Tag Archives: Leadership Situations

Meet the New Boss, Same as the Old Boss – Dealing with Your New Boss

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How Do You Deal With a New Boss?

One of our regular readers – and someone who asked our advice very early on in the legacy that has become AskTheManager.com – AngelCakes from Saskatoon, Saskatchewan recently provided us with both an update on her management career and a new dilemma.

When we first heard from AC, she had just been promoted to a supervisory position in a retail shop and was facing substantial apathy and even antipathy from her charges. Not being one to quit in the face of such adversity, she turned to the Web for answers and stumbled upon AskTheManager.com. Desperate for advice, she gave us a shot at helping her cope with her new situation. (To read the advice we provided AC about her dilemma as a new manager, see our August 14 post.)

Back for more abuse, AC sent us the following this week:

I just wanted to send you the next challenge in the never-ending life that is retail management. But not without a little update first. Let me first add that the childishness of my store is no more. The resources that you gave me have left a huge impression in my memory and I practice what you preach every day. My staff has converted themselves into a well-oiled machine. They seek out the greater good and the bigger picture and that’s when everyone gets along the worlds a better place. The store itself has been running at full speed with a 25% increase in sales year-to-date (which is fantastic considering how “financially unstable” the world claims to be). All has been calm on the home front, and I have felt nothing but enthusiastic about the future and our successes and I strive to push the bar every day.
Until now I have not come to this mountain and I think that it is going to be my biggest challenge to date: Welcome the New Regional!

Most recently there has been a major rift in the tide at my supervisors’ level and they transferred my previous regional supervisor to the east coast, hired outside of the company a man with 35 years experience in the jewelry business, and made him the new regional supervisor. Needless to say the practices that my new regional demonstrates compared to my old one are dramatic and have everyone running for the hills and looking for new jobs. Demanding? Yes. Extremely high expectations? Yes. Respect and value for his new employees? No.

His reputation goes without saying that his employees are just numbers: that they are a dime a dozen and are expendable. He is overseeing every little thing that we as managers are doing, including hiring our own staff. I can understand his obsessive nature over sales and trying to make a good impression to his superiors, but he has taken almost any freedom that we have and are starting to find resentment in him because of it. Tomorrow he is flying in to oversee my hiring of a manager from another company to work for our store that I was extremely excited about until he said that I wasn’t allowed to hire him until “he met him first.” I feel like he is doing my job for me instead of letting me do the job that I was entrusted with. I also feel that he is hovering over my shoulder too much and that it is putting unnecessary pressure on me and my staff. Instead of over-boasting like every other manager is doing to catch his attention, how can I address the situation with my new boss and still make a good impression and respect his position? – AngelCakes, Saskatoon, Saskatchewan

Well AC, in the immortal words of The Who: Meet the new boss, same as the old boss. While Roger Daltrey and gang weren’t thinking of the retail clothing business when they wrote that song, it fits the advice we have for you on how to deal with your latest issues.

Let us pause, however, to congratulate you on making the most of a bad situation. Given your quick and successful transition from frustrated newbie to seasoned leader means you are no quitter. Your most recent description of your team’s dynamics would make Patrick Lencioni proud. I wish we could take the credit for the transformation you’ve made, but the fact remains that all the advice in the world is meaningless without execution. And you clearly executed (a 25% sales increase is phenomenal in any economy). Nice job, AC!

Now, back to your current dilemma…

The ABCs of Job Satisfaction

When you write about the others who are “running for the hills” because of the new regional supervisor, we are not surprised. Beyond the obvious issue that some of these might be immature managers who simply cannot deal with change, it sounds like your new regional manager is clearly violating the ABCs of Job Satisfaction.

While on the surface most people believe that salary is the greatest indicator of job satisfaction, the truth is that Autonomy, Benefit and Challenge (the AskTheManager.com ABCs of Job Satisfaction) are greater predictors of one’s contentment with one’s employment than any other factors. Let’s discuss these in reverse order.

Challenge

Without some level of challenge, any job can become boring and commonplace. As humans, we need varying degrees of intellectual and/or competitive challenges on our jobs to keep us stimulated and engaged.

The challenges created by your new boss, unfortunately, do not equate to the kind of challenging work environment that’s been known to arouse creativity and motivate individuals. In fact, by taking away your ability to make certain decisions, he has effectively removed many of the most challenging aspects of a manager’s job.

Benefit

When we speak about the benefit of your job, we’re not talking about dental coverage. Instead, we are referring to your ability to understand and connect your efforts with the benefit enjoyed by your company. A sales manager, for example, can easily see the results of her efforts; although a factory worker who is tasked with attaching widget X1298TWHQ to gadget G7JJN23 cannot. The factory worker is but a cog, while the sales manager is driving noticeable value. Additionally, the sales manager enjoys a more clearly defined report card; one that displays for all to see the level of benefit enjoyed by the company because of her efforts.

Lucky for you, your new boss won’t be able to effectively remove your ability to see the benefit of what you deliver. Of course, he could make life so miserable that you become passive-aggressive and end up not wanting to drive value.

Autonomy

The level of autonomy granted any employee is the single greatest indicator of job satisfaction. Simply put: where a worker feels like they are the master of their own domain, that worker is less likely to be unhappy with their job. Once our work is second-guessed by our supervisors (or once we have to ask permission for everything) we are ready to jump ship. It’s amazing how quickly this can alter one’s perception of their workplace: Take away someone’s autonomy and you take away their freedom.

This is where your new boss is having the most negative impact on your job satisfaction; and the primary reason you are uneasy and your peers are exiting faster than rats departing a sinking ship. By removing your ability to make decisions he is also removing your commitment to success. Sadly, it was this commitment to success that brought you this far.


Okay, But How Do I Deal With Him?

AC, (by our interpretation of your message) you are seeking both the return of your autonomy and some level of respect from your new supervisor. Let’s deal with the latter, first.

Meet the New Boss, Same as the Old Boss

We’re going to assume that you and your old boss shared some healthy level of mutual respect, and that both of you were highly competent professionals (and both of you knew this fact about the other). We’re also going to assume that your old boss was generous in his/her granting of autonomy. Your old boss granted this autonomy because of your competence and his/her respect of you.

So what’s changed?

You are still highly competent; though your new boss either doesn’t know it or doesn’t care. Don’t worry – if he wants to succeed and grow with your company – he soon will. Gaining his respect, of course, will require a little more work.

First, no matter how distasteful it may be, you must respect him. You have to go out of your way to see the good in what he’s trying to accomplish and genuinely respect him. Respecting him requires that you suppress negative feelings, live (temporarily) with his micromanagement style and, in effect, kill him with kindness. Distrustful managers (it’s an understatement to say that your current supervisor is distrustful) have a difficult time respecting even those they consider competent. They will often, however, respect those who respect them.

Second, admire him without becoming a sycophant. Find a way to like the guy without kissing his ass. Distrustful managers especially have a difficult time respecting those they consider brownnosers.

In other words, treat your new boss the same as the old boss: with respect and admiration. (Even if this fails to sway the guy, you’ll find working with him will become more tolerable due to a psychological phenomenon known as cognitive dissonance – you’ll actually be forced to like the guy by your subconscious mind.)

What if Nothing Works?

Although we seem to be batting 1.000 with our advice to you AC, we have been known to be wrong before. If showing genuine respect and admiration for this micromanager fails to make him give you some leeway and focus his overbearing style on less fortunate managers, you needn’t panic. These situations are generally very short-lived. They may seem like an eternity when you’re trapped in the middle, but rest assured that no one can successfully micromanage multiple locations over the long term.

Because the stores he supervises are scattered across a large area, he will not be able to maintain control over every aspect of every store. He will either cede control to competent, respectful leaders like you or he will implode and be driven from company by his inevitable failure.

What is Your Goal?

The bottom line for you is to ask yourself “what are my goals?” Once you understand your short- and long-term career objectives, ask yourself if you are more likely to attain these by staying and fighting through the current unpleasantness or if you will be better off somewhere else. Because your last supervisor seemed like an enlightened leader, it is likely that your company rewards that sort of behavior, and equally probable that your current supervisor will either change or wither. Of course, if you choose to stay and your last supervisor was more the exception than the rule in your company, you could be in for a very unsatisfactory time.

Either way, just being curious and seeking advice from others tells us that you’ll be an effective leader no matter where you choose to serve next.

A Snow Decision is No Decision When the Decision Comes Too Late

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Leadership Lessons from Snow Days in Georgia

(My apologies as I get a little local here, but this stuff really ticks me off.)

It snowed in Georgia yesterday; this is news. Some towns, like Athens, received as much as six inches of snow. Gwinnett County, Georgia (north of Atlanta) got a little more than an inch. To anyone living in Chicago, Detroit, Philadelphia or Buffalo this wouldn’t be considered anything more than a dusting. To Georgia, this is a major event. This is big news.

As my kids played in an inch-and-a-half of the white stuff yesterday, they continued to ask if school was going to be canceled on Monday. This was 6:30 PM Sunday – and over an hour had passed since the last flake fell in our yard – of course the schools would be open. The roads were clear and the great melting had already begun. Certainly there would be school on Monday.

When we sat down to dinner at 7:30 the kids scanned the local television channels; searching for signs that the Gwinnett County Public Schools would be shuttered in the face of this massive storm.

After dinner, they were surfing the Web for any indication that they could stay up late tonight and sleep in tomorrow. No such luck: the Gwinnet County Schools had announced that they were going to brave the elements and open their doors in the morning. By 9:00 PM the situation remained unchanged. School was on and they were bound for bed. Sure, forecasters expected temperatures to drop below freezing overnight, but school was a go, and these kids were going.

Great Leaders are known for being Great Decision Makers

I hate to break it to you, but the people running our public schools (the district administrators) are generally not great leaders. More often than not they are former educators with so many college degrees that their email signatures take four lines. That’s the problem with administrators: most of them have spent their entire lives in the education system and not a minute in the real world. They’ve never had to live by a P&L or make real personnel decisions. They spend our tax dollars like Monopoly money, and they do all of this with no real accountability.




If they were truly great leaders, they wouldn’t be educators. As noble as the teaching profession is meant to be, our education system is filled with people too afraid to face the business world; too afraid to chase dreams; too afraid to take even minimal risk. A teaching degree is the safest college degree one can achieve. A degree in education is one of the few degree programs (like medicine and law) with a guaranteed title waiting for you on the other end. “In four years, I’ll be a teacher.” “In six years, I’ll be a lawyer.” “In eight years, I’ll be a doctor.”

Deciding to become an educator, like deciding to become a doctor or a lawyer, is safe. Unlike doctors and lawyers, teachers never really put much on the line after college. They move into a union job with no real chance of ever being fired; regardless of their level of incompetence. And, if they’re really incompetent, they can aspire for management.

Those who can, do. Those who can’t, teach. Those who can’t teach, become administrators.

Great Leaders consider all the Stakeholders

Okay, back to the Great Georgia Blizzard of 2009 as the local news stations are just dying to call it. When we went to bed last night, there was no chance school was to be canceled. We made our plans for today based on this knowledge and drifted off to sleep.

5:30 AM comes fast sometimes, and this morning was no different. Rushing around the house as usual, I woke my oldest son and told him to start getting ready. (His bus arrives just after six.)

After showering and shaving (though not in that order), I turned on the TV for background noise as I got dressed. While the local anchors were marveling over the white stuff as if it was an alien sighting, I heard something that shocked me.

“We repeat: Fulton County, DeKalb County and Gwinnett County Schools are closed today…” they exclaimed.

While I knew my kids would be thrilled, I wondered how this would affect families with two working parents. The businesses in and around Gwinnett County, you see, are open today. Had the bureaucrats of the Gwinnett County School District made this decision while it was still snowing more than twelve hours ago, parents could have made plans to take care of their homebound children. Now many of them will be stuck with tough a decision: do they miss work, or do they leave their kids home alone?

Great Leadership is about Looking Ahead

While we can debate all day about whether or not school should have been canceled in the wake of a storm that “dumped” a miniscule amount of snow, the real issue lies in the fact that J. Alvin Wilbanks, the Gwinnett County Schools superintendent, and his team waited to announce the school closings until well after every student and parent in the district had gone to bed. We single out Wilbanks, a lifelong educator and student who does not have any school-age children, because he is in charge. He actually holds the title of CEO for the Gwinnett County Public Schools, so like all CEOs; the buck should stop with him.

The argument from the school bureaucrats is that the roads became icy overnight; forcing the school closures in the name of safety. Noble reason, indeed; and one with which we probably agree, if not for the timing.

For us, this begs the question: In all the years Wilbanks was in school, teaching school, and administering schools, did he never learn that temperatures generally drop overnight? Was it a shock to Wilbanks’ staff to learn that water freezes when the thermometer drops below 32 degrees Fahrenheit? Did no one consider that the melting snow at 6:30 PM Sunday would turn to ice by 5:30 AM Monday? Didn’t anyone bother to check the Weather Channel?

The drop from 34 degrees last evening to 25 this morning was no surprise; it was accurately predicted. Had Wilbanks or his team bothered to look ahead and consider all of the data, the working parents of Gwinnett County would have had plenty of time to make proper arrangements for their children.

As unsafe as it might have been to run the buses this morning, it is equally unsafe to have hundreds of kids home alone today. Let’s hope for everyone’s sake that unlike the Great Georgia Blizzard of 2009, nothing newsworthy happens to the children fending for themselves in big empty houses.

The Nerds are Taking Over – What The Terminator can Teach Us About Leadership

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Skynet is Here, and the Nerds are at the Controls

(Terminator fans can probably skip the next two paragraphs, as they’re just an explanation of the havoc we can expect in our not-too-distant future.)

Skynet, for the uninformed, is a computer-based defense system, created by nerds working for the U.S. military in the 1990s. Long story short, Skynet was put in control of all of the U.S. military’s weapons and given the task of protecting Americans from all threats. Skynet was such a powerful computer program that it “learned” at an exponential rate until it became self-aware.

Skynet, which was basically created to remove the possibility of human error in the event of an enemy attack, eventually turned on the very humans it was designed to protect (it deemed them a threat when they tried to shut it down), and it decided to terminate all humans to protect its own existence.

Can You Even Spell IT?

Welcome to 2009, where instead of Cyberdyne Systems’ Skynet program, we have our various corporate IT departments protecting us from ourselves. (IT, by the way, is short for Information Technology. An oxymoron really, since no one involved with technology is ever very forthcoming with any information.)

At my company this week, our self-aware IT department blocked our regional employees from accessing our own consumer-facing websites because they were “uncategorized.” Never mind that it is the IT department’s job to categorize these sites, or that these websites have been live and accessible for ten years.

This team also blocked employees in our corporate office from accessing our advertising agency’s demo site (where we login to view details of the current marketing programs and make changes to artwork, etc.). The violation here, you ask? Not sure, though the following menacing message appeared on everyone’s screen who attempted to access the website:

“This site is blocked by Corporate Policy.

Reason for restriction: Administrative Custom List Settings”

Aha! The three big threats to our internal network security are clearly computer worms, malicious viruses and “Administrative Custom List Settings.”

While I find this just a little bit humorous today, I was not laughing during the seven hours Thursday while I jumped through hoop after hoop to get the website lifted from the banned domains’ list.




Better Safe than Sorry

Of course, the nerd-driven event this week that clearly proved to be a sign that Skynet is upon us and is exponentially becoming self-aware, happened when one of our vendors (finally) disclosed that they had been “scrubbing” our customer email lists and destroying those that were equated with “domains that have suspicious registration and DNS configuration settings.” While I have no idea what that means in English, suffice it to say that this vendor, without direction from us, had been purging our records of valid customer email addresses because they didn’t like the way the email addresses smelled.

This vendor has potentially cost us hundreds of thousands of dollars all in the name of “data integrity.” The CEO of this company had the nerve to claim that it is better to be safe, than to be sorry.

Really? That’s what you’re going with here? No one asked you to protect us; and as it turns out, you were protecting us from nothing.

When we examined the recent email addresses they had purged (they kept a record of what they deleted in the past week), we found no malicious threats, no spammers and no breach to our data integrity. What we did discover were valid email addresses for real customers who were scheduled to be removed permanently from our database (like the hundreds or thousands before them).

The Tail Wagging the Dog

Prior to the anointment of the IT staff as Lord and Protector in the business world, we had the Admin Nazis. Those large women with cafeteria lady arms or the small, pale men who could stifle the joy of any young salesman’s first big sale with a simple and curt “paperwork’s not right; order’s rejected.”

I’m starting to miss the good old days where anyone in an administrative function believed the world revolved around them. When I was starting out in business, it was woe unto anyone on the operations side who tried to circumvent or curtail the self-important authority of an Admin Nazi. They could be very vindictive and selective in their enforcement of proper paperwork, you see.  

Back then we complained that the tail was wagging the dog; and we just lived with it because we could. As bad as the Admin Nazis were, they just made our lives suck; they didn’t actually control them.

If You’re Not Selling, then You’re Support

The only cure for the productivity-killing Admin Nazi was great leadership. Great leaders have a way of weighing inter-departmental priorities against the goal, and finding a solution that, although it doesn’t always please everyone, makes the most sense over both the short and long terms. They put administrators in their place by asking them to administrate and support the efforts of those who drive the real value for the company: those who touch our customers.

While great leadership was able to overcome the threat of the Admin Nazi in the past, it turns out that great leaders are often the ones who are allowing IT to build their version of Skynet at your company in the present. Because support for this over-protectionism comes from the top, trying to wrestle control from a nerd with network administrative rights is going to be a whole lot harder than getting Marge to accept a customer contract without the Ts crossed.

By the way, this is not the tail wagging the dog; this is the flea wagging the dog’s owner.

Your CEO is oblivious to what the real threats are or what they mean to your business, so she is forced to listen to the CIO’s version of reality. Chief Information Officers, it seems, are mostly frustrated former nerds with larger offices and tons of control.

Their power initially grew from a lack of knowledge and fear; although they gain more muscle every time some knucklehead in a cubicle downloads malware while registering for a free iPhone. Forget that the CIO’s team should have proactively ensured there were adequate protections against malicious computer code in the first place; it only takes a few hours of network outage for the CEO to give up a little more of her power to the CIO. It’s better to be safe than sorry, they’ll say.

I’ll Be Back

Cybernetic organisms aside, it’s time that leaders start asking tough questions of their CIOs and other IT department heads before we allow the nerds to give the computers all the control.

A simple “Why” can work wonders.

Every time anyone in IT appears to be protecting us from ourselves, the leader needs to ask “why?” And when IT answers the question, the leader needs to ask “and why is that important?”

Two questions is more accountability than most IT mangers can handle. They’ll either capitulate or their human-like skin will melt away, revealing their android inner self.

In case the IT manager insists on continuing with their course of action after the leader has asked the two “Why” questions, we recommend they follow up with something like “I’m not sure that’s in our best interest, can you put that request in-writing and give it to my administrative assistant Marge?”

(Marge, you see, misses her old role as an Admin Nazi.)

 

Leadership Lessons from Corporate America’s Amateur Lobbyists

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Leadership and the Bully Pulpit

Michael Jackson (no, not that Michael Jackson) loves the bully pulpit. AutoNation’s Michael Jackson, we’ll call him the “non-gloved-one,” is everywhere these days. Officially, he serves as the CEO of the largest automotive dealer group in the US. Unofficially, he serves as the primary spokesperson for all curmudgeons who are good with a hammer (so they think everything is a nail).

MJ seems like a great guy – the non-gloved-one is well-spoken in an everyman sort of way – he exudes both a confidence and an “awe shucks” humility that seem genuine. Great traits for leaders.

Character (on the surface) does not appear to be his problem – Jackson, you see, is quite the character. Our issues with Mr. Jackson stem from his inability to wean himself off his love of the camera and microphone; and his incredibly narrow sense of how to fix what’s wrong with the economy.

It’s Not All about the Cars, Stupid

Certainly, it’s as prudent for this Michael Jackson to advocate for the auto industry as it is for that other Michael Jackson to advocate for unsupervised slumber parties at Neverland Ranch. We get it – your shareholders benefit if the auto dealers benefit – that’s your job.




To this end, Mr. Jackson is advocating (in a big, big way) for Congress to dramatically raise the gasoline tax at a time when Americans need every penny in their collective pocket. An increase in the gasoline tax? Are you serious?

Let’s put aside whether or not a gasoline tax increase will help his industry (though we think its benefit would be dubious, at best). Raising taxes in a recession would be disastrous for the economy, driving consumers to spend less and hurting the overall economic health of all retailers (including the health of car dealers) even more.

One could argue that part of the woes his industry faces today were directly caused by the very $4 per gallon gasoline he so desperately wishes would return. Jackson’s argument – that his dealers (and manufacturers) will sell more electric and hybrid vehicles with a huge increase in the gasoline tax – is probably a sound assumption… for the short term.

Leadership is more than a Great PowerPoint Presentation

Like Al Gore’s An Inconvenient Truth, Jackson appears to be crisscrossing the country looking for converts. We are not moved.

We cannot buy-in to his assertions that increasing taxes, especially gasoline taxes, is a good idea for what ails car dealers today. Automotive retailers, unfortunately, are selling vehicles today that are built better and last longer than their predecessors. This is really no different that a few years ago, of course. In 2006, when America’s car dealers sold over 16 million new units, consumers felt good about their present and future situations. They were willing to spend $30,000 on a new car even though their current vehicle was running just fine.

Buying a car in 2006 was a discretionary event; ripe with impulses and emotions. Buying a car in 2009 is a necessity event; driven by the need to get from point A to point B. Increasing the tax on gasoline (or raising any tax for that matter) makes any major purchase a necessity event. We will only buy a new car when it becomes necessary for us to do so; and if we purchased one of the 60 million new cars sold in the last four years, we probably don’t need another just yet.

This is why Jackson is advocating a hike in the gas tax. He believes that we’ll be forced to get rid of that 2006 Hummer once and for all. Okay Mike, once we trade in the gas guzzler for a Honda Civic Hybrid out of necessity, then what?

America’s car dealers, especially AutoNation, need Americans to make discretionary purchases to thrive and survive. Discretionary purchases cannot happen without discretionary income. Increasing taxes decreases discretionary spending; decreasing taxes increases discretionary spending. Sorry to break it to you Mike, but it really is that simple.

America Needs Higher Gas Taxes

From national security and environmental perspectives, we would love nothing more than for America to be 100% energy independent. OPEC, and especially the countries that make up OPEC, concern us. America cannot, over the long term, be dependent on “third worlders” for the growth of our economy.

Once our economy stabilizes, it may make sense to raise gasoline taxes. The revenues generated from these taxes could be used to make necessary infrastructure improvements; and the higher price of fuel, as Jackson notes, will drive consumers to purchase more energy-efficient vehicles. It will also drive them to drive less. All good for the environment.

In a recent podcast available on AutomotiveNews.com, Jackson even jokes that he could eventually become a Democrat with his drive for higher taxes. Really? Hey Mike, we’re sorry to inform you that advocating higher taxes probably makes you the Chairman of the Democratic Party today. Interestingly, in this particular podcast Jackson has moved off of his stance of advocating for the immediate tax increases, and has a newly stated goal of increasing these taxes in 2011 or 2012.

Hmm, then why shout from the rooftops for these increases in 2008 and 2009? Wouldn’t Jackson’s shareholders be better served if he lobbied for something that would actually spur economic growth? Perhaps something like a tax decrease?

As much as we like him, we have to tell this Michael Jackson to stick to moon walking and leave the economic decision making to someone (anyone) more qualified. Great leaders know when to use the bully pulpit and when to avoid it. They also understand that just because someone is giving you a microphone, doesn’t mean you should speak.

2008: The Year We Figured Out We Had No Leaders

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2008: A Lesson in Recession and Leadership

The axiom “sales cure all ills” rings more true today than ever. More than anything it teaches us an inarguable lesson: that is, we learn more about leadership in bad times than we do in good times.

To prove this theory to yourself, imagine your company just 18 months ago in June 2007. If your business is like most others, you were humming along and times were great. In fact, times were so good that waste, excess and poor leadership went nearly unnoticed. Why would anyone care if “Bob” was a poor leader? His region’s sales were good and that’s all that mattered, right?

Wrong. Because sales does tend to cure all ills – strike that: sales covers up all ills – you didn’t really care that Bob had poor communication skills, had completed no succession planning, and that his team was largely incompetent. They were selling and that’s all that mattered.

Sales Cannot be Your Only KPM

Once the bottom started to fall out, of course, you looked to Bob for answers. Why, your company asked, was his region in such disarray? No one ever assumed it was poor leadership, because no one ever cared to look that closely. Bob surmised that they were just in a “tough market” and that things would turn around in the second quarter.

Well, the second quarter ended up worse than the first, and your company began to realize that Bob’s region was not only losing money, it was also losing market share. It wasn’t just the market, it must be something else.

Not sure what was happening, your CEO asked Bob in the third quarter to give him a plan on how to turnaround the region. Bob’s plan, of course, included cuts so severe that your company lost muscle and bone along with some of the fat. (Because Bob had no idea why the good times were good, he had no idea how to return to them.) The few truly valuable people in Bob’s region left and the sycophants hung on for dear life. Sales continued to decline and no one had any answers.




Goodbye Bob

Last month, your company let Bob go and realigned his region. Upon further review, you discovered that Bob had been losing market share all along – even in the good times – but that he benefited from a growing market and a perception at headquarters that he was a leader. You scratch your head today and ask yourself, “How could we have been so blind?”

Join the club. The issues at your company are not atypical. Nearly every corporation suffers from the same blindness in the good times: a form of near-sightedness so severe no one can see the forest or the trees. Only when we’re faced with near collapse do we bother to look closer; to examine what’s really happening.

The funniest thing to me about the whole “Bob situation” at your company is that anyone is shocked that it was caused by a lack of leadership. Imagine what your company could have achieved during the good times if Bob’s lack of leadership had been identified years ago; imagine how much easier this recession would be on the employees in that region if Bob had never been at the helm.

Perhaps after this recession – sometime in 2009 or 2010 – companies who were hard hit will place the proper value on real leadership and examine every input; not just the outputs. (For those that survive, that is.)

Goldman “Leaders” Choose Poverty over Incarceration

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Goldman Leaders Forgo 2008 Bonuses

In a recent email from one of our readers, we were asked to weigh in on the Goldman Sachs Group’s leadership decision to request no bonuses for the current calendar year.

What are your thoughts on the following article?  How does this reflect leadership during these troubled times? – Tye Mills

(To read the article Tye mentions, follow this link.)

Lloyd Blankfein, CEO of Goldman Sachs, and six other top executives asked the board’s compensation committee to skip them during bonus time this year.

Pardon us if we don’t cheer.

While it is certainly admirable that these executives would take a seemingly proactive step to helping right the ship at Goldman, this decision should have come from the board (not from the executives) and should have come much sooner than November 2008. (In the nature of full disclosure, the executives likely gave up their bonuses because Attorney General Andrew Cuomo warned them last month that the bonuses might break New York State law.)

We never begrudge any executive their compensation nor any corporation their profits. This is the way our system works; and our system has worked better than any other in the history of the world. The prosperity enjoyed from Joe Six-Pack to Joe the Plumber is in large part due to the spoils enjoyed by the executives of the Fortune 500.

Take away their incentive to make money and you take away our standard of living.

Further, the seeds of destruction at corporations like Goldman and Lehman that plunged the world into economic turmoil were not planted by large bonuses. Rather, it was inattentive executives and especially their boards of directors who drove us off this cliff – while laughing and smiling all the way to the bank.




But How Will They Feed Their Families?

TheManager will not get a bonus this year, either. Not because I petitioned the board, but because my bonus is set up to pay out only when the shareholders make money. In 2008, my company’s shareholders lost quite a bit.

The removal of truly performance-based bonus pay is where most executives and boards have failed the owners of their companies; and why many of these men and women should be in jail. Leveraging your shareholders for personal gain, as Lehman has been reported to have done, by ratios of 30:1 or worse is criminal. No owner (and that’s what stockholders are) would ever agree to assume risks of this magnitude.

Before you worry about poor Lloyd and his crew, they will still receive roughly $600,000 each in base salary this year. Additionally, we can only wish that they were able to save some of their bonus from last year. (Just as the wheels of the economy were coming off in 2007, the top three executives at Goldman Sachs made more than $57 million each.)

It’s No Longer a Free Market

Companies, and especially their highly paid executives, have argued that multi-million dollar bonuses were necessary to “to attract and retain top talent.”

Top talent? By top talent, I’m hopeful you don’t mean Dick Fuld of Lehman or even Lloyd Blankfein.

Before we break our arms patting old Lloyd on the back, let’s remember that Blankfein was the CEO when Goldman posted a 70 percent drop in profits last quarter. Additionally, Blankfein was the CEO when Goldman stock plunged 69 percent this year. Doesn’t sound like bonus time to me.

In a free market, Goldman is free to pay its executives whatever they can grab. However, the market is no longer free for Goldman, Morgan Stanley and many other firms. Goldman, you see, took 10 billion of your tax dollars in the recent bailout. This makes them, in our opinion, a quasi-governmental entity. At the very least, they should be heavily regulated until we get our $10 billion back – this includes their executive compensation plans.

Back to Tye’s Question

Tye asked, “How does this reflect leadership during these troubled times?”

Tye, if this were truly a leadership move and not a classic CYA*, I would be impressed. I am not.

I would have been impressed if the leadership of Goldman Sachs had taken the long view toward building wealth for their shareholders and clients instead of focusing on their multi-million dollar paydays.

Once Goldman became a publicly traded entity in 1999 they moved the risk from themselves (the partners) to the shareholders. Without the risk, they were like drunken coeds on South Padre Island waiting for their shot on Girls Gone Wild.

Leadership is about service and sacrifice. Giving up a bonus because you’re afraid to go to jail is self preservation. Self preservation is as far from leadership as $57 million is from $600,000.

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To read some interesting notes about the current crisis and how we really got there, check out a great article published last week by Liar’s Poker author Michael Lewis. It brings some closure to the fall of Salomon Brothers and some great insights into today’s troubles. Lewis convincingly argues that Salomon’s move from a partnership to a publicly traded corporation led to the current collapse. To read Lewis’ article, follow this link.

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*Editor’s Note: CYA is code for “cover your ass.”

Lehman Brothers, Leadership and Business Bankruptcy

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Leadership and Business Bankruptcy

Bennigan’s, Mrs. Fields and Lehman Brothers. Not really three names you’d ever expect to see in the same sentence, but all three have one thing in common: they all declared bankruptcy in 2008 and substandard leadership is to blame.

Lehman Brothers is certainly the most shocking name on this list. A 158-year old company, Lehman Brothers should have been able to withstand anything. They withstood the Great Depression and two World Wars didn’t they? Economic conditions that would have sunk most companies had no long-term effects on the sturdy Lehman Brothers.

Then came the mortgage meltdown of 2008. Something as truly innocuous as a housing slump was able to cause the collapse of a company started before the Civil War.

How Does A 158-Year Old Company Declare Bankruptcy?

Well, it seems it’s not very hard to do. All you need is egocentric leadership making millions in the short-term without having any regard for the future or (as maybe the case for Lehman) leaders who are asleep at the wheel.

Henry Lehman, Emanuel Lehman and Mayer Lehman founded the company in Montgomery, Alabama in 1850 as a general store that would soon start trading in cotton. Lehman Brothers would eventually grow into one of the most respected and revered names in financial services in the world.

This past weekend, they announced that they could no longer survive and Lehman Brothers declared bankruptcy. Clearly CEO Richard Fuld, Jr., who had been with Lehman for nearly forty years, was the not the servant steward that companies need in their top office.


Whether ego or greed or simple inattention to the risks of the new economy, Fuld, his management team and Lehman’s Board of Directors failed Lehman’s shareholders (the real owners of the company) and destroyed one of the best names in global finance.

We would be remiss if we failed to provide you with the names of all of those responsible for the failure of this great institution. Henry, Emanuel and Mayer Lehman founded the company, and these men and women failed to provide true leadership and they, in effect, destroyed it:

Lehman Brothers Senior Management:

  • Richard S. Fuld, Jr. – Chairman and Chief Executive Officer
  • Riccardo Banchetti – Co-Chief Executive Officer, Europe and the Middle East
  • Jasjit S. Bhattal – Chief Executive Officer, Asia-Pacific
  • Gerald A. Donini – Global Head of Equities
  • Eric Felder – Global Co-Head of Fixed Income
  • Scott J. Freidheim – Co-Chief Administrative Officer
  • Michael Gelband – Global Head of Capital Markets
  • David Goldfarb – Chief Strategy Officer
  • Alex Kirk – Global Head of Principal Investing
  • Hyung S. Lee – Global Co-Head of Fixed Income
  • Stephen M. Lessing – Head of Client Relationship Management
  • Ian T. Lowitt – Chief Financial Officer and Co-Chief Administrative Officer
  • Herbert H. McDade III – President and Chief Operating Officer
  • Hugh E. McGee III – Global Head of Investment Banking
  • Christian Meissner – Co-Chief Executive Officer, Europe and the Middle East
  • Thomas A. Russo – Vice Chairman/Chief Legal Officer
  • George H. Walker – Global Head of Investment Management

Lehman Brothers Board of Directors:

  • Richard S. Fuld, Jr.
  • Michael L. Ainslie
  • John F. Akers
  • Roger S. Berlind
  • Thomas H. Cruikshank
  • Marsha Johnson Evans
  • Sir Christopher Gent
  • Jerry A. Grundhofer
  • Roland A. Hernandez
  • Henry Kaufman
  • John D. Macomber

The sad fact for American business is that all of these senior managers made millions from Lehman shareholders, and they’ll surely land in new roles with other companies despite their record of poor leadership in the face of economic changes.

More disturbing is the fact that the members of the Board of Directors will probably escape unscathed in this mess. Their role and goal is to protect the shareholder. That’s simply not possible when you serve on multiple boards or continue to operate your own company while serving.

Nothing will change with these absentee boards until we take business failures more seriously – and that includes prison time for directors who so miserably fail to protect shareholders.

The Biggest Lehman Joke

I think the biggest joke bestowed on shareholders can be found on the Lehman website where you can view an ironic page entitled Sustainability (also take time to read the Mission Statement). Here’s a link to the Sustainability page that should work for the next few days. In case Lehman has already taken down this embarrassingly ironic page, here’s the verbiage:

Sustainability

We believe that Lehman Brothers has a role to play in delivering environmental and social solutions. Our vision is to build partnerships and value for our clients through environmental and social opportunities, be one of the most responsible investment banks, and contribute to superior returns for our shareholders.

Lehman Brothers Sustainability Principles

o        Transparency and accountability – We will report regularly on the implementation of these principles

o        Operations – We will aim to minimize negative environmental and social impacts of our operations

o        Employees – We will engage with employees on environmental and social issues impacting our operations and business and encourage the development of innovative solutions

o        Assessing risk – We will assess the environmental and social risks posed by our operations and business. We will engage with clients on critical issues (such as climate change, biodiversity loss and water scarcity)

o        Delivering opportunity – We will seek opportunities across our business that deliver commercial, environmental and social benefit

o        Market-based solutions – We believe that market-based solutions can deliver commercially feasible environmental and social benefit. We will apply our knowledge and understanding of financial markets to develop and implement innovative environmental and social market-based solutions

o        Investments – We will build our knowledge of how environmental and social issues impact business performance into advising clients, investing on clients’ behalf and deploying our own capital

o        Thought leadership – We will conduct research and analysis on key environmental and social issues and make the results publicly available. We will engage in public policy dialogues to contribute to the development of effective policies

o        Governance – These principles are approved and owned by our Executive Committee. The Executive Committee will oversee and receive regular reports on implementation and performance

Well, we’re glad Lehman Brothers cared about sustaining the environment and society, we just wish they could have SUSTAINED THE COMAPANY.

(That would be really funny if this business failure was not so tragic.)

 

When Leaders Forget The Goal – The Dilemma Of Annoying Your Customers

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Forgetting The Goal – A Leadership Dilemma

Everywhere consumers turn today they see examples of poor leadership. They may not recognize these little inconveniences as leadership voids, but they are voids nonetheless.

While the lack of true leadership in American business spells trouble for employees and middle managers, a byproduct of this missing leadership is the consumer annoyances we see more of in everyday life.

It seems that business leaders are forgetting the goal. When they focus too closely on a particular business issue, and they fail to weigh the solutions to that issue against the goal, they create unintended negative consequences.

Delta Air Lines – Commercials To A Captive Audience

I was on Delta flight yesterday from Atlanta to Tampa that was unique in one respect: all of the passengers in my area of the plane were in agreement about an annoying occurrence caused by poor Delta leadership.

To be fair, I love Delta Air Lines. Ninety percent of the flights I book, I book on Delta. In fact, I’ve written about Delta before. (To read that post, please follow this link). However, Delta is showing their desperation and they’re taking advantage of their customers at the worst possible time: when they can.

There is no more captive audience than passengers in an airplane flying at 30,000 feet. Delta, like all airlines, knows this. Unfortunately for me and my fellow passengers on this particular one hour and ten minute flight, the Delta flight attendants made no less than four PA announcements explaining the features, advantages and benefits of the American Express Delta SkyMiles credit card.




The PA system in a commercial airplane should be used to explain safety features, provide important instructions to the passengers, and announce periodic arrival gate and time information. Using this as a marketing tool to sign up a few credit card customers was objectionable to the group sitting in my area, and should not be allowed.

Many of us where watching satellite TV, movies or listening to music on the in-air flight entertainment system. Every time the flight attendants made a new credit card announcement, they interrupted our entertainment. They forgot the goal.

What Is Delta’s Goal?

Delta Air Lines, like every other for-profit company in the world, has a primary goal of making money for the owners. Certainly, signing customers up for American Express cards drives some revenue for Delta; though Delta didn’t give enough consideration to the annoyance factor bestowed upon their frequent flyers. What Delta gained on this flight in credit card customers, they lost in respect from the frequent flyers in my section.

I’ve always believed that if a situation works in the absurd, then it stands a chance to work in real life. If Delta is that desperate to market to their captive audience in such an annoying fashion, why stop at four credit card pitches in seventy minutes? Why not remove the movies from the in-seat entertainment and just run seventy minutes of commercials that cannot be turned off? I’m sure Delta would make millions on that venture – they would eventually, of course, lose all of their business flyers

It’s Not Just Delta

Have you been to a Toys R Us or Radio Shack in the last ten years? Each of these retailers greets you at the cash register not with a “hello,” but with a request for personal information. I understand that they want your phone number or email address so that they can market to you, but it annoys consumers and may explain why neither one of these ever cornered their piece of the retailing world.

A softer approach, one that asks if you’d like to receive coupons or advance notice of specials, would provide Toys R Us the necessary information from those consumers who were truly interested in these offers. A win-win.

One of the chain haircutting places (I won’t mention which one, because I don’t want to give them any press, good or bad) basically demands that customers provide their name, phone number and address before they get in the barber’s chair. Are they crazy? I just want a haircut. I’ve only been to this retailer once, provided a fake name, phone number and address, and I’ve spent my money somewhere else since then.

That’s typical of consumers. We won’t complain, we simply won’t come back.

If the leadership at these retailers truly understood the goal, took a long view of their business and ran some “what if” scenarios before instituting these ill-conceived marketing activities, they’d be in better shape to handle the shrinking economy we face today.