14 June 2007

Jerks Need Not Apply

14 June 2007,

“Lars Dalgaard is CEO and cofounder of SuccessFactors, one of the world’s fastest-growing software companies … All the employees (he) hires agree in writing to 14 ‘rules of engagement.’ Rule 14 starts out, ‘I will be a good person to work with—not territorial, not be a jerk.’ One of Dalgaard’s founding principles is that ‘our organization will consist only of people who absolutely love what we do, with a white-hot passion. We will have utmost respect for the individual in a collaborative, egalitarian, and meritocratic environment—no blind copying, no politics, no parochialism, no silos, no games—just being good!'” — Robert Sutton, The McKinsey Quarterly, 2007 Number 2

Mr. Dalgaard is onto something. The advantages to his no-jerk policy are enormous. Bulls in the office are as dangerous as they are in china shops. Yet owners rarely deal with it. The consequences are staggering, both in terms of the emotional toll on brittle employees and in cold, hard cash.

Mind-body research performed in the past decade has proven conclusively that, without intervention, emotional or psychological turmoil can weaken the body’s immune system and lead to physical illness. The upshot? More absenteeism, a productivity plunge, rising health insurance costs and high turnover. One employee’s personal problems can set off a chain of events that could threaten a small company. As the old proverb goes, “For want of a nail, the kingdom was lost.”

7 June 2007

Cheat Vacation at Your Peril

7 June 2007,

Ah, summer, time to get down to … work? That’s what an important new study says my small-business friends have to look forward to. Fewer and fewer entrepreneurs expect to take a summer vacation of a week or longer—59 percent now versus 67 percent four years ago, according to OPEN, the small-business arm of American Express. I can only guess that most of these owners feel they’ll get more done and thus put more food on their family tables, a laudable goal.

I wish that were so, but I don’t think so. Without vacation breaks, what the owner picks up in quantity of hours worked she loses in the quality of that extra time. All work and no play kills her skills, whether it’s planning and organizing, interacting with employees or decision-making. They’re the same deleterious effects that are also caused by getting little sleep, eating poorly and exercising rarely.

Early in my entrepreneurial years, I tried cheating the clock in all of those ways and more. Turns out they actually cost me time when I factored in my overall quality of work. So think again when you try to increase your company’s profits by skipping that vacation or pulling into the fast-food lane. It ain’t gonna happen—you can’t cheat on time off any more than you can cheat sleep or the taxman.

2 June 2007

A Tough-Minded, Warm-Hearted Leader?

2 June 2007,

I still don’t know who I’m going to vote for come presidential primary season. But I do know that I’m looking for a courageous candidate who’s warm-hearted and tough-minded. Democrat Barack Obama showed me that a few weeks ago when he criticized Detroit automakers … in Detroit. I still can’t stop thinking of the guts that took. It reminds me of 1992 when candidate Bill Clinton criticized Sister Souljah … in front of an African-American audience. Obama told the executives that they needed to be more responsive to customer’s needs (fuel-efficient cars) as well as the country’s needs (reducing dependence on foreign oil). Obama’s temerity is a rare commodity for political leaders of either party, where standard operating procedure for stumping to locals is telling them what they want to hear. Obama also mixed caring into the talk as he proposed to help car companies who’ve committed to raising gas-mileage standards. Being a great leader—whether in business, a not-for-profit or politics—involves mixing a warm hearted with tough minded, in an authentic and courageous manner. Obama nailed that in Detroit last month.

11 May 2007

When CEO’s Go Bad

11 May 2007,

I’m still picking my jaw off the ground. Did you see what Northwest Airlines CEO Doug Steenland has decided to award himself? A $26.6 million bonus. It would be one thing if Northwest was on course to fantastic profits. Ah, no, hardly. Mr. Steenland’s airline is trying to break out of bankruptcy. What’s wrong with this picture? He’s taking this massive payday at a time when he has asked his employees to take a 40 percent pay cut over five years to get his books into the black. Mr. Steenland’s stock-option gain also stiffs Northwest’s investors and creditors. It’s simply unconscionable to profit from everyone else’s pain like that.

This is a textbook example of what it is for a business leader to NOT be caring or spirit filled, two of the six traits I believe build a strong, honorable company. Back when I had my own business, my bonus plan was no different than management’s plan. Mr. Steenland could learn a thing or two from Brad Anderson, the Best Buy CEO who in 2002 actually gave his annual option grants to his Best Buy colleagues. Mr. Anderson has been doing it every year since. There you go, opposite ends of the corporate responsibility spectrum: From Anderson to Steenland.

11 May 2007

"$350 Liquor? Just Spreading the Wealth"

11 May 2007,

Floyd Norris’s column (behind the pay wall) in today’s New York Times biz section, about high-end hi-balls in Manhattan, made me think about the flip side to the massive growth in incomes and wealth in the U.S. There’s a lot of entrepreneurial opportunity here. All this green tells me that suddenly there’s a lot more room at the high end of the price-quality-service continuum. Big business, with their steamrolling marketing budgets and capital muscle, is adept at exploiting these niches. But in the age of low-startup costs, thanks to widespread digitization, the little guys and gals can also step in.

Where are the opportunities? High-end personal training? Upscale medical practice? Garbage disposal that’s as discreet, bonded and private as a white-glove home cleaning service? Use your imagination.

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