Feb/Mar 2006

Managers: Are you doing what really works?
Evidence-based. That's the term the medicos use these days to denote that they're using treatments and approaches that reflect the latest research about what works.
If you're anything like me, you probably thought that your doctor already was always using the treatments that were known to work. The truth is that most doctors don't have the time to study up on the latest research for every little thing that could go wrong with you. Hard enough for your own job, isn't it?

Yes, it turns out that doctors aren't the only ones. Most managers, according to a couple of guys writing in the Harvard Business Review, haven't been practicing evidence-based management for probably a couple of centuries. That's right. Managers all over the world are operating their companies and dealing with their employees according to what they learned in school, no matter how outdated or inappropriate those approaches are known to be today--or even worse, just according to how they feel.

That's why if you study these things, you're surprised to see articles about the same problems appearing over and over again. And, say these authors, you see the same old strategies dressed up in slightly different ways and trotted out as "hot" "new" solutions. And it keeps happening this way because we all keep buying into the deception.

It's not because managers are evil, they say. It's just that when you've been doing something a long time, you tend to trust your own experience. And certainly, some things--like the nature of human beings--isn't changing a whole lot. But the cirumstances surrounding those human beings certainly do. What works for a company of 40 employees is often useless in a company of a hundred or more. If you get a promotion to another kind of company and you do what you used to do, it may not work. If you do what your predecessor did, often without having a good idea if it did work, you surely don't know it it will continue to.

They debunk the popular belief that stock options are a great incentive for executives--that this creates an owner mentality that motivates people to work harder and longer. In fact, says the evidence, "equity ownership has no consistent effect on financial performance."

The authors list seven reasons why it's so hard for managers to act based on evidence. It's a telling list that encompasses many truths you've heard before:

1. There's too much evidence. Who can read and digest it all? And a lot of it is presented so stiffly that few can really "get" it and apply it.


2. There's not enough good evidence. Reliable assessments of how well things actually work are in short supply.


3. The evidence doesn't quite fit. Each company's context is slightly different; managers hesitate when they think maybe this wouldn't apply here.


4. What you hear is misleading. Here they mention the problem of consultant accountability--do they get evaluated on whether what they recommended actually improved things? Or do they just get more work--to keep trying to fix what the first try failed to?


5. You are misleading yourself. When you only hear what you already believe, you create the realities you expect. Evidence says, if you expect people to cheat, more of them will.


6. The costs of implementing the evidence-based solution are too high. The ripples from one big change may require you to evaluate further and implement additional evidence-based changes. It can all blossom into a mass of projects that will eat into the time you need to do your regular job.


7. People like stories more than evidence. And stories have their place, say the authors. Stories can be very powerful for suggesting hypotheses, enhancing hard research, and getting people to buy in.

Have you ever been subjected to a human resource practice that made you feel like crap? Somebody comes up with some way of measuring or ranking that seems to help the company improve performance, but it ends up demoralizing the employees because no one ever discussed it with real people. I've seen it often. The authors mention the perils of benchmarking some other company without really understanding why the beautiful practice works there--but might be a disaster at your place.

Yeah, no doubt about it. Managers have a tough job. That's part of why I think the HeartMath.org people are on the right track. When we all start consulting the usnpoken wisdom of our hearts more, the workplace will get dramatically better for everybody.

Sincerely,
Barbara

January 2006

Simple genius - Drucker on being a manager
For more than 50 years he stunned the business world with his observations and admonitions. Born in Germany, he studied economics, journalism and law and, to escape the tidal wave of Nazism, came to the United States in 1933 as a professor and a freelance writer [fascinating occupation, that].

In the more-than-60 times the Harvard Business Review invited him to appear in its pages, Drucker tore into executives' complacency about planning and managing businesses and the people in them. In his book The Practice of Management, he lays it all out using, as does HBR, stories of high-profile companies like Sears and IBM to drive home his points.

Today, his wisdom--like Deming's on quality--is considered baseline stuff. Everybody accepts these truths--yet somehow we still struggle with execution. In celebration of his legacy, HBR this month features selected articles from its archives. I like the last two punchy ones, so you get a snippet from each:

From "They're Not Employees, They're People" (2002). Knowledge workers, though a minority, increasingly create the jobs and wealth in our society. To get the greatest productivity from yours, Drucker advises:

• Cut out dull, routine "employee" paperwork--automate it and/or outsource it.


• Spend time with promising people--get to know them and be known by them.


• Just as in running research department or conducting a symphony orchestra, the key to greatness is to look for people's potential and develop it.

From "What Makes an Effective Executive" (2004). Forget charisma--that's not what it takes to be a leader. In his 65 years of consulting with CEOs (of every personality type imaginable), he found the great ones all did eight things consistently. In a brilliantly succinct description of a leader, he says they all:

1. Asked: What needs to be done?


2. Asked: What's right for the enterprise?


3. Developed action plans


4. Took responsibility for decisions


5. Took responsibility for communicating


6. Focused on opportunities rather than problems


7. Ran productive meetings


8. Thought and said "we" rather than "I..."

Drucker throws in one more--and says consider it a rule: "Listen first. Speak last."

I don't know about you, but I've found some other kinds of readings also help me understand how to be a better manager--readings in which philosophers say you can maintain your own values without rushing to find fault with others who think differently. Seems like good advice on how to fill in the space--to process the information you're receiving--while you "listen first" and before you "speak last."

And for every step you take towards being a better manager, the bonus is you'll be getting better at being a parent, a partner, and a friend.

Sincerely,
Barbara

December 2005

Want employees to be your best business developers? Forget lunch
I love this story, so I'm going to share it with you.

Have you ever been to an Outback Steakhouse? I think I was there once quite a few years ago (surprisingly, it's been around for closing on two decades now), and I don't remember wanting to run right back or anything.

But today the chain is one of the most popular in America--a fact that's hard to argue when you look at their outstanding growth rate. Twenty point one percent (20.1%) growth in sales last year and 15.9% in number of employees--those are extraordinary figures even for a hot young company, let alone an old-timer of 17 years.

How in the heck do they do it? Is it the best steak you've ever eaten? Some would say so. Is it the best value for dollar in the market? Depends on your taste in food. The folks at Harvard Business Review were just as curious as you and I might be, so in a recent issue they featured a long inteview with the founder, former CEO and current chairman of the Tampa, Florida-based corporation.

We write a lot in this newsletter about leadership, good management practices, and good internal customer (employee) relations. The Outback story is a classic example of good management that hearkens back to the early days of America. Back when everybody could become a star. All you had to do was work hard, pay your dues, and with a little cash, a little luck and a lot of sweat, you could own a successful business and maybe get rich enough to call your own shots--and even relax on vacation once in a while while still collecting revenue.

Well, that's the way it still is with Outback. Managers are made, not hired in. People start in the kitchen, or the reservations desk, or wherever, and they cycle through nearly every job in the place--until they've earned the right to talk about being the boss. Outback deliberately plans to give every single employee an opportunity to grow. And it all started with the original four owners sitting down--once they'd reached store number 20--to define their core values.

True, they all agreed people came first, but they also realized that "people" meant several different constitutencies: suppliers, partners (the men and women who ran the restaurants and the regional operations), customers, employees, and the community. And while that's true for almost all businesses, here's where Outback stepped a little off the beaten path: they decided that no one group was more important than any other--not even the customers. "We figured," they said, "if all the other groups were served to their satisfaction, inevitably the customers would be, too."

Satisfied employees ranking right up there with happy customers? Well, good internal customer service isn't revolutionary, but it takes planning and dedication to make it work. The next step at Outback was to develop a constitution--stuff like "kindness before results" and "quality before cost"--and then left it to the individual managers to decide how far to implement its principles.

Turned out, when they measured ROI, the stores that followed the constitution most closely outscored the others by dramatic amounts in every category, including revenues realized. So the "nice-to-believe" became the "smart-to-live-by" principles of Outback.

Oh, yeah. And they don't serve lunch because it wears the staff out to serve two shifts--and who wants a worn-out waitperson at your table for dinner?

A neat little story of how the good guys in business really do win. I hope you enjoyed it as much as I did.

Sincerely,
Barbara

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October 2005

Saving on healthcare
In the wake of a radio news report yesterday that a secret memo was found circulating in WalMart executive circles that said managers were to make sure every WalMart job involved physical labor of some kind so that no unhealthy people would apply for work--and thus save the company money on health insurance costs--this just in: an extensive report in the Harvard Mental Health Newsletter that indicates mental illness is a lot more common than most of us imagined.

The study's findings are remarkable in that almost half the 9,000 adults surveyed had had at least one psychiatric disorder (as defined by the American Psychiatric Association's diagnostic manual) in their lives. Common individual disorders included major depression (17%), alcohol abuse (13%), social anxiety disorder (12%) and conduct disorder (9.5%). More than a quarter (28%) of the people interviewed suffered from more than one psychiatric disorder. Funded by the National Institute of Mental Health and a bunch of academic institutions and foundations, this study is the first large survey of mental illness and its treatment in the United States in a decade.


In the year before the study, 26% of the interviewees admitted having had a psychiatric disorder (22% of which were "severe," meaning involving a suicide attempt, psychosis, serious violence, substantial disability or being unable to function with family, work and in personal relationships for a month or more [italics mine]. And the authors of the study say these results are undoubtedly short of reality--because people with serious issues notoriously avoid participating in self-reporting studies of this kind.

Now, while WalMart's memo is certainly in clear violation, both in letter and in spirit of EEOC discrimination laws, the fact is this illegal directive is just a drop in the the cost-of-doing-business bucket anyway. People who suffer severe mental illness may have no problem at all doing physical labor, especially when symptoms are not active.

But consider the costs you bear when employees are dysfunctional on the job--productivity levels drop precipitously as people stop focusing on work and cause trouble in collegial and reporting relationships--both up and down the corporate ladder. You're not paying in health care costs; you're paying with a damaged bottom line--but it's not as simple to pinpoint as a line item on the budget.

So what's a business owner to do about the spiraling costs of health care? I know of one enlightened company president who invites his valued employees to participate--right along with him--in efforts to improve their health (lose weight, lower blood pressures, etc.), and thus earn the right to pay a lower employee portion of the then-lower-total burden.

Whatever the solution, if it puts profit over people, it won't work for the long haul (see blog entry below about losing people). Profit's not a dirty word--but the idea that you can improve profitability by cutting certain people out of jobs is a muddy one.

Sincerely,
Barbara