In many ways, the employment relationship is like any other kind of relationship. Trust, for example, is at the heart of healthy marriages, friendships, partnerships, and employee-employer relationships.
From the employer's perspective, the million dollar question is: How does a company build trust with its employees?
There is no simple formula for building trust, but company policies can certainly play an important role. SAS Institute provides a great example.
SAS is the world's largest privately-held software company. Based in Cary, NC, the company had nearly two billion dollars in sales last year. SAS is well-known for their family-friendly culture. One thing that stands out is their sick-leave policy. Their policy is simple: If you're sick, don't report to work and they'll pay you anyway. That's it.
It doesn't matter if you're sick for a day or a week or a month. They will keep paying you. Most of us would assume that employees would take advantage of such a policy. At SAS, however, the average number of sick days actually used is less than 2 days per year.
The policy at SAS allows sick employees all the time they need to recover. More importantly, however, the policy communicates the fact that SAS trusts their employees not to abuse the freedom. Because of this trust, employees act in trustworthy ways.
Now let's consider a company at the other extreme. In October of 2001, managers at the Jim Beam plant in Clermont, KY decided that employees were abusing their freedom to use the restroom. They believed that employees were going to the restroom too often and staying too long.
I'm no managerial genius, but the first question I would ask in this situation is: What's so bad about the job that makes hiding in the restroom a more attractive alternative?
Instead of asking this question, the managers at Jim Beam adopted a policy specifying that employees would be allowed to use the restroom during three pre-determined break times each day and once at a time of their choice.
Supervisors were responsible for tracking restroom use and reporting the information to the human resources department each day. Six unscheduled visits could result in termination.
Within a year, this policy had attracted national attention. Connie Chung interviewed a Jim Beam employee on CNN and asked, "Are there a bunch of pinheads running Jim Beam?"
Because of the public outcry (and a citation from the Kentucky Department of Labor) Jim Beam abolished the policy, but the damage had been done. What kind of message did the policy send to employees (or potential employees)? The message was clear: At Jim Beam, we don't even trust you to use the restroom responsibly, so we're going to control your behavior with a policy.
Even after the policy was abolished I wouldn’t be surprised to find out that employee resentment remained. I also wouldn’t be surprised to find out that employees acted in less trustworthy ways while the policy was in place and after it was abandoned.
I’m not suggesting that employees should engage in this tit-for-tat behavior, but I do believe that employees (just like anyone else in a relationship) will act according to their treatment.
Many policies are intended to solve organizational problems. The danger, however, is that the unintended consequences may earn you the label of “pinhead.”
Thursday, November 15, 2007
Thursday, October 18, 2007
Attitudes at Work
I had an interesting revelation this week. I realized that the happiest and most pleasant people in my building at TTU are the people with some of the least desirable jobs.
Our custodians, for example, are responsible for keeping the building clean despite the fact that hundreds of students, faculty, and staff are apparently working hard to make the building dirty each day. Nevertheless, Linda and Rosemary are always smiling and always willing to help when needed.
The secretary in my department spends a great deal of time dealing with student problems, putting out fires, and fixing other people’s mistakes. But I’ve never seen Rachel without a smile and she always asks what more she can do to help.
So why is this a revelation? Because the conventional wisdom in human resource management is that people’s attitudes are driven by the work they do and the money they make. In my building, it appears to be just the opposite.
To be honest this shouldn’t be so surprising. We all know people who would be satisfied in any job and we all know people who would be dissatisfied in any job. What is surprising is the fact that so few organizations realize it and take advantage of it.
Southwest Airlines is one exception to this rule. If you’ve ever flown on Southwest, you know that there’s something different about their flight attendants. They seem like they’re actually having fun at work.
The employees at Southwest are different because of the company’s hiring philosophy. The company readily admits that they “Hire for attitude and train for skills.”
Southwest realizes that they can teach someone the safety procedures they need to know and they can train someone to hand out drinks and peanuts. But they also realize that they can’t train someone to be happy. So the entire selection process is driven towards finding fun, team-oriented people.
In service-oriented companies like Southwest, employee attitudes rub off on customers. Happy, entertaining flight attendants make customers happy. Happy customers make Southwest one of the few continuously profitable airlines.
So how can companies predict which job applicants will be happy and satisfied on the job? There’s some amazing (and perhaps frightening) research that shows that our adult job attitudes are actually correlated with our childhood personality characteristics.
In other words, grumpy children are more likely to grow up into grumpy employees.
Other research shows that our job attitudes tend to be pretty stable even as we move from job to job.
All of this evidence leads to the unpleasant conclusion that some people will be dissatisfied no matter what their organization does for them or to them. So if an organization wants pleasant people, the hiring process may be as important as the compensation practices.
The more I think about it, the more I realize that the most important things an organization needs from its employees are things that can’t be trained. Things like attitude, integrity, and the ability to learn need to be part of the selection process.
I’m not sure if TTU had this in mind when they hired Linda, Rosemary, and Rachel. I think we just got lucky.
Our custodians, for example, are responsible for keeping the building clean despite the fact that hundreds of students, faculty, and staff are apparently working hard to make the building dirty each day. Nevertheless, Linda and Rosemary are always smiling and always willing to help when needed.
The secretary in my department spends a great deal of time dealing with student problems, putting out fires, and fixing other people’s mistakes. But I’ve never seen Rachel without a smile and she always asks what more she can do to help.
So why is this a revelation? Because the conventional wisdom in human resource management is that people’s attitudes are driven by the work they do and the money they make. In my building, it appears to be just the opposite.
To be honest this shouldn’t be so surprising. We all know people who would be satisfied in any job and we all know people who would be dissatisfied in any job. What is surprising is the fact that so few organizations realize it and take advantage of it.
Southwest Airlines is one exception to this rule. If you’ve ever flown on Southwest, you know that there’s something different about their flight attendants. They seem like they’re actually having fun at work.
The employees at Southwest are different because of the company’s hiring philosophy. The company readily admits that they “Hire for attitude and train for skills.”
Southwest realizes that they can teach someone the safety procedures they need to know and they can train someone to hand out drinks and peanuts. But they also realize that they can’t train someone to be happy. So the entire selection process is driven towards finding fun, team-oriented people.
In service-oriented companies like Southwest, employee attitudes rub off on customers. Happy, entertaining flight attendants make customers happy. Happy customers make Southwest one of the few continuously profitable airlines.
So how can companies predict which job applicants will be happy and satisfied on the job? There’s some amazing (and perhaps frightening) research that shows that our adult job attitudes are actually correlated with our childhood personality characteristics.
In other words, grumpy children are more likely to grow up into grumpy employees.
Other research shows that our job attitudes tend to be pretty stable even as we move from job to job.
All of this evidence leads to the unpleasant conclusion that some people will be dissatisfied no matter what their organization does for them or to them. So if an organization wants pleasant people, the hiring process may be as important as the compensation practices.
The more I think about it, the more I realize that the most important things an organization needs from its employees are things that can’t be trained. Things like attitude, integrity, and the ability to learn need to be part of the selection process.
I’m not sure if TTU had this in mind when they hired Linda, Rosemary, and Rachel. I think we just got lucky.
Sunday, September 30, 2007
My First Boss
Passing through my hometown of Chapin, S.C. always makes me nostalgic for the good ol’ days. This summer I passed through and remembered my first boss, Mr. Wicker.
Believe it or not, my first job was as a school bus driver. Until 1987, the legal age to drive a school bus in South Carolina was 16. I started driving as soon as I turned 16 in the tenth grade. Don’t worry, this isn’t one of my “dangerous idea” columns. Instead, it’s about the leadership lessons I learned from Mr. Wicker.
Although it seems bizarre now, the system actually worked pretty well. The student drivers got paid to drive to school and a great parking spot. The school got cheap labor that didn’t know what unions were.
But the brain behind it all was Mr. Wicker. Each year, Mr. Wicker hand-picked about 30 students to go through the testing and training process.
He was pretty good at this task because he was also the vice principal in charge of discipline. Everyone had a healthy fear of Mr. Wicker. Rumors abounded about the implements of torture hidden in his office.
This responsibility, however, allowed him to know just about everyone in town and he had a pretty good idea about which students were responsible enough to handle a bus full of K-12 students.
Mr. Wicker chose drivers from every walk of life: black and white, male and female, athletes and artists. He also liked to keep busses within families. My older brother drove as did my younger sister.
After putting us through the ringer to make sure we were able to safely perform our duties, Mr. Wicker trusted us and supported us. When any conflict arose, he assumed that the bus driver was in the right. If I thought a student needed to be suspended from the bus, he (or she) was suspended. My recommendations carried the same weight as any teacher’s.
I never abused this trust because I knew that it had to be earned. Mr. Wicker’s trust in us caused us to act in trustworthy ways.
With this trust, however, came great responsibility. Mr. Wicker was in the parking lot every afternoon as the busses left. One day I pulled out of the lot when a car was in my blind spot. The car had time to stop before we collided, but Mr. Wicker was waiting for me the next day with a stern warning.
When necessary, Mr. Wicker was willing to go beyond stern warnings. Most of the full-time drivers were seniors and the juniors and sophomores served as substitutes. I received a full-time route as a junior, however, because one of the senior drivers was allowing his friend to stand in the stairwell along the route. Mr. Wicker didn’t tolerate blatant disregard for safety procedures and the senior was fired and replaced by a junior.
I learned a lot more from Mr. Wicker, but these simple lessons would seem to be relevant in any organization. Leaders should select employees carefully, make sure they’re trained well, and then trust them to do their job.
If Mr. Wicker was able to trust a bunch of high school kids with the lives of hundreds of children, I wonder why so many organizational leaders have trouble trusting their grown employees.
Believe it or not, my first job was as a school bus driver. Until 1987, the legal age to drive a school bus in South Carolina was 16. I started driving as soon as I turned 16 in the tenth grade. Don’t worry, this isn’t one of my “dangerous idea” columns. Instead, it’s about the leadership lessons I learned from Mr. Wicker.
Although it seems bizarre now, the system actually worked pretty well. The student drivers got paid to drive to school and a great parking spot. The school got cheap labor that didn’t know what unions were.
But the brain behind it all was Mr. Wicker. Each year, Mr. Wicker hand-picked about 30 students to go through the testing and training process.
He was pretty good at this task because he was also the vice principal in charge of discipline. Everyone had a healthy fear of Mr. Wicker. Rumors abounded about the implements of torture hidden in his office.
This responsibility, however, allowed him to know just about everyone in town and he had a pretty good idea about which students were responsible enough to handle a bus full of K-12 students.
Mr. Wicker chose drivers from every walk of life: black and white, male and female, athletes and artists. He also liked to keep busses within families. My older brother drove as did my younger sister.
After putting us through the ringer to make sure we were able to safely perform our duties, Mr. Wicker trusted us and supported us. When any conflict arose, he assumed that the bus driver was in the right. If I thought a student needed to be suspended from the bus, he (or she) was suspended. My recommendations carried the same weight as any teacher’s.
I never abused this trust because I knew that it had to be earned. Mr. Wicker’s trust in us caused us to act in trustworthy ways.
With this trust, however, came great responsibility. Mr. Wicker was in the parking lot every afternoon as the busses left. One day I pulled out of the lot when a car was in my blind spot. The car had time to stop before we collided, but Mr. Wicker was waiting for me the next day with a stern warning.
When necessary, Mr. Wicker was willing to go beyond stern warnings. Most of the full-time drivers were seniors and the juniors and sophomores served as substitutes. I received a full-time route as a junior, however, because one of the senior drivers was allowing his friend to stand in the stairwell along the route. Mr. Wicker didn’t tolerate blatant disregard for safety procedures and the senior was fired and replaced by a junior.
I learned a lot more from Mr. Wicker, but these simple lessons would seem to be relevant in any organization. Leaders should select employees carefully, make sure they’re trained well, and then trust them to do their job.
If Mr. Wicker was able to trust a bunch of high school kids with the lives of hundreds of children, I wonder why so many organizational leaders have trouble trusting their grown employees.
Friday, September 14, 2007
Organizational Commitment
One thing that most employers want is a committed workforce. If employees are committed to the organization, they should work harder and stick around longer. Replacing employees is expensive, so organizational commitment is a good thing.
What most organizations don’t realize, however, is that there are different types of commitment.
Some people, for example, are committed to their organization because they truly want to be part of the organization. These people strongly believe in the values and goals of the organization.
Some people are committed to their organization because they believe that they ought to be part of the organization. This type of commitment is common in family-owned businesses where someone wants to leave, but feels a moral obligation to stay.
Finally, some people are committed to their organization because they feel like they have to be part of the organization. These people may believe that they can’t find any better option or that it would be too costly to leave.
Many managers believe that it doesn’t really matter what kind of commitment they generate, as long as their employees feel some type of commitment that makes them reluctant to leave.
But is any commitment good commitment?
Let’s answer that question by looking at a different type of relationship. It turns out that people who study marital commitment have identified the same three types of commitment in marriages.
Some people are committed to their spouse because of common goals and values. Others are committed to their spouse because they believe that they have a moral obligation to preserve the relationship. Finally, and you can see where this is going, some people are committed to their spouse because they don’t believe they can do any better or they believe that it would be too costly to leave.
Which kind of marriage seems like the most fulfilling and productive? It’s pretty obvious that people with the “want to” kind of commitment will have better relationships. On the other end of the spectrum, marriages that are based on the “have to” kind of commitment seem rather pathetic, if not dangerous.
Someone who wants to leave a marriage, but feels like they can’t, will rarely act in the best interest of the spouse. And, in fact, a person in this predicament may act in ways that harm the spouse out of resentment.
I think the same danger exists when organizations cultivate the “have to” kind of commitment among their employees. Employees who want to leave a company, but feel as though they can’t, will rarely act in the best interest of the company.
Unfortunately, out of the three types of commitment, the “have to” kind is probably the easiest to generate. All you have to do is offer high pay or expensive benefits.
People with high salaries and miserable work environments often end up feeling trapped. They want to leave, but are trapped by mortgages and car payments. These people will do enough to get by at work, but not much more.
The most difficult kind of commitment to generate is also the most valuable. The “want to” kind of commitment begins with organizational values and goals that employees are proud to help the organization pursue. The next step is a very carefully designed employee selection process. Finally, just like any spouse, employees want to feel appreciated and they want to have a voice in decisions that affect them.
What most organizations don’t realize, however, is that there are different types of commitment.
Some people, for example, are committed to their organization because they truly want to be part of the organization. These people strongly believe in the values and goals of the organization.
Some people are committed to their organization because they believe that they ought to be part of the organization. This type of commitment is common in family-owned businesses where someone wants to leave, but feels a moral obligation to stay.
Finally, some people are committed to their organization because they feel like they have to be part of the organization. These people may believe that they can’t find any better option or that it would be too costly to leave.
Many managers believe that it doesn’t really matter what kind of commitment they generate, as long as their employees feel some type of commitment that makes them reluctant to leave.
But is any commitment good commitment?
Let’s answer that question by looking at a different type of relationship. It turns out that people who study marital commitment have identified the same three types of commitment in marriages.
Some people are committed to their spouse because of common goals and values. Others are committed to their spouse because they believe that they have a moral obligation to preserve the relationship. Finally, and you can see where this is going, some people are committed to their spouse because they don’t believe they can do any better or they believe that it would be too costly to leave.
Which kind of marriage seems like the most fulfilling and productive? It’s pretty obvious that people with the “want to” kind of commitment will have better relationships. On the other end of the spectrum, marriages that are based on the “have to” kind of commitment seem rather pathetic, if not dangerous.
Someone who wants to leave a marriage, but feels like they can’t, will rarely act in the best interest of the spouse. And, in fact, a person in this predicament may act in ways that harm the spouse out of resentment.
I think the same danger exists when organizations cultivate the “have to” kind of commitment among their employees. Employees who want to leave a company, but feel as though they can’t, will rarely act in the best interest of the company.
Unfortunately, out of the three types of commitment, the “have to” kind is probably the easiest to generate. All you have to do is offer high pay or expensive benefits.
People with high salaries and miserable work environments often end up feeling trapped. They want to leave, but are trapped by mortgages and car payments. These people will do enough to get by at work, but not much more.
The most difficult kind of commitment to generate is also the most valuable. The “want to” kind of commitment begins with organizational values and goals that employees are proud to help the organization pursue. The next step is a very carefully designed employee selection process. Finally, just like any spouse, employees want to feel appreciated and they want to have a voice in decisions that affect them.
Are benefits beneficial?
In my last column I proposed the dangerous idea that job experience is overrated. I have a few more dangerous ideas and was planning to save them for later, but one of these dangerous ideas seems especially relevant now.
Let me preface this idea by stating that I’m not taking sides in the current school budget dilemma. Most organizations are facing the same situation, but the school budget allows us to view the problem with some numbers.
Let’s start with a thought experiment. Let’s imagine that we’re starting a brand new school system. We have 68 million dollars to use to educate approximately 11,000 students. How should the money be used to best accomplish the goal?
We could probably come up with a nice long list of ways to spend the money. My list would start with good teachers, books, computers, supplies, furniture, utilities, and building maintenance.
But if we were starting from scratch, how long would it take for someone to suggest that we should spend $200,000 of the money on dental care for teachers’ spouses? That’s not in my top ten and probably wouldn’t be in my top hundred.
Again, I’m not taking sides in the current debate, I’m simply offering this “dangerous” idea: I think employee benefits are a bad way to accomplish what most organizations want to accomplish.
Most organizations use employee benefits to help attract and retain the best employees. They keep people happy. But what if that’s not true? Let’s follow the logic.
Do the best teachers tend to have spouses with bad teeth? We can see the same kind of problem as we examine the most popular employee benefits. On average, companies spend an amount equal to 40 percent of their payroll on employee benefits. Companies spend the most on health insurance, retirement savings, and paid time off.
If a space alien landed in the US and observed this pattern, I’m sure they would ask why we pay so much to attract sickly people who want to get paid for not working.
The idea that benefits help to attract and retain the best employees is certainly debatable. But even if we accept the fact that good employees expect the most popular benefits, we still need to ask: Are benefits the most cost-effective way to “buy” employee loyalty?
The school budget for next year includes about $7.5 million for health insurance. I wonder how many teachers would rather just divide up that pool and take the cash?
Here’s the part where the benefits expert points out that taxes must be paid on the cash but not on the insurance. And the whole idea behind a group plan is to buy insurance at a discount.
That’s true, but I believe that most families can buy perfectly acceptable health insurance plans for much less and would still have some left over to supplement their salaries.
The problem is that we (employees) never shop around. So the cost of the group plan continues to rise, employers continue to pay the premiums because they don’t believe they have a choice, and money gets diverted from the organization’s real goals.
I’m almost to the bottom of the page, but I feel obligated to also point out that I’ve never met an employee who preferred spousal dental care over a positive and supportive work environment.
Let me preface this idea by stating that I’m not taking sides in the current school budget dilemma. Most organizations are facing the same situation, but the school budget allows us to view the problem with some numbers.
Let’s start with a thought experiment. Let’s imagine that we’re starting a brand new school system. We have 68 million dollars to use to educate approximately 11,000 students. How should the money be used to best accomplish the goal?
We could probably come up with a nice long list of ways to spend the money. My list would start with good teachers, books, computers, supplies, furniture, utilities, and building maintenance.
But if we were starting from scratch, how long would it take for someone to suggest that we should spend $200,000 of the money on dental care for teachers’ spouses? That’s not in my top ten and probably wouldn’t be in my top hundred.
Again, I’m not taking sides in the current debate, I’m simply offering this “dangerous” idea: I think employee benefits are a bad way to accomplish what most organizations want to accomplish.
Most organizations use employee benefits to help attract and retain the best employees. They keep people happy. But what if that’s not true? Let’s follow the logic.
Do the best teachers tend to have spouses with bad teeth? We can see the same kind of problem as we examine the most popular employee benefits. On average, companies spend an amount equal to 40 percent of their payroll on employee benefits. Companies spend the most on health insurance, retirement savings, and paid time off.
If a space alien landed in the US and observed this pattern, I’m sure they would ask why we pay so much to attract sickly people who want to get paid for not working.
The idea that benefits help to attract and retain the best employees is certainly debatable. But even if we accept the fact that good employees expect the most popular benefits, we still need to ask: Are benefits the most cost-effective way to “buy” employee loyalty?
The school budget for next year includes about $7.5 million for health insurance. I wonder how many teachers would rather just divide up that pool and take the cash?
Here’s the part where the benefits expert points out that taxes must be paid on the cash but not on the insurance. And the whole idea behind a group plan is to buy insurance at a discount.
That’s true, but I believe that most families can buy perfectly acceptable health insurance plans for much less and would still have some left over to supplement their salaries.
The problem is that we (employees) never shop around. So the cost of the group plan continues to rise, employers continue to pay the premiums because they don’t believe they have a choice, and money gets diverted from the organization’s real goals.
I’m almost to the bottom of the page, but I feel obligated to also point out that I’ve never met an employee who preferred spousal dental care over a positive and supportive work environment.
Thursday, August 2, 2007
Dangerous Ideas
This week I found a new book entitled “What is your dangerous idea?” Over one hundred scientists were asked to describe an idea that, if true, would have profound, and probably unpopular, effects on society. David Lykken, for example, suggested that parenting, like driving, should require a license. Sam Harris suggested that science must destroy religion.
The main point of the book is that dangerous ideas are worth considering, even if they are unpopular and even if they turn out to be wrong.
This book got me thinking about dangerous ideas around the workplace. I’d like to go ahead and throw out one of my own. I believe that experience is overrated.
Employers place a great deal of value on experience. Take a look at today’s employment ads and you’ll see that most job openings require some level of experience. Employers pay more to hire experienced workers and they give raises to employees as they accumulate experience. All of this is based on the assumption that experienced workers are more valuable than less experienced.
What if that’s not true?
I’d like to suggest that experience, per se, offers very little value. And just to add fuel to the fire, I’ll also argue that, in some cases, experienced workers actually perform worse than those with little or no experience.
Evidence supporting this idea comes from a variety of areas, but I have a few favorite examples. One deals with the ability to detect deception. Many studies have been done on the ability of people to determine if another person is lying. Some of those studies compare the accuracy of different groups. In a recent summary of this research, college students were found to have an average accuracy rate of 54%. Police officers and detectives, who presumably have more experience detecting deception, had an average accuracy rate of 53%.
In the realm of employment interviews, research shows that experienced interviewers exhibit the same types of biases as inexperienced interviewers.
A study in the United Kingdom found that experienced loan officers performed worse than college students at predicting loan defaults.
In sports, there is no evidence that coaches with more experience lead their teams to greater success. Major League Baseball’s most experienced manager, Tony LaRussa, has a losing record this season despite having a team loaded with talent.
The underlying problem with valuing experience is that we tend to equate experience with knowledge and knowledge with job performance. I do believe that more job knowledge usually leads to better performance. But I don’t believe that people automatically learn more just by existing in their jobs.
Instead, learning requires active effort and deliberate practice. Some people do this and can learn new things about their jobs very quickly. Others, however, do not make an active effort to learn and are able to survive in their jobs by doing just enough to get by.
If this dangerous idea turns out to be true, there are three primary things that organizations should do differently. First, they should rely less on experience during the selection process and rely more on applicant intelligence or ability to learn. Second, organizations should attempt to create more deliberate learning experiences. Finally, organizations should reward learning more and reward hanging around less.
This idea won’t be popular. But at least I’m not suggesting that we destroy religion.
The main point of the book is that dangerous ideas are worth considering, even if they are unpopular and even if they turn out to be wrong.
This book got me thinking about dangerous ideas around the workplace. I’d like to go ahead and throw out one of my own. I believe that experience is overrated.
Employers place a great deal of value on experience. Take a look at today’s employment ads and you’ll see that most job openings require some level of experience. Employers pay more to hire experienced workers and they give raises to employees as they accumulate experience. All of this is based on the assumption that experienced workers are more valuable than less experienced.
What if that’s not true?
I’d like to suggest that experience, per se, offers very little value. And just to add fuel to the fire, I’ll also argue that, in some cases, experienced workers actually perform worse than those with little or no experience.
Evidence supporting this idea comes from a variety of areas, but I have a few favorite examples. One deals with the ability to detect deception. Many studies have been done on the ability of people to determine if another person is lying. Some of those studies compare the accuracy of different groups. In a recent summary of this research, college students were found to have an average accuracy rate of 54%. Police officers and detectives, who presumably have more experience detecting deception, had an average accuracy rate of 53%.
In the realm of employment interviews, research shows that experienced interviewers exhibit the same types of biases as inexperienced interviewers.
A study in the United Kingdom found that experienced loan officers performed worse than college students at predicting loan defaults.
In sports, there is no evidence that coaches with more experience lead their teams to greater success. Major League Baseball’s most experienced manager, Tony LaRussa, has a losing record this season despite having a team loaded with talent.
The underlying problem with valuing experience is that we tend to equate experience with knowledge and knowledge with job performance. I do believe that more job knowledge usually leads to better performance. But I don’t believe that people automatically learn more just by existing in their jobs.
Instead, learning requires active effort and deliberate practice. Some people do this and can learn new things about their jobs very quickly. Others, however, do not make an active effort to learn and are able to survive in their jobs by doing just enough to get by.
If this dangerous idea turns out to be true, there are three primary things that organizations should do differently. First, they should rely less on experience during the selection process and rely more on applicant intelligence or ability to learn. Second, organizations should attempt to create more deliberate learning experiences. Finally, organizations should reward learning more and reward hanging around less.
This idea won’t be popular. But at least I’m not suggesting that we destroy religion.
Friday, July 20, 2007
Sheriff Taylor on Leadership
One of these days I’m going to get around to writing a book. My first book will be entitled The Leadership Secrets of Sheriff Andy Taylor. Like most red-blooded Americans, I’m a huge fan of The Andy Griffith Show. One of the things I love about the show is the fact that Andy demonstrates many of the qualities of a great leader.
The first episode that comes to mind is Barney and the Cave Rescue. Deputy Barney Fife starts his day off by mistakenly trying to arrest the bank president going into the bank. Fortunately the town picnic is later that day so Barney can forget this embarrassing mistake.
At the picnic, Andy takes his girlfriend, Helen, to explore an old abandoned mine. Barney and his girlfriend, Thelma Lou, follow some time later. When they enter the cave, Barney and Thelma Lou hear the rumbling of a slide and escape just in time. Then they realize that Andy and Helen must be trapped inside. Barney immediately organizes the town into a huge rescue effort.
Unbeknownst to Barney, Andy and Helen are able to escape through another opening and head home to change out of their dirty clothes. While at home, Andy turns on the radio and finds out that the town is frantically trying to rescue them from the cave.
Here’s where the leadership starts. If I were Andy in this situation, I probably would have returned to the picnic and announced that I was able to save myself and my damsel in distress.
Instead, Andy and Helen crawl back in the cave and allow Barney to rescue them. Andy helps Barney be successful. In my mind, this is one of the most important things leaders do. Leaders should help followers be successful.
Some may argue that Barney doesn’t deserve to be successful in this situation. Barney was wrong, just like he was wrong earlier that day. On the other hand, in both situations, Barney was acting on the only information he had. He saw a problem and took action.
So what do leaders gain by helping followers be successful? In this case, Barney was able to recover credibility in the eyes of those who saw him mess up earlier in the day. Both leaders and followers are better off when the followers are respected by others.
Another thing that Andy gains by helping Barney succeed is a more confident follower. Barney’s confidence had taken a hit earlier in the day. Discovering that Andy didn’t really need to be rescued would have been an even bigger hit. There’s actually a fair amount of research showing that confidence raises the level of future job performance.
Yes, this is just a TV show and cave rescues are dangerous and expensive. So I’m not recommending that anyone should stage such an elaborate emergency. But I think leaders have similar kinds of opportunities every day.
Why don’t more leaders “crawl back in the cave”? Crawling back in the cave means that leaders will receive less credit. Crawling back in the cave means that leaders will have to humble themselves a bit. Crawling back in the cave means that leaders must realize that their followers are also critical to their success. That’s also the kind of leader that most of us would gladly follow.
The first episode that comes to mind is Barney and the Cave Rescue. Deputy Barney Fife starts his day off by mistakenly trying to arrest the bank president going into the bank. Fortunately the town picnic is later that day so Barney can forget this embarrassing mistake.
At the picnic, Andy takes his girlfriend, Helen, to explore an old abandoned mine. Barney and his girlfriend, Thelma Lou, follow some time later. When they enter the cave, Barney and Thelma Lou hear the rumbling of a slide and escape just in time. Then they realize that Andy and Helen must be trapped inside. Barney immediately organizes the town into a huge rescue effort.
Unbeknownst to Barney, Andy and Helen are able to escape through another opening and head home to change out of their dirty clothes. While at home, Andy turns on the radio and finds out that the town is frantically trying to rescue them from the cave.
Here’s where the leadership starts. If I were Andy in this situation, I probably would have returned to the picnic and announced that I was able to save myself and my damsel in distress.
Instead, Andy and Helen crawl back in the cave and allow Barney to rescue them. Andy helps Barney be successful. In my mind, this is one of the most important things leaders do. Leaders should help followers be successful.
Some may argue that Barney doesn’t deserve to be successful in this situation. Barney was wrong, just like he was wrong earlier that day. On the other hand, in both situations, Barney was acting on the only information he had. He saw a problem and took action.
So what do leaders gain by helping followers be successful? In this case, Barney was able to recover credibility in the eyes of those who saw him mess up earlier in the day. Both leaders and followers are better off when the followers are respected by others.
Another thing that Andy gains by helping Barney succeed is a more confident follower. Barney’s confidence had taken a hit earlier in the day. Discovering that Andy didn’t really need to be rescued would have been an even bigger hit. There’s actually a fair amount of research showing that confidence raises the level of future job performance.
Yes, this is just a TV show and cave rescues are dangerous and expensive. So I’m not recommending that anyone should stage such an elaborate emergency. But I think leaders have similar kinds of opportunities every day.
Why don’t more leaders “crawl back in the cave”? Crawling back in the cave means that leaders will receive less credit. Crawling back in the cave means that leaders will have to humble themselves a bit. Crawling back in the cave means that leaders must realize that their followers are also critical to their success. That’s also the kind of leader that most of us would gladly follow.
Small Companies Can Be Great Too
I’ve written before about Fortune Magazine’s annual list of the Best Companies to Work For. Google, Inc. won the latest award by offering an innovative atmosphere and unique benefits like free meals.
Companies in the Upper Cumberland may find it difficult to identify with companies like Google. Fortune’s list only includes companies with at least 1000 employees.
Smaller companies simply can’t afford to provide the kinds of environments provided by such large companies. Or can they?
Four years ago, the Society for Human Resource Management began a similar contest aimed at small and medium-sized companies. The most recent winners were announced at SHRM’s annual conference in June.
This year’s winner in the small company division was Badger Mining Corporation of Berlin, Wisconsin. What immediately stands out about this company is that mining is widely regarded as one of the dirtiest and most dangerous industries in the world. Yet this company finds a way to turn the worst working environment into the best.
The 180 employees at Badger Mining make sand. Sounds pretty glamorous doesn’t it?
Badger Mining didn’t end up at the top of the list by offering the same kinds of perks as Google. They offer paid time off and retirement benefits that are pretty normal. The things that make Badger Mining unique are things that reflect an underlying culture that values each employee.
Employee health is protected in this dangerous industry through award-winning safety programs, health insurance, and a comprehensive wellness program. Family priorities are protected by allowing employees to work flexible schedules and take time off to attend to family matters. The financial needs of employees are met by a generous profit-sharing plan. For some reason, employees who get to share the profit make more of it.
Any new initiative at Badger Mining seeks the advice and input of everyone who will be affected. This practice takes advantage of the expertise in the company. It also increases acceptance of change when the organization must adapt to new challenges.
Aside from Badger Mining, one other company stood out on the list of best small and medium-sized companies to work for. The Right Thing, Inc. is a company with 286 employees based in Findlay, Ohio. They help other companies outsource human resource functions like recruiting and selection. Their practices speak volumes about their values.
Everyone in the company reports to the CEO. Everyone works in the same-sized cubicle. Everyone meets with the CEO every other month. And fifty percent of the profit is divided among the full-time and part-time employees.
On average, employees at The Right Thing spend 220 hours per year in training and professional development. They also receive unlimited paid sick days.
So how do Badger Mining and The Right Thing prevent employees from abusing the flexibility and freedom? Both companies believe in the same philosophy: Hire good people. Give them a reason for wanting the company to succeed and then help them succeed. Amazingly enough, these kinds of companies have no trouble finding good people.
I’m sure we have great places to work in the Upper Cumberland. In fact, I’d love to learn more about them. If you have a great place to work, let me hear about it. Contact me at ttimmerman@tntech.edu.
Companies in the Upper Cumberland may find it difficult to identify with companies like Google. Fortune’s list only includes companies with at least 1000 employees.
Smaller companies simply can’t afford to provide the kinds of environments provided by such large companies. Or can they?
Four years ago, the Society for Human Resource Management began a similar contest aimed at small and medium-sized companies. The most recent winners were announced at SHRM’s annual conference in June.
This year’s winner in the small company division was Badger Mining Corporation of Berlin, Wisconsin. What immediately stands out about this company is that mining is widely regarded as one of the dirtiest and most dangerous industries in the world. Yet this company finds a way to turn the worst working environment into the best.
The 180 employees at Badger Mining make sand. Sounds pretty glamorous doesn’t it?
Badger Mining didn’t end up at the top of the list by offering the same kinds of perks as Google. They offer paid time off and retirement benefits that are pretty normal. The things that make Badger Mining unique are things that reflect an underlying culture that values each employee.
Employee health is protected in this dangerous industry through award-winning safety programs, health insurance, and a comprehensive wellness program. Family priorities are protected by allowing employees to work flexible schedules and take time off to attend to family matters. The financial needs of employees are met by a generous profit-sharing plan. For some reason, employees who get to share the profit make more of it.
Any new initiative at Badger Mining seeks the advice and input of everyone who will be affected. This practice takes advantage of the expertise in the company. It also increases acceptance of change when the organization must adapt to new challenges.
Aside from Badger Mining, one other company stood out on the list of best small and medium-sized companies to work for. The Right Thing, Inc. is a company with 286 employees based in Findlay, Ohio. They help other companies outsource human resource functions like recruiting and selection. Their practices speak volumes about their values.
Everyone in the company reports to the CEO. Everyone works in the same-sized cubicle. Everyone meets with the CEO every other month. And fifty percent of the profit is divided among the full-time and part-time employees.
On average, employees at The Right Thing spend 220 hours per year in training and professional development. They also receive unlimited paid sick days.
So how do Badger Mining and The Right Thing prevent employees from abusing the flexibility and freedom? Both companies believe in the same philosophy: Hire good people. Give them a reason for wanting the company to succeed and then help them succeed. Amazingly enough, these kinds of companies have no trouble finding good people.
I’m sure we have great places to work in the Upper Cumberland. In fact, I’d love to learn more about them. If you have a great place to work, let me hear about it. Contact me at ttimmerman@tntech.edu.
Thursday, June 21, 2007
Tough Times at Wal-Mart
Cynthia Haddad worked as a pharmacist at Wal-Mart for ten years before the retail giant fired her. Wal-Mart claimed that she violated company policies. She claimed that male managers were never fired for the same mistakes. She also had the gall to ask for the same pay as males doing the same job.
Last week, a jury in Massachusetts believed Haddad’s side of the story and awarded her two million dollars.
Also in the news last week, state courts in New Mexico, Missouri, and New Jersey agreed that lawsuits against Wal-Mart could proceed as class-action suits. Thousands of current and former Wal-Mart employees are claiming that they were forced to work off the clock without pay. Workers in Pennsylvania, California, and Colorado have already won millions of dollars from Wal-Mart for similar claims.
These cases are small potatoes, however, compared to the sex discrimination case Wal-Mart faces. Filed in June, 2001, the largest ever civil rights class action lawsuit asserts that Wal-Mart discriminated against women in a variety of ways. In this case, the class includes 1.6 million current and former female employees.
I’ve seen some of the data from this case and the evidence is pretty overwhelming. In every job from cashier to regional vice president, women made less than men. Wal-Mart defended itself by claiming that pay was based on performance and experience. Unfortunately, Wal-Mart’s own data showed that female employees had higher performance and more experience, on average, than male employees.
If you had invested $100 in Wal-Mart stock on June 1, 2001, you would have about $95 today. This seems pretty bizarre considering the fact that Wal-Mart has reported record profit levels every year during this time period.
Personally, I believe that Wal-Mart’s stock price is being held back by the uncertainty associated with these lawsuits. What would happen if a jury decided that 1.6 million women deserved the same award as Cynthia Haddad? That’s 3.2 trillion dollars.
Surely the judgment couldn’t reach that figure, but what if each plaintiff is awarded an average of ten thousand dollars? That’s still 16 billion dollars. Even for Wal-Mart, that’s a huge hit.
Wal-Mart does so many things well, how could they possibly allow such basic human resource blunders? I think the root of the problem was revealed in a 2004 Workforce Magazine article (People Problems on Every Aisle). In that article, a former Wal-Mart human resource manager explained that store-level human resource managers were typically hired off the street with little concern for professionalism. They typically had very little knowledge of human resource practices or employment law.
With little expertise they would also have little power over store managers who were pressured to lower labor costs. You mix it all together and you have people working off the clock and incompetent manager favorites being promoted.
One might still wonder why Wal-Mart’s corporate leaders would allow this to happen. The larger problem at Wal-Mart, and lots of other companies, is that they do not believe in the value of a strong human resource function.
Since they don’t believe in its value, they don’t invest in it. Since they don’t invest in it, they don’t receive any value from it. Then they’ve convinced themselves they were right from the beginning.
I’m not sure if these lawsuits will end up costing Wal-Mart billions or trillions of dollars; but I do know that competent and professionally trained human resource professionals make a positive impact on organizations.
Last week, a jury in Massachusetts believed Haddad’s side of the story and awarded her two million dollars.
Also in the news last week, state courts in New Mexico, Missouri, and New Jersey agreed that lawsuits against Wal-Mart could proceed as class-action suits. Thousands of current and former Wal-Mart employees are claiming that they were forced to work off the clock without pay. Workers in Pennsylvania, California, and Colorado have already won millions of dollars from Wal-Mart for similar claims.
These cases are small potatoes, however, compared to the sex discrimination case Wal-Mart faces. Filed in June, 2001, the largest ever civil rights class action lawsuit asserts that Wal-Mart discriminated against women in a variety of ways. In this case, the class includes 1.6 million current and former female employees.
I’ve seen some of the data from this case and the evidence is pretty overwhelming. In every job from cashier to regional vice president, women made less than men. Wal-Mart defended itself by claiming that pay was based on performance and experience. Unfortunately, Wal-Mart’s own data showed that female employees had higher performance and more experience, on average, than male employees.
If you had invested $100 in Wal-Mart stock on June 1, 2001, you would have about $95 today. This seems pretty bizarre considering the fact that Wal-Mart has reported record profit levels every year during this time period.
Personally, I believe that Wal-Mart’s stock price is being held back by the uncertainty associated with these lawsuits. What would happen if a jury decided that 1.6 million women deserved the same award as Cynthia Haddad? That’s 3.2 trillion dollars.
Surely the judgment couldn’t reach that figure, but what if each plaintiff is awarded an average of ten thousand dollars? That’s still 16 billion dollars. Even for Wal-Mart, that’s a huge hit.
Wal-Mart does so many things well, how could they possibly allow such basic human resource blunders? I think the root of the problem was revealed in a 2004 Workforce Magazine article (People Problems on Every Aisle). In that article, a former Wal-Mart human resource manager explained that store-level human resource managers were typically hired off the street with little concern for professionalism. They typically had very little knowledge of human resource practices or employment law.
With little expertise they would also have little power over store managers who were pressured to lower labor costs. You mix it all together and you have people working off the clock and incompetent manager favorites being promoted.
One might still wonder why Wal-Mart’s corporate leaders would allow this to happen. The larger problem at Wal-Mart, and lots of other companies, is that they do not believe in the value of a strong human resource function.
Since they don’t believe in its value, they don’t invest in it. Since they don’t invest in it, they don’t receive any value from it. Then they’ve convinced themselves they were right from the beginning.
I’m not sure if these lawsuits will end up costing Wal-Mart billions or trillions of dollars; but I do know that competent and professionally trained human resource professionals make a positive impact on organizations.
Thursday, June 7, 2007
The Workplace Smoking Ban
October 1 should be an interesting day in workplaces around Tennessee. That’s the day that the Non-Smoker Protection Act goes into effect. This act was passed last week by the Tennessee House and Senate. The governor will sign it soon.
The Non-Smoker Protection Act will effectively ban smoking in any enclosed work environment. That includes restaurants, company break rooms, and restrooms. There are a few exceptions. Smoking will still be allowed, for example, in businesses with less than four employees, age-restricted venues, and areas with open garage-type doors.
Personally, I’m okay with the ban. My father died of smoking-related cancer at the age of 58. I’ve never smoked and will enjoy going to restaurants and not coming out smelling like an ashtray.
On the other hand, I’m still a fan of the free market and probably would have preferred no ban. Business owners are free to ban smoking in the workplace anytime they want. Likewise, customers and employees are free to patronize and work for companies that fit their preferences.
The name of the act implies that non-smokers will be protected by it. I suppose there’s also some hope that smokers might smoke less, or even quit smoking, if they can’t smoke in the workplace.
Following this logic, I began to wonder if companies might be better off without any smokers. As it turns out, I’m not the first to wonder this. One of the most recent studies found that the average smoker costs their company $4,430 per year in lost productivity. This figure only includes absenteeism and does not include the costs of higher health care expenses and early retirement due to smoking-related health problems.
Before you decide to go out and fire all of your smokers, it’s time for the bad news. You can’t. Approximately twenty-nine states have laws that specifically protect smokers from discrimination. Twenty-one states, on the other hand, allow business owners the freedom to lower their costs by firing smokers.
Tennessee is one of the twenty-nine. Maybe that means that Tennessee is an enlightened state that seeks to protect everyone from cruel forms of discrimination. I don’t think so.
As far as I know, only Michigan protects employees from discrimination on the basis of height and weight. Only Washington, D.C. protects employees on the basis of personal appearance.
In other words, private employers in most states are generally free to fire people who are unattractive, overweight, underweight, or fans of the New York Yankees. Employers who choose to make these bad decisions, however, must also suffer the consequences.
But twenty-nine states have decided that smokers cannot be fired. Oddly enough, these states tend to be tobacco-producing states with very powerful tobacco lobbyists.
Interestingly, Tennessee’s statute only prevents the firing of smokers. That wording seems to imply that Tennessee employers could refuse to hire smokers.
By this point it probably sounds as if I’m being too tough on smokers. But smokers need jobs too; especially if they’re going to be able to pay the new 42 cent per pack tax.
I would actually prefer to see employers actively encouraging their smokers to quit. Many companies offer free smoking cessation programs, but very few go as far as providing incentives to participate.
Everyone would benefit from less smoking. Employers would get lower labor costs. Taxpayers would pay less to programs like Medicaid. And more grandkids would get to meet their grandparents.
The Non-Smoker Protection Act will effectively ban smoking in any enclosed work environment. That includes restaurants, company break rooms, and restrooms. There are a few exceptions. Smoking will still be allowed, for example, in businesses with less than four employees, age-restricted venues, and areas with open garage-type doors.
Personally, I’m okay with the ban. My father died of smoking-related cancer at the age of 58. I’ve never smoked and will enjoy going to restaurants and not coming out smelling like an ashtray.
On the other hand, I’m still a fan of the free market and probably would have preferred no ban. Business owners are free to ban smoking in the workplace anytime they want. Likewise, customers and employees are free to patronize and work for companies that fit their preferences.
The name of the act implies that non-smokers will be protected by it. I suppose there’s also some hope that smokers might smoke less, or even quit smoking, if they can’t smoke in the workplace.
Following this logic, I began to wonder if companies might be better off without any smokers. As it turns out, I’m not the first to wonder this. One of the most recent studies found that the average smoker costs their company $4,430 per year in lost productivity. This figure only includes absenteeism and does not include the costs of higher health care expenses and early retirement due to smoking-related health problems.
Before you decide to go out and fire all of your smokers, it’s time for the bad news. You can’t. Approximately twenty-nine states have laws that specifically protect smokers from discrimination. Twenty-one states, on the other hand, allow business owners the freedom to lower their costs by firing smokers.
Tennessee is one of the twenty-nine. Maybe that means that Tennessee is an enlightened state that seeks to protect everyone from cruel forms of discrimination. I don’t think so.
As far as I know, only Michigan protects employees from discrimination on the basis of height and weight. Only Washington, D.C. protects employees on the basis of personal appearance.
In other words, private employers in most states are generally free to fire people who are unattractive, overweight, underweight, or fans of the New York Yankees. Employers who choose to make these bad decisions, however, must also suffer the consequences.
But twenty-nine states have decided that smokers cannot be fired. Oddly enough, these states tend to be tobacco-producing states with very powerful tobacco lobbyists.
Interestingly, Tennessee’s statute only prevents the firing of smokers. That wording seems to imply that Tennessee employers could refuse to hire smokers.
By this point it probably sounds as if I’m being too tough on smokers. But smokers need jobs too; especially if they’re going to be able to pay the new 42 cent per pack tax.
I would actually prefer to see employers actively encouraging their smokers to quit. Many companies offer free smoking cessation programs, but very few go as far as providing incentives to participate.
Everyone would benefit from less smoking. Employers would get lower labor costs. Taxpayers would pay less to programs like Medicaid. And more grandkids would get to meet their grandparents.
Wednesday, May 23, 2007
Should we legislate prices?
I can't say that I'm all that politically active, but occasionally a bill comes along that grabs my interest. This week I heard about a bill that has already passed the Tennessee House and will be voted on soon in the Senate. This bill requires state colleges to develop policies to lower the cost of college textbooks. This bill appears to have good intentions, but I believe it has dangerous implications for our state and perhaps our country.
First let me say that I completely sympathize with students and I agree that textbooks add a substantial burden to the cost of education. I also don't blame those who introduced the bill. They're responding to their constituents. The problem I have with this bill is that it sends the wrong message to our students (and future leaders). This bill suggests that high prices should be dealt with by the government.
If I were an economist, I would argue that lower textbook prices will ultimately lead to fewer incentives for textbook authors and publishers to create quality products. As a professor, I can choose cheaper textbooks now. But you typically get what you pay for.
If I taught personal finance, I might suggest that this problem deals more with student budgeting than with textbooks. I'm not sure if it's still true, but in the late 1990s, a study by the Harvard School of Public Health found that the average college student spent more on alcohol than on textbooks and all other drinks combined.
I know there are a few students who don't buy alcohol, but I'd bet most of my students have cell phone bills that easily surpass their annual textbook budgets. I just got my first cell phone a month ago. And don't get me started about the cars students drive. The difference between a $10,000 car and a $5,000 car will pay for all of your books for your entire collegiate career.
I suppose it's also worth pointing out that, unlike cars, beer, and cell phone use, many textbooks have value that far surpasses their cost. I choose textbooks that I think will help students create value for their organizations after they graduate.
But there's a much bigger point to be made here. The high cost of textbooks is not a new problem and not a problem unique to Tennessee students. I faced the same problem 20 years ago. But instead of asking the government to fix the problem, students at my university came up with an entrepreneurial solution. One of our student organizations began a student book exchange where students could sell books to each other. If eBay had been around, I think I could have paid my entire tuition by buying and selling textbooks.
That's not the only possible solution, but I think this problem offers a tremendous opportunity for students to be creative, innovative, and entrepreneurial. So the question is this: When faced with similar problems, do we want our future leaders to seek government intervention? Or do we want them to see these problems as opportunities for value creation?
I mentioned earlier that this seemingly harmless bill may have national implications. The rest of the world is becoming more entrepreneurial. If we're becoming less so, what will happen to the American economy?
But as long as we're asking our legislators to help lower prices, I wonder if they can do anything about the prices at Outback?
First let me say that I completely sympathize with students and I agree that textbooks add a substantial burden to the cost of education. I also don't blame those who introduced the bill. They're responding to their constituents. The problem I have with this bill is that it sends the wrong message to our students (and future leaders). This bill suggests that high prices should be dealt with by the government.
If I were an economist, I would argue that lower textbook prices will ultimately lead to fewer incentives for textbook authors and publishers to create quality products. As a professor, I can choose cheaper textbooks now. But you typically get what you pay for.
If I taught personal finance, I might suggest that this problem deals more with student budgeting than with textbooks. I'm not sure if it's still true, but in the late 1990s, a study by the Harvard School of Public Health found that the average college student spent more on alcohol than on textbooks and all other drinks combined.
I know there are a few students who don't buy alcohol, but I'd bet most of my students have cell phone bills that easily surpass their annual textbook budgets. I just got my first cell phone a month ago. And don't get me started about the cars students drive. The difference between a $10,000 car and a $5,000 car will pay for all of your books for your entire collegiate career.
I suppose it's also worth pointing out that, unlike cars, beer, and cell phone use, many textbooks have value that far surpasses their cost. I choose textbooks that I think will help students create value for their organizations after they graduate.
But there's a much bigger point to be made here. The high cost of textbooks is not a new problem and not a problem unique to Tennessee students. I faced the same problem 20 years ago. But instead of asking the government to fix the problem, students at my university came up with an entrepreneurial solution. One of our student organizations began a student book exchange where students could sell books to each other. If eBay had been around, I think I could have paid my entire tuition by buying and selling textbooks.
That's not the only possible solution, but I think this problem offers a tremendous opportunity for students to be creative, innovative, and entrepreneurial. So the question is this: When faced with similar problems, do we want our future leaders to seek government intervention? Or do we want them to see these problems as opportunities for value creation?
I mentioned earlier that this seemingly harmless bill may have national implications. The rest of the world is becoming more entrepreneurial. If we're becoming less so, what will happen to the American economy?
But as long as we're asking our legislators to help lower prices, I wonder if they can do anything about the prices at Outback?
How Fair Are You?
Did you know that there are no bad drivers in Cookeville? There are also no bad parents. I know this because whenever I speak in front of groups, I usually ask: Are there any bad drivers in here? What about bad parents? No one ever speaks up.
Maybe they’re just reluctant to confess in front of their peers or co-workers. At least one survey, however, shows that 90% of the population believes they are above average drivers. Statistically, of course, it’s impossible for 90% of the population to be above average.
This kind of overconfidence is not restricted to driving. Research also shows that most people think they are fairer, luckier, and better investors than the average person. I guess that explains why so many people play the lottery.
The larger point here is that most people tend to overestimate their competence in a variety of areas. Most of these areas have profound implications for business management.
A few years ago, a manufacturing company in Ohio lost some key contracts and the CEO decided that a temporary pay cut would be the best way for the company to deal with the lost revenue. The 15 percent pay cut would be applied to everyone at two of the company’s plants and would only last ten weeks.
The CEO was concerned about the possible reactions to the pay cut. He knew that people would probably be unhappy. Would employees quit? Would they slack off? Would they steal from the company? What could he do to minimize the negative reactions?
The CEO contacted Jerald Greenberg, a professor at Ohio State University and an expert in the area of workplace fairness. Greenberg, being an academic, proposed an experiment in which he would write the pay cut announcement for one of the plants. The CEO would write the announcement for the other.
Honestly, the CEO’s announcement sounded like something I would have written. It was simple, straightforward, and conveyed only the necessary information. Greenberg’s announcement, however, was filled with regret, apologies, and detailed financial information justifying the pay cut. So how did people respond?
In the plant that received the professor’s announcement, theft increased by 54% during the ten-week pay cut period. That’s a lot. In the plant that received the CEO’s announcement, theft increased by 141%. That’s a lot more.
With respect to turnover, only one person (out of 64 employees) left the plant that received the professor’s announcement. In the plant that received the CEO’s announcement, 23% of the employees quit.
Without the experiment, we might have concluded that the pay cut was responsible for the huge increases in theft and turnover. The experiment reveals, however, that it wasn’t the pay cut. It was the announcement that produced the biggest effects.
I’ll bet if we asked the CEO if he thought his announcement was as sensitive and informative as it could be, he would say that it was. After all, he wasn’t trying to increase theft and turnover. He was trying to prevent it. But just like the majority of us who think we are above average drivers, most managers believe that they are above average when it comes to fairness and communicating with employees.
The best thing about the professor’s announcement is that it cost absolutely nothing to be more sensitive and provide more information. The financial effects, however, were huge. The only way to reap these benefits is to realize that you might not be as good as you think you are.
Maybe they’re just reluctant to confess in front of their peers or co-workers. At least one survey, however, shows that 90% of the population believes they are above average drivers. Statistically, of course, it’s impossible for 90% of the population to be above average.
This kind of overconfidence is not restricted to driving. Research also shows that most people think they are fairer, luckier, and better investors than the average person. I guess that explains why so many people play the lottery.
The larger point here is that most people tend to overestimate their competence in a variety of areas. Most of these areas have profound implications for business management.
A few years ago, a manufacturing company in Ohio lost some key contracts and the CEO decided that a temporary pay cut would be the best way for the company to deal with the lost revenue. The 15 percent pay cut would be applied to everyone at two of the company’s plants and would only last ten weeks.
The CEO was concerned about the possible reactions to the pay cut. He knew that people would probably be unhappy. Would employees quit? Would they slack off? Would they steal from the company? What could he do to minimize the negative reactions?
The CEO contacted Jerald Greenberg, a professor at Ohio State University and an expert in the area of workplace fairness. Greenberg, being an academic, proposed an experiment in which he would write the pay cut announcement for one of the plants. The CEO would write the announcement for the other.
Honestly, the CEO’s announcement sounded like something I would have written. It was simple, straightforward, and conveyed only the necessary information. Greenberg’s announcement, however, was filled with regret, apologies, and detailed financial information justifying the pay cut. So how did people respond?
In the plant that received the professor’s announcement, theft increased by 54% during the ten-week pay cut period. That’s a lot. In the plant that received the CEO’s announcement, theft increased by 141%. That’s a lot more.
With respect to turnover, only one person (out of 64 employees) left the plant that received the professor’s announcement. In the plant that received the CEO’s announcement, 23% of the employees quit.
Without the experiment, we might have concluded that the pay cut was responsible for the huge increases in theft and turnover. The experiment reveals, however, that it wasn’t the pay cut. It was the announcement that produced the biggest effects.
I’ll bet if we asked the CEO if he thought his announcement was as sensitive and informative as it could be, he would say that it was. After all, he wasn’t trying to increase theft and turnover. He was trying to prevent it. But just like the majority of us who think we are above average drivers, most managers believe that they are above average when it comes to fairness and communicating with employees.
The best thing about the professor’s announcement is that it cost absolutely nothing to be more sensitive and provide more information. The financial effects, however, were huge. The only way to reap these benefits is to realize that you might not be as good as you think you are.
Who's to Blame for Poor Performance
It’s that time of year again. Final exams. Grading. More grading. Some students make me proud of how much I taught them. Those are the ones who convince me that I’m a great teacher. But then there are the others.
Why didn’t they try harder? Why didn’t they pay attention in class? Why did their parents bother sending them to college? Did you notice how I took credit for the successful students and shifted the blame for the others?
I see a lot of this behavior among organizational leaders as well. For that matter, I see a lot of this among parents, students, and politicians too. I think we’re probably born with the tendency to take credit for success and avoid blame for failure.
When teachers abandon all responsibility for student failure, we ignore the possibility that we could have done something differently to motivate more students or inspire greater interest. When students do it, they convince themselves that the teacher was unfair or incompetent. The truth is often somewhere in the middle.
This is a great lesson for managers to learn as well. I once asked one of my professors in graduate school why he did so little management consulting. He told me that he often got calls from managers and business owners asking if he could “fix” their unmotivated employees. My professor’s first response to this question was always: “What will you do if I find out you’re the problem?” This question made him very unpopular as a management consultant.
Anyone who wants to improve their performance as a teacher, as a manager, or as anything else, must be honest with themselves. They must be willing to face the possibility that they need to do something differently.
This possibility is why it’s so important for teachers to give accurate feedback to students throughout the semester. This feedback should help students figure out what they need to change. Likewise, teachers should seek feedback throughout the semester to find out what they might need to change.
The same is true in any organization. In many organizations, feedback is supposed to occur during the performance appraisal process. Unfortunately, performance appraisal is hated by most managers because it is also used to make administrative decisions. Research shows that most managers give employees higher ratings than they deserve. They do this to avoid conflict and avoid acknowledging that their own performance may have been below par. In education we call this grade inflation.
Inaccurate performance feedback, however, helps no one. Inflated feedback perpetuates mediocre or poor performance. It also perpetuates overconfidence that can be dangerous in a variety of ways.
Would you go to a doctor who deserved to fail medical school, but was passed because his professors wanted to avoid conflict? Neither would I. That’s why I don’t pass students who deserve to fail. That’s also why I constantly give and seek feedback to try and keep students from failing.
I wonder what the world would be like if teachers, students, parents, managers, politicians, spouses, and drivers received accurate feedback about their performance and honest advice to help them improve.
Why didn’t they try harder? Why didn’t they pay attention in class? Why did their parents bother sending them to college? Did you notice how I took credit for the successful students and shifted the blame for the others?
I see a lot of this behavior among organizational leaders as well. For that matter, I see a lot of this among parents, students, and politicians too. I think we’re probably born with the tendency to take credit for success and avoid blame for failure.
When teachers abandon all responsibility for student failure, we ignore the possibility that we could have done something differently to motivate more students or inspire greater interest. When students do it, they convince themselves that the teacher was unfair or incompetent. The truth is often somewhere in the middle.
This is a great lesson for managers to learn as well. I once asked one of my professors in graduate school why he did so little management consulting. He told me that he often got calls from managers and business owners asking if he could “fix” their unmotivated employees. My professor’s first response to this question was always: “What will you do if I find out you’re the problem?” This question made him very unpopular as a management consultant.
Anyone who wants to improve their performance as a teacher, as a manager, or as anything else, must be honest with themselves. They must be willing to face the possibility that they need to do something differently.
This possibility is why it’s so important for teachers to give accurate feedback to students throughout the semester. This feedback should help students figure out what they need to change. Likewise, teachers should seek feedback throughout the semester to find out what they might need to change.
The same is true in any organization. In many organizations, feedback is supposed to occur during the performance appraisal process. Unfortunately, performance appraisal is hated by most managers because it is also used to make administrative decisions. Research shows that most managers give employees higher ratings than they deserve. They do this to avoid conflict and avoid acknowledging that their own performance may have been below par. In education we call this grade inflation.
Inaccurate performance feedback, however, helps no one. Inflated feedback perpetuates mediocre or poor performance. It also perpetuates overconfidence that can be dangerous in a variety of ways.
Would you go to a doctor who deserved to fail medical school, but was passed because his professors wanted to avoid conflict? Neither would I. That’s why I don’t pass students who deserve to fail. That’s also why I constantly give and seek feedback to try and keep students from failing.
I wonder what the world would be like if teachers, students, parents, managers, politicians, spouses, and drivers received accurate feedback about their performance and honest advice to help them improve.
Intrinsic Motivation
I have a confession that might make me seem strange. In fact, it might destroy any credibility I may have. Well, here it is: I like to mow the lawn. That horrible task that most normal people hate doing throughout the spring and summer is one of my favorite things to do.
I’m sure it wouldn’t be as much fun with a push mower, but I have a riding mower and about one acre to mow. Once a week I hop on and take a two-hour ride to happiness.
So why would such a distasteful task be the source of such joy for anyone? The more I think about it, the more I realize that the things that motivate me to mow the grass are the same things that motivate people to enjoy any job.
One great thing about mowing the grass, for example, is that you can easily see yourself making progress. That patch of tall ugly grass gradually becomes smaller and smaller until you make that final pass. Within two hours I’ve converted an unsightly mess into something I’m quite proud of. People enjoy jobs when they can vividly experience a sense of accomplishment.
But there must be more to it than that. After all, many people hate their jobs even though they receive the same type of immediate feedback. There’s one more thing that makes mowing the lawn enjoyable. I’m choosing to do it.
I was never forced to mow the lawn when I was younger. Today, I can afford to pay someone else to do it for me. A huge amount of the enjoyment comes from the fact that I decide if, when and how to mow.
My guess is that most people who hate to mow were forced to when they were younger. Or they may have mowed in order to make money. A fair amount of psychological research shows that people lose their intrinsic motivation for a task when they feel like they are being controlled by external motivators (like money).
You can see the same thing among professional athletes. The game they played for fun as a youngster is less fun when they do it to fulfill a contractual obligation.
These two insights might be pretty useful to business owners and managers. Why do your employees have a hard time making it to work at 8:00am but have no trouble waking up at 4:00am to go hunting? Sitting perfectly still in the cold woods hoping that a deer wanders by sounds about as fun as mowing grass. Yet people pay for the privilege. Why? Because a successful hunting trip inspires a sense of autonomy and accomplishment.
Another reason I like mowing is because it’s appreciated. My wife appreciates it. My kids can find their toys lost in the tall grass. My neighbors probably appreciate it. I probably get more thanks after I mow than at any other time during the week.
The only bad thing is that my eight-year old son has discovered the joys of mowing. It’s as close as he’s going to get to a go-kart for awhile, so he thinks it’s fun too. Maybe I’ll start forcing him to do it, paying him to do it, and then forget to thank him for doing it. Then he’ll start to hate his job like normal people are supposed to! In the process he might even learn how not to manage people.
I’m sure it wouldn’t be as much fun with a push mower, but I have a riding mower and about one acre to mow. Once a week I hop on and take a two-hour ride to happiness.
So why would such a distasteful task be the source of such joy for anyone? The more I think about it, the more I realize that the things that motivate me to mow the grass are the same things that motivate people to enjoy any job.
One great thing about mowing the grass, for example, is that you can easily see yourself making progress. That patch of tall ugly grass gradually becomes smaller and smaller until you make that final pass. Within two hours I’ve converted an unsightly mess into something I’m quite proud of. People enjoy jobs when they can vividly experience a sense of accomplishment.
But there must be more to it than that. After all, many people hate their jobs even though they receive the same type of immediate feedback. There’s one more thing that makes mowing the lawn enjoyable. I’m choosing to do it.
I was never forced to mow the lawn when I was younger. Today, I can afford to pay someone else to do it for me. A huge amount of the enjoyment comes from the fact that I decide if, when and how to mow.
My guess is that most people who hate to mow were forced to when they were younger. Or they may have mowed in order to make money. A fair amount of psychological research shows that people lose their intrinsic motivation for a task when they feel like they are being controlled by external motivators (like money).
You can see the same thing among professional athletes. The game they played for fun as a youngster is less fun when they do it to fulfill a contractual obligation.
These two insights might be pretty useful to business owners and managers. Why do your employees have a hard time making it to work at 8:00am but have no trouble waking up at 4:00am to go hunting? Sitting perfectly still in the cold woods hoping that a deer wanders by sounds about as fun as mowing grass. Yet people pay for the privilege. Why? Because a successful hunting trip inspires a sense of autonomy and accomplishment.
Another reason I like mowing is because it’s appreciated. My wife appreciates it. My kids can find their toys lost in the tall grass. My neighbors probably appreciate it. I probably get more thanks after I mow than at any other time during the week.
The only bad thing is that my eight-year old son has discovered the joys of mowing. It’s as close as he’s going to get to a go-kart for awhile, so he thinks it’s fun too. Maybe I’ll start forcing him to do it, paying him to do it, and then forget to thank him for doing it. Then he’ll start to hate his job like normal people are supposed to! In the process he might even learn how not to manage people.
Investing in Health
Today I faced a tough decision. My employer is having its annual “Health Fair” in April and today I had to decide if I should spend $20 to have my cholesterol checked. My other option was spending that $20 at Outback on a steak and cheese fries. Ultimately I caved in and decided to go for the blood work. That makes two cholesterol checks and four steaks over my six years at TTU.
The last time I participated in the Health Fair, my report told me that I had high cholesterol and I should talk it over with my doctor. Unfortunately, I’ve never met my primary care physician, so it’s never come up. I’ll get around to it some day.
I’m not sure how many TTU employees participate in the health risk assessment offered during the Health Fair. I suppose most of them are like me. I’d prefer to be healthy, but my employer has offered to absorb the cost of my medical treatment. So if I continue eating lots of cheese fries and survive the heart attack, I know that my health insurance will pay the humongous hospital bill. Maybe after that I’ll start taking my health seriously.
If I owned a business and provided health insurance to my employees, attitudes like my own would horrify me. Attitudes like mine contribute to the phenomenal increase in employer health care costs each year. That’s why many organizations are taking drastic steps to force employees to take responsibility for their own health. Johnson & Johnson is a great example.
In 1995, Johnson & Johnson decided to offer the same kind of health risk assessment that many employers (including TTU) offer. They decided, however, to make it available for free. That way, employees did not have to choose between the blood work and the cheese fries. They were slightly disappointed when only 26% of their employees participated.
In 1996, Johnson & Johnson decided to try and increase participation by giving employees a $500 reduction in their health insurance premium if they participated. That year, 90% of their employees participated. With over 40,000 employees, that’s quite an investment. How could it possibly pay off?
The health risk assessment done by Johnson & Johnson identified over 4000 employees who were at risk for developing heart disease, diabetes, cancer, and a variety of other conditions. Those high risk employees were then asked to participate in a program called Pathways to Change. This program provided employees with education and other types of encouragement to improve their health.
Over the first three years of the program, participants in Pathways to Change were more likely to exercise and less likely to have high cholesterol and high blood pressure. For all of their efforts to improve the health of their employees, Johnson & Johnson realized a net savings of $225 per employee per year over the first four years of their health and wellness initiative. That’s $225 after paying the $500 to everyone tested and all other expenses of the program.
To boil it all down, Johnson & Johnson discovered that paying people $500 each to participate in a health risk assessment was cheaper than treating the heart attacks lurking in that group.
For $500 I would show up for the health risk assessment and promise not to eat cheese fries for a whole year!
The last time I participated in the Health Fair, my report told me that I had high cholesterol and I should talk it over with my doctor. Unfortunately, I’ve never met my primary care physician, so it’s never come up. I’ll get around to it some day.
I’m not sure how many TTU employees participate in the health risk assessment offered during the Health Fair. I suppose most of them are like me. I’d prefer to be healthy, but my employer has offered to absorb the cost of my medical treatment. So if I continue eating lots of cheese fries and survive the heart attack, I know that my health insurance will pay the humongous hospital bill. Maybe after that I’ll start taking my health seriously.
If I owned a business and provided health insurance to my employees, attitudes like my own would horrify me. Attitudes like mine contribute to the phenomenal increase in employer health care costs each year. That’s why many organizations are taking drastic steps to force employees to take responsibility for their own health. Johnson & Johnson is a great example.
In 1995, Johnson & Johnson decided to offer the same kind of health risk assessment that many employers (including TTU) offer. They decided, however, to make it available for free. That way, employees did not have to choose between the blood work and the cheese fries. They were slightly disappointed when only 26% of their employees participated.
In 1996, Johnson & Johnson decided to try and increase participation by giving employees a $500 reduction in their health insurance premium if they participated. That year, 90% of their employees participated. With over 40,000 employees, that’s quite an investment. How could it possibly pay off?
The health risk assessment done by Johnson & Johnson identified over 4000 employees who were at risk for developing heart disease, diabetes, cancer, and a variety of other conditions. Those high risk employees were then asked to participate in a program called Pathways to Change. This program provided employees with education and other types of encouragement to improve their health.
Over the first three years of the program, participants in Pathways to Change were more likely to exercise and less likely to have high cholesterol and high blood pressure. For all of their efforts to improve the health of their employees, Johnson & Johnson realized a net savings of $225 per employee per year over the first four years of their health and wellness initiative. That’s $225 after paying the $500 to everyone tested and all other expenses of the program.
To boil it all down, Johnson & Johnson discovered that paying people $500 each to participate in a health risk assessment was cheaper than treating the heart attacks lurking in that group.
For $500 I would show up for the health risk assessment and promise not to eat cheese fries for a whole year!
Affirmative Action - Part 2
The phrase “affirmative action” evokes strong emotions from supporters and opponents. The 1947 Brooklyn Dodgers, however, provide a perfect example of how affirmative action is supposed to work and how affirmative action helps organizations excel. The president of the Dodgers, Branch Rickey, recognized that he was fishing for employees from the same pond as every other baseball team. The more that pond is fished, the harder it is to find good talent. If you find another pond where no one else is fishing, however, it’s much easier to find talented employees.
If Branch Rickey were alive today and president of any organization, what would he do? First, he would actively pursue talented people from diverse backgrounds. Rickey didn’t wait for Jackie Robinson to beat down his door. Instead, Rickey sent scouts into the Negro Leagues to find the most talented players. I can’t count the number of times I’ve heard someone say “I’m willing to hire minorities, they’re just not applying.” There’s an easy solution to this problem…it’s called recruiting.
If Rickey were alive today, he would also willingly pursue talented people from diverse backgrounds. One of my favorite parts of the Jackie Robinson story is that Rickey voluntarily pursued Robinson. In other words, there was no government intervention requiring Rickey to do so. In fact, I love the freedom most organizations have to not use affirmative action. That makes it easier for companies like the Dodgers to beat companies like the Red Sox (who didn’t integrate until 1959 and never finished above third place during the 1950s).
Branch Rickey also demonstrated the first-mover advantage. By being the first team to integrate, the Dodgers established a reputation as an organization that valued talented employees regardless of their skin color. This reputation allowed them to quickly recruit other talented African-Americans like Roy Campanella and Don Newcombe. If Rickey were alive today, he would love finding untapped pools of talent where he could be the first.
These principles are probably not surprising to anyone. What is surprising, however, is the number of organizations that are not practicing these principles. I wonder what would happen to the U.S. economy if every company actively and willingly recruited, hired, and promoted the most talented individuals instead of friends, relatives, fraternity brothers, and people that make us comfortable. I’m pretty sure we would have fewer companies like Enron and more companies like Southwest Airlines. I’m also pretty sure there would be more than 10 female CEOs leading Fortune 500 companies.
I honestly don’t believe that most companies consciously and willfully exclude females and minorities from leadership positions. Instead, I think the evidence is pretty overwhelming that discrimination can occur accidentally and unconsciously. The assumptions and stereotypes that drive discrimination are so deeply ingrained that even the best of us are not aware when it’s happening. The fact that it can happen accidentally makes it all the more important for leaders to actively and willingly pursue talent in undertapped pools before our competitors do.
If Branch Rickey were alive today and president of any organization, what would he do? First, he would actively pursue talented people from diverse backgrounds. Rickey didn’t wait for Jackie Robinson to beat down his door. Instead, Rickey sent scouts into the Negro Leagues to find the most talented players. I can’t count the number of times I’ve heard someone say “I’m willing to hire minorities, they’re just not applying.” There’s an easy solution to this problem…it’s called recruiting.
If Rickey were alive today, he would also willingly pursue talented people from diverse backgrounds. One of my favorite parts of the Jackie Robinson story is that Rickey voluntarily pursued Robinson. In other words, there was no government intervention requiring Rickey to do so. In fact, I love the freedom most organizations have to not use affirmative action. That makes it easier for companies like the Dodgers to beat companies like the Red Sox (who didn’t integrate until 1959 and never finished above third place during the 1950s).
Branch Rickey also demonstrated the first-mover advantage. By being the first team to integrate, the Dodgers established a reputation as an organization that valued talented employees regardless of their skin color. This reputation allowed them to quickly recruit other talented African-Americans like Roy Campanella and Don Newcombe. If Rickey were alive today, he would love finding untapped pools of talent where he could be the first.
These principles are probably not surprising to anyone. What is surprising, however, is the number of organizations that are not practicing these principles. I wonder what would happen to the U.S. economy if every company actively and willingly recruited, hired, and promoted the most talented individuals instead of friends, relatives, fraternity brothers, and people that make us comfortable. I’m pretty sure we would have fewer companies like Enron and more companies like Southwest Airlines. I’m also pretty sure there would be more than 10 female CEOs leading Fortune 500 companies.
I honestly don’t believe that most companies consciously and willfully exclude females and minorities from leadership positions. Instead, I think the evidence is pretty overwhelming that discrimination can occur accidentally and unconsciously. The assumptions and stereotypes that drive discrimination are so deeply ingrained that even the best of us are not aware when it’s happening. The fact that it can happen accidentally makes it all the more important for leaders to actively and willingly pursue talent in undertapped pools before our competitors do.
Victims of Affirmative Action - Part 1
Most people don’t recognize the names of Ed Stevens or Sid Gordon. These were two of the first victims of affirmative action in the United States. The saddest of these might be Gordon. He had 11 years of experience when he was replaced with a less-experienced minority. Most people, however, do recognize the names of those who replaced Stevens and Gordon. Sid Gordon lost his job to Hank Aaron. Stevens lost his job to Jackie Robinson. For those who don’t recognize Aaron or Robinson, they are two of the greatest baseball players who ever played and both are enshrined in the Baseball Hall of Fame.
In 1947, Branch Rickey (president of the Brooklyn Dodgers) discovered an amazing truth. A vast pool of talent was not being tapped. Rickey realized that the best players in the Negro Leagues were certainly better than the worst players in the Major Leagues. Any team willing to recruit the most talented players from the Negro Leagues would certainly improve the team’s talent level. The rest, as they say, is history. Over the next ten years, the Dodgers made it to the World Series six times.
It may seem hard to believe, but some teams were reluctant to pursue African-Americans players. They had perfectly “rational” explanations for their reluctance. Some teams thought that attendance would fall when they added African-Americans to their teams. Other teams did not want to disturb team “chemistry”. All of these strawmen eventually fell and other teams began to pursue talented African-Americans.
The story in Boston, however, is a bit more complicated. The Red Sox were unable to find an African-American good enough for their team until 1959. By that time, there was a tremendous amount of social and political pressure for the Red Sox to integrate. Finally, the team caved in and signed Pumpsie Green to play second base. Never heard of Pumpsie? That’s because the Red Sox did affirmative action the wrong way. They decided to pursue diversity instead of pursuing talent in diverse pools.
So what lesson does this story have for modern organizations? Surely we’re more enlightened today. Sadly, there’s a great deal of evidence this isn’t true. In 2001, researchers Marianne Bertrand and Sendhil Mullainathan mailed 5,000 resumes to companies advertising entry-level jobs in Chicago and Boston. Half of the resumes were labeled with African-American names (Tyrone or Latoya). The other half received names that are more common among Whites (Emily or Matthew). The researchers set up voice mail accounts to find out which names were more likely to receive invitations for interviews. Sadly, resumes with White names were 50 percent more likely to receive interviews than resumes with African-American names and the same qualifications.
Even more disturbing about this study is the fact that some of the resumes were written to be a good fit for the advertised position. Others were designed to be a poor fit. Resumes from unqualified Whites were 26 percent more likely to receive interviews than highly qualified African-Americans. In other words, even today Ed Stevens is more likely to get an interview than Hank Aaron.
In 1947, Branch Rickey (president of the Brooklyn Dodgers) discovered an amazing truth. A vast pool of talent was not being tapped. Rickey realized that the best players in the Negro Leagues were certainly better than the worst players in the Major Leagues. Any team willing to recruit the most talented players from the Negro Leagues would certainly improve the team’s talent level. The rest, as they say, is history. Over the next ten years, the Dodgers made it to the World Series six times.
It may seem hard to believe, but some teams were reluctant to pursue African-Americans players. They had perfectly “rational” explanations for their reluctance. Some teams thought that attendance would fall when they added African-Americans to their teams. Other teams did not want to disturb team “chemistry”. All of these strawmen eventually fell and other teams began to pursue talented African-Americans.
The story in Boston, however, is a bit more complicated. The Red Sox were unable to find an African-American good enough for their team until 1959. By that time, there was a tremendous amount of social and political pressure for the Red Sox to integrate. Finally, the team caved in and signed Pumpsie Green to play second base. Never heard of Pumpsie? That’s because the Red Sox did affirmative action the wrong way. They decided to pursue diversity instead of pursuing talent in diverse pools.
So what lesson does this story have for modern organizations? Surely we’re more enlightened today. Sadly, there’s a great deal of evidence this isn’t true. In 2001, researchers Marianne Bertrand and Sendhil Mullainathan mailed 5,000 resumes to companies advertising entry-level jobs in Chicago and Boston. Half of the resumes were labeled with African-American names (Tyrone or Latoya). The other half received names that are more common among Whites (Emily or Matthew). The researchers set up voice mail accounts to find out which names were more likely to receive invitations for interviews. Sadly, resumes with White names were 50 percent more likely to receive interviews than resumes with African-American names and the same qualifications.
Even more disturbing about this study is the fact that some of the resumes were written to be a good fit for the advertised position. Others were designed to be a poor fit. Resumes from unqualified Whites were 26 percent more likely to receive interviews than highly qualified African-Americans. In other words, even today Ed Stevens is more likely to get an interview than Hank Aaron.
Evidence-Based Management
The field of medicine may have a cure for business ills. In 2003, the Midwest Business Group on Health (MBGH) published a report estimating that 30% of the $1.4 trillion spent on health care in the U.S. was wasted. So where does $420 billion go? The report argues that providers overuse some procedures and treatments, underuse others, and misuse still more. The total cost of overtreating, undertreating, and mistreating is somewhere around $420 billion. An underlying theme in the report is that billions of dollars could be saved if health care providers relied more on evidence-based medicine. Evidence-based medicine is medical care that relies on the best available evidence for diagnosis and treatment.
This may sound like a condemnation of the medical profession. On the contrary, I believe that the vast majority of health-care providers are truly well-intentioned. I also believe that they’re a pretty smart bunch. After all, they passed organic chemistry (unlike yours truly). The opening paragraph may also sound like I’m about to argue that evidence-based care can cut the cost of health care paid by employers. That may be true (and it’s certainly the argument made in the MBGH report), but I think evidence-based medicine has even greater lessons for the business world.
How much money are companies losing by not using evidence-based management? What’s the total cost of overmanaging, undermanaging, and mismanaging? This figure may be impossible to calculate, but it has to be in the billions if not trillions of dollars. Is there even any such thing as “evidence-based management”? That’s the same question asked by Carnegie Mellon professor Denise Rousseau in her presidential address to the Academy of Management in 2005. She argued that evidence-based management does exist and evidence-based medicine provides a good role model for the field of business management.
There are many reasons that health care providers may not provide evidence-based care. The biggest reason is probably the fact that it is physically impossible for providers to keep up with the enormous amount of medical research being published on a daily basis. The same thing happens in management. Managers are further disadvantaged, however, by the fact that most health care providers are trained (at some point in their education) to find, read, and evaluate new scientific evidence. In other words, they learn how to learn. Business managers, unfortunately, rarely receive this training. As a result, managers often rely on their “gut”, “instinct”, or “experience”.
Here’s a simple example. We’ve known for decades that hiring managers make better hiring decisions when they use structured interviews instead of unstructured interviews. Unstructured interviews, however, remain more popular. That’s why you might be asked during an interview: “If you were a tree, what kind of tree would you be?” This interviewer has no evidence that “oaks” make better employees than “willows”. Instead, the interviewer thinks they have some sort of super-power that allows them to derive meaning from the answer. How many good employees are lost through this type of decision-making?
The evidence-based medicine movement is nearly 30 years old, but only beginning to have a major impact. Management education and training need a major overhaul that encourages managers to value evidence and learn where to find it. A recent book by Stanford professors Jeffrey Pfeffer and Robert Sutton (Hard Facts, Dangerous Half-Truths and Total Nonsense: Profiting from Evidence-Based Management) is a good place to start.
Personally, I think I would be a St. Helena Gumwood.
This may sound like a condemnation of the medical profession. On the contrary, I believe that the vast majority of health-care providers are truly well-intentioned. I also believe that they’re a pretty smart bunch. After all, they passed organic chemistry (unlike yours truly). The opening paragraph may also sound like I’m about to argue that evidence-based care can cut the cost of health care paid by employers. That may be true (and it’s certainly the argument made in the MBGH report), but I think evidence-based medicine has even greater lessons for the business world.
How much money are companies losing by not using evidence-based management? What’s the total cost of overmanaging, undermanaging, and mismanaging? This figure may be impossible to calculate, but it has to be in the billions if not trillions of dollars. Is there even any such thing as “evidence-based management”? That’s the same question asked by Carnegie Mellon professor Denise Rousseau in her presidential address to the Academy of Management in 2005. She argued that evidence-based management does exist and evidence-based medicine provides a good role model for the field of business management.
There are many reasons that health care providers may not provide evidence-based care. The biggest reason is probably the fact that it is physically impossible for providers to keep up with the enormous amount of medical research being published on a daily basis. The same thing happens in management. Managers are further disadvantaged, however, by the fact that most health care providers are trained (at some point in their education) to find, read, and evaluate new scientific evidence. In other words, they learn how to learn. Business managers, unfortunately, rarely receive this training. As a result, managers often rely on their “gut”, “instinct”, or “experience”.
Here’s a simple example. We’ve known for decades that hiring managers make better hiring decisions when they use structured interviews instead of unstructured interviews. Unstructured interviews, however, remain more popular. That’s why you might be asked during an interview: “If you were a tree, what kind of tree would you be?” This interviewer has no evidence that “oaks” make better employees than “willows”. Instead, the interviewer thinks they have some sort of super-power that allows them to derive meaning from the answer. How many good employees are lost through this type of decision-making?
The evidence-based medicine movement is nearly 30 years old, but only beginning to have a major impact. Management education and training need a major overhaul that encourages managers to value evidence and learn where to find it. A recent book by Stanford professors Jeffrey Pfeffer and Robert Sutton (Hard Facts, Dangerous Half-Truths and Total Nonsense: Profiting from Evidence-Based Management) is a good place to start.
Personally, I think I would be a St. Helena Gumwood.
Best Companies to Work For
One of the few things I look forward to in January is Fortune magazine’s list of the “100 Best Companies to Work For.” As someone who teaches human resource management, I’m always relieved to see that Catbert is not the role model for all human resource managers. This year’s winner is Google, Inc. The work environment at Google is becoming legendary as the source of creativity and productivity that has propelled Google to its current market value of nearly $150 billion.
The perks of being a Googler are beyond amazing. Need to see a doctor or dentist? They’re available onsite along with the carwash, gyms, free laundry machines, and masseur. Hungry? Breakfast, lunch, and dinner are available in eleven cafeterias. But it will be tough to find a bacon cheeseburger at Google. You’re more likely to find shrimp scampi, steak Milanese, or fresh sushi. Did I mention that all of the food is free?
It’s tempting to think that Google makes these perks available because they have nearly $4 billion in cash sitting around. Founders Larry Page and Sergey Brin, however, will argue that the work environment is the reason they’ve been able to accumulate this stash. Google and other companies on Fortune’s list support the idea that an employee-friendly work environment is a sound investment. So how can expenses like blackened sea bass and ping pong tables produce a positive return-on-investment?
One advantage of such a culture is the recruitment value. Google received over 1,000,000 applications last year for less than 3,000 openings. With more than 300 applicants for each opening, Google can choose talented trustworthy employees. Google then sets them free to use their brains and do their jobs with little interference. In fact, Google expects engineers to spend 20% of their time on projects of their own interest.
Another common element among the companies on Fortune’s list is that they all try to make it as easy as possible for employees to be productive and successful. The carwash, food, and easily-accessible childcare relieve employees of daily burdens that distract employees from their work. Eighty-two of the companies on this year’s list allow employees the flexibility of working from home at least 20% of the time.
A final common element among the Best Companies is that they share the fruit with the farmers. Thousands of Googlers are millionaires because the company rewards employees with stock options. The employees who make the company valuable are able to share in the bounty.
Is this type of culture possible only in internet companies? The best thing about Fortune’s list is the diversity of industries represented. Number 3 on this year’s list (and former Number 1) is Wegmans Food Markets, a supermarket chain concentrated in Pennsylvania and New York. QuikTrip (the convenience store chain) is Number 20 this year. All full-time QuikTrip employees are eligible for monthly bonuses based on store profitability and customer-service ratings. South Carolina-based Milliken provides an excellent example of a textile manufacturer determined to stay in the United States. They’re cutting costs by investing in training that will make employees more productive and competitive with international labor.
The Best Companies to Work For have discovered an amazing principle. Employees will do unto the company as the company does unto them.
The perks of being a Googler are beyond amazing. Need to see a doctor or dentist? They’re available onsite along with the carwash, gyms, free laundry machines, and masseur. Hungry? Breakfast, lunch, and dinner are available in eleven cafeterias. But it will be tough to find a bacon cheeseburger at Google. You’re more likely to find shrimp scampi, steak Milanese, or fresh sushi. Did I mention that all of the food is free?
It’s tempting to think that Google makes these perks available because they have nearly $4 billion in cash sitting around. Founders Larry Page and Sergey Brin, however, will argue that the work environment is the reason they’ve been able to accumulate this stash. Google and other companies on Fortune’s list support the idea that an employee-friendly work environment is a sound investment. So how can expenses like blackened sea bass and ping pong tables produce a positive return-on-investment?
One advantage of such a culture is the recruitment value. Google received over 1,000,000 applications last year for less than 3,000 openings. With more than 300 applicants for each opening, Google can choose talented trustworthy employees. Google then sets them free to use their brains and do their jobs with little interference. In fact, Google expects engineers to spend 20% of their time on projects of their own interest.
Another common element among the companies on Fortune’s list is that they all try to make it as easy as possible for employees to be productive and successful. The carwash, food, and easily-accessible childcare relieve employees of daily burdens that distract employees from their work. Eighty-two of the companies on this year’s list allow employees the flexibility of working from home at least 20% of the time.
A final common element among the Best Companies is that they share the fruit with the farmers. Thousands of Googlers are millionaires because the company rewards employees with stock options. The employees who make the company valuable are able to share in the bounty.
Is this type of culture possible only in internet companies? The best thing about Fortune’s list is the diversity of industries represented. Number 3 on this year’s list (and former Number 1) is Wegmans Food Markets, a supermarket chain concentrated in Pennsylvania and New York. QuikTrip (the convenience store chain) is Number 20 this year. All full-time QuikTrip employees are eligible for monthly bonuses based on store profitability and customer-service ratings. South Carolina-based Milliken provides an excellent example of a textile manufacturer determined to stay in the United States. They’re cutting costs by investing in training that will make employees more productive and competitive with international labor.
The Best Companies to Work For have discovered an amazing principle. Employees will do unto the company as the company does unto them.
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