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| Volume 8, Issue 2 |
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In This Issue:
 Bernanke's history lesson
The recession talk your board should have
Splitting the chairman and CEO roles
The seven saving graces for managers
 Delivering on [your customers] experience
 What to pay your top team
What seems to be the [customer] problem?
 CEOs and practices used to manage paradox
 Scuttling [your] scut work
 How to kill morale and start an exodus
 Does your company have an attitude problem?
How to get heart healthy at work
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Bernanke's history lesson
The Fed chief's study of the 1930s, when central bankers mistakenly kept money tight, may mean he'll dismiss inflation and keep slashing rates.
Federal Reserve Chairman Ben S. Bernanke went to Capitol Hill on Feb. 27 as if he were a general called from the battlefield to report on the progress of a losing war. The problem, as he explained to the House Financial Services Committee in his
semi-annual monetary policy report, is the economy is fighting enemies on two fronts: a financial crisis and an economic slowdown on one side; inflation on the other. The more the Federal Reserve does to fight the financial crisis and potential
recession, the worse inflation threatens to be. And vice versa. It's an unenviable dilemma for Bernanke, who took office two years ago, succeeding Alan Greenspan. The Fed is operating, said Bernanke, "in an environment of downside risks to growth,
stressed financial conditions, and inflation pressures." Bernanke indicated that for now, at least, quelling the...
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The recession talk your board should have
 Kevin P. Coyne is senior teaching professor at the Goizueta Business School of Emory University and the founder of Kevin Coyne Partners. He was formerly a senior partner at
McKinsey & Co. He writes The Strategist monthly for BusinessWeek.com/Managing.
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Don't waste valuable time discussing the nuts and bolts of cost-cutting. Your board should be asking if a recession presents any opportunities for growth.
Given the increasing likelihood of a recession, board meetings in the next few weeks are certain to include discussions about course corrections to stave off potential earnings hits. Such discussions are likely to irritate many management teams, who
have seen little time pass since completing their multimonth budgeting process. But there is a much larger issue than how management will react to such talks: Are boards having the right recession-related discussions? For most boards, the answer
is no. In fact, surveys taken during the last recession by management consultants suggest that as many as 70% of boards will make two classic errors: They will hold discussions they shouldn't, while not holding the discussion they should. With
regard to the first error, boards waste their valuable time and management's patience when they choose to discuss the operational details of belt-tightening and tactical cost reduction. Whether the remedy is cutting discretionary expenditures,
avoiding or delaying investments, implementing hiring freezes, or other "standard" actions, management already knows the options and the consequences better than the
board. [After all, every one of these alternatives was probably discussed at length in developing the budget just presented.] The board's role here should be...
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Splitting the chairman and CEO roles
 Beverly Behan is the managing director of the Board Effectiveness Practice of the Hay Group and co-author of Building Better Boards: A Blueprint for Effective
Governance. She writes "The Boardroom" for BusinessWeek.com/Managing/.
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U.S. boards typically combine the roles of chairman and chief executive officer, a majority practice among the Standard & Poor's 1500 composite index even today.
Among the companies that do so, it is also common to appoint an outside independent director to serve as lead director. In Britain, where boards historically have had fewer independent directors than their American counterparts, a different practice
arose: that of appointing an outside, independent director as nonexecutive chair. The question of whether U.S. companies should adopt the British model of separating chairman and CEO roles surfaces every time a corporate crisis erupts in America,
most recently in the controversy over Countrywide Financial (CFC), where institutional investors called for splitting the combined roles held by Angelo Mozilo. Institutional Shareholder Services' latest survey, released in September,
2007, noted that 36% of U.S. institutional investors favored the separation, although 50% found appointment of a lead director entirely satisfactory when the chairman and CEO roles are combined. Does separating the roles really provide better
governance, or is it simply window-dressing for shareholders with little impact on board effectiveness? Before deciding what's best for your board, here are some
practical implications to consider...
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The seven saving graces for managers
 George Hallenbeck is responsible for developing and managing Korn/Ferry's Lominger International Interview Architect® suite of products. He is
co-author of the Lominger publication Interviewing Right: How Science Can Sharpen Your Interviewing Accuracy.
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In managerial and executive success, it is what comes after the "but" that is important. Executives are generally hard-charging drivers with rough edges.
They are often not out to please people but are focused on getting things done. What does the research say about the characteristics that keep an executive in favor, even if he or she possesses some flaws or shortcomings? "He can be awfully shrewd
and is always looking for an angle, but you eventually realize that he has got the company's best interests at heart and is not looking out just for himself." And, "She can be very forward and biting with her ideas and opinions, but she is also
willing to take the time to listen carefully to your point of view." Or, "He can be pretty rough on people, but underneath he is compassionate and considerate." What comes after the "but" are called saving graces—qualities or redeeming features that
make up for other generally negative characteristics. Saving graces serve as balancers so that the driver strengths that got you where you are do not go into overdrive and damage your efforts. They also offer benefits of their own. Because
many saving graces contribute to perceptions of you as someone who is trustworthy, considerate, and insightful, they can help you more easily acquire information from
key people, gain access to limited resources, and navigate the bureaucracy. The [7] saving graces are listed in order of importance...
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Delivering on [your customers] experience
How do you consistently exceed customer expectations?
From a faulty product or flawed service to an angry conversation with a service representative, there are myriad ways companies can fumble on customer experience.
In today’s service-centric world, a single negative interaction can sour a customer for good. Yet many organizations still don’t seem to understand the importance of exceeding customer expectations—or, worse yet, fail utterly and obliviously to
achieve them. In fact, 80 percent of companies surveyed by Bain & Company believe they deliver a “superior experience” to their customers. When Bain asked the customers of those same companies about their perceptions, only 8 percent reported a
superior experience. Clearly, there’s a disconnect between the experience companies think they’re providing and the perception of that experience by their customers. At the same time, there is increasing recognition that customer service is a
competitive imperative, noted CEOs at a roundtable discussion sponsored by FedEx. At FedEx, company research shows that customer loyalty translates directly to the bottom line. “Every one percent increase in customer loyalty represents
approximately $100 million in revenue,” reported Michael Glenn, executive vice president of FedEx in Memphis, Tenn. “We spend a lot of time looking at how to build customer loyalty.” The effort is clearly paying off. Customer attrition averages in
the “mid-single digits”—an impressive figure for a service company. Glenn attributes that success...
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What to pay your top team
Are you paying your CFO too much, too little, or just the right amount? What about your technology chief? Or your operations expert? Read on and find out.
You're sitting across the desk from the guy who could be your next chief financial officer. He has the credentials, the experience, and a personality that will fit right in with your team. So how much money should you offer? Go too low, and you
risk losing the prospect. Go too high, and you're stuck with buyer's remorse. For nearly all companies in all industries, salaries are the single largest expense. But forget about finding reliable data to help you make a smart decision. Public
companies are required to reveal what they pay their executives, but private firms are under no such obligation, leaving private-company compensation information hard
to come by. Until now. Inc. decided to figure out exactly how much it costs to hire top-quality C-suite talent. To do so, we teamed up with...
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What seems to be the [customer] problem?
Customers may always be right, but they can also be lazy.
Many will never read a manual or take the time to pore over a long frequently-asked-questions page on your website. If they can't find something at first glance, they will shoot an e-mail to customer service or reach for the phone.
Next thing you know, your e-commerce business--the one that was supposed to help you take more orders with less manpower--is receiving up to 10,000 customer service inquiries every month. That's what happened to Carfax, a Centreville, Virginia,
company that sells accident reports on used cars. Its reports, which it offers through its website, help car buyers assure themselves that the used car for sale at the local gas station isn't a lemon. But the company was getting hammered with
customer questions, so many that the cost of answering them all threatened to derail its business plan. Now Carfax is using a new generation of customer support software that serves up detailed, easy-to-find responses to customer questions. That's good
for Carfax customers, who don't want to wait several hours for an e-mail response, and it's saving the company hundreds of thousands of dollars. The switch came in the nick of time. The company was getting ready to launch...
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Embracing commitment and performance: CEOs and practices used to manage paradox
How do chief executives establish strategic practices around their visions and intents? How do such practices make it possible to create both high commitment and high performance?
The central puzzle for HBS professor emeritus Michael Beer and colleagues is not the creation of high commitment per se, but the kind of commitment that is useful for the implementation of strategy and sustainable performance. Beer et al. sought out
major companies in North America and Europe that had a history of sustainable, above-average financial performance, and where there were indications of the companies being high-commitment organizations. They then conducted in-depth
interviews with 26 CEOs of such companies, asking about activities and practices that help create commitment and performance. [The research team found 5 groups of
interrelated managerial practices that characterize this kind of strategic management.] Key concepts include...
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Scuttling [your] scut work
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How Much Work Can You Off-Load? Pfizer conducted internal studies to find out just how much time its talent was losing on menial tasks and how much of that work it could outsource
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Pfizer devises a new kind of outsourcing--just for the time-wasting parts of your job.
Come 3 p.m. each day, workers staring at computer screens everywhere share the same dream: a magic button that says click here, and someone else will do this annoying project for you.
ps: by 9 a.m. tomorrow.
Starting this month, that button will become a reality for 10,000 Pfizer employees, though their button actually says oof, short for Office of the Future. "Our Harvard MBA staff was spending a lot of time doing 'support' work, not their actual jobs,"
says Jordan Cohen, senior director of organizational effectiveness. "These are people we hired to develop strategies and innovate. Instead, they were Googling and making PowerPoints." Who is at the other end of that magic button? Two outsourcing
companies in India. Their existence is an extension of the booming Indian outsourcing market, which already handles customer-service and computer programming for U.S. companies, as well as concierge services for executives too busy to answer
email and arrange for dry-cleaning. But Pfizer's move is an acknowledgment that companies are wasting resources by saddling their most-prized workers with their own support work. OOF was born of a financial crisis. In 2005, Pfizer announced a $4
billion annual budget cut to counterbalance the expiration of lucrative drug patents. The company later laid off 10% of its workforce. "It was going to be pretty traumatic," Cohen says. "Were we just going to tighten our belts, or work
differently?" At the time, Cohen was reading Thomas Friedman's The World Is Flat, which profiles India's virtual-assistant companies. After analyzing the activities
of Pfizer employees, he learned that they spend 20% to 40% of their time on four activities...
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How to kill morale and start an exodus
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Fewer people doing the same amount of work places a lot of stress on everyone" |
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The story you're about to read is true. The names have been changed to protect the innocent. My purpose for writing this is so that by reading it, people might learn what not to do.
Zoe is the departmental director for a 45-person department. Her employees are highly-trained and regulated. Working two different shifts in three locations, they're responsible for making highly-sophisticated components. Although for years
the department was tightly knit with high morale, it wasn't due to Zoe's leadership; she was known as a task master. It was her department supervisors that kept the gears of teamwork well-oiled. Scheduling people to cover two shifts at three
locations is rather tricky. Fortunately, the locations are within fifteen miles of each other, so if one location is short-handed, it's easy for someone else to be
there in just a few minutes. The first crack in Zoe's dam occurred without notice about three years ago...
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Does your company have an attitude problem?
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You know the type: coworkers who never have anything positive to say, whether at the weekly staff meeting or in the cafeteria line.
They can suck the energy from a brainstorming session with a few choice comments. Their bad mood frequently puts others in one too. Their negativity can contaminate even good news. "We engage in emotional contagion," says Sigal Barsade, a Wharton
management professor who studies the influence of emotions on the workplace. "Emotions travel from person to person like a virus."Barsade is the co-author of a new paper titled, "Why Does Affect Matter in Organizations?" ("Affect" is another
word for "emotion" in organizational behavior studies.) The answer: Employees' moods, emotions and overall dispositions have an impact on job performance, decision making, creativity, turnover, teamwork, negotiations and leadership. "The state of
the literature shows that affect matters because people are not isolated 'emotional islands.' Rather, they bring all of themselves to work, including their traits, moods and emotions, and their affective experiences and expressions influence
others," according to the paper, co-authored by Donald Gibson of Fairfield University's Dolan School of Business. An "affective revolution" has occurred over the last 30 years as academics and managers alike have come to realize that
employees' emotions are integral to what happens in an organization, says Barsade, who has been doing research in the area of emotions and work dynamics for 15 years. "Everybody brings their emotions to work. You bring your brain to work. You bring
your emotions to work. Feelings drive performance. They drive behavior and other feelings. Think of people as emotion conductors."In the paper, Barsade and Gibson consider three different types of feelings...
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How to get heart healthy at work
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If you regularly load up on oatmeal for breakfast, eat salmon for dinner and jog using a heart rate monitor on the weekends, you probably think you're pretty heart smart.
But if during the work week you're stressed out, constantly hunched over your computer and eating erratically, experts say, you're not doing enough. It's estimated that one in three American adults has one or more types of cardiovascular
disease, according to the American Heart Association's 2008 statistics. If you want to avoid becoming one of them or, worse, one of the nearly 2,400 Americans who die each day from cardiovascular disease, you've got to find ways to make your work life
heart healthy, too. If benefits such as weight loss and lower blood pressure don't motivate you, consider that a makeover of your work habits also could improve your performance. Wachovia Bank employees who participated in an energy renewal program,
which included a number of heart healthy habits, outdid a control group of colleagues' year-over-year performance, showing higher revenues on three kinds of loans over the first quarter of 2006, according to a 2007 Harvard Business Review
report."It's not just about health," says Jolene Bodily, registered dietitian and wellness program coordinator for the Executive Program, a month-long course for managers on the rise, run by the University of Virginia's Darden Graduate School of
Business. "There is such a connection between what is happening physically and how people perform.".Top Tips...
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