Originally published May 18, 2008
Please Buy More Stuff
Well it’s looking more and more like my TTU colleagues and I will be receiving pay cuts this year. Our salaries aren’t decreasing, but the cost of living is going up and our salaries are staying the same. The net effect is that we lose buying power and we effectively receive a cut in pay.
So why are we receiving pay cuts? Did we do our jobs poorly last year? I don’t think so. We manufactured more student credit hours than ever before. We produced more degrees than ever before. And we attracted the largest freshman class ever.
We’re receiving pay cuts because the citizens of Tennessee aren’t buying enough stuff.
At TTU, we mainly receive raises when the state’s elected officials find enough extra money in the budget for us. In Tennessee, of course, the state’s revenue comes primarily from the sales tax. So I receive a raise when Tennesseans buy more stuff.
I’m not going to propose a solution to the state’s budget problems, but I think this is a pretty good example of the difficulty organizations have when it comes to compensation. Most organizations are not very good at using compensation to pursue organizational goals.
The problem is not limited to state governments. The news is full of companies where pay is not aligned with organizational performance.
In 2007, for example, Citigroup’s stock lost about half of its value and the company’s losses from the credit mess are approaching $40 billion.
Citigroup’s CEO, Charles Prince, “retired” in November of 2007 when the losses began piling up. He left with a severance package worth $40 million. He will also receive an office, secretary, car and driver for the next five years. Perhaps Prince will hire one of the 30,000 Citigroup employees who are being laid off because of his “leadership.”
Countrywide’s CEO, Angelo Mozilo, cashed out $400 million in stock options when the stock was doing well between 2003 and 2007. Mozilo’s options were awarded based on the company’s earnings. The company’s earnings, of course, were built on selling increasingly risky loans.
Now that the house of cards has collapsed and the stock price has fallen by 90 percent, Mozilo is doing pretty well while stockholders, employees, and customers are suffering.
Oddly enough, Mozilo was on the board of directors at Home Depot when their CEO, Bob Nardelli, was ousted because of the company’s poor performance. Nardelli left with a package worth $210 million.
And therein lies the problem with CEO compensation. CEO pay is determined by the board of directors. The board is supposed to act in the best interest of the shareholders. But most board members are selected in ways that guarantee CEO-friendly boards.
Most boards have adopted some form of performance-based pay for the CEOs, but their performance goals are either too easy to meet or actually counterproductive to the long-term health of the organization.
I’m the last one in the world that wants any sort of government regulation of CEO pay, but presidential candidates are proposing this very idea. The CEOs are bringing it on themselves.
All organizational leaders need to understand the kinds of things that foster the long-term health of the organization. Then they need to pay people for doing those things.
Until we learn that lesson, please buy more stuff.
Tuesday, July 15, 2008
Advice for Graduates
Originally published May 4, 2008
The week after I graduated from high school, I went to work at the underwear factory where my father worked. On my first day as a member of the labor force, I found a newspaper clipping next to my breakfast plate. I believe the clipping was a Dear Abby column. The column contained advice for graduates and I've always remembered one of the pearls of wisdom: If you don't like your job, quit. Otherwise shut up.
Yesterday, nearly 1200 students graduated from Tennessee Tech. I've attended many graduation ceremonies over the years. To be honest, I can't remember any of the advice given by the commencement speakers. But, for some reason, that newspaper column has stayed with me for over 20 years. Today I'd like to share some bits of wisdom I've picked up over the years. Feel free to share them with your favorite graduate tomorrow at breakfast.
On average, a college graduate will earn about one million dollars more than a high school graduate over the course of their career. Your degree doesn't make you worth a million dollars. It helps you produce value. Your employers will pay you according to your value, not your degree.
In college, you probably had teachers that allowed you to earn optional extra credit, drop your lowest quiz grade, and skip class the day before hunting season began.
In the real world, working extra hard is expected, your worst performance will count more than the others, and you might actually have to work on Saturday.
Your employer is your customer. They are buying labor from you. Keep your customer happy or they will shop elsewhere.
Your employer is not legally required to offer health insurance, a retirement plan, or paid vacation. Some employers offer these benefits to attract and retain great employees. If your employer offers these, they deserve greatness in return.
If you stop on the way to work and spend two dollars a day on coffee (or anything else), that's about five hundred dollars per year. If, instead, you invest five hundred dollars a year in a good mutual fund, you'll end up with over two hundred thousand dollars in forty years. Which would you rather have?
Want an investment with a guaranteed return of eighteen percent? Pay off your credit cards.
Do what you love. But if you love playing video games, don't expect to get paid the same as someone who loves doing brain surgery.
Just because you've finished college doesn't mean you've finished learning. You're just beginning.
Twenty years ago, Google's founders were in high school. Today their company is worth more than Boeing and McDonalds combined. Twenty years from now we'll be just as amazed by some other company. You can start it.
Finally, college graduates should know that Kenneth Lay, Andrew Fastow, and Jeffrey Skilling also graduated from college. Lay, Fastow, and Skilling were the brains behind the rise and fall of Enron. Lay died before he was sentenced, but Fastow and Skilling are in prison serving sentences for conspiracy, securities fraud, and insider trading. Thousands of employees and investors were hurt by the criminal behavior of these men.
Your education will allow you access to some great opportunities. But with opportunity comes great responsibility. So before you make a decision, ask yourself how it will look as a newspaper headline.
The week after I graduated from high school, I went to work at the underwear factory where my father worked. On my first day as a member of the labor force, I found a newspaper clipping next to my breakfast plate. I believe the clipping was a Dear Abby column. The column contained advice for graduates and I've always remembered one of the pearls of wisdom: If you don't like your job, quit. Otherwise shut up.
Yesterday, nearly 1200 students graduated from Tennessee Tech. I've attended many graduation ceremonies over the years. To be honest, I can't remember any of the advice given by the commencement speakers. But, for some reason, that newspaper column has stayed with me for over 20 years. Today I'd like to share some bits of wisdom I've picked up over the years. Feel free to share them with your favorite graduate tomorrow at breakfast.
On average, a college graduate will earn about one million dollars more than a high school graduate over the course of their career. Your degree doesn't make you worth a million dollars. It helps you produce value. Your employers will pay you according to your value, not your degree.
In college, you probably had teachers that allowed you to earn optional extra credit, drop your lowest quiz grade, and skip class the day before hunting season began.
In the real world, working extra hard is expected, your worst performance will count more than the others, and you might actually have to work on Saturday.
Your employer is your customer. They are buying labor from you. Keep your customer happy or they will shop elsewhere.
Your employer is not legally required to offer health insurance, a retirement plan, or paid vacation. Some employers offer these benefits to attract and retain great employees. If your employer offers these, they deserve greatness in return.
If you stop on the way to work and spend two dollars a day on coffee (or anything else), that's about five hundred dollars per year. If, instead, you invest five hundred dollars a year in a good mutual fund, you'll end up with over two hundred thousand dollars in forty years. Which would you rather have?
Want an investment with a guaranteed return of eighteen percent? Pay off your credit cards.
Do what you love. But if you love playing video games, don't expect to get paid the same as someone who loves doing brain surgery.
Just because you've finished college doesn't mean you've finished learning. You're just beginning.
Twenty years ago, Google's founders were in high school. Today their company is worth more than Boeing and McDonalds combined. Twenty years from now we'll be just as amazed by some other company. You can start it.
Finally, college graduates should know that Kenneth Lay, Andrew Fastow, and Jeffrey Skilling also graduated from college. Lay, Fastow, and Skilling were the brains behind the rise and fall of Enron. Lay died before he was sentenced, but Fastow and Skilling are in prison serving sentences for conspiracy, securities fraud, and insider trading. Thousands of employees and investors were hurt by the criminal behavior of these men.
Your education will allow you access to some great opportunities. But with opportunity comes great responsibility. So before you make a decision, ask yourself how it will look as a newspaper headline.
Coping With a Recession
Originally published April 20, 2008
Nationwide, business news has been pretty depressing lately. Gas and oil prices are at all-time highs. The record-breaking foreclosure rate means that people are losing their homes and mortgage lenders are going bankrupt. Food prices are rising faster than they have in twenty years and the stock market’s daily fluctuations make the scariest roller coaster look like a Kansas highway.
It’s looking more and more like the country is in a recession – just in time for the election.
So how should people and organizations cope with turbulent economic times?
This may sound trite, but the answer is to think about the future.
This recession won’t be the first. We’ve had many of them in the last hundred years. The interesting thing about recessions is that we’ve recovered from every single one of them.
The average recession lasts about one year. By the time we realize we’re in one, it’s about halfway over.
So how do people and organizations respond in these situations? Individuals often decide to cash out their investments. Unfortunately, by the time they make this move, the market has reached its low point. So they sell low and buy high when the market recovers.
If the stock market recovers like it has following every other recession, now would seem to be a great time to buy. Since the 2001 recession, over 800 stocks have tripled in value.
Organizational reactions are even more interesting. During recessions, organizations often lay off employees and cut back on “unnecessary” expenses like employee training and other human resource functions. These actions cut costs in the short term. But their long-term effects can be devastating.
Home Depot, for example, recently announced that they were eliminating 1200 store-level human resource management positions. Their plan is to add more sales people to deal with the slowing economy.
Just 10 years ago, however, Home Depot spent $100 million to settle a class action discrimination lawsuit. The judge blamed the discrimination on the lack of competent human resource leadership throughout the organization. So Home Depot is now firing the professionals who were hired to help the organization make better decisions.
Good companies take advantage of these mistakes. During the recession of 2001, companies like Southwest Airlines and SAS went on hiring sprees because they knew that talented people were being laid off by other companies.
These good companies also realize that a recession is a great time to increase training. During slower times, employees are not as busy and have more time to learn new things. They also have more time for brainstorming and coming up with ways for the company to run more efficiently.
When the inevitable economic recovery comes, good companies will have talented well-trained employees ready to respond.
The companies that cut employees and training will be understaffed and behind the curve when demand picks up.
These suggestions probably make sense, but they require something that is hard to find during a recession – money! Companies like Southwest and SAS were able to make the moves they made because they had set aside cash for a rainy day. When the hard times came, they were able to spend (wisely) while their competitors made rash mistakes.
The current recession means that spending will be tight around the Timmerman household this summer. But I’m not planning on laying off the kids to cut costs.
Nationwide, business news has been pretty depressing lately. Gas and oil prices are at all-time highs. The record-breaking foreclosure rate means that people are losing their homes and mortgage lenders are going bankrupt. Food prices are rising faster than they have in twenty years and the stock market’s daily fluctuations make the scariest roller coaster look like a Kansas highway.
It’s looking more and more like the country is in a recession – just in time for the election.
So how should people and organizations cope with turbulent economic times?
This may sound trite, but the answer is to think about the future.
This recession won’t be the first. We’ve had many of them in the last hundred years. The interesting thing about recessions is that we’ve recovered from every single one of them.
The average recession lasts about one year. By the time we realize we’re in one, it’s about halfway over.
So how do people and organizations respond in these situations? Individuals often decide to cash out their investments. Unfortunately, by the time they make this move, the market has reached its low point. So they sell low and buy high when the market recovers.
If the stock market recovers like it has following every other recession, now would seem to be a great time to buy. Since the 2001 recession, over 800 stocks have tripled in value.
Organizational reactions are even more interesting. During recessions, organizations often lay off employees and cut back on “unnecessary” expenses like employee training and other human resource functions. These actions cut costs in the short term. But their long-term effects can be devastating.
Home Depot, for example, recently announced that they were eliminating 1200 store-level human resource management positions. Their plan is to add more sales people to deal with the slowing economy.
Just 10 years ago, however, Home Depot spent $100 million to settle a class action discrimination lawsuit. The judge blamed the discrimination on the lack of competent human resource leadership throughout the organization. So Home Depot is now firing the professionals who were hired to help the organization make better decisions.
Good companies take advantage of these mistakes. During the recession of 2001, companies like Southwest Airlines and SAS went on hiring sprees because they knew that talented people were being laid off by other companies.
These good companies also realize that a recession is a great time to increase training. During slower times, employees are not as busy and have more time to learn new things. They also have more time for brainstorming and coming up with ways for the company to run more efficiently.
When the inevitable economic recovery comes, good companies will have talented well-trained employees ready to respond.
The companies that cut employees and training will be understaffed and behind the curve when demand picks up.
These suggestions probably make sense, but they require something that is hard to find during a recession – money! Companies like Southwest and SAS were able to make the moves they made because they had set aside cash for a rainy day. When the hard times came, they were able to spend (wisely) while their competitors made rash mistakes.
The current recession means that spending will be tight around the Timmerman household this summer. But I’m not planning on laying off the kids to cut costs.
Servant Leadership
Originally published March 30, 2008
Servant Leadership
In a previous column I mentioned a company called TDIndustries. The company is based in Dallas and makes heating, plumbing, and electrical systems for commercial buildings. The company is one of only fourteen that has appeared on Fortune Magazine’s list of Best Companies to Work For every year since 1998.
The company doesn't have the outlandish perks of Google, but it does have some unusual practices. No one's salary, for example, is more than ten times the salary of anyone else's. So the only way the president can receive a raise is if the lowest paid employees receive one.
The company is also owned by its employees. No individual owns more than three percent of the stock and the entire management team owns less than 25%.
It's also interesting that the CEO does not have an open-door policy. The reason he has no open door policy is because he doesn't have a door. The reason he doesn't have a door is because the CEO works in a cubicle that is exactly the same size as everyone else's.
The really interesting thing about these practices is the underlying philosophy in which they are based. Everything the company does revolves around the principles of servant leadership. The company formally adopted this philosophy in the 1970s, but the seeds were sown from the start.
Jack Lowe, Sr. started the company in 1946. Within one year, he had established a profit-sharing plan. He recognized from the very beginning that employees who helped make the profit deserved to share it. Two years later, Lowe offered employees the opportunity to buy stock in the company.
Over the years, the company faced the same struggles as any other company. Like most founders, Lowe found it difficult to give up control. As the company prospered and grew, however, he gradually came to see the company as a tool that could be used to genuinely improve the lives of his growing band of employees.
In the 1970s, Lowe discovered the writings of Robert Greenleaf. After 40 years at AT&T, Greenleaf left the company with the belief that America was suffering a leadership crisis. His 1970 essay "The Servant as Leader" began a movement that a few brave leaders are joining.
Greenleaf's primary argument is that true leaders are servants first. According to Greenleaf, the success of a leader is measured by the growth and well-being of his or her followers.
As Lowe's company continued to grow, Lowe did something that I probably would not have done. Just between you and me, I would have used this success as an opportunity to take it easy and work on my golf game.
Instead, Jack Lowe realized that his corporate success provided him with tremendous influence and opportunities for improving his community.
At the height of the country's school desegregation battles, Lowe led the multi-racial Dallas Alliance Task Force to develop an acceptable plan for integrating the schools in Dallas.
As president of the Dallas Council of Churches, Lowe began a city-wide counseling service and a prison ministry.
Jack Lowe, Sr. died in 1980 and his son picked up where dad left off. Today, the company has over 1600 employees generating $300 million in sales. And every one of those employees has attended servant leadership training.
That sounds like the kind of training they should offer at Jack Lowe, Sr. Elementary School, which opened in 2006.
Servant Leadership
In a previous column I mentioned a company called TDIndustries. The company is based in Dallas and makes heating, plumbing, and electrical systems for commercial buildings. The company is one of only fourteen that has appeared on Fortune Magazine’s list of Best Companies to Work For every year since 1998.
The company doesn't have the outlandish perks of Google, but it does have some unusual practices. No one's salary, for example, is more than ten times the salary of anyone else's. So the only way the president can receive a raise is if the lowest paid employees receive one.
The company is also owned by its employees. No individual owns more than three percent of the stock and the entire management team owns less than 25%.
It's also interesting that the CEO does not have an open-door policy. The reason he has no open door policy is because he doesn't have a door. The reason he doesn't have a door is because the CEO works in a cubicle that is exactly the same size as everyone else's.
The really interesting thing about these practices is the underlying philosophy in which they are based. Everything the company does revolves around the principles of servant leadership. The company formally adopted this philosophy in the 1970s, but the seeds were sown from the start.
Jack Lowe, Sr. started the company in 1946. Within one year, he had established a profit-sharing plan. He recognized from the very beginning that employees who helped make the profit deserved to share it. Two years later, Lowe offered employees the opportunity to buy stock in the company.
Over the years, the company faced the same struggles as any other company. Like most founders, Lowe found it difficult to give up control. As the company prospered and grew, however, he gradually came to see the company as a tool that could be used to genuinely improve the lives of his growing band of employees.
In the 1970s, Lowe discovered the writings of Robert Greenleaf. After 40 years at AT&T, Greenleaf left the company with the belief that America was suffering a leadership crisis. His 1970 essay "The Servant as Leader" began a movement that a few brave leaders are joining.
Greenleaf's primary argument is that true leaders are servants first. According to Greenleaf, the success of a leader is measured by the growth and well-being of his or her followers.
As Lowe's company continued to grow, Lowe did something that I probably would not have done. Just between you and me, I would have used this success as an opportunity to take it easy and work on my golf game.
Instead, Jack Lowe realized that his corporate success provided him with tremendous influence and opportunities for improving his community.
At the height of the country's school desegregation battles, Lowe led the multi-racial Dallas Alliance Task Force to develop an acceptable plan for integrating the schools in Dallas.
As president of the Dallas Council of Churches, Lowe began a city-wide counseling service and a prison ministry.
Jack Lowe, Sr. died in 1980 and his son picked up where dad left off. Today, the company has over 1600 employees generating $300 million in sales. And every one of those employees has attended servant leadership training.
That sounds like the kind of training they should offer at Jack Lowe, Sr. Elementary School, which opened in 2006.
Celebrating Mistakes
Originally published March 16, 2008
Springtime around the Timmerman household gets more exciting each year. My son is now old enough to play in the kids-pitch baseball league. Just like every other kid on the team, he wants to pitch.
So we go outside for a practice session and I squat with my back to the garage door. I have a funny feeling that we're going to need a backstop.
He does pretty well. Eventually, however, he gets a little too excited and tries to throw too hard. The ball sails past me and slams into the garage door with a loud bang.
Here I have a tough situation to handle. My natural inclination is to get angry about the wild pitches and damage to the door. But I also hear the wisdom of Bob Sutton ringing in my head.
Bob Sutton is a professor at Stanford and one of my favorite business gurus. According to Sutton, the best single question for testing an organization's character is: What happens when people make mistakes?
In some organizations, leaders forgive and forget mistakes. This approach makes everyone feel better, but it also means that the same mistakes are likely to occur again and again.
In other organizations, leaders search for someone to blame and humiliate. This approach teaches everyone not to make mistakes. And the best way to avoid mistakes is to try absolutely nothing new or innovative.
This approach also teaches people to cover up their mistakes. Several years ago, Harvard professor Amy Edmondson conducted a study on the relationship between leadership in nursing units and medical errors. She expected to find that teams with better leadership would have fewer errors. Common sense, right?
Instead, she found just the opposite.
Teams with better leadership reported 10 times more errors. When she examined the issue further, she found that teams with poor leadership were more likely to hide errors out of fear. Teams with good leadership, on the other hand, recognized that errors needed to be reported and studied so that they could be prevented in the future.
In rare organizations, leaders forgive and remember mistakes. They recognize that most errors are not committed with the intent to harm the organization. Instead, mistakes represent an opportunity to learn and improve future performance.
Mistakes are especially critical for creativity and innovation to occur. The most innovative companies in the world like 3M and Intuit celebrate mistakes that ultimately lead to better ideas.
One of the most famous mistakes in history was committed by 3M scientist Spencer Silver. He discovered an adhesive that wasn’t very sticky. Instead of hiding this embarrassing mistake, the culture at 3M encouraged him to share his failure with other employees. Another 3M employee wanted a bookmark that wouldn’t fall out of his hymn book and the Post-it Note was born.
There’s an old story that is often attributed to auto maker Henry Ford. One of his vice presidents made an error that cost the company over one million dollars. Assuming that he would be fired, the vice president handed Mr. Ford his resignation letter.
According to the legend, Mr. Ford responded: “I’ve just invested one million dollars in your education. Now get back to work.”
I guess if my son ever thinks he should give up pitching, I’ll tell him: “I’ve invested a garage door in your pitching career. Now grab your glove and let’s play.”
Springtime around the Timmerman household gets more exciting each year. My son is now old enough to play in the kids-pitch baseball league. Just like every other kid on the team, he wants to pitch.
So we go outside for a practice session and I squat with my back to the garage door. I have a funny feeling that we're going to need a backstop.
He does pretty well. Eventually, however, he gets a little too excited and tries to throw too hard. The ball sails past me and slams into the garage door with a loud bang.
Here I have a tough situation to handle. My natural inclination is to get angry about the wild pitches and damage to the door. But I also hear the wisdom of Bob Sutton ringing in my head.
Bob Sutton is a professor at Stanford and one of my favorite business gurus. According to Sutton, the best single question for testing an organization's character is: What happens when people make mistakes?
In some organizations, leaders forgive and forget mistakes. This approach makes everyone feel better, but it also means that the same mistakes are likely to occur again and again.
In other organizations, leaders search for someone to blame and humiliate. This approach teaches everyone not to make mistakes. And the best way to avoid mistakes is to try absolutely nothing new or innovative.
This approach also teaches people to cover up their mistakes. Several years ago, Harvard professor Amy Edmondson conducted a study on the relationship between leadership in nursing units and medical errors. She expected to find that teams with better leadership would have fewer errors. Common sense, right?
Instead, she found just the opposite.
Teams with better leadership reported 10 times more errors. When she examined the issue further, she found that teams with poor leadership were more likely to hide errors out of fear. Teams with good leadership, on the other hand, recognized that errors needed to be reported and studied so that they could be prevented in the future.
In rare organizations, leaders forgive and remember mistakes. They recognize that most errors are not committed with the intent to harm the organization. Instead, mistakes represent an opportunity to learn and improve future performance.
Mistakes are especially critical for creativity and innovation to occur. The most innovative companies in the world like 3M and Intuit celebrate mistakes that ultimately lead to better ideas.
One of the most famous mistakes in history was committed by 3M scientist Spencer Silver. He discovered an adhesive that wasn’t very sticky. Instead of hiding this embarrassing mistake, the culture at 3M encouraged him to share his failure with other employees. Another 3M employee wanted a bookmark that wouldn’t fall out of his hymn book and the Post-it Note was born.
There’s an old story that is often attributed to auto maker Henry Ford. One of his vice presidents made an error that cost the company over one million dollars. Assuming that he would be fired, the vice president handed Mr. Ford his resignation letter.
According to the legend, Mr. Ford responded: “I’ve just invested one million dollars in your education. Now get back to work.”
I guess if my son ever thinks he should give up pitching, I’ll tell him: “I’ve invested a garage door in your pitching career. Now grab your glove and let’s play.”
Great Places to Work
Originally published March 2, 2008
Great Places to Work
Once again, Fortune Magazine has released their annual list of the Best Companies to Work For. And once again, Google leads the list.
Last year the company created over 3,000 new jobs and received almost 800,000 applications. Google has become legendary for their free food and stock options. But they also offer a wide array of other valuable benefits. New mothers, for example, may receive up to 18 weeks of paid maternity leave. New fathers receive up to 7 weeks of paid leave.
My favorite thing about the list is the wide variety of industries represented. The top ten includes a grocery store chain, an online mortgage lender, and Starbucks. Companies from any industry can be great places to work.
The list also includes fourteen companies that have been on the list every year since it began in 1998. The interesting thing about these companies is that they are made great by enduring values instead of by unique perks.
TDIndustries, for example, builds heating, plumbing, and electrical systems for commercial buildings. Based in Texas, the entire company is owned by the employees and no single individual owns more than 3 percent of the stock.
The founder of the company believed very strongly in the concept of servant leadership. Today, every employee is trained in servant leadership so that they can serve others and know what kind of leadership to expect from their leaders.
When Fortune’s list was published last year, I began searching for great companies in the Upper Cumberland. One company kept popping up on my radar: Flexial Corporation.
Coincidentally, I had the pleasure of touring Flexial last week. It was easy to see why the company has been so successful.
Flexial manufactures welded bellows. This doesn’t sound very exciting until you talk with company president, Rick Larsen.
Larsen’s innovative team of engineers and technicians continuously develops new applications. Flexial’s products can be found in US fighter jets, the International Space Station, and the Mars Rover.
Before touring the plant, I received a tour of the company’s management control system. Even though I only received a brief glimpse, two enduring values were obvious.
First, the company strongly believes in making information available to everyone in the company. Every employee has online access to anything they need to perform their job. Beyond this, however, every employee also has access to real-time data regarding the company’s productivity, efficiency, and even sales.
This amazing system has drawn accolades from everyone who interacts with it. But the system itself is the result of an employee’s suggestion several years ago.
Not surprisingly, the system also includes an improvement recommendation process. Larsen describes this as a “suggestion box on steroids.”
Any employee can request an improvement that they think might help the company. The request might be for a new piece of equipment or for access to information. Unlike a traditional suggestion box, every request at Flexial is evaluated by the management team and rated in terms of its costs and benefits. Hundreds of these recommendations have been made over the last few years and the vast majority of them have been implemented by the company.
On my tour of Flexial, I didn’t see any free food, pets at work, or free massages like you find at Google. Instead, I found a culture where employees are truly seen as valuable partners.
Great Places to Work
Once again, Fortune Magazine has released their annual list of the Best Companies to Work For. And once again, Google leads the list.
Last year the company created over 3,000 new jobs and received almost 800,000 applications. Google has become legendary for their free food and stock options. But they also offer a wide array of other valuable benefits. New mothers, for example, may receive up to 18 weeks of paid maternity leave. New fathers receive up to 7 weeks of paid leave.
My favorite thing about the list is the wide variety of industries represented. The top ten includes a grocery store chain, an online mortgage lender, and Starbucks. Companies from any industry can be great places to work.
The list also includes fourteen companies that have been on the list every year since it began in 1998. The interesting thing about these companies is that they are made great by enduring values instead of by unique perks.
TDIndustries, for example, builds heating, plumbing, and electrical systems for commercial buildings. Based in Texas, the entire company is owned by the employees and no single individual owns more than 3 percent of the stock.
The founder of the company believed very strongly in the concept of servant leadership. Today, every employee is trained in servant leadership so that they can serve others and know what kind of leadership to expect from their leaders.
When Fortune’s list was published last year, I began searching for great companies in the Upper Cumberland. One company kept popping up on my radar: Flexial Corporation.
Coincidentally, I had the pleasure of touring Flexial last week. It was easy to see why the company has been so successful.
Flexial manufactures welded bellows. This doesn’t sound very exciting until you talk with company president, Rick Larsen.
Larsen’s innovative team of engineers and technicians continuously develops new applications. Flexial’s products can be found in US fighter jets, the International Space Station, and the Mars Rover.
Before touring the plant, I received a tour of the company’s management control system. Even though I only received a brief glimpse, two enduring values were obvious.
First, the company strongly believes in making information available to everyone in the company. Every employee has online access to anything they need to perform their job. Beyond this, however, every employee also has access to real-time data regarding the company’s productivity, efficiency, and even sales.
This amazing system has drawn accolades from everyone who interacts with it. But the system itself is the result of an employee’s suggestion several years ago.
Not surprisingly, the system also includes an improvement recommendation process. Larsen describes this as a “suggestion box on steroids.”
Any employee can request an improvement that they think might help the company. The request might be for a new piece of equipment or for access to information. Unlike a traditional suggestion box, every request at Flexial is evaluated by the management team and rated in terms of its costs and benefits. Hundreds of these recommendations have been made over the last few years and the vast majority of them have been implemented by the company.
On my tour of Flexial, I didn’t see any free food, pets at work, or free massages like you find at Google. Instead, I found a culture where employees are truly seen as valuable partners.
America's Biggest Threat
My "Running for President" column sparked quite a reaction from local businessman Loren Aschbrenner. You can read it here. I also received two thoughtful responses. One from Flexial President Rick Larsen was posted in the Comments section below. The other was from my TTU colleague Mohamed Abdelrahman. This is my response that was published in the Herald Citizen on February 17.
America’s Biggest Threat
I’ve been asked several times if I was going to respond to Loren Aschbrenner’s letter regarding my last column. I didn’t really think it was necessary. Mr. Aschbrenner believes that defense-related manufacturing needs to remain in the United States.
I agree and never said anything differently. My point was that all manufacturing (regardless of what it is or where it’s done) will gradually require fewer people. America will therefore have fewer manufacturing jobs. That’s what we need to prepare for.
It was a simple misunderstanding and easily clarified.
But one part of his letter nagged me all week. Mr. Aschbrenner wrote: “I guess the old adage is true…Those who can’t do, teach.”
Yes, I find this personally offensive, but I’ve been called much worse on RateMyProfessors.com.
What bothered me the most about his comment was that he didn’t just insult me. He insulted all teachers, so I decided to respond on their behalf.
Besides being insulting, the old adage is just plain wrong. A study published just last August found that companies managed by former business school professors perform better than similar companies without former educators.
Another study found that finance professors did a better job predicting loan defaults than professional loan officers.
There are many other examples, but the old adage is simply a myth.
Besides insulting and wrong, however, I believe the old adage is also dangerous. It’s dangerous because of its underlying message.
If teachers are people who lack the competence to perform what they teach, then the education they provide obviously has very little value.
If I were an enemy of the United States, what would I want American citizens to believe? I would want them to believe that education is not valuable.
A good educational system doesn’t simply train people to operate machines.
Instead, a good educational system equips and inspires people to create, design, and innovate. This type of educational system inspires innovation that leads to economic prosperity (even defense-related).
If I were an enemy of the US, I would want its citizens to believe that the best use of their time and energy is to spend 40 hours a week stamping metal, sewing underwear, assembling bombs, and watching TV. Not only does this activity keep millions of people from innovating, but it also makes them economically dependent on the people who own the metal stamping machines.
Mr. Aschbrenner’s idea that education is not valuable is not shared by the Chinese. Between 1998 and 2004, the number of Chinese enrolled in college jumped by 4300 percent. In the US, the number increased by about 19 percent.
Mr. Aschbrenner’s myth is apparently alive and well in Tennessee. We rank in the bottom 10 with respect to the percentage of our population with a college degree. Is it just a coincidence that the gap between the wealthiest Tennesseans and the poorest Tennesseans is the 6th largest gap in the country?
The warped idea that I teach my students is that they can either spend their lives making the metal stamping machine owner wealthier, or they can spend their lives creating their own opportunities and wealth.
So I can understand why Mr. Aschbrenner would want to perpetuate the myth. But my suggestion that the loss of bad jobs wouldn’t be so bad is far less dangerous than the idea that “Those who can’t do, teach.”
America’s Biggest Threat
I’ve been asked several times if I was going to respond to Loren Aschbrenner’s letter regarding my last column. I didn’t really think it was necessary. Mr. Aschbrenner believes that defense-related manufacturing needs to remain in the United States.
I agree and never said anything differently. My point was that all manufacturing (regardless of what it is or where it’s done) will gradually require fewer people. America will therefore have fewer manufacturing jobs. That’s what we need to prepare for.
It was a simple misunderstanding and easily clarified.
But one part of his letter nagged me all week. Mr. Aschbrenner wrote: “I guess the old adage is true…Those who can’t do, teach.”
Yes, I find this personally offensive, but I’ve been called much worse on RateMyProfessors.com.
What bothered me the most about his comment was that he didn’t just insult me. He insulted all teachers, so I decided to respond on their behalf.
Besides being insulting, the old adage is just plain wrong. A study published just last August found that companies managed by former business school professors perform better than similar companies without former educators.
Another study found that finance professors did a better job predicting loan defaults than professional loan officers.
There are many other examples, but the old adage is simply a myth.
Besides insulting and wrong, however, I believe the old adage is also dangerous. It’s dangerous because of its underlying message.
If teachers are people who lack the competence to perform what they teach, then the education they provide obviously has very little value.
If I were an enemy of the United States, what would I want American citizens to believe? I would want them to believe that education is not valuable.
A good educational system doesn’t simply train people to operate machines.
Instead, a good educational system equips and inspires people to create, design, and innovate. This type of educational system inspires innovation that leads to economic prosperity (even defense-related).
If I were an enemy of the US, I would want its citizens to believe that the best use of their time and energy is to spend 40 hours a week stamping metal, sewing underwear, assembling bombs, and watching TV. Not only does this activity keep millions of people from innovating, but it also makes them economically dependent on the people who own the metal stamping machines.
Mr. Aschbrenner’s idea that education is not valuable is not shared by the Chinese. Between 1998 and 2004, the number of Chinese enrolled in college jumped by 4300 percent. In the US, the number increased by about 19 percent.
Mr. Aschbrenner’s myth is apparently alive and well in Tennessee. We rank in the bottom 10 with respect to the percentage of our population with a college degree. Is it just a coincidence that the gap between the wealthiest Tennesseans and the poorest Tennesseans is the 6th largest gap in the country?
The warped idea that I teach my students is that they can either spend their lives making the metal stamping machine owner wealthier, or they can spend their lives creating their own opportunities and wealth.
So I can understand why Mr. Aschbrenner would want to perpetuate the myth. But my suggestion that the loss of bad jobs wouldn’t be so bad is far less dangerous than the idea that “Those who can’t do, teach.”
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