Category Archives: Management

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.

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Filed under CEO, CEO Pay, CEO Salary, Executive Pay, Harvard Business Review, Leadership, Management, Natalie Mizik, Robert Jacobson

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.

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Filed under Baby Boomers, Corporate Culture, Dell, Gen X, Gen Y, IBM, Leadership, Management, Microsoft, Middle Management, Stephanie Armour, USA Today

Promise-Based Management

Promise

 

Most of the vexing challenges leaders face – improperly executed strategy, lack of organizational agility, disengaged employees, and so on – stem from broken or poorly crafted commitments.  Executives can overcome some of their thorniest problems in the short term and foster productive, reliable workforces for the long term by practicing what we call ‘promise-based management’: cultivating and coordinating commitments in a systematic way.

 

I came across this article written by Sull and Spinosa, Promise-Based Management: The Essence of Execution, in the April edition of the HBR and was fascinated by its title.  As I read the article I began to reflect on my own personal experiences with the organizations that I have worked for, and with my own staff.  I agree that one of the quickest ways to take the wind out of a person’s sails is to break a commitment – especially one that was made publicly.  Most employees realize that in business, as in life, that change is one of the few constants.  With that said, it is hard to justify breaking a promise that was made without adequately considering the impact.  I am suggesting that there are those around us who are “serial committers” – they always say yes and rarely say no, even when they should.  These individuals become so engulfed by the shear number of commitments that they have made that it becomes impossible for them to execute on any of them, at least not effectively.

 

I found Sull and Spinosa’s five characteristics of good promises particularly interesting.  They define good promises as those that individuals are committed to keeping.  And point out that they are:

  1. Public – promises that are made, monitored, and completed in public are more binding.
  2. Active – negotiating a commitment should be an active, collaborative process.
  3. Voluntary – effective promises are not coerced.
  4. Explicit – requests must be clear from the start.
  5. Mission based – explanation of why the commitment matters.

In conclusion, it is time for us to retrain our staff, colleagues and senior executives that it is completely appropriate – if not valuable to the organization – to say no.  Or looking at it a different way, to put the commitment on hold until there is ample time to evaluate the entirety of what is being requested, and its impact on the organization.  It would provide us all with the requisite time to evaluate what the impact would be if the promise is not acted upon.

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Filed under Charles Spinosa, Corporate Culture, Donald N. Sull, Harvard Business Review, Management, Strategy