Marshall Field was quoted as saying "The customer is always right!" He's wrong.
Don't get me wrong, I get the saying. I understand that without customers we wouldn't have a business, we wouldn't have jobs. I understand that customer service is vital to the health of any business. Those who don't serve their customers well will eventually be out of business. But like most things, the vocal minority idiots have ruined the spirit behind that principle and it has led to some huge ethical issues.
I've been in sales and other customer service positions my whole life and I've had that little chestnut "the customer is always right" whipped in my face and in my co-workers faces several times. I've been standing next to friends and family who, much to my embarrassment, also flung that phrase at sales associates to get what they want. I hate it. Let me illustrate why...
The Ding-bat Dentist
A dental office purchases a product from a software company 8 years ago. This product costs $100 dollars a month regardless of whether the product is used or not. The office signs the paperwork that 1)states it's $99 a month regardless of whether they use it or not 2) has them fill out and authorize what checking account to automatically withdraw the funds from every month and 3) makes it plain that if they should decide not to keep it they must call us to cancel it because they are charged for it regardless of whether they use it. The office signs on the bottom line. Our training department trains them on how to use the product and sets it up for them. Over the years they stop using this product but never call our office to cancel it. And although we send them billing statements every month telling them what we've withdrawn money from their account for this service, because they don't read their billing statements and over time they forget they have this service. Along the way our accounts management team decides that as a courtesy they will call offices who haven't used this product in some time to see if they want to keep it or cancel it. The representative calls the office 7 times over 8 months but no one answers the phone, no one returns the many messages left, etc. Remember this courtesy call isn't required because the office said they'd pay it regardless of whether they use it so it's their responsibility to manage it. One day the doctor picks up his billing statement in what would be the first time in years and notices this charge. He calls our office livid about this. He demands that we cancel this service that he's "obviously not using" and give him all his money back because he never used it. We remind him that he did sign the paperwork obligating himself to manage this service, we inform him that as a courtesy we've even been trying to contact his office about this product for the better part of a year but no one will call back. He says he's "too busy" to return the call when they were placed. He gets mad when we tell him that we can't refund the money and starts screaming about how dishonest we are and how this is terrible service. "The Customer is ALWAYS Right!" he shoots at the technician. And because this technician is trained that it is bad customer service to be anything other than polite, calm, and happy to a customer he is steamrolled with abuses from this doctor. In a meek attempt to defend his company's position he says "Doctor you've paid $100 a month for 7 years for a service you're not using. That's $8400. How could you not notice that on your billing statements, bank statements, or credit card bills?" Was the customer justified in demanding his money back? Hadn't the company done every earthly thing possible to make sure the office knows that it's their responsibility to manage this? Even then hadn't the company gone above and beyone the call of duty to contact the office to try and help them decide to keep or cancel it? Was the doctor justified in demanding a refund or did he use his position as a consumer to demand something that he had no right to demand?
Flooring Store Fiasco
A couple walks into a flooring store to purchase carpet. The salesperson spends an hour with the couple showing them everything in the store and then they finally find their perfect carpet. The store doesn't have that product in stock so they'll have to order it in. He takes their deposit and tells them that it's generally 2 weeks for the product to get in and installed unless it's on backorder he tells them that they should be prepared for the possibility that it could be on backorder and to make no plans until they find out when the carpet will be available. They give the salesperson a few phone numbers to contact them and keep them up to date on the progress. At the beginning of the next day when all the orders are placed the salesperson is told that the carpet is on backorder. The salesperson decides that even though he told them that there's always the possibility that it will be on backorder, he decides he'll still call them to keep them in the loop. He leaves a message on the first number, then calls the second number and leaves a message, then leaves a message on the third number. The third number's message states that the woman has a work number that she can be reached at if absolutely necessary. He decides not to call that number reasoning that he had already left 3 messages and that this wasn't an emergency. He doesn't hear from the couple so the next morning goes through the process of leaving messages on all 3 numbers again to see if they want to choose another product or keep their first choice that's on backorder. Again no answer. He goes through this for the next three days. Finally on the fourth day the couple walk into the store to see if the product is in. The salesperson asks them if they hadn't got any of his messages, they admit they hadn't. He tells them the situation and they tell him they'll think about it and storm out of the store furious. Later that evening they call back and demand to speak to the man's boss. They scream at the boss demanding he fire the salesperson because he didn't communicate with them that the product was on backorder. They mention how he should've called the woman's work number that was mentioned on the third number's answering machine (the one that specifies to only use this number in case of an emergency). They demand some sort of a discount and tell the boss how unprofessional it was for the salesperson not to communicate better, they said "Don't you guys value your customers?" The sales manager gives them a discount to their carpet, when that doesn't satisfy them he offers to give them blinds for their home below cost. When the couple come in to pick out their blinds the salesperson apologizes (although he hadn't been in the wrong) for the miscommunication. The woman turns to him and says "You're so lucky buddy, I'm a lawyer and I could've sued you for breach of contract!" (of course he found out later she wasn't a lawyer but a salesperson at the next company he went to work for). Was the salesperson in the wrong? Didn't he try every way they have given him to communicate with them? Didn't he go above and beyond by not only calling all 3 numbers and leaving messages but doing that for multiple days in a row? Hadn't he warned them initially that sometimes carpet is on backorder and to be prepared in case that should happen? Was the customer right here or were they using their position as a customer to take offense at a situation in which they were in the wrong? Hadn't they misused their role as a customer to get not only a discount on their carpet but also get blinds below the company's cost taking money out of the company's pocket?
The Pot Calling the Kettle Black
The stories can and do continue to roll on. Every day customers use their position to demand services and remuneration from companies that they pretend wronged them. in their mind these "big companies" have unlimitedly deep pockets and so what's "$200 here and there?" When the company refuses to bend to their wishes the customer talks about corporate dishonesty and ethics. They throw examples like Enron and Bernie Madoff at the company placing them in the same arena as those scheisters. As the old saying goes "that's like the pot calling the kettle black"! Dishonest and unethical consumers justify themselves by hiding behind that old saying "the customer is always right" and then turn around and accuse companies of being dishonest and unethical. They threaten to turn them in to the Better Business Bureau if the company doesn't bend to their wishes or threaten to talk to the manager or the corporate office.
Manifestations and Consequences
To be clear the consequence of such dishonest behavior isn't simply a couple bucks out of a company's pocket that the company can easily write off. No, the result has more far reaching effects. At the personal level if you've lived behind that lie your whole life you've found an excuse to justify unethical behavior. What's to keep you from justifying similar behavior toward your employer "Well they have a lot of money, they're a huge company so it doesn't matter if I take a longer lunch or add an extra hour on my time card?" or your taxes "the government serves the people, we're their customers. I should claim less, they don't need the money," what about the effect of your example on your peers, especially your children. They see you belittling some poor kid for a couple extra bucks at a Best Buy store and they start believing that the only way to get what you want is by yelling at people and letting your anger get away from you. How can you teach tyour children the golden rule or to play nice with their peers when their parents don't? On a professional level most people in their employment are at times customers (with their suppliers) and at other times retailers (towards their customers). In your role as a customer towards your supplier you take the attitude that as a customer you're always right and you begin demanding unfair discounts and exceptions from your suppliers and the result is that not only do you burn your bridges with your suppliers who are supposed to be your partner (not your slave), you lose the trust of your employees who see this bad behavior as rank hypocrisy!
A Much Needed Paradigm Shift
What we need is a paradigm shift, we need to change the way we think about our roles as a customer. There is such a huge emphasis on business ethics both in college classrooms (believe me, I know. It's non-stop) and in the professional ranks and while the business professionals need to work on that we CANNOT alleviate responsibility from the consumer.
Mr. Consumer, you DO NOT have the right to belittle and abuse our employees just because you're the customer.
Mr. Consumer, you DO NOT have the right to steal from a company by demanding price reductions to which you are not entitled.
Mr. Consumer, you DO NOT have the right to cry foul play after YOU neglected to read the contracts YOU signed or neglected to read the billing statements we send you. Further, you do NOT have the right to hear what you want to hear when talking to a salesperson and then holding them to that standard. You imagined what you think you heard, and I'm NOT bound to your freakishly crazy whims.
Monday, January 25, 2010
Friday, January 22, 2010
Blinded by Monopoly
I work for a company who makes dental software. In fact we were one of the pioneers of the dental software age. Our software makes it easier for dentists to keep track of their appointments, fill out insurance claims and get them transmitted with greater ease and efficiency to the insurance companies. We've tried to sense the needs of dentists and stay ahead of the game. On top of our core product we have an electronic services division. This allows an office to send their patient's claims in electronic form to us as opposed to printing and mailing them to the various companies. We try to be a one stop shop for dental offices so we offer services to which we generally don't make money but it gives us loyalty. We offer a remote backup service, a billing statement service where the office can have us mail their patients their billing statements saving them stamps and paper and time. We offer an appointment reminder service, a website building service, and an insurance verification service. All the services that an office needs to successfully operate in this new age. We were one of the pioneers of that service too.
First Movers and Market Share
Economists talk about a "first mover" advantage in gaining market share. This basically means that those who first pioneer a service gain a larger share of the market early on and this gives them an advantage. Until competitors come along they own a monopoly. In our case for many, many years we owned the monopoly on this service but in recent years a slew of competitors have popped up everywhere. What's unique about these competitors is that they're able to transmit an office's electronic claims (our electronic service's flagship offering) for a tenth of what we do. We charge 50 cents per claim and many of our competitors are charging one flat low monthly charge and we are BLEEDING Customers. They are cancelling left and right. Our company has taken the position that although these competitors can process claims cheaper our "service" is better, and their programs aren't very well integrated with the core software (which most offices retain despite using another claims processing company). The funny thing is that most of our company is drinking the Kool-Aid and really believe that because our software integrates with the core software better that it is a big enough plus to keep customers with our company. They're wrong. Think about it this way, if you're an office who sends 1000 claims a month with us you may get a better integrated software but you're still paying us $500 a month to process your claims whereas our competitors will charge you a flat $50 (1/10th of what we charge)to transmit all of your claims but the software isn't perfectly integrated(but mostly integrated, what would you do?
When a company is the pioneer of a service they set the price level, and in this case they set it pretty high. Our company has enjoyed being the monopoly for this service for so long that they are now unwilling to see how many customers they are losing because they're comfortable. Now, from an employee's perspective I'm okay with them keeping their prices the way they are because if we went as low as our competitors I'd be out of a job, but from a business point of view their unwillingness to adapt to the market is turning into their downfall.
Communication
I've often wondered if perhaps upper management has no idea why we're losing offices. For example, my boss has us calling on offices whose volume of claims submitted has dropped--to see why they've stopped sending so much. When we got this assignment I was actually pretty impressed. This, in my mind, is market research. The company genuinely wants to know why we're losing people, hopefully they'll take our findings and adapt their business model. I WAS WRONG! No we make notes in our reports but our reports are never looked at by our immediate managers so they're obviously not passed on to upper management. I mean, why have your employees try to find out why companies have stopped using us if you're not going to follow up on their response? This is a huge failing that many companies have: they have reports and research done but once it's done they don't do anything with the data. An effective company would be frantic about finding out why these offices are leaving. They'd track trends, they'd do surveys to see what element of our competitors persuaded them to leave us, they'd do everything they can to get their customer's back...but they don't. This is a symptom of a deeper issue, they don't care for their customer. They do on the surface, it's a business buzzworthy subject to say "Our customers are our greatest asset" but it's one thing to say it (and they do) and a whole other thing to translate that to action.
First Movers and Market Share
Economists talk about a "first mover" advantage in gaining market share. This basically means that those who first pioneer a service gain a larger share of the market early on and this gives them an advantage. Until competitors come along they own a monopoly. In our case for many, many years we owned the monopoly on this service but in recent years a slew of competitors have popped up everywhere. What's unique about these competitors is that they're able to transmit an office's electronic claims (our electronic service's flagship offering) for a tenth of what we do. We charge 50 cents per claim and many of our competitors are charging one flat low monthly charge and we are BLEEDING Customers. They are cancelling left and right. Our company has taken the position that although these competitors can process claims cheaper our "service" is better, and their programs aren't very well integrated with the core software (which most offices retain despite using another claims processing company). The funny thing is that most of our company is drinking the Kool-Aid and really believe that because our software integrates with the core software better that it is a big enough plus to keep customers with our company. They're wrong. Think about it this way, if you're an office who sends 1000 claims a month with us you may get a better integrated software but you're still paying us $500 a month to process your claims whereas our competitors will charge you a flat $50 (1/10th of what we charge)to transmit all of your claims but the software isn't perfectly integrated(but mostly integrated, what would you do?
When a company is the pioneer of a service they set the price level, and in this case they set it pretty high. Our company has enjoyed being the monopoly for this service for so long that they are now unwilling to see how many customers they are losing because they're comfortable. Now, from an employee's perspective I'm okay with them keeping their prices the way they are because if we went as low as our competitors I'd be out of a job, but from a business point of view their unwillingness to adapt to the market is turning into their downfall.
Communication
I've often wondered if perhaps upper management has no idea why we're losing offices. For example, my boss has us calling on offices whose volume of claims submitted has dropped--to see why they've stopped sending so much. When we got this assignment I was actually pretty impressed. This, in my mind, is market research. The company genuinely wants to know why we're losing people, hopefully they'll take our findings and adapt their business model. I WAS WRONG! No we make notes in our reports but our reports are never looked at by our immediate managers so they're obviously not passed on to upper management. I mean, why have your employees try to find out why companies have stopped using us if you're not going to follow up on their response? This is a huge failing that many companies have: they have reports and research done but once it's done they don't do anything with the data. An effective company would be frantic about finding out why these offices are leaving. They'd track trends, they'd do surveys to see what element of our competitors persuaded them to leave us, they'd do everything they can to get their customer's back...but they don't. This is a symptom of a deeper issue, they don't care for their customer. They do on the surface, it's a business buzzworthy subject to say "Our customers are our greatest asset" but it's one thing to say it (and they do) and a whole other thing to translate that to action.
Thursday, January 14, 2010
Group Think in Organizations
What is Groupthink? Groupthink is a type of thought exhibited by group members who try to minimize conflict and reach consensus without critically testing, analyzing, and evaluating ideas. Individual creativity, uniqueness, and independent thinking are lost in the pursuit of group cohesiveness, as are the advantages of reasonable balance in choice and thought that might normally be obtained by making decisions as a group. Irving Jarvis, who did extensive research on the subject, best defined Groupthink as "A mode of thinking that people engage in when deeply involved in a cohesive in-group, when the members' striving for unanimity override their motivation to realistically appraise alternative courses of action." In otherwords Groupthink happens when a group who is tasked with making a decision takes the path of least resistence and follows one charismatic leader's suggested course. They all fall in line and conform even when some members of the group have misgivings about the choice made.
We see the symptoms of this all the time in life. The one kid in the group who doesn't feel right about drinking and driving but goes along with it; the politician who doesn't agree with a particular party platform but doesn't want to be labeled a traitor to the party so he goes along with it; an employee who disagrees with a decision that their boss has made and knows that their fellow employees also disagrees with but doesn't speak up either because the fear of losing their job or just being labeled as a black sheep. In all these examples there was a decision made that everyone unanimously agreed to although the decision wasn't necessarily the right one. In all cases of groupthink there are members who have misgivings but often withold them or are pressured into withholding their opinions. Instead of taking a lot of space discussing the symptoms and all the outcomes I'll make some generalized statements about group think and then post links below to read more about it.
Results of Groupthink
Groupthink creates a loss of "cognitive diversity" in that people withhold their opinions and insight from the process of decision making and as a result either the full potential of the situation isn't fully maximized (for example had 3M not encouraged their employees input the post-it note may never have seen the light of day....neither would the over $100 million of revenue that the product has brought to 3M since its inception) or an even more detrimental outcome would ensue because the leader makes a decision thats poorly planned and possibly harmful but no one speaks up. Like the Bay of Pigs.
Irving Janis suggested that groupthink was the cause of the Bay of Pigs fiasco. President Kennedy had surrounded himself with so many sychophantic yes-men who just went along with his plan without offering any concerns and what resulted was a near-disaster. Fortunately, President Kennedy soon realized his failure to pick individuals in his cabinet who would push against him to help him make the right decision. These yes-men had been enablers to a disastrous decision and had led him into a false sense of security. Fortunately he learned from his mistake as evidenced by his decisions during the Cuban Missile Crisis. Dr. Janis said "During meetings, he invited outside experts to share their viewpoints, and allowed group members to question them carefully. He also encouraged group members to discuss possible solutions with trusted members within their separate departments, and he even divided the group up into various sub-groups, to partially break the group cohesion. JFK was deliberately absent from the meetings, so as to avoid pressing his own opinion. Ultimately, the Cuban missile crisis was resolved peacefully, thanks in part to these measures."
In the workplace groupthink is entirely too common, especially given the current economic conditions. Millions of Americans are out of work and given those circumstances we see more and more that employees are scared to give their opinion or to object to poor decisions made my managers, because they don't want to be the next American in the unemployment line. Make no mistake about it, "legally" a company can't fire you for voicing your opinion but they can fire you for insubordination, causing what they construe as a "hostile work environment" and they sure as heck can make your life miserable forcing you to quit. This is another example of the perfect-exterior-with-the-defunct-interior company. On the outside they "conform" to all the laws, they'd never outright fire you for voiceing your opinion, but they can make you pay in other ways--and they do.
In my current job we're going through a process where our goals are being revamped. In my manager's opinion some of our goals are a little too whimpy. Additionally, many of the dental office's we are assigned to assist come to us via a report generated in excel that's never ever accurate. We waste so much time going through reports to weed out the offices that shouldn't be on it that a tension has permeated our department. This problem could be easily remedied with our management taking an extra 5 minutes a day to manage the reports they create instead of just hitting the go button, it could be remedied by our manager asking for input on our goals or sitting with a few of us to see what we do and get an idea of why some processes take longer than she estimates they should. We have all communicated via instant messenger about our frustrations with our manager and supervisor, we but no one wants to speak up because no one wants to be black listed. So we just go along with their policies and procedures, never speaking up. The fault here is equally shared--us because we don't have the courage to speak up and management because they have never reasonably dealt with our objections in the past.
I take courage as I see some of the emerging business leaders of the future and some of the companies of the future. Take Zappos.com for example, Tony Hseia (pronounced Shay) is their CEO who has elevated this company to outstanding returns for their investors. This man will go down in history as a revolutionary figure in the e-commerce and management trends and yet walking into his building there is no 4th floor huge office. Tony has a cubicle on the main floor surrounded by regular-$13 an hour employees. He encourages feedback, encourages individuality. He wants his people to have fun with their customers and with their fellow employees. Tony knows what issues even the lowliest employee deals with because he sits 5 feet away from them in a cubicle.
Studies have confirmed time and time again that the better a company treats their employees the better that company does financially. A happy employee is an employee who feels he matters to his company, who feels their input is not only encouraged but necessary to grow a business, and is given autonomy in the workplace. That employee will perform better, treat your customer better, and seek to improve the entire company that cares for them. This is a symbiotic relationship that unfortunately many haven't bought into...yet. This is what I want to do with my career. I want to help generate a paradigm shift in employee-employer relations and management styles.
We see the symptoms of this all the time in life. The one kid in the group who doesn't feel right about drinking and driving but goes along with it; the politician who doesn't agree with a particular party platform but doesn't want to be labeled a traitor to the party so he goes along with it; an employee who disagrees with a decision that their boss has made and knows that their fellow employees also disagrees with but doesn't speak up either because the fear of losing their job or just being labeled as a black sheep. In all these examples there was a decision made that everyone unanimously agreed to although the decision wasn't necessarily the right one. In all cases of groupthink there are members who have misgivings but often withold them or are pressured into withholding their opinions. Instead of taking a lot of space discussing the symptoms and all the outcomes I'll make some generalized statements about group think and then post links below to read more about it.
Results of Groupthink
Groupthink creates a loss of "cognitive diversity" in that people withhold their opinions and insight from the process of decision making and as a result either the full potential of the situation isn't fully maximized (for example had 3M not encouraged their employees input the post-it note may never have seen the light of day....neither would the over $100 million of revenue that the product has brought to 3M since its inception) or an even more detrimental outcome would ensue because the leader makes a decision thats poorly planned and possibly harmful but no one speaks up. Like the Bay of Pigs.
Irving Janis suggested that groupthink was the cause of the Bay of Pigs fiasco. President Kennedy had surrounded himself with so many sychophantic yes-men who just went along with his plan without offering any concerns and what resulted was a near-disaster. Fortunately, President Kennedy soon realized his failure to pick individuals in his cabinet who would push against him to help him make the right decision. These yes-men had been enablers to a disastrous decision and had led him into a false sense of security. Fortunately he learned from his mistake as evidenced by his decisions during the Cuban Missile Crisis. Dr. Janis said "During meetings, he invited outside experts to share their viewpoints, and allowed group members to question them carefully. He also encouraged group members to discuss possible solutions with trusted members within their separate departments, and he even divided the group up into various sub-groups, to partially break the group cohesion. JFK was deliberately absent from the meetings, so as to avoid pressing his own opinion. Ultimately, the Cuban missile crisis was resolved peacefully, thanks in part to these measures."
In the workplace groupthink is entirely too common, especially given the current economic conditions. Millions of Americans are out of work and given those circumstances we see more and more that employees are scared to give their opinion or to object to poor decisions made my managers, because they don't want to be the next American in the unemployment line. Make no mistake about it, "legally" a company can't fire you for voicing your opinion but they can fire you for insubordination, causing what they construe as a "hostile work environment" and they sure as heck can make your life miserable forcing you to quit. This is another example of the perfect-exterior-with-the-defunct-interior company. On the outside they "conform" to all the laws, they'd never outright fire you for voiceing your opinion, but they can make you pay in other ways--and they do.
In my current job we're going through a process where our goals are being revamped. In my manager's opinion some of our goals are a little too whimpy. Additionally, many of the dental office's we are assigned to assist come to us via a report generated in excel that's never ever accurate. We waste so much time going through reports to weed out the offices that shouldn't be on it that a tension has permeated our department. This problem could be easily remedied with our management taking an extra 5 minutes a day to manage the reports they create instead of just hitting the go button, it could be remedied by our manager asking for input on our goals or sitting with a few of us to see what we do and get an idea of why some processes take longer than she estimates they should. We have all communicated via instant messenger about our frustrations with our manager and supervisor, we but no one wants to speak up because no one wants to be black listed. So we just go along with their policies and procedures, never speaking up. The fault here is equally shared--us because we don't have the courage to speak up and management because they have never reasonably dealt with our objections in the past.
I take courage as I see some of the emerging business leaders of the future and some of the companies of the future. Take Zappos.com for example, Tony Hseia (pronounced Shay) is their CEO who has elevated this company to outstanding returns for their investors. This man will go down in history as a revolutionary figure in the e-commerce and management trends and yet walking into his building there is no 4th floor huge office. Tony has a cubicle on the main floor surrounded by regular-$13 an hour employees. He encourages feedback, encourages individuality. He wants his people to have fun with their customers and with their fellow employees. Tony knows what issues even the lowliest employee deals with because he sits 5 feet away from them in a cubicle.
Studies have confirmed time and time again that the better a company treats their employees the better that company does financially. A happy employee is an employee who feels he matters to his company, who feels their input is not only encouraged but necessary to grow a business, and is given autonomy in the workplace. That employee will perform better, treat your customer better, and seek to improve the entire company that cares for them. This is a symbiotic relationship that unfortunately many haven't bought into...yet. This is what I want to do with my career. I want to help generate a paradigm shift in employee-employer relations and management styles.
Saturday, January 9, 2010
Old School Business vs New School Business
The State of the Business World
We're in a peculiar situation in our world right now. There's a whole new way of doing business that's slowly rising on the horizon while the old school is waning in the background and yet we're caught in the middle. Most companies are some sort of hybrid of both ways of doing business--both old and new. I'm talking about the old school, authoritative "my way or the highway" managing techniques, the "although our prices are higher our service is better. That's why people are choosing us" pricing strategies, and the "what the customer (and our employees for that matter) don't know won't hurt them" behind the door meetings about policies and procedures of yesterday are being met with the new school's "we're all in this together, the lowliest employee has just as much right to input as the CEO," the "we're in a global economy, we can't afford to not stay price competitive but what's going to give us the market is differentiation," and being totally up front and honest with your customers and your employees. Recognizing that they are not dumb. People catch on and see through the bs that companies or their employers put out a whole lot more than they realize. And yet we're in the middle.
Symptoms of the Hybrid
This is a major cause of the "beautiful exterior but defunct underneath the hood" way of business I've mentioned earlier. This may be why many businesses talk about "employee empowerment" and yet suffer from group think or why some companies talk about "equal opportunity" employment but will only hire women in their HR department (also a sin of my current company)--because the new school recruits coming in as lower level managers are trained to think new school but the old fossils with the huge office on the top floor have always done things the old-school way.
A Bright Future
But make no mistake about it, the tide is turning. In the next 10 to 15 years the old-school baby boomers will be retiring and the new school will reign in a new era of transparency in business practices and unprecedented overnight global brand building. I'm excited for the new era, being taught in the new school way of business, because it will mean that we'll finally come closer to respecting our employees. For tapping their potential, for including them in on goal setting and strategic planning. For treating them as unique individuals with something to offer the company that will help shape the company's fortune in the years ahead. Right now employees are interchangeable and replaceable cogs in the corporate machine. But not for much longer. In some companies the leap has already been made company wide. In some companies it may just be a forward thinking supervisor or manager who sees the new school way of doing business while the rest of the company lags behind.
Predictions and a Caution
In the next 10-15 years company perks will increase at an unprecedented rate as companies try to attract and retain key talent knowing that they're not just competing with other local or national companies for that talent but with the rest of the world. As we become more and more of a global society more people will choose jobs overseas and companies who don't soup of their benefits will lose out. People will get more vacation time, better health benefits, we'll see more companies structured like the famous Google building in SoCal with day care, on campus spas and gyms, fine dining, and video game rooms all in the name of keeping talented people happy. This will be a great era to live and work in! But there are some things from the past that we should be cautious not to disregard. As many positive things as I see the new school ushering in I fear that we'll lose the habit of patience in business growth. That we'll become so enamored with growing our business that our growth will outpace our ability to sustain growth and many businesses will topple. This will become so common-place that we'll see recessions much like the one we're in now become more and more common. The business cycle will become hyper-sensitive because of the lack of patience that the new school brings. It's like the old allegory of the olive trees that grew too fast on top so that the trunk could no longer support the weight of growth and the trees would topple over and die. One thing the old school did right was to be patient in growth. To realize that building an enduring company takes decades of careful planning and not being swept away by fly-by-night business trends. This, I feel, we in the new generation should be mindful of and in the few remaining years that we have with the baby boomers, we should learn this important lesson from them. Those who do will absolutely experience unprecedented growth, but it will be sustainable growth.
Updated 1/12/2010.
It appears that I'm not alone in my notions that hyper-growth is detrimental in our future. After writing this I read an article about the mega-shoe online retailer Zappos.com (ranked 23rd best company in the nation to work for). It's CEO Tony Hsieh (pronounced Shay) talks about the perils of rapid growth at the expense of patiently building a stable company. Here's an excerpt:
"Zappos was founded in San Francisco in 1999; Hsieh joined the company within a year as co-CEO. He eventually took the reins, moved the operation to Las Vegas for the cheap real estate and abundant call-center workers, and vowed to avoid a LinkExchange-style fate. Looking back, he realized what happened: In boom times it's easy to make ad hoc decisions that feel right because they assuage short-term pressures. But that's the equivalent of driving without a map. 'One of the biggest enemies to culture is hyper-growth. You're trying to fill seats with warm bodies, and you end up making compromises,' says Hsieh."..."Seventy-five percent of our purchases are from repeat customers," says Zappos chairman, COO, and CFO Alfred Lin. "There are a lot of things we do that seem overly costly. But we have always been focused on the long term when looking at whether something should be cut." http://money.cnn.com/2009/01/15/news/companies/Zappos_best_companies_obrien.fortune/index2.htm
We're in a peculiar situation in our world right now. There's a whole new way of doing business that's slowly rising on the horizon while the old school is waning in the background and yet we're caught in the middle. Most companies are some sort of hybrid of both ways of doing business--both old and new. I'm talking about the old school, authoritative "my way or the highway" managing techniques, the "although our prices are higher our service is better. That's why people are choosing us" pricing strategies, and the "what the customer (and our employees for that matter) don't know won't hurt them" behind the door meetings about policies and procedures of yesterday are being met with the new school's "we're all in this together, the lowliest employee has just as much right to input as the CEO," the "we're in a global economy, we can't afford to not stay price competitive but what's going to give us the market is differentiation," and being totally up front and honest with your customers and your employees. Recognizing that they are not dumb. People catch on and see through the bs that companies or their employers put out a whole lot more than they realize. And yet we're in the middle.
Symptoms of the Hybrid
This is a major cause of the "beautiful exterior but defunct underneath the hood" way of business I've mentioned earlier. This may be why many businesses talk about "employee empowerment" and yet suffer from group think or why some companies talk about "equal opportunity" employment but will only hire women in their HR department (also a sin of my current company)--because the new school recruits coming in as lower level managers are trained to think new school but the old fossils with the huge office on the top floor have always done things the old-school way.
A Bright Future
But make no mistake about it, the tide is turning. In the next 10 to 15 years the old-school baby boomers will be retiring and the new school will reign in a new era of transparency in business practices and unprecedented overnight global brand building. I'm excited for the new era, being taught in the new school way of business, because it will mean that we'll finally come closer to respecting our employees. For tapping their potential, for including them in on goal setting and strategic planning. For treating them as unique individuals with something to offer the company that will help shape the company's fortune in the years ahead. Right now employees are interchangeable and replaceable cogs in the corporate machine. But not for much longer. In some companies the leap has already been made company wide. In some companies it may just be a forward thinking supervisor or manager who sees the new school way of doing business while the rest of the company lags behind.
Predictions and a Caution
In the next 10-15 years company perks will increase at an unprecedented rate as companies try to attract and retain key talent knowing that they're not just competing with other local or national companies for that talent but with the rest of the world. As we become more and more of a global society more people will choose jobs overseas and companies who don't soup of their benefits will lose out. People will get more vacation time, better health benefits, we'll see more companies structured like the famous Google building in SoCal with day care, on campus spas and gyms, fine dining, and video game rooms all in the name of keeping talented people happy. This will be a great era to live and work in! But there are some things from the past that we should be cautious not to disregard. As many positive things as I see the new school ushering in I fear that we'll lose the habit of patience in business growth. That we'll become so enamored with growing our business that our growth will outpace our ability to sustain growth and many businesses will topple. This will become so common-place that we'll see recessions much like the one we're in now become more and more common. The business cycle will become hyper-sensitive because of the lack of patience that the new school brings. It's like the old allegory of the olive trees that grew too fast on top so that the trunk could no longer support the weight of growth and the trees would topple over and die. One thing the old school did right was to be patient in growth. To realize that building an enduring company takes decades of careful planning and not being swept away by fly-by-night business trends. This, I feel, we in the new generation should be mindful of and in the few remaining years that we have with the baby boomers, we should learn this important lesson from them. Those who do will absolutely experience unprecedented growth, but it will be sustainable growth.
Updated 1/12/2010.
It appears that I'm not alone in my notions that hyper-growth is detrimental in our future. After writing this I read an article about the mega-shoe online retailer Zappos.com (ranked 23rd best company in the nation to work for). It's CEO Tony Hsieh (pronounced Shay) talks about the perils of rapid growth at the expense of patiently building a stable company. Here's an excerpt:
"Zappos was founded in San Francisco in 1999; Hsieh joined the company within a year as co-CEO. He eventually took the reins, moved the operation to Las Vegas for the cheap real estate and abundant call-center workers, and vowed to avoid a LinkExchange-style fate. Looking back, he realized what happened: In boom times it's easy to make ad hoc decisions that feel right because they assuage short-term pressures. But that's the equivalent of driving without a map. 'One of the biggest enemies to culture is hyper-growth. You're trying to fill seats with warm bodies, and you end up making compromises,' says Hsieh."..."Seventy-five percent of our purchases are from repeat customers," says Zappos chairman, COO, and CFO Alfred Lin. "There are a lot of things we do that seem overly costly. But we have always been focused on the long term when looking at whether something should be cut." http://money.cnn.com/2009/01/15/news/companies/Zappos_best_companies_obrien.fortune/index2.htm
Friday, January 8, 2010
Goal Setting
"Without a goal you'll never know where you're going, without a plan you'll never get there."
Setting goals is something that a lot of people and organizations talk about doing, but most often don't do it right. With the myriad of information about goal setting in the world it is startling how obtuse people remain about how to set a goal. Most people (and unfortunately some organizations) pick a goal with little or no planning and start working towards it. Coincidentally, most people don't meet their goals and don't know why.
Goal Setting and Planning
After determining what your goal is there is a strong likelihood that you will fail to hit your goal if you do not plan to hit it. For example, if I was planning a family vacation, and my family chose to visit a vacation spot we had never been to it would do us little good to jump into our car and start driving. Jumping in the car heading in the general direction of Disney world would probably never get us there. We would need to have a map. We would need to plan out how much it'll cost us, when to fill up on gas. We'd have to decide which roads we'd take, if we will sleep in a hotel in Witchita, Kansas or New Orleans, Louisiana. All of these things need to be taken into consideration, these are the planning aspects of goal setting. Similarly, when we set goals we must first develop a plan for achieving our desired destination. You should plan all of the steps necessary to hit the goal. When developing your plan, remember to be flexible! You do not know what roadblocks will fall in your path on your way to hitting your goal, however, there is one thing you can count on in your quest to hit your goals, and that is roadblocks! Roadblocks are thrown in your path on your way to hitting your goals, they are placed there to strengthen or test your resolve. How much you want to achieve your goal will be challenged by these roadblocks. Because of that there should be a level of flexibility in how much you can allow yourself to stray from your plan and still reach your goal without feeling like you failed. If you do not allow yourself to be flexible to account for those roadblocks you will fail. This is so because if you stringently plan out every aspect towards hitting your goal and are determined to follow the mapped out course to a T and if even one wrench is thrown into the equation and even one aspect is thrown off there's a higher likelihood that you'll give up on your goal considering it a failure because it didn't go according to plan. So plan deeply but allow for roadblocks. Don't let a minor setback destroy your momentum. Think on your feet when they occur and swerve around or over the roadblock. Heck plow right through it but don't let them stop you.
Organizational Goals
Organizations thrive on making and meeting goals. They have to in this hyper-competitive global economy. If you want to remain relevant you must grow and improve from the top all the way down the line. Goals should be a stretch for your employees but not out of their reach. Everyone should be committed to the goals and management should be a valuable resource in helping their employees reach their goals. When a goal is reached it brings with it a sense of power and control. Satisfaction in the workplace increases and turnover decreases. At the organizational level relevant data analysis should be used when developing a goal. Goals within an organization should be like the carrot attached to the end of a pole dangling in front of the mule. They shouldn't be far out of reach but far enough to make your employees stretch.
Negative Examples of Developing Goals
1. Goals were set at a level across the board regardless of the employee involved
2. Goals were not based on relevant data, there was just an arbitrary number chosen
3. When goals were continually not reached the companies didn't adjust the goals or evaluate why the goals fell short.
4. The importance of the goals was only stressed at the end of the month, not continuously.
What trends are common among successful companies?
1. When setting goals each person had goals set to their capabilities and experience level. 2. Extensive data was analyzed in the formation of numerical goals (ie sales figures etc)
3. When goals weren't met the organization evaluated why not and then would adjust the goals if they felt them too high or too low.
4. Hitting goals was a constant obsession! It became a game between employees. We'd tell each other after every sale where we were at. We'd create mini-contests or keep a white board illustration of a thermometer that we'd fill in whenever our numbers went up. We made hitting goals fun!
I contend that you can take any employee from Point A to Point B with their goals if they are set correctly. The goal here is to challenge people individually to build them up. Just like my manager slowly and patiently built me from a $3600 a month salesperson to a $100,000 a month salesperson, managers who set realistic, achievable goals tuned to that employees' circumstances can also build better employees.
People want to hit goals. They like to be challenged. But when a goal is placed out of the reach of your employees soon they become disinterested, even cynical. Before long you will find that your company's culture has changed and that you've created a culture of dissatisfaction and mistrust. Dissatisfied employees leads to employee turnover and employee turnover is costly to your company, make no mistake about it!
Setting goals is something that a lot of people and organizations talk about doing, but most often don't do it right. With the myriad of information about goal setting in the world it is startling how obtuse people remain about how to set a goal. Most people (and unfortunately some organizations) pick a goal with little or no planning and start working towards it. Coincidentally, most people don't meet their goals and don't know why.
Goal Setting and Planning
After determining what your goal is there is a strong likelihood that you will fail to hit your goal if you do not plan to hit it. For example, if I was planning a family vacation, and my family chose to visit a vacation spot we had never been to it would do us little good to jump into our car and start driving. Jumping in the car heading in the general direction of Disney world would probably never get us there. We would need to have a map. We would need to plan out how much it'll cost us, when to fill up on gas. We'd have to decide which roads we'd take, if we will sleep in a hotel in Witchita, Kansas or New Orleans, Louisiana. All of these things need to be taken into consideration, these are the planning aspects of goal setting. Similarly, when we set goals we must first develop a plan for achieving our desired destination. You should plan all of the steps necessary to hit the goal. When developing your plan, remember to be flexible! You do not know what roadblocks will fall in your path on your way to hitting your goal, however, there is one thing you can count on in your quest to hit your goals, and that is roadblocks! Roadblocks are thrown in your path on your way to hitting your goals, they are placed there to strengthen or test your resolve. How much you want to achieve your goal will be challenged by these roadblocks. Because of that there should be a level of flexibility in how much you can allow yourself to stray from your plan and still reach your goal without feeling like you failed. If you do not allow yourself to be flexible to account for those roadblocks you will fail. This is so because if you stringently plan out every aspect towards hitting your goal and are determined to follow the mapped out course to a T and if even one wrench is thrown into the equation and even one aspect is thrown off there's a higher likelihood that you'll give up on your goal considering it a failure because it didn't go according to plan. So plan deeply but allow for roadblocks. Don't let a minor setback destroy your momentum. Think on your feet when they occur and swerve around or over the roadblock. Heck plow right through it but don't let them stop you.
Organizational Goals
Organizations thrive on making and meeting goals. They have to in this hyper-competitive global economy. If you want to remain relevant you must grow and improve from the top all the way down the line. Goals should be a stretch for your employees but not out of their reach. Everyone should be committed to the goals and management should be a valuable resource in helping their employees reach their goals. When a goal is reached it brings with it a sense of power and control. Satisfaction in the workplace increases and turnover decreases. At the organizational level relevant data analysis should be used when developing a goal. Goals within an organization should be like the carrot attached to the end of a pole dangling in front of the mule. They shouldn't be far out of reach but far enough to make your employees stretch.
Negative Examples of Developing Goals
In my current job we develop and support software for dental offices. I work in the account management department which is tasked with helping offices who have purchased and are paying for our products but aren't utilizing them. Our goal is to make 200 calls a week and to have 5 hours of outbound phone time. The statistics have shown that the more calls we make--the lower our phone time is. This is because outbound phone time only includes how long you are on a phone call, not your dialing time, not the time it takes for you to take notes about the conversation, and certainly not the time it takes to research the office that you are contacting. The only way to get your phone time up is to keep a customer on the phone for a long drawn out time, but then you would never hit your goal of 40 calls a day. There is a disconnect here, in fact, because in reality there is an inverse relationship between the number of calls made and the amount of phone time. As employees we have pointed this out to our superiors but our superiors choose to ignore this, even though they have the data before them. If they had analyzed our call records they would see this trend. If they truly valued the input of their employees, as they claim, they would catch this trend (my company is the shining example of the car with the beautiful exterior but under the hood is broken and beleaguered).
I worked for a home electronics company in 2001. I was a car audio sales associate. I had never been in sales before so I was excited when I was able to sit down with my manager to talk about my goals. He sat me down and said "Your goal is $36,000 this month." That was the goal for all of the salespeople not just myself. Whether you had worked there for 5 years or 5 minutes it was $36,000 a month. That month I didn't even get close. Nor did I the next month, nor the next (Remember in 2001 we were in a recession). That recession was pulling all sales down nationwide but $36,000 a month was the goal management had decided on a year prior to the September 11th attacks and the subsequent recession (this is an example of a company not being flexible). After my first 3 months I thought they would reevaluate my goals to make them closer to where I was performing but they didn't. They kept them there. After some time I actually lost motivation and stopped trying. My goals were so far out of my reach that I knew there was no way I could hit them so I stopped trying.
A Positive Example of Developing Goals
I contrast that with another experience I had as a salesperson. I sold flooring for a local company about 5 years later. When I started we had our goals, since I was the new guy I wasn't held up to the same standard as my peers and my goals were significantly smaller. Not only did we have our monthly goals but we broke them down into weekly chunks, and then daily chunks. More manageable bites. As the old saying goes "How do you eat an elephant? One bite at a time." The first month I got close to my goal because I was tracking it on a daily basis. I knew I had to sell so much every day, then every week, and then for the month. The second month I actually hit my goal, and the next month, and the next, and every month for the next 3 years. As I hit one goal our managers would look at what we hit and then using that data would set a goal for the next month that was higher than the previous month but still pushed me. They also took into account the slower sales months and adjusted our sales goals down accordingly. There was no across the board number like there had been at the electronics store, they knew which months were historically slower and would adjust our goals accordingly. Every month I knew that I could hit my goals because they were within my reach while still requiring me to stretch. When I started they had wanted me to sell $3,000 that first month, by the time I left I was selling close to $100,000 a month! What's better was that I felt empowered. I felt a sense of autonomy and control over my destination. It was wonderful.
What trends do we see here? Companies where we failed to hit our goals had a few things in common:1. Goals were set at a level across the board regardless of the employee involved
2. Goals were not based on relevant data, there was just an arbitrary number chosen
3. When goals were continually not reached the companies didn't adjust the goals or evaluate why the goals fell short.
4. The importance of the goals was only stressed at the end of the month, not continuously.
What trends are common among successful companies?
1. When setting goals each person had goals set to their capabilities and experience level. 2. Extensive data was analyzed in the formation of numerical goals (ie sales figures etc)
3. When goals weren't met the organization evaluated why not and then would adjust the goals if they felt them too high or too low.
4. Hitting goals was a constant obsession! It became a game between employees. We'd tell each other after every sale where we were at. We'd create mini-contests or keep a white board illustration of a thermometer that we'd fill in whenever our numbers went up. We made hitting goals fun!
I contend that you can take any employee from Point A to Point B with their goals if they are set correctly. The goal here is to challenge people individually to build them up. Just like my manager slowly and patiently built me from a $3600 a month salesperson to a $100,000 a month salesperson, managers who set realistic, achievable goals tuned to that employees' circumstances can also build better employees.
People want to hit goals. They like to be challenged. But when a goal is placed out of the reach of your employees soon they become disinterested, even cynical. Before long you will find that your company's culture has changed and that you've created a culture of dissatisfaction and mistrust. Dissatisfied employees leads to employee turnover and employee turnover is costly to your company, make no mistake about it!
Tuesday, January 5, 2010
Smoke Screens
SELF-ESTEEMJust because you think you're a star doesn't mean you're going anywhere.
The Smoke Screen and My First Car
Definition of smoke screen: an action intended to conceal or confuse or obscure; "requesting new powers of surveillance is just a smokescreen to hide their failures"
What does an unread book and a 1995 Mitsubishi Eclipse have in common with a smokescreen? Sit tight, I'll tell you.
1. In August 2000 I bought my first vehicle, a 1995 Mitsubishi Eclipse. It's the same model that Paul Walker's character drove in the original Fast and the Furious Movie but it was a beautiful copper color. I loved that car. It was beautiful on the outside, the interior was immaculate, and it was a great price! 4 months later it was winter. In Utah. I quickly found out that my immaculate car was only immaculate on the outside. It had several leaks in the radiator, some engine problems, and the motor on the back windshield wiper didn't work. What, on the outside, appeared to be the ideal specimen of the perfect car turned out to be nothing more than a piece of junk with a fancy cover.
2. I walked into the office of the head of our Human Resources Department to meet about my wife's impending delivery of our child. On the bookshelf in the HR Manager's office was one of my favorite books about management, Winning! By Jack Welch. This is perhaps the greatest book I've ever read about effective management of people and processes(and I've read literally dozens). I asked her about her experience reading the book and to my chagrin she admitted she had never actually read the book. In fact she admitted she hadn't read most of the books on her shelf, most of which were about management.
So what do these have in common with a smoke screen? They all describe the business practices of several companies. On the outside they appear to be perfectly ran organizations that promote all of the business buzz words like "equal opportunity," "synergy," and "employee empowerment" but underneath that fancy cover they are like my piece of junk car with faulty mechanisms, or like the bookshelf of my HR manager--full of potential-- yet never utilized. Companies are missing the boat here. They're missing the boat on their employees untapped potential, on increasing profits, using sensible goal setting, and how to run more efficiently. Meetings in these companies are usually a feel good--get you pumped session but in the end that enthusiasm fizzles quickly. Most of the time it's because not all of management buys into what upper management is doing. It's because everyone has different motivations for why they work and because most managers do not take the time to figure out what those motivations are and how to exploit them to motivate that employee to help meet organizational goals.
My blog will be designed to explain some of the ways that companies have failed to maximize their potential. I'll give experience from my life as well as studies, statistics, and other's experience. Below is a list of topics that I want to cover:
1. Goal Setting the right way
2. Autonomy and utilizing human capital
3. The costs of and cures for employee turnover
4. Meetings
5. Etc.
Introduction: College Football and Management Techniques
BLOGGING
Never before have so many people with so little to say said so much to so few.
If I'm honest with myself no one will actually read this blog. Because I'm aware of that I'll post things that are on my mind and in my life. A lot of the posts will be about topics I'm passionate about...mostly college football and proper business management techniques.
My Two Topical Passions
I had started another blog about my Mountain West Conference teams for college football and about how they should be an automatic BCS qualifying conference. I still believe that but as I was beginning to publish my first blog with some amazing stats on the MWC TCU lost their game to Boise State. Knowing how the media jumps on the MWC bandwagon the moment they have any measure of success and then jumps off even quicker when they lose games I figured it was a moot point. It should be noted, however, that statistically the MWC is an elite conference. A lot of the talking heads from ESPN and Fox Sports claim that the MWC is top heavy but the statistics I've found debunk that myth. For example for the past decade the MWC has had between 40 and 60% of it's teams with winning records. Our teams winning against bigger teams all the time.
- BYU beat Oregon State a highly touted team (who were a touchdown away from the Rose Bowl) with a celebrated QB and the Rogers brothers but BYU made them look like the lowest of the WAC teams.
- Utah dismantled the same Cal team that was ranked 5th earlier in the season. Some people argue that had Jahved Best played Utah wouldn't have won but I argue if your season rises or falls depending on one player being in the game are you really an elite team or just a decent team with one good player?
- Wyoming beat a good Fresno State team which isn't necessarily a huge win except that Fresno State, according to some pollsters, was predicted to thump Wyoming 34-0.
- Air Force beat a Houston team that was ranked in the top 15 who's QB was in the Heisman hunt through most of the season. In that one bowl game Air Force forced more turnovers from their QB than he had thrown in the other 12 games combined.
In fact, until the TCU game the MWC had beaten their bowl opponents by an average of 17 points--that's 2 touchdowns and a field goal!! Then the Fiesta Bowl happened. It was clear that TCU thought what most people thought--that they'd roll over Boise State--and so they didn't show up at all except in brief flashes. But every season it happens. A couple of our teams have big wins and everyone, including the national media start talking National Championship and Heismann and then the moment they have a less than stellar performance the talking heads start this talk about the team being "overrated." This is always comical to me because if the team is overrated it's their fault, not the teams. BYU in 2008 thumped UCLA, Washington State and a few other decent teams. The Heismann talk for Max Hall started, BCS buster talk started all before the 3rd week and then they lost to TCU and every ESPN tool in the nation started screaming "overrated." These are the same people that were touting the team 3 days earlier. It happened again this season when BYU beat Oklahoma. People quickly jumped off the wagon when we fell to Florida State and started calling for Max's head but statistically Max was an elite QB. He averaged 9.3 yds per pass attempt, passed more than most QB's and still completed about 70% of his passes! Do we realize what that means? I contend that the MWC is just as elite as the Big 10, the ACC, the Big East, and often the Pac-10. I contend that the reason why the MWC isn't an automatic qualifying conference isn't because they're not good enough but has everything to do with their teams falling in small media markets.
My second topical passion is principles of Business Management, specifically the Managing and Motivating--the leading--part of management. Yes, that's my major in school, but outside of school I devour books about management because I believe in the future, companies who will be elite companies in the global economy will be companies that know how to utilize their human capital (cherish their employees). Sadly, most companies that many of us work for are not elite. I've had more than my share of terrible businesses I've worked for and so it gives me a contrast between how things should be based on the books I read and the things I study, and how things shouldn't be. While the fields of Human Resource Management and Organizational Behavior (the psychology of management and leadership) are not necessarily new, they're receiving a much larger audience in recent years and so they are starting to explode. Organizations are becoming more aware that the way they've treated their employees isn't getting the job done. What a paradigm shift!! These two topics will provide the framework for my blogs, of course I'm sure I will stray from time to time. Enjoy!!
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