Archive | April, 2010

The acrid aroma of burning rubber

26 Apr

I’m overwhelmed with a virtual stinky rubber smell just reading this Harvard Business brief case, Treadway Tire Company: Job Dissatisfaction and High Turnover at the Lima Plant. The phantom smell is symptomatic of the problems at the plant, which are multiple. Human Resources Director Ashley Wall needs to identify the root causes of line foreman turnover, and present a plan to resolve it. Stepping into Ashley’s rubber-soled work boots, here’s what I identified as the root causes:

  • Lack of training and preparation for new line foremen
  • Weak support from their superiors: general supervisors and area managers
  • Lack of firing authority/ability to impact union grievances
  • Burden of 12-hour shifts
  • Too many roles for line foreman/too many targets to meet
  • Apparent unresponsiveness of other managers – why is equipment not working at beginning of a shift?
  • Failure of supervisors/managers to act upon line foremen’s requests/suggestions
  • More effort expended on testing potential hires than training actual hires
  • High level of specialty knowledge required

Here’s a mini-breakdown of line foreman turnover by category:

  • Overall turnover = 46%. Almost half leave within one-year period.
  • External hires = a whopping 75% turnover! Half leave voluntarily, half involuntarily.
  • Internal hires = 40%. However, 62.5% of these leave Treadway involuntarily. Meaning that more than three-fifths of employees who were successful enough to get promoted get fired within a year? This points to major systemic problems, probably correlating to issues above.
  • Transfers = 50%. This could be really, really concerning. Half of the transfers from within Treadway leave? However, the sample size is small – only 2 – so this is one is least concerning of the three. However, it should be assessed again using more data.

So how should Ashley plan to address the issues and lower line-foreman turnover? She might want to explore the following in her plan:

  • A detailed budget analysis. The budget has been cut, leaving no money for training. But what is the cost of constantly hiring? Develop a variety of forecasts to show that hiring constantly to account for turnover rate costs more than training would. Forecast losses in productivity, increased time devoted to union matters, increased time for more FLT testing, etc. While only a hypothesis at this point, all this hiring has to cost more than training. Develop the data to prove it.
  • External or college hires are the MOST likely to fail. Turnover is 75 percent within one year. However, it’s important to continue to bring in college-educated potential managers. Propose a temporary moratorium on specifically recruiting external line foremen. Presumably, it costs more to recruit these people as well. Once internal problems are alleviated, the external program could begin again.
  • Focus training on general supervisors/area managers FIRST. These people seem to create the greatest impediments, are the least responsive, and have the most ingrained behavior. Make them share in all targets the line foremen have: We succeed or fail as team. Change needs to come from the top down. Focus on this group heavily first, then roll out …
  • Training for line foremen. Follow Ashley’s original training outline, and add modules in specialty knowledge. Continue sporadic specialty knowledge sessions throughout the year.
  • Review union grievance processes. See if there are ways line foreman can be involved in follow-up and firing decisions.
  • Consider shift adjustments. There were several references to 12-hour shifts causing illness as well as lateness. Twelve-hour shifts work great for some people – they like three days off – and not for others. Perhaps employees could have the option of whether to work 12-, 10- or 8-hour shifts. This keeps costs down and factory running 24/7, but also gives employees leeway. This type of scheduling option is commonly used in acute hospitals, which have roughly the same scheduling issues.
  • Consider giving hourly staff more say. Perhaps they can self-schedule, which would relieve line foreman. (This technique is also used in hospitals.) As Jürgen Dormann of ABB recommends, ask hourly employees for suggestions on scheduling, productivity, broken equipment and other issues. This could also lower the number of grievances over time and help foment better management/union relations.
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By George, I’m impressed

21 Apr

It’s funny to consider my reactions to these cases. Recently, we read about Nordstrom, a high-end retailer with beautiful goods. After learning about its practices and how the company treats employees, I came to the conclusion that I wouldn’t want to work there. (Although I’m not in retail so it’s fairly unlikely.) And then we read about The Men’s Warehouse, an off-price men’s retailer, and I am thoroughly impressed. My only previous experience with the company is seeing the George Zimmer commercials, and being aware of the Reno store, but that’s it. And I came to the conclusion I would want to work there, that I would actually be excited to work there. (Although I’m not in retail so it’s fairly unlikely.)

What is so appealing about a men’s clothing retailer? Because it’s not about the clothing, it’s about the culture and the values, and embodying them as managers. George Zimmer has it absolutely correct: If you want your employees to treat customers well, you have to treat the employees well first. You have to value them.

Like my former boss, Lynn Atcheson (who seems to come up again and again on my blog), Zimmer not only espouses servant leadership, but also models it. I was shocked at Zimmer’s 1996 salary as chairman for the company he founded: $420,000. While that’s high compared to a wardrobe consultant’s salary, it’s modest for a chairman, even when adjusted to 2010 dollars. Like Lynn, Zimmer knows how important it is for management to “walk the talk” (an expression I actually learned from her). When I worked for Washoe Med, bonuses were not typical, and only went to the senior management team. When Lynn received her bonus, she shared it with each of us. Because of course, as she recognized, she would not be receiving the bonus without our efforts. How many leaders do you know who would do that? Zimmer has the same idea. He essentially told his compensation committee he didn’t need more salary. (And after all, he does have $100 million in stock. But many leaders don’t let that stop them from asking for more.)

Compare Zimmer’s salary with the disgusting pay package that the venal chairman and CEO of Abercrombie  & Fitch received in 2008. He also happened to be named one of the five Highest Paid Worst Performers of 2008.

My husband is an academic, so he never wears suits. So it was interesting to ask him if he’d ever shopped at The Men’s Warehouse. He said “Yes, I bought my blue blazer there” – which he only wears to one or two academic conferences a year, one of only two formal jackets he owns. So I asked him what he thought of his service experience there, which occurred almost 10 years ago. I fully expected he wouldn’t remember, given it was so long ago. And he unhesitatingly and enthusiastically responded “Excellent!”

Best validation I can think of for the veracity of this case study.*

* 2010 update: The Men’s Warehouse continued to grow its revenues over the past five years. However, in FY2009, revenues were down by 4 percent – given the economy, no surprise whatsoever. It expects to have single-digit profits in Q1 2010. Many of the people mentioned in the 13-year-old case are still with the company, including George Zimmer and Charlie Bresler.

Robin the Rabbit

14 Apr

Assumptions without evidence are dangerous, as outlined in the HBR Case Study The Layoff . Robin Astrigo, CEO of his family’s namesake company, leaps to the assumption, based on ONE quarterly earnings call, that he needs to lay off employees. His leadership team, based on Robin’s dictate, jumps to the same conclusion that yes, layoffs are the only option, and fails to adequately, soundly and rationally assess alternatives. Strategy, and a long-term vision, are both sorely lacking.

Robin’s emotional reaction to the earnings call – described as “excruciating” – appears to be dictating his conclusions. He also seems to live in fear of disappointing his dead father, the company founder, while not factoring in that maybe business conditions are different than in Dad’s day. Perhaps the company wasn’t even publicly held then.

The case says that Astrigo profits dropped by double digits – serious, yes, but the company is still profitable and has plenty of cash. We’re talking about one quarter’s earnings here, and he’s holding a drastic senior leadership meeting at 4 p.m. that day? If the situation is really that dire, the company should be looking at a long-term strategy to dig out, over a period of many quarters or even years. Heck, if it’s that dire, Robin should have started that process BEFORE the call. Instead, he’s just chasing the next earnings call.

There’s another investor-relations possibility why the earnings call was brutal – Wall Street doesn’t like surprises. It’s possible, although not detailed in the case, that Robin has not been forthright with analysts all along about what the company is facing, or giving sound earnings guidance, and therefore is now taking the hit.

Perhaps Robin needs to learn to cultivate Wall Street a little better. As Laurence J. Stybel and Maryanne Peabody point out in their analysis of this case, he should focus on speaking to long-term shareholders, à la McDonald’s. Rather than focus on the quarterly call, which is almost always bound to bring out a naysayer or two, Robin should focus on telling the company’s story on his own terms. One way to do that is to develop a well-honed, well-tested thoughtful strategy first, and then share it with the market via an analyst day or other meeting. He should also try to get himself scheduled as a speaker at as many investor conferences as possible. That way, Robin gets to tell the story of what the company faces on his OWN terms, in less emotional, less combative settings, and also helps adjust Wall Street’s expectations over the next few quarters.

Robin actually seems quite directionless and spineless. He worries about “what the board would think,” and what Daddy would think from beyond the grave. He fails to ask his senior-management team to question his logic or develop other alternatives. His formation of teams of two is a bad idea: that allows a little too much coziness in private dining rooms and not enough questioning. When someone like Marzita Vasquez rightfully questions the company’s strategy, it wouldn’t have been so easy for Bob Slater to shoot her down in a group of three or more. What are the odds Marzita will bring this up again in the larger group setting? With the exception of Vasquez, and non-senior leadership member Sushil Bhatia, Robin’s leadership team comes across as self-interested and simplistic – certainly not servant leaders.

Jürgen Dormann, not surprisingly, got it exactly right in the Case Commentary. Dormann, a real-life chairman and CEO, faced a similar situation at ABB – actually, a much direr situation than Astrigo. Dormann focused on consolidating leadership at the board level, shaking up the executive committee, opening up communication and asking for advice from experts – the employees of the company. Best of all, Dormann espouses servant leadership – Robin must model humility. Instead, he’s running like the proverbial scared rabbit.

Real leaders ask questions

12 Apr

Whoa! What a surprise. There they are in today’s reading — what I call The Lynn Review Questions:

  • How are you doing?
  • What are you learning?
  • What are your goals?
  • How can I help you?

My former boss, Lynn S. Atcheson, met with each of her staff several times a year to review the answers to these questions. It was intended as a status report on our progress toward the annual performance review. I valued these questions and the dialogue they opened up so much that I later used them with my own direct reports. I’ve even kept the list on my Palm for almost 10 years!

However, I was missing was the underlying infrastructure that goes along with the questions, as detailed in Stephen R. Covey’s article New Wine, Old Bottles. I always knew Lynn was a student of leadership, and she made it clear she did not originate the questions, but I never knew the source.

Lynn’s use of the questions went along with how our performance agreements were structured: We were the “experts” in our individual specialty areas. Lynn provided guidelines, and then it was up to each one of us to decide how the work was to be done. When we ran into tough decisions, we knew she was available to help.

I’m presuming this December 1994 Executive Excellence article is an excerpt from one of Covey’s books – perhaps Principle-Centered Leadership or Servant Leadership: A Journey into the Nature of Legitimate Power and Greatness. While this article outlines the general principles of servant leadership, a more detailed exploration would be helpful. For example, one of Covey’s three steps to transformation is “Build a new relationship.” To do that, you have to have trust. But this article doesn’t explain how to build relationship of trust – although I realize there’s no magic formula – or, more challengingly, how to resuscitate relationships where trust has been broken. Perhaps it’s covered in his books.

Covey recommends setting up performance agreements and becoming a source of help, à la Lynn. This is difficult for most managers to pull off – Lynn is a rarity. In my experience, most managers struggle with the day-to-day interactions more, and tend to fall into old judging patterns without even realizing it. Me included.

A related Wall Street Journal article, Good Leadership Requires Executives to Put Themselves Last, also skimps on the details. The point of the article: Corporations shouldn’t assume that strong governance principles are enough. The actions of leaders matter more. Michael Leven’s story is compelling, but I wish the article were longer with more exploration of practices and principles for leaders – although perhaps The Dean’s Disease could suffice. With a shorter article, sadly most of the target audience will fail to recognize themselves and the need for change.

Embodiments of leadership

7 Apr

A common business bromide is “Management is doing what’s right. Leadership is doing the right thing.” Its embodiment is a 2003 Wall Street Journal article, “For Lt. Withers, Act of Mercy Has Unexpected Sequel: U.S. Officer Broke the Rules To Let His Men Take In Young Dachau Survivor.” For Lt. John Withers, doing what’s right as a manager — the safe route — would have been to turn in Martin “Peewee” Weigen, né Mieczyslaw Wajgenszperg. Withers chose to do the right thing, help him, despite the risk it presented to his own future.

Withers and his men demonstrated compassion for Peewee and another Holocaust refugee, Salomon. As Withers puts it, “I think I identified with them very strongly and instantaneously,” referring to his own background as a black American in the South.

Bryan Gruley’s article demonstrates something beyond the beauty of the compassion itself: the economic impact of compassion. Withers’ compassion led to Wiegen’s emigration to the U.S., where he ran businesses and raised children who then went on to run businesses themselves. Generosity and compassion for others make us a better nation morally, socially and economically.

Col. Joe Dowdy, like Lt. Withers, also embodies leadership in practice, not just principle. Unfortunately for Dowdy, things were not so fortituous for him. As detailed in another Wall Street Journal article, How a Marine Lost His Command in Race to Baghdad, Dowdy is a consummate servant-leader who put his men before the mission, and paid dearly for it.

Humility is good. But it may not make your company great.

7 Apr

Level 5 Leadership: The Triumph of Humility and Fierce Resolve is excerpted from the mega-selling business book by Jim Collins, Good to Great.

Collins describes a Level 5 leader as “an individual who blends extreme personal humility with intense professional will” — in my estimation, an external, subjective judgment with no data to back it up. My opinion is formed in part, no doubt, by our earlier reading of Good to Great, or Just Good? According to the authors of that article, Collins did not support the conclusions in Good to Great with rigorous data. In fact, the data as analyzed by Bruce Niendorf and Kristine Beck showed that Collins’ 11 Good-to-Great companies did not produce the stellar long-term financial results he claimed, calling the rest of his conclusions into question.

I see that pattern in this excerpt too. Collins is a great storyteller, and the CEOs he features, such as Darwin E. Smith, come alive on the page. But a rigorous approach to data? Not so much.

For example, examine the Level 5 hierarchy, as detailed in a callout on page 5. What differentiates a Level 5 leader from Level 4, according to Collins, is personal humility, along with professional will. That’s it? Personal humility is the difference? Sorry, I just don’t think that explains it. Plenty of Level 4 leaders have humility as well. Was this measured and quantified in any way? No.

Again, my skepticism is bleeding over from the Niendorf/Beck article. Collins cites the modesty of Coleman M. Mockler, former CEO of Gillette, as “typical of Level 5 leaders.” But did he test this hypothesis? Say, something like:

H0 : Level 5 leader = profit

HA : Level 5 leader ≠ profit

That’s a little loose for an actual testable hypothesis, but you get the idea. Collins refers to extensive interviews with multiple executives , but nowhere in this excerpt is there any hard data provided to document Level 5 Leadership really exists as a key factor pushing companies toward greatness. It’s all subjective. Although Collins didn’t prove his case with statistics, at least in this article, I love and support his concept and his values. The world does not need more Al “Chainsaw” Dunlaps. Humility is a good thing.

The pernicious effects of power

5 Apr

“A dean is to his faculty as a hydrant is to its dogs.”
– Lyman W. Porter, former management dean, University of California, Irvine

The Dean’s Disease: How the Darker Side of Power Manifests Itself in the Office of Dean demonstrates that academic administrators are unaware of how power changes their thinking and behavior. I’ve seen this havoc up close and personally: I’m a former university administrative faculty member, and my husband is a tenured professor. This article, however, applies broadly to organizations in general — leaders in all types of organizations present with many of the same symptoms.

Author Arthur G. Bedeian identifies three causes for the Dean’s Disease:

  • Doppelgängers. Closed inner circles of sycophants develop, while dissenting voices are shut out. Deference to the dean creates a protective cocoon that shields out reality. This effect is especially dangerous in academia, as profit-driven business leaders are less able to shut out reality if financial results are bad.
  • Strategic praise. Thanks to the sycophants, deans begin to believe they are, indeed, special.  “Unless new ideas belong to power holder, old positions must be defended regardless of whether they have been shown to be outdated.” This concept is not unique to academia, unfortunately. Sadly, I once worked for a power-driven individual who believed that the only good idea is one of his, regardless of whether the environmental factors in the outside world had changed the defensibility of his concepts.
  • A taste for power. Those in power want to maintain it, whether in government, academia or business. This can lead to morally questionable decisions made in interest of maintaining power. “As a way of rationalizing their actions, power holders devalue the worth of others and act to distance themselves from those less worthy.” They are afraid of strength in their associates. This happened to me in corporate life, with the aforementioned boss (because I had new ideas which were different than his!), and it was painful and demoralizing.

One of Bedeian’s observations I loved: True leaders generally find it unnecessary to employ power associated with their position. Weak leaders rely on coercive or reward power. A true leader relies on referent power – power that attaches to individuals because people admire them or are impressed by their integrity – or expert power, based on possessing special knowledge or skills. The best leaders I’ve ever worked for acquired power in these two ways, and that made all the difference.