The intentions, objectivity and execution of a successful organization

In today's mail I received a very lovely talking birthday card from the NY Jets, with a personal note from head coach Rex Ryan.  Of course my birthday was almost two weeks ago and the card arrived the day after Coach Ryan's team lost 49-19 to their fierce AFC East rival New England Patriots. The Jets have now lost their last 2 home games by a combined score of 79-28, both to fierce AFC East rivals.

The Jets are proud professionals; I have no doubt these Jets want to win every game and even if I pay an absurd price for Jets club seats and personal seat licences, sending me a birthday card is a very nice touch from an organization that clearly wants to do the right thing. But the utter consistency between the lousy play of an utterly undisciplined team and their sending birthday cards two weeks too late is reinforcement the NY Jets is still an organization that can't execute on anything.  At this juncture, I'm rather convinced that Matthew Broderick based his character Jimmy Winter on Jets owner Woody Johnson in the terrific Broadway musical "Nice Work if You Can Get It."

Under-performing companies tend to take operate much the same way the lost and wounded NY Jets do: breakdowns in every facet of the business conspire to keep them from achieving very much. Mediocrity becomes the norm, miscues are rationalized, management does more to justify why they have been victims of bad luck or bad economies rather than engaging the strenuous process that will really fix the apparent and growing structural problems.  Just as Rex Ryan continues to defend the embarrassingly horrible play of his poster boy QB Mark Sanchez, most managers in troubled companies strenuously defend their direct report employees guilty of their own on-the-job fumbles, interceptions and routine bad judgment.

Businesses are a collection of human beings and it is only natural that people who spend so much time together in the same workplace in their chosen field will develop close relationships with one another.  I'm always particularly wary of those proclaiming "we're so close and we so care about each other we're like a family!"--- because they are guaranteed to be the least objective of all.  Just as being a player's coach serves Rex Ryan well when he has talent that can win games, I can't fully blame management for failing to stop a company in decline when it is built on a culture of camaraderie.  Clearly, I'm not suggesting organizations should not foster positive working conditions, but when they are plagued by poor execution it becomes necessary to bring in professionals who do not carry the baggage of established relationships.

Without objectivity even the best intentions won't be sufficient. Bringing in external help to navigate through diminished performance is not a sign of weakness, in fact excellent executive teams recognize its importance.  My experience is only the strongest executives, those with the serious intentions of winning have the good sense to engage objective professionals to align intentions with objectivity that will drive desired results through superb execution on all levels.

It's Time for Business to Focus on Meaningful Performance Standards: Let's Get Back to Inspiring and Teaching

In recent weeks I've heard from a surprisingly large number of you urging me to post a new column. This space is intended to share useful information and insights from my interesting business encounters and experiences; quite frankly I thought I was becoming redundant and not breaking new ground. So I've resisted the temptation to write for the sake of it and am now reappearing because I've got something worthwhile to share.
As the economy plods along, as adjusted real unemployment figures are estimated at nearly 18%, as companies struggle to compete, the great strains are showing in most insidious ways. Not enough managers are truly leading their organizations by inspiring them, teaching them, better equipping them and it's creating greater levels of fear and suspicion in the workplace. At a time where organizational strength is an imperative far too many employees are looking to play the hero; freelancing and pushing others away from what they believe is their turf. In many respects this stands to reason: the fear of being unemployed is now so powerful that otherwise capable and rational human beings are determined to prove themselves to be indispensable. It's happening at alarming rates and these misguided efforts are universally making bad situations worse. I won't go as far to say we're approaching organizational anarchy, but there are too many signs of it coming from too many companies to not put a spotlight on this dangerous trend.
Signs of this self-indulgent behavior are evidenced throughout society, whether it's the Henne's of Colorado or Salahi's of Virginia who aspire to fame through outrageous and no-value behavior that will earn them starring roles on (anything but) reality tv. Just as the Salahi's believe they're worth a few hundred thousand dollars so a television network can interview them, many in the workforce evidently believe crashing their organizational structure or undermining corporate unity of command will not only guarantee their continued employment doing so will earn them big bonuses. I find the seeds for the twisted logic were sewn well before this diabolical behavior became apparent.

In one case a senior executive had delegated virtually everything in his business to tenured staff, but over time both company staff and their customer base eroded. This is hardly coincidental; employees developed deep resentment for a leader that hadn't been involved for quite some time but ruled his business as an emporer so they left and took customers with them. His reaction was to further wall off access to his staff and customers as an attempt to be the hero to parent company executives that had lost patience in direct correlation to the control he had lost in his business. Even though steps have been taken to prohibit this senior manager from following a disastrous course of self and turf protection, it will be a constant effort to stay on him and manage the situation that will undoubtedly further drain corporate resources.

Another example is a sales person who recently closed a couple of deals; his first significant sales in roughly 18 months. Between 2007 and ytd 2009 this sales person's business was off by nearly 60%; of course he attributed this to "the economy" and nothing he had any control over. Emboldened by a couple of new deals he is now attempting to hold his company hostage by demanding no less than a 50% increase in his compensation. His rationale is that he's owed extra pay to compensate him for the tough couple of years he's had, never mind his company continues to lose substantial money or that his tough couple of years was a direct reflection of his poor sales performance.
It's as easy to make this a story of individual behavior as it is for me to cite other examples, but I believe the root cause is deeper. Any system that seems to have replaced merit with entitlement, achievment with grandstanding, is badly broken and must be repaired through compelling leadership and reinforced management. We've all let standards devolve over the years and as companies prepare themselves for 2010 I urge them to put an immediate and significant focus on meaningful performance standards.

Toxic CEO Ted Provides a Lesson: How NOT to Run a Business

He said he really needed to speak with me about an urgent matter.

He said he needed at least a couple hours and would buy me lunch if I helped him work through the problem.

He said he had nobody else he could turn to and because we have totally different business philosophies he really needed me even though he knew I had no respect for him.

He said he needed a friend.

Maybe I was more curious than I was motivated to help, but I couldn’t refuse this invitation. So I met with this CEO for a privately-held firm, and for purposes of this post we’ll call him Ted.

Ted is one of naturally brightest people I know and at a very young age he built a formidable company. But Ted used his native intelligence to constantly scheme and find ways to make money by really bending the rules; reneging on agreements, overcharging customers in hopes they wouldn’t notice, and engaging in several other unethical and possibly even illegal tactics.

Ted is a lazy guy, he would much rather use his God-given brainpower to find the easy way rather than pushing himself to really build something. So Ted is probably the dumbest person I know. I will say this though, from time-to-rime, especially when he was caught in one of his schemes, he did try to clean his ethics and practices up. Although I hadn’t been in touch with Ted for a long time I was rather certain that these periodic spasms of operating integrity never lasted very long.

Ted has always believed he was able to make a great deal of money by always outsmarting everyone else. This also allowed Ted to not work very hard and because he had found a handful of employees that served as trusted accomplices Ted could enjoy a life of leisure funded by a steady stream of what I can only consider to be ill-gotten income. Ted had always said the reason he wanted to run his own company was it would allow him to “make a lot of money”. Furthermore, Ted created a company culture that was addicted to the same.

Ted’s willing accomplices extended to more than just low-skilled low-talent employees that would do his (literally) dirty work to draw a paycheck; a paycheck that was always far greater than anything any of them could have ever dreamt imaginable. Because Ted’s company routinely posted impressive top-line growth for most of this decade lenders were tripping all over themselves to give him money.

There are many excellent small/mid-sized companies that are being choked to death today because banks aren’t lending; the unemployment rate is indescribably scary because these cash-starved companies can’t financially maintain a workforce. In large part, Ted and others like him are the root cause. In larger part, the bankers who ignored fundamentals are really to blame for the mess. But that’s not what Ted wanted to talk to me about.

As a man who built a business based solely on short-term thinking and taking obnoxious short-cuts, current economic conditions have accelerated and highlighted Ted’s many corporate shortcomings. Dependent on equally short-term thinking bankers who were no longer there for him, some calling in major loans early, his business was being squeezed. Competitors were taking business away from him at eye-popping rates; some customers disappeared quietly, others have litigated. His company was bleeding at such a furious pace he had to significantly cut back on staff and when even that wasn’t enough to cover his growing financial shortfalls he had to impose radical salary reductions for remaining employees. His low-skilled low-talent staff hadn’t developed real professional capability; they were doing what the boss told them and drawing hefty paychecks in return…until now. But that’s not what Ted wanted to talk to me about either.

No, Ted’s urgent matter was that he had just uncovered a ring within his organization, comprised of the most trusted of his inner-circle staff, where his employees were selling his company data to competitors and, of course pocketing these ill-gotten gains themselves. Ted was angry about this but as I listened to him he was clearly more hurt. After all, how could they do this to him!?!? How could they not show Ted the loyalty due him since he had taken such good care of them all these years, especially at a time when he most needed them!?!?!??!

What he initially said he wanted from me was advice on what he should do. Should he prosecute all for industrial espionage? Or should he get some to turn over on others and just make examples of a few (the few would be those he liked the least anyhow)? But as Ted kept talking he then said, “But I can’t really do anything can I? They all know too much and they might get me in trouble.” In truth what he really wanted was a forum to rant and engage in one of his most common practices: self-justification and putting the blame elsewhere.

I gave Ted the couple of hours he requested and I don’t think I said more than 20 words the whole time. Yes, Ted said he wanted my helpful advice but he really didn’t, and if actually asked I wouldn’t have told him anything he wanted to hear. Of course we both knew this going in to that lunch meeting.

Ted was distressed because his employees were disloyal and did despicable things to him. It seems to me that in this case, these despicable employees showed themselves to be totally loyal to Ted: they acted exactly the way they had seen him and conducted themselves as he has. For a brief period of time Ted thought he had it all, thought he had figured it out better than anyone ever could. Forever, Ted will be toxic.