The Risk of Reviews

We’re in the 4th quarter of most companies’ fiscal year, to managers up and down the chain are thinking about doing or getting performance reviews.

The Wall Street Journal had a useful article on this topic a few days ago, and we’ve blogged about it before, so we think it’s useful to recap some of the trends:

1. Most companies give performance reviews once a year, about this time. The single review can lead to real employee anxiety, which isn’t a good thing. We would agree with that assessment, and would recommend doing them quarterly, at least in large companies. When promotions are handed out, particularly into new departments, they’re benchmarking performance that can be ranked.

2, Some major US firms such as Microsoft, Lilly, Cigna and GE have actually pulled even yearly rankings. The reason is apparently that 90% of the workers got a rating they thought they didn’t deserve, resulting in a 23% drop in engagement. Fair enough, but what happens at promotion time?

3. Microsoft, to its credit, has replaced it’s review system with frequent ‘conversations’ about performance among managers and subordinates. We think this is a good policy and apparently results in better morale and engagement. Now if they could do something in the operation of the Hotmail renewal office, to make it more customer friendly, that would be something.

4. We think among our small business clients, most practice a yearly review, based on the conversations, or do nothing at all, because it’s more paperwork, preferring to note any conversations or disciplinary actions in written form in the employee’s file.

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Radical New Idea: Middle Managers

Some months ago, there was an article in the Wall Street Journal about a company (Treehouse) that had NO middle managers, believing that its people were sufficiently motivated that they didn’t need them.

This plan was fine until the business grew, probably beyond the capacity of the owner to manage everyone, and maybe the self discipline didn’t work out as well as hoped. The big problem was that people thought less was expected of them, since there wasn’t a boss around to prod them.

The article doesn’t raise the obvious question (the Wall Street Journal isn’t in management advice) about how many supervisors one needs. The numbers are all over the map, depending on the nature of the work, self motivation of the employees, size or the company, etc. We’ve seen figures of 1 to 5, to 1 to 20.

So, yes you need bosses, but it’s hard to tell how many you need. The more complex the work, the higher the ratio of bosses to workers. The more independent the work, the lower the ratio.


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SMB Comments on 9/16 Repub Debate

Well, after sifting through all the snark, we have a few comments about the debate (we’re going to be so presumptious to speak for SMBs):

1. Aside from Trump and Fiorina, it doesn’t seem to us that the rest of the folks have any idea that it’s small and medium sized businesses that will drive the economy forward, and even they didn’t say much about it. So say more. Donny and Carly are natural alies, but they haven’t figured it out yet.

2. Tax cuts are the way to go, to spur growth, IMHO, particularly on corporations, because if they’re growing, they’re employing a few more workers somewhere. Regan tried this and it worked.

3. We’ll  have to cut spending before the tax cuts, or couple them, because little Barry and Gangsters have about exhausted our financial capacity to borrow and not be like Greece. Yeah, some of spending was Keynesian to pull us away from the ditch in 2008/9, but by now, tax cuts might have done more to get beyond 2% growth. But you’ll never get a tax cut solution out of today’s Dems. Hillary and Bernie are going the other direction.

4. We could try a consumption tax, to offset corporate tax cuts at the outset, and then cut individual rates to be offset with more consumption tax. No way would this even be considered until an R is in the White House.

Anyway, the above is our .02 worth.

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How Google’s Rules Can Work In Your Office

Well, my alma mater, Wharton School, has come up with a useful post that we can reblog. It’s a little unfocused, but that’s why we try to put it into a less than five page format.


My impression is that Google doesn’t have many rules for its employees, just show up and get the work done. But, here are their rules, as interpreted by Wharton:

1. Take power away from managers. Interesting, but you’ve got to have employees who are pretty well self disciplined. There was an article in the Wall Street Journal last week about a company CEO who didn’t have ANY managers until he got to about 100 employees, but that’s probably an extreme. Management theory says that your managerial span of control is the inverse of the complexity of the work, ie. the more complex the work, the fewer workers per manager. Or supervisor.

2.  Have meaning in your work. Have a mission that all your people understand. Hard to believe, but productivity gains cited by the authors just from this range from 30% to 400%.

3. Data driven decisions. Wharton apparently thinks our intuition is wrong most of the time (we think it’s the decider when data is unclear). Can you measure the impact of your decisions? It doesn’t sound like Google managers can decide who to hire or promote; it’s all done by committee. This is not all bad; most of our clients, especially the larger ones, use about the same approach. The use our personnel profiling system in the American School of Entrepreneurship for both hiring and evaluation, even of sales people.

4. There’s some verbiage about ‘nudging’ people which is unclear, but I think the authors are talking about suggesting something to your managers or direct reports, but not ordering them to do it, per se.

So, there you have it, an entire book summarized in 300 words. Put the checks in the mail, payable to CEO to Go, through PayPal.

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The Jeb Bush Tax Plan

Well, we applaud Gov. Bush for putting it front and center in the Journal’s op ed page.

We also like the cut in corporate rates to 20%, which is much lower than the currently published 35% (no one with depreciable assets really pays that). Personally, we’re down around 12% now, and we’re not that big.

And, at least he’s only going to whack the unrepatriated trillion or so that sits offshore 8.5%, which is better than little Barry and the Minions rate of 35%. Actually, it’s our contention that it shouldn’t be taxed at all, because the corporations who earned it have already paid tax once, either to the US or and foreign governments, or both.

But the big problem that we have with his plan is that there’s no discussion of how we pay for it. We think we’re about $200 billion upside down in the current year vs. revenues, and the debt stands at $19 trillion, which are Grecian proportions, and in this case, that’s not a good thing.

So, we could logically expect to add about $500 billion to the deficit while we’re getting to 4% growth. Presumably, we’re in balance at 4% (although this isn’t specified, either).

So, good 1st stab at things Jeb, contributed to the debate, now let’s put a little more meat on the bones. Go wake up Art Laffer.

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The Shop Steward in the White House

Ronald Melsburg in the 9/4 Wall Street Journal, probably in honor of Labor Day, has written a disturbing article for those of your who head companies larger than 50 employees. Mr. Melsburg is clearly a labor lawyer, and a prominent one, so keep the name around.

His central point is that none of the newer NLRB decisions or diktats would have happened if Obama weren’t in the White House. The WSJ has obliged with a wonderfully demonic picture of BHO for the occasion.

You probably know that the NLRB is no friend of small and larger businesses, but apparently it’s gotten worse. We missed it because we write from right to work Arizona, with a grand total of 5.3% of our workforce unionized, which ranks 36th of 50 states.

Melsburg makes 3 points (I’ve expanded them to 4) wherein the NLRB has expanded worker, and or union, rights:

1. It has given employees ‘unprecedented power to use employer email for union purposes and to challenge employer-conduct rules– such as rules requiring politeness and civility ‘ in the workplace as overly broad and unlawful. So much for running a tranquil workplace.

2. The NLRB has also paved the way for employees to avoid arbitration of workplace disputes in favor of judicial class actions and their potential for legal actions. Which means you might go find a labor lawyer in your town. I’ve been blessed to find good ones when I twice needed them.

3. The NLRB has granted the unions almost unlimited power to define the groups of employees that the union wishes to organize. The definited group can also be quite narrow, so the union can get it’s foot in your plant door. With a small, sympathetic group, the unions can engineer victories, which gives them entrée to the rest of your workers. Drip, drip, drip. Unions already have a natural advantage, because they can prepare their campaigns to organize workers, and once they do, employers are limited in what they can say to counter union organizing statements.

4. Finally, the NLRB issued a ‘join employer’ decision on August 27, making it far easier to get a toehold for unions, since they can organize at a location or franchise, and those organizing principles in that shop mean that the company must bargain with the union nationally. This is a really remarkable overreach, and will probably get overturned if it’s appealed. If it is appealed, you-know-who will probably be out of office, and the NLRB commissioners will be changed.

So, happy labor day to all of you.

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Donny and Carly

When I was growing up, my Dad was fond of saying ‘the business of America is business’. I think he got the quote from the head of General Motors, Charlie Wilson. No matter, it’s a great quote.

But, how long has it been since you heard a candidate for elective office say something like that?

Lost in all the hoohaa about Trump and, to a lesser extent Fiorina, is that they’re the first serious candidates coming out of the business community in some time, probably since Ross Perot. Let’s hope that Trump is more flexible in his outlook that Ross was. So far, so good.

The business of America is getting out of the way of business, not hampering it with new regulations, such as those coming from the EPA or the NLRB. Besides, who employs all those Democrats? They don’t all work for the government at various levels or academia.

Immigration law should support American business, which is to say a free flow of labor from wherever. We need all levels, but we need to know who they are and where they’re going. If they’re here illegally, tell them to get in line and start over, pay a nominal fine and get something like a provisional green card.

Reparations from abroad.? Get rid of the tax. However, companies should have a reinvestment clause…..either invest in something or give it back to the shareholders through more stock. Are you listening Apple?

Anyway, these are just some initial thoughts for the dynamic duo.

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An Intense Workplace Doesn’t Have to Be Cruel

This was a great title whose text didn’t quite live up to the title.

And, it was reinforced by the recently reported problems that Jeff Bezos is having with his Amazon culture….apparently some people who work for him are being less than nice to their direct reports.

And, there was the case of the two lady Rangers being helped by a male during a tough phase of training. And, aside from SEAL BUDs training, there’s not much that is harder than Ranger training. Or more intense.

What it comes down to is the fact that your people are the translators of your culture, and they mostly derive how they translate the culture from their bosses. All the way to the top.

So, if some of Bezos’ underlings are yelling at their people, they got it from somewhere, and no one should be surprised. Except the business press, that is.

You can get your points across without yelling….yelling betrays to me a certain sense of insecurity. And this insecurity must be at the root of the Amazon culture.

So, Jeff, you better hit the chill button and find out why people in your organization are yelling at each other.

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Company Culture

In two of our recent Solutions Forum meetings, we’ve had CEOs talk about culture, and how to improve it.

When I started with researching the topic, I went first to our SF website, because it has a couple of articles, the most recent of which is 2012, which isn’t much help, because with the explosing of rapidly growing tech companies, it’s an item the founder needs to think about as he/she sails past 25 or so employees, but rarely does.

It also comes up as one generation of family transitions to another: the younger generation is likely to make the culture more aggressive than his/her forbears (I did, and one of my member’s son is, but one isn’t, at least not yet.).

The article I found has some good points, but is pretty sketchy.

1. Cultures change when Leaders Show That They Want Then to Change.

This is important. How does a leader do this? Hiring and firing decsions for one. Just because someone has been employed at your company for 10 or 20 years doesn’t mean they’ll be there for the next five. You have to take the temperature of your direct reporting managers/directors/vice presidents and evaluate for yourself if they’re on board. What would positive actions look like? This is a conversation you should have after your 90-day onboarding time, other than there may be a few obvious direct reports that should be replaced.

2. Results begin immediately. What can/should you do right away? A town hall on Friday afternoon is a good start. Awards and recognition for jobs well done are another good idea. People will get the idea that you’re creating an ‘accountability’ performance culture, not a ‘don’t rock the boat’ culture.

3. The larger the organization, the longer it might take, but it depends on the leader. Both of my clients wanting to change culture are about 150 employees, and the chart says two years. I’d say one. I am always reminded of Alan Mullaly, of Ford, who changed that elephant’s culture in two years by a few judicious hires/fires and a completely new employee/manager evaluation system that stressed innovation, accountability and so forth.

4. In your annual/quarterly meetings with your direct reports, ask them how they made money for the company, and was it more than the prior quarter? This was a favorite question of a former client (former only because he moved to San Jose, where we didn’t have a licensee). He would have made a good one.

5. Encourage opportunistic employees. I once had once dive into a truck to copy a distributor’s name from a box. He got an award. Encourage employees to start entrepreneurial activities. Fold ‘em in, maybe sell ‘em later.

Well, there are some starters. Think on what you could do next week.

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Your Customers Will Tell You About Good Customer Service

This was a great title of a blogpost by Shep Hyken (good resume, but he’s never been to Phoenix, as far as I know) that didn’t quite live up to the title, but a post of customer service is always a good thing, because not everyone does it well, or sometimes even evenly, so here are some the definitions that were used, which are pretty good if you wade through them:

1. Al Hooper, another blogger, defined it as “the assistance and advice provided by a company to those people who buy or use its products or services”. Yes, widely used in marketing textbooks no doubt, but sort of transactional, Al. Al does go on to say that great customer service is a differentiator for commoditized products or services, which we agree.

2. Retail Wire said it’s ‘not having to ask someone for help’. Really? In this era of online shopping, and reduced store and physical stock presence, asking for help is nearly a given. Your people should be perceptive enough to spot someone who seems to be having a hard time finding something. The first merchant who does that online, maybe through lack of activity after logging on, will have something that’s a real differentiator.

Shep goes on to cite several other, rather transactional definitions by such worthies as Meghan Norris, Corporate Dynamics, Lisa Catalano and Jack Dillon Dillon got closest to our definition, which we use in our courses, which is being served to meet my expectations. How about being served to exceed one’s expectations, Jack?

And, as we say in the title, the customers will tell you if your service is meeting, or exceeding their expectations.

A survey of whether customers were well or poorly or averagely served, after the transaction is done, if a good thing, regardless of whether it’s physical or online service. I will say that most online merchants do an after-transaction survey.

If you

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