Managing Costs Instead of Managing the Business

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If there is one thing certain as a result of recent events, it is that the world of business is going to change. After a fairly long period of economic growth, companies are finding themselves in the midst of shrinking markets, increasing costs, falling profits, and a highly competitive environment. The choice for a company during these times is either to be defensive by implementing cost cutting measures, laying off employees, and shrinking in size, or go on the offensive and use the slowdown to attack problems and become more focused on innovation and improvement of products, processes, and services.

An offensive strategy is actually nothing new to business. Companies like Toyota, Samsung, Honda, Apple, and Nucor Steel have used innovation and improvement for years as a way to strengthen their abilities to compete. For a variety of reasons though, most other companies have had little success with these philosophies or rejected them altogether. Over the last few decades, American business leaders have increasingly taken the easy route and implemented cost cutting moves to deal with economic challenges; announcing the layoffs as if there was no other alternative. And recent actions have shown that the response to the current recession is magnified, but no different.

One of the biggest problems with a defensive approach is, when the recovery does begin to occur, the companies that have ‘cut to the bone’ will not be able to quickly respond to the growth. When they do finally catch up with the increased level of business, they will do so with the same level of inefficiency and waste that they have in the past. Those organizations that go on the offensive, however, will be in a much better position to take advantage of the recovery to profit and grow quickly.

As an example, the U.S. automakers have been shedding massive amounts of workers in an effort to show Congress that they are managing their costs. Unfortunately, by losing tens of thousands of workers, they are also losing the experience and knowledge that the people have in these companies’ processes and how to improve them. Those who manage to keep their jobs will likely not have the time (or the enthusiasm) to work on improving operations. It is amazing that Congress has no problem giving taxpayer money to companies that manage costs instead of managing their businesses. Rewarding organizations to layoff workers only increases the number of people who will cut back on spending, thereby increasing the length and severity of the recession. If anything, bailout money should go to those companies that choose to not lay off their workers.

One of the positives that could result from the auto bailout, however, is that the Detroit 3 may be forced to reduce the current level of outsourcing work to low cost countries and bring jobs back to the U.S. If this does happen, they will have no choice but to find ways to innovate and improve in order to compete with foreign automakers.

The Difference Between Talking and Doing

Knowing that innovation and improvement are necessary for survival and actually doing them well, however, are two different things. Continual improvement and innovation require more than training people in the latest methods and then telling them to go innovate and improve. Most organizations require a drastic cultural shift in order to enable improvement to take hold and become a part of the way the company operates.

There are unfortunately very few people in business who truly understand that lean manufacturing and kaizen are business philosophies rather than sets of tools to reduce waste. Managers read about the success of the Toyota Production System and rush to copy the tools instead of looking deeper at the company to comprehend how the system was developed and why it works.

It’s In The Culture

Changing a company’s culture is a complicated process because of the psychological and sociological issues – both of which are rarely taught in any depth in business schools. When you startup a company and are the only employee, culture is not an issue. As soon as you add one person, though, the culture gets more complex and the complexity grows exponentially as more people are added.

So how can an organization’s leader change the culture to make it more likely to succeed with improvement initiatives? In effect, we need to rewire western organizations in order to continually identify and remove the barriers to improvement. And, just like changing a personal habit, once a barrier is removed, it must continue to be watched to make sure it stays removed.

There is an organized way to approach the cultural aspects of improvement. The key is for the leader to be serious about the need for improvement, and understand that it will require work on the indirect or softer issues in an organization. A leader who writes off psychology and/or sociology as too theoretical and not practical has little chance of implementing a change initiative of this magnitude.

The Necessary Elements

The elements that are necessary for initiatives like lean, six sigma, or kaizen to be successful in achieving sustained levels of improvement are listed below. Assuring that these components exist within the organization requires constant effort to prevent returning to old patterns and behaviors. You must continually strengthen and develop the elements until they get to the point where they build on themselves.

None of these elements are new to the world of business. They have been written about in one way or another for many years. Unfortunately, many leaders both don’t believe in their importance or find them to be too much work and abandoned or ignore them. It is common to write these issues off as too theoretical because they are not easy to manage. In reality, however, those companies that have been successful with improvement and innovation have spent considerable effort to align their cultures with their visions, thereby setting up the organization to succeed.

In no particular order, the items that require continual reflection and focus include the following:

• Clear Purpose An understanding of why the organization exists and what its future holds;

• Consistent Values A clear understanding of the team DNA and screening new hires to assure they share the same values;

• Enthusiasm for improvement People within the organization need to be obsessed with improvement and possess the humility to realize that there is always a better way of doing things;

• Openness A culture where people feel comfortable telling management when decisions and actions conflict with the purpose and/or values;

• Trust Workers must trust that nobody will lose their job as a result of the improvements made. Also, management must trust in the knowledge, experience and intelligence of workers;

• Focus on People/Processes/Customers More attention must be given to people, customers and processes than spreadsheets and financial reports;

• Training & Development of People and Teams Training and developing of team members must be a high priority within the organization. Leaders need to be developed from inside the company rather than hiring in from the outside;

• Pride Throughout the Organization People must be proud to be associated with the company and truly care about its success;

• Understanding Internal Customers/Suppliers Everyone must clearly understand their role in the company, including whom they serve and what these people need. Whatever the company provides its customers defines its main processes (whether it is a product or service). Anyone who is not directly involved in a main process is in a support role and his or her purpose is to serve those who are directly involved;

• Walking the Talk Improvement initiatives require attention, commitment, and involvement of executive managers;

• Aligned Measurement & Reward Systems Reward systems must support improvement initiatives. This requires rewarding teams instead of individuals, and tying promotions to success, enthusiasm and commitment to improvement and change initiatives;

• Proper Organizational Alignment The process focus required for improvement initiatives is difficult to achieve within a traditional functional organizational structure;

• Clear Objectives Without close alignment to organizational objectives,
  improvement projects will be fragmented and have very little chance of succeeding;

• Patience Changing culture takes time. People tend to want change to happen rather quickly, but in most organizations, it just doesn’t happen,

People tend to be much more open to change during a recession than at any other time. The willingness to try new things and not be looked at as standing in the way of change increases dramatically when people are worried about their jobs and the jobs of their coworkers. In other words, if you are a leader and ready to implement lean manufacturing, kaizen, or any type of improvement initiative, your chances of success may never be higher.

Do Layoffs Make Sense?

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The lead story in today’s Wall Street Journal is about companies accelerating layoffs in response to the recession. According to the story, companies have laid off about 600,000 workers since October 1. The list of companies shedding workers includes AT&T (which recently reported a 5.5% increase in 3rd quarter profit), Adobe Systems (which actually projected an 18%-21% increase in 4th quarter profit), Viacom, DuPont, Avis, Whirlpool, Motorola, GE, and many other high-profile businesses. Spokespersons for these companies blame falling revenues as the reason for the layoffs.

Looking at this situation from a macro perspective, it appears that companies are setting themselves up for a self-fulfilling prophecy by implementing layoffs. When people lose their jobs, they generally cut spending and only buy absolute necessities. They don’t buy cars, appliances, electronics, or apparel, and stop spending on services that are unnecessary or they can do themselves. When this happens, revenues for companies that produce cars, appliances, electronics, apparel, and offer services fall. These companies respond by laying off more workers, thereby increasing the number of people who reduce spending, and the cycle continues. This cycle actually worsens as it continues because people who remain employed start cutting back on spending because they are worried about eventually losing their jobs.

The problem is, by laying off workers, companies are actually adding to the problems they face. Until an executive (or board) at a major company makes a statement by not laying off workers in response to falling revenues, the situation will continue to get worse. In short, until consumers feel comfortable enough to begin buying again, the economy will continue to decline.

Our government is in the process of giving away our unprecedented amounts of money to companies in order to help them survive. Looking at the companies that have received bailout money (and those who are hoping to get some), it appears that one of the stipulations for receiving government money is to lay off workers. From this perspective, it looks like our officials are rewarding companies for firing workers (i.e., adding to the unemployment rate).

Bailout money should only go to companies that make a commitment to keep their workers employed. If a significant number of companies make this type of commitment, consumer confidence would slowly increase and buying would return, thereby increasing company revenues and preventing the need to lay off workers.

During the Great Depression, SC Johnson (makers of Johnson Wax®, Pledge®, and other household products) did not lay off a single worker. Instead of producing products though, workers washed windows, improved landscaping, and painted factories to keep busy. The courage and commitment shown by SC Johnson management by keeping their workforce intact during this rough economic time resulted in an immeasurable amount of loyalty and gratitude from their employees. Imagine how you would feel today if your company was to show you the same level of commitment.

CEOs today are like captains faced with guiding their ships through a dangerous storm. When a ship captain faces this type of situation, though, he uses the crewmembers to help guide the ship safely and does not throw them overboard in order to save the ship.

Since corporate executives are obviously not going to take on the responsibility of getting us out of the recession, it is up to the government to focus actions and bailout money on activities that will get consumers buying. Without this type of focus, the economic death spiral that we are currently in will continue well into t

Auto Industry Bailout a Good Idea?

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I have very mixed feelings about the bailout of the U.S. automakers. Besides knowing many Detroiters and automotive professionals personally, I have a lot of sympathy for the thousands of people who will lose their jobs if some sort of bailout does not occur (not to mention the retirees who will lose their pensions and benefits). Many people who work for the Detroit 3 (and its suppliers) really love the auto industry, and they (along with their parents and grandparents) have worked in the industry for so long that they can’t imagine doing anything else. Also, automobiles have been such a vital part of Detroit’s culture for so many years that losing the automotive industry could result in the city losing its identity – the effects could be devastating.

On the other hand, using government money to bail out companies that have suffered from bad management does not make me a happy taxpayer. We are already bailing out banks and investment firms for bad management practices and now homebuilders and automakers want to be bailed out as well. It’s been awhile since my college days, but I really don’t remember learning in any of my economics classes that a free market economy includes bailing out companies that have been mismanaged by their executives and boards of directors.

A bailout of the Detroit 3 should not even be considered without several stipulations, including a change at the executive and board levels, and a clear and concise plan for a fundamental change in their cultures to enable focus on continual improvements in product offering, quality, productivity, and costs. Without these types of changes, there is no guarantee that these companies won’t waste the billions given to them just as they have wasted billions of their own cash reserves over the last 10 years. And the last thing we need is to be debate this issue again 1-3 years from now . . . most likely for a whole lot more than $25 billion.

Are Legacy Costs the Problem?

All three of Detroit’s automakers are affected by the legacy costs to their retirees, and GM’s Rick Wagoner never misses an opportunity to note this as a major competitive disadvantage for the company. One thing that Wagoner never mentions, though, is the more than $1.4 billion in contractual pension obligations that GM has for its executives. I’ll have a little more sympathy for Mr. Wagoner as soon as I hear him complain about these obligations as well.

Although Toyota and Honda have the advantages of operating nonunionized plants, and having much lower legacy costs, these are not the reasons for their success. They produce great cars that people want to buy; and they do it quicker, better and at a lower cost than anyone else. Also, the people at Toyota and Honda love their jobs and their companies, and directly contribute to improving the work that they do.

Anyone who has studied business – and especially manufacturing – knows that there are huge differences in how Toyota approaches business as compared to Ford or GM. One of the most glowing differences is that they take care of their people and do not fire them whenever revenues fall. They have also been continually working to perfect their system of production for the last 60 years.

Taiichi Ohno, former Toyota executive and father of Lean Manufacturing wrote in his book, The Toyota Production System: Beyond Large-Scale Production, “hiring employees when business is good and production is high, just to lay them off, or recruiting early retirees when recession hits are bad practices.” Ohno wrote this over 30 years ago when few thought that Toyota had any chance of surpassing the Big 3 in sales. Obviously, executives at Ford, GM and Chrysler have chosen to follow a different approach and continue to undervalue the people who design and build their cars.

Funding the Business for the Long-Term

Much has been written about the profits made by Ford and GM from their SUVs and pick-up trucks over the last 10-15 years. Unfortunately, the executives chose to sit back and enjoy their success instead of thinking about the future health of the companies they were supposed to lead. Unlike Toyota and Honda, they did little to develop small, fuel-efficient models and instead chose to continue to focus on gas-guzzling, but highly profitable automobiles, all the while handing out millions in bonuses. Anyone who lived during the initial oil crisis back in the 1970s might be experiencing some very painful déjà vu from this situation.

While Toyota and Honda also did what they could to maximize profits from hot-selling SUVs and pickup trucks, they invested billions into developing hybrids and more fuel-efficient models for the future, as well as continuing to focus on updating and improving their factories.

A further important distinction with Toyota is their philosophy of building cash during the good times in order to help the company withstand the bad times. They use profits as a way to invest in the future and make sure that there is a future. At present, they are one of the few companies that have the ability to finance purchases for their customers. Any company that does not build its cash during the good times to keep it operating during the bad times is doing all of its stakeholders a disservice.

I also wonder why we are considering giving Chrysler money when their strategy seems to be to sell themselves to GM (who, according to all indications, plans to shut them down). The company announced recently that it is cutting back on product development to save money. This does not sound like a company that plans to be around for the long-term and, from my perspective, makes it a bad investment for taxpayer money.

GM is predicting that, without the bailout, a massive number of people will lose their jobs and suppliers will close down. This is a strange concern for a company that has history of massive layoffs and a reputation for apathy towards its suppliers. Why do they now care about putting people out of work and suppliers out of business when they didn’t for so many years?

Remembering When Quality Was Job 1

One of the real shames in this situation is that Ford was actually on the right path back in the 1980s when Donald Peterson was CEO. Peterson was an avid follower of W. Edwards Deming (one of the people credited with teaching Toyota how to compete), and began making progress on shifting the culture at Ford toward quality and continual improvement. Unfortunately Peterson had a very short tenure as CEO and the company quickly changed direction after he retired in 1989. One has to wonder where Ford would be today if the company continued implementing Deming’s teachings.

Maybe the answer to all of this is for the Detroit 3 to reorganize as banks. They would then have access to the $700 billion financial system bailout without the headache of developing and presenting plans to show that they intend to change.

Circuit City Unplugged

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Circuit City has now officially joined the list of faltering U.S. companies facing severe financial troubles. In a series of announcements over the last few months, the company has disclosed plans to close 20 percent of its stores and layoff thousands of workers. Increased competition from Best Buy, Wal-Mart, and others, along with a deep U.S. recession are being blamed for the company’s troubles. I don’t agree. Like so many companies that have entered a death spiral over the years, it is obvious to me that Circuit City was just another company suffering from bad management.

I truly feel bad for the workers who have lost (or will soon lose) their jobs at the company. What is really sad, though, is like so many other companies that have been in the same situation, the people responsible for the troubles - the executives – get to keep their jobs while thousands of workers lose theirs. It is not the salespeople, accountants, warehouse workers, and cashiers who led the company into decline. In fact, I cannot even think of a situation where a salesperson or cashier can cause company to go out of business.

Back in 2007, the company laid off 3400 of their higher priced salespeople and replaced them with lower-paid workers. In justifying the move, Circuit City spokesman Jim Babb was quoted as saying, “All companies at one time or another need to go through and make sure their cost structure works with market conditions.” Being the employee-focused company they are, Circuit City did allow these workers to reapply for their old jobs at a lower wage (and after a 10-week waiting period), but they were not given the option of staying at a lower wage. Just for comparison, according to the company’s 2008 proxy filed with the SEC, Circuit City CEO Philip Schoonover received in excess of $6 million in compensation for the year (and each member of his executive team received compensation in excess of $1 million). Imagine what these people would receive if the company had actually been successful this year. It is really sad that the Circuit City executive team is accepting this level of compensation while throwing thousands of people out of work – especially in today’s economic climate.

Besides the obvious morale issues caused by this type of action, the company gave up on its customers by firing their trained and experienced salespersons. Circuit City had the reputation of having among the most knowledgeable people in the retail electronics industry. By ridding the company of the high level of expertise that customers had come to expect, Circuit City eliminated the only advantage it had over companies like Best Buy and Wal-Mart. They treated the products they sold like commodities and became just another discount electronics store. The problem with this strategy is that they did not have the cost structure to compete as a discount store.

In their 2006 annual report, the company formally announced its “three parallel areas of work.” These were: UPGRADE the current business through talent, processes and systems; EVOLVE the core business to grow revenues and profits through fundamental change; and INNOVATE to grow new business with new consumer values. Like so many, the parallels comprise another very catchy and creative slogan that lacks substance. In mid-2006, the company’s stock was trading at $30.75 – it closed today (11 November) at $0.13.

Further on in the report, Schoonover writes, “I embrace the opportunity to lead Circuit City as we continue the transformation of our company to better serve our customers, Associates and shareholders.” Looking at the performance of the company since 2006, there is little evidence that Circuit City has served anyone well . . . except Best Buy and Wal-Mart.

Returning to Prosperity Will Require Getting Back to Basics

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Back in the 1980s, management experts W. Edwards Deming and Peter Drucker wrote about the importance of an organization understanding its purpose in order to be successful. Unfortunately, we didn’t get it. Although many companies did develop highly professional and well-written mission and vision statements, they tended to be aimed at those outside the organization – investors and customers – instead of the people inside the company, for whom this information is critical.

Now that the American economy is collapsing, it’s time to get back to the basics of running a business – something we have not done for many years – and the first step is to establish and communicate the purpose.

I have been speaking to groups and coaching executives for years about the need for communicating a clear and unchanging purpose to get people to work together and focus on what is important. I’ve also been teaching these same people that the fundamental purpose of an organization is NOT related to profits or share price. Just to be clear, though, let’s go through this one more time . . .

Why Purpose is Important

If we look at the Cambridge Dictionary of American English, we find that an organization is, “a group whose members work together for a shared purpose in a continuing way.” In line with this definition, without a purpose, there is no organization. There is only a group of people who come to work each day, put in eight or nine hours, and go home.

Without a clear purpose, those inside the organization will attempt to define it in their own terms and conflict between people and departments will result. The most basic premise of teamwork is that those on the team understand why they are there and what they are trying to accomplish. We see examples in sports virtually everyday where a superstar is more concerned about his or her own statistics instead of the team winning. This is why dream teams are rarely successful in winning championships.

The purpose statement does not need to be framed and posted throughout the organization to be effective. It just needs to be understood through indoctrination when a person is hired and continually exhibited through the decisions and actions of management.

It’s Not About Profits

An organization is established in order to serve a need in society. Either the need is not being served well or not at all by existing organizations. Although it is absolutely necessary for a business to be profitable to survive, profits are not the reason for the company’s existence. As human beings, we need air, food and water to survive, but (assuming that we have enough of each) they are not the purpose of our existence and the focus of our lives.

The need that the organization was originally created to satisfy is the purpose. Henry Ford wanted to build a car for the masses; Google wants to organize the world’s information and make it easily accessible; and the M.D. Anderson Cancer Center wants to eliminate cancer throughout the world. It is statements like these that give people clarity, focus, and inspiration.

Regarding profitability (or any other financial measure), the better an organization serves its purpose, the more profitable it will be. And contrary to popular belief, the mission statement does not need to make reference to shareholders. If the people and activities are aligned with the purpose and the company continually improves the products or services it offers, the shareholders will do just fine.

Why We’re in this Mess

The financial institutions involved in the global collapse did not understand their purpose. The bonus schemes and metrics implemented inspired greed and selfishness instead of teamwork and commitment to the fundamental need these institutions were created to provide. One has to wonder what Charles Merrill, Edmund Lynch, Emanuel and Mayer Lehman, Joseph Bear, and Robert Stearns would think about what the people in charge of the organizations they founded did to destroy these institutions.

The fact is, what happened in the financial markets can (and has) happened to other companies over the years. As long as greed continues to drive the business world, the purpose of organizations will be defined in financial terms, and the judgment of executives and managers regarding what is best for the company will be clouded.

The Basics

The financial institutions that remain must soul search to truly understand why they were created in the first place. The result will be purpose statements that Boards and executive committees can clearly communicate to team members. This is vital in order to get everyone on the same page and focus on what is important for the organization to continue to survive and prosper in the future.

This will be new to many people in these organizations and continual reminders and checks will be necessary to make sure that they stay on track and don’t stray from the purpose. It will be a difficult but highly rewarding process, and is absolutely necessary for America to regain its competitive position in the world.

Another Toyota Advantage

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Toyota has announced a $250 million ad campaign to introduce 0% financing on 11 of its models. At first glance, it looks like another attempt by an automaker to generate business during the latest slowdown in U.S. auto sales. After all, Toyota sales have been hit hard during the last several months – last month showing a 32% drop over September 2007. Digging a little deeper into this campaign, however, gives a little more insight into the Toyota way of doing business and how they are able to offer a type of incentive that would be very difficult, if not impossible, for its U.S. rivals to match.

Toyota has approximately $19 billion in cash, while Ford and GM are hemorrhaging. While the growth in Toyota sales over the last several years, as well as sales of high margin cars like the Prius, is part of the reason that the company is sitting on such a large amount of cash, it doesn’t give the whole picture. It wasn’t very long ago that GM and Ford were selling SUVs and pickup trucks at record levels and hauling in huge amounts of profits. The difference is that Toyota holds on to its cash so it can weather a downturn in business while Ford and GM (as well as many other U.S. businesses) give theirs away as bonuses to executives. Toyota executives are paid well, but their compensation does not come close to the amounts received by their counterparts at U.S. companies.

Although reading reports from analysts would make one think otherwise, it is ridiculous for any company to assume that it can achieve growth and profitability every year. Toyota understands this and puts away a portion of its profits every year to provide a cushion for years when business drops off. Fortunately for Toyota, it has been a number of years since they experienced a downturn, so their level of cash reserves has grown to enormous levels.

Keeping cash from the good years enables Toyota to offer 0% financing to its customers now while GMAC and Ford Motor Credit struggle to find the cash to stimulate sales. And this situation has even more far reaching consequences than are visible at first glance. If, for example, GMAC does not have the cash to offer customers financing, its sales will continue to slide, causing a further decline in profits which forces it to use more cash to finance its operations. This results in further declines in the amount of cash available to offer customers and further reduces sales and profits. This type of downward spiral is difficult to escape. This type of situation appears to be driving the move by GM to purchase Chrysler which, at the moment, has several billion in cash reserves.

Another benefit to Toyota’s cash position is its ability to keep paying workers while it temporarily shuts down production in its factories. Workers at the Toyota plants affected by the shutdown are still paid to come into work. Instead of building new cars and increasing inventories, however, they attend training classes in safety, quality, and productivity, and work to improve the processes so when production starts up again, they are even more efficient. This practice also keeps employee morale high and increases the level of commitment people have to the company.

Time will tell if Toyota’s 0% financing offer will work to stimulate sales. It may be that people are not willing to buy a new car when they don’t know if their jobs are secure or their investments will recover. About the only certainty in the foreseeable future, though, is that “The Big Three” will be GM, Toyota, and Honda. By purchasing Chrysler, GM will hold onto the top spot for a little while longer.

Communicating With Workers - A New Concept?

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In an article in the Wall Street Journal earlier this week, Brittany Hite wrote about the differences in giving feedback to younger workers as compared to older workers (Employers Rethink How They Give Feedback). In the article, Ms. Hite presents six points to remember when giving feedback to Gen Y employees:

• Avoid surprises by giving feedback on a continual basis instead of waiting for the annual performance review;

• Be clear on expectations, especially when discussing a new task;

• Listen and make sure the feedback is given through open dialogue;

• Keep it loose and informal;

• Discuss what you’ve learned from them;

• Keep notes to make the feedback sessions more constructive.

While it’s commendable to see the WSJ provide this type of information to managers in the business world, it is a shame that these steps are presented only in the context of dealing with younger workers. We have gotten so far away from understanding the basic responsibilities of management that we think wanting open and constructive communication within the workplace is something new. Do people actually believe that it is acceptable for a manager to not communicate to older workers in this way? If there is a difference between the two generations of workers, it is in the expectations. After years of working for American companies and receiving little or no consistent or constructive feedback, older workers have most likely lowered their expectations in order to survive.

The writer goes on to say, “Increased demand for feedback from younger workers is forcing some employers to rethink how they discuss employee performance review. Often, the annual review just won’t cut it anymore.” Guess what? The annual performance review has never “cut it.” It doesn’t matter which generation the worker is from – people need continual communication and feedback in order to develop and improve. Waiting for the once-per-year meeting to talk with a team member, although a common practice in the U.S., is just bad management.

Too often, people are promoted to management positions because of financial knowledge and/or technical skills instead of leadership abilities. If someone performs well in the position they are in, it is assumed that they are promotable into management. And once a person is put into a management position, developing his or her skills as a leader becomes a low priority. As a result, poor communication becomes the norm and the organization and people who work there, stagnate.

Continual feedback and coaching has always been an essential responsibility of a manager. Success in management comes when the manager makes the people on his or her team successful. It is impossible to do this without continual communication and clarity on expectations. Waiting for the annual performance review to do this is illogical and ineffective.

I had a conversation fairly recently with the CEO of a mid-sized U.S. company. Since he is nearing retirement, he and the Board are looking for someone to replace him. He proceeded to tell me the main characteristics for the type of person he is looking for and not one had anything to do with leadership capability. If leadership competency is not important at the top of the organization, there is little chance that it will exist at any other level.

If the information in the article is the result of younger workers demanding that managers fulfill their responsibilities as leaders by coaching and developing team members, then I encourage these younger workers to keep up the pressure. We desperately need a revolution in management practices in this country and it may take the unrelenting energy of younger workers to make it happen.

And a note to any young professionals who may be reading this . . . please remember all of this when it is your turn to enter the management ranks. Remember how important feedback and coaching was to you and how you didn’t get enough of it when you were new to the workforce. I’m counting on you to save American companies from the death spiral that the traditional western approach to managing organizations has caused.