Archive for the ‘Business Strategies’ Category

This week I watched as a friend was crushed by his supervisor.  He has worked for the company for the past four years, and is the perfect example of an individual who “owns” his job.  His relationship with the company goes beyond employee / employer but might be better described as he is a “FAN” of the brand and company.  I am not sure how many people I know really operate at this level of engagement or ownership – it seems like this level is above “Active Engagement” and generally reserved for the actual owners of the business.

Over the years the company has grown and created new infrastructure and levels of reporting – bringing a new manager between my friend and the company owner who he used to report to.  Of course this brings change, which can always be tough to deal with as a human. But this case is different.  Mike’s role is being reduced to a smaller set of tasks and responsibilities, not due to issues of performance but because of other growth needs of the company.  While Mike understands the strategic shift, it doesn’t make it easier for him personally.  The interesting question and opportunity to watch and learn will be to see how this affects his view of the company, his “ownership” in the brand and his performance as the biggest fan the company has.


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Most companies will testify that first and foremost that their employees are their greatest asset.  Read most mission statements and they will say some version of “our customers are our number one priority”.  Neither statement could be truer, or more crucial, yet many companies have an alignment problem between the two.

Consider the typical employment model: 

                A talented sales professional who seeks to further their career is promoted to sales manager

                A skilled and customer-focused Starbucks barista is promoted to Starbucks store manager

                The best call-center employee is promoted to train future call center employees.

Is this the best model?  At issue is the assumption that the best seller can be a sales manager, or has the abilities to lead others.  If our customers were always the “Number one priority” it would be of maximum importance to have our best employees working directly with them, not struggling to manage those who are.

In college I managed a retail store for Kinko’s.  (at the time) A great company, but in many cases we fell into this model.  Typically a new employee started on the front counter – consulting with the customer, yet not fully trained in our capabilities.  How can one consultatively sell if they don’t know the capabilities?  Once a person mastered the order-taking and selling process we would “promote” them to run the copy machines – (a job that truly anyone can be trained to do).  The best machine operator later would become Assistant Store Manager, and if they could handle that they would become Store Manager.  What a backwards model.  I would argue that it should not be a promotion to no longer interact with  customers, instead I think you ‘protect’ your customers from the ‘rookie’ and only allow employees who are well-versed in your culture, capabilities and values to interact with your “number-one priority”.

Taking care of your team, empowering them with the tools and skills to meet your customer needs will ensure that customer needs are met – meaning they continue to buy from you.  When they buy more often, and more volume financial results will inevitably improve.

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Daniel Pink (author of A Whole New Mind) gives a compelling case for why extrinsic rewards, namely pay for performance, are not successful in helping a 21st century business tackle the complex problems in the current market place. This Ted Talk has created a buzz around our office. Set aside 18 minutes to view the clip.

What culture are you building at your workplace? Are you building a workforce that has the autonomy, mastery, and sense of purpose to guide your company into the future?

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Performance management is one topic on which we provide training at PeopleSmarts.  Over the course of the past several weeks we have been internally discussing this topic and the launch of a software application to support and provide additional resources in conjunction with our trainings.  While performance management is a comprehensive process, one piece of that process is the performance review.  This week I ran into a former colleague from the retail industry who was telling me horror stories of his schedule right now because his company is currently in the midst of their bi-annual performance review process.   I suppose as this topic we have been working on it seemed fitting to write about it today.

Talking with my former colleague reminded me of some of the stories and inefficiencies of some organizations performance review process.  The first mistake they make is confusing the annual performance review with being the entire performance management process.  It seems like managers and employees don’t take the time to talk throughout the year, so often the employee is surprised by the feedback received during the review (and therefore dread the annual review because it is negative).  The second problem is lack of preparation.  Maybe the manager is too busy, maybe it is a time-management issue, but either way the result is that the manager waits until the very last second to “Rush” a review by the deadline – and therefore fails to give the employee any constructive feedback on their performance.  As a result the employee dreads the annual review because there is no value in the feedback.

A few years ago I took over a new division during the annual review cycle – according to my new boss the former division manager had written reviews for each of my 23 direct reports and it would be “easy” for me to simply deliver the review.   So I started reading and found each review to be nearly identical.  The only change was perhaps the addition or deletion of a word like “not”  or “does not” instead of “does”.  Example:  “  Mike lives our company values”  vs “Michelle does not live our company values”.   What!  And this is supposed to be feedback as to how this person performed during the year?  There were no examples to back up the sentence or to corroborate how or why Mike or Michelle did or did not live the company values.  Simply said, I could not “easily” just deliver such a review.

There are two major cost components associated with delivering a review like that in the example.  One is the opportunity cost of the time the former manager spent writing those reviews – while not nearly the amount of time it would have taken to create a comprehensive review, but several wasted hours of that manager’s labor in the writing and delivery.  Maybe one hour total x 23 direct reports or 23 total hours.  To deliver a review with no value and waste half of a work week doing so creates no economic value for the company.

The other cost I see is the lack of impact of the review.  The employee eventually becomes disenfranchised and disengaged as a result of no clear feedback or knowledge of how they fit into the organization.  They simply stop to care, and now you bare the cost of disengagement.

 While we continue to develop our trainings on the basis of EQnomics, or the economic effect on a company of poor management practices or disengaged employees expect to see more on this topic as well.    There are two ways a company can spend their performance management budget:

A company can throw labor dollars and the cost of missed productivity at a poorly developed or poorly executed performance management and performance review process is wasting money on achieving nothing.  


A company can have great processes executed well where employees are valued, employee skillsets are developed and where clear, consistent and measurable feedback are delivered throughout the year.

Each company will spend money, each can say they have a process in place but one company is simply burning dollars that yield no or little return (like simply renting your employees)  while the other is increasing the value of their employees or their “people assets”. The company who invests in their human resources and creates an appreciating asset stands to yield greater returns in the long run than the company who simply rents their employees time.

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This week I was talking to a friend who reported hearing a story where two figures were quoted:  one was that 95% of people thought they were “better than average” drivers , and that 95% of people thought they performed at work at an “exceeds expectations” level or higher. 

Of course, an hour of Google searching and I cannot find those same stats or any reference to the story or article he heard or read, but I can find studies showing that 88% of people think they are better than average drivers (Svenson 1981), 80% of students say they are better looking than average.   According to a Wikipedia article when 829k high-school students were asked to rate how well they “Get along with others” less than one percent rated themselves as below average and  sixty percent rated themselves in the top 10%.

As an employer I want these people.  I want 90% of my workforce to be performing at top 10% level,  I want to work with and live my life with the people who “Get along well with others”  but where are they?  Is it really possible statistically to have 60% of people fit into a 10% bucket?   I think the bucket would run over!   Along those same lines if 80% of people think they are performing at an above-average level at work, yet the average performance review score in a company is 3.2 on a 5.0 scale there clearly exists a gap between employee perception and employer perception of the same performance.  It has been a while since I studied statistics, but I do think It is certainly possible to have a greater number of above average employees than below – the distribution does not have to be perfect, as one below average employee can certainly drag down the company productivity levels even when balanced 2:1 with productive people  .

I took over a failing business operation a few years ago where the division had been losing money for 3 consecutive years, measures of customer satisfaction were ranked among the lowest in company and industry, production quality rankings were too at dismal rates.  After first taking this position I met with all my direct reports, and about half of the hourly employees.  I asked each to rate how they fit in to the team.  I saw this same pattern:  80% thought they were better than the rest.   I looked at the previous year’s performance evaluations for the same group.  They all had the same basic “Meets standards”  3.0 on a 5.0 scale score.    My analysis:  We had a group of people who all think they are performing well, the company has told them they are performing at an average and meets standards level while the operation is failing in every way possible;  customers are unhappy, quality is suffering and we are losing money.  These people are not being honest with themselves, nor is the company being honest with them!

As we continue to look at the costs and effect of employee engagement it is critical to also ensure that both the employer and employee have a realistic and common measure of the same performance.  A group of people who’s standards of performance are not aligned with company standards or actual expectations will never perform at a level that can yield long-term and healthy results.

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I’m in the office recounting my recent river trip on Cataract Canyon. Nothing like the roar of 16 foot waves and an accidental swim to get the blood pumping and to focus the mind. Have you ever planned a course of action, only to discover midway through that life and the elements were taking you in a different direction? Sometimes you need to stick to your guns and push through along the path you planned, and sometimes you need to switch gears and make a new plan. Knowing which time is before you is the great challenge of life.

I was at that crossroads in the rapid named Big Drop 1. I scouted the rapid from shore and plotted my course before shoving off to run the first of a series of three extremely gnarly rapids. I steered the boat through the first waves and set up to avoid a large hole at the bottom of the rapid. En route, I discovered that my boat was too water ladened and the river too swift to execute our escape. Consequently, we were headed straight for the center of a large and ugly looking wave.  In a panic, I shouted out loud, “Holy s__t; mother of god; this is going to be bad!” This, of course, did not inspire confidence from my four friends in the boat. As we crashed into the hole our boat was twisted sidewise and the wave swept me off my seat and into the water. This left the boat upright, but captainless. One of my co-adventurers grabbed me and plopped me back in the boat. Isearched the horizon for where we were headed next and spied “little niagra”, the most dangerous feature at the top of Big Drop 2. Normally, you pull the boat over to scout the next two rapids, but a heavy boat and the loss of time from hanging out in the water made this option impossible. The river was taking us through the next rapid!

Picture 1

I pulled with all my might, but the boat was not budging from its collision course with “little niagra”. I begged Ferryn (the one who plucked me from the water) to jump on the oars and help me maneuver the boat to a safer course. Together, we pulled the boat across the river where I had to make a decision: should we keep pulling to get us to the left side of the “marker” rock (the traditional and most used route) or straighten the boat and take a right run (a non- traditional and more dangerous route)? In a couple of seconds Ihad to make a decision that would significantly impact the safety of my friends and myself. In Big Drop 1 I had stayed on course and nearly flipped my raft. This time I decided to abandon my initial plan and change course. Fellow rafters have since exclaimed, “nobody takes a right run at Big Drop 2!” (see youtube video below). I’ll never know if I had the strength to safely pull our boat to the more traditional path down the rapid.

Business managers and supervisors are constantly plotting courses forward into their future. We face challenging decisions such as when to keep going with a software program that needs configuration and when to scrap it and purchase a new program, or when to keep going with a marketing strategy that isn’t generating the results we want and when to create a new marketing plan. We can use hind sight to evaluate how we performed, but not to determine if another option would have worked out. We all come to crossroads in our lives and face the challenging decision of staying the course or plotting a new one.

The most important thing to do when you come to this point in business, or in your life, is to MAKE A DECISION. Choose a course and allow the consequences to guide your hind-sight evaluation. We regret a “default decision” far more than a conscious decision. When we go into default mode, we tend to bemoan the fact that “I should have done something.” When we make a decision that didn’t work out the way we planned, we tend to exclaim, “I’ll never do that again.” We made it successfully through the rapid, barely kissing the edge of “little niagra”. More importantly, my four friends are still friends.

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GuitarsEver wonder the effect your customer’s experience has on your brand identity and the public opinion?

In March 2008 musician Dave Carroll flew from Halifax to Omaha, transferring planes in Chicago’s O’Hare Airport. Apparently baggage handlers in Chicago caused damage to Carroll’s guitar http://www.chicagotribune.com/business/chi-biz-united-breaks-guitars-video-ual-july8,0,4414385.story and after a year of trying to negotiate and work with United’s customer service department to no avail, Carroll decided to take things into his own hands, and has created a very popular YouTUBE music video / anti-United campaign calling the airline out for their failure to take care of his perceived customer service issue. His music video has had over 3 million views on YOUTUBE.

Imagine United’s annual budget for advertising and marketing. They spend millions to create their brand identity and position it strategically within the marketplace. Simultaneously they spend millions of dollars on direct labor, millions on training and development of new and existing employees. As a result of this issue, I am thinking today about the effectiveness of both.

A customer service decision, caused by an apparent operations problem in one facility is creating a media stir at a fraction of United’s budget and achieving a much less than desirable result for the company. Independent of whether or not the baggage handlers actually were negligent in their behavior, due of the increasing popularity and power of social media, United will certainly experience a negative consequence as a result of whatever happened on the ground in Chicago. The company had an opportunity to address the musician’s concern when he originally made his claim, but did not so we have to consider the actions of the customer service team responsible for addressing damaged baggage claims. Are these teams trained to empathetically address customer concerns? Are they calloused by the myriad of complaints they deal with every day and each new case becomes just another in the long list of problems they address? Do these service representatives have the Emotional Intelligence Skills necessary to perform their job functions? Is the culture at this customer service center one with an emphasis on delivering a positive customer experience?

I don’t know the answers to those questions about United’s culture and policy but am truly amazed at the implications and consequences of United’s handling of this customer’s issue, and the power of the media for one person to stand up, and tell their service story to over 3 million (and counting as you read this…) United spends millions of dollars each year to create their brand, but the real brand – the brand that people buy, trust and are loyal to is not created by the marketing department, but by the way the company treats every customer and responds to customer issues.

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