Goal Setting
At the end of each year, we inherently reflect upon our accomplishments for that year. Have we been successful in achieving what we set out to do? Have we exceeded our expectations as well as the expectations of others? If we have not met expectations, what will be done to improve? After evaluating our performance, we focus our sights toward setting goals for the upcoming year. This week’s blog will address the goal setting process within the business environment, and offer tips for crafting viable individual goals and an individual development plan.
SMART Goals
A widely accepted business practice is developing “smart” goals. This acronym defines goals as: specific, measurable, achievable, realistic, and timely. Developing goals is essential to both the manager and employee for evaluating performance and establishing a plan for continuous development and improvement.
First, your goal must be specific. It must be clearly defined and address what will be accomplished; how the goal will be accomplished; and why the goal will be accomplished (i.e. what is the reason or what is the benefit of achieving the goal). Second, the goal must be measurable. Short-term or periodical milestones should be identified to evaluate progress in meeting the goal. Periodical milestones help gauge progress and determine if the goal will be completed as planned, or if there is a need to readjust and reforecast the goal.
Third, the goal must be achievable. Have you set a goal that will challenge you? Do you possess the knowledge and skills to complete the goal? Setting a goal that is not attainable may adversely impact your morale and motivation. To help ensure an achievable goal has been established, it is a sound practice to have agreement between manager and employee on the set goal. Fourth, the goal must be realistic and results-oriented. The goal must be relevant to the organization, and can be achieved with the appropriate employee knowledge and available resources. Fifth, the goal should be timely. Every goal should be defined with a timeframe for completion. Again, the timeframe should present a challenge and precipitate a sense of urgency in providing a tangible, quality result.
Alignment of Employee Goals and Organizational Goals
The next step in the goal setting process is critical. If your goals are not aligned with your organization’s goals and objectives, it does not matter how “smart” they are. You will not receive support from the leaders and managers in your organization to meet those goals. Further, you may (will) encounter significant resistance and disdain towards conducting activities that will benefit your personal growth and development at the expense of the organization. In this scenario, you have not established a smart goal, but a “dumb” goal. A dumb goal can be characterized as one that is: Detrimental to the organization’s objectives; Undermines the organization’s objectives (and/or is unreasonable); Mis-aligned with the organization’s objectives; and is Broadly defined without enough specifics to be understood or accurately evaluated.
Part of the leader’s role in the organization is to reward employees who consistently demonstrate the organizations’ desired behaviors and attitudes, and who deliver the organization’s desired results. Developing and attempting to execute “dumb” goals will provide the opposite leadership reaction. Employees who are not aligned with the organizational goals, objectives, and mission will be alienated and will not be rewarded.
Implications of Setting “Dumb” Goals
The organization objective is to make a profit. If your individual goals and individual development plan does not align with the organizational goals and objectives, you will not have the support of your management team in achieving those goals. If your personal goals require financial assistance, or time away from the job for classroom training, you may not receive that assistance. Moreover, the degree of resistance could result in termination. For example, your organization’s goal for 2010 may be to improve profitability by decreasing operating costs. The desired method for cutting costs may be reducing staff and eliminating unnecessary tasks. If your personal goals and individual development plan do not support this organizational goal, you could find yourself as part of that planned workforce reduction.
In order to receive support for individual goals and development, you must first understand the organizational goal; ensure your individual goals will contribute to the success of the organizational goal; and clearly articulate the expected results and benefits to the organization of accomplishing your goal. In addition, make sure to include periodic milestones in order to review your progress. These milestones can serve as an ideal mechanism for communication and interaction with your manager/leader on your work performance.
Finally, the goal setting process must be an open, honest dialogue between manager and employee. All established goals should be agreed upon – by both parties. Lack of communication leads to ineffective and unproductive employees. Open and honest dialogue ensures that both manager and employee have a vested interest in successful completion of the goal, and facilitates a much simpler and stress-free end of year performance review.
More information on goal setting and the performance evaluation process can be reviewed in Corporate Leadership Selection: Impact on American Business, Employees, and Society (Authorhouse Publishing).
Feedback to the bi-monthly blog entry is always welcome.
Tuesday, December 29, 2009
Sunday, December 13, 2009
What’s UP (Weekly, Hot, Applicable Topic Summary - Unbiased Perspective)
Employee Performance Reviews
As the end of the year rapidly approaches, managers focus on the employee performance evaluation process. For both managers and employees, performance evaluations have unfortunately precipitated undue stress and uncertainty. This week’s blog addresses performance evaluations as a beneficial mechanism for employee communication, motivation, and development.
Communication
Open and honest communication between employee and manager is an essential component of organizational effectiveness and productivity. One of the basic leadership guidelines is to clearly articulate and communicate the organization’s mission, goals, and objectives to all employees. When conveying the organization’s direction, this communication can be done as a town-hall meeting, a formal/informal group discussion, or on an individual basis. But once the communication is done, feedback on one’s performance in meeting expectations is typically one-on-one.
To be effective, communication must also be done consistently. An end of year performance review should not be the one and only time an employee receives feedback on their performance. While there are no set guidelines on how often feedback is given, some organizations and managers have experienced significant success in conducting weekly or monthly performance discussions with employees. Further, there are highly motivated employees who are willing to take the initiative and ask their manager to provide input on their (the employee’s) performance. Conducting such informal reviews and providing employee feedback minimizes any potential “surprises” in the end of year performance review.
Employee Performance Reviews and Employee Motivation
Another leadership cornerstone of organizational effectiveness and productivity is to reward employees who consistently perform their duties above expectations while demonstrating the desired behaviors and attitudes of the company. The employee performance evaluation process may help to administer monetary rewards, employee recognition, and promotion opportunities. If an employee’s performance is producing operational and/or financial success for the company, the performance review is an appropriate avenue for discussing individual rewards and recognition for hard work.
On the other hand, the performance review discussion is also the appropriate avenue to discuss any work-related deficiencies and the need for improvement. When discussing employee work deficiencies, managers must provide specific examples of what was done wrong; what the impact of the poor performance was; recommendations on how to improve; and a sincere commitment to help by removing any barriers that impedes the employee from doing a good job. If the negative impact of poor performance and the consequences of continued poor performance are clearly explained, it may serve as an incentive to the employee for immediate improvement. If the negative impact of poor performance is not communicated, the result may be continued poor work performance, and poor operational/financial results.
Employee Performance Reviews and Employee Development
The third and final benefit of the employee performance review process is to identify employee development opportunities. Employees who are passionate about doing a good job want input on how they are doing and how they can continuously improve. Highly motivated and high potential employees also have individual development plans. These development plans describe their strengths, weaknesses, and individual goals and aspirations.
An important manager role is to understand their employees’ individual goals and ensure employees’ individual goals align with the organization’s goals. Communicating and aligning organization and employees goals should be done at the beginning of the year between manager and employee. Expectations and desired results (for both sides) should be discussed and accepted at that time. If there is agreement, acceptance, and alignment of the performance expectations at the beginning of the year, the performance evaluation discussion will be easier with minimal degrees of stress, anxiety, and uncertainty. The next blog entry will discuss the goal setting and individual development plan in more detail.
More information on employee performance reviews can be found in Corporate Leadership Selection: Impact on American Business, Employees, and Society (Authorhouse Publishing).
Feedback to the bi-monthly blog entry is always welcome.
As the end of the year rapidly approaches, managers focus on the employee performance evaluation process. For both managers and employees, performance evaluations have unfortunately precipitated undue stress and uncertainty. This week’s blog addresses performance evaluations as a beneficial mechanism for employee communication, motivation, and development.
Communication
Open and honest communication between employee and manager is an essential component of organizational effectiveness and productivity. One of the basic leadership guidelines is to clearly articulate and communicate the organization’s mission, goals, and objectives to all employees. When conveying the organization’s direction, this communication can be done as a town-hall meeting, a formal/informal group discussion, or on an individual basis. But once the communication is done, feedback on one’s performance in meeting expectations is typically one-on-one.
To be effective, communication must also be done consistently. An end of year performance review should not be the one and only time an employee receives feedback on their performance. While there are no set guidelines on how often feedback is given, some organizations and managers have experienced significant success in conducting weekly or monthly performance discussions with employees. Further, there are highly motivated employees who are willing to take the initiative and ask their manager to provide input on their (the employee’s) performance. Conducting such informal reviews and providing employee feedback minimizes any potential “surprises” in the end of year performance review.
Employee Performance Reviews and Employee Motivation
Another leadership cornerstone of organizational effectiveness and productivity is to reward employees who consistently perform their duties above expectations while demonstrating the desired behaviors and attitudes of the company. The employee performance evaluation process may help to administer monetary rewards, employee recognition, and promotion opportunities. If an employee’s performance is producing operational and/or financial success for the company, the performance review is an appropriate avenue for discussing individual rewards and recognition for hard work.
On the other hand, the performance review discussion is also the appropriate avenue to discuss any work-related deficiencies and the need for improvement. When discussing employee work deficiencies, managers must provide specific examples of what was done wrong; what the impact of the poor performance was; recommendations on how to improve; and a sincere commitment to help by removing any barriers that impedes the employee from doing a good job. If the negative impact of poor performance and the consequences of continued poor performance are clearly explained, it may serve as an incentive to the employee for immediate improvement. If the negative impact of poor performance is not communicated, the result may be continued poor work performance, and poor operational/financial results.
Employee Performance Reviews and Employee Development
The third and final benefit of the employee performance review process is to identify employee development opportunities. Employees who are passionate about doing a good job want input on how they are doing and how they can continuously improve. Highly motivated and high potential employees also have individual development plans. These development plans describe their strengths, weaknesses, and individual goals and aspirations.
An important manager role is to understand their employees’ individual goals and ensure employees’ individual goals align with the organization’s goals. Communicating and aligning organization and employees goals should be done at the beginning of the year between manager and employee. Expectations and desired results (for both sides) should be discussed and accepted at that time. If there is agreement, acceptance, and alignment of the performance expectations at the beginning of the year, the performance evaluation discussion will be easier with minimal degrees of stress, anxiety, and uncertainty. The next blog entry will discuss the goal setting and individual development plan in more detail.
More information on employee performance reviews can be found in Corporate Leadership Selection: Impact on American Business, Employees, and Society (Authorhouse Publishing).
Feedback to the bi-monthly blog entry is always welcome.
Monday, November 30, 2009
What’s UP (Weekly, Hot, Applicable Topic Summary - Unbiased Perspective)
Technology and the Human Resource Function
During the past 25 years, the organizational HR role has experienced a change in how it is utilized. Large and small companies alike have undergone a transformation in the HR role and the use of HR professionals. The Society for Human Resource Management (SHRM), with over 250,000 members, has provided development, training, certification, and guidance on the values and benefits of having qualified HR professionals in the company. Given the opportunity and leadership support, HR personnel can successfully lead (and have successfully led) organizational development and organizational learning initiatives. This week’s blog will discuss three areas of how the organizational HR role has evolved, and the implications for future HR contributions as a result of technological advancements. The three areas are: personnel administration; external hiring; and management of corporate policy violations.
Personnel Administration
Corporate HR staff remains accountable for employee administrative functions such as: overseeing payroll disbursements; processing hiring and termination correspondence; and developing personnel reports (i.e. company demographics, employee training metrics, and possibly company newsletters associated with public relations activity). Although HR staff may enter employee salary increases in official company records, this information is typically determined by line managers and/or leaders not in the HR department. In large companies, this information is automated and HR is not involved in the process at all. Further, there are computer software programs implemented in some companies that will allow employees to resign from the company without involving anyone else within the company.
In prior years, organization development and training required coordination of face-to-face classroom sessions which would impact employee productivity. Technology advancements have introduced convenience into employee training. Webinars, webcams, and online classes are used to help companies train employees, yet minimize their time away from work. The amount of effort and human intervention in conducting organizational training and development may be reduced.
Hiring External Employees
The second change in the HR role is in the external hiring process. In years gone by, HR played a significant role in the recruiting, interviewing, and selection process of new employees. HR personnel solicited candidates through want ads; participated in career fairs; scheduled interviews; and contributed to selection decisions. HR still participates in these activities; however, the degree of participation has changed. Soliciting talented professionals is done by websites like monster.com and career builder.com, and external search firms that use technology-based search engines to acquire and manage employee resumes and employee databases. These hiring activities are still done with guidance from HR.
Line level managers have taken a more active role in the hiring process. Whereas HR will solicit job openings and select interview candidates (based on keyword searches in one’s resume), the hiring managers determine who will be interviewed and selected. When selecting technology professionals, HR’s role may be reduced, especially if the HR professional has no knowledge or expertise of the technical skillset being sought. To streamline the interview process, it is a common practice to conduct a phone interview with prospective employees before investing time and energy in the face-to-face interview. To further streamline the process, companies may even employ the services of an external hiring agency to find the right candidate. Using an external agency may result in bypassing the HR department altogether. External search agencies have the appropriate experience in identifying talent. However, external search agencies may not understand the attitudes, behavior, and culture of the organization they are hiring talent for. This may lead to additional organizational productivity challenges.
Oversight and Prevention of Employee Wrongdoing
The third change in the HR function is how employee violations of corporate policy are handled. Employee violations of sexual harassment, discriminatory hiring and promotion practices, workplace violence, misuse of corporate resources, accessing inappropriate websites, and contributing to a threatening work environment were previously reported, investigated, and curtailed by HR. In today’s heightened security environment and concern over financial risk, major corporations have established an Office of Ethics (or some companies call it the Compliance Office).
It is important to note the corporate office of ethics does not generate any revenue for the corporation. The office of ethics is comprised of legal professionals. Their sole objective is to mitigate risk to the company. Either the office of ethics or the HR department may communicate information on corporate policy and corporate compliance. Employees may even report violations to either department. However, investigation, possible prosecution, and reporting of corporate wrongdoing are handled by the office of ethics. Also note that reports of wrongdoing are not typically shared. Where HR may have played an essential role before, the office of ethics is now the focal point for such issues.
Future Implications for the HR Role
The corporate HR role has changed. Technological advancements have replaced the need for a number of activities that previously required human intervention. In large, multi-million dollar companies, HR professionals may see their role diminishing. In small to mid-size companies, the HR role might be done by non-HR professionals. These smaller sized companies may be able to benefit from having an HR professional. Technology may help to streamline the HR function.
Without subscribing to a purely quantitative measuring stick in defining a large company versus a small company, perhaps an easier depiction is whether the company has an office of ethics or not. If a company has established an ethics office with legal professionals, it implies that there is a substantial amount of financial risk for employee wrongdoing. But it also may imply that the company acknowledges the fact that there will be employees who do not adhere to the corporate policy, and that there will be a need to minimize the financial penalty for such wrongdoing. The HR professional may not be trained in mitigating this risk, but they may be beneficial in its oversight.
More information on employee morale and productivity can be reviewed in Corporate Leadership Selection: Impact on American Business, Employees, and Society (Authorhouse Publishing).
Feedback to the bi-monthly blog entry is always welcome.
During the past 25 years, the organizational HR role has experienced a change in how it is utilized. Large and small companies alike have undergone a transformation in the HR role and the use of HR professionals. The Society for Human Resource Management (SHRM), with over 250,000 members, has provided development, training, certification, and guidance on the values and benefits of having qualified HR professionals in the company. Given the opportunity and leadership support, HR personnel can successfully lead (and have successfully led) organizational development and organizational learning initiatives. This week’s blog will discuss three areas of how the organizational HR role has evolved, and the implications for future HR contributions as a result of technological advancements. The three areas are: personnel administration; external hiring; and management of corporate policy violations.
Personnel Administration
Corporate HR staff remains accountable for employee administrative functions such as: overseeing payroll disbursements; processing hiring and termination correspondence; and developing personnel reports (i.e. company demographics, employee training metrics, and possibly company newsletters associated with public relations activity). Although HR staff may enter employee salary increases in official company records, this information is typically determined by line managers and/or leaders not in the HR department. In large companies, this information is automated and HR is not involved in the process at all. Further, there are computer software programs implemented in some companies that will allow employees to resign from the company without involving anyone else within the company.
In prior years, organization development and training required coordination of face-to-face classroom sessions which would impact employee productivity. Technology advancements have introduced convenience into employee training. Webinars, webcams, and online classes are used to help companies train employees, yet minimize their time away from work. The amount of effort and human intervention in conducting organizational training and development may be reduced.
Hiring External Employees
The second change in the HR role is in the external hiring process. In years gone by, HR played a significant role in the recruiting, interviewing, and selection process of new employees. HR personnel solicited candidates through want ads; participated in career fairs; scheduled interviews; and contributed to selection decisions. HR still participates in these activities; however, the degree of participation has changed. Soliciting talented professionals is done by websites like monster.com and career builder.com, and external search firms that use technology-based search engines to acquire and manage employee resumes and employee databases. These hiring activities are still done with guidance from HR.
Line level managers have taken a more active role in the hiring process. Whereas HR will solicit job openings and select interview candidates (based on keyword searches in one’s resume), the hiring managers determine who will be interviewed and selected. When selecting technology professionals, HR’s role may be reduced, especially if the HR professional has no knowledge or expertise of the technical skillset being sought. To streamline the interview process, it is a common practice to conduct a phone interview with prospective employees before investing time and energy in the face-to-face interview. To further streamline the process, companies may even employ the services of an external hiring agency to find the right candidate. Using an external agency may result in bypassing the HR department altogether. External search agencies have the appropriate experience in identifying talent. However, external search agencies may not understand the attitudes, behavior, and culture of the organization they are hiring talent for. This may lead to additional organizational productivity challenges.
Oversight and Prevention of Employee Wrongdoing
The third change in the HR function is how employee violations of corporate policy are handled. Employee violations of sexual harassment, discriminatory hiring and promotion practices, workplace violence, misuse of corporate resources, accessing inappropriate websites, and contributing to a threatening work environment were previously reported, investigated, and curtailed by HR. In today’s heightened security environment and concern over financial risk, major corporations have established an Office of Ethics (or some companies call it the Compliance Office).
It is important to note the corporate office of ethics does not generate any revenue for the corporation. The office of ethics is comprised of legal professionals. Their sole objective is to mitigate risk to the company. Either the office of ethics or the HR department may communicate information on corporate policy and corporate compliance. Employees may even report violations to either department. However, investigation, possible prosecution, and reporting of corporate wrongdoing are handled by the office of ethics. Also note that reports of wrongdoing are not typically shared. Where HR may have played an essential role before, the office of ethics is now the focal point for such issues.
Future Implications for the HR Role
The corporate HR role has changed. Technological advancements have replaced the need for a number of activities that previously required human intervention. In large, multi-million dollar companies, HR professionals may see their role diminishing. In small to mid-size companies, the HR role might be done by non-HR professionals. These smaller sized companies may be able to benefit from having an HR professional. Technology may help to streamline the HR function.
Without subscribing to a purely quantitative measuring stick in defining a large company versus a small company, perhaps an easier depiction is whether the company has an office of ethics or not. If a company has established an ethics office with legal professionals, it implies that there is a substantial amount of financial risk for employee wrongdoing. But it also may imply that the company acknowledges the fact that there will be employees who do not adhere to the corporate policy, and that there will be a need to minimize the financial penalty for such wrongdoing. The HR professional may not be trained in mitigating this risk, but they may be beneficial in its oversight.
More information on employee morale and productivity can be reviewed in Corporate Leadership Selection: Impact on American Business, Employees, and Society (Authorhouse Publishing).
Feedback to the bi-monthly blog entry is always welcome.
Monday, November 23, 2009
What’s UP (Weekly, Hot, Applicable Topic Summary - Unbiased Perspective)
Addressing the U.S. Unemployment Rate
Since January 21, 2009, President Barack Obama and his administration have attempted to rectify a multitude of issues plaguing our nation. He should be commended for his efforts. The next challenge on the administration’s agenda is the U.S. unemployment rate. According to U.S. Department of Labor Statistics, the reported unemployment rate has surpassed 10%. This number is based on unemployment claims. It does not include those who are unemployed, but have not filed for unemployment assistance.
This week’s blog highlights two critical elements that must be addressed in order to reverse the existing unemployment trends. The two critical areas identified are corporate mergers and acquisitions; and offshoring jobs to other countries. The attitudes and behaviors in Fortune 500 companies when laying off American workers may influence the attitudes and behaviors, and operations of small to mid-size companies – thus adversely affecting the overall health of our economy.
Mergers and Acquisitions
I am fortunate to have spent over 30 years in Corporate America. The business strategies, operations, and relationships I experienced are priceless. During the very first-six months of my career as an educated (yet somewhat naïve) junior executive, I noticed the stiff competition within the industry I worked. In a meeting with my director, I asked why our company didn’t merely acquire or “buyout” one or two of the smaller companies within our industry. This would increase our market share and decrease a percentage of our competition. The response I received was “federal regulatory agencies would not permit a company of our size (and influence) to grow too large. It may result in an attempt to monopolize the market and/or deter fair competition and trade.”
The acceptance of multi-billion dollar corporate mergers and acquisitions has evolved in the U.S. corporate landscape. Thirty years ago, federal agencies were more vigilant in monitoring corporate operations that could potentially harm fair trade and competition. During the past eight years, less government oversight has facilitated a trend in merging, acquiring, downsizing, offshoring, and eliminating businesses. The banking and lending industry is an example of how merging/acquiring companies within that industry have affected our economy.
The Case Against Corporate Mergers and Acquisitions
Corporate mergers and acquisitions are not good for the U.S. economy for three reasons. First, when two separate companies exist and compete in the marketplace, there are two separate groups of employees at each company. In addition, competitive pricing provides consumers with viable options. When those two companies merge, there is no longer a need for two employees doing the same job. Someone is eventually released.
Second, the released employee may feel resentment toward the company and choose to purchase goods and services from another company within the industry. Even worse, the released employee may no longer have the financial resources to purchase goods and services from any company, thus decreasing revenue generation throughout the industry. Third, if there is no competition (or limited competition) within an industry, a company may price goods and services however they deem appropriate for being profitable (i.e. price gouging) – without any consequences. As a result, the business strategy of merging/acquiring other companies is not a means of maintaining a sound U.S. workforce and strong economy.
The Dilemma of Offshoring U.S. Jobs
The primary goal of every business is to make a profit. Companies must generate enough revenue to cover its expenses. A popular company strategy is to “offshore” a portion of the organization to a business entity in another country. This entity may be an affiliate of the corporation or a separate entity altogether. A company may implement this strategy in an effort to reduce employee operating expense by utilizing a workforce whose salary, healthcare, and medical expenses are far less than the expense incurred in using the American workforce. Further, the company may have identified favorable tax laws in another country or a workforce with comparable knowledge, skills, and abilities as the U.S. workforce.
This strategic approach provides a short-term benefit. The salaries and healthcare expenses for U.S. workers are eliminated which will result in improved profitability. However, just like in the case of corporate mergers and acquisitions, the attitudes and behaviors of released employees may result in a drastic reduction in revenue, thus defeating the objective of downsizing in the first place.
Based on leadership’s prior behavior, integrity, and interaction with their environment, the method(s) by which a company executes an offshoring or downsizing initiative may result in a “boycott” of the company. This may be done not only by released employees, but also by released employees’ friends and family members; vendors; suppliers; and possibly even employees chosen to stay at the company (the anxiety and questions of who’s next to be released can be de-moralizing). Above all, the reaction of the investment community will determine corporate long-term success of failure. If the company’s investors are not comfortable with the potential profitability of the company, the company will fail.
Therefore, any incentives, plans, or other attempts to reduce our national unemployment rate must consider addressing these existing ineffective corporate practices. These practices have significantly contributed to the unemployment rate, and will continue to do so. Finally, this “big company” approach to laying off workers has trickled down to the small and mid-size companies, and the national unemployment rate is higher than the reported statistic of 10% because of it.
More information on employee morale and productivity can be reviewed in Corporate Leadership Selection: Impact on American Business, Employees, and Society (Authorhouse Publishing).
Feedback to the bi-monthly blog entry is always welcome.
Since January 21, 2009, President Barack Obama and his administration have attempted to rectify a multitude of issues plaguing our nation. He should be commended for his efforts. The next challenge on the administration’s agenda is the U.S. unemployment rate. According to U.S. Department of Labor Statistics, the reported unemployment rate has surpassed 10%. This number is based on unemployment claims. It does not include those who are unemployed, but have not filed for unemployment assistance.
This week’s blog highlights two critical elements that must be addressed in order to reverse the existing unemployment trends. The two critical areas identified are corporate mergers and acquisitions; and offshoring jobs to other countries. The attitudes and behaviors in Fortune 500 companies when laying off American workers may influence the attitudes and behaviors, and operations of small to mid-size companies – thus adversely affecting the overall health of our economy.
Mergers and Acquisitions
I am fortunate to have spent over 30 years in Corporate America. The business strategies, operations, and relationships I experienced are priceless. During the very first-six months of my career as an educated (yet somewhat naïve) junior executive, I noticed the stiff competition within the industry I worked. In a meeting with my director, I asked why our company didn’t merely acquire or “buyout” one or two of the smaller companies within our industry. This would increase our market share and decrease a percentage of our competition. The response I received was “federal regulatory agencies would not permit a company of our size (and influence) to grow too large. It may result in an attempt to monopolize the market and/or deter fair competition and trade.”
The acceptance of multi-billion dollar corporate mergers and acquisitions has evolved in the U.S. corporate landscape. Thirty years ago, federal agencies were more vigilant in monitoring corporate operations that could potentially harm fair trade and competition. During the past eight years, less government oversight has facilitated a trend in merging, acquiring, downsizing, offshoring, and eliminating businesses. The banking and lending industry is an example of how merging/acquiring companies within that industry have affected our economy.
The Case Against Corporate Mergers and Acquisitions
Corporate mergers and acquisitions are not good for the U.S. economy for three reasons. First, when two separate companies exist and compete in the marketplace, there are two separate groups of employees at each company. In addition, competitive pricing provides consumers with viable options. When those two companies merge, there is no longer a need for two employees doing the same job. Someone is eventually released.
Second, the released employee may feel resentment toward the company and choose to purchase goods and services from another company within the industry. Even worse, the released employee may no longer have the financial resources to purchase goods and services from any company, thus decreasing revenue generation throughout the industry. Third, if there is no competition (or limited competition) within an industry, a company may price goods and services however they deem appropriate for being profitable (i.e. price gouging) – without any consequences. As a result, the business strategy of merging/acquiring other companies is not a means of maintaining a sound U.S. workforce and strong economy.
The Dilemma of Offshoring U.S. Jobs
The primary goal of every business is to make a profit. Companies must generate enough revenue to cover its expenses. A popular company strategy is to “offshore” a portion of the organization to a business entity in another country. This entity may be an affiliate of the corporation or a separate entity altogether. A company may implement this strategy in an effort to reduce employee operating expense by utilizing a workforce whose salary, healthcare, and medical expenses are far less than the expense incurred in using the American workforce. Further, the company may have identified favorable tax laws in another country or a workforce with comparable knowledge, skills, and abilities as the U.S. workforce.
This strategic approach provides a short-term benefit. The salaries and healthcare expenses for U.S. workers are eliminated which will result in improved profitability. However, just like in the case of corporate mergers and acquisitions, the attitudes and behaviors of released employees may result in a drastic reduction in revenue, thus defeating the objective of downsizing in the first place.
Based on leadership’s prior behavior, integrity, and interaction with their environment, the method(s) by which a company executes an offshoring or downsizing initiative may result in a “boycott” of the company. This may be done not only by released employees, but also by released employees’ friends and family members; vendors; suppliers; and possibly even employees chosen to stay at the company (the anxiety and questions of who’s next to be released can be de-moralizing). Above all, the reaction of the investment community will determine corporate long-term success of failure. If the company’s investors are not comfortable with the potential profitability of the company, the company will fail.
Therefore, any incentives, plans, or other attempts to reduce our national unemployment rate must consider addressing these existing ineffective corporate practices. These practices have significantly contributed to the unemployment rate, and will continue to do so. Finally, this “big company” approach to laying off workers has trickled down to the small and mid-size companies, and the national unemployment rate is higher than the reported statistic of 10% because of it.
More information on employee morale and productivity can be reviewed in Corporate Leadership Selection: Impact on American Business, Employees, and Society (Authorhouse Publishing).
Feedback to the bi-monthly blog entry is always welcome.
Sunday, October 25, 2009
What’s UP (Weekly, Hot, Applicable Topic Summary - Unbiased Perspective)
Employee Morale During Corporate Downsizing
The focus of successful business leaders is to develop and maintain a motivated, energetic workforce that is capable of delivering desired business results. Simultaneously, business leaders must keep their finger on the pulse of the organization to accurately interpret and react to an ever-changing economic environment. In today’s turbulent economic climate, this challenge relies on a leader’s ability to maintain/improve team effectiveness and team productivity even though some members of the team have been released. This week’s blog addresses the difficulties of maintaining high employee morale during a period of company layoffs.
Innovative Downsizing Strategies
Once the downsizing/employee reduction decision has been made, major corporations have used one of three (or a combination thereof) means for reducing employee operating expenses. Sometimes, companies “outsource” a portion of their organization to another company that specializes in the operation being downsized. For example, instead of maintaining a marketing department or technology support team, a company may eliminate these roles internally and enter into a contract with another company to perform them externally. The primary advantage corporations realize from this activity is elimination of employee payroll expense, healthcare, and medical benefits. The amount paid to an outsourced contract firm is far less than employee payroll expense.
Another popular company strategy is to “offshore” a portion of the organization to a business entity in another country. This entity may be an affiliate of the corporation or a separate entity altogether. The advantage to the corporation is a significant reduction in employee operating expense by utilizing a workforce whose salary, healthcare, and medical expenses are far less than the expense incurred by using the American workforce. There is concern over standardization of employee compensation and employee engagement practices in other countries (however, that discussion falls in the category of corporate social behavior and ethical business practices – to be discussed in a future blog).
A third strategy is to merely reduce the existing workforce. While the U.S. Department of Labor quotes the unemployment rate at approximately 10%, some companies have reported layoffs and labor reductions well in excess of that percentage. Corporations have vigorously attempted to maintain high productivity levels with fewer employees. Some companies have even tried to do more with fewer employees. In the cases where a company reports success in this endeavor, they might not necessarily share information on employee morale - which may have been severely impacted.
Employment Fluctuations – A “Natural” Behavioral Pattern
Fluctuations in employee staffing is a natural evolution. Companies grow and increase their workforce. Companies shrink and reduce their workforce. Companies aggressively manage their workforce and “prune” out those who do not consistently meet the expectations of their role. Nonetheless, employee morale is also a natural behavior. The stress and anxiety level of those chosen to stay is arguably just as high as those chosen to be released. Most corporations utilize outplacement services to help workers through the layoff process. These services can offer assistance with filing unemployment insurance claims. Outplacement services can also provide guidance and assistance in “re-tooling” employees for other job opportunities.
Employees that have not been eliminated may deal with stressful issues such as: “why was this employee selected to stay and that employee was selected to go”; “will there be another layoff”; “will I be eliminated next”; “how much more work am I expected to deliver”; or “have I been given the appropriate training to carry an additional workload”. These are all “water cooler” and hallway discussions that inevitably decrease the amount of time employees are effective and efficient in completing their tasks. Leaders must play an integral role in reducing chaos and maintaining productivity during this time.
Open and Honest Communication
In order to maintain an effective work environment, leaders must confront the issue with integrity, honesty, and vision. Every company has goals, objectives, values, and a mission. In a time of layoffs, leadership must consistently re-iterate the corporate goal; the role employees play in achieving the corporate goal; and any reassurance possible that the remaining employees are a valued part of the corporation’s future. If the company’s leadership has consistently operated with a high degree of integrity and honesty in the eyes of their subordinates, the probability of successfully maintaining morale and productivity will be higher than if leadership is perceived as dishonest, untrustworthy, and unethical. Further, the leadership behavior and attitudes displayed when executing an employee reduction strategy is not only observed by the company’s employees. Corporate vendors, suppliers, competitors, and investors are also closely monitoring these activities. It is truly a difficult scenario.
More information on employee morale and productivity can be reviewed in Corporate Leadership Selection: Impact on American Business, Employees, and Society (Authorhouse Publishing).
Feedback to the bi-monthly blog entry is always welcome.
The focus of successful business leaders is to develop and maintain a motivated, energetic workforce that is capable of delivering desired business results. Simultaneously, business leaders must keep their finger on the pulse of the organization to accurately interpret and react to an ever-changing economic environment. In today’s turbulent economic climate, this challenge relies on a leader’s ability to maintain/improve team effectiveness and team productivity even though some members of the team have been released. This week’s blog addresses the difficulties of maintaining high employee morale during a period of company layoffs.
Innovative Downsizing Strategies
Once the downsizing/employee reduction decision has been made, major corporations have used one of three (or a combination thereof) means for reducing employee operating expenses. Sometimes, companies “outsource” a portion of their organization to another company that specializes in the operation being downsized. For example, instead of maintaining a marketing department or technology support team, a company may eliminate these roles internally and enter into a contract with another company to perform them externally. The primary advantage corporations realize from this activity is elimination of employee payroll expense, healthcare, and medical benefits. The amount paid to an outsourced contract firm is far less than employee payroll expense.
Another popular company strategy is to “offshore” a portion of the organization to a business entity in another country. This entity may be an affiliate of the corporation or a separate entity altogether. The advantage to the corporation is a significant reduction in employee operating expense by utilizing a workforce whose salary, healthcare, and medical expenses are far less than the expense incurred by using the American workforce. There is concern over standardization of employee compensation and employee engagement practices in other countries (however, that discussion falls in the category of corporate social behavior and ethical business practices – to be discussed in a future blog).
A third strategy is to merely reduce the existing workforce. While the U.S. Department of Labor quotes the unemployment rate at approximately 10%, some companies have reported layoffs and labor reductions well in excess of that percentage. Corporations have vigorously attempted to maintain high productivity levels with fewer employees. Some companies have even tried to do more with fewer employees. In the cases where a company reports success in this endeavor, they might not necessarily share information on employee morale - which may have been severely impacted.
Employment Fluctuations – A “Natural” Behavioral Pattern
Fluctuations in employee staffing is a natural evolution. Companies grow and increase their workforce. Companies shrink and reduce their workforce. Companies aggressively manage their workforce and “prune” out those who do not consistently meet the expectations of their role. Nonetheless, employee morale is also a natural behavior. The stress and anxiety level of those chosen to stay is arguably just as high as those chosen to be released. Most corporations utilize outplacement services to help workers through the layoff process. These services can offer assistance with filing unemployment insurance claims. Outplacement services can also provide guidance and assistance in “re-tooling” employees for other job opportunities.
Employees that have not been eliminated may deal with stressful issues such as: “why was this employee selected to stay and that employee was selected to go”; “will there be another layoff”; “will I be eliminated next”; “how much more work am I expected to deliver”; or “have I been given the appropriate training to carry an additional workload”. These are all “water cooler” and hallway discussions that inevitably decrease the amount of time employees are effective and efficient in completing their tasks. Leaders must play an integral role in reducing chaos and maintaining productivity during this time.
Open and Honest Communication
In order to maintain an effective work environment, leaders must confront the issue with integrity, honesty, and vision. Every company has goals, objectives, values, and a mission. In a time of layoffs, leadership must consistently re-iterate the corporate goal; the role employees play in achieving the corporate goal; and any reassurance possible that the remaining employees are a valued part of the corporation’s future. If the company’s leadership has consistently operated with a high degree of integrity and honesty in the eyes of their subordinates, the probability of successfully maintaining morale and productivity will be higher than if leadership is perceived as dishonest, untrustworthy, and unethical. Further, the leadership behavior and attitudes displayed when executing an employee reduction strategy is not only observed by the company’s employees. Corporate vendors, suppliers, competitors, and investors are also closely monitoring these activities. It is truly a difficult scenario.
More information on employee morale and productivity can be reviewed in Corporate Leadership Selection: Impact on American Business, Employees, and Society (Authorhouse Publishing).
Feedback to the bi-monthly blog entry is always welcome.
Tuesday, October 13, 2009
What’s UP (Weekly, Hot, Applicable Topic Summary - Unbiased Perspective)
What’s UP (Weekly, Hot, Applicable Topic Summary - Unbiased Perspective)
Corporate Leadership Development
Leadership development is the crux of long-term success of business operations. It focuses on identifying, evaluating, and improving the knowledge, skills, abilities, and competencies of those chosen to lead the organization. Leadership development may also “shape” one’s values and attitudes in conjunction with the organization’s values and attitudes. Finally, leadership development addresses one’s ability to lead others.
Across all industries, there are leadership development programs. There are leadership development programs in most major universities. In our technology-based society, there are also seminars, webcams, virtual classrooms, newsletters (and yes blogs) on leadership and leadership development. With so many avenues for leadership training and development, the question still remains why are there so many organizations with poor, unqualified leadership?
This week’s blog highlights the role of leadership development; those fortunate to be selected for leadership development; and the consequences of poor selection of leadership development candidates.
The Role of Leadership Development
First, and most important, I will address the age-old question: “Are leaders born or are leaders developed?” While there is significant and far reaching research that shows one may be born with viable leadership traits, I am firmly in the group that believes leaders are developed. Regardless of the leadership traits, skills, or innate patterns one demonstrates, you must still undergo an “experiential process” to develop, enhance, and perfect those skills. Retention of leadership concepts through training classes has been estimated in the range of 10-15%. There must be a comprehensive, “hands-on” approach of transferring knowledge and developing leadership skills.
Some researchers argue that leadership traits can be observed at childhood. Some children “naturally” take the lead and demonstrate leadership behaviors with peers in their social environment (i.e. school; extracurricular activities; other siblings, etc). However, demonstrating leadership skills at an early age may highlight those who are willing to follow just as much as highlighting those who are willing and able to lead. Part of human nature is to consider ideas and solutions from others when/if we do not have an idea or solution of our own.
Second, leadership development helps the organization fill the pipeline with capable, qualified leaders to ensure continuity of business operations. In a time of economic downturn, many companies look for ways to minimize expense. Unfortunately, one of the first areas to get cut is training and development. The short term effect is potential increased profitability from eliminating an expense. The long term effect is a potential organization in disarray without developed leaders in place to provide vision, clarity, and direction as the organization navigates through a highly competitive business environment. Finally, how can an organization successfully select and retain talent if they have no program for developing that talent (any volunteers for working in an organization that cannot or will not provide you with development and training opportunities)?
Selecting Leadership Development Candidates
The next crucial component in leadership development is determining who will be selected for leadership development. It is imperative the organization has a fair, un-biased employee performance appraisal process in place to accurately evaluate employee performance and potential leadership candidates. Multiple reports provided by the U.S. Equal Employment Opportunity Commission (EEOC) identify biased, unfair (and illegal hiring practices). Further, EEOC reports documented substantial financial penalties organizations have paid because of unfair employee promotion and employee salary practices. If the selection process for leadership development emulates these dysfunctional practices, the long term consequences will also result in financial disaster.
The cost of replacing incompetent, unqualified leaders is expensive. The organization must retrace its steps: re-state the leadership qualifications and the role it is trying to fill; re-identify and re-evaluate viable candidates; and re-select a leader. Without internal leadership development, the organization may seek external leaders. Though an external leader may have the competencies to be successful, will their values, attitudes, and beliefs align with the organization? The possible damage to organization morale, team effectiveness, and employee productivity may be impacted. Employees will lose trust and confidence in the organization if their existing leadership cannot display integrity and ability in selecting good talent. Finally, heightened vigilance for not adhering to government regulations will result in hefty fines and potential negative reaction from the investment community – which all organization’s proactively seek to avoid.
Implications for Aspiring Leaders
The role(s) of the leadership selection process and leadership development are not new. They have been in existence for decades. For those aspiring to become leaders in today’s business environment, the following tips will be beneficial:
• Invest time and effort in your individual development plan. Make sure you conduct an accurate self assessment of your strengths and weaknesses.
• Discuss your self assessment with your manger/leader and devise a plan to help improve your skills – together.
• Seek input on how to get selected (or considered for future selection) into the organization’s leadership development program. You will not become a leader within that organization if you are not included in this development. You may successfully deliver significant initiatives for the organization which will result in other types of rewards and recognition, but it will not result in a leadership role.
• Follow up with your manager/leader on a specified period of time to ensure you are adequately fulfilling the goals, objectives, and milestones in your individual development plan in conjunction with the organization’s goals, objectives, and milestones. If there is not alignment, your priorities will not translate into the desired results.
If you are meeting/exceeding the expectations of your role within the organization, and following these guidelines do not result in leadership development for you, you might not be a fit for that organization. More information on leadership integrity can be reviewed in Corporate Leadership Selection: Impact on American Business, Employees, and Society (Authorhouse Publishing).
Feedback to the bi-monthly blog en
Corporate Leadership Development
Leadership development is the crux of long-term success of business operations. It focuses on identifying, evaluating, and improving the knowledge, skills, abilities, and competencies of those chosen to lead the organization. Leadership development may also “shape” one’s values and attitudes in conjunction with the organization’s values and attitudes. Finally, leadership development addresses one’s ability to lead others.
Across all industries, there are leadership development programs. There are leadership development programs in most major universities. In our technology-based society, there are also seminars, webcams, virtual classrooms, newsletters (and yes blogs) on leadership and leadership development. With so many avenues for leadership training and development, the question still remains why are there so many organizations with poor, unqualified leadership?
This week’s blog highlights the role of leadership development; those fortunate to be selected for leadership development; and the consequences of poor selection of leadership development candidates.
The Role of Leadership Development
First, and most important, I will address the age-old question: “Are leaders born or are leaders developed?” While there is significant and far reaching research that shows one may be born with viable leadership traits, I am firmly in the group that believes leaders are developed. Regardless of the leadership traits, skills, or innate patterns one demonstrates, you must still undergo an “experiential process” to develop, enhance, and perfect those skills. Retention of leadership concepts through training classes has been estimated in the range of 10-15%. There must be a comprehensive, “hands-on” approach of transferring knowledge and developing leadership skills.
Some researchers argue that leadership traits can be observed at childhood. Some children “naturally” take the lead and demonstrate leadership behaviors with peers in their social environment (i.e. school; extracurricular activities; other siblings, etc). However, demonstrating leadership skills at an early age may highlight those who are willing to follow just as much as highlighting those who are willing and able to lead. Part of human nature is to consider ideas and solutions from others when/if we do not have an idea or solution of our own.
Second, leadership development helps the organization fill the pipeline with capable, qualified leaders to ensure continuity of business operations. In a time of economic downturn, many companies look for ways to minimize expense. Unfortunately, one of the first areas to get cut is training and development. The short term effect is potential increased profitability from eliminating an expense. The long term effect is a potential organization in disarray without developed leaders in place to provide vision, clarity, and direction as the organization navigates through a highly competitive business environment. Finally, how can an organization successfully select and retain talent if they have no program for developing that talent (any volunteers for working in an organization that cannot or will not provide you with development and training opportunities)?
Selecting Leadership Development Candidates
The next crucial component in leadership development is determining who will be selected for leadership development. It is imperative the organization has a fair, un-biased employee performance appraisal process in place to accurately evaluate employee performance and potential leadership candidates. Multiple reports provided by the U.S. Equal Employment Opportunity Commission (EEOC) identify biased, unfair (and illegal hiring practices). Further, EEOC reports documented substantial financial penalties organizations have paid because of unfair employee promotion and employee salary practices. If the selection process for leadership development emulates these dysfunctional practices, the long term consequences will also result in financial disaster.
The cost of replacing incompetent, unqualified leaders is expensive. The organization must retrace its steps: re-state the leadership qualifications and the role it is trying to fill; re-identify and re-evaluate viable candidates; and re-select a leader. Without internal leadership development, the organization may seek external leaders. Though an external leader may have the competencies to be successful, will their values, attitudes, and beliefs align with the organization? The possible damage to organization morale, team effectiveness, and employee productivity may be impacted. Employees will lose trust and confidence in the organization if their existing leadership cannot display integrity and ability in selecting good talent. Finally, heightened vigilance for not adhering to government regulations will result in hefty fines and potential negative reaction from the investment community – which all organization’s proactively seek to avoid.
Implications for Aspiring Leaders
The role(s) of the leadership selection process and leadership development are not new. They have been in existence for decades. For those aspiring to become leaders in today’s business environment, the following tips will be beneficial:
• Invest time and effort in your individual development plan. Make sure you conduct an accurate self assessment of your strengths and weaknesses.
• Discuss your self assessment with your manger/leader and devise a plan to help improve your skills – together.
• Seek input on how to get selected (or considered for future selection) into the organization’s leadership development program. You will not become a leader within that organization if you are not included in this development. You may successfully deliver significant initiatives for the organization which will result in other types of rewards and recognition, but it will not result in a leadership role.
• Follow up with your manager/leader on a specified period of time to ensure you are adequately fulfilling the goals, objectives, and milestones in your individual development plan in conjunction with the organization’s goals, objectives, and milestones. If there is not alignment, your priorities will not translate into the desired results.
If you are meeting/exceeding the expectations of your role within the organization, and following these guidelines do not result in leadership development for you, you might not be a fit for that organization. More information on leadership integrity can be reviewed in Corporate Leadership Selection: Impact on American Business, Employees, and Society (Authorhouse Publishing).
Feedback to the bi-monthly blog en
Sunday, September 27, 2009
What’s UP (Weekly, Hot, Applicable Topic Summary - Unbiased Perspective) September 27, 2009
Corporate Leadership and Integrity
In our 21st Century business environment, integrity is arguably the top characteristic of successful leaders. The integrity of corporate senior leadership (i.e. CEO’s, Presidents, Vice Presidents, Corporate Board Members, Senior Managers, etc.) is closely monitored – and scrutinized – by employees, vendors, suppliers, stockholders, and other leaders. In addition, senior leadership integrity may be emulated by those who aspire to become senior leaders.
The definitions of corporate leadership integrity differ for one primary reason: there is no universal acceptance of what ethical, moral behavior is. For example, a corporate leader’s interpretation may be different from that of an employee, a vendor, an investor, or the citizens of the community in which the business operates. Most definitions of integrity I have researched include the following:
• Acting in an ethical, honest, and moral manner;
• Your actions and behaviors when everyone is watching compared to when no one is watching;
• Standing up and speaking out when you encounter unethical, immoral behavior of others.
This week’s blog, albeit rather short, will address some of the challenges of corporate leaders and integrity.
Current-Day Business Issues and Integrity
The temptation of financial gain and notoriety from corporate success is great. Sometimes the fine line between ethical, moral, and legal activity becomes shaded. Corporate stockholders and the investment community expect a constant and predictable return on investment. If a company delivers a 5% ROI in a quarter, the company must devise and produce additional efficiencies to deliver another 5% ROI the following quarter – or risk stockholders selling their stock. Sometimes finding innovative ways to consistently increase ROI results in unethical, immoral, or maybe even illegal behavior.
Senior leaders, specifically CEO’s wield significant clout. CEO’s of our Fortune 100 companies may influence our cultural, environmental, and social values and attitudes. I encourage you to research the activity and impact of the senior leaders of Enron and WorldCom during the past 10 years as a reference to the societal consequences of leadership integrity and behavior. Also examine the Sarbanes Oxley Act of 2002 for requirements of corporate leaders to help prevent future improprieties.
Considering the ramifications of unethical behavior, stakeholder reaction is mixed. On the one hand, stakeholders become disappointed, disgruntled, and frustrated when they hear reports of unethical behavior from their leaders. In addition, the level of trust in senior leadership is lost. Think about what your own personal feelings were when (if) you experienced such dysfunction. Think of how such news impacts your morale about the company you work for. On the other hand, some stakeholders find solace in the fact that their leaders are human and can make mistakes like the rest of us. Yet, some stakeholders are envious of leaders and aspire to become a leader. These stakeholders may even look to emulate the senior leadership behaviors they observe, regardless if the attitudes and behaviors are considered to be ethical or not.
Seeking Feedback on Your Leadership Integrity
If you currently serve in a management or leadership role, and you firmly believe that you consistently act in an ethical manner, I encourage you to seek input from others. Feedback is a gift. Just like you provide open and honest performance feedback to your employees and suppliers, they can also offer you open and honest feedback on your performance and behavior. If obtaining this valuable information is a challenge, then try a method by which subordinates, peers, and vendors can provide feedback confidentially. Whatever ethical means is used, you want to get this input and compare it to your own self assessment. You may find that your attitude, behavior, and values meet the expectations of those you work with. But you may also find out that you attitude, behavior, and values do not. In any case, please remember and adhere to the following acronym: DWYSYWD (do what you say you will do). Always keep your word. Leadership integrity and trust can be difficult to build, but it is very easy to tear down. More information on leadership integrity can be reviewed in Corporate Leadership Selection: Impact on American Business, Employees, and Society (Authorhouse Publishing).
Feedback to the bi-monthly blog entry is always welcome.
In our 21st Century business environment, integrity is arguably the top characteristic of successful leaders. The integrity of corporate senior leadership (i.e. CEO’s, Presidents, Vice Presidents, Corporate Board Members, Senior Managers, etc.) is closely monitored – and scrutinized – by employees, vendors, suppliers, stockholders, and other leaders. In addition, senior leadership integrity may be emulated by those who aspire to become senior leaders.
The definitions of corporate leadership integrity differ for one primary reason: there is no universal acceptance of what ethical, moral behavior is. For example, a corporate leader’s interpretation may be different from that of an employee, a vendor, an investor, or the citizens of the community in which the business operates. Most definitions of integrity I have researched include the following:
• Acting in an ethical, honest, and moral manner;
• Your actions and behaviors when everyone is watching compared to when no one is watching;
• Standing up and speaking out when you encounter unethical, immoral behavior of others.
This week’s blog, albeit rather short, will address some of the challenges of corporate leaders and integrity.
Current-Day Business Issues and Integrity
The temptation of financial gain and notoriety from corporate success is great. Sometimes the fine line between ethical, moral, and legal activity becomes shaded. Corporate stockholders and the investment community expect a constant and predictable return on investment. If a company delivers a 5% ROI in a quarter, the company must devise and produce additional efficiencies to deliver another 5% ROI the following quarter – or risk stockholders selling their stock. Sometimes finding innovative ways to consistently increase ROI results in unethical, immoral, or maybe even illegal behavior.
Senior leaders, specifically CEO’s wield significant clout. CEO’s of our Fortune 100 companies may influence our cultural, environmental, and social values and attitudes. I encourage you to research the activity and impact of the senior leaders of Enron and WorldCom during the past 10 years as a reference to the societal consequences of leadership integrity and behavior. Also examine the Sarbanes Oxley Act of 2002 for requirements of corporate leaders to help prevent future improprieties.
Considering the ramifications of unethical behavior, stakeholder reaction is mixed. On the one hand, stakeholders become disappointed, disgruntled, and frustrated when they hear reports of unethical behavior from their leaders. In addition, the level of trust in senior leadership is lost. Think about what your own personal feelings were when (if) you experienced such dysfunction. Think of how such news impacts your morale about the company you work for. On the other hand, some stakeholders find solace in the fact that their leaders are human and can make mistakes like the rest of us. Yet, some stakeholders are envious of leaders and aspire to become a leader. These stakeholders may even look to emulate the senior leadership behaviors they observe, regardless if the attitudes and behaviors are considered to be ethical or not.
Seeking Feedback on Your Leadership Integrity
If you currently serve in a management or leadership role, and you firmly believe that you consistently act in an ethical manner, I encourage you to seek input from others. Feedback is a gift. Just like you provide open and honest performance feedback to your employees and suppliers, they can also offer you open and honest feedback on your performance and behavior. If obtaining this valuable information is a challenge, then try a method by which subordinates, peers, and vendors can provide feedback confidentially. Whatever ethical means is used, you want to get this input and compare it to your own self assessment. You may find that your attitude, behavior, and values meet the expectations of those you work with. But you may also find out that you attitude, behavior, and values do not. In any case, please remember and adhere to the following acronym: DWYSYWD (do what you say you will do). Always keep your word. Leadership integrity and trust can be difficult to build, but it is very easy to tear down. More information on leadership integrity can be reviewed in Corporate Leadership Selection: Impact on American Business, Employees, and Society (Authorhouse Publishing).
Feedback to the bi-monthly blog entry is always welcome.
Monday, September 14, 2009
Employee Layoffs - The Corporate Downsizing Initiative
What’s UP (Weekly, Hot, Applicable Topic Summary - Unbiased Perspective)
Employee Layoffs – The Corporate Downsizing Initiative
The primary goal of every business is to generate a profit. When a company’s expenses exceed its revenues (or when the financial projections may result in an operating loss), a common, acceptable leadership strategy is to reduce expenses. In today’s fragile business environment, employee layoffs – also known as “downsizing” – is one of the more prevalent practices used to reduce operating expenses. This week’s blog will address the challenges of downsizing, and highlight the dilemma leaders potentially encounter with this initiative.
Downsizing and Leadership Decision Making
Leaders face three tough challenges once the decision to downsize has been made. First, how much of the workforce must be released. If too many employees are released that daily operations cannot be maintained, leaders may seek to bring back released workers. Another option would be to contract temporary workers to fulfill a specific need. The advantage of using knowledgeable, skilled contractors is that the desired work gets completed and there is only a short-term expense to the operating budget (once the job is complete, the contract can be terminated. In addition, there are no healthcare and medical benefits to be paid for temporary contractors). The disadvantage of using temporary contractors is their lack of knowledge about the company and its culture. There may be a need for new employee orientation which could affect productivity. On the other hand, if too few employees are released, leadership will have the unenviable task of subsequently releasing more people. The impact of multiple downsizing activities is low employee morale of the remaining workforce, and their lack of confidence and trust in their company’s leaders. Employees become more concerned over who will be let go next (particularly themselves), than actually producing the results they were hired to deliver.
The second decision in employee downsizing is determining who to let go. Downsizing the more experienced “knowledge workers” within the organization results in lower productivity and facilitates team inefficiency. Downsizing the “younger” less-experienced workers has the long-term effect of not developing talent and not filling the pipeline with a capable workforce for the future. Yet, daily business operations must be sustained while handling this challenge. Further, the main objective – the primary goal of generating a profit – must drive the process when making the layoff decision(s).
Many companies have identified that downsizing the more experienced, long-term employees reduces payroll expense, healthcare and medical claims, and pension costs. However, this results in only a short-term expense reduction. The expense of training and developing inexperienced (and sometimes unqualified employees who ultimately are let go) offsets the anticipated gains of releasing higher priced workers.
Where feasible, a significant effort has been made to either offshore jobs to other countries, or to hire workers from other countries into domestic operations at a lower labor wage rate. This desired lower labor wage expense also takes into consideration the cost (and employee utilization) of healthcare and medical benefits. One of the most heated debates on American quality of life and U.S. citizens’ rights is access to healthcare and medical help. This societal issue is a tremendous opportunity for leadership in the business community to step up and be a part of the solution (corporate social responsibility and corporate citizenship will be discussed in a future blog).
Open and Honest Leadership Communication
The third leadership decision in the downsizing process is when and how to communicate to employees they are being let go; in addition, how and when to communicate to the remaining employees newly defined roles, responsibilities, and expectations as a result of the layoffs. Whereas many companies are agree with the need to downsize, there are vast differences in their techniques in carrying out this delicate and sometimes difficult task. Fear of negative responses and repercussions such as: verbal abuse; physical abuse; lawsuits; damage to company property; and slander of company reputation have facilitated the use of technology to carry out the communication activity. What should be a personal face-to-face discussion, albeit a tough conversation is now being done by telephone, or by email, or other electronic non-personal means. In my book on Corporate Leadership Selection, I briefly discuss a software package that when implemented, will draft employee an termination letter; calculate employee severance pay; and discontinue employee access to the company’s resources (i.e. computer, building access, and other security related material).
Although downsizing is a “necessary evil”, there are more personal and professional means of conducting this difficult leadership activity. From a personal perspective, I have not experienced or participated in these leadership behaviors. However, more information on others’ experiences with downsizing can be reviewed in Corporate Leadership Selection: Impact on American Business, Employees, and Society (Authorhouse Publishing).
Feedback to the bi-monthly blog entry is always welcome.
Employee Layoffs – The Corporate Downsizing Initiative
The primary goal of every business is to generate a profit. When a company’s expenses exceed its revenues (or when the financial projections may result in an operating loss), a common, acceptable leadership strategy is to reduce expenses. In today’s fragile business environment, employee layoffs – also known as “downsizing” – is one of the more prevalent practices used to reduce operating expenses. This week’s blog will address the challenges of downsizing, and highlight the dilemma leaders potentially encounter with this initiative.
Downsizing and Leadership Decision Making
Leaders face three tough challenges once the decision to downsize has been made. First, how much of the workforce must be released. If too many employees are released that daily operations cannot be maintained, leaders may seek to bring back released workers. Another option would be to contract temporary workers to fulfill a specific need. The advantage of using knowledgeable, skilled contractors is that the desired work gets completed and there is only a short-term expense to the operating budget (once the job is complete, the contract can be terminated. In addition, there are no healthcare and medical benefits to be paid for temporary contractors). The disadvantage of using temporary contractors is their lack of knowledge about the company and its culture. There may be a need for new employee orientation which could affect productivity. On the other hand, if too few employees are released, leadership will have the unenviable task of subsequently releasing more people. The impact of multiple downsizing activities is low employee morale of the remaining workforce, and their lack of confidence and trust in their company’s leaders. Employees become more concerned over who will be let go next (particularly themselves), than actually producing the results they were hired to deliver.
The second decision in employee downsizing is determining who to let go. Downsizing the more experienced “knowledge workers” within the organization results in lower productivity and facilitates team inefficiency. Downsizing the “younger” less-experienced workers has the long-term effect of not developing talent and not filling the pipeline with a capable workforce for the future. Yet, daily business operations must be sustained while handling this challenge. Further, the main objective – the primary goal of generating a profit – must drive the process when making the layoff decision(s).
Many companies have identified that downsizing the more experienced, long-term employees reduces payroll expense, healthcare and medical claims, and pension costs. However, this results in only a short-term expense reduction. The expense of training and developing inexperienced (and sometimes unqualified employees who ultimately are let go) offsets the anticipated gains of releasing higher priced workers.
Where feasible, a significant effort has been made to either offshore jobs to other countries, or to hire workers from other countries into domestic operations at a lower labor wage rate. This desired lower labor wage expense also takes into consideration the cost (and employee utilization) of healthcare and medical benefits. One of the most heated debates on American quality of life and U.S. citizens’ rights is access to healthcare and medical help. This societal issue is a tremendous opportunity for leadership in the business community to step up and be a part of the solution (corporate social responsibility and corporate citizenship will be discussed in a future blog).
Open and Honest Leadership Communication
The third leadership decision in the downsizing process is when and how to communicate to employees they are being let go; in addition, how and when to communicate to the remaining employees newly defined roles, responsibilities, and expectations as a result of the layoffs. Whereas many companies are agree with the need to downsize, there are vast differences in their techniques in carrying out this delicate and sometimes difficult task. Fear of negative responses and repercussions such as: verbal abuse; physical abuse; lawsuits; damage to company property; and slander of company reputation have facilitated the use of technology to carry out the communication activity. What should be a personal face-to-face discussion, albeit a tough conversation is now being done by telephone, or by email, or other electronic non-personal means. In my book on Corporate Leadership Selection, I briefly discuss a software package that when implemented, will draft employee an termination letter; calculate employee severance pay; and discontinue employee access to the company’s resources (i.e. computer, building access, and other security related material).
Although downsizing is a “necessary evil”, there are more personal and professional means of conducting this difficult leadership activity. From a personal perspective, I have not experienced or participated in these leadership behaviors. However, more information on others’ experiences with downsizing can be reviewed in Corporate Leadership Selection: Impact on American Business, Employees, and Society (Authorhouse Publishing).
Feedback to the bi-monthly blog entry is always welcome.
Monday, August 24, 2009
What's UP (Weekly, Hot, Applicable Topic Summary - Unbiased Perspective)
University of Illinois Board of Trustees - Application Admissions Activity
In July 2009, the University of Illinois Board of Trustees were reported to have tampered with university admissions applications and admitted lower qualified (or maybe even un-qualified) applicants based on clout. Alleged charges also focused on a potential violation of the Illinois Ethics Act rules on nepotism. In August 2009, the University of Illinois Chairman of the Board of Trustees resigned. From a leadership perspective, the implications of this behavior by the members of the board of trustees goes much further than the perceived notion of admitting non-qualified students into the university. This week’s blog will address some of the ways the University Of Illinois Board Of Trustees’ activity may impact society in general.
Concerns of Using the Concepts of Clout in Academic Admissions
OK, there is the possibility that a “few students” did not meet the university’s admissions qualifications, but were admitted anyway. First, how long has this activity been going on? Once admitted, have these students demonstrated their ability to grasp the knowledge to pass the classes in their respective schools of study? Or do the concepts of clout extend to the classroom and the academic assessment process as well? Has anyone (inside or outside of the university) monitored the progress of students who did not meet admissions standards to see if they met the graduation requirements – yet were still allowed to graduate? Or, do the concepts of clout and privilege supersede the concepts of meritocracy and fairness?
In accordance with privacy and confidentiality regulations, no student names were given – and rightfully so. However, there are dire future circumstances if unqualified students were admitted to the university; graduated from the university; and placed in professional careers throughout our “fragile” business environment which is already challenged with immoral, unethical, illegal behavioral trends. Some potential pitfalls are discussed below.
Potentially Societal Impacts
There are no details of the academic progression of students allegedly admitted without meeting the university standards. Nonetheless, here are a few things to consider of how some of our society’s widely used industries can be affected. These considerations are highly theoretical, but not beyond the realm of possibility. What happens if a student is admitted to any university; does not meet academic standards but still graduates; and starts a career in the field of medicine or pharmacy? Is it possible that our healthcare industry, that we care so deeply about, has practitioners that received their degree based on something other than their competence?
What about the fields of law or political science? What about criminal justice? If unqualified or under-qualified graduates infiltrate this sector of society, will we appropriately sustain our means of governance? Can we maintain our way of life which has been in place for over 330 years? Will the practice of “who you know” be the acceptable norm of American society?
Finally, our existing business environment withstands reports of malfeasance and unethical behavior on a daily, weekly, monthly basis. Facilitating a process where those without adequate training and development are placed in executive/leadership roles is a recipe for continued disaster when public confidence in corporate behavior is already waning. Yes, the criteria for assessing leadership readiness are subjective, and will vary among companies. However, nurturing a process that allows college admission; college graduation; and executive placement based on clout and nepotism, rather than competence and qualifications should not be condoned.
Summary
Again, there is no evidence that the activity of the University Of Illinois Board Of Trustees has resulted in the aforementioned scenario. But there are no documented reports that show it has not. Given my 30+ years of experience and observation of leadership behavior, I am hopeful that these potential challenges are wrong. The consequences of selecting the wrong leaders within an organization can be expensive. The consequences of selecting an undeveloped or unqualified leader can be even greater.
More information on corporate leadership can be found in Corporate Leadership Selection: Impact on American Business, Employees, and Society (Authorhouse Publishing).
Feedback to the bi-monthly blog entry is always welcome.
In July 2009, the University of Illinois Board of Trustees were reported to have tampered with university admissions applications and admitted lower qualified (or maybe even un-qualified) applicants based on clout. Alleged charges also focused on a potential violation of the Illinois Ethics Act rules on nepotism. In August 2009, the University of Illinois Chairman of the Board of Trustees resigned. From a leadership perspective, the implications of this behavior by the members of the board of trustees goes much further than the perceived notion of admitting non-qualified students into the university. This week’s blog will address some of the ways the University Of Illinois Board Of Trustees’ activity may impact society in general.
Concerns of Using the Concepts of Clout in Academic Admissions
OK, there is the possibility that a “few students” did not meet the university’s admissions qualifications, but were admitted anyway. First, how long has this activity been going on? Once admitted, have these students demonstrated their ability to grasp the knowledge to pass the classes in their respective schools of study? Or do the concepts of clout extend to the classroom and the academic assessment process as well? Has anyone (inside or outside of the university) monitored the progress of students who did not meet admissions standards to see if they met the graduation requirements – yet were still allowed to graduate? Or, do the concepts of clout and privilege supersede the concepts of meritocracy and fairness?
In accordance with privacy and confidentiality regulations, no student names were given – and rightfully so. However, there are dire future circumstances if unqualified students were admitted to the university; graduated from the university; and placed in professional careers throughout our “fragile” business environment which is already challenged with immoral, unethical, illegal behavioral trends. Some potential pitfalls are discussed below.
Potentially Societal Impacts
There are no details of the academic progression of students allegedly admitted without meeting the university standards. Nonetheless, here are a few things to consider of how some of our society’s widely used industries can be affected. These considerations are highly theoretical, but not beyond the realm of possibility. What happens if a student is admitted to any university; does not meet academic standards but still graduates; and starts a career in the field of medicine or pharmacy? Is it possible that our healthcare industry, that we care so deeply about, has practitioners that received their degree based on something other than their competence?
What about the fields of law or political science? What about criminal justice? If unqualified or under-qualified graduates infiltrate this sector of society, will we appropriately sustain our means of governance? Can we maintain our way of life which has been in place for over 330 years? Will the practice of “who you know” be the acceptable norm of American society?
Finally, our existing business environment withstands reports of malfeasance and unethical behavior on a daily, weekly, monthly basis. Facilitating a process where those without adequate training and development are placed in executive/leadership roles is a recipe for continued disaster when public confidence in corporate behavior is already waning. Yes, the criteria for assessing leadership readiness are subjective, and will vary among companies. However, nurturing a process that allows college admission; college graduation; and executive placement based on clout and nepotism, rather than competence and qualifications should not be condoned.
Summary
Again, there is no evidence that the activity of the University Of Illinois Board Of Trustees has resulted in the aforementioned scenario. But there are no documented reports that show it has not. Given my 30+ years of experience and observation of leadership behavior, I am hopeful that these potential challenges are wrong. The consequences of selecting the wrong leaders within an organization can be expensive. The consequences of selecting an undeveloped or unqualified leader can be even greater.
More information on corporate leadership can be found in Corporate Leadership Selection: Impact on American Business, Employees, and Society (Authorhouse Publishing).
Feedback to the bi-monthly blog entry is always welcome.
Monday, August 10, 2009
What's UP - (Weekly, Hot, Applicable Topic Summary - Unbiased Perspective) August 9, 2009
What’s UP (Weekly, Hot, Applicable Topic Summary - Unbiased Perspective)
The U.S. Government Financial Stimulus Package : A 90-day Review
During the first quarter of 2009, the U.S. Government’s approach to reviving the American economy was arguably the most pressing issue in our country. My initial blog entry on May 17th provided an unbiased perspective on the stimulus package initiative. I wrote of a “three-pronged approach” that the government was using to fix our economic woes: assistance to multi-billion corporations who asked for assistance; b) state and local municipalities that needed financial assistance in repairing, roads, bridges, and other aging infrastructure components; and c) providing financial assistance directly to American citizens. This blog entry will review the progress of the stimulus package during the past 90 days.
Financial Assistance to Multi-Billion Corporations
On May 17th, I reported that some of our most prestigious and profitable multi-billion dollar corporations requested (and received) financial assistance from the U.S. government. Since that time, some of these same corporations have returned to Washington D.C. and asked for more financial assistance. Further, some of these same companies have also reported quarterly profits for the 1st quarter of 2009.
There is still a “mixed bag” of reaction from the investment community. Some of the companies have seen their stock price remain flat, while other companies have seen their stock price return to levels prior to the Summer/Fall of 2008. Thus far, the U.S. Government’s desired outcome from providing financial assistance to multi-billion corporations has not materialized. There appears to still be room for significant improvement.
Financial Assistance to State and Local Municipalities
Financial assistance to state and local governments for repairing the country’s roads, highways, and bridges appears to be working. In the past 90 days, I have only traveled through 10 states. However, I did observe significant construction repairs in all 10 states. I have not found any reports of inoperable roads, highways, or bridges that have been recently repaired. With the amount of attention given to the economic stimulus plan, any failure (or rumors or speculation of failure) would be front-page news across the country.
In addition, this part of the economic stimulus initiative is also helping to keep construction workers employed. As a result, there are signs that providing, financial assistance to state and local governments is delivering the desired results of improved roads, highways, and bridges as intended. Further evidence of success in this initiative will be available during the winter months when changes in the weather have the potential to impact travel. Removing snow and dumping salt on icy interstates will give a better indication of success in repairing roads and highways.
Financial Assistance Directly to American Citizens
The final portion of the economic stimulus initiative was to devise a way of giving financial assistance directly to the “average American citizen”. There have been government checks sent to citizens; there have been tax cuts built into citizens’ paychecks; there have been multiple avenues and opportunities for small to mid-size businesses to apply for – and receive – financial assistance. All of these attempts have produced marginal results. However, the one activity which has proven to be successful is the “Cash for clunkers” program. Automobile buyers have the opportunity to receive up to $4500 when trading in a “qualified clunker” for a new car. The U.S. Government subsidized this program with $1 billion. Within four days, American citizens had traded in their clunkers for new autos and fully exhausted the $1 billion. The program was viewed as such a success the U.S. Congress approved an additional subsidy to continue to support this effort in stimulating the economy.
As a result of the auto sales, and the government’s willingness to support the program, financial assistance directly to U.S. citizens is providing the desired outcome envisioned. It will be extremely interesting to see the impact to the U.S. economy if the same fervor applied to the automobile industry is applied to the U.S. job market and the unemployment rate.
More information on corporate leadership can be found in Corporate Leadership Selection: Impact on American Business, Employees, and Society (Authorhouse Publishing). Feedback to the bi-monthly blog entry is always welcome.
The U.S. Government Financial Stimulus Package : A 90-day Review
During the first quarter of 2009, the U.S. Government’s approach to reviving the American economy was arguably the most pressing issue in our country. My initial blog entry on May 17th provided an unbiased perspective on the stimulus package initiative. I wrote of a “three-pronged approach” that the government was using to fix our economic woes: assistance to multi-billion corporations who asked for assistance; b) state and local municipalities that needed financial assistance in repairing, roads, bridges, and other aging infrastructure components; and c) providing financial assistance directly to American citizens. This blog entry will review the progress of the stimulus package during the past 90 days.
Financial Assistance to Multi-Billion Corporations
On May 17th, I reported that some of our most prestigious and profitable multi-billion dollar corporations requested (and received) financial assistance from the U.S. government. Since that time, some of these same corporations have returned to Washington D.C. and asked for more financial assistance. Further, some of these same companies have also reported quarterly profits for the 1st quarter of 2009.
There is still a “mixed bag” of reaction from the investment community. Some of the companies have seen their stock price remain flat, while other companies have seen their stock price return to levels prior to the Summer/Fall of 2008. Thus far, the U.S. Government’s desired outcome from providing financial assistance to multi-billion corporations has not materialized. There appears to still be room for significant improvement.
Financial Assistance to State and Local Municipalities
Financial assistance to state and local governments for repairing the country’s roads, highways, and bridges appears to be working. In the past 90 days, I have only traveled through 10 states. However, I did observe significant construction repairs in all 10 states. I have not found any reports of inoperable roads, highways, or bridges that have been recently repaired. With the amount of attention given to the economic stimulus plan, any failure (or rumors or speculation of failure) would be front-page news across the country.
In addition, this part of the economic stimulus initiative is also helping to keep construction workers employed. As a result, there are signs that providing, financial assistance to state and local governments is delivering the desired results of improved roads, highways, and bridges as intended. Further evidence of success in this initiative will be available during the winter months when changes in the weather have the potential to impact travel. Removing snow and dumping salt on icy interstates will give a better indication of success in repairing roads and highways.
Financial Assistance Directly to American Citizens
The final portion of the economic stimulus initiative was to devise a way of giving financial assistance directly to the “average American citizen”. There have been government checks sent to citizens; there have been tax cuts built into citizens’ paychecks; there have been multiple avenues and opportunities for small to mid-size businesses to apply for – and receive – financial assistance. All of these attempts have produced marginal results. However, the one activity which has proven to be successful is the “Cash for clunkers” program. Automobile buyers have the opportunity to receive up to $4500 when trading in a “qualified clunker” for a new car. The U.S. Government subsidized this program with $1 billion. Within four days, American citizens had traded in their clunkers for new autos and fully exhausted the $1 billion. The program was viewed as such a success the U.S. Congress approved an additional subsidy to continue to support this effort in stimulating the economy.
As a result of the auto sales, and the government’s willingness to support the program, financial assistance directly to U.S. citizens is providing the desired outcome envisioned. It will be extremely interesting to see the impact to the U.S. economy if the same fervor applied to the automobile industry is applied to the U.S. job market and the unemployment rate.
More information on corporate leadership can be found in Corporate Leadership Selection: Impact on American Business, Employees, and Society (Authorhouse Publishing). Feedback to the bi-monthly blog entry is always welcome.
Monday, July 27, 2009
What's UP (Weekly, Hot, Applicable Topic Summary - Unbiased Perspective) July 26, 2009
What’s UP (Weekly, Hot, Applicable Topic Summary - Unbiased Perspective)
The Changing of the Guard – Part III
This week’s blog is the third entry of a three-part series on workplace diversity, aging, and the corporate workforce. The changing of the guard is inevitable – turnover occurs. Employees may leave the company for a better opportunity elsewhere. Corporate downsizing as a result of a merger, acquisition, or offshoring of jobs may result in the termination of valuable, knowledgeable workers. Recently hired employees may prove to NOT be a fit for the organization. Or in some cases, employees simply retire. The method in which the organization handles the knowledge management process and the termination of “senior” employers with the knowledge and experience to help the organization achieve its goals and objectives will be crucial.
Existing Literature on Age Discrimination and Workplace Diversity
Two of the recommendations stated in the conclusion of my book on Corporate Leadership Selection are derived from the existing research on workplace diversity and the aging American workforce. First, U.S. corporations must develop an inventory skills database of the current knowledge, skills, and abilities within the company. Second, U.S. corporations must have a comprehensive succession planning process in place to ensure the corporate pipeline is “stocked” with capable, competent executives who will maintain (and potentially improve) corporate operations.
A skills inventory of the organization’s workforce will identify the existing employee competencies. This can/should be used in conjunction with the organization’s long-term strategic plan. It will highlight any gaps between the organization’s future plans and the human capital needed to get there. For example, if the organizational goal is to transition its existing business applications to a new technology, it is imperative that there are knowledgeable workers involved that know the business application’s capabilities AND the new technology to support those business applications. Merely terminating “senior” employees with the business application knowledge will not help the organization effectively implement the new technology. The short-term gain of reduced salary by terminating the experienced worker(s) will be negated by the learning curve and training expense of developing inexperienced employees.
In addition to the inventory skills database, a comprehensive succession planning process must be in place. Executed properly, succession planning serves as a duel process of identifying potential, future organization leaders and overseeing organizational knowledge transfer through talent management and employee development. However, these initiatives may not be successful if the workers with the experience have been released from the company. External consultants and trainers may be able to teach the concepts of the new business application or the new technology, but they can NOT teach employees about the organization’s culture, values, and attitudes.
Consequences of Age Discrimination in the Workplace
U.S. corporate culture has evolved into one of persistent vigilance. Ethical leadership behavior is closely monitored both inside and outside of the organization. When the aforementioned inevitable turnover (job elimination) occurs, leadership must conduct this activity with the highest degree of integrity by retaining employees based on their competence and future contributions to the company.
There are two significant, negative impacts to the organization when terminating, or not hiring, employees based on their age. First, age discrimination is against the law. There are legal consequences, often with substantial financial penalties, for not complying with federal regulations. Second, employee morale of the remaining workforce will be low – productivity will suffer. Although no research studies have been observed to substantiate the impact to employee productivity, a viable case can be made that an ample portion of time allotted to getting work done will now be spent in conversations on leadership behavior in eliminating competent, knowledgeable workers based on their age.
In today’s technology-based environment, there are corporate “chat rooms”, websites, “You-Tube”, and yes, blog entries to communicate corporate activity. Inside the corporation, the use of technology to discuss leadership’s attitudes and behavior is not needed. The amount of time and energy spent in “hallway talk” and conversations around the water cooler about leadership practices can offset any anticipated cost savings of any corporate decision.
As a result, the best mode of operation is for organizational leaders to execute employee selection and employee termination with a high degree of integrity. Further, these decisions must be made based on knowledge, competence, and future potential contributions to the organization, instead of based merely on the age of those considered. More information on corporate leadership can be found in Corporate Leadership Selection: Impact on American Business, Employees, and Society (Authorhouse Publishing). Feedback to the bi-monthly blog entry is always welcome.
The Changing of the Guard – Part III
This week’s blog is the third entry of a three-part series on workplace diversity, aging, and the corporate workforce. The changing of the guard is inevitable – turnover occurs. Employees may leave the company for a better opportunity elsewhere. Corporate downsizing as a result of a merger, acquisition, or offshoring of jobs may result in the termination of valuable, knowledgeable workers. Recently hired employees may prove to NOT be a fit for the organization. Or in some cases, employees simply retire. The method in which the organization handles the knowledge management process and the termination of “senior” employers with the knowledge and experience to help the organization achieve its goals and objectives will be crucial.
Existing Literature on Age Discrimination and Workplace Diversity
Two of the recommendations stated in the conclusion of my book on Corporate Leadership Selection are derived from the existing research on workplace diversity and the aging American workforce. First, U.S. corporations must develop an inventory skills database of the current knowledge, skills, and abilities within the company. Second, U.S. corporations must have a comprehensive succession planning process in place to ensure the corporate pipeline is “stocked” with capable, competent executives who will maintain (and potentially improve) corporate operations.
A skills inventory of the organization’s workforce will identify the existing employee competencies. This can/should be used in conjunction with the organization’s long-term strategic plan. It will highlight any gaps between the organization’s future plans and the human capital needed to get there. For example, if the organizational goal is to transition its existing business applications to a new technology, it is imperative that there are knowledgeable workers involved that know the business application’s capabilities AND the new technology to support those business applications. Merely terminating “senior” employees with the business application knowledge will not help the organization effectively implement the new technology. The short-term gain of reduced salary by terminating the experienced worker(s) will be negated by the learning curve and training expense of developing inexperienced employees.
In addition to the inventory skills database, a comprehensive succession planning process must be in place. Executed properly, succession planning serves as a duel process of identifying potential, future organization leaders and overseeing organizational knowledge transfer through talent management and employee development. However, these initiatives may not be successful if the workers with the experience have been released from the company. External consultants and trainers may be able to teach the concepts of the new business application or the new technology, but they can NOT teach employees about the organization’s culture, values, and attitudes.
Consequences of Age Discrimination in the Workplace
U.S. corporate culture has evolved into one of persistent vigilance. Ethical leadership behavior is closely monitored both inside and outside of the organization. When the aforementioned inevitable turnover (job elimination) occurs, leadership must conduct this activity with the highest degree of integrity by retaining employees based on their competence and future contributions to the company.
There are two significant, negative impacts to the organization when terminating, or not hiring, employees based on their age. First, age discrimination is against the law. There are legal consequences, often with substantial financial penalties, for not complying with federal regulations. Second, employee morale of the remaining workforce will be low – productivity will suffer. Although no research studies have been observed to substantiate the impact to employee productivity, a viable case can be made that an ample portion of time allotted to getting work done will now be spent in conversations on leadership behavior in eliminating competent, knowledgeable workers based on their age.
In today’s technology-based environment, there are corporate “chat rooms”, websites, “You-Tube”, and yes, blog entries to communicate corporate activity. Inside the corporation, the use of technology to discuss leadership’s attitudes and behavior is not needed. The amount of time and energy spent in “hallway talk” and conversations around the water cooler about leadership practices can offset any anticipated cost savings of any corporate decision.
As a result, the best mode of operation is for organizational leaders to execute employee selection and employee termination with a high degree of integrity. Further, these decisions must be made based on knowledge, competence, and future potential contributions to the organization, instead of based merely on the age of those considered. More information on corporate leadership can be found in Corporate Leadership Selection: Impact on American Business, Employees, and Society (Authorhouse Publishing). Feedback to the bi-monthly blog entry is always welcome.
Sunday, July 12, 2009
What’s UP (Weekly, Hot, Applicable Topic Summary - Unbiased Perspective) July 12, 2009
The Changing of the Guard – Part II
From 1989 to the present, several studies have been conducted on age discrimination in the workplace. Manufacturing and construction workers were most often subject to workplace age bias. However, other industries such as information technology, business consulting, and marketing (white collar professions) are also victims of this phenomena. This week’s blog will address the concept and practices of age bias. This is Part II of a three-part series on workplace diversity, aging, and the corporate workforce.
Age Discrimination Practices
Research studies have found that workers at the age of 50 years old and older experience varied degrees of age discrimination. Some of the types of discrimination identified were termination (yes, employees have been fired merely because of their age); harassment from other workers not in their age range (as of yet); and exclusion from even being considered for hiring. Some of the reasons used to exclude older workers were: inability to fit the company profile; not having the required skills to do the job; lack of drive; not a self-starter; set in their ways and not willing to learn new things; too intimidating to younger workers, and financial costs (insurance and medical benefits would be too expensive for the company to incur).
In some reported cases, women were subjected to further discrimination. Companies viewed married women over 50 years old as secondary family earners. The concept of interviewing, selecting, developing, and promoting candidates based on their competence and potential benefits to the organization has been summarily discarded.
Age Bias in the Workplace – A Perplexing Concept
Selecting, or more prominently in today’s work environment, not selecting a viable employee based on their age is a difficult, perplexing concept to grasp for four reasons. First, the basic premise of the recruiting, interviewing, and selecting process is to gather a pool of talented, knowledgeable, and competent candidates and select the best candidate(s) from this pool. If competent workers are omitted because of their age, the talent pool (and the organization’s talent pipeline) may be incomplete. Second, the crucial knowledge transfer process cannot be effectively executed if the personnel involved in the process do not have the knowledge. This is not to say that employees under the age of 50 years old are not knowledgeable. However, there is something to be said for the proverbial “voice of experience” which can readily be identified in employees with 20 – 30 years of work expertise. Further, when the details of workplace discrimination spread through the workforce, team productivity and employee morale suffers. There is more effort put into gathering information and opinions about this activity than actual work being done.
Third, age discrimination in the workplace is extremely short-sighted. Workplace diversity in all forms is sound business savvy. Do corporations really want to omit and discourage the age group with the most discretionary income from purchasing their products and services? Given the existing economic business environment, American corporations are best served by catering to all customers and including them in the workforce - regardless of demographic background. Finally, the practice of age discrimination defies the golden rule (do unto others…). Regardless of one’s other demographics, EVERYONE will age and eventually become a member of the 50 and over age group.
I have received confirmation from a number of executive search firms, staffing agencies, and consulting companies that their corporate clients do not want employment candidates over the age of 45. The agencies are being instructed (implicitly and explicitly) to only present candidates in a certain age group. I have not conducted any research to identify who in the organization’s leadership ranks have made this demand. However, research has shown that the average age of corporate board members (which typically includes the CEO) is over 50 years old. It would be interesting to know what level of corporate leadership has initiated and supported this demand. It would also be interesting to know what their current age is.
“To Be Continued”
There is a significant impact on corporate stakeholders and society based on how corporations manage workplace diversity. The next bi-monthly entry (Part III – Changing of the Guard) will address a viable means for preventing age discrimination in the workplace, and how adapting and embracing a diverse workforce which includes knowledgeable, competent workers over 50 is successful. More information on corporate leadership can be found in Corporate Leadership Selection: Impact on American Business, Employees, and Society (Authorhouse Publishing). Feedback to the bi-monthly blog entry is always welcome.
From 1989 to the present, several studies have been conducted on age discrimination in the workplace. Manufacturing and construction workers were most often subject to workplace age bias. However, other industries such as information technology, business consulting, and marketing (white collar professions) are also victims of this phenomena. This week’s blog will address the concept and practices of age bias. This is Part II of a three-part series on workplace diversity, aging, and the corporate workforce.
Age Discrimination Practices
Research studies have found that workers at the age of 50 years old and older experience varied degrees of age discrimination. Some of the types of discrimination identified were termination (yes, employees have been fired merely because of their age); harassment from other workers not in their age range (as of yet); and exclusion from even being considered for hiring. Some of the reasons used to exclude older workers were: inability to fit the company profile; not having the required skills to do the job; lack of drive; not a self-starter; set in their ways and not willing to learn new things; too intimidating to younger workers, and financial costs (insurance and medical benefits would be too expensive for the company to incur).
In some reported cases, women were subjected to further discrimination. Companies viewed married women over 50 years old as secondary family earners. The concept of interviewing, selecting, developing, and promoting candidates based on their competence and potential benefits to the organization has been summarily discarded.
Age Bias in the Workplace – A Perplexing Concept
Selecting, or more prominently in today’s work environment, not selecting a viable employee based on their age is a difficult, perplexing concept to grasp for four reasons. First, the basic premise of the recruiting, interviewing, and selecting process is to gather a pool of talented, knowledgeable, and competent candidates and select the best candidate(s) from this pool. If competent workers are omitted because of their age, the talent pool (and the organization’s talent pipeline) may be incomplete. Second, the crucial knowledge transfer process cannot be effectively executed if the personnel involved in the process do not have the knowledge. This is not to say that employees under the age of 50 years old are not knowledgeable. However, there is something to be said for the proverbial “voice of experience” which can readily be identified in employees with 20 – 30 years of work expertise. Further, when the details of workplace discrimination spread through the workforce, team productivity and employee morale suffers. There is more effort put into gathering information and opinions about this activity than actual work being done.
Third, age discrimination in the workplace is extremely short-sighted. Workplace diversity in all forms is sound business savvy. Do corporations really want to omit and discourage the age group with the most discretionary income from purchasing their products and services? Given the existing economic business environment, American corporations are best served by catering to all customers and including them in the workforce - regardless of demographic background. Finally, the practice of age discrimination defies the golden rule (do unto others…). Regardless of one’s other demographics, EVERYONE will age and eventually become a member of the 50 and over age group.
I have received confirmation from a number of executive search firms, staffing agencies, and consulting companies that their corporate clients do not want employment candidates over the age of 45. The agencies are being instructed (implicitly and explicitly) to only present candidates in a certain age group. I have not conducted any research to identify who in the organization’s leadership ranks have made this demand. However, research has shown that the average age of corporate board members (which typically includes the CEO) is over 50 years old. It would be interesting to know what level of corporate leadership has initiated and supported this demand. It would also be interesting to know what their current age is.
“To Be Continued”
There is a significant impact on corporate stakeholders and society based on how corporations manage workplace diversity. The next bi-monthly entry (Part III – Changing of the Guard) will address a viable means for preventing age discrimination in the workplace, and how adapting and embracing a diverse workforce which includes knowledgeable, competent workers over 50 is successful. More information on corporate leadership can be found in Corporate Leadership Selection: Impact on American Business, Employees, and Society (Authorhouse Publishing). Feedback to the bi-monthly blog entry is always welcome.
Sunday, June 28, 2009
What’s UP (Weekly, Hot, Applicable Topic Summary - Unbiased Perspective) June 28, 2009
The Changing of the Guard – Part I
An “interesting” dynamic is taking place across the corporate landscape that is worth monitoring by existing and aspiring organization leaders. The primary goal of every business is to generate revenue and make a profit. The role of management within the organization is to get work done through others who have the knowledge, skills, and abilities to be successful. Yet, the behaviors, attitudes, and practices in Corporate America around talent management (employee selection, development, promotion, and termination/downsizing) defy logic in meeting and exceeding the corporate mission.
This week’s blog is Part I of a three-part series on workplace diversity, aging, and the corporate workforce. Recent reports by the Equal Employment Opportunity Commission (EEOC) and studies by the Society for Human Resource Management (SHRM) have pointed to a significant increase in age discrimination. Elimination of “older” employees (and programs) in the workplace, regardless of their level of competence and knowledge have become commonplace. The current techniques towards workplace age diversity appear to be a “zero sum”, “no middle ground” approach. The following examples come from experiences witnessed, observed, or conducted by leaders at different organization levels in the public radio industry. These examples can readily be seen in other industries, and will be addressed in parts two and three of this series.
Attempts of Catering to Age Demographics
During the 1st quarter of 2009, three highly recognized radio stations in the Chicago, IL area (1 AM station, 2 FM stations) discontinued popular radio programs. In all three cases, the organization’s leadership contended the objective of eliminating these “older” programs was to cater to a changing, demographical listener audience. While the reasoning for re-programming is somewhat viable, the method used leaves room for concern. The three radio programs were totally eliminated. There was no attempt to find an alternative time slot in order to maintain the existing customer base while catering to a new customer base.
At the AM radio station, there was a long-standing, mid-morning talk show. I do not have access to any organizational or marketing strategy for this discussion, however, the 18-35 year olds that I have discussed this with (I am a college professor, and I talk with hundreds of 18-35 year olds on a regular basis) first, do not listen to AM, and second, have no inclination to start listening to mid-morning AM radio, whatever the programming is. It would be interesting to see what the radio station leadership has projected for financial success based on this re-programming decision.
In the case of one FM radio station morning show, the objective was also to gear the programming to a younger listening audience. This audience is part of what we call the “hip hop” culture. However, given the technological advancements in our society, the “hip hop” generation typically invests its time, effort, and money in downloading music, MP3’s, IPOD’s, etc. instead of listening to radio stations. There is potential for music radio to take the slow road to obsolescence like the newspaper industry is experiencing. With so many means of access to information and entertainment through technology, it is the “older” generation which will continue to utilize the traditional media. An opportunity to retain the older listening audience may be missed.
In the case of the other FM station, a totally jazz format was replaced by an all-Hispanic format – the whole station was replaced. I applaud this station for embracing cultural diversity and catering to a rapidly growing Hispanic audience. However, it is difficult to understand why there was no means for catering to both listening audiences. Could there be favorable time slots to realize opportunities in both markets? Has this leadership decision opened the door for other radio stations to move into a niche and thereby reduce the profit-making objectives of the station that switched formats?
The Call for Change
The elimination of these radio programs is only one side of the issue. From the organization’s viewpoint, there are probable, possible financial implications which lead to the decisions. Increased employee salaries, decreased advertising and sponsorship dollars influences decisions in the radio industry. The leaderships’ analysis in each case identified the need for a change in direction.
The verdict is still out on how the leadership decisions by these radio stations will result in increased profitability. It has only been 90 days. However, it would be interesting to know the age range of the leaders who made these decisions. It would also be interesting to know if these leaders are truly part of the listening audience of their new radio programming. Finally, it would be interesting to know what feedback the radio stations have received from their listening audience and other stakeholders since the changes have been made.
“To Be Continued”
There is a significant impact on corporate stakeholders and society based on how corporations manage workplace diversity. The leadership approach taken by the radio industry can also be observed in other highly profitable industries. The next bi-monthly entry (Part II – Changing of the Guard) will address the effect of age diversity in the workplace on issues such as: team productivity; team effectiveness; employee morale; and the critical knowledge management/knowledge transfer process.
More information on corporate leadership can be found in Corporate Leadership Selection: Impact on American Business, Employees, and Society (Authorhouse Publishing). Feedback to the bi-monthly blog entry is always welcome.
An “interesting” dynamic is taking place across the corporate landscape that is worth monitoring by existing and aspiring organization leaders. The primary goal of every business is to generate revenue and make a profit. The role of management within the organization is to get work done through others who have the knowledge, skills, and abilities to be successful. Yet, the behaviors, attitudes, and practices in Corporate America around talent management (employee selection, development, promotion, and termination/downsizing) defy logic in meeting and exceeding the corporate mission.
This week’s blog is Part I of a three-part series on workplace diversity, aging, and the corporate workforce. Recent reports by the Equal Employment Opportunity Commission (EEOC) and studies by the Society for Human Resource Management (SHRM) have pointed to a significant increase in age discrimination. Elimination of “older” employees (and programs) in the workplace, regardless of their level of competence and knowledge have become commonplace. The current techniques towards workplace age diversity appear to be a “zero sum”, “no middle ground” approach. The following examples come from experiences witnessed, observed, or conducted by leaders at different organization levels in the public radio industry. These examples can readily be seen in other industries, and will be addressed in parts two and three of this series.
Attempts of Catering to Age Demographics
During the 1st quarter of 2009, three highly recognized radio stations in the Chicago, IL area (1 AM station, 2 FM stations) discontinued popular radio programs. In all three cases, the organization’s leadership contended the objective of eliminating these “older” programs was to cater to a changing, demographical listener audience. While the reasoning for re-programming is somewhat viable, the method used leaves room for concern. The three radio programs were totally eliminated. There was no attempt to find an alternative time slot in order to maintain the existing customer base while catering to a new customer base.
At the AM radio station, there was a long-standing, mid-morning talk show. I do not have access to any organizational or marketing strategy for this discussion, however, the 18-35 year olds that I have discussed this with (I am a college professor, and I talk with hundreds of 18-35 year olds on a regular basis) first, do not listen to AM, and second, have no inclination to start listening to mid-morning AM radio, whatever the programming is. It would be interesting to see what the radio station leadership has projected for financial success based on this re-programming decision.
In the case of one FM radio station morning show, the objective was also to gear the programming to a younger listening audience. This audience is part of what we call the “hip hop” culture. However, given the technological advancements in our society, the “hip hop” generation typically invests its time, effort, and money in downloading music, MP3’s, IPOD’s, etc. instead of listening to radio stations. There is potential for music radio to take the slow road to obsolescence like the newspaper industry is experiencing. With so many means of access to information and entertainment through technology, it is the “older” generation which will continue to utilize the traditional media. An opportunity to retain the older listening audience may be missed.
In the case of the other FM station, a totally jazz format was replaced by an all-Hispanic format – the whole station was replaced. I applaud this station for embracing cultural diversity and catering to a rapidly growing Hispanic audience. However, it is difficult to understand why there was no means for catering to both listening audiences. Could there be favorable time slots to realize opportunities in both markets? Has this leadership decision opened the door for other radio stations to move into a niche and thereby reduce the profit-making objectives of the station that switched formats?
The Call for Change
The elimination of these radio programs is only one side of the issue. From the organization’s viewpoint, there are probable, possible financial implications which lead to the decisions. Increased employee salaries, decreased advertising and sponsorship dollars influences decisions in the radio industry. The leaderships’ analysis in each case identified the need for a change in direction.
The verdict is still out on how the leadership decisions by these radio stations will result in increased profitability. It has only been 90 days. However, it would be interesting to know the age range of the leaders who made these decisions. It would also be interesting to know if these leaders are truly part of the listening audience of their new radio programming. Finally, it would be interesting to know what feedback the radio stations have received from their listening audience and other stakeholders since the changes have been made.
“To Be Continued”
There is a significant impact on corporate stakeholders and society based on how corporations manage workplace diversity. The leadership approach taken by the radio industry can also be observed in other highly profitable industries. The next bi-monthly entry (Part II – Changing of the Guard) will address the effect of age diversity in the workplace on issues such as: team productivity; team effectiveness; employee morale; and the critical knowledge management/knowledge transfer process.
More information on corporate leadership can be found in Corporate Leadership Selection: Impact on American Business, Employees, and Society (Authorhouse Publishing). Feedback to the bi-monthly blog entry is always welcome.
Sunday, June 14, 2009
What’s UP (Weekly, Hot, Applicable Topic Summary - Unbiased Perspective)
Corporate CEO Selection and the U.S. Government Impact
During the past year, there has been significant focus on CEO selection and replacement, particularly in flailing companies who have asked for financial “stimulus” from the federal government. While public sentiment for replacing the leadership in an underperforming company is viable, additional thought must be given about who is chosen to lead the company. The criteria for CEO leadership of today’s corporation are pervasive.
Prior leadership experience, business savvy and financial knowledge are solid requirements for corporate leaders to have. However, integrity, sound corporate citizenship, and leadership development are traits that have forged to the forefront in today’s business environment. There is a shortage of leaders who fulfill all of the basic expectations that employees, vendors, shareholders, and customers look for in corporate leadership.
The CEO and Corporate Board Member Roles
The CEO role in U.S. corporations is unique. The CEO does not report to one individual – but to a group of individuals – the corporate board of directors. CEO dismissal and selection goes beyond impacting the company’s internal stakeholders. The CEO sphere of influence affects a firm’s shareholders, suppliers, and customers as well. Research has shown that behaviors and attitudes at the top levels of our corporations also impact our society. For example, a merger or acquisition may result in a positive outcome on the profitability, size, and growth potential of a company. However, that same merger/acquisition may also result in a negative outcome on job employment statistics (you don’t need two employees to do the same job in a merged company). Another example is unethical or illegal activity that results in devaluation of the corporate stock price. In some of these cases, honest hard-working citizens lose their life savings. As a result, a lot of thought, research, and analysis should be done in identifying and selecting a CEO.
The corporate board of directors is accountable for selecting the CEO, and monitoring corporate operations to protect shareholder investment. Government assistance (or intervention depending on your personal viewpoint) into the corporate CEO selection process introduces a new paradigm in corporate operations. Who develops the corporate strategy? What if the corporate board and federal government leadership disagree on how the company is being run? Is there now a federal government official placed on the corporate board of directors? Does the corporate board still have the responsibility and discretion to release the CEO when the company underperforms? Are the existing C-level executives also replaced, or are they retained? How is the CEO salary determined? Will consumers purchase products and services from a company that is perceived to be run by the federal government? Conversely, will consumers purposely purchase products and services from a competing company that is not run by the federal government? Finally, if any of these acts pose a threat to shareholders’ investments, is it still in the purview of the corporate board to act, or is it the federal government?
The Impact of Corporate Leadership Selection
There is a shortage of sound, experienced corporate leadership. Corporate boards make leadership development a CEO requirement. Along with guiding a company under the “normal” scrutiny of corporate stakeholders, the CEO must now also consider the ramifications of changing the course of an underperforming company under the watchful eye of government officials (considering they received “stimulus” funding). Hopefully, the development of C-level executives and potential future CEOs will continue as a critical function. Development and training for CEO candidates cannot successfully be conducted by someone who has not been in the position of CEO. Real-life application of theory and processes for leading a company must come from those who have lived the experience. Without a comprehensive leadership development initiative; the corporation will find itself with the same operational issues for the foreseeable future.
The consequences of selecting the wrong leader(s) are expensive. It will cost the company in terms of employee productivity, effectiveness, consumer confidence, perhaps even corporate survival. Measuring the success or failure of a new leader may take time. Installing a federal government-appointed leader will be closely watched considering recent events in the relationship between Corporate America and U.S. Government federal agencies. On the one hand, this action may result in public corporations operating in the same manner as some of our government agencies. On the other hand, this action may result in publicly communicating and addressing corporate practices/behaviors that are considered harmful.
Every major U.S. Corporation has in place an Office of Ethics or a Compliance Office. These departments do not manufacture products; they do not generate revenue; they are cost centers. They communicate corporate values and desired ethical behavior. But they also address corporate wrongdoing and mitigate the damage from lawsuits against the corporation as a result of corporate wrongdoing. The statistics on corporate wrongdoing are obviously not made public by the corporation. Maybe having a federal government-appointed leader will shed light on corporate practices and behaviors that were not meant to be publicized.
More information on corporate leadership can be found in Corporate Leadership Selection: Impact on American Business, Employees, and Society (Authorhouse Publishing). Feedback to the weekly blog entry is always welcome.
During the past year, there has been significant focus on CEO selection and replacement, particularly in flailing companies who have asked for financial “stimulus” from the federal government. While public sentiment for replacing the leadership in an underperforming company is viable, additional thought must be given about who is chosen to lead the company. The criteria for CEO leadership of today’s corporation are pervasive.
Prior leadership experience, business savvy and financial knowledge are solid requirements for corporate leaders to have. However, integrity, sound corporate citizenship, and leadership development are traits that have forged to the forefront in today’s business environment. There is a shortage of leaders who fulfill all of the basic expectations that employees, vendors, shareholders, and customers look for in corporate leadership.
The CEO and Corporate Board Member Roles
The CEO role in U.S. corporations is unique. The CEO does not report to one individual – but to a group of individuals – the corporate board of directors. CEO dismissal and selection goes beyond impacting the company’s internal stakeholders. The CEO sphere of influence affects a firm’s shareholders, suppliers, and customers as well. Research has shown that behaviors and attitudes at the top levels of our corporations also impact our society. For example, a merger or acquisition may result in a positive outcome on the profitability, size, and growth potential of a company. However, that same merger/acquisition may also result in a negative outcome on job employment statistics (you don’t need two employees to do the same job in a merged company). Another example is unethical or illegal activity that results in devaluation of the corporate stock price. In some of these cases, honest hard-working citizens lose their life savings. As a result, a lot of thought, research, and analysis should be done in identifying and selecting a CEO.
The corporate board of directors is accountable for selecting the CEO, and monitoring corporate operations to protect shareholder investment. Government assistance (or intervention depending on your personal viewpoint) into the corporate CEO selection process introduces a new paradigm in corporate operations. Who develops the corporate strategy? What if the corporate board and federal government leadership disagree on how the company is being run? Is there now a federal government official placed on the corporate board of directors? Does the corporate board still have the responsibility and discretion to release the CEO when the company underperforms? Are the existing C-level executives also replaced, or are they retained? How is the CEO salary determined? Will consumers purchase products and services from a company that is perceived to be run by the federal government? Conversely, will consumers purposely purchase products and services from a competing company that is not run by the federal government? Finally, if any of these acts pose a threat to shareholders’ investments, is it still in the purview of the corporate board to act, or is it the federal government?
The Impact of Corporate Leadership Selection
There is a shortage of sound, experienced corporate leadership. Corporate boards make leadership development a CEO requirement. Along with guiding a company under the “normal” scrutiny of corporate stakeholders, the CEO must now also consider the ramifications of changing the course of an underperforming company under the watchful eye of government officials (considering they received “stimulus” funding). Hopefully, the development of C-level executives and potential future CEOs will continue as a critical function. Development and training for CEO candidates cannot successfully be conducted by someone who has not been in the position of CEO. Real-life application of theory and processes for leading a company must come from those who have lived the experience. Without a comprehensive leadership development initiative; the corporation will find itself with the same operational issues for the foreseeable future.
The consequences of selecting the wrong leader(s) are expensive. It will cost the company in terms of employee productivity, effectiveness, consumer confidence, perhaps even corporate survival. Measuring the success or failure of a new leader may take time. Installing a federal government-appointed leader will be closely watched considering recent events in the relationship between Corporate America and U.S. Government federal agencies. On the one hand, this action may result in public corporations operating in the same manner as some of our government agencies. On the other hand, this action may result in publicly communicating and addressing corporate practices/behaviors that are considered harmful.
Every major U.S. Corporation has in place an Office of Ethics or a Compliance Office. These departments do not manufacture products; they do not generate revenue; they are cost centers. They communicate corporate values and desired ethical behavior. But they also address corporate wrongdoing and mitigate the damage from lawsuits against the corporation as a result of corporate wrongdoing. The statistics on corporate wrongdoing are obviously not made public by the corporation. Maybe having a federal government-appointed leader will shed light on corporate practices and behaviors that were not meant to be publicized.
More information on corporate leadership can be found in Corporate Leadership Selection: Impact on American Business, Employees, and Society (Authorhouse Publishing). Feedback to the weekly blog entry is always welcome.
Sunday, May 31, 2009
What's UP (Weekly, Hot, Applicable Topic Summary - Unbiased Perspective)
Corporate Performance and CEO Bonus Pay
There are few issues in today's business environment that raise employee and shareholder concerns as much as CEO salary and CEO bonuses. This topic is of grave concern, especially in companies that report annual net losses and/or fail to meet their annual forecasts. From the perspective of employees, shareholders, and "average citizens", the concept of a multi-billion dollar company reporting a multi-million dollar loss while its leader(s) receive multi-million dollar bonuses is unsavory. For U.S. corporations that sought federal assistance, the notion of CEOs returning their annual bonus is under serious consideration. Hopefully, more research and analysis (on both sides of the issue) is done before a broad brush elimination of this vital leadership-incentive mechanism occurs.
The Business Case for Intervention - The Need for Change
More consideration must be given to how future CEO bonus pay is determined for three reasons. First, all of the components in CEO salary and bonus pay have not been shared. Bonus pay consists of more than the bottom line corporate results. Second, there is no uniformity or guideline for determining CEO salary or bonus pay (for example, one company may request only a percentage of a CEO's bonus for poor corporate performance, while another company may request a CEO's entire bonus for a bad year - and the former company performance is far worse than the latter company). Third, our free enterprise society has no appetite for limitations which would adversely impact our interpretations or freedoms that a capitalist economy provides. Perhaps, the underlying solution can be found in the organizational behavior of those involved in the process (i.e. corporate board members and the CEO), as well as a review of what are the desired results and behaviors attached to incentive pay and bonuses.
Corporate Accountability
The corporate board of directors is accountable for CEO selection, CEO salary, and CEO bonus pay decisions. The corporate board is also accountable for protecting shareholder investment. Research has shown numerous corporate boards are comprised of CEOs from other companies (but in different industries than the corporate board for which they serve). The time has come for more communication and explanation from corporate boards to address the dynamics of this phenomenon. Communication, or lack thereof, is the primary key for soliciting support, buy in, and acceptance of ALL initiatives in the corporate business environment. Open, honest communication, integrity, and accountability has forged to the forefront as required, expected behaviors and traits of our corporate leaders.
CEO Bonus Pay Components
I am not a CEO or a corporate board member in a for-profit corporation. However, I have conducted extensive research in the area of CEO selection in U.S. for-profit firms. Research has shown CEOs must possess three vital skills; and successful execution of those skills may result in bonus compensation. First, is the ability to provide and communicate vision/direction of the company. The CEO must clearly articulate the organization's mission to employees, shareholders, and the community at large. Second, the CEO must be able to run a multi-billion dollar corporation; hopefully, with year after year increased profitability and stockholder return on investment. Third, the CEO must be able to develop others - more specifically, the CEO must develop/groom their replacement. Significant leadership studies have found there is a shortage of corporate leaders. Corporate boards "incent" CEOs to develop a CEO successor in order to ensure long-term corporate leadership continuity and potential stability. This third skill has become an important part of the CEO role and their bonus pay.
All of the components of CEO salary and incentive are not typically shared. There are other factors that could be included. Further, the amount or percentage of CEO bonus pay attached to any of these activities is not public knowledge as well.
Whereas the concepts of incentive pay and bonuses for good corporate performance is viable, there is no justification for multi-million dollar bonuses for poor corporate performance. An initial prescription for resolution is to re-structure CEO bonus pay with a significant portion of the incentive pay based on corporate performance. In today's era of instant gratification, corporate profitability is the ultimate measuring stick. Hopefully, such a pay restructuring will provide CEOs who are in a tough spot to begin with (regardless of compensation) the environment to effectively carry out the other vital, critical functions of their role.
More information on the role of the CEO and the corporate board of directors can be found in Corporate Leadership Selection: Impact on American business, employees, and Society. As always, feedback and input to this blog is welcome.
Dr. Reginald J. Gardner
There are few issues in today's business environment that raise employee and shareholder concerns as much as CEO salary and CEO bonuses. This topic is of grave concern, especially in companies that report annual net losses and/or fail to meet their annual forecasts. From the perspective of employees, shareholders, and "average citizens", the concept of a multi-billion dollar company reporting a multi-million dollar loss while its leader(s) receive multi-million dollar bonuses is unsavory. For U.S. corporations that sought federal assistance, the notion of CEOs returning their annual bonus is under serious consideration. Hopefully, more research and analysis (on both sides of the issue) is done before a broad brush elimination of this vital leadership-incentive mechanism occurs.
The Business Case for Intervention - The Need for Change
More consideration must be given to how future CEO bonus pay is determined for three reasons. First, all of the components in CEO salary and bonus pay have not been shared. Bonus pay consists of more than the bottom line corporate results. Second, there is no uniformity or guideline for determining CEO salary or bonus pay (for example, one company may request only a percentage of a CEO's bonus for poor corporate performance, while another company may request a CEO's entire bonus for a bad year - and the former company performance is far worse than the latter company). Third, our free enterprise society has no appetite for limitations which would adversely impact our interpretations or freedoms that a capitalist economy provides. Perhaps, the underlying solution can be found in the organizational behavior of those involved in the process (i.e. corporate board members and the CEO), as well as a review of what are the desired results and behaviors attached to incentive pay and bonuses.
Corporate Accountability
The corporate board of directors is accountable for CEO selection, CEO salary, and CEO bonus pay decisions. The corporate board is also accountable for protecting shareholder investment. Research has shown numerous corporate boards are comprised of CEOs from other companies (but in different industries than the corporate board for which they serve). The time has come for more communication and explanation from corporate boards to address the dynamics of this phenomenon. Communication, or lack thereof, is the primary key for soliciting support, buy in, and acceptance of ALL initiatives in the corporate business environment. Open, honest communication, integrity, and accountability has forged to the forefront as required, expected behaviors and traits of our corporate leaders.
CEO Bonus Pay Components
I am not a CEO or a corporate board member in a for-profit corporation. However, I have conducted extensive research in the area of CEO selection in U.S. for-profit firms. Research has shown CEOs must possess three vital skills; and successful execution of those skills may result in bonus compensation. First, is the ability to provide and communicate vision/direction of the company. The CEO must clearly articulate the organization's mission to employees, shareholders, and the community at large. Second, the CEO must be able to run a multi-billion dollar corporation; hopefully, with year after year increased profitability and stockholder return on investment. Third, the CEO must be able to develop others - more specifically, the CEO must develop/groom their replacement. Significant leadership studies have found there is a shortage of corporate leaders. Corporate boards "incent" CEOs to develop a CEO successor in order to ensure long-term corporate leadership continuity and potential stability. This third skill has become an important part of the CEO role and their bonus pay.
All of the components of CEO salary and incentive are not typically shared. There are other factors that could be included. Further, the amount or percentage of CEO bonus pay attached to any of these activities is not public knowledge as well.
Whereas the concepts of incentive pay and bonuses for good corporate performance is viable, there is no justification for multi-million dollar bonuses for poor corporate performance. An initial prescription for resolution is to re-structure CEO bonus pay with a significant portion of the incentive pay based on corporate performance. In today's era of instant gratification, corporate profitability is the ultimate measuring stick. Hopefully, such a pay restructuring will provide CEOs who are in a tough spot to begin with (regardless of compensation) the environment to effectively carry out the other vital, critical functions of their role.
More information on the role of the CEO and the corporate board of directors can be found in Corporate Leadership Selection: Impact on American business, employees, and Society. As always, feedback and input to this blog is welcome.
Dr. Reginald J. Gardner
Sunday, May 17, 2009
Whats UP (Weekly, Hot, Applicable Topic Summary - Unbiased Perspective)
U.S. Government Stimulus for U.S. Corporations - Will it Work? During the Summer 2008, signals of a faltering U.S. economy intensified. According to national reports, unemployment rates increased; housing starts and auto sales decreased; stock prices plummeted; and Fortune 100 corporations traveled to Washington, D.C. in search of federal financial assistance. Questions and debate focused on whether the government should help these companies that arguably constitute the backbone of the U.S. economy; how will these companies use federal funding; and will investing taxpayer dollars in these companies be effective. This week's blog entry addresses the question: "Will a federal economic stimulus package work?"Economists and Financial Analysts' Perspective Highly regarded economists, financial analysts, and researchers have consistently (uniformly?) stated they are unsure if an economic stimulus package will work. I have the utmost respect and trust in those who have admitted uncertainty around this issue. I am also extremely encouraged that our government has acted swiftly to take action on behalf of its citizens. I have no economic or financial research data to question their judgment. However, based on my research, experience, and observations, I can address why the economic and financial experts are unsure. Diagnosing the symptoms and prescribing a remedy for high unemployment, or low stock prices, or fluctuations in the Gross National Product (GNP) is a science. Understanding what a corporate leader (or civic leader, or individual citizen for that matter) will do with federal financial assistance is not. There are a variety of behaviors and attitudes that will enter the equation in determining the "optimal" use of financial stimulus dollars.The Economic Stimulus Package Objective The economic stimulus initiative is a 3-pronged approach intended to rejuvenate the U.S. economy. First, stimulus dollars have been given to states, cities, and municipalities to improve public services (i.e. health care, education programs, police service, streets and sanitation, roads, bridges, etc.). Providing economic stimulus for this initiative has a high probability of success. What civic leader/politician wants the reputation of mis-managing federal funding to improve their communities in light of the current economic scenario? Second, stimulus dollars have been given to U.S. citizens in the form of tax breaks or tax refunds. The expectation is that recipients will spend their dollars to help boost a sagging U.S. economy. Undoubtedly, there will be a mixed bag of individual behavior and attitudes. Some will save; some will pay off debts - specifically credit card debts; some will indeed go out and spend. Every individual case will be different, and thus, there is room for uncertainty. The third, and most significant portion of the $750 Billion stimulus package has been given to ailing multi-billion companies. Despite the good intentions, this part of the economic stimulus initative may not work! And here's why: the objective of a corporation is to make a profit and deliver a favorable return on investment (ROI) for its shareholders. No corporation that requested and recieved federal stimulus money is going to use that money on any expense-related activity that adversely impacts their bottom line. Some way, somehow, this money will be reflected in the company's annual reports and demonstrate their profitability. Ponder this - is there any corporation out there who wants to report to their shareholders that they received millions of dollars in stimulus incentive, yet, still had an operating loss for the year?Corporate Behavior and Activity with Federal Stimulus The following examples summarize diverse corporate behavior, attitudes, values, and activity with federal stimulus money. In an effort to keep this discussion and data as a positive analysis, no corporate names are listed. The objective is not to paint a negative picture of U.S. corporations, but to highlight what may have led to success of some companies and failure of others.
One highly successful bank recieved federal funding - and bought/acquired another bank;
It has been reported that lending institutions who recieved federal stimulus have been "slow" to resume lending activity to its customers, but the lending institutions' cash reserves are quite high;
One automotive giant received an economic "bailout" (as opposed to an economic stimulus). This money was needed to maintain operations and prevent a total collapse of the corporation, and possibly the entire U.S. auto industry. This automaker has since returned to Washington, D.C. in search of additional economic bailout assistance. In spite the good intentions, economic stimulus, bailout, or any other terminology we use for helping U.S. corporations has not provided the desired results - yet! The intent of this week's blog entry is not to paint a negative picture of the economic stimulus initiative or U.S. corporations, but to offer a glimpse of the corporate mission and objectives, and the behaviors, attitudes, values and expectations of those chosen to lead. More information on corporate leadership can be found in Corporate Leadership Selection: Impact on American Business, Employees, and Society (Authorhouse Publishing). Feedback to the weekly blog entry is always welcome.
One highly successful bank recieved federal funding - and bought/acquired another bank;
It has been reported that lending institutions who recieved federal stimulus have been "slow" to resume lending activity to its customers, but the lending institutions' cash reserves are quite high;
One automotive giant received an economic "bailout" (as opposed to an economic stimulus). This money was needed to maintain operations and prevent a total collapse of the corporation, and possibly the entire U.S. auto industry. This automaker has since returned to Washington, D.C. in search of additional economic bailout assistance. In spite the good intentions, economic stimulus, bailout, or any other terminology we use for helping U.S. corporations has not provided the desired results - yet! The intent of this week's blog entry is not to paint a negative picture of the economic stimulus initiative or U.S. corporations, but to offer a glimpse of the corporate mission and objectives, and the behaviors, attitudes, values and expectations of those chosen to lead. More information on corporate leadership can be found in Corporate Leadership Selection: Impact on American Business, Employees, and Society (Authorhouse Publishing). Feedback to the weekly blog entry is always welcome.
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