The cesspool syndrome

I’ve read and re-read the Arthur Bedeian and Achilles Armenakis article, The cesspool syndrome: how dreck floats to the top of declining organizations. In my opinion this article is worth the time to read. At its core it talks about how their research shows that unlike in successful organizations where the cream rises to the top, dreck often rises to the top of unsuccessful organizations. They argue that largely this is due to the fact that the more successful and desirable employees have greater opportunity to leave an organization that is on a decline. Whereas the less talented and desirable employees do not have the same options and stay with the organization and ultimately work their way to the top. Ultimately, the authors are suggesting that organizations need to do a better job of identifying valuable employees and putting programs and incentives in place to retain them.

I believe that this is incredibly important because an organization does not need to be in a full blown decline to experience this phenomenon. Many of our organizations go through lulls or short-term declines. In addition, I would also point out that the uncertainty that is created during a merger or acquisition can easily create an environment in which your best employees leave for new opportunities or more “stable” environments.

Read this article and treat it as a cautionary tale.  Lastly, ensure that your organization has programs in place to further develop and retain your best employees.

Does short-term management pay?

Natalie Mizik and Robert Jacobson wrote an article entitled, The cost of myopic management for the July/August edition of the Harvard Business Review in which they explored the costs paid by the organization (and ultimately investors) when they become too focused on short-term revenue targets and begin inflating their earning by cutting expenditures. During their study executives would cut discretionary spending, which often included R&D, in favor of more impressive looking earnings. Mizik & Jacobson tracked over 400 companies and found that those firms that practiced “myopic management” would often have very impressive returns in the short-term, but long-term performed miserably. In order to begin to correct this behavior, firms need to begin to penalize executives for losses, not just reward them for gains. In addition, a portion of their compensation package should be tied to tenure, long-term growth and brand strength. Once an executive’s compensation is tied to long-term goals and objectives the myopic behavior will change as well.

The business environment has changed more rapidly than Middle management

Stephanie Armour in her USA Today article, “Who wants to be a middle manager?,” discusses the challenges facing today’s middle manager, and that a growing population of Generation X & Y employees do not view a move into middle management as a desirable career move.  The Gen X or Y managers that she interviewed discussed their challenges with work-life balance, struggling with increasingly wide-spread employees, pressures of managing the output (and the interpersonal issues) of employees while counterbalancing that against the objectives of senior management.  The article indicates that the role of the middle manager has dramatically changed over the years – becoming a less desirable role.

Some of the primary issues the article references are:

• Lack of flexibility in work schedule – often there is a need to be available nearly 24×7

• More demanding work and technology have forced managers to multi-task

• Generational differences between the Baby boomer senior managers and the Gen X & Y middle managers and front line employees – who often have different views on company loyalty, career paths and job security

• Work flexibility and security are perks that the middle managers do not get to take advantage

She finishes by pointing out that some organizations, like IBM, are attempting to offer executive-like perks to middle managers in the hopes of making the positions more attractive to employees.  Some companies, she points out, are being more flexible with valued middle managers.  One such company allowed a middle manager to retain her position, supervising a largely US-based team, when she relocated to Europe.

A few questions that occurred to me as I was reading this article: Has middle management changed more so than the work world?  Haven’t there always been employees – regardless of generation – who understand the additional commitments that management requires and would rather not have the additional responsibilities?  Are there a percentage of Gen X & Y managers who share similar views as Baby Boomers?  If so, how large is that group?  If Gen X & Y employees are wired differently than Baby Boomers, what ways will the business world need to change to accommodate this change once the Baby Boomers begin to retire from the workforce?

I believe that the work world has been and continues to change at an incredible pace.  Today you have companies that are less than 25 years old – that are among the most successful entities in the world (i.e. Google, Cisco, Microsoft, eBay, Dell, Lenovo, Yahoo).  My point is that there will be a company that starts in someone’s garage or basement tomorrow that may be a global brand within 5 – 7 years.  Those types of successes place an enormous amount of pressure on established businesses in many industries.  In addition, there is a greater amount of competition globally which has forced many organizations to face fierce new competitors.  And if that was not enough, businesses have additional focus on financial reporting – due to the misdeeds of senior mangers from organizations like Enron, Adelphia, WorldCom, etc.

All levels of management are facing enormous amounts of pressure.  Can you remember a time in which new CEOs were given such short amounts of rope before they were replaced?  So with senior managers facing a tremendous amount of pressure, it is understandable for middle managers – those who are tasked with implementing the organizations strategic plans – to feel incredible pressure as well.

I have known a number of Baby Boomer first-line employees who no desire of being in management.  The belief that this is a phenomenon that is owned by Gen X or Y employees is a myth.  You will always find that a fair number of employees do not want the additional responsibility that comes with being in management.  Every generation produces individuals who are driven to be the best that they can be, not every generation takes the same path to success, but Gen X & Y is no different in their drive.  If anything there is probably some truth in Gen X & Y wanting to move farther at a faster rate.  Not wanting to wait and “pay dues” over an extended period of time.  Some of this is due to the “peer pressure” of witnessing peers launch successful companies.  As a result they will increasingly look for opportunities of upward mobility outside their present organizations.  So while some Gen X & Y employees want to take charge of an organization, generally, they don’t want to wait 15 or 20 years to do it.

Workplace Stress

Jenna Goudreau wrote an interesting article in the August 6^th issue of BusinessWeek on stress in the workplace. I was particularly impressed with the way in which one organization handled an overworked and stressed out manager. Based on the amount of time that he was working, the organization proactively stepped in to offer some assistance. Unfortunately, most organizations are not proactive when it comes to worker stress. Instead they tend to react only after there is a major, and sometimes (very regrettably) deadly, circumstances.

 

It is easy for a leadership team to only focus on bottom-line results, but through taking steps to reduce stress, they could greatly improve the overall efficiency of the organization. Think of all of the colleagues who we have lost due to feeling completely and totally overwhelmed. More often than not, they have brought the issue to the attention of their superiors, but the issue was never addressed. This, as we know, leads to the employee leaving the organization. If you think hard, you can probably think of two or three colleagues who currently fit this description.

 

Many companies start out by helping employees repair the work-life balance. General Mills (GIS ) provides a range of personalized services while employees at headquarters work so they can spend more time recharging with their families and less time running errands on the weekends. Want your hair colored? An in-house stylist will do it. Car need an oil change? A mechanic will do it on your lunch break.

 

Given the amount of time that employees spend working – being on call nearly 24 hours a day – providing services to employees to allow them more time to unwind with family and friends in non-work hours is a major step in the right direction. But, so is listening to employees, and providing them with the assistance that they need. As the article stated, sometimes it is as simple as additional headcount.

Nasty People Drain Productivity in the Workplace

I recently re-read the Robert Sutton article entitled Nasty People.  This article, which helped lead the way to his recently published book The No Asshole Rule: Building a Civilized Workplace, discusses the impact that employees who create a hostile work environment have on others and the organization itself.  I immediately began to reflect on the various nasty people who I have worked with over the years.

I thought of two people in particular who didn’t know what a carrot is, but they have a mountain of sticks.  They need a mountain of sticks because they wear them out so quickly – figuratively bashing those that don’t do exactly what they want, when they want over the head.  More frustratingly they will often employ their clubs when they only have a small amount of facts, often clubbing an innocent person.  And once proven wrong, they can not muster the strength to say “I apologize,” instead they are out clubbing the next person.

 

By clubbing I am referring to the nasty, accusatory and public emails (conference calls and face-to-face meetings) that a large number of us have had the displeasure to witness (or experience).  You know the type – the one that has nearly every member of the organization on copy – and it serves to public point the finger at an individual(s).  More often than not, its purpose is to cover the butt of the person sending it.  This is because they are admitting that, while the subject of the email is near and dear to them, they couldn’t manage to stay engaged in the project to help keep it on track.  But they will now cast blame, after the fact, where they believe it should lie.  Go back and re-read these emails, as a key stakeholder do they accept any responsibility?  I am willing to bet that in 98% of the cases the answer is NO.

 

What these individuals don’t seem to understand is that this behavior does not accomplish what they hope.  My belief is that they feel that by publicly chastising people, it will motivate that employee to work harder the next time.  While I am not a Psychologist, I have to believe that this actually de-motivates people as well as it creates bitterness and resentment.  As Professor Sutton points out, it can often lead towards the escalation of this nasty behavior as people begin to lob verbal hand grenades at each other.  I would also argue that as a result of these behavior productivity decreases, which is exactly the opposite effect that the “club” holder would argue they were trying to accomplish.

 

If there was no management intervention following a “clubbing” the employees learn that they need to “CYA” from this point forward.  So they begin to document every step and wait for countless approvals and signoffs before they move forward.  Projects begin to take much longer than they could or should, often because the employees are covering their butts by documenting where the problem has probably always existed – with the person(s) doing the clubbing.  The net effect is that the mood of the group drops and so does productivity.

 

I disagree completely with publicly embarrassing a colleague and those that do it should be disciplined.  And when it is done with a lack of evidence the penalty should be more severe – up to and including termination.  People who are too busy to pick up the phone, or visit with a colleague that they “believe” missed the target, in order to gather data and possibly council them (if necessary) are too busy to continue to work for the organization.

 

Because of the nature of business, we ask employees to deal with a lot – from 50+ hour work weeks, nearly 7 day work weeks, and on and on.  We should not hire or tolerate nasty employees who make work life even more difficult.  And when you consider the price of unproductive behavior and possibly future legal activity, they can produce a very tangible negative financial impact on the organization.

Do companies need a second in command?

  Recently I read an article written by Nathan Bennett and Stephen Miles which was published in the May 2006 issue of Harvard Business Review entitled, “Second in Command” which discusses the relationship between CEOs and COOs.  The authors point out that no two COOs have the same job description – not even two that have been employed by the same organization.  This, they argue, is a result of the fact that position is determined largely by the needs (and strengths and weaknesses) of the CEO.  They quote statistics that show the gradual decline in the number of COOs who are currently employed.  More interestingly they point out that 17% of COOs, who are promoted to CEO, elect not to hire a replacement COO.  I am surprised by this statistic, because I would imagine that a former COO would understand the benefit that a COO brings to an organization.

 

Many would agree that, among many other things, the CEO needs to be focused on the long-term direction and strategy of the organization.  The COO should be focused on the day-to-day operations of the business and implementing the CEOs vision.  A mistake that some organizations make is by having a CEO who is too tactically focused.  If we view those companies over a 5, 10 or 15 year period, I am willing to bet that those organizations – with tactically focused CEOs (and no COO) – will be much less successful than those with a CEO and COO.

Companies do need a second in command.  The CEO can not effectively be both strategically and tactically focused.  They need a trusted employee to focus their attention on the daily operations of the business and on executing on the CEOs strategy.