In his book, Good to Great, Jim Collins stresses that an important means for companies to become extraordinary is to choose the right people. But as Collins points out, too many organizations allow incompetent or disobedient employees -- workers he calls the wrong people on the bus -- to obstruct their company's road to greatness. These troublesome employees cause leaders to impose highly stringent rules. In turn, the added restrictions frustrate many good employees and prompt them to leave. As a result, problem workers make up a larger percentage of the organization's workforce, leading management to enact even more rules.

Not surprisingly, Collins found that companies willing to deal with their poor performers are able to avoid this deadly spiral.

Perhaps you've been avoiding the unpleasant task of tossing some "wrong people" off your organization's bus. If so, you're not alone. Firing workers is gut-wrenching work. Besides, you want to give people every opportunity to succeed. But as the following story illustrates, delaying the inevitable might be as detrimental to your problem employees as it is to your organization.

Many years ago, on the morning of my first day at a new job, I boarded a city bus for the twenty-minute commute downtown. There was a bus stop right outside our apartment building and another one just across from my new office. So, I decided to forgo the downtown parking hassles and take the No. 5 bus to and from work. My morning ride went off without a hitch.

After work, I once again hopped aboard the No. 5 for what I expected would be a quick trip home. To my surprise, about three blocks from our apartment, the bus driver turned off our street and headed in a new direction. Because the bus had made some short loops around several neighborhoods along the way, I wasn't overly concerned at first. It was just a matter of time before we returned to my street and reached my stop. Or so I thought.

One by one, my fellow passengers all disembarked while the bus traveled further and further from my home. Finally, the bus driver pulled over to the curb. "This is the end of the line, pal," the driver said to me. "My next stop is the garage. You have to get off."

I explained to the driver how I thought he would be passing my apartment. After all, I had boarded the No. 5 in front of my place just this morning. "That's my morning route. In the afternoon, you need to take the 5A." And with that, he left me on the sidewalk, five miles from home.

As I searched for a payphone to call my wife and ask her to come and retrieve her off-course husband, I remember wishing someone had told me that I was on the wrong bus.

Like your wayward workers, I thought I understood where my bus was headed. And even when it became increasingly clear that the No. 5 was going another direction, I tried to convince myself that everything would work out eventually. Had I known sooner that I was on the wrong route, I could have saved myself some frustration and embarrassment.

The moral of the story is simple: If you have some wrong people on your bus, do them -- and yourself -- a favor by making it clear that they'll never reach their hoped-for destination in your organization. Bookmark this post on del.icio.us

"Many of those who remain after downsizing are stricken with survivor's guilt. Others are filled with an enormous amount of anxiety, assuming that it is only a matter of time before the other shoe drops." John Challenger

There are few leadership tasks more gut wrenching than laying workers off during business downturns. What could be harder than putting people on the street when jobs are in short supply? If you have any kindness in you, you'll feel badly for those you've had to displace. As it turns out, those employees who are spared from layoffs need your compassion, too.

"Companies use the word affected with people who lose their jobs -- the implication being that the people who remain aren't," says Joel Brockner, a professor of management at Columbia Business School. "They're very much affected."

And when workers are affected, their employers are, too. According to a survey by Challenger, Gray & Christmas, companies undergoing downsizing efforts face tough challenges in keeping surviving employees engaged and focused. Fifty-four percent of HR executives cited maintaining employee engagement as their biggest challenge after conducting layoffs. Another large concern, according to 23 percent of respondents, is easing anxiety among surviving workers that additional layoffs might be imminent.

And then there’s the guilt.

Psychologists note that workers who avoid the downsizing ax experience mixed emotions, ranging from the initial relief of keeping their jobs to the feeling of guilt over their good fortune. What's more, anxiety that more job cuts are coming and the burden of taking on additional workloads can lead some workers to actually envy their former coworkers.

As a leader, be aware that your role in layoffs doesn't end once you've pass out the pink slips. Columbia's Brockner recalls a conversation with a bank executive who boasted about the company's generous severance package. "I said, 'That's great. What have you done for the people who have remained?'"

"It is an unfortunate situation to be in, but the way companies handle it -- particularly the way they deal with surviving employees -- can make it significantly better or worse," says John Challenger, CEO of Challenger, Gray & Christmas. "You cannot simply tell employees to 'do more with less.' There must be a back-and-forth dialogue to address employees' concerns and fears."

According to Challenger, surviving employees want leaders to be straight with them. "Honesty is the best policy; employees deserve up-front communication when it comes to the state of the company and their jobs," he says.

When economics dictate that you let people go, do it as compassionately as possible. And don't forget to take care of your survivors.

Labels: business, employees, leadership, management

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Why are we here? I think many people assume, wrongly, that a company exists solely to make money. Money is an important part of a company's existence, if the company is any good. But a result is not a cause. We have to go deeper and find the real reason for our being." David Packard, cofounder of Hewlett-Packard

Are U.S. companies morally responsible for putting principle before profit? As Nike found out in the 1990s, consumers often make that decision for them. Appalled by the working conditions Nike's foreign suppliers imposed on employees, many consumers stopped buying the athletic shoe company's products. The boycott forced Nike, whose leaders at first denied responsibility, to make its supplier contracts contingent on decent working conditions.

News out of China this week will now compel PC makers to choose between human rights and revenue. The Chinese government has announced that, beginning July 1, every computer sold in China must come with filtering software that blocks Internet access to "unhealthy words and images." China's rulers insist the program is intended to prevent access to pornographic Web sites; however, the software is capable of blocking other sites as well as tracking each person's Internet activity. What this means is that companies like Hewlett-Packard, Dell, and Apple will have to decide between having access to China's lucrative consumer market or standing up to censorship.

I don't mean to single out Hewlett-Packard, but it probably has the most at stake in this dilemma. HP sells more PCs in China than any other U.S. company -- 40 million computers last year alone. From where I sit, the company appears to have three choices. First, HP could comply with the Chinese government's demand and install the filtering software on the PCs it sells there. Second, the company could include a CD containing the software in its packaging -- an option that meets the government’s requirement -- and let Chinese buyers make their own decisions about installing it. Or, third, HP could refuse to participate in censorship and stop selling PCs in China. Regardless of which option the company selects, you can bet they'll be highly criticized.

These are the situations that test a company's moral sensitivity. As we've seen, it's common for leaders to try to distance their organizations from sticky issues. Hey, who are we to tell China how to run their county? We just sell PCs. As Nike learned the hard way, that approach doesn't sit well with U.S. consumers who expect companies to do the right thing. But before they make the correct choice, leaders must recognize that a moral dilemma exists.

What would you do? Bookmark this post on del.icio.us

In the early 1960s, Phil Knight conceived his idea for a successful athletic shoe company. His strategy was to minimize production expenses by outsourcing manufacturing to low-cost foreign suppliers. That would leave him more money to spend promoting his products. The concept worked, and today Nike is the largest -- and most recognized -- athletic shoe company in the world.

But in the 1990s, critics began condemning Nike for contracting with overseas suppliers that paid low wages, employed young children, required excessive work hours, obstructed unionization efforts, and physically abused workers. Nike's initial reaction to the criticism was to deny responsibility. The company, they argued, could not control how its foreign suppliers treated their workers. In other words, Nike claimed that outsourcing absolved them of their obligation to protect the workers making their products.

As criticism increased, public outrage and a consumer boycott forced Nike to take responsibility. The company implemented reforms requiring suppliers to increase the minimum age of factory workers, improve air quality standards, educate employees, and enforce compliance with the rules. As a result, Nike has been generally praised for its newfound social responsibility.

Compare the Nike case to what's happening right now at a company called Auto One Warranty Specialists. Auto One, located in Irving, California, utilizes telemarketing to help sell its extended warranty programs. Consumer advocates say the company's telemarketers dishonestly tell consumers that their car warranties are about to expire. Critics also complain that the company violates government regulations by ignoring do-not-call lists and pestering cellphone users via automatic dialers and computerized messages.

Here's the similarity to the Nike situation. Auto One's president David Tabb has responded to the criticism by saying his company is not responsible for the unscrupulous phone calls because it outsources telemarketing to third-party marketing firms. Criticism, he says, should be directed to those companies and not at Auto One. Sound familiar?

By initially denying its responsibility to the deplorable conditions at its suppliers' factories, Nike demonstrated a lack of moral sensitivity. That is to say, the company seemed incapable of recognizing that an ethical problem existed. As a result, Nike faced the dual problem of improving its working conditions and restoring public faith in the company.

For Nike, it took waning consumer loyalty to convince company leaders that the ethical problem was indeed theirs. Auto One is currently the target of internet activists who are inundating the company's own phone lines with calls intended to disrupt its business. Time will tell if the action serves as a wakeup call for Auto One's leaders.

Leaders must possess the moral sensitivity necessary to spot their ethical responsibilities. Are you morally sensitive? Bookmark this post on del.icio.us

Leonard Abess likes to read annual reports. As the head of City National Bank in Miami, he especially likes to study the annual reports of other banks. He always pays particular attention to the opening letter written by the corporation's CEO. It struck Abess as backward that CEOs begin the final paragraphs of their letters with the phrase, "And last but not least, we wish to thank our loyal employees…" Why, he wondered, are the employees the last to be mentioned? In his letters, he always likes to acknowledge his employees first.

Last fall, Abess sold his majority stake in City National. In a business environment in which many corporate leaders have demonstrated mindboggling personal greed, he did something remarkable. He gave $60 million of his proceeds to 471 current and former employees. It was, he said, something he'd been planning to do for more than 20 years.

When deciding how to allocate the money, Abess created an undisclosed formula based on longevity. Recognizing that the highest ranking -- and thus, highest paid -- employees had the shortest tenure, Abess gave the largest amounts to those who had been with City National the longest. As a result, some long-term employees received bonuses equal to nine times their annual salaries.

At a time when the country has lost faith in the leaders of its major financial institutions, what Abess did is highly unusual. He wishes it wasn't. "I prefer to live in a world where this is ordinary," he has said.

Me too.

Labels: business, employees, integrity, leadership, management, values

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My friend and editor Laurel Marshfield has begun a blog for authors and writers called Your Book Your Self. It is full of advice, success stories, encouragement, and inspiration for current and future authors. Through her editorial services business, Blue Horizon Communications, Laurel sees firsthand the obstacles authors face. And as a professional writer and editor with over twenty-five years of experience, she knows how to help authors circumvent those obstacles. Her new blog provides an avenue for Laurel to share her insights into what it takes to be an author.

As much as I respect Laurel's talent as a writer and an editor, what I value most from our working relationship is her constant inspiration. She seems to sense whenever I get sidetracked from writing, because a gentle nudge arrives in my email inbox in the form of an encouraging note.

But please don't take my word for Laurel's ability to inspire writers. Read her latest post about the Susan Boyle phenomenon -- and what it tells authors about success -- and see for yourself. Bookmark this post on del.icio.us

Circuit City is selling its name. Unfortunately, it's a name with little value these days. And that's too bad. The former electronics retailer was once a great company praised for its progressive leadership.

From 1982 to 1997, Circuit City outperformed the general stock market by eighteen-and-a-half times. During that period, Circuit City developed a system for operating its stores that enabled the company to expand rapidly across the country. Under the guidance of board chair Alan Wurtzel and CEO Richard Sharp, Circuit City's leaders provided a consistent framework within which store managers and salespeople had leeway to operate. The key was having self-disciplined employees who understood the system and willingly followed it. In his book, Good to Great, Jim Collins credits Circuit City's culture of discipline for its tremendous success.

But under the leadership of Philip Schoonover, the company demonstrated a much different attitude toward its employees. This was the leadership that, in early 2007, fired 3,400 of those self-disciplined salespeople, claiming they earned 51 cents per hour too much. Over the next three months, Circuit City's year-over-year sales dropped 4.3 percent and the company lost $54.6 million. Stock analysts blamed the losses on management's decision to replace the company's most experienced salespeople with cheaper workers. After its stock price hit a four-year low, those leaders had a change of heart and asked the terminated employees to come back and help revive the company's sales. Then, after firing frontline salespeople for earning too much, Circuit City awarded its top executives retention bonuses of up to $1 million each. So much for self-discipline.

Once a good-to-great success story, Circuit City's leaders shattered its culture of discipline and drove the company to extinction. The company closed all of its 567 stores earlier this year, costing nearly 40,000 employees their jobs. Now all the company has left is its name.

When all that remains is your name, what will your reputation be worth? Bookmark this post on del.icio.us

Even in today's tough economic times, good employees are hard to find. And even harder to hold on to. That's why leaders must demonstrate their values -- not just in the moment of truth, but continuously and proactively -- in order to secure the trust of their employees. That was my message in a presentation to a group of business leaders at the Islamic Center of Greater Toledo. You can view the slides on slideshare. Bookmark this post on del.icio.us

Looking for a great place to work? Consider applying at the Mountain View, California headquarters of Google. Among the perks enjoyed by Google employees are onsite haircuts, free laundry facilities, workout and massage rooms, in-house childcare, and car washes. And then there's the free food. The campus has eleven cafeterias serving everything from gourmet meals to M&Ms. Legend has it that Google workers are never more than 150 feet away from free food. No wonder the company topped Fortune’s list of the 100 Best Companies to Work For in 2007 and 2008.

But there's a new number one company on the Fortune list this year: storage and data management company NetApp. Unlike Google, which got to the top largely by providing employees with lots of goodies, NetApp earned the number one spot because of its culture of trust. NetApp's leaders promote an atmosphere of openness and honesty, and they go out of their way to proactively share information with workers.

Robert Levering and Milton Moskowitz, whose Great Place to Work Institute has been compiling information on great workplaces since 1980, have been quoted as saying, "The most important factor in selecting companies for this list is what employees themselves have to say about their workplace." For their part, NetApp employees say they appreciate how easy it is to share ideas, get answers to questions, meet with senior leaders, and find opportunities to take responsibility. Funny, no one mentions wanting free M&Ms.

At number four on the 2009 list, Google is still clearly a great place to work. And Google's culture of fun, high energy, and innovation undoubtedly attracts as many people as the free chow does. But NetApp's elevation reveals how important trustworthy leadership is to workers in today's business environment. "Perks are nice, but employees are looking for something more basic," Levering and Moskowitz have noted. "They want to be told the truth, especially if the news is bad."

If you want employees to consider your company a great place to work, focus less on promoting financially oriented rewards and more on demonstrating the values that attracted them in the first place.

Labels: business, employees, integrity, leadership, management, trust, values

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This is part of a series of posts featuring earlier content from the Vital Integrities Blog along with updated information and opinions.

Here's an excerpt from a March 2006 post:

Weather forecasting, once an easy way to fill five minutes on a local news broadcast, is transforming the six o'clock news into reality TV. Network affiliates, which used to compete to be their area's preferred "news station," now market themselves as "weather stations." Meteorologists don't transmit from a studio anymore; they come to us "live from the weather center," conjuring up images of scientists sequestered away, scouring weather maps with military precision. And they no longer rely on simple radar; they now use Doppler. But not just your run-of-the-mill Doppler; it's now Super-Digital-Pinpoint-Triple-Bigfoot-Skytrak-Accu-Doppler. Unfortunately, the "reality" is forecasters still get it wrong at least 20 percent of the time.

Here's why this bothers me so much. I can accept that even the best forecasters will be wrong one out of five times. But TV stations are using weather to generate ratings, and ratings come from sensational stories. Meteorologists are "creating news" with their dire forecasts and reporting their grim predictions as fact. And, in today litigious society, we force people to react to those reports to avoid lawsuits if they don't. For instance, school systems must respond to heavy snow forecasts by keeping their buses off the roads, so that means closing schools. Local governments must deploy snowplows to await the storm on highway roadsides; otherwise, we won't blame the storm for traffic accidents, we'll blame the government for not being ready. News shows are pumping up their ratings at our financial expense.

Amid the current recession, local television news shows have added economic reporting to their repertoire. And like their exaggerated weather prophesies, their forecasts for the economy are overly ominous. While we can't blame the media for creating our economic mess, we can fault television news for fostering a sense of doom and gloom. It's one thing for newscasters to report the latest unemployment figures or announce an area plant closing. But it's journalistically irresponsible to falsely state that we're in the worst economic period ever (does anyone else remember the double-digit mortgage rates of the 80s?), or to predict that a recovery is years away. Is it any surprise that consumers have stopped spending money?

Like weather forecasters who continuously miss the mark, TV journalists who pretend to be economic experts will lose credibility with their viewers. In the meantime, we're better off weathering this economic storm without them.

Labels: credibility, integrity, trust

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