representative to participate in strategic planning meetings because I felt that the person could play a big part in getting workers on-board with specific initiatives.

The benefits of including the union in the strategic planning process were huge.  Besides the success achieved with initiatives that directly involved unionized workers, people felt that their opinions were respected and valued by the management team.  Trust also increased because of the openness that was demonstrated by letting a union representative hear - and actively participate in - the high-level planning sessions.

It Can Work If You Want It To

To get to the point where the union vs. management situation becomes a thing of the past requires a lot of effort on both sides.  It is critical that managers start making the union feel like a partner in the company, and for both sides to focus on what is best in the long run for the company as a whole.  The chance for success diminishes greatly, though, if one or both groups does not truly want to improve the relationship.  One act of distrust can quickly wipe out years of work to build the relationship.

With many years of concerted effort, however, it is possible to build up trust to the point where one company, instead of two sides, exists.  And when the company reaches this point, great things will start to happen.

Monday, March 8, 2010

Berkshire's Future Management Tool?

Projected Successor to Buffet Uses Termination List to Motivate

Every year, speculation increases as to who will one day succeed Warren Buffet as CEO of Berkshire Hathaway.  According to an article in the February 27th issue of the Wall Street Journal, the most likely heir apparent at present is David Sokol, chairman of MidAmerican Energy Holdings Company and chairman/CEO of NetJets, Inc. (both are units of Berkshire Hathaway).

Mr. Sokol's record at MidAmerican has been impressive.  He took over the company in 1993 and, since Berkshire Hathaway began investing in the company in 2000, earnings have increased from roughly $109 million to $1.7 billion.  Results like this, along with Sokol's reputation as a deal-maker, and his close relationship with Buffet have increased the speculation that he will be the next Berkshire Hathaway CEO.

Many people wonder how the company will change when someone other than Buffet is in charge.  The fact that he ahs been running Berkshire Hathaway since the mid-1960s and has built it from a small, unknown textile manufacturer to the 18th largest company in the world with 250,000+ employees makes discussion and debate about its future very interesting.

Leading Via a Termination List

With Sokol, we do get a glimpse into his leadership style through the book, Pleased But Not Satisfied, that he authored in 2007.  The book presents his philosophy on a variety of business issues, including leadership.  On the topic of managing people, he wrote that he maintains a notebook of the successes and failures of each person on his team.  He uses the information to evaluate and rank each person in terms of whom he would terminate at any given time.

Although I've seen a number of different approaches to leadership over the years, I've never seen one that makes use of a termination list.  In previous blog posts, I've written about the importance of being people-oriented when leading a company.  I believe that an often forgotten responsibility of a CEO is to continually motivate, develop, and focus the efforts of people.  If the leader is not fundamentally people-oriented, attempts to create the type of culture that motivates and unleashes the potential of team members will be a constant struggle.

Keeping a list of successes and failures for coaching purposes is potentially an effective way to develop people.  Ranking people, based on the list, in order of expendability turns the list from a development tool into management by fear.

I'm sure that Mr. Sokol has some very talented people on his team.  I can't help but think, though, that the fear created by the termination list results in burying some of the talent and motivation, discourages people from taking chances or setting aggressive goals for fear of failure, and has resulted in the loss of some potentially excellent workers.

In some way, the results Sokol has achieved at MidAmerican makes it difficult to argue with his approach.  I believe a more open, servant leadership style, however, would lead to even greater results because when people are relaxed and secure in their positions, they are more innovative, less competitive with each other, and willing to strive for the impossible.

The Draw of Berkshire

It is Warren Buffet's reputation as a leader that gives Berkshire Hathaway first shot at many acquisitions - sometimes before anyone else even knows a company is for sale.  Many companies actually approach Buffet when they are ready to sell because they feel comfortable with the way Berkshire treats companies (and the people working in them) after the acquisition.  This gives Berkshire Hathaway the ability to target strong, well-run companies, while avoiding desperate and troubled organizations.

I'm not sure a CEO with a termination list will give an acquisition by Berkshire the same level of desirability.

Thursday, March 4, 2010

An Easy Way to Reduce Corporate Espionage

The thought of corporate espionage used to conjure images of insiders being paid by competitors to provide confidential information or hackers making their way into corporate intranets to gain access to cost or design secrets.  Although these aspects of spying obviously exist, gaining access to privileged information is not that difficult.  It may actually be as easy as hanging around a coffee shop.

When I write a blog post, article, or book, I often do it in a coffee shop (American - not Dutch).  Over the last several weeks, while i was actually trying to concentrate on what I was writing, I realized how much confidential information is openly discussed over coffee.  Among the surprisingly loud discussions going on nearby, I overheard the sales strategies for a pharmaceutical company, costing information for an instrument manufacturer, and exploration plans for a major gas producer.  Fortunately for these companies, I believe spying is unethical, and I wasn't really paying attention anyway, but there is no guarantee that any of the other people sitting near me felt the same way.

It's a shame that we've gotten to the point where some companies would rather steal information than compete on the merits of their business strategies, but this is the reality of the world in which we live.  People really need to be more aware of what they are talking about over a cup of coffee - especially when the foccee shop is near the workplace.

So for your own protection, please use coffee shops for discussions about personal topics, complaints about your boss, or politics, but keep confidential information where it belongs: behind closed doors.

Monday, March 1, 2010

Whole Grains and Happy Employees

With all the recent news about layoffs, plant shutdowns, and product recalls, it's refreshing to hear a positive story from the world of business.  Bob Moore, the 81 year-old founder of Bob's Red Mill, an Oregon-based producer of whole grains and related products, announced last week that he is turning the company over to the employees. [Story]

Apparently, Moore felt that the only way to maintain the focus that has made the company successful over the years was to give it to the employees rather than sell it to outsiders.  He credits his success to a commitment to customers and employees and does not want that to change - even when he is no longer running the company.

Employees Really Are an Asset

Many companies talk about the value of employees, but with this decision, Moore has shown that he truly believes it.  My initial thought when I read the story was how the employees must have responded when they heard that their contributions and efforts had been recognized.  After further thought, however, my guess is that they already knew that they were valued and this was just another example of the type of culture Moore has created for the company.

We all need to learn from Bob Moore.  People can do amazing things, but only if the company's leaders remove the barriers that interfere with motivation and action.  This is not a difficult concept, but it cannot happen if the leaders do not truly value the company's employees.  If respect for people is not part of the fundamental makeup of the leader, efforts to create a positive culture that motivates people will require continual effort and will never be fully achieved.  And you do not need to give the company to the employees to make it happen.  People know when they're appreciated - rewards are part of the equation, but money does not appeal to a person's intrinsic motivation.  Appreciation, being heard, having control over the work, and contributing to something worthwhile are the things that really contribute to motivation.

I've bought Bob's Red Mill grains for many years because I like their products.  From now on, though, I'll be thinking about how the product I'm buying was developed and produced directly by the company's owners.