Category: Leadership

Danish electronics retailer Fona is losing money so they just announced that all store employees must accept a 5-10% pay cut or face termination (Danish article via Google translate).

That’s a mistake and here’s why:

1. This is bound to make employees unhappy and frustrated leading to bad customer service and lower sales.
2. Those employees who can find a better job somewhere will do so. Fona will be left with only those who can’t get away.

Circuit City tried something very similar in the US a few years ago and saw exactly those two effects. And they went bankrupt a very short time later.

And if you’re in retail, staff is NOT the place to save money. A study found that:

… every dollar in additional payroll led to somewhere between four and twenty-eight dollars in new sales. Stores that were understaffed to begin with benefitted more, stores that were close to fully staffed benefitted less, but, in all cases, spending more on workers led to higher sales.

What could they do instead? Here’s a fantastic example: In 2000 computer chip maker Xilinx was facing massive financial problems and they introduced a pay cut that was progressive and voluntary. Read the whole story here – it’s a fascinating case of facing a serious crisis with creativity, instead of with layoffs.

I wrote about this in my 3rd book – you can read the whole story of Xilinx here.

I just want to make it very clear, that I’m not saying that Fona’s decision is “mean” or morally wrong. They are well within their legal rights as employers. I’m saying that it’s a bad business decision that will end up costing Fona much more money than it saves them.

Related posts

• Let me tell you how I feel about the crisis.
• Hooray for the crisis.

Companies waste huge amounts of time, money and energy on practices that pretty much everyone hates, not because these practices deliver any value but out of habit and because “everyone else does it.”

Here’s my list of the top 10 things companies should stop doing right now.

10: Competitive team building events
Californian home security company Alarm One Inc. had a team building event where winners poked fun at the losers, throwing pies at them, feeding them baby food, making them wear diapers and swatting their buttocks with rival companies’ yard signs.

The good news: Alarm One Inc. got swatted in court when an employee sued them and had to cough up USD 1.7 million.

The bad news: A lot of team building events borrow elements from this approach, setting up artificial (and often meaningless) contests pitting coworkers against each other. Let’s stop that kind of thing once and for all.

More: The top 5 reasons why most team building events are a waste of time.

9: Performance reviews
Performance reviews are fundamentally broken. Managers hate them and fear them and resent the drain on their time. Employees often leave reviews demotivated, cynical and with no clear idea of how well they’re doing and how to improve.

In the words of Sammy Culbert, professor of management at the UCLA Anderson School of Management in Los Angeles

To my way of thinking, a one-side-accountable, boss-administered review is little more than a dysfunctional pretense. It’s a negative to corporate performance, an obstacle to straight-talk relationships, and a prime cause of low morale at work. Even the mere knowledge that such an event will take place damages daily communications and teamwork.

More: Top 9 Reasons why Performance Reviews Don’t Work.

8: Job titles

When you ask people what they do for a living, most people will give you their job title. As in “I’m an engineer” or “I’m a project manager” or “I’m a developer”.

But that’s not what you do – that’s just your title. It really says nothing about you or your job, so I always find myself asking follow-up questions. “So what kind of projects do you manage?”

And make no mistake: A lot of energy is spent in organizations on trying to give people the right titles and fighting over who gets be X and who gets to be senior X. I think we’ll be fine without’em.

More: Death to Job Titles

7: Org charts
Seriously – when was the last time you needed your workplace’s org chart for anything?

6: Staff satisfaction surveys
I am thoroughly skeptical about job satisfaction surveys. Here is one reason why:

I’ve been with my current company for 9 years, and our “engagement score” just hit an all time high in a year when I have heard more employee concerns about the company than ever before.

Over the last five years, I have personally seen a combination of rewriting survey questions and “teaching to the test” that I believe solely explains the reason for the current score that clearly doesn’t match reality.

For those who might think I’m just cynical, a member of our executive team responsible for the largest part of the company told the HR team to check their math when they showed him this year’s score.

More: Do Staff Satisfaction Surveys do Anything?

5: Job descriptions

Job descriptions are almost always incomplete and/or obsolete. When was the last time you even read yours?

Also, if your job can be adequately described in one page, it will soon be outsourced to India.

More: 5 reasons why job descriptions are useless.

4: Corporate values
Having a conversation about your workplace’s identity and mission can be very inspiring. But typical values programs aiming to define and instil corporate values like respect, openness, excellence, team-work etc. rarely work.

More: Why corporate values often have no value.

3: Employee handbooks
Employee handbooks are usually long, boring and useless. They gather dust on the shelf or linger unread on the company intranet.

Let’s abolish them. Or alternatively, do as computer game company Valve did and let the employees write it. The result is the coolest and most useful employee handbook ever.

More: The Top 10 Most Awesome Things from Valve’s Employee Handbook.

2: Rules and red tape
Alabama A&M University has this policy in case of a death in an employee’s family:

Staff members shall, upon request, be granted up to three (3) days annually of bereavement leave for the death of a parent, spouse, child, brother or sister, grand parents [sic], grand parents-in-law, grandchild, son or daughter-in-law, mother-in law, father-in-law, brother-in-law, sister-in-law, step children, children-in-law, aunts, uncles, nieces, nephews, and first and second cousins. Other relationships are excluded unless there is a guardian relationship. Such leave is non-accumulative, and the total amount of bereavement leave will not exceed three days within any fiscal year. If additional days of absences are necessary, employees may request sick or annual leave, after providing an explanation of extenuating circumstances.
(source)

Got that? Contrast that with Nordstrom’s rule book:

Rule #1: In all situations, use your good judgement. There are no further rules.

Let people do their jobs – don’t put endless rules, regulations and bureaucracy in their way.

1: Pointless meetings

Meetings are one of the most hated workplace activities. Studies show that the more meetings people attend, the less happy they are at work and that meetings are the biggest time waster keeping people from actually, you know, doing their jobs.

I’m not saying we can abolish meetings entirely, but we should abolish all meetings that don’t lead to tangible results. Fortunately, you can fix all problems your workplace has with meetings with one decision: Make all meetings voluntary. You’re welcome.

That’s impossible!!!

Most of the time we advice our clients on what they can do to become better and happier workplaces. But an equally important question to ask is this: “What can we stop doing that is making employees unhappy?”

If you look at the list above and think “That’s impossible! There’s no way we could abolish X,” I want you to ask yourself this: When was the last time, you could only do your job, because you had X?

For instance, when was the last time the org chart was incredibly useful to you? When was the last time you could only complete a project on time because everybody working on it had just the right job title? When was the last time you could only make an important decision by referring to the corporate values?

Your take

Are any of these indispensable to you? Or conversely, did we miss any on the list? Has your workplace abolished some of these already? What was the results?

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Do you have time for your employees? Or do you have more important things to do?

John from Seattle wrote a frustrated comment at my blog some time ago. One of his colleagues at a huge IT project is simply not cutting it: He is always late, he never meets his deadlines and he doesn’t respect agreements. John has raised these issues with his colleague several times without any success, and now he feels that it’s time for his manager to step in.

And John’s manager would very much like to discuss this with him the next time he has a bit of space left in his schedule – which is in three weeks! That’s not good enough because in the meantime John grows more and more frustrated having to do his own job as well as that of his incompetent colleague. John is this close to just quitting – and the company is close to losing a valuable employee just because his manager hasn’t got time to talk to him.

A few years ago The Danish Association of Managers and Executives published a study showing that 60% of Danish managers have too little time for their work because they spend too much time on their employees.

What a load of nonsense! As a manager, your employees are your job. Your very first priority is to keep them happy and productive. Of course all managers have other things to do as well, but if you put your own assignments above those of your immediate subordinates, the result will be an increase in one person’s efficiency (yours) at the expense of that of 10-20 others (depending on how many you are responsible for).

If you’re not 10-20 times more productive than them, that’s a really bad idea.

So you need to have time for your people every single day. Time for two things: creating and maintaining good, friendly relations and handling any crises that may arise.

Some of the world’s top executives have already caught on: Marissa Mayer, in her time at Google opened her office door every afternoon between 4 and 5.30. There was a signup sheet on the wall and couches and WiFi in the hall outside so people could work while they waited. During this hour and a half, all Google employees could present their questions, doubts, wishes or ideas.

A few years ago, IKEA held a European executive meeting in their store in Gentofte, Denmark, and founder Ingvar Kamprad was present too. When the meeting ends, Ingvar takes a stroll through the store, kindly and smilingly greeting each and every employee. He encounters two female employees talking to each other and approaches them with a smile and the words: “And what are too such lovely ladies talking about then?” – following up with giant hug for them both. Not bad for a man who’s a multi-billionaire in charge of well over 100,000 people worldwide – and 86 years old.

Many managers believe that it’s enough to just proclaim that “My door is open”. Well, it’s a good start, but your schedule is also open – or do you have wall-to-wall meetings for many weeks to come? So what exactly can YOU do make time for your employees? I’ve got two simple and effective tips for you:

Tip No. 1: Say good morning!
A kind greeting from the boss has a completely amazing effect. But it’s not enough to just put your head through the door and yell good morning to the room in general. Walk the aisles and give each and every employee a personal greeting. Shake hands, look people in the eyes, and connect with people – “Did you have a nice weekend?”; “Did you watch the game yesterday?”; “Is your son doing better?”.

Tip No. 2: Reserve five minutes for an employee every day – without any particular agenda.
Just talk to a new one every day, simply to find out how things are going. You can make a list to help you keep on top of whom you have talked to and when and ensure that you get around to everybody eventually.

This will strengthen your relationship with all your employees, but you will also hear a lot that you might not have been told otherwise.

Do these steps sound trivial? Well, you’re right, they are – but that’s why they work! They’re so simple, they cost nothing, they take (almost) no time at all, and every manager can do them.

And if you don’t think you can find time for them, my answer is simple too: You can’t afford not to! How many good employees do you risk losing if you haven’t got time for them? And how much will it cost you to replace them?

I’m about to rant. You’ve been warned :o)

In this article, Lucy Kellaway argues against public praise in the workplace, calling it

…a dangerous, corrosive substance that has a powerful and positive effect on the person it is aimed at but is better administered behind closed doors.

She bases this partly on her own observations:

I’ve often observed this effect. If you watch the faces of journalists when a colleague is told that their latest article was a marvel, they pretend to take it in their stride: they may even manage to splutter out agreement that the article was indeed brilliant. But if you look carefully you may see a slight puckering around the mouth as if they had just sucked on a lemon.

And she also references a new study on this:

The authors conducted four experiments in clothing stores to investigate consumers’ reactions to salespeople’s flattery. In each case, participants heard salespeople making flattering comments about other customers’sense of style. Then researchers asked various questions about their opinions of the salespeople.

The result:

The authors found that observing someone else being flattered causes people to compare themselves to that person, which leads to feelings of envy. Another experiment showed that participants experienced more envy when the target of flattery was a peer (a student at the same university).

Got it? Praise is fine but only in private. If you praise employees in front of coworkers, the result is envy. In Kellaway’s words “the effect is roughly like drinking acid.”

I say “nonsense” for three reasons.

First of all, Lucy Kellaway’s personal experiences with public praise may be perfectly correct but remember, the plural of anecdote is not data. That’s why we do studies.

Secondly, what about that study – didn’t that prove that public praise is toxic? Well, if you read the article itself, you’ll find that it’s not actually a study on praise, it’s a study about flattery. Those two things are not the same at all. Being flattered for your dress sense by a store employee is not analogous to being praised for your good work in the office.

Also, the study looks at shoppers in a clothing store. To think you can directly transfer that to the workplace is incredibly simplistic. Unless you work in a clothing store, I guess :o)

And thirdly, public praise is actually a common practice among all the world’s happiest workplaces. They consistently praise and celebrate people and teams who deserve it in public.

Which begs the question, if public praise is so horribly toxic, then why does it work so well at Zappos, Southwest Airlines and Virgin, just too mention a few?

To conclude on such a flimsy basis that public praise is bad, bad, bad and recommend that managers stop doing it is in my opinion overly simplistic.

But what depresses me the most about Kellaway’s article is not the sloppy reasoning, but the negative view of human nature it reveals. Does she really think that people are so petty and narrow-minded that we can’t deal constructively with our coworkers being praised? Does she really think we are completely unable to enjoy other people’s success and just be happy for them? What a sad, sad view of human nature.

Let’s add some nuance instead, shall we?

Is public praise always good?

Is public praise in the workplaces always good? No. I can imagine at least three ways public praise can backfire.

1. Some employees, especially introverts and those unused to praise, may prefer being praised in private. Public praise makes them feel exposed and singled out – even if it is for something positive.
2. If the workplace is already toxic and employees dislike each other, then praising one person will annoy everyone who hates that person.
3. Finally, some studies have shown that we tend to have a slightly negative view of positive people. For instance, people who are against a topic are rated as slightly more intelligent than people who are for the same topic. Managers who praise their employees may be victims of this bias. In fact, this may be partly what is going on in the study Kellaway references.

Advantages of public praise over private praise

Also completely missing from Kellaway’s article is any discussion of the possible advantages of public over private praise. I can see at least three:

1. Spreading best practices – If I hear someone else being praised, I can learn from what they did right and learn from their good example.
2. Pride – If people are praised in front of others that makes them proud and happy.
3. Create a sense of results and progress – When my coworkers are praised, it shows that we’re doing good work and achieving progress. Teresa Amabile’s research shows that perceived progress is a powerful source of happiness at work.

The upshot

Public praise is a fantastic practice which has proven its value in many, many workplaces. It is not a universal good (see above), but we certainly haven’t seen enough evidence to declare it universally bad.

My recommendation to managers remains the same: Praise whenever there’s a meaningful reason to do it, and praise in public whenever possible so more people get the benefit.

OK – rant over. Phew, I feel all better now :o)

Your take

What’s your take on this? How do you feel when your coworkers are praised? Do you feel happy for them or hate their guts? How would you feel about working in a workplace, where praise is given only in private?

Related articles

• You manager probably thinks criticism is better than praise. He’s wrong. Here’s why.
• The top 5 ways NOT to praise people at work.
• How Richard Branson praises Virgin employees.

Meet Pawel, the CEO of IT company Lunar Logic in Poland. Unlike most CEOs he doesn’t have a fancy corner office. In fact, he has NO office. Here’s how it works:

A laptop desk, a bean bag and a recycled cardboard box – that’s all he needs to set up a flying office. He can usually be found in a few rooms in our office, shifting his spot couple of times a day. Or a week. The pattern changes. Not only because of a possible back pain – there are several reasons for him being in motion. Some of which have already changed our company.

I think it’s a great experiment. Does it work? Here’s what Pawel says:

I can grab my flying office in my hands and move it to the place where I’m needed or I feel like I can be helpful. I need just a bit of space in a corner or by the wall and done – a new office set up.

Surprisingly, sitting in the corner and almost on the floor has a few unexpected advantages . First, you need very little physical space, which means you will fit to almost any room (unless it is already packed beyond any healthy limits). Second, this way you become almost invisible, which definitely helps if your goal is to understand how the team functions, and not just scratch the surface.

Third, and arguably most importantly, you strip yourself from status symbols. Instead of a huge desk dubbed by your colleagues as the airstrip, a leather armchair and a locker just the simplest set that does the job.

All in all, you’re way more accessible and much less intimidating. Isn’t that something every single leader should strive for?

Read all about it here to find out what his employees honestly think about it.