"Change is vital, improvement the logical form of change." --James Cash Penney

Myron Ullman wants his employees to call him Mike. It's not that the CEO of J.C. Penney Co. doesn't like his given name. It's that he trying to break with tradition.

Upon his arrival at Penney, Ullman encountered a culture with rules so archaic that employees were compelled to address their bosses as Mr. or Ms. He discovered corporate office guidelines that prevented employees from having personal items on display in their cubicles and barred most workers from setting foot anywhere near the executive suites. At a company that sells Dockers to the masses, he found a dress code that prohibited casual attire. And, not surprisingly, he inherited a company losing the war on employee retention.

That stifling culture dated back to the early 1900s, when founder James Cash Penney opened a store he called The Golden Rule. Penney's father was a minister who taught him the importance of strong moral discipline. So, after changing the company's name in 1913, Penney established "The Penney Idea," a mission statement outlining the values of honor, confidence, service, and cooperation. Those principles endured through the company's century of growth, and Ullman has no intention of tossing them out now. But he has updated the code of conduct and relaxed some of the rules. Employees are now encouraged to call each other by first name, decorate their offices, visit the executive floor, and dress casually.

Quoted in a Wall Street Journal article, Ullman says, "If I had a choice to honor the past and lose, or move forward and win, I pick winning." Shareholders support that approach: Penney's shares are up 80 percent from two years ago. And Ullman is confident that he also has the support of his late predecessors, adding, "I think our founding fathers would want us to compete in today's market." Bookmark this post on del.icio.us

In a post at The Bell Curve Scar, Curt Wehrley relates his discussion with a hiring manager who described an ideal job candidate: detail oriented, able to multitask, excellent written communication ability. In other words, the technical skills required for the job. Curt points out that those technical competencies may help get the job done, but passion, obsession, and love for the work distinguish the workplace environment.

I always find it easier to teach someone how to do a job than how to fit a culture. That's why, when I worked for a Fortune 500 bank, I often pursued nontraditional candidates, individuals lacking job-specific skills, but who demonstrated values already in alignment to the corporation. If they could multitask, great. But if they showed strengths like creativity, initiative, and perseverance, I would gladly invest time teaching them specialized job functions.

Why should you consider this approach? New business models are emerging. The critical distinction between competing organizations is shifting away from the biggest over to the brightest; brains are replacing brawn, and we are outsourcing laborers while hiring knowledge workers. Therefore, leadership today requires skills for attracting, retaining, and inspiring workers with passion, obsession, and love for the organization's mission. Find workers like that, and they'll figure out how to get the work done. Bookmark this post on del.icio.us

Everything we do as leaders communicates something to our employees. The words we choose set the tone for openness, respect, and trust. The stories we tell determine how employees remember our messages. Our visions identify common interests, and show employees how a shared vision will satisfy mutual needs.

That was my message to this year's Leadership Toledo class this afternoon. You can download the slides here. You will need PowerPoint to view these slides. Bookmark this post on del.icio.us

Following in the footsteps of a good leader is always difficult--people are inclined to measure the new leader against the legacy of the old one. But taking over for a convicted criminal can be even more daunting. According to a recent Knowledge@Wharton article, that was the challenge facing Edward Breen when he replaced Dennis Kozlowski at the helm of Tyco International three years ago.

Late last summer, a court sentenced Kozlowski to up to twenty-five years in prison for diverting millions of dollars in company funds for his personal use. Saddled with huge losses and mounting debt, Tyco was on a path to bankruptcy. Recounting his early days as Kozlowski's successor, Breen told a lecture audience at Wharton, "I knew I was going to be in the fire."

To restore credibility in the company's leadership, Breen fired 290 of Tyco's top 300 executives and replaced the very board that hired him. He moved the company from its luxurious Manhattan digs to a modest New Jersey office, closed hundreds of facilities, and put new acquisitions on hold. He used the savings to help repay the company's $28 billion of debt, keeping Tyco out of bankruptcy in the process. All were tough choices, but Breen was up to the challenge. "I'm not afraid to make decisions," he said, "and I'm not afraid to make a few mistakes along the way."

Not only has Breen turned the company around financially--the company went from losing $9 billion in 2002 to making a $3 billion profit in 2004--he has restored credibility at the top. As he points out, proving that credibility continuously is vital. "The leader must not only always do the right thing," he says. "But the leader must be perceived to be doing the right thing." Bookmark this post on del.icio.us

Only two things are certain in life, and one of them is taxes. No company knows that better than H&R Block, who prepares 15 percent of the tax returns filed in the United States each year. And customers who invest in the company's individual retirement accounts know it's not certain they'll make money. But they do expect the certainty of a fighting chance.

New York Attorney General Eliot Spitzer has filed suit against H&R Block on behalf of 500,000 customers who purchased the company's "Express IRA" in the past four years. The suit alleges that H&R Block failed to disclose account fees that "virtually guaranteed" that investors would lose money. For example, the suit describes how one typical customer with the minimum investment of $300 incurred a $15 set-up fee and a $10 annual maintenance fee for three years. The $45 in fees far outweighed the $10.29 in interest the account earned over the same period. The claim states that H&R Block's fees exceed the interest earned for 85 percent of customers who bought the account.

Some H&R Blocks salespeople actually refused to tell clients about the account because of the fees involved. One district manager took the risk of sending an email to company CEO Mark Ernst in 2002, writing, "Our mission was to help these clients begin a savings plan since many of them had none...I really don't think maintenance fees should exceed the amount of interest that we are paying on these accounts." Yet management failed to address those concerns and continued to hype Express IRA as a good way for low to moderate income people to save for retirement. In a release denouncing the lawsuit, Ernst said, "We believe in the Express IRA product and are proud of the opportunities it presents for our clients."

Consistency between an organization's stated values and its leaders' actual behavior is critical to credibility. When leaders promote a product as beneficial to customers, and then dupe those customers out of their investments, employees immediately and rightly recognize those leaders as frauds. And organizations that tolerate unethical behavior will find the resulting employee turnover very taxing. Bookmark this post on del.icio.us

I'm looking out my window at a nippy, but beautiful, morning. The sun is shinning in a cloudless blue sky, and the first wave of robins is busy settling in. Why is this meaningful? Because, for the past five days, local television weather forecasters predicted that we would awaken today to four inches of freshly fallen snow. In other words, they were wrong. Again.

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.

But here's my biggest concern: because TV forecasters are sacrificing their credibility for ratings, people will stop paying attention. Like every other business, the buck stops at the top. Leaders of local stations must prevent their news departments from exaggerating weather forecasts. Otherwise, people will one day tragically attribute a critical warning to a sweeps month ploy. Bookmark this post on del.icio.us

Lisa Haneberg "demystifies" the word integrity in a recent post on her Management Craft blog. In short, Lisa reminds us that integrity means doing what you say you are going to do.

I truly believe that integrity is what leadership is all about. I've spent nearly three decades in leadership positions, including a nineteen-year engagement with a Fortune 500 bank. I've presided over technology workers and fry cooks, clerical staffs and salespeople, ambitious up-and-comers and working stiffs, highly paid professionals and nonprofit volunteers. I keep returning to the same conclusion: people are searching for leaders with integrity who prove their credibility continuously. And credibility comes from doing what you say you will.

Not only will integrity make you a better leader; it will also give you a higher self worth. I think Lisa sums it up best with the following statement: "It feels great to be in integrity." Bookmark this post on del.icio.us

A post by Seth Godin reminds me how predictable we are when faced with change-the more action required on our part, the more we resist new ideas. And the most difficult action is choosing to accept the idea. The story of a nineteenth-century obstetrician illustrates this point.

In the middle 1800s, women giving birth in public hospitals throughout Europe risked developing the deadly disease puerperal sepsis or, as many referred to it, childbed fever. Doctors had not yet discovered a connection between germs and disease, and mothers were dying at alarming rates. The conventional medical wisdom proclaimed childbed fever as simply not preventable.

Hungarian-born Ignaz Philipp Semmelweis was assistant physician of midwifery at Vienna General Hospital in 1847. The hospital, which served primarily poor and unwed women, had two delivery wards, one staffed by medical students and the other by midwives. Dr. Semmelweis observed that 13 percent of the patients in the medical student ward died from childbed fever, compared with only 2 percent of the patients in the ward attended by midwives. He began to suspect that the students, who practiced surgical techniques by dissecting cadavers, were transmitting the fever as they moved back and forth between performing autopsies and treating patients.

To Semmelweis, the solution was obvious. He instructed students to wash their hands after performing autopsies and before examining patients. The results were dramatic. Mortality rates for the two wards were now comparable. Next, he directed students to wash the medical instruments used in the delivery process. Soon, Semmelweis had virtually eradicated childbed fever from the ward.

When Semmelweis published his findings, mainstream medicine belittled his conclusions. The idea of washing their hands seemed undignified and humiliating to physicians who considered their profession divinely blessed. But to Godin's point, to accept the idea, doctors would have had to admit their inadvertent role in causing the deaths of unknown numbers of patients.

When employees bring you new ideas or warnings, how do you react? If you respond with an onslaught of rejection--the aptly named Semmelweis Reflex approach--your employees will in the future refrain from challenging conventional wisdom. Instead, they will fritter away their insights while swapping lunchroom grievances with coworkers. Bookmark this post on del.icio.us

Highly effective leaders welcome feedback from their employees in the form of new ideas or warnings about overlooked problems. But when employees struggle to sell their ideas, unexpected resistance can lead to frustration. Because their theories are incredibly obvious to them, they believe anyone who resists is either foolish or deliberately standing in their way. In fact, an employee's inability to articulate a suggestion is often what really gets in the way of its acceptance. So the employee grows frustrated (it's so obvious), becomes more vocal, and eventually earns the disrespectful employee label.

A 1990 study conducted by psychologist Elizabeth Newton illustrates how people assume that what's obvious to them is equally apparent to others. Newton asked her subjects to tap out the rhythm of a familiar tune for another person, and to assess the probability that the listener would identify the song correctly. Those tapping predicted that their listeners would be able to recognize the songs 50 percent of the time. However, listeners were lucky if they could identify the tunes 3 percent of the time. The difference, of course, is that the tappers could hear the music in their heads as they tapped, whereas listeners heard only a series of intermittent taps. Newton proved that when people measure their expectations for others, they use themselves as the yardstick.

It is often difficult to distinguish the frustrated malcontents--those who simply grapple for the right words--from the everyday chronic complainers. As a result, the tendency is to dismiss the ideas and concerns of ineloquent employees. So when you don't recognize the music, remember that even some of your most creative thinkers might require help communicating their unconventional ideas. Bookmark this post on del.icio.us

On the witness stand in the trial of former Enron bosses Kenneth Lay and Jeffrey Skilling, the company's ex-CFO Andrew Fastow testified that Skilling instructed him to "give me all the juice you can" by falsifying earnings. Translation: create phony partnerships to cover up hundreds of millions of dollars in losses and hide billions of dollars of company debt. Fastow, who previously pleaded guilty to helping pump up Enron stock by scamming Wall Street analysts, is now a government witness against his former employers. "We were using this to inflate our earnings," admitted Fastow.

Legal experts call Fastow's "I was only following orders" explanation the Nuremberg Defense, a term coined because so many defendants invoked it during Nazi war criminal trials. Does Fastow's claim that Skilling made him do it excuse his actions? Of course not, but it does highlight a growing problem: pressure from management to meet unrealistic business objectives is the leading cause of unethical corporate behavior, according to a new American Management Association survey. In other words, when hierarchical rank looms threatening overhead, imposing its unethical demands, puppets like Fastow exhibit an unquestioning, even fearful, reverence for authority.

If you think standing up to unscrupulous demands from above is risky, you're right. But consider the courageous actions of another former Enron leader, vice president Sherron Watkins. In August 2001, Watkins boldly warned Lay that the company was using shady accounting practices—specifically, off-the-books deals secured only by devalued Enron stock. Initially believing she had discovered trouble unforeseen by senior management, she expected Lay to intervene. When a cover-up ensued instead, she took it upon herself to report her company's bad behavior. Her remarkable bravery in risking everything for her values distinguishes Watkins from her coworkers who caved in to the pressure and blindly deferred their moral choices to outside authorities.

If you're not standing up to unethical behavior at work, what's your excuse? Bookmark this post on del.icio.us

Retaining employees is a priority for business executives; they just don't know how to go about it. That's the verdict from an employee-turnover study released last month by retention specialists TalentKeepers. Ninety percent of the 391 U.S. companies that TalentKeepers surveyed said employee retention was important to achieving their business goals. However, 89 percent stated that their leaders are minimally or only moderately skilled at keeping workers.

Alarmingly, although these companies acknowledge that turnover rates in this country are climbing--91 percent said turnover in their companies got worse or remained stubbornly high in 2005--few seem to be equipping their leaders with the skills needed to retain employees. Instead, many seem to be crossing their fingers and hoping that the problem goes away on its own. What else could explain that while 44 percent expect turnover to worsen in their respective industries this year, one-out-of-five foresees it actually improving at their companies?

According to Fredric Frank, CEO of TalentKeepers, managers may need a wakeup call. "With retention rising as a strategic business issue, accountability for retention among senior executives also will grow." In other words, top managers who resist making employee retention a top training focus will not only have a hard time meeting their business objectives, but they'll likely struggle to keep their own jobs as well. Bookmark this post on del.icio.us