SLOW Movement

WSJ: How a Few Bad Apples Ruin Everything

OCTOBER 24, 2011

How a Few Bad Apples Ruin Everything

What harm can a handful of nasty or incompetent employees do? A lot more than you may think.

By ROBERT SUTTON

Superstars get a lot of attention from bosses. But bad apples deserve even more.

A growing body of research suggests that having just a few nasty, lazy or incompetent characters around can ruin the performance of a team or an entire organization—no matter how stellar the other employees.

Bad apples distract and drag down everyone, and their destructive behaviors, such as anger, laziness and incompetence, are remarkably contagious. Leaders who let a few bad apples in the door—perhaps in exchange for political favors—or look the other way when employees are rude or incompetent are setting the stage for even their most skilled people to fail.

It's crucial for leaders to screen out bad apples before they're hired—and if they do slip through the cracks, bosses must make every effort to reform or (if necessary) oust them.

Spreading the Vibes

It's easy to understand why bosses would rather focus on attracting and developing superstars. A mountain of research shows that stars and geniuses can deliver astounding results. And, obviously, it's more fun and inspiring to focus on top-performing, energetic employees.

Serge Bloch

But studies of everything from romantic relationships to workplace encounters show that negative interactions can pack a much bigger wallop than positive ones. The reason is simple: "Bad is stronger than good," as psychologist Roy Baumeister and his colleagues put it. The negative thoughts, feelings and performance they trigger in others are far larger and longer lasting than the positive responses generated by more constructive colleagues.

Consider research on bad apples and team effectiveness by Will Felps, Terence R. Mitchell and Eliza Byington. They examined the impact of team members who were deadbeats ("withholders of effort"), downers (who "express pessimism, anxiety, insecurity and irritation") and jerks (who violate "interpersonal norms of respect"). An experiment by Mr. Felps found that having just one slacker or jerk in a group can bring down performance by 30% to 40%.

How can organizations squash those negative influences? The easiest way, obviously, is to avoid hiring bad apples in the first place—and that means taking a different approach to assessing candidates for jobs.

The usual means of screening are often weak when it comes to determining if a job candidate is a bad apple. Candidates may have gone to the best schools or may come across as charming and brilliant in interviews—thus disguising their laziness, incompetence or nastiness.

That's why one of the best ways to screen employees is to see how they actually do the job under realistic conditions. Akshay Kothari and Ankit Gupta favor that approach. When they're hiring new people for their Palo Alto, Calif., company, Pulse, which makes a news-reading app for mobile devices, they consider evaluations from peers and superiors and do multiple rounds of interviews. But they say the most effective thing is to bring candidates in for a day or two and give them a short job to accomplish. (The candidates are paid for their time.)

Not only do they learn a lot about the candidates' technical skills, Messrs. Kothari and Gupta say, but they also learn about their personality. How do they deal with setbacks? Do they know when to ask for help and to give others help? Is the candidate the kind of person they want to work with? The partners say there have been several candidates who looked great on paper and came highly recommended but weren't offered jobs—because technical and interpersonal weaknesses surfaced during the selection process.

Play Nice or Else

Beyond smarter screening, it's important to develop a culture that doesn't tolerate jerks. The best organizations make explicit their intolerance for bad apples; they spell out which behaviors are unacceptable in the workplace and act decisively to prevent and halt them.

Consider Robert W. Baird & Co., a financial-services firm that has won praise as a great place to work. The company is serious about creating a culture where disrespect and selfishness are unacceptable. They call this the "no jerk rule" (though they use a more colorful word than "jerk").

The company starts sending the message during the hiring process, says CEO Paul Purcell. "During the interview, I look them in the eye and tell them, 'If I discover that you are a jerk, I am going to fire you,' " he says. "Most candidates aren't fazed by this, but every now and then, one turns pale, and we never see them again—they find some reason to back out of the search."

When the company makes a hiring error and brings aboard an employee who persistently demeans colleagues or puts personal needs ahead of others, Baird acts quickly to deal with or expel the bad apple.

Mr. Purcell's crusty approach won't work in every company culture. For an idea of how to handle the task with a more subtle hand, look at renowned chef Alice Waters, who has headed the restaurant Chez Panisse in Berkeley, Calif., for 40 years now.

Biographer Thomas McNamee describes how Ms. Waters's love of people and food has spread to those around her. Along the way, though, many bad apples have been shown the door—but Ms. Waters doesn't hold it open. The process usually starts when one of her colleagues conveys the message that Ms. Waters isn't "entirely pleased." If the hints don't work, then that colleague—or someone else close to Ms. Waters—does the firing.

A spokesman for Chez Panisse says Ms. Waters does personally fire employees on occasion and "she manages to have that person feel as though they are making the decision to leave and it is better for themselves to move on and explore new opportunities." He also notes that a large percentage of employees have been with the restaurant for decades.

Keeping Them Close

There are times, of course, when an organization can't—or won't—remove a destructive personality. Maybe the person is a star as well as a bad apple, for instance, or is otherwise crucial to the operation. In such cases, leaders might try to use coaching, warnings and incentives to curb the toxic employee's behavior. Another tactic is to physically isolate the bad apple.

In one organization, there was a deeply skilled and incredibly nasty engineer whom leaders could not bring themselves to fire. So, they rented a beautiful private office for him several blocks from the building where his colleagues worked. His co-workers were a lot happier—and so was he, since he preferred working alone.

But beware: Leaders who believe that destructive superstars are "too important" to fire often underestimate the damage they can do. Stanford researchers Charles O'Reilly and Jeffrey Pfeffer report a revealing episode at a clothing retailer. The company fired a top-producing salesman who was a bad apple. After he was gone, none of his former colleagues sold as much as he had. But the store's total sales shot up by nearly 30%. The lesson, according to the researchers: "That one individual brought the others down, and when he was gone, they could do their best."

Mr. Sutton, a professor of management science and engineering at Stanford University, is the author of "Good Boss, Bad Boss: How to Be the Best…and Learn from the Worst." He can be reached at reports@wsj.com.

Copyright 2011 Dow Jones & Company, Inc. All Rights Reserved

WSJ: Better Ideas Through Failure

WORK & FAMILY
SEPTEMBER 27, 2011

Better Ideas Through Failure

Companies Reward Employee Mistakes to Spur Innovation, Get Back Their Edge

• By SUE SHELLENBARGER

To pitch a prospective client for her ad agency, Amanda Zolten knew she a had to take a risk. But the client's product—kitty litter—posed a unique challenge.

Lucy Belle, Ms. Zolten's cat, furnished the answer.

Before she and her team met with six of the company's executives, Ms. Zolten buried Lucy Belle's mess in a box of the company's litter and pushed it under the conference-room table. No one noticed until Ms. Zolten pointed it out—and the fact that no one had smelled it.

A growing number of companies are explicitly rewarding failure - giving cash prizes or trophies to people who foul up. Sue Shellenbarger has details on Lunch Break.

Shocked, several executives pushed back from the table. Two left the room. After a pause, those who remained started laughing, says Ms. Zolten, a senior vice president with Grey New York. "We achieved what we hoped, which was creating a memorable experience," she says.

She won't know for a few weeks whether Grey won the business. But her boss, Tor Myhren, has already named Ms. Zolten the winner of his first quarterly "Heroic Failure" award—for taking a big, edgy risk.

Amid worries that we are becoming less innovative, some companies are rewarding employees for their mistakes or questionable risks. The tactic is rooted in research showing that innovations are often accompanied by a high rate of failure.

"Failure, and how companies deal with failure, is a very big part of innovation," says Judy Estrin of Menlo Park, Calif., a founder of seven high-tech companies and author of a book on innovation. Failures caused by sloppiness or laziness are bad. But "if employees try something that was worth trying and fail, and if they are open about it, and if they learn from that failure, that is a good thing."

Amanda Zolten with the 'Heroic Failure' trophy from her employer, a New York advertising company.

Grey's Mr. Myhren recently started handing out the "Heroic Failure" award because he was worried that fast growth at the agency, a unit of WPP's Grey Group in New York, was making employees "a little more conservative, maybe a little slower," he says. Creator of E*Trade's talking-baby ads, Grey New York has more than doubled to 900 employees since 2008.

"I thought rewarding a little risk-taking was potentially an answer," Mr. Myhren says. The award is for ideas that are "edgier or riskier, or new and totally unproven," he says.

Mr. Myhren acknowledges that Ms. Zolten's prank could have gotten his eight-member team "kicked out of the room and told never to come back." He adds, "There was enough chaos in the room that we weren't sure whether it was a good or bad thing." Nevertheless, he calls the idea "absolutely brilliant" and deserving of the garish two-foot-tall "Heroic Failure" trophy. Regardless of how it turns out, he says, "we're proud that we had that idea."

Photo illustration by Stephen Webster

Many people succeed at producing innovations because they churn out a very large number of ideas, both good and bad, says Dean Keith Simonton, a psychology professor at the University of California, Davis. "The most successful people tend to be those with the most failures," says Dr. Simonton, author of more than 500 studies and articles and 12 books on creativity and innovation.

Extracting lessons from foul-ups is the focal point of Michael Alter's "Best New Mistake" awards at SurePayroll, a payroll-services company in Glenview, Ill. Only people who are trying to do a good job, make a mistake and learn from it are eligible for the $400 annual cash award.

To test new functions of SurePayroll's systems in 2009, project manager Kate Vick created a fake company with imaginary employees. She flagged the data as a "test" before processing it, and the trial run went smoothly.

But Ms. Vick failed to foresee that the system would automatically report the fake employees to a state payroll-tax agency as if they were new hires at an actual company. A few days later, she was stunned by a phone call from an Illinois official asking her to confirm that her "company," named "Product Kate Test," had just hired someone named "Salaried Employee One" with a phone number of 555-555-5555. For a painful 15 minutes, "he went through my entire list of fake employees and wouldn't let me interrupt," she says. The official eventually hung up after she explained and apologized. But he made the issue seem so serious that "I felt like a very small human being," she says.

When Ms. Vick confessed to her boss, Steve Kania, he had a laugh at the official's "FBI-esque seriousness" about "completely ridiculous data," says Mr. Kania, a vice president, product management. They now train others to avoid using hypothetical new hires during tests.

Mr. Alter describes the fallout as "paying tuition. As opposed to saying, 'You screwed up,' or, 'You messed up,' we say, 'Let's talk about what we learned.' That drives a lot of innovation," he says.

Employers use a variety of tactics to foster innovation. Grey New York blocks off a "no meeting zone" every Thursday morning, to allow employees sustained time for work on creative projects. Procter & Gamble Co. has set up a division for innovation, called FutureWorks.

Some add game or nap rooms, expansive art-filled atriums, hiking trails or private meditation rooms with music and adjustable lighting.

Intuitive Surgical, a Sunnyvale, Calif., maker of surgical robots, limits work teams to five members "like jazz bands," says Gary Guthart, president and chief executive. Team members tend to share ideas easily, respond quickly to problems and hold each other accountable, he says.

However, all innovative companies tend to be alike in certain ways, Ms. Estrin says. They encourage coworkers to trust each other, comment on each other's work and take criticism in stride. Also, managers encourage intelligent risk-taking, tolerate failure and insist that employees share information openly.

At the 150-employee Consumer Electronics Association, an Arlington, Va., trade group, Gary Shapiro, president and chief executive, tries to make it safe to fail by talking openly about screw-ups. In his eight-page manifesto called "Gary's Guidelines," writes Mr. Shapiro, co-author of a book on innovation: "Mistakes are OK—hiding them is not."

—Email sue.shellenbarger@wsj.com

Copyright 2011 Dow Jones & Company, Inc. All Rights Reserved

 

Bloomberg Businessweek: The Games Companies Play

CEO Guide to Business Gamification April 4, 2011, 11:24PM EST text size: TT

The Games Companies Play

Siemens, Hilton, and Target are using games to train workers and improve how they design and market products

By Rachael King

 

Siemens (SI) is pinning high hopes on Pete. A cheery fellow, Pete wears a yellow hard hat with his name emblazoned across the front. He's polite and eager to lend a hand. He's also animated: Pete the Plant Manager stars in a new online video game from Siemens called Plantville that simulates what it's like to run a manufacturing facility. The aim is to take three dilapidated factories and make them more efficiently meet customer orders by hiring employees, redesigning layout, and buying and installing new Siemens equipment.

Germany's Siemens, which makes power plants, scanners, and trains, created the game to fuel equipment sales and foster greater employee knowledge of its products. "Employees are sometimes siloed in their business units and don't see the breadth and depth of our portfolio," says Tom Varney, head of marketing communications at Siemens Industry. The company joins a growing roster of enterprises as diverse as Hilton Worldwide's Embassy Suites hotel chain and German software maker SAP (SAP), which are using technologies that make games interesting in order to interact more effectively with customers and employees.

The trend, known as gamification, lets businesses weave elements of games into applications that otherwise have little to do with playing. The market for gamification will grow to $1.6 billion in 2015, from $100 million in 2011, according to Wanda Meloni, founder of M2 Research, a consulting firm that researches the gaming industry.

Companies such as Cold Stone Creamery and United Parcel Service (UPS) have for years used games for such tasks as training workers. Gamification is now letting managers push aspects of gaming into marketing, product design, and everyday work experience. It's also helping companies compensate for shortfalls in traditional forms of advertising and marketing, says Gabe Zichermann, chief executive officer of Gamification, a company that runs workshops for businesses that want to implement a gamification strategy. "What we have is a crisis of engagement," he says.

Nissan's "eco mode" dashboard service

Nissan Motor (NSANY) brought gamification to its new electric vehicle, the Nissan Leaf. The automaker uses the technology to help drivers conserve fuel. When the car is driven in so-called eco mode, its accelerator contains a counter push-back control mechanism that is activated when it detects excess pressure. The feature informs drivers that they're using more power than required. An online portal connected to the car's dashboard also lets drivers know how well they're conserving energy, compared with other drivers in the region. The most efficient drivers are given virtual bronze, silver, gold, and platinum medals.

Similarly, cashiers at Target (TGT) receive a score each time they check out a customer. The score is based on the the transaction's speed, with the checkout system also calculating the cashier's success rate over multiple transactions.

Companies need to guard against adding a superficial gaming gloss to applications—for instance, by creating meaningless leader boards that have little lasting impact on employee behavior, says Aaron Dignan, author of Game Frame, a book published in March that explores game mechanics in the workplace. "My hope is that it grows beyond that into a real discipline that's more rigorous than it is today," Dignan says. Managers also need to be alert to such possible unintended consequences as hacking or employees putting too much emphasis on the wrong aspects of play. "People could pay too much attention to things that don't matter or too little attention to things that do matter if the game is designed poorly," he says.

U.S. Companies Helped on Plantville

Siemens spent a year designing Plantville, working with such companies as Eugene (Ore.)-based game-design company Pipeworks Software, advertising and design firm Shaw Co. in St. Louis, and Fusion Performance Marketing in Plano, Tex. The game can be downloaded at Plantville.com and Siemens is using advertising, social media, and employee communications to get the word out. While the game hasn't been out long enough for Siemens to have amassed results, Varney says early feedback from employees has been positive.

Hilton's Embassy Suites is using game techniques in a customer loyalty campaign. Created with a marketing company called Maritz, the campaign targeted 50,000 of Embassy Suites' most loyal guests, then solicited their participation with 10 different approaches, including direct mail, e-mail, and asking customers to play a game. The game option proved most effective, says Christian Kuhn, director of brand marketing for Embassy Suites. The 5,000 people targeted by the game were most likely to open e-mails and later spent the most money, Kuhn says. That group accounted for about $200,000 of the additional $1 million in revenue generated by the campaign, he said.

Games may be more effective in marketing because they offer the gratification people experience when surprised and rewarded. An unexpected reward releases dopamine in the brain, giving beneficiaries a pleasurable feeling, says Barry Kirk, a vice-president at Maritz. "We don't think you can gamify something without understanding the human brain and neuroscience," Barry says.

Game designers are good at creating psychological hacks into how the human brain works to determine what motivates people, says author Dignan. That's why gamification can be a good fit for companies seeking to better engage workers. "It's about managing motivation and energy level and commitment," he says.

SAP's Games for Corporate Directors

Software maker SAP is turning to gamification to help corporate board members prepare for meetings. Directors typically must slog through thick binders full of documents or dashboards that feature key performance metrics. SAP is developing an application for Apple's iPad that boasts game elements such as progress bars and leader boards to get directors "more engaged in consuming various pieces of data," says Reuven Gorsht, senior director of strategy and global pre-sales at SAP. "We're dealing with very high-ranking executives that sit on six or seven boards and may have a full-time job running a company," he says. "Their time is precious and their attention span is fairly low." he says. The app should be ready in three to four months, he says. SAP is also looking at other ways to use game mechanics to make its software easier to use and more engaging for employees.

Traci Sitzmann, an assistant professor of management at the University of Colorado's business school, says games can make employees better at their jobs. She spent more than a year examining 65 studies and data from 6,476 trainees in a study due to be published in the journal Personnel Psychology. Those using video games had a 14 percent higher skill-based knowledge level, an 11 percent higher factual-knowledge level, and a 9 percent higher retention rate than trainees in comparison groups, Sitzmann says.

Siemens is looking to games, not only for retaining current employees but attracting future ones as well. "With Plantville, we think there's a big educational play with colleges and high schools," says Siemens' Varney. He says he hopes the game can help make manufacturing more attractive to young people. "We have about 3,000 jobs posted in the U.S. at Siemens, many in technology or manufacturing," he says. "We're hoping to inspire a new generation of plant managers."

King is a writer for Bloomberg Businessweek in San Francisco.

FT: Time to stand up for middle managers

Time to stand up for middle managers

Philip Delves Broughton

Published: January 10 2011 22:07 | Last updated: January 10 2011 22:07

The death of the middle manager is one of those headlines like falling house prices or rising university tuition that seem purpose-built to wreak mental havoc on swaths of the professional middle class. What other curses do the economic gods have in mind?

These thoughts were prompted by a recent column in the Harvard Business Review titled “The End of the Middle Manager” by Lynda Gratton, a professor at London Business School. Prof Gratton argues that new technology means the end for the middle manager as we know it. There is no longer any need for the manager filling the gap between senior executives and the people who do the work or, in Prof Gratton’s definition, those with the “shallow general skills that kept things running smoothly rather than created and innovated”.

EDITOR’S CHOICE

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Philip D. Broughton: The storm before the calm - Dec-27

Philip D. Broughton: Turning slack time into profit - Dec-20

Philip D. Broughton: Family constraints have their benefits - Dec-13

Philip D. Broughton: Importance of cloud computing - Dec-06

Philip D. Broughton: Leadership not just for extroverts - Nov-29

There appears to be plenty of support for Prof Gratton’s view. Middle managers have become the whipping boys of the corporate world. While senior executives have taken advantage of the rise in financial leverage to reward themselves with ever larger compensation plans, middle managers have seen their salaries stagnate.

Middle management is no longer seen as a route to the top. They can toil away for years hoping for a promotion, only to see the top jobs filled by ex-consultants or fresh-faced MBAs. There is the all-consuming work itself, worsened by the 24-hour global working day, which corrodes personal lives. And then there is Generation Y, who consider middle managers losers and have no truck with 20th-century anachronisms such as meetings and weekly reports.

Prof Gratton says technology is now the general manager. “It can monitor performance closely, provide instant feedback, even create reports and presentations,” she writes. Meanwhile, the innovators in companies no longer need managers. They can self-manage and report to the executives at the top.

At first sight, it is hard to argue with all this. But there is something obnoxious about the dehumanising idea that companies will soon be made up of self-managing creative teams and executives, with nothing in between.

Steven Spear, a senior lecturer at MIT and author of The High Velocity Edge, says the difficulty with Prof Gratton’s argument is that it is based on an outdated view of middle management. It is the view articulated by Alfred Chandler in The Visible Hand, the classic account of the growth of US corporations from the 19th to 20th centuries.

According to Chandler, the middle manager fulfilled two roles: he conveyed information back and forth between the executives and the workers on the line; and he drove functional efficiencies, in the system designed by the executives – for example, better managed sales forces, lower pricing and better channels of distribution.

Of course, Prof Spear says, all of these traditional managerial roles have been under siege for years from technology, from systems that are cheaper and more efficient than humans.

What Prof Gratton fails to acknowledge is how companies’ needs have changed. While they may no longer need middle managers who meet Chandler’s definition, they do need middle managers who can manage the complexity of modern corporations.

Prof Spear has spent a lot of time at companies such as Toyota, Alcoa and Intel, as well as studying the healthcare industry, and he has found repeatedly that middle managers are as vital as ever but in a different way. Technology is yet to give the chief executives of these companies a clear view from top to bottom of their operations. They still depend on managers to tell them what is going on. As Prof Spear describes them, these must be “agile managers capable of dynamic problem solving and solving local problems locally”.

Abundant evidence of this need was provided during the financial crisis when it became clear that many bank bosses had no idea of the risks being taken inside their own organisations.

Prof Spear offers two persuasive analogies with armies and the human body. For all the sophistication of modern warfare, armies still need non-commissioned officers and officers to provide the link between generals and privates.

The human body also has layer after layer of middle management, across cells, tissue and organs, leading up to the brain. Remove any of those layers and ask the brain to talk directly to cells and you have something quite different and less efficient.

Prof Spear’s final, resounding point is that, given how fast business changes these days, human beings remain the most adaptable management tools any executive could want. They can learn, lead, change, haggle, calculate, persuade, emote and inspire. Middle managers will survive because they give a great company its pulse.

philip@philipdelvesbroughton.com

Copyright The Financial Times Limited 2011.

WSJ: The Perfect Stimuls - Bad Management

• SMALL BUSINESS
• NOVEMBER 6, 2010

The Perfect Stimulus: Bad Management

If no one had a hamster-brained sociopath for a boss, who would start new businesses?

By SCOTT ADAMS

One of my earliest childhood jobs involved shoveling manure at my uncle's dairy farm in upstate New York. Things were going well until my uncle explained that no matter how well I performed, I would never be promoted to farmer. Or even cow. I had hit the manure ceiling.

I consider that experience my first economic stimulus package—the unwelcome realization that my current job was a dead end. While my classmates were building snowmen with carrot noses (mostly the girls) and carrot genitalia (mostly the boys), I started to do some serious career planning about how to get out of the fecal relocation profession and into the warm embrace of a loving corporation. I studied hard, and I earned money for college by mowing lawns, shoveling snow, shoveling even more manure, and (my personal favorite) shoveling frozen manure covered with snow. I saved my meager funds, and with the help of my parents, who both took extra jobs, plus a few scholarships, I clawed my way into college.

Years later, my dream came true. I got a job with a large bank, and I never again needed to shovel manure. Corporations use something called PowerPoint instead. Thanks to my farm training, I was so good at designing PowerPoint slides that my coworkers called me "The Natural." Jaws dropped when I introduced my signature move: the frozen PowerPoint slide with snow on top.

In those days, I was a furious bundle of ambition and determination. The old-timers told me I had a "rocket strapped to my ass." All I needed to do was get my "ticket punched." It wasn't long before I was able to enjoy my second economic stimulus package: bad management.

Though most of my immediate bosses were entirely reasonable and competent, the organization at large was riddled with hamster-brained sociopaths in leadership roles. Surely, I thought, this must be a problem that exists no place else on Earth. Otherwise we'd all be living in caves and holding long meetings on the feasibility of using sticks as stabby things.

One day, a position opened above me, and I was the most obvious candidate to fill it. My boss called me into her office and said she had some bad news. She explained that the media was giving our company a lot of heat because almost all of our managers and executives were white males. Promoting me, she explained, would only make things worse. I asked how long I might need to wait for all of this to blow over. My boss was vague, but she said the timeline involved smoothing out the effects of two centuries of corporate discrimination.

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Copyright Scott Adams, Inc.

I decided to jump ship and go where my talent and hard work would be rewarded. I took a job at the local phone company and soon discovered, to my horror, that banking was not the only industry in the world managed by hamster-brained sociopaths. Once again, my immediate bosses were quite capable, but interacting with other departments was like being the last human in Zombieville and trying to buy groceries at dusk. Still, it was marginally better than shoveling manure, so I doubled down. I finished my MBA classes at night and distinguished myself as an up-and-comer.

One day my boss called me into his office and explained that the media was giving the phone company a lot of heat because almost all of the managers and executives were white males. So, he explained, promoting me would only make things worse. You might say that was the day that the "Dilbert" comic strip was born, although I had not yet drawn one. Let's call it a tipping point. From that day on, I considered myself an entrepreneur. All I had to do was figure out what business I was in. The phone company was willing to pay for almost any sort of semi-relevant training or education that I was willing to endure. It was like an accidental school for entrepreneurs. From an economic viewpoint, I was in exactly the right place, with exactly the right amount of career discomfort.

I wasn't suffering alone. Many of my co-workers already had active side businesses and ambitious expansion plans. The guy in the cubicle behind me was running a concert equipment rental business. Across from me was a guy running a computer tech support business. We had Amway dealers, Mary Kay sales people, inventors, authors and just about any other business you can imagine. That's not counting all of the business plans in the incubation phase. I think we all understood that working in a cubicle and being managed by Satan's learning-challenged little brother was not a recipe for happiness.

The way I describe it may sound pessimistic, but consider the alternative. Imagine a parallel universe where employees enjoy going to work. They feel empowered and fulfilled—so much so that they don't care about the size of their paychecks and never want to leave their jobs. That's exactly the sort of nightmare scenario that would destroy the economy. The last thing this world needs is a bunch of dopey-happy workers who can't stop humming and grinning. Our system requires a continuous supply of highly capable people who are so disgruntled with their jobs that they are willing to chew off their own arms to escape their bosses. The economy needs hamster-brained sociopaths in management to drive down the opportunity cost of entrepreneurship. Luckily, we're blessed with an ample supply.

To put it in plainer terms: The primary purpose of management is to kill any hope that staying in your current job will work out for you. That sort of hope is like gravel in the engine of progress. The economy needs workers who are fed up, desperate and willing to quit their jobs for something better. Remember, only quitters can be winners, because you can't do something great until first you quit doing something that isn't.

You see this same dynamic with countries. The United States is a nation founded by people who couldn't stand the leaders of their old homelands. I'm no geneticist, but I suspect that the "screw it, I'm out of here" attitude can get passed on. We're probably the most disgruntled, self-loathing, hard-to-satisfy people on Earth. It's no wonder our GDP is awesome.

Israel is another perfect example. The entire nation is full of people who were displeased with their last situation. And Israel's economy is one of the most vibrant in the world. If every Israeli became satisfied at once, they couldn't keep the lights on for a week.

I have always assumed there's a correlation between imagination and risk-taking. You wouldn't leave an unpleasant but relatively safe situation unless you could imagine a better outcome. So the people who leave a company first tend to be the visionaries who can best imagine entrepreneurial success. The last wave of people who leave are usually excreted just before the door is chained. They didn't imagine it would happen so soon. Bad management is how imagination gets wings.

—Scott Adams is the creator of 'Dilbert.'

Copyright 2010 Dow Jones & Company, Inc. All Rights Reserved

FT: Break the model on employee behaviour

Break the model on employee behaviour

Philip Delves Broughton

Published: October 4 2010 23:05 | Last updated: October 4 2010 23:05

If ever there were a moment for companies to be experimenting with how they organise and motivate their employees, now would seem to be it. Businesses are being yanked in every direction by the forces of recession, emerging markets and new technology. Psychologists and economists are collaborating as never before to expand the field of behavioural economics, to tell us why we behave the way we do when it comes to work and money.

So why are more companies not using the crisis to rethink how they manage their people? Why are they so much more innovative when it comes to jiggering with their balance sheet or product line than human resources?

EDITOR’S CHOICE

Philip D. Broughton: The awful boss is not fiction - Sep-27

Philip D. Broughton: Blind eye to the facts - Sep-20

Philip D. Broughton: Beware the superstar chief executive - Sep-13

Richard Waters: Angels can beat deals with the devil - Aug-31

Philip D. Broughton: An old-fashioned view of hoarding - Aug-30

Tom Peters: Kindness can be the hardest word - Aug-23

It is a question that is dumbfounding Dan Ariely, a professor of behavioural economics at Duke University and author of two books, Predictably Irrational and The Upside of Irrationality. Prof Ariely is one of management’s most widely cited behavioural economists, and he told me that while companies harried him for insights into customer behaviour, they were loath to try out anything new on their employees. “There is no worse place to try to do experiments than human resources,” he said. “The first thing on their mind when they hear the word ‘experiment’ is lawsuits.”

Some of Prof Ariely’s most interesting research has been in the area of compensation. He has concluded, for example, that large bonuses have little effect on the performance of bankers. He suggests that banks would be better off firing all but their most talented employees and hiring thousands of new workers with none of the salary and bonus expectations of the old ones. They would be able to do the same work for much less money, unburdened by outlandish expectations. I would love to hear Jamie Dimon and Lloyd Blankfein debate that one.

Prof Ariely argues that financial rewards are only one piece of a complex web of motivations which affect each of us differently. These include a sense of purpose, status, altruism, ego and control, all of which a clever manager should take into account. And yet how many do this in anything but the most informal way?

“I went to a lot of companies and said, ‘Let’s do studies of bonuses,’ ” he says. “One hundred per cent of the time, people would tell us that bonus season is so miserable, they didn’t want to prolong the agony by studying it any further – even though we know that productivity goes down during bonus season and that bonuses are not the most efficient motivator.”

He added that “the biggest curse in compensation are compensation consulting firms” that do nothing but benchmark compensation against companies, which may or may not be useful comparisons. “They know nothing about the science,” says Prof Ariely. “They’re just perpetuating the misery.”

It may be that companies don’t have Prof Ariely’s urgency. Managers who have survived the recession intact are probably feeling confident in their existing model. Now may not seem the time to go redrafting the rewards structure and instituting flexi-time for all.

Prof Ariely says he still receives plenty of calls from start-ups, brimming with enthusiasm for new organisational forms. They crave new ideas about compensation and how to improve employee morale and creativity. They are eager to use unconventional methods to motivate individuals who spend their days working away from the main office on unusual schedules, and may only ever see parts rather than the whole of a business.

But once these companies reach any kind of scale, the experimental mindset hardens into a procedural one. The enthusiasm to get the most out of every individual becomes a desire to settle on a one-size-fits-all motivational template, regardless of the irrational behaviours it might cause.

The only way Prof Ariely has found through this inertia is to get the chief executive on side. He began working with Scott Cook of Intuit, the financial software company, on experiments to understand the behaviour of his customers. Why, for example, do people pay down their smallest loans before those that carry the highest interest rates? He suggested creating a software tool to help customers behave more rationally.

But now he says his behavioural economics research is seeping into Intuit’s internal organisation. Instead of offering purely financial incentives for great work, Intuit now offers high-performing employees half a year’s sabbatical.

Mr Cook is also encouraging a culture of experimentation, telling employees that a failed experiment is no failure if it produces evidence. This is vital to employees’ feelings of control.

Innovative management that takes the complexity of human behaviour into account can be a competitive advantage – especially now, when so few are ready to practice it.

philip@philipdelvesbroughton.com

Copyright The Financial Times Limited 2010.

FT: A timely guide to being a better manager

A timely guide to being a better manager

By Peter Whitehead

Published: September 29 2010 19:21 | Last updated: September 29 2010 19:21

Good Boss, Bad Boss: How to be the best... and learn from the worst
By Robert Sutton
Business Plus $23.99/Little Brown £10.99

It can be a mighty relief when a disliked boss decides to leave, creating a dangerous moment during which emotions must be kept in check.

EDITOR’S CHOICE

Business books: Guide to greasy-pole climbing - Sep-29

Business books: How the web will save the world - Sep-08

Book review: Rich history of Lehman’s demise - Sep-01

Band shows us how to knock ’em dead - Aug-26

Business books: Stay tuned for Bronfman’s story - Aug-18

Business books: Inventor of modern marketing - Aug-11

It can certainly be a mistake to follow the example of one employee I knew who pinned a departing manager against a wall and told him, in robust language, to go away and not come back. Unfortunately, the manager returned a year later to an even more senior position.

Anecdotes such as this abound in Robert Sutton’s book Good Boss, Bad Boss: How to be the best...and learn from the worst. Without them, it would be a brief and colourless exhortation to use common sense and treat people with respect when in a position of authority.

With them, it paints a terrifying picture of workplaces randomly blessed with paragons of virtue or damned with dysfunctional misfits at the helm.

Sutton is a professor of management science and engineering at Stanford University and in 2007, he declared war on bullies and incompetents, who make life for those around them a misery, in his book The No Asshole Rule.

He reports that this prompted thousands of readers to send him messages, convincing him that the modern workplace is plagued with “assholes” – commonly those in charge.

This follow-up takes a closer look at bosses: the things they should and should not do; the central role they play in the lives of their teams; and the damage they can do to those around them and to their business.

It pulls no punches into laying into the bad bosses. There are allegations of employees being physically tortured – one incident of “waterboarding” during a company picnic resulted in a lawsuit – and tales of people being fired by e-mail.

Mistreated employees become resentful, demotivated, obstructive and energised only by the thought of revenge.

Bad bosses are labelled “clueless and coldhearted” and accused of causing far-reaching damage to their teams and their companies. They “make people sick”, says Sutton.

To back this up, we hear of a 10-year Swedish study of 3,000 workers that found “those with lousy bosses suffered far more heart attacks”. Sutton comments: “I would call those lousy Swedish bosses incompetent assholes.”

Then there are the good examples, such as the Oakland police sergeant who was so widely respected that several veteran officers chose the unpopular all-night graveyard shift so they could work alongside him.

Alternating between the heartwarmingly enlightened and the blood-curdlingly awful is good knockabout stuff, but will bad bosses learn from it? Will they even pick up this book?

Sutton offers various strategies for improvement, such as imagining your 14-year-old son is following you around all day: how proud of you would he feel?

Sutton himself acknowledges that one of the offenders’ worst traits is self-delusion: bad bosses could read the book from cover to cover without recognising themselves.

Having made the case repeatedly that managers need to consider others in everything they do, Sutton’s perhaps counter-intuitive conclusion is that they have to accept the role is all about themselves: their own behaviour is infectious and will be copied; everything they do will be watched and noted.

Is this good advice? The world’s worst boss, David Brent of The Office TV comedy series (renamed Michael Scott in the US series) believes exactly that, with his constant “look at me” antics. But he is utterly lacking in common sense and compassion. So perhaps the best advice would be that anyone without these traits should please do everyone a favour and steer clear of management.

Copyright The Financial Times Limited 2010.

FT: A guide to climbing the greasy pole

A guide to climbing the greasy pole

Review by Morgen Witzel

Published: September 29 2010 23:17 | Last updated: September 29 2010 23:17

Power
Why Some People Have It – and Others Don’t
By Jeffrey Pfeffer
HarperBusiness $27.99/£18.99

“Almost anything is possible in attaining positions of power,” begins Jeffrey Pfeffer’s new book. “You can get yourself into a high-power position even under the most unlikely circumstances if you have the requisite skill.”

EDITOR’S CHOICE

Business books: How the web will save the world - Sep-08

Book review: Rich history of Lehman’s demise - Sep-01

Band shows us how to knock ’em dead - Aug-26

Business books: Stay tuned for Bronfman’s story - Aug-18

Business books: Inventor of modern marketing - Aug-11

UK management guru deserves a revival - Aug-04

As the text makes clear, “skill” does not necessarily have anything to do with being exceptionally knowledgeable or good at one’s job. Instead, skill lies in knowing about the levers of power: where they are, how to pull them and what to do next.

Pfeffer, a professor of organisational behaviour at Stanford University, is a long-time observer of the corporate world, and knows whereof he speaks. He writes fluently of his subject, using anonymous case studies of people he has known over the years.

After discussing how people should prepare themselves to achieve power, Pfeffer then looks at such essential skills as how to get noticed by the right people, how to build networks with the right people, how to build a reputation and how to overcome opposition.

These skills are described in detail with plenty of practical suggestions. If any readers fancy a career in greasy pole-climbing, then this is the book for you. Like all of Pfeffer’s books, this one is highly readable, interesting and at times entertaining. On one level, it is also deeply honest.

“Power” is not a very fashionable word these days. Most powerful people, especially in business, try quite hard not to appear too powerful. Democracy, inclusiveness, sharing, being mutually supportive; these are supposed to be the most valued qualities in an executive.

So it is actually quite refreshing to read a book that talks openly about power and acknowledges its uses in frank terms. Powerful people, says Pfeffer, tend to be the ones who get things done. They are also wealthier, live longer and have a better quality of life. So, power is good.

And yet, there is also a strong streak of intellectual dishonesty running right through the book. Power has consequences and, apart from one chapter – a very good and thoughtful chapter, it should be said – on the consequences of power for those who have it, Pfeffer never comes to terms with the uses and abuses of power. Nor does he describe what the wielding of power by one person does to others around them.

Partly this is because he never really explains what power is. I looked through the book in vain for a definition. But in most standard definitions, power means control over other things, and particularly other people. It means getting other people to do what you want them to do, and it can mean getting them to do things they themselves do not want to do.

Any observer of Pfeffer’s experience and knowledge must know this. So why the omission?

None of the people in the case studies acts dishonestly or unethically, nor are they even particularly ruthless. This means the book contrasts unfavourably with older works such as Machiavelli’s The Prince or Eustache de Refuge’s Treatise on the Court, or the more recent studies of power by Manfred Kets de Vries which go deep into the psychology of power.

These works discuss power as a moral issue, and talk about the consequences of having power and its morally corrosive effects on those who have it. As Lord Acton said, power corrupts.

But there is no acknowledgement of that here. This book is about getting power and keeping it, nothing more. It assumes that power is benign and benevolent, and we know that this is not always the case.

That said, this is never less than an interesting read, and some chapters are particularly good.

The section on the reasons why people lose power, for example, ought to be required reading for would-be leaders. Many of them are so intent on reaching the top that they have no real idea of what they will do when they finally get there. They either become prey to inertia, so paralysed by the responsibilities of power that they fail to act decisively, or they fall prey to factions among their followers and are destroyed. (Would-be prime ministers in particular, take note.)

The chapter on networking also makes some useful points about building networks with the right people and the consequences of choosing the wrong ones.

This sounds like common sense, but choosing the wrong allies in an organisation can be a sure way to failure; networking partners have to be chosen with care. It reminded me of a recent novel, Dork, by Sidin Vadukut. It is the tale of a trainee management consultant with an unerring ability to network with the wrong people.

Pfeffer’s book includes an excellent summary that makes an important point: if you do not take power over your own life, then someone else will. It is up to you to protect your own life, your career, your future; no one else will do it for you.

Perhaps for that reason alone, this book is worth reading.

Copyright The Financial Times Limited 2010.

ST: Singapore emerging as regional talent hub

Singapore

Home > Singapore > Story

Sep 30, 2010

S'pore emerging as regional talent hub

Republic well positioned to develop products and practices for both East and West: DPM Teo

By Kor Kian Beng

 

WHEN global consultancy PricewaterhouseCoopers (PwC) was considering setting up a human resource research centre in the Asia-Pacific, it did not look beyond Singapore.

The country's status as a regional hub, its skilled talent base coupled with strong government support were powerful pull factors. And in June, the centre opened its doors at the PWC Building in Chinatown, adding to two earlier centres in the United States and Britain.

PwC's decision to locate its Asia-Pacific Saratoga Centre in Singapore was cited yesterday by Deputy Prime Minister Teo Chee Hean as indicative of the country's initial success in becoming a regional talent hub for human resource research and networking.

It was further buttressed last week when consumer goods giant Procter & Gamble opened its Asia Leadership Development Centre in Novena Square.

Mr Teo, who heads the National Productivity and Innovation Council, highlighted these cases at an international human resource meeting to underline the challenges ahead as talent around the world heads towards a rising Asia.

'A better understanding of Asia is required to help integrate these global talents with the local workforce and society,' he said at the opening of the two-day Singapore Human Capital Summit attended by about 650 local and global business leaders.

Singapore, sited at the confluence of global talent flows between the East and the West, is uniquely positioned to 'develop new products, services, knowledge and practices customised for both markets', he added.

These efforts and ambition were applauded by Mr Ajay Lavakare, executive chairman of RMSI, an Indian geographic information services company.

He told The Straits Times that Singapore's edge is in its globally recognised academic institutions, entrepreneurial culture and acceptance of diverse cultures.

In his speech, Mr Teo also explained why the Government is supporting this third annual summit, organised by the Ministry of Manpower (MOM) and the Workforce Development Agency (WDA).

The reason is that it wants to study the management of cross-border talent flows, which he said is a very important factor in a small country like Singapore.

Other reasons include the need to raise the skills of the local workforce to meet the needs of a complex economy requiring 'very complex skills', and helping the Government, a major employer, to improve the quality of public service.

These are challenges that many Asian countries will face too, said Mr Teo.

In Singapore, WDA's response is to roll out 114 courses in human resource, and leadership and management by the end of next year.

These are part of a Workforce Skills Qualifications framework in business management to be launched next month.

Other challenges the region faces, Mr Teo said, include developing effective and 'authentic localised' leaders who understand the local environment and culture, and addressing emerging demands from workers 'expecting to work smarter, not longer'.

The challenges Asia faces in attracting talent and grooming leaders featured as a hotly discussed topic at the summit yesterday, as were issues such as ways to motivate Asian workers and the ingredients for successful leadership in Asia.

Asia-Pacific president of Starwood Hotels and Resorts Worldwide, Mr Miguel Ko, a speaker at the forum, told The Straits Times that one weakness is the lack of emphasis on social skills, such as communication, in Asian schools.

As a result, smart people are stuck in middle management, he said.

Today, Manpower Minister Gan Kim Yong will give out the second Asian Human Capital Award at the summit held at Resorts World Sentosa. It is conferred by MOM, international business school Insead and CNBC Asia-Pacific, to recognise regional companies with innovative and effective people practices.

kianbeng@sph.com.sg

---

FORGING UNDERSTANDING

'A better understanding of Asia is required to help integrate these global talents with the local workforce and society.'

DPM Teo Chee Hean, on the challenges ahead as talent around the world heads towards a rising Asia

===

Singapore

Home > Singapore > Story

Sep 30, 2010

P&G centre to train next generation of managers

By Robin Chan

P&G's Asia Leadership Development Centre, whose opening was officially announced yesterday, will train 500 managers for the Asia-Pacific each year. It is part of the consumer giant's initiatives to strengthen its ties with Singapore. --PHOTO: P&G

 

CONSUMER giant Procter & Gamble (P&G) has further strengthened its ties with Singapore by opening a facility here to groom its next generation of managers.

The Asia Leadership Development Centre, whose opening was officially announced yesterday, will train 500 managers for the Asia-Pacific each year, P&G said.

This comes after the Cincinnati-based maker of products, such as Head & Shoulders shampoo and Gillette razors, had also committed to building a plant in Tuas to produce water purification packages, as well as a 'mega innovation centre', where it will conduct research and development on a range of products and technologies.

The centre - only the second such P&G facility in the world after one in Beijing - is expected to be completed by late 2013. It will be augmented by a three-year research collaboration agreement with the Agency for Science, Technology and Research.

The new initiatives underline how dramatically the firm has increased and deepened its presence here. Less than a decade ago, it employed 150 people here to coordinate some regional activities. Today, it employs 1,300 staff across three locations - an Asia headquarters at Novena Square Towers, a customer service centre in Alexandra Road, and a Tuas perfume plant that makes scents for half of its products in Asia.

It also chose Singapore for its global office of its high-end women's cosmetic brand SK-II, as part of a 2007 strategy to centralise its offices.

All top-level decisions about the brand, including spending, packaging, finance and product innovation, are made here.

P&G's rapid transformation here reflects the way global firms now see Singapore - as a place that is more than just a well-connected business location.

'P&G... really provides an exciting story of the sort of home for international business that the (Economic Strategies Committee) had envisioned,' said Economic Development Board (EDB) chairman Leo Yip, speaking to The Straits Times last week.

'The ESC had identified that we need to move away from just having strong infrastructure, excellent connectivity and a pro-business environment, to grow new value propositions for international businesses.'

The ESC was formed last year to come up with new and creative ways to further grow the Singapore economy. It unveiled its report earlier this year. One of its five key strategies to attract companies here is for Singapore to offer a whole gamut of operations - not just business activities, but also innovation as well as talent development.

P&G's initiatives are the first substantial materialisation of the ESC sub-committee's report - moves that date back to earlier this decade when P&G decided to run Asia as one unit and found Singapore most suitable, said P&G Asia group president Deborah Henretta. She is on the EDB board and was the co-chair with Mr Yip of the sub-committee that made the recommendations.

'Once you make a decision to put down roots, you're then encouraged to think about Singapore as not just a host for your business, but a home,' she said.

Mr Yip said that while it is still early days to say how many companies are following suit, 'this is quite clearly a strategy that has received strong response from companies around the world'.

The test is to turn the interest into concrete investments and programmes, he said.

Harvard Business Review: 12 Things Good Bosses Believe

Article from Robert Sutton - this is for the bosses and for those with bosses.

Robert Sutton is Professor of Management Science and Engineering at Stanford University. He studies and writes about management, innovation, and the nitty-gritty of organizational life. His last book was the New York Times bestseller The No Asshole Rule: Building a Civilized Workplace and Surviving One That Isn't.

===

12 Things Good Bosses Believe

9:32 AM Friday May 28, 2010
by Robert I. Sutton  | Comments (116View)

What makes a boss great? It's a question I've been researching for a while now. In June 2009, I offered some analysis in HBR on the subject, and more recently I've been hard at work on a book called Good Boss, Bad Boss (forthcoming in September from Business Plus).

In both cases, my approach has been to be as evidence-based as possible. That is, I avoid giving any advice that isn't rooted in real proof of efficacy; I want to pass along the techniques and behaviors that are grounded in sound research. It seems to me that, by adopting the habits of good bosses and shunning the sins of bad bosses, anyone can do a better job overseeing the work of others.

At the same time, I've come to conclude that all the technique and behavior coaching in the world won't make a boss great if that boss doesn't also have a certain mindset.
My readings of peer-reviewed studies, plus my more idiosyncratic experience studying and consulting to managers in many settings, have led me identify some key beliefs that are held by the best bosses — and rejected, or more often simply never even thought about, by the worst bosses. Here they are, presented as a neat dozen:

1. I have a flawed and incomplete understanding of what it feels like to work for me.
2. My success — and that of my people — depends largely on being the master of obvious and mundane things, not on magical, obscure, or breakthrough ideas or methods.
3. Having ambitious and well-defined goals is important, but it is useless to think about them much. My job is to focus on the small wins that enable my people to make a little progress every day.
4. One of the most important, and most difficult, parts of my job is to strike the delicate balance between being too assertive and not assertive enough.
5. My job is to serve as a human shield, to protect my people from external intrusions, distractions, and idiocy of every stripe — and to avoid imposing my own idiocy on them as well.
6. I strive to be confident enough to convince people that I am in charge, but humble enough to realize that I am often going to be wrong.
7. I aim to fight as if I am right, and listen as if I am wrong — and to teach my people to do the same thing.
8. One of the best tests of my leadership — and my organization — is "what happens after people make a mistake?"
9. Innovation is crucial to every team and organization. So my job is to encourage my people to generate and test all kinds of new ideas. But it is also my job to help them kill off all the bad ideas we generate, and most of the good ideas, too.
10. Bad is stronger than good. It is more important to eliminate the negative than to accentuate the positive.
11. How I do things is as important as what I do.
12. Because I wield power over others, I am at great risk of acting like an insensitive jerk — and not realizing it.

What do you say: does that about cover it? If not, tell me what I missed. Or if you're not quite sure what I mean in these brief statements, stay tuned. Over the coming weeks, I'll be digging into each one of them in more depth, touching on the research evidence and illustrating with examples.

If you're like most people I meet, you've had your share of bad bosses — and probably at least one good one. What were the attitudes the good one held? And what great, workplace-transforming beliefs could your worst boss never quite embrace?

FT: It's time to sack job appraisals

It’s time to sack job appraisals

By Lucy Kellaway

Published: July 11 2010 20:27 | Last updated: July 11 2010 20:27

Last week an e-mail went round the office touting for suggestions on ways to improve our performance appraisal system. My suggestion is dead easy and dirt cheap: get rid of the whole thing and replace it with nothing at all.

Normally, if I have any bright ideas about how this newspaper could be managed better, I propose them in private. It is not seemly to wash the Financial Times’ dirty linen in public. Yet when it comes to appraisals, the linen of every other company is covered with much the same filthy stains as ours, and so there seems no shame in suggesting a mass outing to the launderette.

Over the past 30 years, I have been appraised three dozen times – as banker, journalist and non-executive director. I’ve lived through the craze for long, complicated forms. I’ve also survived the informal fashion in which appraisals are called “career chats” and where a bogus air of equality prevails. I’ve done appraisals across a table, on a sofa, even over a meal. I’ve had them à deux and à trois – with a facilitator in tow.

But never have I learnt anything about myself as a result. I have never set any target that I subsequently hit. Instead I always feel as if I am playing a particularly dismal game of charades, with three disadvantages over the traditional parlour game. There is no dressing-up box; there is no correct answer to guess and it isn’t remotely fun. The norm is a harrowing hour’s conversation during which you are forced to swallow an indigestible mix of praise and criticism referring to long-ago events, which leaves you demotivated and confused on the most basic question: am I doing a good job? The resulting form is then put on file, making you feel vaguely paranoid, even though you know from experience how much attention will be subsequently paid to it: none whatsoever.

At least I’ve only had to suffer one side of the process. I have never – thank goodness – had to appraise anyone else, which must be even more tiresome as you have to perform the same operation with each underling in turn, wearily letting people believe they are doing more or less okay, because it’s too tiring to drop the bombshell that they aren’t doing okay at all.

I have a friend in a large company who spends an entire month each year appraising her team. She says the system has been “improved” so that she no longer sorts people into “exceptional performers”, “good performers” and so on. Instead she works through a list of mysterious attributes – such as “leverages mastery” and “innovates holistically” – choosing three strengths and one development need (or weakness, as it was formerly known) for each.

She admits that this system – which applies to almost 100,000 people worldwide – is utterly idiotic. But when I suggest it be scrapped she looks shocked. “Out of the question,” she says. “That would be interpreted as us saying we don’t care about developing people.”

Not by everyone, it seems. Last week Samuel Culbert, a business school professor in California, went on US radio to say that all appraisal systems were total baloney. He thinks even less of them than I do. They were a throwback to the bad old days of management by objective, he said, and only persisted because they allow evil managers to hold employees down and because HR managers are like the KGB when it comes to hoarding information.

His alternative, which he describes in his new book Get Rid of the Performance Review, is that bosses and underlings should have regular, equal conversations during which the boss says things like: “What do you need from me to deliver what we are both on the firing line to produce?”

This is a fantastic idea. The only trouble is that it bears no relation to the world as I know it; managers don’t talk or think like that.

The most sinister thing about the current system is that it allows managers to delude themselves into thinking that they are managing their people.

With this delusion stripped away, some managers might take matters into their own hands. They might even start saying “that’s good” and “that’s not so good” at the only helpful time to say such things: when they have just happened. This sort of thing is called managing, and the beauty of it is that it makes formal appraisals quite unnecessary.

Even for those whose managers did nothing to fill the gap, there would still be a net gain from scrapping appraisals. Time and energy would be saved and the only two things lost would be cynicism and paranoia.

lucy.kellaway@ft.com

Copyright The Financial Times Limited 2010.

Dan Pink on the surprising science of motivation

This lively RSA Animate, adapted from Dan Pink's talk at the RSA, illustrates the hidden truths behind what really motivates us at home and in the workplace. Enjoy!

FT: Lucy Kellaway on office romance

Lucy Kellaway on office romance

By Lucy Kellaway

Published: April 30 2010 15:21 | Last updated: April 30 2010 15:21

It was the graveyard slot just after lunch and the bankers assembled in the ballroom of a London hotel were sleepy. The middle-aged woman in the seat next to me – who was to be one of the afternoon’s speakers – was surreptitiously sending e-mails on her BlackBerry. Bored, I glanced across and saw that the messages going to and fro were composed predominantly of kisses. I positioned my head so that I could see more and was rewarded by the discovery that the other side of this conversation appeared to be in the room. The e-mail exchange was an (unflattering) running commentary on the current speaker, leavened with endearments and lascivious thoughts and a plotted assignation once her speech was over.

I turned around to see if I could spot the man equally engaged with his BlackBerry but half the audience seemed to be prodding at gadgets in their laps, their faces all blank and blameless.

The speaker was coming to a lacklustre close and my neighbour calmly got up, positioned herself at the lectern and proceeded to give a presentation on the success of diversity policies at her bank.

Mostly her colleagues looked on with the sort of torpor that comes over an audience at 3pm when listening to a talk on diversity. But I was riveted. She struck me as both perfectly ordinary and perfectly professional; nondescript in a plain trouser suit and clicking through her PowerPoint slides with total conviction.

Since then I have thought about her often. I have thought about her in meetings and in offices when everybody is doing what they are supposed to be doing. And I’ve wondered: who are they really e-mailing? What are they really thinking? What is going on beneath all that quiet, seemly behaviour?

Offices are the strangest of places. They are where the bulk of western humanity spends the bulk of its time, following rules that do not come naturally. Armies of workers turn up to work at a certain time, dressed in a uniform, and behave in a proscribed fashion. Under these conditions it is perhaps not surprising that all sorts of dysfunctional things start to happen.

In the past 15 years at the Financial Times I’ve become an expert on the weirdness of office life, writing about the lengths people go to in order to bend themselves into the right shape for office survival. For the past 10 I’ve written a fictional column about a male executive as he goes up the ladders and down the snakes of corporate life. Martin Lukes understands better than most that to do well in the office you cannot talk or think or behave in a natural way and therefore, like the real executives he is based on, he talks in out-of-the-box business jargon, 24/7.

It is easy to see why offices are Petri dishes in which jargon and management fads grow but it isn’t so obvious why they are also the perfect breeding ground for sex and even for love, which thrive in this alien environment.

The office demands that one is guarded and restrained; sex is about being unguarded and unrestrained. Office life requires a suppression of emotion; sex – and love – require just the reverse. Offices demand that everyone is treated on their own merits, while sex and love demand just the opposite: a mad irrational preference for one person over every other.

Yet despite – or because of – the fact that illicit love is the last thing the office was designed for, it is now the most popular place for it in the western world.

Statistics show that variously two-thirds of workers have had sex with a workmate at some point, that one in 10 have had sex with a boss, and that one-quarter meet their future partners in the office.

These stats are, of course, more than usually dodgy. People lie about their office affairs even more than they lie about how many units of alcohol they consume.

I met my own husband at the FT and, in the early stages of our relationship, used to lie through my teeth. I remember the surreal transition from being workmates to lovers and how I found it quite impossible to admit to colleagues that David and I were going out – if that indeed is the right term for a romance that blossomed in a windowless, dirty newsroom. Almost certainly everyone knew anyway, otherwise why was he endlessly phoning me from across a crowded room pretending to be an irate captain of industry incensed at whatever I’d written in the paper that morning? And why was he so gleeful when I started blushing and stammering?

It now seems silly to have been so coy given that we were young and equals and unmarried. By contrast, the woman at the conference was not young. And judging by her comments on multitasking, she appeared to be married with children and the man to whom she was sending e-mails was most certainly not her husband.

She, it seemed to me, was living at the extreme point where the professional and the personal collide. Everything that was demanded from her as a responsible senior banker was at odds with what was happening in her personal life. This situation, I thought as I watched her calmly give that presentation, was begging for fictional treatment.

What is so strange is that this material features so little in novels. The armies of commuters who travel to and from work on trains and Tubes may have in their hearts romantic yearnings towards a colleague but they have their noses in love stories that are more likely to be taking place in a leper colony in Greece or in the court of Henry VIII than in a modern-day office.

The reason that this richest of seams has been mined so inadequately is probably that the sort of people who write romantic novels don’t work in offices. In fairness, neither do they work with Greek lepers or 16th-century courtiers but, as the readers don’t either, the writers may feel at less of a comparative disadvantage than dicing with the contemporary workplace.

Indeed, there aren’t many literary novels set in the office either, perhaps for the same reason. By far the most famous and still the best book about the office is Something Happened (1974), Joseph Heller’s account of a miserable manager who loathes his wife – who is a drunken flirt – his retarded son and conniving daughter. He hates and is bored by his job and works in an office where everyone fears the people above them on the ladder and is feared by those below. Yet the most feared person of all is a half-mad typist who hasn’t got the hang of disguising her feelings. They dread that one day she’ll go crazy in the office, because that would be embarrassing and embarrassment can’t be tolerated.

The thread of how the office infantalises us and makes us powerless was picked up 30 years later by Joshua Ferris in Then We Came To The End (2007), a study of boredom and disaffection in an advertising agency. And now Tom Rachman has written The Imperfectionists, a story of a group of journalists plugging away pointlessly on a doomed newspaper, ignoring the cracks in their careers because the cracks in the rest of their lives are so much bigger.

In all three books, work is mostly boring and hateful and pointless but it is also a distraction from the greater pain that takes place outside work; the office, despite being mostly disagreeable, can be the best sort of refuge.

Yet I wanted to write something different: a novel in which the emotional tumult of life was going on in the same place as the work. Where the office wasn’t a place to escape to, it was the focus both of the personal anguish as well as the professional calm.

This time, I decided to tackle the subject as a woman. Not only was this the easy option, being one myself, but after having cross-dressed as Martin Lukes for a decade, I needed a break. Martin has no emotional intelligence and no self-knowledge and is so endlessly boastful, I found myself longing to reinvent myself as a pair of women, one of whom was lacking in confidence and the other with rather too much emotion for her own good.

The problem with this, I soon realised, is that being female is somehow less funny than being male. A man who doesn’t know himself is stiff with comic potential, while a woman who is well aware of the mess she is getting into might be mad or sad or wayward but she’s not particularly funny.

When I started on this project a couple of years ago I had been excited by the slapstick possibilities of office affairs. Who can ever forget the way that the then deputy governor of the Bank of England, Rupert Pennant-Rea, was exposed as having conducted an affair in Threadneedle Street? And then there are all the ludicrous trappings of an office romance: the hilarious Christmas parties, the scope for double entendres and misapprehension, with the comedy afforded by CCTV cameras and misdirected e-mails – all of which surely lead to a novel as funny as a Carry On film.

Yet the more I looked into it, the blacker the humour became. In researching the book I assembled a group of half a dozen women, each of whom had had an office affair, and who, after a bit of coaxing and reassurance that I wasn’t about to blurt out their secrets, seemed willing to spill their stories in all their gory detail. But as I listened I realised this was much more tragic than comic. All six affairs ended badly, some of them horribly so. One ended in divorce. One woman had to leave her job. The rest soldiered on, wounded. Not one had walked off into the sunset hand in hand.

What was compelling about the stories was the madness of it all. With one throw of the dice, these women were compromising their jobs, their home lives and their reputations. I realised that what I was dealing with, even more than tragedy, was mystery. Given how high the risks, and given that everyone agrees it’s always and inevitably a bad idea to have an affair with a colleague, why do people do it?

There seem to be five main reasons, the first of which is proximity: two people are holed up together for most of the waking hours of the day. The second is shared interest – simply by working together people have a great deal in common. Third is boredom: work can be dull and a bit of flirtation can make it considerably less so. The fourth explanation is that to have an affair at work turns out to be terribly easy, and technology makes it easier still. And then there are business trips, company away days and drunken Christmas parties.

But the fifth reason is the oddest. It is that people look at their most alluring at work. They are more capable and more in control, particularly seeming that way to anyone further down the hierarchy. For this reason people end up having office affairs with colleagues they would not otherwise look twice at had they seen them across a crowded room at a party.

But all these reasons still don’t fully explain why sensible people are willing to risk so much. The real answer is that an office affair works like a drug addiction. All but one of my six women said it was not something that they had set out to do. Indeed it was something that they would have been horrified to find that they were capable of. But they were all lulled into it, thinking it harmless and that they could handle it, only to find themselves head over heels and quite out of control.

And once in, their ability to read risk was quite distorted. They simply did not believe that they would be caught. They did not believe it would end badly and that the secret world would be prised open. Yet half of the women I talked to did get caught. And they all got caught in the same way: discovery of e-mails. That very thing that made the affairs seem so secret and so safe – the private little bubble of messages silently sent to and from – turns out to be the most dangerous of them all.

Lucy Kellaway is an FT columnist. Her book ‘In Office Hours’ (£12.99, Fig Tree) is published on May 6. To buy at the discounted price of £10.39 plus p&p, call the FT ordering service on 0870 429 5884 or go to www.ft.com/bookshop

.....................

Book extract: ‘In Office Hours’ by Lucy Kellaway

Stella had opened the e-mail that had just arrived from the CEO.

“Have you got a moment?”

Stephen’s e-mails were never one word longer than strictly necessary, and the summons never gave any clue as to what he wanted to see her about. Stella briefly wondered whether it was ominous, but decided it wasn’t. When Stephen had bad news to impart he got his PA to ring and make an appointment. She e-mailed back:

“Sure – on my way up now. Stella.”

The CEO’s office was two floors above her own, and occupied the corner of the tower with a view down towards the grey dome of St Paul’s. There was a large Persian carpet on the floor, and on the bookshelves, next to Sun Tzu’s The Art of War, was a leather-bound copy of Paradise Lost. Stephen Hinton wanted people to know that not only was he CEO of one of the biggest oil companies in the world but he was also a man of culture. Perhaps he wouldn’t make quite such a big deal of it, Stella sometimes thought, if he wasn’t the son of an electrician from Hull. She had nothing against electricians from Hull, In fact she admired their graft. Stella, as the daughter of a distinguished professor of philosophy at Oxford University, had always felt relatively uncultured, and her way of dealing with it was to keep quiet.

Stephen always looked undersized in his huge office, and today he was waiting for her, pacing up and down like a small, hairy animal in a cage.

“Thanks for coming up,” he said, reaching out a hand and touching her upper arm with it. She didn’t like being touched by people at work but her smile didn’t falter.

“I’ve got a people issue that I’d like your take on, he went on. Now that Julia Swanson has quit, I’ve got to decide what to do about Press Relations. We need a hard hitter there. Did you see that crap in the Daily Mail this morning saying that we should be paying a windfall energy tax?”

Stephen spat the words out scornfully and Stella, who had not seen the article, nodded knowledgeably.

“We need someone who will knock some sense into these stupid hacks. So I was thinking about giving the department to James Staunton. It makes sense to bring media under the umbrella of External Relations. James is highly capable but I worry about his leadership style. Question: is he a great listener? You and he go back a long way and I wondered what your take was?”

Copyright The Financial Times Limited 2010.

FT: I've found the worst employee handbook ever

I’ve found the worst employee handbook ever

By Lucy Kellaway

Published: July 1 2007 14:41 | Last updated: July 1 2007 14:41

Forty-one years ago, chairman Mao distributed 900m copies of The Little Red Book to the people of China. A couple of weeks ago, Deloitte distributed thousands of copies of The Little Blue Book of Strategy to its US employees.

Apart from the difference in colour, the two books have much in common. Both came with the instruction that they should be carried around and referred to often. The red book was a tool for brainwashing and torture. The blue book is also a tool for brainwashing and torture, though the brainwashing is not terribly likely to succeed and the torture is suffered by business logic, taste and style.

EDITOR’S CHOICE

More from this columnist - Nov-07

Sharp-eyed readers may note this is the second time in a month I have written about Deloitte: three weeks ago I wondered if a motivational memo written by Jim Quigley, the new CEO, might be the worst ever written. In the normal run of things, I would now ignore Deloitte and let other companies take their turn. Yet the Blue Book is drivel of such a richly contemporary kind that all principles of even-handedness go out of the window.

The little volume arrived at employees’ homes in an envelope that said “Your Little Blue Book of Strategy. Compliments of Jim Quigley and Barry Salzberg.”

Even before the book is pulled out, two points are scored. One point for “Your” with its bogus implication that the book is personal to you, and another for “compliments of”. This reminds me of the waiter at my local Italian restaurant who says “compliments of the house” as he produces two unasked-for glasses of liqueur.

While the sickly drink is something you wouldn’t dream of paying for, these booklets could be sold on Ebay to students of business language eager to see how the genre of the employee’s handbook is evolving.

Three years ago, JP MorganChase produced a booklet containing 123 principles for staff to follow each day. A year later, Cadbury Schweppes trumped that with a yellow book with more than 144 rules for managers to “live and breathe”.

By contrast, the Little Blue Book contains only five points of strategy and only four values. Complexity is out. Simplicity is in. “We think a good explanation of strategy should be jargon-free,” say the authors, making their first and last sensible point.

The book’s subtitle, An Abridged Guide to All the Important Stuff You Need to Know, hints that all is not well in this simple, jargon-free world. The clue is the word “stuff”.

This word does not belong in a strategy document at all, particularly not from an auditor. Neither do many of the words to be found inside. “Guys” and “you bet” and “loads of” – the language sounds as if a management consultant has mated with a teenager from the 1970s who doesn’t know where to put full stops. Deloitte staff are told to deliver “Loads of value”. To “Every Client. Every Time.” It almost makes one nostalgic for paradigm shifts.

But what exactly is the “important stuff” that employees need to know about Deloitte’s strategy? The first heading is “Starry starry heights” and comes with a picture of the stars by Van Gogh. The message: shoot for the moon. This is bathos, and corny at that.

The next plank of the strategy is that clients and “talent” matter equally. “Sound like a kind of a yawner?” it asks, in a dangerous moment of perceptiveness. Then on to the four values, which, according to the strategy, staff must “obsess over”. This instruction is downright irresponsible. I’ve had quite a few obsessions in my life, and find they interfere with rational thought and generally get one into trouble.

One of the values is diversity. Here is what the book has to say on this hackneyed theme: “We strive to make our world comfortable for people of all stripes, thinking styles and hairdos – even when they exceed our comfort level.”

Again, the extraordinary linguistic hybrid: the “comfort levels” cheek by jowl with the jocular yet baffling reference to hair. Does this imply Deloitte’s customers must steel themselves for the arrival of consultants with blue mohicans or greasy comb-overs? Even more mystifying is the assertion that Deloitte welcomes diversity of thought. If this were the case why would staff need a little book telling them how to think?

On the second last page there is a check-list of 10 points to see if you are “living the strategy”, including “I reach high” and “I make things happen” and “I fuss over the grey areas”. Only this last did I tick with conviction, thinking we were back on hairdos again. But then it turned out to be referring to an obsession with integrity, which I don’t suffer from quite so badly.

There is much to marvel at in the Little Blue Book but the pièce de resistance is the page entitled Our Pledge. “The promise of our brand. To that we pledge allegiance,” it says.

To pledge allegiance to the US flag and to “one Nation under God” may have become a bit un-PC, but at least one can understand the history of it. To pledge allegiance not just to a brand, but to a promise of a brand, you’d have to be utterly daft. And if you were that daft, I wouldn’t want you anywhere near my audit.

Copyright The Financial Times Limited 2010.

BusinessWeek: Zappos Retails Its Culture

Management & Leadership December 30, 2009, 5:00PM EST text size: TT

Zappos Retails Its Culture

The online shoe seller is marketing its playful, customer-friendly model to other businesses

By Christopher Palmeri

Visitors touring Zappos.com's suburban Las Vegas headquarters can see Chief Executive Anthony C. "Tony" Hsieh waving from his cubicle or get their photos taken in goofy, mullet-shaped wigs. On the tour, which the online shoe retailer offers 16 times a week, staffers blow horns and ring cowbells to greet the guests, who move among the aisles in groups of 20, trying to get a handle on the company's unique culture. "The original idea was to add a little fun," Hsieh explains. Then it all escalated "as the next aisle said, 'We can do it better.' "

Zappos already knows how to sell shoes. Now it's hoping to profit from people's fascination with its friendly, antics-filled business model. Last summer, the company began holding two-day, $4,000 seminars on how to recreate the essence of its corporate culture. At the third such session, last October, the 25 attendees included an executive from the Girl Scouts, some competing e-tailers, and an entrepreneur from Scotland—a market Zappos doesn't even serve. In coming weeks the company will also relaunch Zappos Insights, a Web site offering management videos and tips from staffers at a cost of $39.95 a month.

The goal behind these activities is to build more buzz around the Zappos brand and its extreme customer service. Hsieh, 36, is an avid consumer of management tomes. He has 1.6 million followers on Twitter—more than either CBS News or the NFL—and he regales these fans with inspirational quotes, riffs on the news, and whatever else is on his mind. In the October seminar, which will be repeated once every quarter, Hsieh, the chief financial officer, and two dozen other staffers shared tips on hiring, compensation, customer care, and creating the right work environment.

One big Zappos fan is Amazon.com (AMZN) founder Jeffrey P. Bezos. On Nov. 2, Amazon completed its purchase of Zappos for shares worth $1.2 billion.

There's certainly much for students of management theory to try on at Zappos. For example, pay for call-center operators starts at a modest $11 an hour, and there are no bonuses or 401(k) matching contributions because Hsieh believes the most productive employees work for the psychic gratification in helping others. Customer service reps are given plenty of freedom. They may chat for hours with customers, write thank-you notes, send flowers, and even direct shoppers to rival Web sites if an item is out of stock. In a tough year for retail, sales are up by double digits.

Zappos rep Michelle Robles recently showed a reporter how the approach works. She offers coupons and free shipping to one unhappy customer while grabbing a returned pair of shearling boots for another. Robles knows her top priority is to establish an emotional connection. More than 95% of Zappos' transactions take place over the Web, so each actual phone call is a special opportunity. "They may only call once in their life, but that is our chance to wow them," Hsieh says.

A Zappos seminar last July impressed David Brautigan, who runs a family heating and air-conditioning repair business. It prompted him to fire 12 employees who were "just not being nice," while rewarding those who remain with such perks as sky diving trips. "The nicer we are to people," he says, "better things are happening." Hsieh appears pleased to spread that message: "Sharing is how we build our brand."

Palmeri is a senior correspondent in BusinessWeek's Los Angeles bureau. Follow him on Twitter @chrispalmeri .

FT: Wash away management's verbal germs

Wash away management’s verbal germs

By Lucy Kellaway

Published: September 6 2009 20:10 | Last updated: September 6 2009 20:10

Hygiene at work is in. In office toilets, grown-up employees are being told how to wash their hands in the hope of preventing everyone passing swine flu to everyone else. First you wet your hands, the notices say, then you apply soap, then rub them together for 15-40 seconds (different companies require employees to do this for different lengths of time) and finally, you dry them with a paper towel.

But now businesses are being urged to keep metaphorically clean, too. Arthur D Little has devoted much of its current journal to urging companies to be “hygienic” and attend more meticulously to their working capital levels and procurement methods. Good hygiene, it says, is what sorts out winners and losers at this point in the cycle.

I’m not keen on this new metaphor, partly because I’m a grubby Brit. In my book, cleanliness is not next to godliness. It’s next to dreariness. Necessary up to a point, but quite dull, and not something that deserves a place in management literature.

However, on returning to work after a long summer break I find that hygiene is just what we need, after all. With hands that still had traces of Cornwall’s soil under the finger nails, I picked up a proof copy of Top Talent, the hot new business book by Sylvia Ann Hewlett. Hewlett made her name seven years ago with a book saying working life was a complete nightmare for successful women. Now she’s saying that in a recession it’s even worse: successful people of both sexes are getting totally cheesed off.

I had expected the recession to kill off the global epidemic of Waffle Flu. Instead it continues to infect increasing numbers of the business population

This wasn’t terribly cheering to read after a break. Neither was it interesting. The very phrase “top talent” should have been a warning sign that what followed would not be up to much. Top talent as opposed to what? Bottom talent?

As well as calling good employees “top talent”, she uses an impressive number of other synonyms. “High echelon employees”, “high potential talent”, “high octane brainpower” and even “the delta force of the workplace”.

As I studied these terms, I had an epiphany. What is called for is a great clean-up, but what needs to be washed away is not the H1N1 virus from our hands or excess working capital from our balance sheets. It’s these verbal germs that must be flushed down the lavatory with a large glug of bleach poured in afterwards to prevent further infection.

I had expected the recession to kill off the global epidemic of Waffle Flu. Instead it continues to infect increasing numbers of the business population, interfering with the functioning of the brain, and sometimes leaving the patient unable to communicate at all.

Hewlett’s book is riddled with signs of infection. She talks of “ramping up touch points” by which she means “ talk to each other more”. Even more worryingly, she writes, “Talent is a gift that keeps on giving”, by which she means nothing at all.

Everyone who works in a company is still at grave risk of infection from Waffle Flu and tragically, once an individual has the condition, they can no longer recognise it in others. Hewlett starts her book quoting Jeffrey Kindler, the chief executive of Pfizer. “Reaching out to support, sustain and fully engage top talent is central to our strategy”, he says. Poor Kindler is evidently sick with the flu, too. “Reaching out” is an early symptom. A more serious one is sticking a trinity of dreary verbs before the word “talent”.

I have just subjected this quote to cleaning with an antiseptic wipe and there is little true meaning left. All that remains is the statement: we try to look after our good employees. Which is fair enough, but not much of a basis for a book.

Happily, there is an antidote, and it is selling in almost as large quantities to corporations and individuals in the US and the UK as Tamiflu. It is a motivational poster from the start of the second world war. Its message is soothing and uplifting and bracing all at once, and is seen as the thing to help us through recession. KEEP CALM AND CARRY ON, it says.

Non-execs of Me Inc

Hewlett’s book does, however, contain one exciting idea. Each of us, she says, should appoint a personal board of non-executive directors. Though the idea is excellent, it’s not entirely new: in fact, I think she has stolen it from me. I once wrote a column saying that I considered my husband to be my non-executive director, as he issued instructions, ate a hearty board lunch, but was exempt from doing any heavy lifting.

It was Tom Peters who pointed out that we’re all CEOs of Me Inc, but he missed a trick in not seeing that Me Inc needs some decent corporate governance.

The first snag, however, is the composition of the boards. Hewlett imagines we all have armies of “loyal protagonists”, but I can’t say I do. Even my closest friends aren’t necessarily protagonists – friendship being rather a complex thing. And that leaves only husbands and assorted family members, who aren’t exactly independent.

There are other difficulties, too. Does one’s board have to be diverse? And can one sack them if they get on one’s nerves and start interfering over pay? And how many personal boards can one sit on? And do they get to oversee succession planning? A Walker report into personal corporate governance is clearly needed.

lucy.kellaway@ft.com

Read and post comments at www.ft.com/kellaway

Copyright The Financial Times Limited 2009

BusinessWeek: How 3M Forged a Culture of Collaboration

How to Innovate September 2, 2009, 2:19PM EST text size: TT

How 3M Forged a Culture of Collaboration

The Post-it company built and nurtured a system in which employees across divisions are encouraged—even expected—to collaborate

By Jessie Scanlon

By 1999, Sumita Mitra, a corporate scientist in the research lab of 3M ESPE, the giant's dental products division, had been working on new dental materials for more than two decades. She'd helped develop coatings that prevent plaque, and innovative cements that could be set by light. As she'd watched the cosmetic dentistry business emerge in the late 1990s—a market the American Academy of Cosmetic Dentistry estimates at $2.75 billion according to a 2007 survey, its most recent—she saw an opportunity: No existing composite material delivered the strength and natural appearance that dentists needed to create long-lasting, good-looking restorations. Dentists using composites were having to choose between strength and polishability, and Mitra wanted to develop a product that delivered both. To do so, she would have to venture outside the realm of traditional dental materials.

Three years later, 3M ESPE introduced Filtek Supreme Plus, a strong, polishable dental material and the first to include nanoparticles. More than a technological breakthrough, Filtek Supreme Plus is an example of successful collaboration—in this case, between Mitra and a scientist working in one of the company's four corporate labs. The product wouldn't have come to life if the company hadn't created the organizational systems and culture needed to encourage and support collaboration. Taking Filtek as an example, here's a look at how 3M (MMM) has done both.

Established Internal Networking Channels

When Mitra decided she needed to look into nontraditional materials, she turned to 3M's database of technical reports written by the more than 7,000 scientists at the company. Those scientists are spread between a corporate lab devoted to basic research, 40 division labs that essentially form a bridge between that basic science and the market, and 35 international labs. When Mitra searched the database, she found a promising article about nanoparticles written by William Schultz, a scientist in the company's corporate labs right there in St. Paul, Minn., near her own office within 3M ESPE.

For spreading knowledge across the company, the database is invaluable, but the real work of collaboration happens face-to-face, often at events organized by TechForum, an employee-run organization designed to foster communications between scientists in different labs or divisions. Such networking, says Larry Wendling, vice-president of 3M's corporate research labs, "is 3M's secret weapon." Indeed, soon after reading the paper, Mitra ran into Schultz at a TechForum gathering and described her problem. (Three years ago, 3M also created the "R&D Workcenter" networking Web site, which Mitra describes as a "LinkedIn for 3M scientists.")

Schultz was happy to help, giving Mitra a primer in nanoparticles and eventually lending her two of his researchers. "One literally moved into our lab for a few months," she says. Such sharing of resources is almost impossible when different units of a company feel they are competing against each other to deliver better financial results or the next breakthrough technology. But at 3M, employees are expected to collaborate—and are evaluated on their success. So for a basic scientist like Schultz, patents are nice but what his manager really wants to see is his research leading to new products for the business units. "Bill needs a Sumita to take his work, link it with a consumer need, and turn it into something of value," says Wendling.

Such collaborations can also involve the business units. When 3M's automotive aftermarket division asked the corporate research lab to help it develop a better system for mixing and applying the putty used to repair dents, for instance, one lab scientist immediately thought of work he'd seen at a TechForum event: a technology developed by the 3M ESPE's German lab to efficiently mix and apply the material used to make dental impressions. The lab adapted the dental technology for use in body shops. (In cases involving business units, there are more formal processes—one unit might buy a technology from another unit, for instance.)

Collaboration's Dividends

The company launched Filtek Supreme Plus in 2002, and it is now the industry's leading composite for restorative work. "Bringing nanotechnology into dental materials was a great breakthrough," says Andrew Spector, a founder of Gentle Dentistry, a private practice in Haworth, N.J. And 3M wouldn't have made that breakthrough if it didn't recognize collaboration as an essential element of innovation and create the systems to support it.

What can executives learn from 3M's approach to collaboration?

Support networks. Build Web-based social networks that help employees with a problem find those with an answer. Support grassroots networking initiatives such as 3M's TechForum—an employee-run group that organizes speaker events to stimulate thinking and also serves as a kind of mixer, where scientists from different labs or divisions can connect in person.

Build collaboration into your employee evaluation system. Reward employees not just for developing an innovative technology, idea, or process, but for spreading it. No company reaps the benefits of collaboration if their employees or managers are hoarding innovation in order to look good at the next quarterly meeting.

Encourage curiosity. 3M allows employees to spend 15% of their time on projects of their choosing, giving them permission to develop ideas or technologies that may be outside of their regular work focus. Such policies increase the odds of collaboration, as the path of curiosity often leads employees beyond their knowledge base, to a place where they need the advice and insight of others.

Create innovation funds. Group or department managers focused on core-related projects often don't want to spend money exploring or developing innovative ideas. To overcome this common roadblock, companies should create an alternative source—3M calls these Genesis Grants—that employees can go to for funding of innovation projects that don't fit neatly into existing departments.

Don't underestimate the value of physical proximity. When 3M's Post-it Note team wanted to accelerate product development, it had the team's marketing, financial, and other nonmembers move into the same building with the tech folks. If different functions have to be housed in different buildings, pay for a shuttle service that makes it easy for employees in different departments to visit each other.

Jessie Scanlon is the senior writer for Innovation & Design at BusinessWeek, where she covers the intersection of design and business.

Copyright 2000-2009 by The McGraw-Hill Companies Inc. All rights reserved.

BusinessWeek: How to Build a Culture of Innovation

How to Innovate August 19, 2009, 1:11PM EST text size: TT

How to Build a Culture of Innovation

India's Tata Group has made innovation part of its DNA, setting up a way for handling new ideas and making creative thinking a performance criterion

By Jessie Scanlon

It's not that there had been no innovation inside Tata Group, the 117-year-old Indian powerhouse responsible for that nation's first steel mill, power plant, and airline, among other achievements. But when India's long protected economy was opened in 1991, Chairman Ratan Tata decided that for his companies to survive and thrive in a global economy he had to make innovation a priority—and build it into the DNA of the Tata group so that every employee at every company might think and act like an innovator.

Today those 15 companies have produced such innovative products as the $2,000 Tata Nano car, and includes firms such as Tata Consultancy Services (TCS), the Mumbai-based IT services and outsourcing power, which earned almost $6 billion in revenues in 2008.

The TCS Strategy

Cultural transformation is impossible without the leadership of top executives, so Tata created the Tata Group Innovation Forum (TGIF), a 12-member panel of senior Tata Group executives and some CEOs of the independently run companies. "TGIF's main objective is to inspire and share best practices" says Sunil Sinha, CEO of Tata Quality Management Services and a member of the forum. But executives also have employed other strategies to build a culture of innovation. Here's how they did so within TCS.

First, leaders approached the challenge both top down and bottom up. TCS Chief Technology Officer Ananth Krishnan says this involved establishing formal systems for encouraging innovative thinking and processing of ideas. "If I come up with an innovation, whether it's an incremental or a disruptive idea, I need to know whom to go to with it, and there needs to be an organizational process for moving it forward," says Krishnan.

TCS created multiple channels, and managers are trained how to direct an employee's idea: incremental innovations are handled and funded by the business unit in which the idea originated; platform-level innovations that might extend an existing offering are directed to one of the company's 19 global innovation labs, leading-edge research centers focused on specific technology areas or business sectors. Disruptive ideas tend to originate in the labs, but if one emerged from a business unit it would be directed to a lab or funded through an incubator fund run by the CTO's office. How all of the ideas are evaluated and funded is almost less important than the fact that TCS employees know ideas are welcome—and that good ones won't die in a pile on someone's desk.

TCS has also incorporated innovation into its formal annual review process, making it one of the nine categories on which employees are evaluated. If an employee wins the company's Young Innovator Award, he or she will see more than a salary bump. "It certainly accelerates your career track," says Krishnan. "I might pluck you up and put you in one of our innovation labs."

"Creative Dissatisfaction"

In addition to formal systems, TCS takes steps to stimulate innovative thinking. "We train people to think about improvement all of the time, to have what I call a culture of creative dissatisfaction with the status quo," says Krishnan. TCS has made innovation a component of training programs, from its leadership institute, to which 50 senior managers are sent every year, to its four-day "Technovator" workshop, at which its programmers are taught to think creatively.

Five hours of an employee's 45-hour week can be used for personal projects, such as learning a skill or developing an idea. To better capture nascent ideas, the company launched IdeaMax, a Digg-like social network that lets any employee submit, comment, and vote on ideas. Since it was launched last year, IdeaMax has collected 12,000 ideas, several hundred of which have become projects. "Every quarter, I review the top 10 most popular ideas," says Krishnan. "The wisdom of crowds works for us."

The company says it has been steadily meeting its innovation goals. Last year 10% of revenues were directly traceable to innovation activity, says Krishnan. TCS also has set goals for customer recognition of their innovations. "When we launched our innovation initiative three years ago, we said one third of customers must be able to recount an innovative element of their project," he says. "Now we've raised that to one half. Is that enough? I don't know. Maybe we should raise it again."

What can executives learn from TCS about building a culture of innovation?

Leadership Lays the Foundation

The CEO is the cornerstone of any effort to build a culture of innovation. He or she needs to communicate the importance of innovation directly to managers and to celebrate innovative efforts, including those that failed but were valiant attempts.

Hire the Right People. But…

In a targeted effort to build its capacity for breakthrough innovations, TCS hired more PhD graduates. But broadly speaking, the processes are as important as the people when it comes to building a culture of innovation.

Build Innovation Into the Organization

A culture of innovation won't take root if you don't have clear systems for approving and funding ideas, for example, or an employee review process that includes innovation criteria.

Use Social Media to Tap Ideas and Encourage Collaboration

In addition to IdeaMax, which will roll out to all Tata companies in September, TCS created Just Ask, a platform that allows employees to post and answer questions internally. Ten thousand questions were asked and answered within the first months of its launch.

Celebrate Innovators

In addition to the Tata Group-wide Innovista innovation competition, TCS runs its own Young Innovator Awards to reward and recognize successful innovators.

Jessie Scanlon is the senior writer for Innovation & Design at BusinessWeek, where she covers the intersection of design and business.

Copyright 2000-2009 by The McGraw-Hill Companies Inc. All rights reserved.

FT: Straight path to a superior business

Straight path to a superior business

By Luke Johnson

Published: July 28 2009 23:30 | Last updated: July 28 2009 23:30

Just as you meet few truly great individuals in the journey through life, so there are a tiny handful of companies that have outstanding management. And the reason so few organisations are really well run is not that it is a complicated matter; it is that managing well takes discipline and effort.

The principles followed by superior businesses are straightforward – but executing them consistently and over extended periods is very hard.

All the best companies have bottom-up management. That means those staff who actually meet customers, or run operations, tell the boss what works, rather than vice versa. It means delegating responsibility in order to empower staff. Imperious, dictatorial leaders who are out of touch with the shop floor do not achieve sustained success.

I was told of the chief executive of a large publisher who, when the fire alarm went off accidentally, would summon his chauffeur to pick him up so he could circle the building ensconced in his limousine rather than stand on the pavement and mingle with the troops. Not surprisingly, the business underperformed and he was replaced.

Another characteristic of winners is that they manage for the long term. Sudden strategic moves to suit quarterly targets or shorter-term bonus measures are damaging. Family stewardship often beats publicly traded or private equity as a form of ownership for this reason. Germany’s Mittelstand companies are the backbone of their economy: they are principally family-owned, often world-class operations that adopt prudent financing, and invest in capital expenditure and research and development. Incentives at all levels tend to be long term.

The best leaders possess domain knowledge. This means they understand their industry and are experts in their field. It allows them to command the respect of their colleagues, and means they have genuine insight into the vital economics of their profession or niche.

When I interview managers, I ask them about their customers and competitors. The high achievers will know them intimately, and can talk for hours about the strengths and weaknesses of their rivals. Generic managers, who claim they can turn their skills to any sector and deliver impressive results, are mostly a clever illusion. That is why I tend to respect actual experience in a line of work, or a specific trade qualification, over an MBA.

Companies I’ve most admired have usually been run by teams. While every business needs an ultimate boss, larger 21st-century organisations are too complex to permit an individual to call all the shots. The enduring successes have several high-quality people at the top working as a collegiate group, co-operating and sharing responsibilities across divisions and disciplines.

The most able chief executives find, nurture and retain talent, and they delegate and congratulate in large doses. They never promote sycophants; instead they hire ambitious challengers who can one day replace them. As ever, this sounds easy to do, but it takes genuine willpower and self-confidence.

A further characteristic of outperformers is that they adopt the Japanese philosophy of kaizen: constant improvement through small but material steps. This is the belief that things are never perfect and could always be better. It is the acceptance that dramatic changes are unlikely to yield the best returns; relentless, incremental progress should be the objective.

Adopting these practices – many of which are common sense – should produce better business outcomes. The inspiration for noting them down came from one of the best management books I have read in years: The Puritan Gift by Kenneth and William Hopper. It is a work of history and a study of how the Anglo-American financial system has gone wrong. It has its flaws but, overall, it is a magnificent and original text. Moreover, it offers redemption and useful rules about how the best organisations are run. It should be required reading for everyone who cares about the capitalist system and those in high office in the business world.

lukej@riskcapitalpartners.co.uk
The writer is chairman of Channel 4 and runs Risk Capital Partners, a private equity firm

Copyright The Financial Times Limited 2009

BusinessWeek: Innovation Calls For I-Shaped People

Insight July 13, 2009, 2:37PM EST text size: TT

Innovation Calls For I-Shaped People

These thinkers have their feet firmly planted in the practical world, can stretch their heads to the clouds—and simultaneously span all of the space in between

By Bill Buxton

It has become almost a cliché to say that cross-disciplinary teams are a key component for successful innovation. If certain problems are beyond the scope of any individual—and most of them are—the way to address them is with a team with complementary skills and a common language in which they can all communicate. So far so good. But useful guidance starts to dry up rather quickly beyond that. Since there is no reliable secret formula that can be used by a hiring manager or someone trying to build up appropriate skill sets, I thought that I would share a way of thinking that I have found really useful.

There may be no "I" in team, but every team needs to be made up of "I-shaped" people.

First of all, I should acknowledge the influence of my friend, the co-founder of IDEO, Bill Moggridge. He came up with the wonderful formulation of "T-shaped people". The vertical aspect of the T represents depth, and the horizontal bar is breadth. So a T-shaped person has basic literacy in a relatively broad domain of relevant knowledge along with real depth of competence in a much narrower domain.

Three Pillars

When you slide multiple Ts together, their cross bars all overlap, indicating that the various Ts have a common language, and, ideally, their combined base can be broad enough to cover the domain of the problem that you are addressing. At Microsoft (MSFT), we try to make sure that in looking at new product or services ideas, we have at least three Ts, which we call BXT, reflecting equal levels of competence and creativity in three domains: business, experience (in design), and technology. These are three interdependent and interwoven pillars we see as the foundation for what we do.

But while I love Bill's notion of T-shaped people, things are just not that simple. So as both compliment and complement, I propose I-shaped people. These have their feet firmly planted in the mud of the practical world, and yet stretch far enough to stick their head in the clouds when they need to. Furthermore, they simultaneously span all of the space in between.

This idea was crystallized in my mind thanks to another Englishman, one of the early pioneers of human-centered design, Brian Shackel. I once asked him if he had noticed any particular attributes that distinguished the students that went on to do remarkable things compared with the rest.

His answer was as immediate as it was insightful. He said: "The outstanding students all had an outstanding capacity for abstract thinking, yet they also had a really strong grounding in physical materials and tools." By this, he meant that they could rise above the specifics of a particular problem to think about them in a more abstract, and in some ways, more general way.

Getting Their Hands Dirty

At the same time, as they were growing up, all had been deeply involved in things such as fixing bicycles or cars. In fact, it didn't matter how this was manifest. What was important that they had a "can do" and "have done" competence in some aspect of the messy, dirty, and fascinating world of physical materials and tools. In short, they were firmly grounded in reality.

These attributes have been at the core of all of the best teams that I have ever had the pleasure to work with.

Is this all there is to know about staffing for innovation? Of course not. But to summarize and synthesise, let me leave you with a few rules of thumb for building a cross-disciplinary team:

• The last thing a team needs is someone else like you. You already have the best in the world: you. What you need is people who fill in the gaps that you left in your own skill set as you built up competence in your specialty. That goes for everyone else on the team. (The only exceptions might be when you are staffing another team, or the problem that you are working on is sufficiently hairy that you need to divide in order to conquer.)

• Know the difference between solid breadth of literacy and deep competence, and test for both in considering candidates. You do not need jacks-of-all-trades.

• If you think you know the core competencies needed for a team, list them on a bunch of Post-it notes, and have each person on the team write the name of the "go-to" person on the team who has the most depth in that area. If you do not have strong consistency in the responses, Houston, you probably have a problem.

• T-shaped is highly desired, but not sufficient. In staffing up teams, interview and test for I-shapedness. I don't care how good someone is either at the pragmatic or abstract level, there is someone out there who is equally good and who has strength at both ends. Find that person. If you doubt such people exist, just look at the profile of a reasonable sample of Nobel Prize winners. What I suggest you will find —based on having done so myself—is that a very high number share these combined T and I attributes.

• Hire people who do not require predictability and stability in order to be effective. Typically, each problem that confronts you is going to be different and will require different skills. Hence, teams will be constantly reconfigured to meet the demands in front of them.

• Hire people with strong interpersonal skills. Remember, I come from the computer industry and have seen my fair share of brilliant software engineers who have the social skills of an oyster. All that I can say is that I have also seen those with the same skills that know how to communicate, back down, listen, question, and compromise. A Renaissance team of T and I-shaped thinkers is a potentially volatile cocktail. Its value is too precious to be put at risk by even a single individual, regardless of how otherwise talented.

With that, all that I can leave you with is the imperative that you should always cross your Ts, but never dot your Is.

Bill Buxton is Principal Scientist at Microsoft Research and the author of Sketching User Experiences: Getting the Design Right and the Right Design. Previously, he was a researcher at Xerox PARC, a professor at the University of Toronto, and Chief Scientist of Alias Research and SGI Inc.

Copyright 2000-2009 by The McGraw-Hill Companies Inc. All rights reserved.