Category Archives: Conflict Management

Accountability, Communication, Conflict Management, Finances, Leadership, Responsibility

When to Say When

Blog 395 – When to Say When

Nobody likes to admit defeat. Nobody enters into a deal expecting to lose. Nobody starts a project that they don’t expect to complete. But sometimes, unexpected stuff happens. Partners don’t live up to commitments. Suppliers can’t supply. Developers forget how to develop or run into unexpected issues. It happens. The question that is now faced is, when do you say “enough” and cut the loss?

First and foremost, this is a time for a “business” decision. Pride and emotion should not come into play. Multiple issues and disciplines need to be reviewed. Prioritizations need to be made and weighted values need to be assigned. There will always be multiple stakeholders in the decision that will believe that their specific issue should take precedence and be the basis for the decision. There will also be those who are probably best ignored in the greater scheme of things. I’ll try to sort through some of the various topics and inputs that should go into this decision.

The first input is one of the most critical inputs of all: Time. No one immediately finds themselves in a failure situation. It is usually the compounding of many items over time that causes the “Ah Hah” moment where the issue manifests. It must be understood that “All errors are Additive”. Two wrongs do in fact not make a right. It is usually a series of small errors or issues that add and multiply to create the failure state.

If you are interested, there is a Harvard University paper on error propagation that can provide you the mathematical foundations of this idea at http://ipl.physics.harvard.edu/wp-uploads/2013/03/PS3_Error_Propagation_sp13.pdf.

The business equivalent here is that there are usually many disassociated errors across time that add up to what can be viewed as a non-recoverable situation. Always correlate all error or issue reports, then review how long the failure condition really existed before it was noticed.

The second is based on the business nature of the issue: Is it an External – Customer Related Issue, or is it Internal to the Business itself? If it is a customer related issue, then the loss of business, both current and future should be the deciding factor. If the customer is committed and dependent on the product, good or service at question, then there probably is no alternative than to continue to commit resources (money, people, components) until either a resolution or work-around is achieved. Here the pain of the customer must outweigh the pain to the business. Effectively, the plug cannot be pulled.

If the customer has recognized the issue and has taken steps to mitigate their exposure, or made other plans based on expected non-compliance, move quickly to achieve an appropriate solution (give them their money back, substitute other products or solutions, etc.,) and move on quickly. The same would apply if the effect on the customer’s business can likewise be minimized.

Understand that engineers will always say that with a little more time and budget they should be able to find a solution. Developers will always say with a little more time and budget they should be able to get the solution working as desired. All will point to the amount that has already been spent and how with just a little more it should be possible to recoup it.

Personally, I have yet to see this work. This argument usually results in an incrementalistic approach that ends up costing more people, time, money, with little more in the way of deliverable results to show for it. One thing to remember here is that if you have hit the point where you have to examine the business case for continuing on along a certain path, then you have probably already passed the point when it was appropriate to stop doing whatever you were doing.

Internal programs, projects and developments are far easier to analyze. The question will always be: Is it strategic to the future of the business? And of course, the answer to this question from those responsible for the topic in question will always be “yes”. Just remember that strategic topics and programs usually encompass years on the timescale and similarly large values on the funding scale. A good rule of thumb is: If multiple years have not already passed by the time you are examining the “Stop / Continue” decision, then it is probably not a strategic topic that is being discussed.

There will always be those that want to continue whatever program, project or development that is being reviewed. These will be the people and groups that have budget and resources stemming from the program. There will always be those that will want the program to be stopped. They will be the people and groups with competing programs that want the budget and resources. These groups can also almost always be immediately discounted as input into the decision.

The internal stop / continue decision must be taken out of the hands of the technical groups (engineering, research and development, etc.,) and put in the hands of the financial and business management teams. How much more will it realistically take to complete? How much revenue or cost reduction will be foregone if not completed? How much longer will it take? What is the project’s trajectory? Will it take a restart / rewrite, or is it truly a defensible incremental piece of work (be very careful here)? It is here that the money should talk, not the desires or beliefs.

Occasionally a business may find itself at the mercy of another business group or supplier as the cause of the program, project or product delay. Instead of a stop / continue decision, you will be faced with a “wait / continue” decision. This means instead of stopping permanently and moving all resources to other projects, the decision is now do you stop temporarily, move resources to other projects and await the outcome of the delaying party, or do you continue with your piece of the project and just hope the offending party will be able to catch up?

Almost every time when presented with this decision, those associated with the project in question will want to continue on and hope the other group or supplier catches up. From their own budgeting and staff assignment point of view, this is the best and simplest solution for them. They will always try to justify this decision by stating that it will be more expensive to stop, reassign the resources, then reassemble them and restart the project at a later date.

Most of the time, since they are the technical resources associated with generating the costs associated with this decision, their assertion is not questioned.

This is a mistake.

Always question, quantify and justify costs to both stop and restart a project. Stopping should usually be nothing more than the cessation of charging to the project. Starting may require some re-familiarization with the project but should not entail significant time. What this means is that from a business and financial point of view, it will almost always be less expensive, and better for the business, to pause all efforts on a third party delayed program or development than it is to continue to work while the third party is delayed.

It may add complexity to those groups whose budgets are now in somewhat of disarray due to the pause and inability to keep charging, but it is better for the business overall.

The only potential mitigating circumstance is how long the third-party delay is forecasted to be. If it is on the order of days to a few weeks (less than four as an arbitrary limit) than continuing may be the right solution based on future resource availability. If it is on the level of a month or more, the decision starting point should be biased toward stopping the costs and investments until such time as the third party has caught up.

So, summarizing the decision tree associated with when to say when on failing or delayed programs, projects and developments:

If the customer business is dependent on the commitment, then whatever it takes to complete is required. Not only current customer business, but potentially all future customer business is dependent on competing the deliverable.

If the customer business is not dependent on the commitment, then the business case for stopping, substituting or finding a work around should be examined. Only the current customer business is dependent on completing the deliverable.

For internal programs and developments, the question of how strategic the program or development is will be key. We all know that nothing ever fully goes according to plan. For those strategic topics, requiring large budgets and long time-lines this is even more evident. Those that are truly strategic it may be best to continue to push on through, but with significant monitoring to make sure further issues and delays do not continue to show up, causing incremental failure.

For those non-strategic programs and developments, it should be a financial / business case decision based on the cost to complete versus the foregone revenues or cost reductions associated with a successful completion. Question all inputs and let the numbers fall where they may.

Finally, when the decision to wait or continue when a contributing entity is the cause of a delay, it is almost always a financially better decision to reassign resources and wait for the third party to complete their work than it is to continue to work in the expectation that they will catch up. It may be more complex and disruptive to those entities assigned to the program, but it will be better for the business.

Finally, understand that any time you ask for the inputs on the decision from the groups that are directly involved with the program in question, they will almost always declare that the program should continue at current funding and spending levels. While this may be beneficial and easier for them, it is the least financially viable approach to the decision in question. Always question inputs and justifications from all parties. Remember, when it comes to money, either internally to the business, or externally from the customer, there will be those that want it, and those that want to spend it.

Alignment, Analysis, Business, Conflict Management, Finance, Sales

Conflicting Internal Forces

I have talked in the past about the three internal organizational resources required for business success, and their trade-offs and interrelationships: Time, People and Money. The idea that if you have less time than desired to achieve a goal, it will require the expenditure of more people and more money to achieve it. If you have fewer people for the goal it will require more time and money. And so on.

I am now going to talk about the driving internal functional forces that are acting upon desired organizational goals. There are again three of them and to put them at their simplest, they are Sales, Finance and Engineering. I think in order to be a little more accurate it would be better to look at the conflicting goals of each of these functions with respect to the desired goal of the organization, instead of just the function itself.

The goal of sales is to get orders. There may be additional sub-requirements placed on them, but it is almost always quota attainment, as it pertains to orders, that is the measuring stick for sales. Achieve your sales order goal as a salesperson, and you get money, fame, glory, respect and most importantly, you get to keep your job. Fail to achieve your sales order goal and you don’t get the money, fame, glory or respect. More importantly, perhaps the first time you fail you may get a pass on keeping your job, but probably not the second time.

Sales in general doesn’t really care about finance or engineering. This is primarily because they are not paid to care about them. They are paid (usually in the form of commissions) to get orders. Sales usually wants the highest quality and lowest price possible as this helps enable their sales. The greater profitability desired by finance usually means a higher price, which usually makes sales more difficult. Sales will usually align with engineering on generating the highest quality solution but diverge when the costs of such solutions are taken into account.

The goal of Finance is margin or profitability. Again, there may be other sub-requirements, but finance’s primary role is to make sure that the organization brings in more money than it spends. Finance keeps score. It’s not enough to just bring in more than you spend. Finance quantifies how much more money needs to be brought in than is spent so that the business’s ongoing and future success can be assured. Future investments and corporate overheads (as well as salespeople’s salaries and commissions, etc.) have to be paid for.

Finance is usually focused on what could be called the margin percentage versus margin value balancing act. It is desirable to have a high margin percentage and high profitability on each sale. However, having high margins with low volumes will not generate enough profit to drive the business forward. Just as a high volume of sales with low margins will not generate the desired margin value. There is a desired financial equilibrium where both margin percentages and values are maximized.

The goal of Engineering is to make sure that everything gets done right. Engineering makes sure that products and solutions are configured properly. They make sure that components and solutions are available in the desired time frames. They make sure that services are costed and allocated correctly. In short, they make sure that the organization can in fact do whatever the salespeople are trying to sell.

Engineers are also believe that they are the primary group responsible for doing the people, time, money, analysis. Engineers are not usually interested in the sales aspect, other than recognizing if there are no sales there is no need for engineers. And they are not particularly focused on finances, as margin and profitability again have little direct effect on them. They are usually focused on the accuracy of the solution and will include whatever they deem appropriate (the people, time, money resources) to that solution to make it ever more accurate.

Of the three functions, sales is probably the most difficult. Sales is competing with external entities for each order, in addition to trying to balance the internal goals associated with the financial and engineering functions. Finance and engineering are only associated with internal functions, including sales. There is no competing engineering or finance function claiming that their financial wizardry or engineering prowess is superior. When they are forced to deal with external forces, it usually only through sales.

When these internal functions, and their associated goals are in balance, an organization can operate at near its peak efficiency. Sales pushes for orders, finance makes sure the sale is profitable and engineering makes sure that the sold solution is done correctly. Life can be good.

It is when an organization gets out of balance that we start to see significant issues. When an organization becomes too sales focused, margins and profitability can begin to slip as the quickest way to increase sales is to reduce price (this is just baseline economic theory). We saw an example of this some time ago when some stocks started being valued based on the assumptions of future sales and sales growth instead of the more standard stock and organizational valuation criteria. These stocks eventually came crashing down when it was realized that they would in fact have to start making money if they wanted to stay in business, regardless of how much they sold.

When an organization becomes too financially focused, growth, expansion and development can slow, again causing issues for the organization. Strategic opportunities can be missed because they may be deemed to either represent too much risk, or not enough return (margin) to be pursued. Being too safe from a financial point of view can be just as deadly to an organization as being too risky and focused only on sales.

With the increased global awareness and focus on the “cost of non-quality”, or more accurately the cost of not doing things right, there seems to now be an organizational drift toward becoming more engineering focused, since they are the organizational force associated with doing things right. I also think that this approach potentially has the greatest capacity for generating corporate issues in the future.

When an organization becomes engineering focused it has a tendency to lose sight of both sales and finance. With decreased input and parameter focus from sales and finance, engineering will continue to focus on accuracy and reducing the risk of an incorrectly engineered solution, almost to the point of trying to generate perfection in its solutions.

The issue here is that perfection usually comes at a very high cost.

Finance will continue to try to demand specific margin levels, while sales will want lower prices to enable the generation of orders. This is the recipe for the perfect organizational storm. Engineering generated increasing costs, finance generated desired margin levels, and sales generated reduced pricing demands to meet the market competition.

The point here is that the market, more or less, sets the market price for the organization’s goods or services. There can be some variations, sometimes based on the quality of your sales team, sometimes based on the quality of your solution, and sometimes it is based on other factors (such as the regulatory exclusion of a competitor from the market, etc.). If you raise your prices too much in response to the engineered increase in costs, sales volumes and hence margin values will decline. If you reduce margin percentages, again margin values can decline. This can become a lose-lose situation.

The organization won’t make any mistakes, but it may not generate enough business, or margins to survive for very long.

In allowing an organization to become engineering focused, you start down the road to becoming a cost-up pricing organization. This is the least market responsive type of organization. Since engineering nominally has no focus or interest in sales or margin, when an organization becomes engineering focused, it becomes almost entirely internally focused.

It is usually the position of the market that an organization that loses its focus on the customer or the market, doesn’t get to enjoy the benefits of that customer or market for very long.

Engineering in an organization is about reducing the risk associated with achieving a goal. But like everything else, this risk avoidance comes with a cost. It is not enough to tell engineering to make sure that the solution is correct. This direction invariably leads to the inclusion of all kinds of failure avoidance constructs, and their costs to be included in the solution. And since engineering can be a complex function, there are few outside of the engineering function that can understand or question it.

In the long past world of “Five Nines” of reliability, this was once the recipe for success, but in today’s “short life-cycle” disposable product world, few can afford it, and even fewer are willing to pay for it.

I mentioned earlier that engineers see themselves as the group that is responsible for solving the Time, Money, People resource equation. It is obvious that when none of these parameters are set, the solution is much easier to obtain. And without limits to these parameters, the costs of the risk-adverse solution can grow quite large. Organizations need to understand that the Time, Money, People equation requires parameters to be set. Time frames and budgets need to always be set before being handed to engineers to configure a solution.

Engineering is a key component to any solution. The functional internal conflicts between sales, finance and engineering will always come into play, and must always be balanced out. As organizations seem to continue to drift into a little more of an engineering-centric approach to customers and solutions, it should be safe to assume that left unchecked, the commercial and financial aspects of these solutions will re-emerge in the customer decision making process.

It is safe to say that you do indeed get what you pay for, but it is also safe to say that sales will have difficulty selling, and customers are probably not going to be willing to pay for an over-engineered solution of any type that does not take into account their commercial needs.

Analysis, Budgets, Business, Conflict Management, Finances, Management, Metrics, Performance, Process Management, Time

Time Cards

Time cards have been a symbol of manufacturing productive efficiency for years. I think we have all seen images of production and manufacturing associates dutifully standing in line to “punch in” at their appointed shift on the time clock. It seemed to be a marvelous mechanism to maintain, measure and direct those resources associated with production, in the most efficient manner. It is where the phrase “on the clock” originated. You came in and they started paying you when you “clocked in” and they stopped paying you when you “clocked out”. It was efficient.

By the way, the “Time Clock” that has become so universal when talking about clocking in and clocking out, first made its appearance on the business scene in the late nineteenth century.

” An early and influential time clock, sometimes described as the first, was invented on November 20, 1888, by Willard Le Grand Bundy, a jeweler in Auburn, New York. His patent of 1890 speaks of mechanical time recorders for workers in terms that suggest that earlier recorders already existed, but Bundy’s had various improvements; for example, each worker had his own key. A year later his brother, Harlow Bundy, organized the Bundy Manufacturing Company, and began mass-producing time clocks.” https://en.wikipedia.org/wiki/Time_clock

There then arose the dichotomy in business where there were those that were “paid by the hour” (those on the clock), or waged employees, and those that were paid a set amount per period of time, or salaried employees. Waged employees were referred to as Non-Exempt and Salaried employees were referred to as Exempt. These definitions were laid down in 1938 by the Fair Labor Standards Act.  https://www.investopedia.com/terms/e/exempt-employee.asp

Below is a brief comparison of the differences between the two:

So, why am I talking about one hundred and thirty year old inventions (Time Clocks) and eighty year old employee definitions (Fair Labor Standards Act)?

The reason is pretty simple. As the production and standardization processes that have been used in manufacturing have found their ways into the other disciplines and aspects of business, so has the cost tracking and charging of those resources responsible for doing the manufacturing.

We are now asking our exempt employees to fill out time cards associated with the work they are doing. This in and of itself is probably not a bad thing, however it engenders a new and different behavior in the exempt employee. It is this new “Time Card” behavior in exempt employees that can a detrimental effect on the business.

For lack of a better definition, exempt employees are paid by the “job” as opposed to by the “hour”. If an exempt employee must work late hours and weekends to complete their assignment, they do not get paid any more. They do however get the satisfaction of knowing the completed their task, regardless of how long it took them.

The idea of having exempt / salaried employees track their time, was to better associate costs directly with specific projects or activities. This association gave rise to the exempt employees who could directly associate their activities with specific items or revenue producing functions, and those that could not associate their work with specific items. Those that could be directly associated with specific products, projects and functions were called “Direct” labor, and those that could not be directly associated were called “Indirect” labor.

“The essential difference between direct costs and indirect costs is that only direct costs can be traced to specific cost objects. A cost object is something for which a cost is compiled, such as a product, service, customer, project, or activity. These costs are usually only classified as direct or indirect costs if they are for production activities, not for administrative activities (which are considered period costs).

The concept is critical when determining the cost of a specific product or activity, since direct costs are always used to compile the cost of something, while indirect costs may not be assigned to such a cost analysis. It can be too difficult to derive a cost-effective methodology for the assignment of indirect costs; the result is that many of these costs are considered part of corporate overhead or production overhead, which will exist even if a specific product is not created or an activity does not occur.” https://www.accountingtools.com/articles/the-difference-between-direct-costs-and-indirect-costs.html

The following as a good way to think about this. I promise I will get to my point about Time Cards and why this is important soon.

So, all of this work associated with slicing and dicing the time that salaried employees spend on their various activities is being done to understand what portion of their work can be directly associated with a cost object (Direct) and what portion cannot (Indirect). Why is this important anyway? It’s pretty simple.

All businesses want to reduce, minimize and otherwise exit overhead or indirect costs from the business equation.

Every business has the objective of reducing indirect costs, otherwise known as “Overhead”. As noted, these are the costs that cannot be directly associated with revenue production.

So, when Exempt, salaried employees are asked to fill out time cards, and they have multiple options, both “Direct” and “Indirect” to associate their time with, which are they going to choose? Knowing the corporate desire to minimize, reduce and exit Indirect and overhead costs from the business, they will naturally migrate their time charging to “Direct” functions and charges.

On the surface this might seem like a wonderful way for companies to reduce overhead, and in some instances, it will work. However, if you have the financial responsibility for one of these cost objects, you will want to be able to closely monitor the number of people and the amount they can charge to your cost object. This monitoring, or policing activity and capability again creates an incremental overhead.

It is essentially a transference of the overhead responsibility from the labor pool owner (of salaried, exempt employees), to the Cost Object owner.

Labor pool owners are always going to try and minimize the amount of their labor that is not directly associated with a revenue producing cost object. They will want to show the preponderance of their time, as reported by time cards, as being directly associated with a revenue producing function. Engineering groups, development groups, support groups and just about every other group will begin to display this behavior once time cards are utilized in this fashion.

The fear for them is that if they show too much time spent on overhead functions, they will be subject to a cost reduction activity in an effort to reduce overhead.

The results of this “Time Card” behavior are manifold:

  • With the pressure to be associated with, and charge to only Direct costs, the direct costs associated with specific cost objects can become inflated by excessive charging. Since direct costs are “above the line” in accounting and margin terms, this could result in inflated and non-competitive prices.
  • There will now be a somewhat adversarial relationship in place between those groups wanting to charge directly to cost objects, and those groups that are responsible for maintaining those cost object budgets, and the corporate inefficiencies and friction that this creates. There is also the non-productive time that will be spent challenging, changing and rectifying those charges as they come in.
  • There is non-productive time, effort and cost for increasingly capable corporate tools to maintain, monitor and control this type of charging effort. How do you control who should and should not charge to a cost object?

Time cards, like process can be a good thing. But like process, they should not be viewed as a replacement for judgement. When you move costs associated with time cards from indirect labor to direct labor, it may solve a corporate desire to reduce perceived overhead and indirect labor expenses, but it also creates several new issues and expenses associated with monitoring and controlling those charges. Due to how costs are accounted for in direct versus overhead items, it can also change both the cost profiles, margins and ultimately pricing profiles in the market.

Time cards in the salaried or exempt employee environment can and will change behaviors. Labor resource groups will increase their focus on having cost objects to charge to as opposed to understanding that there is to be expected a certain amount of slack time that they will have. Instead of the labor resource pool manager managing this slack level, time cards in essence transfer this issue to the cost object owners to try and control and manage.

Time cards for salaried and exempt employees can provide a better level of visibility into how time is spent and what employees are working on. It does however carry with it what is known as “The Observer Effect”.

I always try to sneak a little physics into any discussion.

“Observer effect (physics) In physics, the observer effect is the theory that simply observing a situation or phenomenon necessarily changes that phenomenon. This is often the result of instruments that, by necessity, alter the state of what they measure in some manner.”    https://en.wikipedia.org/wiki/Observer_effect_(physics)

As long as business is aware of how behaviors are changed, and what may need to be done to compensate for these changes, there can be value in them. However, without those considerations they can create an entire new set of issues for a business to deal with, and may result in little to no efficiency gains.

Alignment, Conflict Management, Decision Making, Management, Matrix Organizations, Organizations

Globalization and Regionalization

I have had the opportunity to work for several different organizations in both global roles and regional roles. They are as diverse in their approaches to business as they are different in their drivers. As Captain Obvious might say “Well, duh”. However, I thought I might spend a little time looking at why they are so different. What factors contribute to what appears to be an ongoing, never ending conflict of business imperatives between the global business and the regional business unit.

Global businesses are driven to try and do everything only once. That means they try to create single products that can be sold and implemented in multiple regions. The same would also be true of their services. Global businesses try to create single business processes and business structures. They then try to make the regional business units fit this ideal as closely as possible.

This is all based on the global business’ desire to minimize costs and associated overheads.

If you can do things only once, you don’t have to put multiple products, or redundant business support infrastructures in place. This keeps your costs down.

It is also a very internally focused approach to doing business. As we have all seen, when your internal drivers outpace your customer focus, you are probably in for some difficult times in the very near future as your competition outplays you in the customer environment.

Regional business units are usually put in place to deal with a specific (regional) customer set. This can usually be due to language, regulatory, cultural, or any number of other factors associated with and specific to that region. By their very nature, and the limited customer set that the regional organization focuses on, they are primarily externally focused. They want products and services that have been specifically modified and adapted to their specific customers’ desires.

As we have all seen, when your customer focus overwhelms your internal cost concerns you are also probably in for some difficult times as your costs and support issues drive your profitability down.

I think herein lies the root of the “push-me, pull-you” issue between global and regional organizations. Global organizations want minimal diversification of their products, services and processes in order to keep the associated costs at a minimum, while regional organizations want multiple, specific customer and cultural variations that directly relate to their specific customers.

So, what can be done?

Sometimes one of the regions emerges as the “lead” region for the organization. Again, usually, but not always the lead region is the region where the global organization is located. This is the region where the provided product or service gets the most traction, or generates the most revenue. This “lead region” has a tendency to create a resonant “do loop”.

The lead region provides its input to the global organization as to the customer specific variations that they need or want, and the global organization responds to them first since they are generating the most return for the organization’s investment expense. Since the global organization wants to minimize the total number of variations that they must support, the other regions are usually left to try and adapt to the lead region requirements.

Customers within in the dominant region get their requests responded to first and hence maintain their lead position by then making the purchase decision, where the other regions’ and their customer specific requests are forced to wait, if they receive their requests at all. Since there is always competition in every region, those customers within the secondary regions tend to remain smaller since their product and service requests are not met as well or as quickly as those of customers in the dominant region. The secondary region customers have a tendency to utilize other suppliers if they wish to have their needs met on a level that more closely meets their needs.

This phenomenon is equally applicable to both the customer product (external and customer requirements) and business process (internal and cost directives) associated with both the regional and global organizations.

While Darwin was a champion of the survival of the fittest, that is little consolation to the secondary region within a global organization, when it is simultaneously told to grow, but cannot get the regional specific needs of their customers, or business processes quickly or adequately addressed.

As an example, there are few things more ubiquitous in the business world today than the laptop or personal computer. Everybody has one. And size matters. But not how you might at first suspect. In the business world, the smaller the laptop computer an executive has, the more important they are. The really important people do not carry a laptop at all. They have someone who carries it for them.

But I digress….

Instead of making country specific laptops and computers, vendors make a generic computer with country specific plugs and charger cords, since very few countries enjoy using the same wall outlets or power structures. They have a global product with specific regional, or country adapters. It works great.

Unless you take your laptop to another country. Then you need another adapter.

What I’m getting at here is that even something as ubiquitous as the laptop needs to be adapted to almost every region and country. And when a laptop that was designed for one region is taken into a different region, it needs another adapter.

I think that sort of implies that almost every other product, service or process will probably need the same type of adaptation treatment for each of its targeted regions.

On the other side of this argument, it can be said that not every country has a market opportunity sufficient to support its own specific product or process set. It is in these types of instances that again as Captain Obvious would again say “well, duh”. Hence, relatively similar countries get grouped into regions where similar market characteristics can be addressed.

This doesn’t mean that they are all the same. Just similar. We all know the basic beak-downs, North America, Latin / South America, Europe, etc. Within these regions we might see some further specification such as Caribbean or Southern Cone in the Latin American region, or Benelux and Scandinavia in Europe.

So why all this grouping and sub-grouping of regions and their respective organizations? Partly to reduce redundancy and overlap of cost structures, but also to more clearly enable what should be that bastion of business, the business case.

By accreting organizations upwards, (hopefully) business cases can be made for the appropriate level of diversification / specification of the products, services and processes to specifically service that region. Or at least one would hope that this is the case.

Again, the problem here will be that the business cases of the lead region / country will almost always be stronger than even those of the secondary regions. So, what can be done?

The solution will lie with the business focus.

If the business focus is on cost containment, increased profitability and process unification, the needs and desires of the regions will be deprioritized in favor of global approaches and processes in the name of cost containment and simplification. This will normally be the case with both “cash cow” and lower margin businesses. Businesses associated with older technology products as well as businesses associated with services will usually try to drive to this one size / one process fits all reduced investment and increased earnings optimal state.

In this case, the desires and needs of the lead region will probably drive the directions and processes of the entire global business.

If the business focus is on revenue growth, that means specific customer requests and requirements must be responded to in order to obtain the desired customer commitments. This means the specific needs of each region will need to be addressed within the global organization plan. Prioritizations regarding which customer demands are responded to first will still be made, but there will be an extensive set of delivery plans to make sure as many specific regional requests as possible are met within the desired time frames.

The net result of globalization versus regionalization is that neither organization will ever be entirely happy. Regional business units will never get all that they want in the way of customized products, services and processes that are adapted to their specific needs. Global businesses will never be able to get their one size fits all cost utopia. There will always be a spectrum along which these items will lie.

The more internal the focus of the topic or the business, the more globalized the approach. This seems to particularly be the direction for anything associated with internal organizational systems and processes.

Businesses associated with older technology will probably also find themselves with less R&D funding available for region specific developments, as that funding will probably be utilized on newer products.

Services businesses, which normally also operate on a lower margin business case will also probably find themselves trying to regionally find a way to adapt as closely the one size fits all approach of the global structure as possible.

It will probably be only those high growth or high margin businesses that will enjoy the opportunity to access full customer responsive regionalization. This will normally be because they are the only types of products (and services) that can afford the investments that regionalization requires.

This further supports the golden rule of business: Those regions that deliver the gold, get to make the global rules.

Alignment, Analysis, Conflict Management, Organizations, Politics, Process Management

Détente in the Organization

As the matrix organizational structure continues to flourish, where organizations are structured according to business disciplines and processes rule on how these organizations interact, tension is bound to build between these organizational states. Product groups will always believe that they know how best a product should be sold. Finance teams will always think that they are the only ones who will care about the profitability of a deal. Sales will always have to deal with ever more aggressive competitors, and ever more demanding customers, as they try to translate these requirements into something the product and finance groups (and others) can act on and agree with. Trust between these groups when associated with the new business process will be key to the success of the organization going forward.

So, how do you deal with the tension between these organizational groups? History has shown that détente, as practiced between the United States and the USSR during the cold war has probably found its way into the organizational environment.

Détente (a French word meaning release from tension) is the name given to a period of improved relations between the United States and the Soviet Union that began tentatively in 1971 …https://www.history.com/topics/cold-war/detente

The relaxation of strained relations or tensions https://www.merriam-webster.com/dictionary/d%C3%A9tente

While the Soviet Union (in that manifestation) no longer exists, it would appear that Détente still has a place in the current organizational discussions, at least when it comes to discussions associated with matrix organizations and how they interact. That being in how these organizations can decrease the tensions that invariably arise when they are working with each other, sometimes at cross purposes, in the pursuit of their business objectives.

This is just a nice way of introducing the idea of how do you get disparate organizations to work together towards the overall business goals. In the perfect world these organizations would all be altruistic, focus on the business’ greater good and trust each other as they worked together according the latest management process. Unfortunately, none of us resides in a perfect world.

To continue the political allegory a little farther (to possibly foolish extremes, but since I am already in this deep…) this can result in inter-organizational relationships (as noted above) that can be best described as resembling those of the participants of the “cold war”. That being somewhat distrusting and antagonistic, but not so openly as to flare into open warfare.

Although the start of détente has been attributed to President Nixon in the 1970’s, it arguably hit its peak in the 1980’s with president Reagan. As the two world powers searched for a way to work together toward nuclear arms reductions, Reagan is credited with the immortal phrase:

“Trust, but verify”

Suzanne Massie, a writer in Russia, met with President Ronald Reagan many times between 1984 and 1987. She taught him the Russian proverb, “Доверяй, но проверяй” {Doveryai, no proveryai} (trust, but verify) advising him that “The Russians like to talk in proverbs. It would be nice of you to know a few.” The proverb was adopted as a signature phrase by Reagan, who subsequently used it frequently when discussing U.S. relations with the Soviet Union. Using proverbs that the Russians could relate to may have helped relations between the two leaders.

Reagan used the phrase to emphasize “the extensive verification procedures that would enable both sides to monitor compliance with the treaty”, at the signing of the INF Treaty, on 8 December 1987.  https://en.wikipedia.org/wiki/Trust,_but_verify

The Intermediate-Range Nuclear Forces Treaty (INF Treaty) is the abbreviated name of the Treaty Between the United States of America and the Union of Soviet Socialist Republics on the Elimination of Their Intermediate-Range and Shorter-Range Missiles. https://en.wikipedia.org/wiki/Intermediate-Range_Nuclear_Forces_Treaty

Now, “extensive verification procedures…” are very good if you are talking about global nuclear weapons reductions. I for one, am all in favor of it in this instance. The easing of tensions and the reduction in nuclear arms are “good things” as Martha Stewart is apt to say. The significant cost of these verifications when measured against the global good generated by the agreements and conduct of the participants would seem to be a significant value.

However, when we are talking about inter-organizational tensions in business, how do you trust but verify?

Matrix organizational structures, and their accompanying processes were put in place to reduce costs and increase efficiencies. Each group was to be responsible for the application of their discipline specific expertise, and then hand off the process to the next organization. An almost production line capability was envisioned where efficiency would rule. These inter-organizational tensions were never taken into account. So, what has occurred?

As I noted earlier, each business organization associated with a process has relinquished ownership and control for all associated activities outside of their specific disciplines. This means that the product group that feels that it knows best how to make sure the product is properly sold, has no real direct responsibility or authority for the sale of its product. This obviously creates tension between the sales group and the product group.

How do they create detente out of this situation?

The answer that seems to have evolved with the “trust, but verify” aspect of the relationship. Most product group organizations have responded to the trust issue by creating a product group owned organization that is responsible for “helping” or supporting the sales group in the proper sale of the product. They bring aspects of the product group to the sales team, and provide communication from the sales team to the product group. They in essence handle the process hand-off from the product team to the sales team.

The other actual function of these sub-group organizations is to trust the sales group in the sale of the product, but also to verify that they are in fact selling the product, and selling the product properly (at appropriate margins, with accurate and deliverable functionality, etc.), in the manner the product group might prefer.

The product group (in this example) is not the only discipline to have created an inter-discipline “support” team. These inter-organization hand-off groups have a tendency to spring up at almost every inter-organization interface in the matrix business process. A structure and process that was thought of and designed to increase efficiency and reduce costs has now given way to a whole new set of incremental organizational structures designed to make sure that those “other” groups are in fact doing the job that they were envisioned and supposed to do when the matrix structure was adopted.

Inter-organizational détente has been achieved, but at what cost?

Have the efficiencies that were to be gained by going to a discipline structured matrix organization with defined processes and hand-offs been lost due to the proliferation of these inter-organizational “support” groups? Has the “Trust, but Verify” doctrine created the need for every business organization to create groups that are designed to understand and interface into every other business organization, for the purpose of verifying that the other groups are in fact doing what they are responsible for doing? Doesn’t all this seem to violate the idea of efficiency and cost reduction that drove the matrix structure in the first place.

The cold war, and détente ended when one of the powers involved started to crumble under the weight of the structure that they had imposed. In the 1980’s the Soviet leadership tried to introduce reforms that would allow their system and structure to adapt to the new realities of the fast-changing world. These new structures and adaptations did not enable the soviet system to adapt, but instead ended up further precipitating its downfall.

… In November of that year (1989), the Berlin Wall–the most visible symbol of the decades-long Cold War–was finally destroyed, just over two years after Reagan had challenged the Soviet premier in a speech at Brandenburg Gate in Berlin: “Mr. Gorbachev, tear down this wall.” By 1991, the Soviet Union itself had fallen apart. The Cold War was over.  https://www.history.com/topics/cold-war/cold-war-history

It appears that sometimes the idea of an organizational structure can be much better than the reality of it application. When the concept and reality don’t quite mesh, the first impulse seems to be to try to increment and adapt the structure to get closer to what is called for. This seems to be something of a delaying tactic for what is usually the inevitable outcome.

A structure can be imposed by management with the idea of better progress and efficiency for all. As incremental structures are added to deal with the true business environment, the entire “weight” of the organizational structure begins to be strained. Many of the expected efficiencies associated with the matrix structure organization would appear to have been lost due to the growth of the many hand-off and verification groups that have sprung up to deal with both the process, and human nature.

Détente, and trust, but verify, are excellent historical applications associated with the difficult relationship between global nuclear powers. I think when you can start seeing the parallels associated with these concepts within the difficult relationships between business organizations, that there may be some inherent challenges associated with the organizational structure. After all, the result of the application of these ideas was the verifiable dissolution of one of the global participants and the changing of their organizational model completely.

Accountability, Alignment, Character, Conflict Management, Leadership

Saying Yes

I have written a few times in the past about the requirement that leaders are obliged to present a dissenting opinion when they genuinely feel that there may be a better alternative solution. I have also noted that that the word “no” can be one of the most important and valuable words in the leader’s lexicon. Having a different or contrary opinion does not make anyone any less a member of the team. It makes them someone who continues to maintain a different perspective on the business knowing that the diversity of opinion is a key to business health.

It is an exceedingly difficult line for a leader to walk. Many times a dissenting opinion can be confused with open opposition, which is something most managers cannot tolerate. Sometimes management doesn’t want to hear a differing opinion. Many times they can be quite content with a single perspective. What do you do when you have much to say to the contrary, but all that is desired of you is to hear you say “yes”?

I think we have all probably been in a situation like this from time to time. Most of the time situations like this are usually transient. Sometimes there is complete alignment on business topics. Occasionally there is divergence of opinions. Many times there are aspects of both alignment and divergence of opinions. This is what is known as a healthy business environment.

In this sort of business environment differing opinions are understood and accepted. The challenge is to the idea or the process, not the individual. The objective is to try and get to the best solution. As I said, this is in an ideal environment. Unfortunately individuals are prone to differing behaviors in the business environment.

Issues such as cultural differences, personalities, management styles and differing individual versus corporate objectives can come into play. Any one or more of these factors can contribute to a situation where the differences of perspective, opinion and approach are no longer the exception to the management alignment, but seem to become the standard.

In many instances there can also be “opinion drift”. If another manager sees that the alignment of opinion is better rewarded than the healthy discussion of alternatives, eventually a polarizing of positions and opinions can take place. It can fall more and more to the leader to make sure that the contrary is both heard and considered.

In time a situation can evolve where management is no longer looking for a specific or studied input on any new idea or direction. As more and more opinions drift into total alignment with management all that is desired is for all the various team members to align and say yes to each new process or direction and immediately get behind it. There can be a total breakdown in the structure of the healthy challenge business model. Contrary views and opinions in such an organization can begin to be viewed as oppositional and divisive.

Before leaping to specific conclusions along this line of thinking, as always it is best to take a step back to understand and assess the situation. Sometimes it only feels as though the stars are aligning and that everyone is aligning without due consideration. A complete management alignment along the lines described is a pretty rare event in my business experience.

On the other hand, I can hear the words my dad used to say in just about any situation that could even be remotely considered a parallel to this. His favorite was:

“Just because you are paranoid doesn’t mean that they are not out to get you.”

He would also say:

“Aim low because the bad guys* could be crawling.”

*Dad actually used a more colorful word for “bad guys” that also started with a “b”, but I know my mom occasionally reads this and she doesn’t like it when I use such colorful language.

Needless to say, you needed to take what dad said with a grain of salt.

Sometimes the best approach to a potential situation, particularly one that involves the input and behavior of others, is to not be in a hurry to resolve the perceived issue. This approach runs almost entirely contrary to everything we have seen, learned and thought about business leadership.

We have learned that those who recognize the issue first, are the first to take steps to resolve the issue and those that do in fact resolve the issues first are the ones usually rewarded. This approach does normally work when identifying and resolving business issues. However when the issues are not business or performance in nature and are more personality or management style related, an immediate and direct approach may be difficult.

It is best to remember that it always takes two to have a difference of opinion. In most instances no one sees themselves as being either wrong, or in the wrong. Sometimes a mismatch of this type can occur.

It is again at times like these that I think back to my dad and what he told me about these instances. He said:

“I may not always be right, but I am always boss”

I think that this was his way of telling me that while I was under his purview I was the one responsible for finding a way to rationalize our cultural or generational differences. Since he was the one paying the bills at that time, it did make a certain amount of sense.

However the parent offspring relationship is not the same as the leader team member relationship when it comes to differences of opinion. Leaders need to understand that differences of opinion, even prolonged ones, are something that should be expected. The recognition by the leader that opinion diversity needs to exist for the business to stay healthy is key. Differing opinions do not mean wrong opinions.

One of the best ways to establish a baseline for dealing with these management differences is to revisit past differences with an eye toward what the different positions were and what the eventual resolution of the difference was. Facts are normally everyone’s friends. The historical record has a funny way of refocusing the disagreement away from positions and more toward resolutions.

Business is about performance. Performance comes from taking the right positions and making the right choices. The historical record is always very clear along these lines. If the right positions are taken, contrary or aligned, the business performance will reflect this. If they weren’t then there are usually second and third “adjustments” that get made as the corrections are implemented.

I have found that members of teams that I have been leading are in many instances much closer to the specific issues at hand than I was. Because they have been closer they usually had a better vantage point from which to derive a solution. It has served me very well in the past to stop, even when I am so absolutely sure of the elegance, purity and accuracy of my solution, and truly understand why they are saying “no” when all I wanted to hear was “yes”.

In many instances I was fortunate to have done so. We can all be prone to having blind spots in our solutions when we are so sure of their accuracy. When someone wasn’t ready to go along with the desired solution, it usually was for a good reason, and that reason probably needed to be reviewed and possibly incorporated into the actual solution.

It almost always made for a stronger final solution.

All leaders will always want their teams to say yes, but will be open to addressing and incorporating differing or contrary opinions. This is how solutions are strengthened. Other managers may be less tolerant and accepting of differing positions with the resulting opinion drift I mentioned before.

Understanding which environment you are in will be a key in deciding how you can respond when someone is looking for you to say yes.

Accountability, Adversity, Change, Conflict Management

Kung Fu and the Laws of Change

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It seems that I do have a tendency to talk about change in business, a lot. I think one of the main reasons for this is that some of my initial leadership roles involved being charged with either changing and transforming some underperforming organizations, or shutting them down. No one likes or wants to shut an organization down. It doesn’t matter that it was not your leadership that caused the performance issue. Shutting down an organization is an event that will stay with you for a while.

This is what has led me to coin what I humbly position as “Gobeli’s First Law of Change Management”. It goes something like this:

No matter how many businesses you grow, expand and improve in your career, shut down just one business because you could not get it to change in order for it to survive and you will always and forever be known as a “hatchet man”.

A hatchet man is a person who is recognized in the organization as someone who causes people either voluntarily or involuntarily to leave the company. They lay off. They fire. They close. When they walk into a room or meeting, all conversation momentarily stops. Other people keep track of them and never turn their backs on them. Once given the label, it is almost impossible to shake it.

This fact has led me to coin what I humbly position as “Gobeli’s Second Law of Change Management”. It goes something like this:

A “Change Agent” is someone who when faced with the option, will almost always do whatever it takes so as to not be labeled a hatchet man.

When faced with the down side prospect of being labeled a hatchet man as opposed to the upside opportunity of changing a poorly performing business into a more profitable one, I think it is easy to see why I usually chose to be a change agent. It really isn’t so bad once you understand some if the realities associated with being a change agent. You need to understand that even though you are avoiding the down side of shutting down a business there are still many obstacles that will need to be overcome.

This is what has led me to coin what I humbly position as “Gobeli’s Third Law of Change Management”. It goes something like this:

No matter how necessary the change is that you are leading, no matter how much it will improve profitability, efficiency or customer satisfaction, there will be people who will feel that they have something to lose as a result of the change, and they will resist the change at every opportunity.

Everybody understands in some esoteric way that change must occur. They just don’t want it to happen to them. They want someone else to have to change. They may already have plans and strategies that conflict with your change. They may have organizations that are dependent on the change not happening. (I am sure that there were buggy whip product or service or maintenance groups that were not happy with the change in corporate direction when the automobile came about). They in short have a vested interest in the status quo.

The point is that they will take the short sighted approach and fight change. The fact that the alternative would eventually be the emergence of a hatchet man on the situation does not seem to matter. That will be then and this is now.

In my rather arcane way this change resistant conflict has reminded me of an episode of the old television show Kung Fu that I saw as a kid. For those of you unfamiliar with the show, it had David Carradine as a Kung Fu master monk wandering around the old west looking for his brother. That was the extent of the show’s entire plot. There would be a requisite martial arts action sequence and there would also be a requisite eastern philosophy lesson in each episode. As a kid I loved it.

I am sure that it must have had some influence on me and my resulting studies of martial arts and readings of eastern philosophies. Although I have been talking about conflict and resistance to change, I am going to use one of the show’s eastern philosophy lessons here.

The lesson that I am going to refer to dealt with attackers and defenders. The following is a paraphrase of the lesson. Please read it with something of an Asian accent in your mind to get the full value and effect since that is the way the Kung Fu master sounded when he intoned it to the then monk – student David Carradine:

Attackers must win to be considered a success. Defenders need only survive to be considered a success.

The question that must first be answered when making sense of this quote is to understand if you are the attacker or the defender. The answer is that as a change agent you are a little of both. You are attacking the current status quo that you are wanting to change, and defending your proposed change plan. However when you look at the bigger picture, change agents are attacking and those that are resisting the change are defending.

With this in mind, and knowing that you must “win” the change related contention points in order to implement change, I will now coin what I humbly position as “Gobeli’s Fourth Law of Change Management”. It goes something like this:

Before engaging in a change management battle, get the data. Get all the data. The data will be your friend. It is much more difficult for people to argue with and resist numbers than it is to argue with and resist opinion.

Now a certain amount of attribution for this law needs to be given to Robert McNamara. He was one of the first automotive industry “whiz kids” and a member of President John F. Kennedy’s cabinet in the 1960’s. He was a great proponent of data acquisition and analysis. He was called a “whiz kid” because he seemed to be right quite often. This is probably because he had acquired the data and analyzed it better than everyone else at the time. Go figure.

Now if you have acquired the data and properly analyzed it, this will force those that are resisting your change to rely on something other than data for their resistance. They will call in other topics and non sequiturs as reasons for their resistance and defenses for their positions. These reasons and defenses can be quite vociferous and colorful, but data usually wins. They will resist the change with an appeal to the “greater good” argument for the company. They will counter with their own incremental improvement. They will talk about the non-monetary effects of the change.

In general there will be great keening, rending of clothes and gnashing of teeth.

As an aside, I once had a group try to argue that there were more hours in a man year in one country as opposed to another as one of the reasons to resist the pending change. Desperation when it comes to resisting change knows no limits.

In the final analysis, if you have followed these simple laws for effecting change you should be successful. The one note of caution to post here is to understand when you are dealing with a business that does not want to change. Sometimes despite what may be some of your best work, the decision to change will just not get made.

We all need to understand that we may not be acting with all the data that those who must make the final change decisions have. There can be other plans. There can be other strategies that you may not be party to. On the other hand, they may just like the way things are done now.

You need to takes these pieces of information into account when trying to be a change agent as opposed to a hatchet man. It is also a good idea to remember that doing nothing can eventually be an invitation for a visit by those that swing not a hatchet but an ax.

Conflict Management, Self Analysis, Style

Don’t Drive Angry

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For those of you that don’t know, I live in Texas. Texas is an interesting state and there are many things that I like about it. And there are a few that I am not so fond of, such as the apparent absence of any mountains or anything else that might pass for “terrain” within a five to six hour driving radius from where I live. It’s pretty flat here. Driving in Texas is invariably a very high speed endeavor and learning experience. Hence there are many signs along the sides of the various highways which simply state “Drive Friendly”.

It may be a reach but I got to thinking of the parallels that exist between Texas highways and today’s business climate. I think it is obvious that there are far more ups and downs in today’s business than there are on Texas’ highways, at least in the part of Texas that I live in. Now there is supposed to be some mythical portion of Texas that is referred to as the “hill country” where there are supposed to be some hills and there may be some people who claim to live there that might dispute this assertion.

I have flown and driven over a great deal of the state. While not “planer” flat in the mathematical sense, it is by and large pretty flat.

But I digress….

I think that some of the speed limits on Texas highways are some of the highest speed limits in the country, and even these are considered to be not much more than guidelines and suggestions as opposed to limits and laws by the Texas locals driving here. People move quickly here on the roads. This requires a great deal of attention and high speed interaction if you are to get anywhere safely.

Are you now starting to see the parallel between driving in Texas and working into today’s business environment?

What Texas has learned is that high speed interaction between people requires a certain amount of courtesy and respect between the related participants. There needs to be a certain adherence to the protocols associated with the various interactions (such as driving on the proper side of the road, remaining in your appropriate lane, dimming lights for oncoming traffic, and if you are going to swear at or call the other participants on the road derogatory names it is probably good form to keep your windows up so that they cannot hear you (this would be the automotive equivalent to the “mute” button on a conference call). Hand gestures of just about any kind, other than a polite, short, open handed wave are discouraged.

In short, this type of mutual respect and interaction on the Texas highways can be considered driving friendly.

What the Texas highway department has realized is that people who are not friendly on the Texas highways seem to have more issues and unpleasant interactions on the Texas highways than those that are friendly. They have learned that people who are not operating in a friendly manner in a high speed environment have problems interacting with other people in a high speed environment. Being tired, angry or any other non-friendly physical or emotional state could affect how they are perceived and have a detrimental effect on their performance and interactions.

Overly aggressive behavior, just as overly timid behavior had a tendency to cause issues on the roads and disrupt the smooth flow of traffic. The same was seen with a lack of respect for the needs and rights of the other drivers on the road. It was also noted that the boorish behavior of one could engender a similar behavior in others, again resulting in a limitation of the progress for all. Even those that are maintaining their proper decorum on the roads needed to be ever aware for those that were not in order to make sure that they were not inadvertently caught up in issues not of their own making.

Hence the multitude of signs dotting the (mostly flat) Texas highways reminding all participants to “Drive Friendly”.

Unfortunately, most business environments do not come with signs reminding the various participants to drive friendly.

By its very nature today’s high speed business environment requires us to openly and directly confront the various issues that we face on a daily basis. Many of these issues can be the result of actions, activities and behaviors of others on the same road. In short there are many times where we are asked, or in some instances forced to deal with issues that are not of our own doing. There are other times where we will be dealing with issues that are our own. This is business.

When there is an issue to be solved it doesn’t matter at that point in time who is responsible for creating that issue. Despite everyone’s urge and desire to first thing figure out who is to blame for it. What matters is who is going to be responsible for solving it. If someone is driving on the wrong side of the street or running red lights, it can create issues. If there is a traffic issue you worry about taking care of the issue and those affected by it first, then you look at who is at fault. Getting people back in the right lanes and making sure that they stop at future red lights should be the preventative solution goal as it is always more effective to avoid future issues than to have to expend the time and resources required to deal with them.

By the way, that red light thing in Texas can be tricky. I think the standard street light progression as perceived by Texans is: Green – Yellow – Dark Yellow – Really Dark Yellow – Almost Green Again – Should Have Been Green Again By the Time I got There – Green. It seems that the standard response to any of these perceived light colors or light color changes is to increase speed to enable that person get through the intersection as quickly as possible and thereby minimize the time available for any intersection issues. This approach does not always seem to work.

Business is about how effectively we can interact with others in the pursuit of our objectives and goals. Our human nature makes it difficult to separate how we are feeling at that time from how we are dealing with others. Anger and other emotions have a tendency to adversely affect our performance and decisions making abilities in the office, just as they do when we get behind the wheel of a car.

Business decisions and judgment, like the decisions and judgments while driving on the highway are best performed when we “Drive Friendly”. Perhaps we might do better if we added a few more “Drive Friendly” signs to the office environment, instead of just having them on the sides of the flat Texas highways.

Conflict Management, Employees, Leadership. Communication

Difficult Conversations

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When was the last time you held a difficult conversation? I am not talking about having an argument. Anybody can have an argument. Arguments are usually unproductive for the participants and rarely provide a beneficial value to the business. I am referring to having a civilized conversation with someone about a potentially unpleasant or difficult business topic. In the business world difficult or unpleasant conversations normally revolve around what you feel may be improper conduct, low performance or lack of goal attainment. These conversations can be positioned in a number of ways depending on who you are talking to and what the objective of the conversation is. Whether you are trying to provide guidelines as to what future performance or behaviors are acceptable and expected, informing someone that past performance or behaviors were not acceptable, or explaining to an executive that micro-management is unproductive and that they need to delegate more responsibility, a business leader must be prepared to deal with difficult performance or behavior issues, as well as being prepared to recognize and encourage the desirable ones.



I think that we would all prefer to avoid conflict or unpleasant situations. Unfortunately as business leaders we are responsible to make decisions that may be unpopular, enforce standards of performance and behavior, as well as make sure the consequences associated with behaviors and performance are enacted. If leaders fail to address issues directly with individuals and teams, or fail render appropriate consequences, they run the risk of allowing the entire business to become demoralized.




I would like to believe that positive reinforcement for desirable behaviors and outcomes would be sufficient incentive for all individuals and teams. I have however found that this is not necessarily the case in all situations. If there are positive reinforcements for good performance, there must also be difficult conversations associated with those factors and areas that need improvement. I have found a key here is to make sure to separate the behavior / conduct / performance in question from the person you are having the difficult conversation with. A negative reaction or review cannot be seen as a personal attack. Staying simple, direct and factual have always worked best for me in these situations.




On the other side of the coin I have also been associated with managers who not only did not shy away from difficult conversations, but could best be described as too aggressive and confrontational when it came to addressing a team member’s performance improvement requirements. If the team begins to feel that the negative feedback and consequences outweigh the positive reinforcements, they can again as a group begin to feel disenfranchised in the organization and their performance will also suffer.




For me difficult conversations seem to come in variations of two general approaches. The first approach is to focus on what sort of future performance state is acceptable. In this way the focus is on what is desirable going forward, whether it is a behavior, performance or goal. The person you are talking with may not have achieved, behaved or performed in the past, but you are making sure they know what is expected in the future. This approach seems to work best when there are definable or measurable standards that people must be held accountable to.




The second approach to difficult conversations is a little more tenuous, at least for me. This is the approach where you are focusing on what is unacceptable about the past state. I have had to use this approach when team members or colleagues have conducted themselves in manners that while not adversely affecting their business performance, could be seen as detrimental to the team. The idea here is that it is impossible to tell everyone what they must do for the team to operate at its highest levels. Sometimes you need to make sure that it is clear what they must not do. Instead of saying what is desirable in the future, you are saying what is undesirable about the past. 




Either way, it is important for the leader to quickly, clearly and professionally address the negative issues associated with the individual and team performance. I think we would all much prefer to only have to recognize good performance and to provide positive reinforcement. However, if we don’t have the difficult conversation when it is called for, we run the eventual risk of fewer and fewer opportunities to recognize good performance.

Alternatives, Conflict Management, Relationship

What Would You Do ? (Part 2)

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A little while ago a friend of mine called me and asked me the following question:

“A past business associate of mine is out looking for a job and has put me down as a reference. While I know times are hard and I do want to be supportive of him, he was not in my opinion a very good employee. On one hand I don’t want to give him a bad recommendation and potentially ruin his chance at a position, but on the other hand I do not want to give a report or recommendation that is not the truth. What should I do?”

This is a situation for our current times. With so much continued upheaval in the job market, I am sure that we all know multiple numbers of people who either are, or have been looking for new positions. I am also reasonably certain that although we many know multiple people who are searching for a new job, we might not be as willing or prepared to vouch for or recommend some of them as we may be for others.

So that brings up the question: What would you do if someone put you down as a reference, and you did not feel comfortable in providing a positive recommendation?

Do you respond to the person by saying that you would not feel comfortable being a reference for them? This would inevitably lead to having to explain why you would not want to provide the reference input. It might lead to hard feelings and someone who in the future might feel they have reason or position to cause you professional issues in the future. Who can truly say they know where they will be working, or who they will be reporting to in the future?

Do you accept and provide a less than glowing reference and potential derail an employment opportunity?

Do you accept and provide a less than fully truthful positive reference?

It’s at times like this that I remember what my dad has told me in the past: “If you can’t say something nice, don’t say anything at all.”

My recommendation to my friend was that if he did not want to directly respond “no” to the request, (which would probably be the proper response) then he should not to respond at all to either the request to be a reference or the request for reference input by whomever his name had been provided to. Let his inaccessibility and silence be his comment. Normally both the reference requestor and the reference input requesting entity should get the message.

People who have something positive to say about someone are normally accessible. Those who don’t have something good to say normally aren’t accessible.

I would say this course of action is the professional equivalent of the “pocket veto”. A pocket veto is a legislative maneuver in United States federal lawmaking that allows the President to indirectly veto a bill. If the president does not want to go on the record as being against a bill, he can hold it with no response until congress adjourns. His “no response” in effect kills the bill without having to take the active measure of vetoing it.

Given the situation that my friend outlined, this was my suggestion. What would you do?