Author: John Hollon

There’s a lot I don’t like about Wal-Mart.

    It’s a huge American success story, but I have always found the stores to be crowded, cheap and tacky. Yes, prices are low, but the customer experience is terrible. There never seems to be anyone who can answer a simple question, and the checkout lines are always Disneyland-long and airport-slow.

    Despite Wal-Mart’s great success over the years, it’s a place I try to avoid at all costs because it has always seemed to me that the company’s top leadership has been singularly focused on growth and profits at the exclusion of anything else.

    Clearly, I’m not a big fan of Wal-Mart or its management—and that’s why I’m surprised to find myself rooting for Wal-Mart CEO Lee Scott.

    Last month, Scott gave his annual start-of-the-year address to about 7,000 Wal-Mart employees and suppliers at the Kansas City Convention Center in Missouri. There’s nothing surprising about him doing that, but the tip-off that this might be a little different presentation was that fact that for the first time ever, Wal-Mart let the press in to hear him speak.

    And what a speech it was. The New York Times called it a social manifesto, a “lofty address that at times resembled a campaign speech,” and as our staff writer Jeremy Smerd reported on Workforce.com, “Scott [said] the company would redouble its efforts to improve the efficiency and reduce costs in health care, make environmental-friendly technologies affordable to customers and businesses and exert greater pressure on its supply chain to meet higher ethical standards in the way it produces goods.”

    What surprised me most about Scott’s speech was that his approach was different from that of, say, Bob Nardelli, the current Chrysler CEO and former Home Depot chief. A few years ago, Nardelli famously presided over a Home Depot annual meeting where he not only forced the board of directors to stay away, but where he also refused to answer any shareholder questions and used NFL-size guys in Home Depot aprons to intimidate anyone who tried to speak.

    Although Wal-Mart’s past approach hasn’t been quite as pugnacious as Nardelli’s, the company’s philosophy has been to stonewall the press when the questions get tough: The Washington Post charitably described Wal-Mart as “traditionally reclusive,” and CEO Scott surely signed off on that policy. Despite the company’s business success, Wal-Mart has been the target of a lot of people who felt that the world’s largest retailer could use its size and clout to do better, for both its employees and for the world in general.

    That Lee Scott is now talking about how Wal-Mart can help be ethical and more environmentally friendly and health-care-focused represents a sea change in the company’s traditional approach. It also shows that Scott and his management team have finally heard what a lot of people have been saying—that Wal-Mart’s scale and scope give it a unique opportunity to leverage its relationships for the common good just as it has leveraged them in the past for business efficiency and lower costs.

    Not everyone, however, buys what Wal-Mart and Scott are now selling. David Nassar, executive director of Wal-Mart Watch, a group funded by the Service Employees International Union, told The Washington Post: “Certainly Wal-Mart has made some progress in a few areas, but the progress is not what we can and should expect from the largest company in the world. In typical Wal-Mart fashion, [Scott] takes credit for ‘leading’ and doesn’t do it.”

    Nassar and Wal-Mart Watch are right to be skeptical, but absolutely wrong to not give Lee Scott his due. Yes, this is just the first step for Wal-Mart, but it is a huge first step for a company that in the past has famously failed to listen or react to critics much at all.

    In fact, I would add this: Scott should be applauded for stepping forward and laying out all the positive things that he is pushing Wal-Mart to do. It’s clearly just talk at this point, but inviting in the press and publicly making a big deal out of the company’s “social manifesto” is not unlike Hernando Cortez burning his ships when he first landed in Mexico. In other words, it’s a clear signal that there’s no going back.

    Will Scott and Wal-Mart carry through on these ambitious initiatives? Will Wal-Mart Watch and the company’s critics be patient and pipe down for a bit while the company tries to follow through?

    Only time will tell, but Lee Scott seems to have learned that although growth and profits are at the core of any successful business, a huge market leader like Wal-Mart needs to do more than just that to be successful.

Workforce Management, February 4, 2008, p. 34 — Subscribe Now!

Here’s a hypothetical business problem to ponder: What do you do when your top executive, someone who has only been on the job a short time yet has quickly revamped and revitalized the organization, has a momentary moral lapse and gets involved romantically with a subordinate?

    In America’s 21st century business environment, there’s an easy, knee-jerk answer—you get rid of the executive involved, even if he (or she) is doing a great job. That’s what happened to American Red Cross president Mark Everson, who resigned late last month after admitting that he had engaged in a personal relationship with a subordinate.

    For many, this is a cut-and-dried issue. After all, this is not France. How can an executive, particularly the top executive, continue to command the respect of the workforce after such a huge moral misstep? Wasn’t the Red Cross board right to call Everson on the carpet and force him out?

    You might say yes, but surprisingly, a lot of America’s business press is seeing it a bit differently.

    As The Wall Street Journal pointed out, “While CEOs sometimes have relationships with subordinates, until recently it was rare for such behavior to lead to a public dismissal.” And The New York Times talked to Regina Rafferty, a consultant to Red Cross donors, who was critical of the board’s quick action. “I’m sure there were sanctions,” she told the Times, “that could have been taken short of firing the man, which wasted the 18 months they spent searching for him, any money spent on that search, and his six months’ worth of learning.”

    Two experts on workplace romance, Stephanie Losee and Helaine Olen, authors of Office Mate: The Employee Handbook for Finding—and Managing—Romance on the Job, also questioned the seemingly precipitous decision by the Red Cross board.

    As they point out in an online column on the Huffington Post, “The American Red Cross has been a troubled organization in recent years, and more turmoil at the top is the last thing this worthy charity needs. … Ironically Everson, who had only been on the job for six months, had won raves for the agency’s handling of this fall’s California wildfires.”

    “If Everson was fired expressly for committing adultery with a co-worker in spite of his objective success in his position, we’ll be rather disappointed with the Red Cross,” Losee and Olen added. “People do stupid things at the behest of their hearts. We don’t need headline-making firings to serve as a modern-day version of The Scarlet A,” with a nod to Nathaniel Hawthorne’s novel.

    I can’t believe I’m writing this, but I tend to agree with the I authors that perhaps the Red Cross board was too hasty in pushing Mark Everson out the door.

    Yes, he showed terrible judgment here, but all reports say that this was a consensual relationship between two adults who were married to others. There’s no threat of a lawsuit (according to the Times), nor are there accusations of harassment or favoritism.

    More important, Everson, a former commissioner of the Internal Revenue Service, seemed to bring stability to the Red Cross, an organization that had been through five chief executives in six years and was severely criticized for its response to Hurricane Katrina. He “appeared to have brought a level of stability to the Red Cross that it had not experienced in more than a decade,” the Times wrote. “Even as he eliminated senior vice presidents and set what some thought were overly ambitious fund-raising goals, employees said, he was respectful of staff members and an ardent defender of the organization.”

    Leaders like that are hard to find. But more and more, it seems that we prefer easy solutions to complex problems. Zero-tolerance policies are just one example of how our society seems to prefer one-size-fits-all decision-making that is preferable to actually thinking through an issue and weighing the consequences of an action.

    Relationships in the workplace are never easy, and they get geometrically more difficult when there is sex involved. Everson made a bad decision, but was it one that was so terrible that it should have cost him his job? I’m all for decisiveness and strong leadership, but this seems like a hasty decision made on the fly that the Red Cross board may ultimately come to regret.

Workforce Management, December 10, 2007, p. 58 — Subscribe Now!

I’ve never been a big fan of John Kenneth Galbraith, the late economist and Harvard professor, but he once said something I wholeheartedly agree with. “Meetings are indispensable,” Galbraith observed, “when you don’t want to do anything.”

    Thomas Sowell, the Stanford professor and conservative columnist, had an equally strong feeling about the usefulness of meetings—and the people who seem to thrive on attending them—when he said, “People who enjoy meetings should not be in charge of anything.”

    As someone who has attended more than his fair share of meetings, I safely say that Sowell knows what he’s talking about.

    I can’t begin to tell you how many brain cells I’ve lost over my career attending senseless, wasteful, mind-numbing meetings. When I left one employer after more than 11 years on the job, I calculated that I had attended in excess of 11,000 meetings during my time there—and those were just the regularly scheduled ones that I could easily count. Add in special or unscheduled meetings, and I easily was up around 13,000 meetings in less than 12 years. Some were necessary, but many were futile and wasteful. I’d be surprised if more than 10 percent of them were truly productive.

    This all came to mind recently when I read a new survey by NFI Research that found that 57 percent of business leaders spend 21 percent to 60 percent of their time each week in internal meetings. Some 56 percent of the executives found half of their meetings to be productive, a stunning figure when you consider that these same executives considered the other half of the meetings they attended to be unproductive.

    “While meetings are a necessity of businesses, some organizations can tend to go overboard with internal gatherings, which can take away from a customer focus,” NFI chief executive Chuck Martin said in a press release that announced the survey findings. I hear what Chuck is saying, but I think he’s understating the issue. Structured, tightly focused meetings with a clear purpose and goal can serve a business purpose, but as the great UCLA basketball coach John Wooden once noted, “Never mistake activity for achievement.” Meetings should never be confused with actually taking action and getting things accomplished. At best, they’re a road map to focus the participants on what needs to get done.

    Monty Python’s John Cleese made a funny motivational video about this—it’s called, appropriately enough, “Meetings, Bloody Meetings.” But embedded in the classic Cleese humor are some smart tips on how to make sure that meetings are effective and productive. For example: “Control the flow. Keep participants from jumping from one area to another. Keep participants on task.”

    I have a million stories about all those meetings to which I surrendered brain cells, but the one that sticks out most is when my brutish, tyrannical boss told me that the daily afternoon scheduling meeting I ran was TOO efficient and made TOO many decisions TOO early in the day. He took over running the meeting, and of course, he failed to make any real decisions on anything, procrastinating long into the evening and driving everyone crazy. His sterling decision-making abilities drove the company to “encourage” him to take “early retirement” a few years later.

    Wikipedia, the online do-it-yourself encyclopedia, makes an interesting point in its definition of a “meeting.” It says, “In organizations, meetings are an important vehicle for human communication. They are so common and pervasive in organizations, however, that many take them for granted and forget that, unless properly planned and executed, meetings can be a terrible waste of precious resources.”

    In other words, too many meetings can suck the life out of a workforce. Those who love to schedule lots of meetings would do well to
remember the words of the late, great management guru Peter Drucker: “Meetings are a symptom of a bad organization. The fewer meetings, the better.”

Workforce Management, November 5, 2007, p. 58 —Subscribe Now!

I get lots of press releases. Few stop me in my tracks, but this one did because the numbers were so amazing. To wit:

Travel and merchandise incentives for employees is now a $46 billion industry, according to the Incentive Federation’s 2007 United States Incentive Merchandise and Travel Marketplace Study. According to study, $32.7 billion was spent on merchandise incentives and $13.4 billion on incentive travel, in 2006.

The size of that number took my breath away — $46 billion per year on employee incentives?????? Can that be possible? Do all those gift cards, holiday turkeys, and roundtrips on Southwest really add up to that much?

 “The incentive industry is booming,” Frank Katusak, Incentive Federation Board chairman, says in the press release, and some of the numbers broken out of the study seems to back him up:

• Thirty-four percent of U. S. companies used either incentive travel or merchandise incentives in 2006. Almost one third (31 percent) of companies used merchandise incentives, while 10 percent used incentive travel.
•  Incentive travel is seen as an investment by 85 percent of companies with revenues over $100 million in the study. Merchandise incentives are seen as an investment by more than three-fourths of respondents.
• Companies with revenues over $100 million are more likely to use both travel and merchandise incentives than smaller companies.
• The most common incentive travel application is for sales incentives. Other widely-used applications are non-sales employee recognition and consumer/user promotions.
• Merchandise incentives are most often used for non-sales employee recognition and business gifts.
• The average budget for travel incentives was $164,271. More than three fourths of incentive travel end users spent between $100,000 and $500,000.
• The typical budget for merchandise incentives last year was $119,008. Almost half of the merchandise incentive users spent between $100,000 and $500,000.

I’ve always questioned whether a lot of these incentive programs work, but these recent numbers would seem to indicate that they have a much bigger impact than I ever thought. And, as Roger Rickard, senior vice president for incentive travel company Don Anderson Inc. in Rocklin, California, told Workforce Management last September, “An organization, and particularly a public company, has an obligation quarterly to show that they are continuing to drive profits. And if the incentive travel is created to drive profit and is successful in doing that, that’s really not an area that anybody is going to risk changing.”

Do we have a looming labor shortage, or not?

    A few weeks ago, I wrote an item for my Business of Management blog  on what I called “The Talent-Shortage Myth.” My premise was this: The gloom-and-doom talk about a huge talent shortage based on the looming retirement of 76 million baby boomers is premature and overstated. I pointed to an AARP survey that found that 69 percent of workers between the ages of 45 and 75 plan to work during their retirement, as well as other anecdotal evidence, to make my case.

    Many executives and HR professionals responded with comments that add some additional insight and perspective to the point I was trying to make. Here are a few of the things they had to say:

    It’s about quality, not quantity. “The issue … is the quality of the workers we have, especially the competitiveness of our leaders,” wrote Marc Effron, vice president of talent management for Avon Products. “It seems that companies in developing countries are much more serious about building great leaders than we are. They are aggressively investing in good, basic leadership development—developmental assignments, projects, self-awareness—and they’re doing this with more commitment and a greater investment of time than many Western companies. So, whether there will be a physical shortage of talent may be a moot point if the talent we will have can’t compete.”

    The public sector is where the problem is. “While I agree that boomers in some areas may keep working as long as their health permits, in others they will not,” says Lisa Rowan, program manager for HR and talent management services at IDC. “Notable among the areas that will be hardest hit is the public sector. With traditional defined-benefit pensions and early-retirement incentives, teachers, for example, are opting out in record numbers. And, it doesn’t end in education, as it carries through the entire government sector as well.”

    Training and technology will be key factors. “Technology waits for no one. Sure, baby boomers may stick around longer, but will they adapt to the skills needed for tomorrow’s skilled workforce?” wrote Steve Bradley, founder and president of SystemLink. “Will companies step up to the challenge of training their workforce for the skills they need? Most companies already do a poor job of this and have not planned for it.”

    Boomers will stay for new opportunities. “As a recruiter, I interview these boomers all day long. Almost all of them are working, but are looking for new opportunities,” says Elizabeth Lyons at Onsite Financial. “The conversation is the same … [boomers) want to feel valued, they want to be heard and feel like at the end of the day, what they did had some point to it. That is the only reason why they are looking at opportunities. Work has long lost its luster for them.”

    These various insights offer different perspectives, but all come at the issue of a looming “talent shortage” from the same place—that it is not necessarily the aging of the workforce that is the issue, but one of many other factors that go hand in hand with it.

    Although I agree with all of the points that these workforce experts are making, it still doesn’t shake me from my original premise: The forecasted labor shortage is at best a demographic ripple, and not the giant tidal wave people claim is out there.

    And here’s one final comment from someone who agrees with me, an HR consultant who signed his note “T.J.” in Lancaster, Pennsylvania: “The stats on savings patterns and the disappearance of the lifetime pension suggest that retirement at 65 is truly an illusion for many of us boomers. We’ll be working later because we won’t have a choice. The workforce will not only benefit from our staying active longer, it will also be bolstered by the incoming 80 million members of the millennial—Gen Y—group that is larger than the boomer generation. Unfortunately, none of this is as headline-grabbing as the doom-and-gloom messages. Keep up the good work of challenging ‘common knowledge.’ ”

Workforce Management, August 20, 2007, p. 58 — Subscribe Now!

In the end, it is pretty easy to see what killed America’s Job Bank: bureaucratic indifference, governmental ineptitude and a singular shortsightedness.

I believe in the old adage: “The government that governs least, governs best.” And that’s why I’m having a hard time coming to terms with the Department of Labor’s imperious and precipitous decision to shut down America’s Job Bank.

    On the surface, the decision to shutter the site seems like a slam-dunk. After all, what’s the government doing in the Internet job board business? Don’t Monster, CareerBuilder, Yahoo HotJobs and about a zillion other niche job boards do the very same thing? How can a government job board effectively compete with them?

    These are all good questions, but remember that America’s Job Bank was developed back in 1995, at the dawn of the Internet age. And, as Workforce Management’s Ed Frauenheim reports in article “What Killed America’s Job Bank?“, it was modestly successful, as evidenced by its 2.2 million jobs, more than 600,000 résumés and 450,000 registered employers using the site. CareerBuilder, by contrast, only claims to have about 1.5 million jobs.

    But what concerns me isn’t whether America’s Job Bank was successful enough, or even if government should be involved today in the job board business. I understand the push to privatize government services that can be handled more efficiently by the private sector. But what I don’t get is the decision by the Labor Department to systematically starve America’s Job Bank of resources and finally shut it down without any attempt to sell it off or get any return on investment for the taxpaying public.

    In fact, the bureaucrats at the Department of Labor seemed to go out of their way to systematically ignore or belittle any data or hard evidence that would support keeping America Job Bank running in some fashion. For example:

    Fact: A 2002 Labor Department report found that 35 percent of employers tracked over three months hired at least one person through America’s Job Bank.

    Fact: The site played a major role in interstate job data sharing, with 39 states submitting job listings to the site. Fact: This year, America’s Job Bank won a Weddle’s User’s Choice Award, an honor that recognizes “the Web sites that provide the best level of service and value to their visitors.” Other 2007 winners include Monster, CareerBuilder and Yahoo HotJobs.

    Fact: America’s Job Bank continued to be a viable Internet job site despite the decision by the Labor Department had it on a maintenance-only (read “starvation”) funding level of $12 million per year since early 2004.

    Even at its peak, the site wasn’t that costly to maintain—at least by government standards. The cost of the operating the site was around $27 million per year at the high point, which is a relatively small amount in a $54 billion 2007 Labor Department budget. And, given all the wasteful government spending and “bridges to nowhere” that get funded in Washington, you would think that a resource that was actually providing a needed service and doing it effectively would be worth continuing—or at a minimum, selling to someone in the private sector who might see some benefit in running it.

    In the end, it is pretty easy to see what killed America’s Job Bank. It was bureaucratic indifference, governmental ineptitude and a singular shortsightedness by Labor Department functionaries who seem to have an agenda that is completely devoid of reason or common sense.

    The adage is true: The government that governs least DOES govern best. If you were ever unsure of that, just ponder the notion that if the government hadn’t been hellbent on closing down America’s Job Bank, no matter how wasteful that might turn out to be, there might have been a better outcome for the site, to say nothing of the employers and job seekers it served.

    Workforce Management, July 23, 2007, p. 50 — Subscribe Now!

Home Depot used to be about the people.

    I was sadly reminded of this during the hullabaloo over the abrupt departure of Home Depot CEO Bob Nardelli earlier this month. The focus of most news coverage was on Nardelli’s excessive compensation, his even more excessive $210 million departure package, and his pugnacious, imperial style.

    All of that may be true, but all of that also misses the point. Nardelli may have been overpaid, but from my perspective, his failure was rooted in his decision to take a hammer to the people-oriented culture that was the essence of the Home Depot experience.

    In the old, B.N. days (before Nardelli), Home Depot stores were filled with experts in orange aprons roaming the aisles and ready to help with whatever you might need. In fact, they generally found you before you even realized you needed them. It was the personal touch rarely found anywhere else.

    All that changed after Nardelli became CEO in late 2000. He decided that all those experts really weren’t needed, so he got rid of many of them, reduced the hours of others, and hired more part-timers in order to cut costs. Seemingly overnight, Home Depot went from a place with great customer service to one where it became difficult to find anybody who could help you.

    Slashing staff is a time-honored tradition of new executives. For many, it’s the first thing they do when they come on board, mainly because it’s easy and gives the sense that someone is taking charge and making things happen. It also makes the new executive appear decisive and confident.

    But, as basketball coaching legend John Wooden once said, don’t confuse activity with accomplishment. And mindlessly slashing staff without considering the big-picture perspective is frequently just that—lots of action that is more show than strategy and, ultimately, may hurt the operation more than it helps.

    In my experience, slashing staff and running roughshod over people is the province of weak managers who have few real skills they can fall back on. They often dismiss the need to be more subtle or strategic in dealing with people, and are dismissive of people who are, because managing people is difficult and hard to quantify.

    No one can accuse Bob Nardelli of being an inexperienced executive when he joined Home Depot, but many now question whether he was the right guy for the job, considering his background under Jack Welch at General Electric—a very different business environment where frontline staff just weren’t as important.

    “GE people are good at getting structure, system and strategy right, but they don’t always understand soft issues like culture,” Boris Groysberg, an assistant professor at the Harvard Business School, told The New York Times. That’s the “GE Way” that has been made famous by Welch. Many have tried to follow the Welch formula, particularly the “rank and yank” system of eliminating the bottom 10 percent of the workforce each year.

    The problem I have always had with the Welch formula is, well, that it’s a formula. Managing people is much more complicated than that and can’t easily be reduced to a formulaic approach if you want to be successful and do it right.

    That’s where Nardelli got into trouble. Yes, he was paid too much and frequently acted like an arrogant jerk (Remember the last annual meeting he presided over, where he told the board to stay away, then wouldn’t answer any questions about anything?), but his legacy will be what he did to the service culture for which Home Depot was so famous. He brought the GE playbook with him when he took over as CEO, but he failed to recognize that he was leading an entirely different team.

    One size does not fit all. A formula for success in one environment may be a recipe for disaster in another. The lesson we can all learn from Bob Nardelli is that people still do matter, especially in a people-oriented business culture.

    Too bad it’s a lesson that many companies, in their search for a quick fix or shortcut to success, have chosen to ignore.

Workforce Management, January 15, 2007, p. 34 — Subscribe Now!

A couple of weeks ago, at an event in Chicago called the Motivation Show, I attended a seminar titled “Reward & Recognition: Best Practices and Solutions That Work.” Little did I know it, but this session was a glimpse of the future—and it was a future I didn’t recognize.

The two speakers were the CEO and marketing director for a company that pitches reward solutions (prizes, travel and other such goodies) to businesses trying to find ways to better motivate and reward their workforce. What surprised me was that their presentation was all about how to reward and motivate Generation X and Generation Y employees, and that their idea of “best practices and solutions that work” in this area apparently included ignoring anyone in the workforce over the age of 40.

In other words, if you are a baby boomer (or beyond), there’s no need to reward or recognize you because you aren’t going to be around much longer anyway.

That kind of thinking runs counter to the premise of our cover story this week (“Face of the Future”), in which Workforce Management staff writer Ed Frauenheim challenges the conventional wisdom that America is heading for a huge labor shortage because of all the retiring boomers.

The story quantifies what I have been saying for some time: that the looming labor shortage is a lot of overblown rhetoric. There are a couple of reasons for this.

Reason No. 1: Boomers are unlikely to follow the neat and tidy retirement patterns of the past. For better or worse, members of the post-World War II generation have always done things their own way. Why would they be any different in retirement?

And that ties to Reason No. 2: People are living longer, healthier lives. Life expectancy in the U.S. has risen from around 50 in 1910 to 77.6 years today, according to the National Center for Health Statistics. Baby boomers will probably retire later than anticipated (if at all) and will be more likely to ease into a working retirement where they continue to work, but just not as much as before.

This doesn’t mean there won’t be shortages of people in some areas—for instance, in science- and math-driven fields like engineering or fast-growing sectors like health care and physical therapy—but rather, that the shortages will be in small pockets of the economy rather than across the board.

If you are a business executive or workforce management professional, one of your keys to future success will be keeping as many healthy, productive and experienced older employees on the job and in the workforce for as long as you can.

And forget about the longstanding practice of saving money by dumping veteran employees in favor of cheaper, younger talent. A new Conference Board survey of leaders from a consortium of business research organizations found that the incoming generation of young workers is “sorely lacking in much of the needed workplace skills,” both basic academic and more advanced applied skills. As the study concludes: “The future workforce is here—and it is ill-prepared.”

If you believe the Conference Board survey, keeping older workers in the workforce will increasingly become more of a business imperative because organizations will need those veterans to help mentor the younger generation of employees who don’t have all the required skills needed as they enter the workforce. Smart executives will realize that they need more good workers of all ages if they are going to continue to grow and succeed in our increasingly competitive global business environment.

That brings me back to my seminar in Chicago. The two guys who put on the reward and recognition session weren’t bad guys, just terribly shortsighted. They had a lot of interesting things to say, but missed the boat in failing to recognize that older workers are an important part of the workforce who are still going to be around—and need to be recognized and motivated—for some time to come.

Peter Drucker once said that the goal of a manager should be to “make productive the specific strengths and knowledge of each individual.” That’s true of all workers, today and tomorrow. If your business doesn’t have practices that focus on the motivation and productivity of the entire workforce, you’re missing the boat as well.

No matter where you work today, take comfort in the fact that you aren’t working for Radio­Shack.

    What’s that? You say you DO work for Radio­Shack? Well, then you have my deepest condolences, because I can hardly imagine a worse fate than working for a company where senior management thinks it is acceptable and proper to lay off 400 people by e-mail.

    Worse yet is the response to the not-unexpected public outrage from RadioShack’s corporate PR weasels. They claim that since employees knew layoffs were coming, and, since they knew that they would first be notified electronically of the layoffs, that doing it this way was actually a marked improvement over the traditional method.

    “We wanted to treat our employees with as much dignity and respect as possible,” a Radio­Shack spokesweasel told The Dallas Morning News last month. “It’s a difficult thing to do, and everyone will have a different opinion on how to do it. To be open and have constant communication, whether you’re impacted or not, was the right thing to do.”

    The only thing that makes any sense in that statement is that “it’s a difficult thing to do.” That’s an understatement of monumental proportions. As someone who has sat on both sides of the table in this process, I can tell you with certainty that it is probably the single most difficult thing a manager ever has to do in their working life.

    And, I don’t buy for one second the notion that notifying employees electronically of job cutbacks is some huge management breakthrough. Taking away a person’s job—their livelihood—is one of the worst things you can do to another human being. People deserve, if nothing else, as much dignity and honesty as you can give them in the process. You only get that by doing it in person.

    It should also be handled that way because management should be forced to personally confront the consequences of its actions. Mass layoffs done impersonally are like carpet bombing from 35,000 feet. You avoid seeing the impact it has on real people.

    I once had an arrogant boss who bragged that he had never fired anyone. Over time, I found out that’s because he always wimped out and made somebody else do his dirty work instead. In the real world, however, managers have to do tough things from time to time. Sometimes, that means letting someone go. No one likes this part of the job, but for a manager, it comes with the territory.

    Letting people go is easy to do when you don’t have to deal personally with the people getting canned. It’s a lot harder when you have to actually give the news to some poor soul who breaks down in front of you because he has some other personal crisis going on in his life, a crisis that just increased tenfold because you took his job away.

    When you have to handle layoffs in person, you find that you are a lot less willing to consider doing it in the abstract. And that’s why doing it by e-mail is the ultimate management cop-out. It further dehumanizes a process that is pretty inhuman to begin with.

    RadioShack is a company with a lot of problems. Last winter, the company’s CEO was forced to resign after it was discovered he had lied about his education, claiming he had two degrees he never earned. The new chief executive started his tenure this summer by canceling all conference calls with financial analysts, a curious move for a company that has closed some 500 stores and would probably benefit from being more open and transparent with shareholders and the public.

    From that perspective, informing workers of layoffs by e-mail is just another in a long line of wrongheaded, coldhearted and dumb actions by a company that can’t seem to figure out which way is up. There’s a great management lesson to be learned here. Unfortunately for those working at RadioShack, they’re learning it the hard way.

Workforce Management, September 11, 2006, p. 42 — Subscribe Now!

For years, Warren Buffett has been known as the world’s greatest investor, and for good reason. Since the early 1950s, he’s generated an incredible average return of 31 percent per year, compared with the S&P 500 return of 11 percent per year over the same period.

    This summer, Buffett picked up a new title—world’s greatest philanthropist—after he announced that he was giving away 85 percent of his stake in Berkshire Hathaway, about $37 billion, to charity. It’s the biggest charitable gift ever.

    But believe it or not, there is another, less heralded area in which Buffett has world-class skills. And, it is at the heart of what has made his Omaha, Nebraska-based holding company, Berkshire Hathaway, so successful that he’s been able to generate the fortune that fuels his philanthropy.

    For my money, Warren Buffett is also the world’s greatest manager.

    I was reminded of how good Buffett is earlier this month when Berkshire Hathaway reported a 62 percent rise in net income in the second quarter to $2.35 billion ($1,522 per share), compared with $1.45 billion ($941 per share) in the same quarter last year. Revenue jumped to $24.19 billion from $18.13 billion last year, a 33 percent increase.

    These are huge increases for any company, but especially big for Berskshire Hathaway, which is an eclectic mix of more than 45 subsidiaries such as Dairy Queen, Geico Auto Insurance, Helzberg Diamonds and Fruit of the Loom. Berkshire also has major investments in such companies as Coca-Cola Co., Anheuser-Busch, Wells Fargo & Co., American Express and the Washington Post Co.

    The genius of Buffett in managing this is simple. He puts good people in place and stays out of their way.

    More to the point, Buffett only buys companies for Berkshire that are a good fit. The focus is on businesses (usually family-run) with a strong culture and values, and that usually means a strong CEO. Buffett believes that managers of Berkshire companies ought to be left to run their businesses without interference from him and without any overriding unifying corporate strategies or goals.

    “We delegate to the point of abdication,” Buffett says. As The Wall Street Journal put it: “A prerequisite to a Berkshire purchase of any company is trusting that company’s managers to make decisions.”

    This is a counterintuitive strategy and not particularly popular in this day and age when Jack Welch and others preach the gospel of aggressive management, the forced ranking of workers (the famous “rank and yank” strategy) and other top-down management techniques.

    Buffett’s philosophy is very different. He recognizes that good people need room to operate without someone looking over their shoulder or micromanaging them from above. Once he decides to buy or invest in their business, he lets them operate it the best way they see fit.

    He described this process in his letter to Berkshire Hathaway shareholders in the company’s 2005 annual report:

    “Our managers focus on moat-widening (improving their long-term competitive position)—and are brilliant at it,” Buffett wrote. “Quite simply, they are passionate about their businesses. Usually, they were running those long before we came along; our only function since has been to stay out of the way.”

    This is not to say that Warren Buffett is right and Jack Welch is wrong, but rather, that there are very different ways to manage people and maximize the return to shareholders.

    As much as I admire Welch and what he did at GE, I’d much rather work for Buffett. He’s the boss every skilled manager would love to have—supportive, there when you need him, but more often, the boss who recognizes that you know what you are doing and stays out of the way so you can do it.

    It may be impossible to match Warren Buffett as an investor or philanthropist, but really, it’s easier to equal his stature as a manager. Just find great people, give them a lot of room to operate, show some trust and get out of the way. You may not be able to match Buffett’s track record, but I guarantee you this: You’ll be heading the right way. wƒm

Workforce Management, August 14, 2006, p. 58 — Subscribe Now!