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Blog: The Business of Management May 2008 Archive
 

May 30th, 2008

Blowing Your Cool Can Be a Good Management Tool

I was home over the Memorial Day weekend, bored and not feeling well, so I found myself flipping around the TV and doing something I never, ever do: settling in to watch the Indianapolis 500. The race also reminded me of a management lesson well worth remembering—sometimes, it’s OK to blow your cool.

What kept me involved was the jockeying for the lead position, the occasional crash and the ongoing saga of Danica Patrick as she battled to stay near the race leaders. Patrick gets a lot of press because A) she’s a moderately successful woman competing in a sport that is overwhelmingly dominated (and populated) by men, and B) she’s pretty hot.

Patrick kept battling and stayed around eighth or ninth position until disaster hit with less than 30 laps to go—her car got clipped coming out of the pits by another car, driven by Ryan Briscoe, when he tried to get going again after his pit stop. I felt bad for Patrick because I had been rooting for her to finish the race (a big accomplishment in and of itself), but what amazed me was her reaction to the crash—she got mad and wanted a piece of the guy who carelessly knocked her out of the race.

“Briscoe clipped Patrick’s car as she was leaving pit road with 29 laps left last Sunday, inflicting enough damage to take both drivers out of the race,” wrote columnist Richard Durrett in the Dallas Morning News. “A frustrated Patrick jumped out of her car and briskly walked toward Briscoe’s pit stall, taking her gloves off as she went as if planning to send a stern message when she arrived. But security steered her clear.”

It was a pretty riveting scene because, clearly, Patrick wanted to do a lot more than just thank Briscoe for being a competitor in the race. As the Morning News columnist noted, “Patrick’s 80 or so steps down pit road are the lasting image of Sunday’s race, no offense to winner Scott Dixon. Imagine the memories if she’d actually reached Briscoe. … Regardless, the incident has fans split into two camps when it comes to Patrick: She’s either a chronic complainer or a consummate competitor.”

Or, it could be something else—that Patrick consciously and deliberately used her anger as a management tool to send a message to Briscoe, and everyone else in the race world, that she is not just a hot babe who can drive a little, but a tough, skilled competitor who wants to win just as badly as anyone else.

I’ve written before about unorthodox management practices such as “Verbal Abuse as a Workforce Strategy” and getting rid of your best and most productive workers to save money, but this is very different from that. Blowing your cool and getting angry, on occasion, especially if it is done in a very focused and specific way, can pay big benefits for a manager. To wit:

1. It gets everyone’s immediate attention;
2. It crystalizes an issue in people’s minds as something of unique significance and great importance;
3. It draws a line in the sand about what you will tolerate, and what you won’t; and,
4. It sends long-lasting ripples through the workforce about how deeply you care about the work at hand.

I’ve used this technique on occasion, and I have to say, it made my point to the workforce far better than a memo or a meeting ever could have done. My guess is that is what Danica Patrick had in mind as well. Although she may have been frustrated at being knocked out of the Indy 500 by a careless competitor, her angry walk down pit row was more about sending a larger message than it was about getting in Ryan Briscoe’s face. And from my perspective, blowing her cool was a useful and worthwhile management tool.


May 28th, 2008

The Art of Knowing When to Shut Up

I’ve asked this question before, but it bears repeating: What do you do when the big boss has a big mouth? Is there anyone in the organization who can tell bosses they’re out of line, out of bounds and need to just put a cap on it? This is a question that is probably bouncing around the boardroom of Whole Foods Markets, now that CEO John Mackey has decided to take up blogging again.

In case you missed it, Mackey has some history as a blogger that should make his board members shudder. As I said in that blog post, he put his company’s $565 million acquisition of rival Wild Oats at risk by anonymously attacking and belittling Wild Oats and its CEO on Internet financial forums. Writing under the handle “Rahodeb,” Mackey also anonymously questioned why anyone would buy Wild Oats stock and that the company was probably headed for bankruptcy—just before Whole Foods made its buyout bid.

Mackey fessed up to his indiscretion, and the Whole Foods board took some minor action, but basically, he got away with his bad behavior because, well, he’s the boss. As I noted at the time, Lynn Turner, former chief accountant for the Securities and Exchange Commission, hit the nail on the head when he told The Denver Post: “If it was any other employee of the company, he would be fired. The board should fire him.”

Well, the Whole Foods board didn’t fire him, of course, and as The Wall Street Journal points out, “the SEC spent the past 11 months investigating whether Mackey`s 1,400-odd anonymous messages … had broken any laws, but concluded no action needed to be taken against the chief executive or the company.”

So now that he’s been cleared—or more accurately, dodged a bullet—CEO Mackey has “returned to the Web with a vengeance,” according to the Journal, “posting a 2,037-word piece on the Whole Foods’ Web site in which he says he`s sorry the investigation put a negative spotlight on the company. The CEO acknowledges a mistake in judgment, but not ethics, saying he didn’t realize posting under a screen name in an online community would cause so much controversy.”

You can find Mackey’s blog on the Whole Foods Web site, and probably the best thing you can say about it is that it isn’t anonymous anymore. Other than that, what jumps out at me from Mackey’s latest blog post is that he is a delusional apologist for his own bad behavior. But even more amazing is when he writes this: “My mistake here was one of judgment—not ethics. I didn’t realize posting under a screen name in an online community such as Yahoo would be so controversial and would cause so many people to be upset. That was a mistake in judgment on my part and one that I deeply regret because it caused so much negative media attention about me and Whole Foods Market.”

In other words, Mackey says his ethics are good but his judgment bad. Maybe it’s just me and my peculiar way of looking at things, but isn’t good judgment one of the key qualities essential for a CEO running a business? And, isn’t it laughable for Mackey to claim that he didn’t know that blogging anonymously—and anonymously belittling a competitor he was trying to acquire—might be an issue?

As Barron’s pointed out, “the chief executive of Whole Foods has resumed his controversial practice of communicating with investors via the Web. But it hasn’t done anything to lift the pitiful stock from its year-long slump.” If I were Mackey, I’d be more concerned with the stock price instead of the gibberish he’s putting in his blog.

And if I were a Whole Foods investor, I’d seriously reconsider my investment, because if anything is clear, it’s this: Any company with a CEO with such terrible judgment, who doesn’t know when to shut up, is not a company I’d be comfortable keeping my money in.


May 27th, 2008

Why Is Real Leadership So Hard to Find?

Why is it that real leadership is so hard to find? I thought about this over the long Memorial Day weekend when reading a New York Times story that contrasted the annual shareholder meetings last week for Southwest and American Airlines. Both airlines are headquartered in Dallas, of course, but that’s where the similarity ends.
As the Times notes, “The [American] meeting itself could not have been more downbeat,” and the discussion by CEO Gerald Arpey was about all the bad things the airline industry is suffering these days—$130-per-barrel oil, capacity cutbacks, worker layoffs and customer surcharges.

Contrast that with this: “The Southwest Airlines meeting began a few hours later,” according to the Times, “[and] Southwest, of course, is the great success story of the airline business—the only company that has been consistently profitable through these tumultuous times. … Its annual meetings tend to be love fests. This year’s [meeting], though, was the love fest to end all love fests. The company’s beloved co-founder, Herbert D. Kelleher—known to one and all as Herb—was stepping down as chairman after 37 years.”

The story goes on to talk about how an overflow crowd at the Southwest meeting—everyone from shareholders to members of the pilots union to rank-and-file employees—showed up to sing the praises of Kelleher on his retirement. But the outpouring of love and affection for Southwest’s outgoing chairman and longtime leader raises a simple question: Why does Kelleher command such loyalty, love and respect from his workforce? Outside of Warren Buffett and a couple of others you hear about here and there, very few CEOs or senior executives command the kind of loyalty—or have the kind of impact and success—that Kelleher has had at Southwest. How does he do it?

Well, simple questions sometimes have deceivingly simple answers, and if you listen to Herb Kelleher tell it, he succeeded in large part because he simply cared about his people.

“Over the years,” the Times noted, “whenever reporters would ask him the secret to Southwest’s success, Kelleher had a stock response. ‘You have to treat your employees like customers. … When you treat them right, then they will treat your outside customers right. That has been a powerful competitive weapon for us.’ As he stepped away from the company this week, his line didn’t change. ‘We’ve never had layoffs. …We could have made more money if we furloughed people. But we don’t do that. And we honor them constantly. Our people know that if they are sick, we will take care of them. If there are occasions or grief or joy, we will be there with them. They know that we value them as people, not just cogs in a machine.’ ”

I’ve worked for a number of years at a number of companies, and if I have observed any common principle it’s this: Consistently treating workers right—with fairness, dignity and compassion—is the exception and not the rule. Herb Kelleher’s style, despite its obvious success, is something far too few executives seem willing to follow.

“When you look at a company like American, with its poisonous employee relations and its glum customer base, and compare it with Southwest, with its happy employees and contented customers,” the Times observed, “you can’t help thinking that Kelleher was on to something when he put employees first.” 

The Times is right; Kelleher was on to something. But it makes you wonder: Given how little original management thinking seems to be out there these days, why don’t more CEOs who are looking for a successful leadership model to emulate try copying Herb Kelleher?


May 23rd, 2008

Where Do Old Workers Go?

I’ve written a lot about “The Talent Shortage Myth,” and I know that there are a lot of people who don’t necessarily agree with my assessment that baby boomers aren’t going to leave the workplace en masse.

So, you may ask, what exactly are boomers going to do? Well, some will retire outright, but others will take advantage of a phased retirement, where they have a formal program to slowly ease out of the workforce over an extended period of time. Others will cut back to part-time status, or become a consultant to their old company on a shorter work schedule, or perhaps even cut back to more of a seasonal basis, working for the company when the company needs them. The options are endless for boomers, of course, because they are the generation that has been hell-bent on not doing things the way the earlier generations did.

But some will also just leave their old job and move on to something completely new. More times than not, the Los Angeles Times reports, that new job is in retail.

“In recent years, the question of exactly where older workers were employed has baffled those who have seen conflicting trends ripple through the nation’s job sites: More older Americans say they want or need to work past traditional retirement age, but employers are still reluctant to retain or hire them,” the story says. “One result is that there has been little solid information about where people beyond the average retirement age of 63 work in greatest numbers, a critical issue especially now as benefits shrink and recession looms.”

The Times story adds: “But statistics from the Urban Institute, a nonpartisan research group based in Washington, show for the first time that those 65 or older and still working in America are statistically most likely to do retail, farming or janitorial work, in that order. … In a separate study scheduled for release later this year, the Urban Institute found that 43 percent of people working full time in their early 50s will change jobs before their late 60s. More than a quarter of those fiftysomething full-time workers will enter a new occupation. Nearly one in four will be laid off.”

These are sobering statistics that point to a troubling notion that underlies “The Talent Shortage Myth”—older workers, and boomers in particular, want to continue working and doing something meaningful, but all too often, it is their longtime employer that doesn’t want them to stay. That’s why so many end up in retail and wearing an orange apron at Home Depot or greeting people at Wal-Mart.

  “These are not exactly the pictures of reinvention that you get in your monthly issue of Fortune, Money or AARP magazine,” said Marc Freedman, author of “Encore: Finding Work that Matters in the Second Half of Life.” This is “an object lesson in the dangers of what could happen if we don’t develop a compelling human resource strategy for an aging society.”


May 22nd, 2008

A Stopgap Approach to Worker Shortages

One good thing about this being an election year: There is at least a glimmer of hope that some long-standing worker and workforce issues may finally get some attention. A case in point: more visas for foreign workers.

It should be no big surprise to anyone that the United States has some very specific areas where there are worker shortages—like nurses and engineers—because the U.S. is not turning out enough native-born workers with skills in these areas. This is the classic H-1B visa problem that Microsoft’s Bill Gates has spent so much time talking about  and that Congress seems so unwilling to deal with. Current rules only allow 66,000 H-1B visas per year, and as Gates rightfully points out, that number is woefully inadequate.

But there is another worker shortage problem that faces us today as we head into the summer season: a shortage of seasonal workers for all those summer restaurant and resort jobs that need to get filled right away. A story this week in the Los Angeles Times details how the Labor Department “is rewriting rules to help employers find and hire workers for temporary jobs as landscapers, waitresses and crab pickers more quickly and efficiently than current guidelines allow.” 

Here’s the key to this, according to the Times story: a fairly dramatic change in what constitutes a temporary worker. “In one major change affecting industries such as construction and shipyards, the definition of ‘temporary’ will be drastically expanded—from the current 10 months to three years. Adjusting the so-called H-2B visa program is part of an ongoing administration effort to reconfigure immigration laws on a piecemeal basis in the absence of a comprehensive overhaul.”

Labor Secretary Elaine Chao told the Times that the changes in the H-2B program would cut down bureaucratic delays. “Use of the program has increased in recent years, but duplicative requirements have … [meant] employers have failed to get workers in a timely fashion,” she said in the Times’ story. Chao added that the new rules also are meant to protect American workers. “Foreign workers will have to reapply annually and labor markets will be tested yearly to ensure there are no able and available U.S. workers for the jobs, Chao explained,” the paper reported.

Of course, there are critics of the Bush administration’s new policy toward H-2B visas.

 “The administration is trying in the only way it can to respond to business pressure,” said Mark Krikorian, director of the Center for Immigration Studies. He argued that if employers paid high enough wages, Americans would take these jobs. “Why do we even have such a program?” Krikorian asked. “Employers are never satisfied with how cheap labor is.”

Krikorian’s argument is old and tired. There have always been low-wage jobs—I had quite a few when I was in high school and college. But those jobs aren’t all that attractive to a broad cross section of the American-born workforce. That job I had at McDonald’s in high school? Today here in Southern California, it is likely to be filled by a middle-aged Latino from Mexico instead of an Anglo-American high school student. And you can’t raise the wages high enough to solve the problem and widen the worker pool without hurting the profitability of the business.

More flexibility for temporary worker visas is certainly a big help, but this is really just a stopgap solution. What we need is a comprehensive immigration policy that deals with the realities of today’s American economy. The Bush administration failed to address the issue when it had the clout to get something done, and now, with just 242 lame-duck days left, it doesn’t have the clout anymore.

So this is clearly an issue for a new president and Congress to tackle. It is on the agenda of Clinton, McCain and Obama, but the question is, how important do any of them really think it is? Out here in California, immigration and the impact on the workforce is a really big deal, as I am sure it is in much of America. We need to press our presidential candidates to see it as a big deal too.



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