Doling out Raises

Once you're in management, one of the trickier assignments you'll have is determining raises for your direct reports.  It's an easy job to flub, which might either cause problems with an important subordinate or even get you in hot water with your boss.

Here are a few rules of thumb for putting together increases.

1.  The total of all direct report increases should be in the same range imposed on your business as a whole.  In other words, if the budget is a 3% increase, those under your direct control should also be subject to the same limitation.

2.  The raises should make sense relative to one another -- your best performer should get the lion's share of the increase, and your worst performer, the smallest.  This should, however, be tempered by the position of each subordinate within their pay range, and the real risks you have of losing someone critical to your success due to non-competitive compensation.

3.  Don't wimp out and fail to confront your weaker performers.  You'll regret it later, particularly if you decide you need to make a change.

4.  Get your boss's approval of all raises before talking to anyone about what you are planning.  Many bosses have a big need to fiddle with amounts, or want to argue specific points with you.  If you say anything ahead of time, you're putting yourself and your credibility at great risk.

5.  Don't ever make any concession to an employee that could be seen as a form of compensation without discussing it with your boss ahead of time and getting his/her approval.  This means any arrangement which involves travel, reduced or modified hours, incentive pay, or any other change that could remotely be seen as impacting pay.

Just like any other political hotspot where you can singe your fingers, I've learned a few of these rules by making mistakes.  And if you've followed this series of posts, you can probably already guess which ones -- yep, those that involve getting approvals ahead of time.  I freely admit I've always hated asking for permission to do what I've already decided is right.

In one of my jobs, I went through the entire performance appraisal process and raise cycle without once saying a single thing to my supervisor.  In that job, I was responsible for a stand-alone profit and loss business, and I did have an approved and budgeted overall increase for all employees.  And while I was able to keep the salary changes for my direct reports in line with the budget, my boss clearly wanted to debate each increase in great detail.  I later learned that the boss had his own favorites from among my staff, and he wanted to make sure those he perceived as "high performing" were rewarded with the top increases.  He also wanted to see that those who were at the bottom (in his estimation) received the message that they should begin looking for employment elsewhere.

The problem was, his opinions were developed based on little direct observation of their work (other than the occassional presentation), and reflected his belief that he was an oracle when it came to picking "A" players.  I can tell you from personal experience that he vastly over-estimated his abilities, much to my later woe.

Fortunately, I broke no rules by leaving him out of the loop, so other than a general question about my own perceptiveness and intelligence at not seeking his counsel, there were no major repercussions.  At least none at that juncture.  Soon afterward, it was codefied in HR's policies that all raises required a supervisor's sign-off.  No exceptions.

I also violated the last rule once, by allowing one of my direct reports to office out of a remote facility part of the time.  While I did get the agreement of the top HR manager in the company, my boss had other ideas about whether permitting this was wise or appropriate.  One of the dimensions I was attacked along as a result was the concept that allowing the employee to fly to the remote location during working hours was, in effect, a pay increase -- the "logic" being that those would have normally been hours when the employee was working.

The result of this fiasco was a two year campaign by my boss to oust the employee.  The entire episode wasted a lot of my time, and put me in a perpetually stressful situation.  While I was completely happy with the subordinate's performance, I found myself continually fending off attacks over trivial matters, and defending the arrangement I'd made.  In the end, I decided it would have been a lot easier dealing with the situation up front by discussing it with my superior.

Other Recent Posts:

Embargo Laws Can Ruin Your Whole Day

Anchor Your Expansion to a Stable Platform

Keep Your Distance

Fire the First Shot

The Nuclear Option

If you enjoy the ideas presented in my blog posts, then check out my other writing.

Non-Fiction:  NAVIGATING CORPORATE POLITICS

Corporate Thriller novels: LEVERAGE, INCENTIVIZE, and DELIVERABLES.  These are all based on extensions of my basic experiences in the world of corporate management.

Embargo Laws Can Ruin Your Whole Day

Don't try to circumvent the U.S. embargo laws.

You would think such advice would be unnecessary, but I'm aware of at least two intentional instances where employees did just that, and another one where it was (probably) accidental.  I'll describe those incidents in a moment, but first here are the five things you need to know about U.S. embargo laws:

1.  They're complex.  There are prohibited countries, prohibited entities, and prohibitied individuals.  If you're doing international business, there is no way you'll stay in compliance without some kind of system which makes sure you're not inadvertently making mistakes.

2.  Trying to stay in compliance does count for something -- regular training, reporting procedures, and other mitigating actions will help, if your company is found to be in violation at some point.  These are reasonable and prudent precautions.

3.  Self-reporting a violation will be painful.  Covering up the incident and hoping no one finds out would, however, be infinitely worse.  If you find something, I recommend you consult an expert attorney, and if they recommend it, self-report.

4.  The rules vary from country to country, product to product, and instance to instance.  Your best bet is to stay well away from any perceived grey area.  There isn't enough potential gain available if you accidentally cross the line of legality and are caught.

5.  The U.S. Government is serious about violations.  There are lots of individual penalties, as well as corporate penalties.  When in doubt, consult an attorney.  When in doubt, don't let an investigation stall at your desk.  Protect yourself first, then worry about the company.

Now for the examples:

In one instance, my employer's Canadian subsidiary was selling to a company on one of the restricted lists (blacklists).  The company was on this list because they had holdings in Cuba, and had a history of trans-shipping products from the U.S. to Canada and then on to Cuba.  The shipments were a violation of the U.S. Embargo.  Additionally, I learned that our Canadian employees could be arrested for violation of Canadian law if they denied sales to this same entity as a result of the U.S. embargo.  It was a "Catch 22."  In order to resolve the situation, we put in a U.S. based "approval process" for all sales orders, so our U.S. employees could actually issue the "no" determinations, thus protecting the Canadians.  It was a Kludge, but at least it worked.

In a second instance, a European subsidiary of my employer's was knowingly selling to a distributor, who was then selling product to Cuba.  When we discovered this violation, it had been going on for six years, and millions of dollars were involved.  As a result, we failed to collect open receivables from the distributor, had to put recent receipts in a suspense account, fired the distributor (yes, they sued us for improper termination in a European court), fired all the employees involved (one of them also sued us), did a year-long investigation, and self-reported to the U.S. government.  Fortunately, no U.S. employees were involved, or they would have probably been criminally charged.  All in, the incident probably cost us between $2-3 million, much more than we ever earned from the sales.

In the third incident, an innocent email received by one of our employees from a potential client in Libya (back when they were under embargo) was answered.  In the answer, the employee correctly stated that he couldn't do business with them due to the U.S. embargo, but then he went on to refer the potential customer to one of our European competitors.  That last part was a violation.  While we were not required to self-report, this was discovered as a part of an investigation of accusations made by a third party, and it's discovery caused us to back down in a dispute we had with them.  The larger ramifications were quite painful.

Messing around with these laws, in my experience, always costs you.  So my advice is to stay as far away from them as you possibly can.  That will keep you and your employer out of trouble.

Other Recent Posts:

Anchor Your Expansion to a Stable Platform

Keep Your Distance

Fire the First Shot

The Nuclear Option

Selling your less than stellar outcome

If you enjoy the ideas presented in my blog posts, then check out my other writing.

Non-Fiction:  NAVIGATING CORPORATE POLITICS (FREE on Amazon 9/17 and 9/19)

Corporate Thriller novels: LEVERAGE, INCENTIVIZE, and DELIVERABLES.  These are all based on extensions of my basic experiences in the world of corporate management.

Anchor Your Expansion to a Stable Platform

During my many years in international business, I came to see national markets as falling into two categories -- stable and unstable.

Stable markets are ultimately driven by consumers, and have recourse to reliable laws.  While they are still prone to cycles, they aren't as severe as in unstable markets.  Stable markets will anchor your business in a region, allowing you the opportunity to exploit nearby unstable markets on an opportunistic basis, without putting your assets at risk.

Unstable markets tend to be government dominated.  They may have laws, but they are subject to change.  An unstable market may be dormant today, going like crazy tomorrow, and the government might be overthrown next year.  They should never be used as the anchor for your business, because they can't be relied upon long term.  Unless, of course, you can pay off your costs in an extemely short time -- like six months!

How did I learn this, you might ask?

I built a factory in the UAE who's primary purpose was to serve the Iraqi market (UAE being far too small a market to feed the plant).

Yeah, you read it right.  Iraq.  Between the first and second Gulf wars.  At that time, there were huge contracts available through the United Nations Oil for Food program, and I knew that if I wasn't present in the region, I had no chance of participating in the gravy train.  So did I cover my bet, and grab enough in contracts to pay off the factory in six months, just like I advised?

Nope.

By the time the plant was running, the second gulf war had started, and Oil for Food was over.  I never shipped a single product to Iraq from that facility.

Next I tried to use the plant to supply Saudi Arabia (another unstable market).  My competitors there managed to get import duties raised so high that we were too expensive to sell much of anything.

Next was Egypt -- there the main problem was most of the equipment of our type was purchased using USAID money.  That meant the stuff actually had to manufactured in the United States.  And the bulk of the business was government-driven, meaning it was always feast or famine.

Pakistan?  Sorry, few customers there were willing to consider changing their traditional practices, and adopt new technology.

Libya?  Azerbaijan?  We did manage to land a few projects in both places, enough to keep the plant busy for a year or two.  You probably know what happened in Libya.  Azerbaijan simply ran out of gas.

Bottom line is once we had the walls up and the equipment installed, nothing really materilized of any great significance.  The factory is still undoubtedly under-utilized to this day.  So much for a "field of dreams" expansion strategy (build it and they will come).

If I'd anchored the plant to a stable market -- South Africa.  Possibly Southern Europe.  Perhaps even Saudi Arabia (by placing the assets in country, where they'd be harder to neutralize by the competition).  I would been immensely better off in the long run.

So don't make the same mistake I did all those years ago, put your plant in Brazil, not Argentina.  In Taiwan, not Vietnam.  In Poland, not Russia.  Or wherever your analysis says you have a stable, sustainable demand that won't completely dry up on a moment's notice.

Other Recent Posts:

Keep Your Distance

Fire the First Shot

The Nuclear Option

Selling your less than stellar outcome

It's Never too Late to Rethink Strategy

If you enjoy the ideas presented in my blog posts, then check out my other writing.

Non-Fiction:  NAVIGATING CORPORATE POLITICS (released 7/19/12)

Corporate Thriller novels: LEVERAGE, INCENTIVIZE, and DELIVERABLES.  These are all based on extensions of my basic experiences in the world of corporate management.

Keep Your Distance

During my business career, I found myself working with some pretty strange and unsavory types of people.  Thieves, cheats, backstabbers, expert politicians, self-righteous jerks, screaming lunatics -- every type of exteme person or personality you'll find out in the world is also lurking somewhere in corporations.

Some of those relationships you inherit, perhaps mistakes of a predecessor.  Others represent errors you might have made yourself by agreeing to work with the wrong person.

The problem relationships you inherit can be particularly tough to deal with.  If they're subordinates, perhaps you can fire them.  Peers, you can sometimes avoid.  Bosses...well, there you might have to just wait them out, or move somewhere else.  And then there are the problem customers, suppliers and other contractual partners -- these often times have to be dealt with for extended periods.  Separating from any of them can range anywhere from difficult to downright impossible.

I recall one joint venture I inherited during one of my general management jobs that was particularly difficult to handle.  You see, I discovered our partner was stealing from the joint venture.  It seemed the JV was supplied by one of the partner's other manufacturing companies, and prices for raw materials were set such that every nickel the JV made was transferred to the supplier.  I did the best I could with the situation, demanding that competitive quotes be used to set prices for key commodities.  Once trust had been broken, however, it was virtually impossible to regain, and I found myself constantly wondering how else they might be ripping me off.  My preference would have been to completely unwind the venture, but other corporate relationships made that option unavailable.  The only thing that saved me from a prolonged period of torture was a new job elsewhere.

If you can unwind the inherited messes, do so as favorably as you can and as quickly as you can.  But do so.  If you can't, then at least fight to put rules and policies in place that give you whatever protections and relief you can get.  And even though you might want to punch out the person that got the company into the mess in the first place -- don't.  Trust me, you'll make plenty of similar mistakes of your own.

And those mistakes you make yourself are even worse than the ones you inherit.  You'll probably often find yourself looking in your personal rearview mirror, thinking about all the signs you should have noticed that indicated this particular partner was unsuitable.  Self-flagulation is nearly always much worse than any imposed by others.

One of my biggest errors of this type was doubling down on an investment in a small distributor.  The company was already working with the two owners, and wanted to either get out, or get in far enough to consolidate the results.  Of course, I wanted to grow the business, so the idea of buying more was appealing.  I had plenty of indication early in the negotiations that these two characters would be very difficult to work with, but I chose to ignore them in favor of getting the deal done.  The resulting relationship was one of the more painful experiences in my professional career, which started with arguing and fighting, and ended with a nasty lawsuit.

So, if a potential partner shows themself to be difficult, immoral, or just downright suspicious, keep your distance.  Better to forego the potential gain, than live with the pain of an (in hindsight) obvious mistake.

Other Recent Posts:

Fire the First Shot

The Nuclear Option

Selling your less than stellar outcome

It's Never too Late to Rethink Strategy

Don't Rely on the Courts

If you enjoy the ideas presented in my blog posts, then check out my other writing.

Non-Fiction:  NAVIGATING CORPORATE POLITICS (released 7/19/12)

Corporate Thriller novels: LEVERAGE, INCENTIVIZE, and DELIVERABLES.  These are all based on extensions of my basic experiences in the world of corporate management.

Fire the First Shot

It might go against your beliefs.  It might seem reprehensible.  It might seem like hitting below the belt.  But if you let your opponent fire the first shot, you'll suffer as a result.

Several years ago, I attended a seminar on the subject of protecting yourself in the event of a personal, physical attack.  What should you do?  How to react?  These were the things the seminar sought to determine.  Then the instructor attempted to train all of us in the appropriate response.  One of the things that really stuck with me was the realization that the person who strikes the first devestating blow in a fight, will end up "winning" 95% of the time.

It doesn't work like the movies, folks.  A punch to the throat, a broken nose, a fractured elbow, and you're opponent is virtually finished.  As long as you follow up the initial blow with the appropriate force, you will prevail.

Things in business work much the same.  If you are intent upon beating an opponent in a political game -- one where you are locked into a "career-survival" type struggle -- you need to be willing to strike the first heavy blow.  Recognize you'll probably be hurt in the process, but play to win and survive -- attack first.

I know, it doesn't sound nice.  And truth be told, I had trouble following this advice, myself.  But the one who launches their missles first, is much more likely to prevail in any conflict.  The first significant blow...the first devestating blow...is where the battle is won or lost.

I once had a major pricing conflict a peer, one where I was purchasing services from his business, and they were a significant part of my costs.  We disagreed on a price increase he attempted to cram down my throat, and my opponent and I exchange "sizing up" blows via emails.  In the last email of the exchange, I copied the company CFO so that he could see the unprofessional behavior of my opponent, and how I was trying to be "fair" in comparison.  The tactic worked perfectly when the peer and I couldn't settle the dispute, and had to appeal to a higher power.  My pre-emptive strike (a simple blind copy of the most damning of my opponent's communications), helped me to eventually prevail in the dispute.  I was bringing the CFO in on my side because of the peer's "over the top" behavior.

It worked.  But it did seem a bit of a "dirty trick".  On the other hand, had my opponent not been excessively sarcastic and insulting, my maneuver wouldn't have been so effective.

Firing the first shot gives you a strategic political advantage over your opponent, but just as is true in the physical world, you need to be prepared to follow it up and take the fight to completion.

Other Recent Posts:

The Nuclear Option

Selling your less than stellar outcome

It's Never too Late to Rethink Strategy

Don't Rely on the Courts

Brilliant Strategy, Bad Execution

If you enjoy the ideas presented in my blog posts, then check out my other writing.

Non-Fiction:  NAVIGATING CORPORATE POLITICS (released 7/19/12)

Corporate Thriller novels: LEVERAGE, INCENTIVIZE, and DELIVERABLES.  These are all based on extensions of my basic experiences in the world of corporate management.

The Nuclear Option

Business is rife with tough talk -- we want to "dominate" the competition, "strong-arm" our suppliers, and "lock-in" our customers.  Business writing is full of war analogies, from Sun Tzu's The Art of War, to my own humble effort with Navigating Corporate Politics.

But does this rush of testosterone really make any sense?  Are these objectives plausible goals?  What is the likely outcome when we attempt to dominate, strong-arm, or lock in?

The answer is both yes and no.

At one level, tough business talk is inspirational.  It provides easily related to objectives that rally the troops, and align the organization's activities toward a common goal.  I've seen this magic work more than once, galvanizing seemingly self-interested employees into rapid and well-cordinated action to accomplish the seemingly impossible -- particularly when survival of the company is at risk (or seems to be).

But when it comes to actually trying to dominate, strong-arm, or lock in, it is my humble opinion that it rarely works, sometimes backfires, and often results in a worse financial outcome for everyone involved.

During my career, I had the opportunity to watch, in some detail, the latter stages of a prolonged competitive battle among two distributors.  I don't know which of the organizations first decided they would use the nuclear option, but by the time I was seeing it, the battle had been going on for many years.  Both organizations were beaten down, financially weak, had demonized employees of their opponent firm, and couldn't seem to see any way out other than taking their competitor into bankruptcy.  But even that was a false horizon.

What they missed, even if either was successful in driving the other to liquidate, was the assets of the bankrupt company would undoubtedly be purchased for pennies on the dollar by a new owner.  Then, odds were good that the battle would continue much as it had before.

In watching the antics of these two companies, a number of conclusions struck me.

1. The nuclear option -- initiating a war of survival -- is almost never profitable for either firm.
2. The battle almost always lasts far longer than the aggressor anticipates.
3. Since most of these battles are fought with price, both companies end up taking major hits to their profitability.
4. The enemy camp is nearly always characterized as "evil" or "stupid", making any redress of differences, and the ending of battles difficult.  Anti-competitive laws also make settling disputes difficult and sometimes risky.
5. Success is elusive.  Companies go through bankruptcy and emerge recapitalized and with lower costs, ready to fight on.

So while battling competitors, suppliers or customers may make a good rallying cry, actually taking the nuclear option rarely (dare I say, never) is.

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Selling your less than stellar outcome

It's Never too Late to Rethink Strategy

Don't Rely on the Courts

Brilliant Strategy, Bad Execution

A License to Steal

If you enjoy the ideas presented in my blog posts, then check out my other writing.

Non-Fiction:  NAVIGATING CORPORATE POLITICS (released 7/19/12)

Corporate Thriller novels: LEVERAGE, INCENTIVIZE, and DELIVERABLES.  These are all based on extensions of my basic experiences in the world of corporate management.

Selling your less than stellar outcome

Imagine a protracted negotiation with a challenging customer.  Your firm is clearly in the wrong, yet you know it's your responsibility to take the firm's side and hammer out a compromise.  You labor for days (perhaps weeks) attempting to get the best possible deal you can without violating the (stated) governing principles of your firm.  At the end of the negotiation, you have a compromise -- one that is hard-fought, and certainly the best you can do.

But when you step back and look at it, it's pretty clear it's going over like a lead balloon with your boss.  The compromise is expensive, ugly and perhaps inconsistent with the boss's image of the company.

How do you sell the deal, get approval, and move on with life?

At this point it probably isn't valuable to point out that you should have been keeping your boss in the loop all along.  When the boss understands the pain experienced to reach a compromise, he/she is much more likely to accept it.  But what if you failed to loop her in?  What then?

I recommend a two step process, the first one involving a little influencing, and the second one consisting of taking your lumps and being patient.

In the first step, you have to identify the most likely person your boss will lean on for advice when faced with approving or scuttling your deal.  With most of my bosses, this was a predictable and repeatable person -- in one company it was the CFO, in another a subordinate, in a third a corporate staffer.  Once you know your target, you should schedule a meeting and go through the details of what got you to where you are now.  Listen to advice or thoughts -- these same items are likely to come up when you talk to the boss about the situation, too -- and it will give you a chance to think through your responses.  In the end, ask for help.  This won't always work, but most senior people can't resist an earnest request for aid.

After step one, you'll have a pretty good idea what the boss might object to, and how he is likely to react.  With a little luck, you'll also have a quiet ally who can help sell your compromise.  Your influencer may or may not say something to the boss prior to your meeting, be prepared either way.  In my experience, the influencer's preselling won't make things more difficult unless you've crossed a line, or are about to hit one of the boss's hot buttons.

Then comes the big meeting, which is likely to be unpleasant and uncomfortable.  When hearing the "coulda, woulda, shoulda" don't get angry, but don't just roll over and give up either.  In parallel apologize, and explain (when you can) why you did what you did (or didn't do) what the boss thought you should do.

Ideally, you'll get through all the explanations, and the boss will realize your compromise, while not the best conceivable outcome, might be the best possible under the circumstances.

But don't count on it.

Most likely you'll be sent from the room early leaving an angry boss, an unfinished story, and possibly instructions to undo all your hard work -- but don't move too quickly on this last point.

This is where completing the first step can save you.  When the boss goes to his/her confidant, they are likely to act as a voice of reason in the roilling sea of emotions.  With a little time, the boss will usually come around and accept your compromise as the best one under the circumstances.

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Don't Rely on the Courts

Brilliant Strategy, Bad Execution

A License to Steal

You can't Create a Crisis, but you can Capitalize on One

If you enjoy the ideas presented in my blog posts, then check out my other writing.

Non-Fiction:  NAVIGATING CORPORATE POLITICS (released 7/19/12)

Corporate Thriller novels: LEVERAGE, INCENTIVIZE, and DELIVERABLES.  These are all based on extensions of my basic experiences in the world of corporate management.

It's Never too Late to Rethink Strategy

What makes a good Strategy?

Perhaps the easiest way to measure this is in the rearview mirror where good=successful.  A good strategy is one that wins.

Backward looking evaluations are nice when performing analysis, but not particularly helpful in evaluating a strategy in the process of being implemented.  So if, like most managers, you're responsible for developing or implementing strategy in real time, how can you evaluate it?

There are several dimensions that are fairly easy to examine.  Is the strategy understandable by those who need to carry it out?  Has it taken into account competitive reactions?  Is it too complicated to actually work?  Do the people charged with implementing, actually have the skills to do so?  And so on, and so forth -- strategy books are full of these questions, ones that should have been answered when the strategy was initially launched.

The strategist should have already done their homework along these and other fairly obvious dimensions.  Implementers should be thinking these questions through, as well.  As an implementer, even though you didn't craft the strategy, you still owe it to yourself to make sure it is workable.

Most of the strategies I've seen over the years do a pretty good job with those dimensions.  The area where they seem to get tripped up is in the less-obvious underlying assumptions that often go unnoticed and unexamined, even as information emerges to suggest they are just plain wrong.

For example, imagine launching a strategy to capture a market by making a product design improvement that competitors will have great difficulty matching.  This happened to one of my employers not that long ago.  When the strategy was developed, there were numerous underlying assumptions about what the "customers" valued -- lower cost, for example.  There were also assumptions about what wouldn't matter to them -- a more cluttered-looking design, in this example.

As the project evolved, I discovered the primary customer DID care about appearance.  They had to get a series of approvals to use the product, and an "ugly" appearance was much harder for them to sell.  I also found out that the primary customer, who did actually prefer a lower cost, was not the specifier of the product.  The specifier was much more concerned about keeping control of the old design than offering reduced costs to the primary customer.

When these revelations surfaced, it was a sure sign we needed to rethink our strategy.  But most of the times I've seen this type of scenario play out, people stick their heads back in the sand, and hope that their "brilliant" strategy (usually one that someone else developed) will all just "work out".  In the above example, we did eventually come to grips with the meaning of mistaken assumptions (six months and hundreds of thousands of dollars later), and pulled the plug on the entire project.  In that case the mistaken assumptions were fairly obvious, but that certainly isn't always the case.  Sometimes you have to dig deeply and search hard to uproot a killer erroroneous assumption.

The time to re-evaluate your strategy is...now.  It should be done on a regular basis throughout it's life. Not just at the beginning.  Not just once per year.  Both strategists and implementers shouldn't hesitate to challenge, revise, or even drop a strategy that has proven itself to be headed for the ditch.  Better dealing with it then, than confronting an even bigger problem further down the track.

Other Recent Posts:

Don't Rely on the Courts

Brilliant Strategy, Bad Execution

A License to Steal

You can't Create a Crisis, but you can Capitalize on One

Wrap that Problem in a Solution

If you enjoy the ideas presented in my blog posts, then check out my other writing.

Non-Fiction:  NAVIGATING CORPORATE POLITICS (released 7/19/12)

Corporate Thriller novels: LEVERAGE, INCENTIVIZE, and DELIVERABLES.  These are all based on extensions of my basic experiences in the world of corporate management.

Don't Rely on the Courts

Choose your employees, customers and business partners well.  Nothing will allow you to sleep at night better than knowing the people you work with are honest, reliable and can be counted on to live by the letter and spirit of their agreements with you.

If you can't count on them, you'll likely end up in court at some point in time, and that experience can surprise even the most jaded of senior managers.  Here are a few examples of what can (and did) happen.

An employee who worked in my business unit left for a competitor.  Not unusual by itself, but I discovered soon after he was out of the building that he had taken megabytes of critical, sensitive information along with him.  I later learned that he had been meeting with the CEO of the competitor, and had even had dinner at his house prior to the sealing of their "secret" deal.  I ran to the courts seeking an injunction preventing my former employee from taking the job.

Result:  Court agreed the employee was attempting to steal confidential information to use in his new job, but wouldn't grant the injunction!  He was simply given a stern warning not to use anything confidential in his possession, and allowed to continue on his merry way.

In another incident, three employees blackmailed the company into a "harassment" settlement, under threat of revealing sensitive company information as their case proceeded in court.  The information concerned a scandal they were aware of, but had no bearing on their "case."  We backed down quickly on that one, providing a hefty payment to each complaintant, and were happy it didn't go any further.

A third incident involved the termination of a senior manager and partial owner of a joint venture.  In the separation, I agreed to buy his shares of the venture, to allow him to completely leave the company.  When I refused to complete the purchase (due to the fact he had been "cooking the books," thereby giving an incorrect impression of their value) he sued the company and me personally.  The judge compelled me to complete the transaction anyway, despite the fact we had relied on false information from the owner when extending the offer.

In a fourth, I was forced to avoid the courts completely, when a foreign licensee threatened to fabricate "evidence" of our involvement in their sales to a blacklisted country (totally false, I might add).  That might have been a godsend since the case would have been tried in a foreign court, and I seriously doubt we would have prevailed.

One of my former bosses used to say:  "Business is great fun, except for the people."

When you go to court, you receive a decision, not necessarily justice.  In most cases, once you're on the path to legal action, you've already lost.  You're taking a situation that is in you control, and placing it in someone else's hands.  And for the honor, you'll likely pay your attorney a handsome fee.

So do your homework on the front end to make sure the people you deal with are honest, reliable and ready to live by both letter and spirit of the agreement.  Craft your agreement well, so it is clear to both sides exactly what is expected when any number of unexpected situations arise.  And when you become embroiled in a dispute, endeavor to settle it amicably and without reliance on the courts.

Other Recent Posts:

Brilliant Strategy, Bad Execution

A License to Steal

You can't Create a Crisis, but you can Capitalize on One

Wrap that Problem in a Solution

Ask and Act, or Hold You Tongue

If you enjoy the ideas presented in my blog posts, then check out my other writing.

Non-Fiction:  NAVIGATING CORPORATE POLITICS (released 7/19/12)

Corporate Thriller novels: LEVERAGE, INCENTIVIZE, and DELIVERABLES.  These are all based on extensions of my basic experiences in the world of corporate management.

Brilliant Strategy, Bad Execution

When I was in business school, I read case after case where companies had fundamentally flawed strategies which lead to the firm's ultimate demise.  Bad assumptions, a lack of understanding of how a critical part of the market worked, inattention to a killer competitor -- the reasons were different in almost every case.  And while we focused on the big, company-killing strategic errors, other cases pointed out that smaller strategic errors clearly happened on a regular basis, as well.

Once I entered executive management, it was clear to me the view from inside the company is completely different -- there all strategies seemed to be labeled as "brilliant," and every failure was the result of "poor execution."

The reason for this isn't difficult to see -- senior executives, particularly CEO's, are the ones who develop strategy, and they also pass along the execution part (read:  the hard part) to lower level management and professionals.  Of course, the senior executives are the people who assess the cause of a failure, so it shouldn't be any great shock that almost all are a result of "bad execution."

This is a phenomena humorously referred to as "drinking your own bathwater" by one of my former bosses.

And I don't think this part of the equation is likely to change any time soon, because there is absolutely no advantage to those passing judgment in pointing the finger of guilt back at themselves.

At one of my employers, a senior executive fell in love with a concept for a new product (one for a new market -- already danger alarms should have been sounding).  The product concept was innovative, cheaper than what was on the market at the time, and contained a few performance advantages as well -- at least that was how it was portrayed.  For more than five years the company invested millions of dollars developing the concept, but also meeting significant resistance from potential customers.  When I took over responsibility for the project, a few customer conversations at a trade show made it obvious to me that unless the product offered huge cost advantages over the current method, customers wouldn't switch.  After an exhaustive study, I was able to determine it didn't, and shut the project down.

So was it bad execution?  Or bad strategy?  Bad strategy, of course.  No amount of hard work in the execution could drive the costs anywhere close to low enough to gain acceptance from the customers.  So why hadn't this been figured out five years and ten million dollars earlier?  A defect in strategy development and planning.

In this case, which I've found to be true in most of these stories, the only ones punished were the "executors."  The grand strategist blamed them for "misleading" him about the costs of the product.  And somehow the resistance of customers to the design ended up being the "executor's" fault, too.  They departed the company, while the strategist continued on to strategize another day (hopefully he learned something in the process). 

And that's the way it usually seems to go.

If you're on the "execution" end of this process, how do you protect yourself?  There are a few tactics you can use, but it's still easy to find yourself in a "no win" situation.  Here's what I've seen work over the years...

1. Assess the strategy yourself, and avoid those projects that have obvious flaws, or where the odds of success seem too low.
2. Get an outside opinion to counter the senior executive's optimism on the project.  And get it early.
3. Raise concerns and objections yourself -- this often gets you labeled as "negative," but at least it can keep you from taking full blame for the thing when it ultimately fails.
4. Quit before the whole thing falls apart.

To do any of this means that the manager responsible for execution needs to develop a keen eye for good versus bad strategy themselves, and an ability to make those judgments quickly.  If you have this, you can avoid many of these problems.

And once you make it to senior management, at least be aware of the bias and try to drink a little less of your own bathwater.

Other Recent Posts:

A License to Steal

You can't Create a Crisis, but you can Capitalize on One

Wrap that Problem in a Solution

Ask and Act, or Hold You Tongue

The Essence of Competitive Advantage

If you enjoy the ideas presented in my blog posts, then check out my other writing.

Non-Fiction:  NAVIGATING CORPORATE POLITICS (released 7/19/12)

Corporate Thriller novels: LEVERAGE, INCENTIVIZE, and DELIVERABLES.  These are all based on extensions of my basic experiences in the world of corporate management.

A License to Steal

There are many options a senior manager has to increase the rate of growth for a "hot" product or service -- sell it, franchise it, develop distribution, set up outlets yourself, joint venture, web-based sales -- the list is lengthy, the options seemingly endless.

One method you might be consider is to license your product.  For those who are unfamiliar with a license, it grants the licensee the rights to manufacture and sell your product in a particular region, in a particular configuration, or to a particular market.  The first of these is certainly the most common use of a license agreement -- where small to medium-sized firms can extend the distribution of their product/service to geographic areas they either don't want to personally serve, or won't get around to serving for years.

The problem with the license is that when you provide your licensee the intellectual property needed to replicate your product/service, you're essentially giving them the keys to the castle.  You're arming them to become a future competitor.

A number of years ago I worked for a company that had engaged in four license agreements some time in the distant past (at least four that I knew of, there could have been more).  It's interesting to note what happened with each of these agreements over time.

One license agreement was in the former USSR.  That was the easiest for the company to deal with as during the fall of the Soviet government the market for the product collapsed, and the licensee went out of business.  Without a significant domestic market, attempts to restart the company were not successful.

A second licensee was in Africa.  That company struggled with profitability due to a bloated overhead structure, but did succeed in dominating the African market.  Eventually, our parent company formed a joint venture with the licensee, and we took effective control of the firm.  Would it have been better than simply starting over?  Debatable.

A third licensee was in Brazil.  This company went into bankruptcy during an economic crisis, and once again, the our parent firm eventually concluded a joint venture with the post-bankruptcy entity.  Had that not happened, we would have effectively handed the market to local firms, including the former licensee that was now lean and mean.  Arguably, the price paid for the JV was high, but in retrospect it turned out to be a timely and profitable move in what was to become the most important offshore market for the product.

The final licensee was in the middle east.  Because of some of the licensee's business practices, it was decided a joint venture or purchase of the firm wasn't an option.  Once the license ended, this "partner" stole our product designs and technical know-how, and began selling a competing product.  Within a couple of years, they were entering some of our core markets using a "same as, only cheaper" marketing strategy.  They also managed to wrest away a few solid employees that formed the core of their offensive team.

So in three out of four cases, the licensee became a competitor which required either an expenditure of significant capital to counter, or a market-based reaction to combat.  My lesson learned here is to avoid license agreements like the plague -- at least with respect to your core products or services.  While they may give you a boost in short term sales and profits, you are giving birth to future competitors in the process.

Other Recent Posts:

You can't Create a Crisis, but you can Capitalize on One

Wrap that Problem in a Solution

Ask and Act, or Hold You Tongue

The Essence of Competitive Advantage

Get that Confrontation Behind You

If you enjoy the ideas presented in my blog posts, then check out my other writing.

Non-Fiction:  NAVIGATING CORPORATE POLITICS (released 7/19/12)

Corporate Thriller novels: LEVERAGE, INCENTIVIZE, and DELIVERABLES.  These are all based on extensions of my basic experiences in the world of corporate management.

You can't Create a Crisis, but you can Capitalize on One

Change is tough.  Anyone that has tried to lose weight or quit smoking can tell you that.

So it shouldn't come as a big surprise that changing organizational practices is tough, too.  After all, those practices are the aggregation of individual behaviors and habits, most established over a period of time when the organization was successful, and resistant to change.

When I attended business school, we read case after case about change and change management.  "Change agent" is something you find listed on half of the resumes you read today.  Everyone claims to be open to change, involved in change, or a victim of change these days.

So what does it take to make really meaningful change in an organization?

In my experience, the most important requirement is for the leader of the organization to convince the employees that change is necessary, desirable and achievable.  Desireable is often the easiest of these requirements to satisfy -- a logical argument that people can understand and buy into.  Convincing people the change is achievable is best done by making the quantity of behavior that must be altered as small as possible -- not too much of a stretch, not too disruptive.  Getting there is hard, but with clever planning, is usually possible.  Necessary, on the other hand seems to be an emotional hurdle that is very difficult to get past.

Even if you know you should make a change (the health arguments to stop smoking), and everything is in place to make the transition as easy as possible (taper down time, patches, etc.), real change usually takes a motivating event (cancer diagnosis?) to get underway.

In business, this motivating event is usually called a crisis.

A crisis can be caused by a loss of market share, a distributor revolt, a major performance failure -- any number of things.  But a crisis can NOT be fabricated.  I know, I've tried.

One of my president jobs was with a division of a large corporation that had a terrible track record of on-time delivery performance.  For years the leadership of the division had tried to implement changes that would improve their dismal record, and all of them had failed.

"You need to create a crisis," my boss advised.  

Of course, he'd run the business himself, and hadn't been able to successfully "create a crisis."  But I dutifully set about formulating new measures, and whipping up a whirlwind of words, in an attempt to make the delivery performance seem like a big deal.

And just like my predecessors, I also failed.

Then a curious thing happened.  We were surprised by a substantial increase in demand, and suddenly dismal performance quickly devolved into horrible.  At a distributor representative meeting, the participants united and delivered a clear message to me and my staff -- "you're killing our business, you have to fix this."  The real crisis, the one I'd been trying to pretend was present, was now suddenly upon us.

But just having the crisis present wasn't enough.  I still needed to use it as a motivating tool to make the changes happen.  I did this by committing our organization to an improvement plan.  Publically.  To my boss, to the distributors, to my employees.  I made it clear that jobs were on the line if we didn't get this fixed.  And I appointed a change leader who had the horsepower and the desire to walk the changes through the organization all the way down to the shipping dock, if necessary.

Slowly, with continual focus over the next several months, we began to turn the ship around.  After a year of continuous attention, I was able to say the crisis was over.  And then only after installing systems and procedures to assure there would be no backsliding.

Making the change took explaining how it was desirable, convincing people it was achievable, and capitalizing on a real crisis to deliver the necessity.

Other Recent Posts:

Wrap that Problem in a Solution

Ask and Act, or Hold You Tongue

The Essence of Competitive Advantage

Get that Confrontation Behind You

Corporate Vendettas

If you enjoy the ideas presented in my blog posts, then check out my other writing.

Non-Fiction:  NAVIGATING CORPORATE POLITICS (just released 7/19/12)

Corporate Thriller novels: LEVERAGE, INCENTIVIZE, and DELIVERABLES.  These are all based on extensions of my basic experiences in the world of business.

Wrap that Problem in a Solution

I've posted before on the subject of hiding problems.  The short summary is -- DON'T.  Hiding problems is a quick route to the unemployment line.  Hiding damages the trust and confidence others have in you as a manager.  Hiding takes you out of the loop when it comes to managing how others perceive the situation.  Hiding is a gamble that something will come along to save the situation, and eventually you'll lose that bet, usually with significant consequences.

But disgorging your problems in raw form is almost as bad.

When you walk into your boss'es office and throw a big, stinky problem on the floor, it usually looks like you're delegating it upward.  That's akin to saying:  "Here is this big ugly thing, and I have no idea what to do with it."  You don't want that to be the perception of your competence (or lack thereof).

There are two techniques I have discovered that soften the revelation of problems.  The first is what I call "the bad news sandwich."  When discussing your problem, preface it and follow it with a bit of good news.  That way, the impression of the encounter is not entirely negative.

As a recipient, I even appreciated this approach -- the two slices of "good" news helped me keep things in perspective, and reduced those feelings of despair that come when the "meat" of the sandwich is particularly awful.

For example, imagine this hypothetical bad news sandwich:  "We got a call back today from Phil at Widget Distributions, and he's very interested in our new superwidget.  On the downside, I don't think we can hit the cost targets on project X, but I have some ideas on how we can deal with that problem, which I'll get to in a minute.  And I almost forgot to mention, Lois accepted that offer we made on the marketing job -- she starts next week."

That makes the cost problem seem a bit more palatable, even if it is a big deal.

There are a couple of subtleties in the example -- for the good news parts, I used the pronoun "we," rather than "I."  When good things happen, it usually does you credit to share the glory with your team.  With the problem, I used "I."  When there's a problem, bosses like to know you're accepting ownership, and "I" signals that.  

You may also have noticed I said: "...I have some ideas on how we can deal with that problem...."  That is critical to accomplishing the second technique for bringing up a problem -- present your best attempt at a solution.  Few bosses appreciate having to do all the heavy lifting themselves, and it is definitely more difficult to create the options than to edit.  By offering your solutions, you counter several potential negative impressions in one fell swoop.

The best way to offer your solution is to get the basics out first, then, if the boss allows it, try to explain some of the options you discarded.  In most cases I've seen or personally experienced, the boss will quickly become involved in editing your solution -- which is okay.  Maybe the boss actually has some insight that improves where you're going.  At the least, he/she also picks up a tiny little bit of ownership in the problem by participating.

Here is a continuation of the above example:  "I know we all agreed if we couldn't hit those cost targets, Project X was dead in the water, but I've been thinking -- if we create two versions of the product, and strip out some features of the entry level one, then we can hit the cost target, and still have the new features available in the high end version.  We've tested the idea with a couple people in sales, and it just might work.  I considered just cheapening the components, or taking it on the chin when it comes to our profits, but I think this is the best approach."

From this point (assuming the boss lets you get this far), you're likely to get some "help" in the form of ideas or directives.  But that's certainly a lot better than the boss thinking you're an idiot who is expecting him/her to solve the problem for you.

Employ these two techniques, and problems will go down easier when you feed them to your boss.

Other Recent Posts:

Ask and Act, or Hold You Tongue

The Essence of Competitive Advantage

Get that Confrontation Behind You

Corporate Vendettas

Humor, out of context

If you enjoy the ideas presented in my blog posts, then check out my novels. Corporate Thrillers LEVERAGE, INCENTIVIZE, and DELIVERABLES are all based on extensions of my basic experiences in the world of business.

Ask and Act, or Hold You Tongue

I've talked in the past about the natural inclination humans seem to have to complain about thing.  Anything from the quality of the "free" office coffee, to "why Sally got to take Tuesday off, but I couldn't get off next Thursday," to the seeming stupidity of certain corporate strategies or policies (or the lack thereof).

Management teams frequently undermine themselves and exacerbate this problem, by asking for these types of opinions and criticisms without a clear cut plan of what they will do with them once they are heard.

One of the chief causes of the rise of industrial unionism during the last century was the perception of "favoritism" in the supervisory ranks.  I have no doubt there was some rampant favoritism going on, but certainly the unwillingness and/or inability of supervisors to respond to concerns, criticisms and complaints of employees was a big part of what led to this perception.

I can't even begin to count the number of times I've listened to "all hands" meetings, where employees were invited to ask questions and share concerns, with a management team that had no intention of doing anything about the information gathered and the requests made.  Often times, management would discuss the comments of employees when they were cloistered, but typically seemed to decide they were already adequately addressing the issues.  The problems were rarely addressed with the person bringing them up at all, and almost never publically.  Over time, employees became discouraged with management's seeming lack of response, and the meetings became increasingly adversarial.

I witnessed the same thing happening with salesforces in a couple of companies where I worked -- the complaints and criticisms of the sales organization being invited by management, but not addressed.  At one employer, I walked into my first meeting and witnessed one of the distributors rage about an error the company had been repeatedly making on his shipments.  He then went on to quote the income, stock options and bonus payout of the senior company executive in the room (available in the proxy statement), stating that as a distributor, he didn't have that kind of largess to fall back on.  Talk about embarrassing.

To try to bring these distributors back under some semblance of control, my team instituted a regular agenda which started with a review of all the open items from the last meeting.  We provided time for the distributors to discuss their concerns without us in the room, and then present the three or four biggest issues from their perspective.  We would then work on those issues (or a subset of them) between meetings.

I set this all up by telling the distributors we were serious about their concerns, but we wouldn't successfully fix every one of them between meetings.  With a more reasonable expectation of progress, and improvements on at least one open item to report back each time, things calmed down.  The success came as a result of getting the distributors to help us prioritize what was to be addressed, and we communicated thoroughly on progress.  I also made it a point to never drop items from "the list" withoug discussing why we were doing so -- trying to lend some credibility and build confidence in us..

Later, I was able to apply the same principles to other dissatisfied groups (mostly employees).  Engaging them in helping to make things better and keeping them involved seemed to reduce divisiveness, and improve attitudes.

Of course, none of this worked without a fairly high level of effort from management.  And if you're in management, you know dealing with internal complaints can easily become one of the "thousand things" you're responsible for.  So my counsel is to pick your battles carefully.  Save this tactic for your most important and/or most disaffected groups.  Otherwise, limit the opportunities for employees to make criticisms and provide critique.  When they slip in, go for quick solutions -- a "no, we're not going to do that" answer is better than letting a suggestion fall into the abyss.

Other Recent Posts:

The Essence of Competitive Advantage

Get that Confrontation Behind You

Corporate Vendettas

Humor, out of context

Vice in the Workplace

If you enjoy the ideas presented in my blog posts, then check out my novels. Corporate Thrillers LEVERAGE, INCENTIVIZE, and DELIVERABLES are all based on extensions of my basic experiences in the world of business.

The Essence of Competitive Advantage

When you're new in a job it's important to, as quickly as possible, grasp what makes the business successful.

Sometimes the answer is obvious:  "we've got the lowest cost structure in the business."  Othertimes, it is a bit more subtle.  In my time working for agricultural irrigation companies, it was well understood that the quality of the dealers made or broke you as a manufacturer.  What wasn't so obvious was what our company did to make sure we could attract and maintain the best dealers.  It was a few seemingly smaller things (getting our shipments out 100% correct and on time, standing behind any product or other problems and not leaving the dealers hanging, and being patient with dealers through the occassional rough patch) that made all the difference.

When you figure out the essence of the company's competitive advantage, you know what to build on, and along which dimensions to carefully watch your competitors.  I was astonished to see one of my main competitors repeatedly renegging on their warranty commitments, for example -- it created a huge vulnerability for them with their precious dealers, one I was able to exploit on multiple occassions.

Don't be lulled into complacency, however.  Sometimes the rules of the game change (read Clayton Christensen's The Innovator's Dilemma for more on this subject).  Sometimes your greatest strength (such as a tremendous dealer network) can become the albatross around your neck (if, for example, your product can now be distributed without dealers).  Scanning and staying informed about all aspects of the business are critical to avoiding nasty surprises.

For the present, and usually for the forseeable future, the competitive advantage dimensions are where the action is.

Any contributions you make to the company along these most important dimensions, will count double when your performance is tallied.  One of my subordinates, for example, dramatically improved our company's ability to ship roducts on time and without errors, and earned a positive reputation that stayed with him the rest of his tenure with the company.

Spend some time distilling those core elements of competitive advantage, to make your efforts as targeted and hard-hitting as possible.

Other Recent Posts:

Get that Confrontation Behind You

Corporate Vendettas

Humor, out of context

Vice in the Workplace

When you have to fire someone...

If you enjoy the ideas presented in my blog posts, then check out my novels. Corporate Thrillers LEVERAGE, INCENTIVIZE, and DELIVERABLES are all based on extensions of my basic experiences in the world of business.

Get that Confrontation Behind You

I estimate that the majority people are conflict avoiders.  I am one of them.  Non-confrontational people would prefer to escape any type of conflict with someone else.  If you are far into the Non-confrontational realm, you quake in fear that someone who embraces conflict will go toe-to-toe with you.

You can easily see the non-confronters as they operate at work.  They prefer to leave phone messages when there's something controversial going on -- and like it even better if they can do so when the recipient won't be available (like after hours).  Email is one step better -- avoiding the possibility of a direct battle.  Or put it off until tomorrow.  Or next week.  Or maybe forever.

If you're in management, there are three reasons you shouldn't follow your instincts on this.

1. Written and recorded comments, especially when focused around an emotion-laden subject, can be easily forwarded to others.  Often, when taken out of context, such information can be quite damaging to its author.
2. If your problem is with another non-confrontational person, they're probably just as unhappy to charge into a conflict as you.  If you approach them in a concilliatory fashion, you might be able to avoid having a pitched battle.  If the other person is indifferent to (or actually enjoys) confrontation, at least they will respect you more if you stand up to them.
3. Misunderstandings, disagreements, and conflicts almost always age poorly, particularly if you and the person at the focus of your conflict are in contact on a regular basis.  Delaying is almost as bad as having an email war -- it won't appear reasonable to third-party observers.

What you need to do is toughen up.  Resolve to yourself that you need to take care of the problem now, rather than procrastinating.  In most cases, the confrontation will likely not be as bad as the worst-case scenario you're imagining.  And if it is, at least you will have the personal satisfaction of knowing you conquered your fears, and pushed for what you know to be right.  So get it behind you as soon as possible and stop living with the terror of impending conflict and the paralysis it entails.

Other Recent Posts:

Corporate Vendettas

Humor, out of context

Vice in the Workplace

When you have to fire someone...

Watch Out for that HR Manager!

If you enjoy the ideas presented in my blog posts, then check out my novels. Corporate Thrillers LEVERAGE, INCENTIVIZE, and DELIVERABLES are all based on extensions of my basic experiences in the world of business.

Corporate Vendettas

"That dirty rotten jerk!  I'll get even with him for that."

Bet you've been there before.  I certainly have.  In the world of work, we are all subject to various political games including things like:  blaming, backstabbing, badmouthing, cheating (sorry, ran out of ones starting with "b"), swindling, scapegoating -- the list goes on and on.

So how should you react?

Human nature would be to "get even" -- an eye for an eye, that sort of thing.  Or both eyes for an eye, would probably be more typical.  We want to make those people who make us suffer pay for it.  And as a survival skill from back when we were cavemen, it kinda makes sense.  "Grog will rain down massive retribution on anyone who crosses him, thus making the next caveman think really hard before they give it a try".  Now, that might be a bit sophisticated for a caveman, but you get the idea -- it undoubtedly helped.

In the corporate environment, however, we are hired and paid to look at the interests of the stakeholders (I wanted to say "shareholders" here, but our jobs do, in fact, go beyond just the shareholder's priorities).  Getting into a Hatfields vs. McCoys type feud hardly seems like it's in their interests.

But is rolling over, and letting people walk all over you, the best solution?

In some instances, the answer is yes -- particularly when the impacts of doing so are short lived.  But you also have to think through the long term impacts of being too much of a pushover -- much like our caveman.

It's a judgment call....

If you let your responses be governed by the commonly held views of others in the company (particularly bosses and peers), you can't go too far wrong.  If your peers are scratching their heads and asking, "Why did Fred let her do that to him?" then you probably responded too passively.  If bosses seem to think you have a Vendetta against another manager, you've undoubtedly become too aggressive.

Examples:

In one of my jobs, I was sued by a former employee for what was termed a "constructive discharge" (meaning I'd effectively fired him, given the circumstances I'd forced him to exist under).  Needless to say, I disagreed -- in fact, I thought I was doing him a favor by giving him several options about how he went forward either within the company or outside.  I felt violated.  And it made my blood boil every time I thought about it.  Furthermore, he threatened to expose an embarrassing corporate incedent he was familiar with (Hey, I was totally uninvolved in that thing), if I didn't agree to a rather hefty settlement.

I fought back against his unreasonable demands using every legal means at my disposal -- counter claims, injunctions, demands that improperly obtained documents be returned, etc.  I was determined to make sure I didn't lose.

Eventually, however, I turned around and looked (in the figurative sense, only), and noticed there wasn't anyone else standing with me.  Most of the corporation's senior management was nervously pacing about with their hands in their pockets (figuratively, again), apparently hoping the whole thing would just go away.  I finally realized they had a lot to lose if the blackmailer made good on his threats.

So I backed off, delegating the task of dealing with the situation to someone else.  It was shortly settled for a disgusting amount, but one that was probably a good move for the company as a whole.

I'd nearly pushed my vendetta too far.

In another situation, I was the recipient of a demand for an exhorbitant price increase from an internal supplier (a peer) -- one that would have had a major impact on my division's performance.  In this incident, there was no risk to other stakeholder's welfare, as the corporation would earn the same amount of money regardless of who "won" our little war.

I was open to compromise -- infighting seldom improves the general opinion of either combatant.  But my opponent was a bit of a bully, not being willing to accept anything short of total capitulation.  So I pushed back -- starting with logical arguments, and ending with an appeal to a higher authority when logic didn't get me anywhere.

The incident went all the way to a senior corporate executive, who acted as a judge based on the merits of each side's argument.  He ended up permitting a minimal increase in prices as a peace offering, but nowhere close to what was demanded.  In this case I won the battle, but the cost was high -- I was never able to successfully work with my opponent on anything again.  I'd turned him into an enemy.  It was still probably still the right move, but sometimes winning the feud isn't as satisfying as it seems like it might be going in.

So how should you decide what to do?

Carefully play out the scenarios, and try to look at the situation through the eyes of peers, subordinates and superiors.  If people will think you're way out in left field with the position you're considering, don't go there.  But don't be a complete push-over either -- you don't want to end up being a corporate doormat.  And keep in mind what's best for the stakeholders of the company, too.  You can't go too far wrong by keeping their interests in the forefront.

Other Recent Posts:

Humor, out of context

Vice in the Workplace

When you have to fire someone...

Watch Out for that HR Manager!

People Flail before they Crater

If you enjoy the ideas presented in my blog posts, then check out my novels. Corporate Thrillers LEVERAGE, INCENTIVIZE, and DELIVERABLES are all based on extensions of my basic experiences in the world of business.

Humor, Out of Context

One man's humor is another's insult.  Or cruelty

I've seen this principle in action in business repeatedly, and learned the lesson myself -- the hard way.

I had a peer who worked with me at a prior employer who was quite funny.  The problem was, his humor was built on the backs of others on the management team.  Whenever we were together, he was cracking jokes at the expense of whatever executive wasn't in the room.  Everyone would laugh...nervously, and we all wondered what he was saying about us when we weren't present.  When he finally left the company, I didn't miss his acidic wit.

Another peer at another employer was extremely quick-witted.  He always had a smart comment on the tip of his tongue, usually very funny.  Unfortunately, sometimes those quickly delivered remarks would offend.  Eventually, they caught up with him -- he probably ticked off his boss one too many times -- and he ended up being exiled to the corporate equivalent of Siberia.  At least he didn't get fired, which could easily have been the result.

My own bad experience with humor came as a result of a poorly executed practical joke.

My HR manager was working with the Operations VP to put together a list of employees who would have to be laid off -- the result of a large and unexpected downturn in the business, and a grim prospect.  Predictably, the HR manager felt we should select employees for the layoff based on past practice, while the Operations VP wanted to be able to select the weakest performers.  And the two of them didn't get along well, which added to the tension wrapped up in the discussion.

I listened to this argument go back and forth several times, and finally called a meeting to settle it -- just the three of us in my office.  But the HR manager was late.  In his absence, I decided to try to turn the situation into a joke.  It would relieve the tension a bit, I reasoned.

When he walked into the office I closed the door and said:  "Fred, we've decided to eliminate your position.  Joe (the Operations VP) is here to escort you out of the building."

He stood there for about fifteen seconds, mouth hanging open, until I said:  "I'm just kidding."

We all laughed, but his laugh was...uncomfortable, and I could tell he didn't appreciate my attempt at humor.  I considered it just a bad joke, and apologized.

Then I forgot about the incident.

A year later, the HR manager (by then a former HR manager) was suing the company, and one of his central claims related to his "cruel and inhumane treament" based solely on this incident.

Our attorneys told me that while the fifteen seconds of discomfort he'd experienced might have been a small thing, it wouldn't play well to a jury.  Eventually, we had to settle the claim -- which irked me greatly -- and the situation became an embarrassment.

Humor is great in the workplace -- it lightens moods, builds comraderie, and makes the day more bearable.  But it can also be a sharp-edged tool that can bite you quickly if lines are crossed.  My lesson learned:  Think before you Joke.

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If you enjoy the ideas presented in my blog posts, then check out my novels. Corporate Thrillers LEVERAGE, INCENTIVIZE, and DELIVERABLES are all based on extensions of my basic experiences in the world of business.

Vice in the Workplace

Humans can be strangely self-destructive creatures.  They smoke, drink, drive like lunatics, and take all kinds of crazy risks.  And the behavior isn't confined to their leisure time -- they engage in their vices at work as well.

As a manager, you need to keep in the back of your mind that this kind of stuff is going to happen in the office and in the factory.  If you manage long enough, you will see it.  Guaranteed.  

I am no longer surprised by some of the strange and wild things that go on in the work environment.  Prostitution, substance abuse, porn, violence and intimidation, it's all out there.  I've come to the conclusion that when people think they have the opportunity to engage in this stuff, and they think the chance of being caught is relatively remote (and sometimes, don't seem to be able to stop even if getting caught is likely) it's going to happen.

So how about a few stories to illustrate the point?

Story one.

At one of my employers, I kept hearing persistent rumors of drug dealing going on out in one of the production areas.  Of course, our internal investigations (which were conducted mainly by asking people to confess or tattle on their co-workers) lead nowhere.  It wasn't until we teamed up with the police, and put someone in the plant undercover, that we found the evidence of what was going on and had the primary participants arrested.  An expanded version of this story is the backdrop for one of my latest novels Empowered, which should release late this year.

Story two.

I once had a salesman working in my business unit who had a pornography problem.  A rather big pornography problem.  This came to light when he brought his laptop into the IT department complaining about slow response times.  Not surprisingly, the cause of the slow response was huge amount of porn jammed onto the hard drive.  I later discovered this was the second incident, the first one had stopped with the IT manager giving him a stern warning.  His explanation?  "I only watch in on my own time."

Story three.

Perhaps the most telling example, this situation happened a number of years ago when my employer switched computer systems.  As part of the process we replaced the dumb terminals on the production floor with full-blown computers, complete with open access to the world wide web.  Within days, the employees in one of the production departments figured out how to log onto the machine anonymously, and surf the internet's plethora of porn sites.  We didn't realize what was going on until some genius started printing pictures and posting them (when no one was looking) on some of the bulletin boards.  Needless to say, we had to block internet access on all those computers.

People are a mischievous lot, and love to indulge in all kinds of vices.  So anticipate it, imagine how company assets could be abused in it's pursuit, and follow your nose.  Regardless of your personal opinion about the "rightness" or "wrongness" of indulging in these things, if you allow it to happen under your watch, you're likely to suffer plenty of political damage.

Other Recent Posts:

When you have to fire someone...

Watch Out for that HR Manager!

People Flail before they Crater

Exceeding Your Authority

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If you enjoy the ideas presented in my blog posts, then check out my novels. Corporate Thrillers LEVERAGE, INCENTIVIZE, and DELIVERABLES are all based on extensions of my basic experiences in the world of business.

When you have to fire someone...

Is there a good way to fire someone?

Probably not, but there are ways that are respectful, and others that are cruel.  Or stupid.  And yes, you can go too far trying to be "kinder and gentler" -- in situations when it puts you or the company at risk of a lawsuit.

As a senior executive, particularly one running a highly seasonal and cyclical business, I found myself in this situation a lot.  I've listed a few do's and dont's from my own personal experiences below.

Do:

• Directly participate.  It is disrespectful to the employee, and cowardly to avoid the termination just because it's going to be difficult.  You owe it to the person to be there, and not just delegate the dirty work to HR or someone else.  When you look back on these traumatic events, participating goes a long way to allowing you to maintain your self-respect.
• Be honest, up to a point.  Firings, because they have a huge impact on people's lives, can become the focus of legal action.  Make sure you tell the employee why they are being fired -- exactly what you would say in court -- but try to keep things general enough that you aren't feeding the person amunition for a complaint.  By being honest, you're giving the person being fired the insight they might need to avoid a repeat of the situation with a future employer.
• Be generous.  A fair and reasonable separation package is certainly one element of that.  Your personal assistance (contacts, recommendations, etc.), if appropriate, is also important.  The employee is probably going to have a tough time for some months ahead, both financially and emotionally.  Do what you can to east their suffering.
• Use a downturn as an opportunity to clean house.  Select your weaker contributors when things go south, even though their performance might not ordinarily have warranted termination.  It is your best opportunity to strengthen your team.
• Document.  Sooner or later you're going to get sued for wrongful termination.  Make sure you've got what you need to justify your actions.

Don't:

• Suprise the employee.  If the person is surprised they're being terminated, then something broke down somewhere in the process.  If the situation is egregious (theft, assault), then any semi-intelligent person would understand why you would go directly to termination.  On lesser problems that have festered over time, there should be a history of discussions concerning the key issue.
• Let the employee hang around afterward.  Even if the termination is justified in the employee's mind, they are likely to still be angry.  There is no upside to letting them stay at the office (or factory), and pollute others with "their version" of the "truth".  On very rare occassions, I've violated this rule, but only with employees I thought I knew extremely well, and believed I could count on their professionalism.  Even then, on two occassions, it bit me.
• Refer to anything related to a protected class.  Be extremely careful what you say.  You're not firing the person because of their age or race (I certainly hope not, anyway!), but people are looking for clues that this is exactly why it's happening.  An innocent statement ("You're too slow getting things done," for example) can sound like it is age, race or gender discrimination to the recipient ("They fired me because I'm too old to move quickly").
• Cross previous precedents.  If you paid out a previous employee's vacation on termination, don't withhold the same from the next termination without a very good and clear reason.  This is another mistake that will likely land you in court.  Consistent rules applied consistently are your defense.
• Trickle out cuts over time.  When the terminations are related to a business downturn, make sure to cut fast, cut deep, and try to avoid going back to the well.  It is better for everyone, especially the "survivors," to have it happen once and early.  Otherwise employees live in an environment of fear, waiting for then next axe to fall.

While nothing said above will make firings easy, if you follow these guidelines, at least you will:  maintain your own self-respect, complete the firings with the maximum amount of compassion possible, and cause the least amount of damage to the organization due to lawsuits and ongoing terror.

Other Recent Posts:

Watch Out for that HR Manager!

People Flail before they Crater

Exceeding Your Authority

Time Kills Deals

Control the Venue, Control the Law

If you enjoy the ideas presented in my blog posts, then check out my novels. Corporate Thrillers LEVERAGE, INCENTIVIZE, and DELIVERABLES are all based on extensions of my basic experiences in the world of business.