Category Archives: Management

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.”

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.

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.”

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.”

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.

Careers and Gigs

A new year has started and that has got me thinking again. Always a dangerous pastime for me. I watched my dad go through his career. He was and still is a scientist. One of those guys who actually conceptualized and then created things. A PhD in physics. He worked at Bell Labs and got put on permanent loan to the United States federal government for research. Later in life he went on and did some other interesting stuff. He created some forecasting capabilities to predict price movements in the commodities markets. Most recently he started to lose some of his hearing, so he created a new type of hearing aid (which he and my mom sell), and from that technology he is working on the creation of true High-Fidelity ear-buds for listening to music.

That to me was, and still is an amazing career. He will be eighty-nine next month. He is still having fun. I hear it in his voice when I talk to him.

I bring this up because I believe for the most part, that the age of the career in business as we have known it, is just about over. Most people in the workforce, and certainly those that are just entering the workforce are probably not going to be able to enjoy what has in the past been described as a career. Like everything else, the definition, and expectation of a career is changing.

It used to be that a career was built on what you learned and then how you applied it to the next opportunity or situation. You learned, you internalized, you synthesized, and you applied it elsewhere. You built, and you grew. There was an investment in you and you were vested in them.

I’m going to change gears here a little bit and talk about music, one of my other advocations. I like to play in some of the Jazz bands located around here. It has been a long road to get there. I had to learn, practice and apply what I had learned in order to get to the capability to play with some of the musicians in the area. Even then I feel as though I am barely able to keep up. I enjoy that challenge.

However, there doesn’t seem to be a lot of demand for Jazz bands. There is some, but it is a decidedly niche type of audience. What this means is that the opportunities to play for people, particularly people who specifically like and appreciate Jazz are somewhat limited. The opportunity to be a “house band” or have steady employment as a Jazz musician is pretty limited.

The opportunities to play for an audience are usually referred to as “gigs”. defines “gig” as:

a single professional engagement, usually of short duration, as of jazz or rock musicians.

So, as a Jazz musician, you are usually always looking for the next opportunity to play, or gig. Even if you currently have one, you are looking for the next one because you know that in a reasonably short period your current gig will be over, and you will need to find the next one.

I think you can see where I am going with this. also defines “gig” in the following way:

any job, especially one of short or uncertain duration

I looked back over my career and realized that I have had the opportunity to work for no less than eight major corporations. Some of the moves and changes were of my own volition. Some of the changes were due to corporate mergers and acquisitions. Some were due to corporate downsizings and changes in strategic direction.

The point I make here is that my dad worked for basically one company (Bell Labs, even while on loan to the Federal Government) for the vast majority of his career. I have considered myself nominally stably employed for the majority of my career, but even so I have worked for eight companies. I think that going forward that corporate tenures are going to continue to become shorter and shorter, either through the individual’s own volition, or the company’s.

In short, it would seem to me that business employment is going to take on many of the characteristics associated with gigs. Opportunities are going to be shorter term as both the employee and the employer begin to expect and react to the gig environment. It does not appear that there will be the longer-term commitment or investment by either the company or the employee going forward.

In other words, don’t expect a career. It will be a job. And as time goes by, it will probably be best described as a gig. You sign up, work and then sign off.

A side benefit to the company with the new gig business structure will be the corporation’s ability to better control their labor costs. Due to the fluidity and replaceability of labor associated with the gig structure, annual, merit, seniority and cost of living raises will probably become things of the past. Instead of increasing someone’s pay to perform the same gig, it will be cheaper to just hire someone else to do the work.

In the past it was sometimes viewed as a sign of instability if there were too many different positions and companies on one’s resume. I think that will obviously change. In fact, I think in the future having multiple assignments, or gigs, with various companies will be seen as a strength. If you don’t have enough, varied assignments with different companies, employers will wonder why.

Employees should no longer look to or expect to matriculate upwards into management, in a single company. As the horizon continues to shorten, each gig will be viewed as just a step in an overall body of work. (Very similarly to each album is an increment to the musician’s bodies of work.) If you don’t change your direction and content often enough you will run the risk of being type-cast or worse, thought of as lacking in aggression or creativity.

As companies continue the drive toward being process driven, the gig will continue to be defined and refined into smaller and smaller, discrete functions. The only way to get broader experience will be to have multiple, different gigs. The best way to get that will be to go to different companies.

This could have a disillusioning effect on those that are coming into the workforce with expectations that may be unaligned with the current corporate directions and trends. Simon Sinek, the British-American author on business and organizations, had a very interesting video discussion where he addresses the millennial in the workplace topic.

In it he discusses how he believes that organizations are going to have to change and adapt to this new millennial force in the workforce. I think he is partially correct in that there is a mismatch between the millennial generation’s expectations and the direction that business is moving. As business moves to contractor / gig / low-cost labor model, the new employees are going to have less and less of an opportunity to have an effect on the corporation. This is the direction that companies appear to be moving, of their own volition. There is a drive for this inter-changeability.

Just as when a musician becomes unhappy with the band he may be in and leaves, the ability to replace them with another musician becomes paramount. So it will be in business. The process will define your gig. The way to move forward will be to have multiple gigs. The way to get multiple gigs will be to move from organization to organization.

As with any new organizational or employment structure, there will be ways for people to prosper. Just as good musicians are always in demand for bands and gigs, so will competent and capable employees be in demand. It will however change the dynamic between employees and employers in the extreme. Employees will be more and more apt to leave at any time. Employers will more and more structure employment around gig concepts and temporary assignments. When the assignment is up, it will be incumbent on the employee to find something else, either internally or externally to the company.

Just as all musicians, even those with a current gig, are always looking for the next gig, employees will also have to start preparing for their next gig, even when they have one. Times are changing. Cycle times are getting shorter, and so are the horizons that companies are willing to invest in research and development, new products, new markets and employees. The returns will need to be seen almost immediately or they will move on to something, or someone else quickly.

Just as a musician likes to have his next gig lined up even before he is done playing the current one, I think in the coming environment it will be almost a necessity to line up your next business gig before the one you are on is over. No one likes to be waiting on, or without a gig.

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.

Work and Effort

Wow, was it just me or did the last year and a fair chunk of the first month of this year just fly by? According to Einstein time is supposed to slow down the faster you go, but that doesn’t seem to be the case in business. It seems that the faster I try to go the faster time tries to go too. It’s interesting how in just about any race with time, time has a tendency to win. Go figure.

I think I may have touched on this topic in the past, but since we are at the relative start of a new year, I think I’ll spend a little more time on it. As we start out on a new year with new opportunities, new goals and new hope, we cannot forget that we must also reflect on the past year. This reflection is normally referred to as an annual review. Depending on how you did last year this reflection can either be a pleasant or unpleasant experience. I think most of mine for the most part have been reasonably pleasant experiences. I think that is because a learned early on the difference between work and effort.

I have mentioned in the past that I have an affinity for physics. This seems to serve me in good stead when my son brings home his high school physics assignments such as building a bridge out of paper or trying to construct a capability to disperse the force of a mass rolling down an incline plane. It’s kind of cool to be a go-to guy for your son. I just hope I got the equations right.

I also find that sometimes it relates directly to business as well. To a physicist work is done when a force that is applied to an object which moves that object. The work is calculated by multiplying the force by the amount of movement of an object (W = F x d).

In this example “Work” would equate to the goal that was set for the individual or business at the beginning of the year, “Force” is the equivalent effort that someone expends in the pursuit of that goal and “d”, the movement is the equivalent of an almost unknown item which I’ll call an efficiency or “success rate”. So for business the equation for work would be Work = Effort x Success Rate, or W = E x SR.

What this means is that the effort expended and the achievement of the goal may or may not be positively linked. This would explain why some goals would seem to be easily attained with apparently little effort and some goals may be unobtainable regardless of the amount of effort expended.

This is something of a roundabout way of saying that just because you worked hard last year; it doesn’t mean you are entitled to a good year end review.

Everybody works hard these days. The exception might be “Wally” in the Dilbert comic strip (by Scott Adams), but by and large everyone puts forth the effort. Even Wally puts forth an effort in his quest to avoid work. Effort is good, but it is at this point table stakes.

“Work” as it is defined in the annual review is the measurement of the achievement that they effort generated. If you are in sales and you have a quota that means you have a numerical target, such as orders. You can put forth a great deal of effort but unless you actually get some orders, according to your compensation plan (and probably your sales manager) you didn’t really accomplish anything. So by these measurement criteria you in fact did no work.

Catch the difference here? Lots of effort does not mean you did any work.

I purposely try to create primarily quantitative objectives and goals for my teams. There will always be a certain amount of qualitative acknowledgement associated with them, but for the most part I want them to be numerical, and measurable in nature. By doing this you remove a great deal of the effort versus work type of discussion.

In business we keep score via the financial numbers. If you can’t create objectives and goals for any of the business functions that you may have, that somehow relate to or distill down to these types of financial numbers, then I might suggest that a review of the necessity of the function being measured might be in order. Again to simplify things: If you can’t create a viable metric for a function that relates to the achievement of one of the financial goals, you had better look at the viability of the function, goal and metric.

Numbers are finite. We all seemed to get a working knowledge of numbers dating back to approximately the second grade. We all know when one number is either larger or smaller than another number. It is usually not open to much interpretation. This concept usually leads to readily acknowledgeable annual reviews, regardless of the performance level.

Too many times we create “soft” goals that are somewhat open to management as well as staff interpretation. Any time there is an open interpretation of an objective you can be reasonably assured that there will be different interpretations of the achievement of the objective. This is the essence of the effort versus work example.

Non-quantifiable goals invite an effort based annual review. Quantifiable goals invite a work based review. Effort based reviews can lead to a basic inequality of reviews across an entire team. Instead of measuring progress and achievement you are instead measuring activity. Activity and progress are as different as effort and work. It is as different as splashing around in a pool (activity), and actually swimming across it (progress).

We all know that is possible to appear busy without actually accomplishing anything.

In looking back at the last year, and at last year’s goals it may be difficult to implement a quantifiable measurement scale, if the goals were not originally established with such a scale in mind. However, the other aspect of the early part of the year is that in addition to reviewing last year’s performance, it is the time and opportunity to set the goals and objectives for the coming year.

The beginning of the year provides leaders with the opportunity to modify the goals and objectives as well as the measurement scales and criteria so that they can be quantitatively based. By doing so the leader enables the team to focus on progress and achievement as opposed to activity, and work as opposed to effort. It enables the team to understand and make the distinction associated with knowing if they are doing something that will ultimately contribute to achieving an objective or if they are doing something that just keeps them busy.

The key point here is that when it comes time to review this year’s performance at the beginning of next year it would be to the benefit of all members of the team to have defined quantifiably goals, and a known scale by which they will be measured. It makes this time of the year a little easier for everyone involved.

Lead, Change or Get Run Over

Normally when I start off on an article I have a pretty good idea of the topic that I want to cover. Call me old school but this antiquated idea of writing coherently about a single topic appeals to me. That will not be the case this time. I have been thinking about change lately and I decided that I need to step outside of my comfort zone and practice a little of what I have here to fore been preaching. Hang on; it could be something of a bumpy ride, at least for me.

Since I have just mentioned change, I think we will go there first. I am going to propose what I humbly call “Gobeli’s Axiom of Change”. It goes something along the lines of the following:

In order to change, you must do something different.

There are so many wonderful quotes about change that are available. I have used many of them in the past. I am particularly fond of the quotes attributed to Albert Einstein regarding change. He seemed like a pretty smart guy to me but I won’t use any of his quotes again here. If you want to read them, go Google “Einstein quotes change” and see what you get. There are not only a bunch of quotes from Einstein; there are a bunch of sites that have a bunch of quotes from Einstein.

However it has been my experience in business that change is not about quotes. It appears to actually be some sort of arcane concept that business people pay little more than lip service to. They are more apt to put up posters encouraging change and quote Einstein when it comes to change, than actually changing anything.

The idea of change and the quotes surrounding change make it seem like a lustrous concept that is neat and clean and simple. It’s positioned as if it is your patriotic duty in business to change. Change however is not clean and simple. It takes effort. It involves risk. It is invariably messy. That is just the way change works. This is because you are usually changing from something you know, to something you don’t know, yet.

It is precisely for these reasons that many managers will talk glowingly about the need for change, but will never ever do anything different. Doing something different would mean that there would have to actually be some change involved and that would subject them to the effort, mess and risks noted above. Therefore there is usually a significant amount of discussion regarding change and the need for change, but due to the inherent reluctance to change anything, very few things are ever done any different.

When it comes to change, remember what Einstein said:

“Insanity is doing the same thing, over and over again, but expecting different results.”

Based on this and other topics that I have covered in the past, one could infer that leading change, or leading anything in business for that matter involves more effort, and more risks than following someone else who may be doing the leading. I think it is pretty safe to say that is the case. In the past managing has been much easier and less stressful than leading.

The shuffling of papers and paying lip service to all the change initiatives used to be a safer, lower profile approach to business. There are many people who have happily gone through their careers on this path.

If that is truly the case, it brings up the question:

Why would anyone want to lead?

The simple answer to this question is:

Because things have changed.

It used to be that people who took jobs and worked reasonably hard were pretty much assured that they probably had a job for the rest of their lives. They had reasonable job security and could look forward to a pension when they retired.

As Dorothy said to Toto in the Wizard of Oz:

“I don’t think we’re in Kansas anymore.”

When was the last time you heard of someone having job security? How about staying at the same company for an extended period of time? Lastly, when was the last time you heard of anyone talking about a pension when not referring to a corporate or municipal bankruptcy?
I don’t think this is a case of Dorothy and Toto leaving Kansas. It is more like Kansas slipping away out from under them when they weren’t paying full attention to the landscape.

With all that being said, it still doesn’t fully answer the question of why anyone would want to lead. This reminds me of a college survey that I once read a long, long time ago in a galaxy far, far away. The survey asked the question:

Which is a bigger threat to society: Ignorance or apathy?

The general consensus at that time was that no one knew, and no one cared.

I think the parallel here is that leaders do know and do care about what the threats to business are, and what needs to be done to avoid them. We have all heard the more than trite saying that the only constant in business today is change. I do not necessarily think that is true, or we would all be experiencing more change and it would be much easier to change than it apparently is. If change is truly a constant we seem to have far too many people constantly fighting against change.

I would not focus on the change function as a topic unto itself, but rather as a result of instability. When business seemed to be stable (and pensions were available) there was not much in the way of change. Now even this was not entirely true. Technology continued to change, but the way business and businesses worked remained reasonably constant. Hence the ability for the risk adverse follower to still make out a reasonable career existed.

The only thing stable about today’s business paradigm (I actually hate that word, but it does seem to fit well in this context) is the instability of business. I worked for a company that was once recognized as a world leader in their market with more than thirty billion dollars in annual revenues, and less than seven years later the company was bankrupt and gone from the market landscape.

In a business world where apparently so many do not know what to do, or are unwilling to venture forth with a plan, it would seem to me that the best way to go now is to lead. When it turns out that everyone is taking the safe route and everyone is following everyone else, then everyone ends up at risk. Inactivity or failure to act now presents a bigger risk than taking action, even the wrong action.

Leaders understand the risks involved with taking a stand or implementing change, and do it anyway. They don’t take unnecessary risks. They understand that the risks associated with today’s business environment are multiplied if they do not take action. They see that what was once a stable landscape is no longer stable. They understand that waiting for someone to tell them to take action is riskier than identifying the action that needs to be taken and then taking it.

Despite my affinity for quotes from Albert Einstein, I’ll close with a quote from someone else. John Cage was a renowned musician and composer. He said:

“I can’t understand why people are frightened of new ideas. I’m frightened of the old ones.”

In an ever more unstable business environment leave it to a musician to capture the essence of the new structure. Go figure.

Arguing and Negotiating

When two people are have a discussion with opposing points of view it is usually called an argument. Webster’s Dictionary (an all time favorite of mine) defines an argument as: “An argument usually arises from a disagreement between two persons, each of whom advances facts supporting his or her own point of view.” This is a great description for what goes on between two friends when they are arguing if the beer does in fact taste great or is in fact less filling. I don’t drink that particular beer so it doesn’t matter to me.

However, if these two individuals are no longer representing themselves in the beer argument, but are now representing their respective different companies with opposing points of view, they are no longer arguing. They are negotiating. Going back to Webster’s we find the following definition for a negotiation: “a discussion set up or intended to produce a settlement or agreement”. To me these two descriptions appear to be the two sides of the same coin. There are many reasons to have an agreement, one of which is to avoid future disagreements. Once there is a disagreement you definitely want to have a negotiation to resolve it as an argument probably won’t provide a solution.

Now we are getting somewhere. When two people disagree, they have a discussion called an argument. When two companies disagree, they send people to have a discussion called a negotiation.

One of the key points required for both arguing and negotiating is to clearly establish what each participant’s starting positions are. Who is claiming what, and who is denying what? Who says “yes” and who says “no”. Who says “up” and who says “down”. Who thinks they should be paid a lot of money and who thinks they shouldn’t have to pay any money at all. That sort of thing. This is a very important point in the process.

If the two parties find that their initial positions are similar, or even the same, then it will be difficult to have a meaningful argument, and the negotiation will consist mainly of nodding heads and the shaking of hands. This type of premature negotiation has a tendency to leave both parties vaguely unfulfilled from the negotiation process.

The next part of the process should be the justification and validation of the respective initial positions. I think this is the key part to many arguments and is critical to any negotiation, or argument for that matter. The respective positions on the topic in question need to be defined and justified. Why does each participant believe that they are correct, and why do they believe the other party is not?

In a recent discussion with my wife (it was a discussion not an argument as she does not allow me to argue with her) she put forth the position that “I should have fed the dogs”. I never feed the dogs unless I am specifically asked to feed the dogs because she always feeds the dogs and if I also fed them we would very quickly have obese Chihuahuas. Hence my position was that I do not feed the dogs unless asked to feed them. We therefore started out with very well defined positions for the ensuing discussion with our differing points of view (argument).

As you might guess this was a discussion that I was not going to win.

Fast forwarding to the end of the discussion, it was decided (by her) that either I was asked to feed the dogs and forgot, or I was asked to feed the dogs and did not hear the request. The fact that I was at work in my office in another building in another part of town when this request was made was inadmissible evidence. So I went and fed the dogs.

In business, depending on who has made the claim or demand, there may be a similar tendency to accept the same type of behavior and response when it comes to requesting positional justification prior to a negotiation. Why does on party feel that they are due a large sum of money from the other party? What specifically justifies the claim? What specifically validates the amount? In too many instances businesses seem to rush to try and deal directly with the claim, regardless how potentially outrageous it may be, before they understand the basis for the claim itself.

Please do not misunderstand me. For the most part most businesses perform and act in a reasonably appropriate and logical manner. They usually only make claims requiring a negotiation when there is a justifiable cause for such behavior. I think that part of the reason for this general behavior is that businesses are usually made up of honorable and logical people. Those types of people are prone to logical and honorable behavior.

I also think that logical people fully expect to have to be able to justify and defend any claim that they may make. If in general the first response to any claim being made is to ask for a justification of why the claim was made, then there is a certain amount of preparatory work that should be expected.

When it comes to customers, sometimes this check and balance claim expectation validation can break down. In today’s hyper-competitive world, where the customer is always right and vendors strive to be identified as “partners” instead of just “vendors”, customer service is sometimes the only differentiating factor available in the market. In this new commercial world where the speed with which you respond to a customer request or demand can be the difference between keeping that customer and losing them to the more responsive competition, jumping when the customer says jump is rapidly becoming the expectation.

In this type of environment, where “partners” are working together to achieve a mutually beneficial solution (It’s true. That’s what it now says on every sales presentation I have seen, and they wouldn’t be exaggerating, would they?) it is sometimes easy to forget to ask why partners are making any specific demand, or making the claim that they are making.

Vendors and customers ask these sorts of questions of each other. Just as good fences make for good neighbors; these good questions make for good contracts and relationships. Sometimes partners can forget or neglect to ask these questions. Those exclusions can eventually make for some significantly misplaced expectations, expenditures and possible difficulties in the partnership relationship when the necessary reset on the expected demand response occurs.

Good customer service and customer relationships require vendors to not only understand what is wanted, but why it is expected. Asking for this justification of demands and claims is not the sign of a weak partnership. It is more the sign of an engaged relationship. To blindly respond to any customer generated stimulus will create an unbalanced and unsustainable situation. In this event the desire for a partnership will devolve into more of a master and servant arrangement where one party makes demands and the other fulfills them.

Asking for the justification of expectations, demands and claims is probably the best way to validate what the other party actual desires. Are they looking for a problem to be rectified, or is it something else? Are they testing your responsiveness, or do they have a genuine need? Is there something that they actually want, or are they just seeing what they can get? It is not the sign of distrust in the partnership. It is more the sign of parity in the relationship.

Or as in the case with my wife, it was probably just my turn to feed the dogs.


I have spent most of my time writing about business and leadership and work. I going to veer off into a little bit of a different area here and write about what is supposed to be the antithesis of business and work, and that is vacations. Vacations are part of your total compensation package. Vacations are supposed to be the time that the company pays you not to work, to recharge your batteries so to speak, to get a tan. Vacations are something that we seem never to have enough available time to properly take. Vacations are an interesting concept in that they truly seem to vary in definition and application from company to company and definitely from culture to culture.

For example, I don’t think I can remember taking a vacation that lasted longer than a week. I think part of this stems from the idea that we all like to view ourselves as far too important to the ongoing operation of the business to be gone from our roles for periods of time extending beyond this. Equally I think there is a fear that if we do take a vacation that extends beyond a week, we may have it proven to each of us that we are in fact not so crucial to the efficient operation of the business and that they can get along just as well and possibly even better without us. There is also the possibility that if some people are gone from their job for more than a week that they will need to be retrained on how to do their work when they return.

The other issue associated with taking an extended (greater than a week long vacation) is the inability of the business to leave you alone for greater than a week. I have been on two-day vacations where I have gotten calls (usually more than one) from the office. It is interesting to note that these calls while on vacation have seldom originated from my team but rather invariably come from management. It seems that here management believes that if they are not on vacation, then no one should be on vacation.

The exception to this no extended vacation trend at least in the United States seems to occur toward the end of the year when many in business start reviewing how many vacation days they have, that they are going to lose if they do not start taking vacation. In the past many companies allowed their employees to carry over their unused vacation days into subsequent years if they were either unable or decided not to take all their vacation. This resulted in many people having an inordinate amount of vacation available to them, and created a significant exposure to the businesses. I think at least part of this practice came from the idea that when businesses had layoffs that they had to pay the severed employee for their unused vacation. If you had saved up a bunch of unused vacation days it was like guaranteeing yourself extra severance pay, should you need it.

Businesses countered this “banking” of vacation days by disallowing the carrying over of unused vacation days between years. The desired result was the reduction of the vacation exposure to companies and the encouragement of employees to adopt the attitude of either “use it or lose it” when it came to their vacation.

This seemed to work, but only up to a point. After so many years of not taking vacations a culture had almost grown up around the concept of not taking vacations. This approach to not taking vacations didn’t change, and in some instances and locations it still hasn’t changed. The result is that as the end of the year approaches many employees find themselves with several days of vacation that they still must take or lose.

People will not accept the loss of vacation days. This event is seen by the employees as comparable to giving the company free work days as the company no longer compensates them for, nor allows them to save the unused vacation days for future use. This invariably leads to people taking extra days of vacation around the end of the year holiday season in an effort to use up their vacation.

Fortunately most people take their business phone with them during these vacation periods just in case either their team or management need to talk with them. It seems some habits die hard.

It is hard to believe that taking a vacation has become such an effort or an afterthought when it seems to be such a prized portion of each employee’s compensation package. What was once seen as a time to relax and recharge is now yet another source of stress associated with making sure that all vacation days available are in fact taken.

This does not seem to be either the situation or such an issue in other countries and cultures around the world.

In Europe time off is not referred to as vacation. It is called holiday. A slightly different nomenclature than what we are used to in North America but still functionally useful. For those of you not familiar with this term, there is a descriptive term for European vacations that you may be a little more familiar with.

It is called “August”.

It seems that almost everyone in Europe goes on holiday (vacation) in August. It’s true. If you don’t believe me, just try and arrange a business meeting or complete a business task there during August. In Europe when they go on holiday, they are gone. And unlike here it does not seem quite as acceptable to try and contact them when they are on holiday.

This is actually not a bad idea. If everyone knows that everyone else is going to be out of the office during a specific time that becomes the ideal time for them to be out of the office as well. Since everyone is on holiday at the same time no one is left in the office to be concerned about any potential lost productivity.

There are similar types of vacation or holiday times in countries around the world. In Brazil there is Carnival, which for the longest time I thought was Portuguese for “February”. In reality it is approximately a week long holiday associated with the Easter – Lent season. However it appears that it takes approximately a week to prepare for, and if properly enjoyed, may take as much as an additional week to recover from. This period could in fact be considered a holiday.

In Asia the Chinese New Year is another extended holiday season. It is usually a multi-day celebration that begins on the first day of the month (usually February) and extends approximately 15 days to the first new moon. Again an extended holiday period that usually serves as a basis point for the taking of vacation. Have you ever tried to get much done during the Chinese New Year in Asia?

The culture seems to be changing here in that people are now encouraged to take their vacation. What it appears that we need is some sort of cultural or specific “holiday season” or event (other than the Thanksgiving and Christmas seasons) to provide an impetus for people to take their vacation. And while management may have succeeded in getting people to take their vacations, management must now take the lead in demonstrating and understanding that when people are on vacation that they should not be called with issues regarding work.

Bon Voyage.

High Maintenance Managers

We all work for someone. Sometimes we work for people that are leaders and create an environment where we can grow and flourish. Sometimes we work for managers that seem to feel it is their responsibility to keep track of our every activity. These are the managers that for whatever reason seem to consider themselves the center of the group’s processes and the core of its activities. They appear to think of each member of the team as to be some sort of appendage or digit to be controlled or told what to do. These managers want to position themselves as the control point and decision making hub of their organization. These are the types of managers that I refer to as High Maintenance Managers.

High maintenance managers can present a significant issue to responsible and capable leaders. In addition to managing downward into their team, high maintenance managers also seem to focus on reporting upwards into their management. Most leaders understand that there is a trade-off between how much time and effort is spent getting work done and how much time and effort is spent reporting how much work is getting done. The obvious point here is that the more time that is spent reporting, the less time that is spent actually doing. Most managers do not see this trade-off as an opportunity cost / productivity issue. High maintenance managers seem to thrive in the reporting arena to the point of almost seeming to place a higher priority on the reporting of the work than the actual work accomplished.

I once heard it said that “Those who can’t do, teach.” This always intrigued me. Being someone who enjoys and appreciates golf, I looked at some of the professional golfers and their beautiful rhythmic swings for inspiration. They all seem to have swing coaches of one type or another. I always wondered if these swing coaches were capable of creating these great swings in others, why they couldn’t create one for themselves and start winning. It would seem to indicate that there is more to golf than just the physical / mechanical aspect of being able to swing a golf club correctly. Hence, they teach.

I would propose that the business corollary to “Those who can’t do, teach” is “Those who can’t do, report.” It is my experience that high maintenance managers love reports. They love to get them. They love to give them. They want reports from their team members weekly, monthly, ad hoc, you name it. They want project reports. They want progress reports. They want to have meetings and conference calls to discuss their reports. They seem to want to know what everyone is doing, all the time.

They are almost information junkies when it comes to their areas of responsibility. They can’t seem to ever know enough about what is going on. This might be an acceptable situation if the information that is gathered is used for the purpose of directing or affecting the performance of the business. More often than not it is not used this way. High maintenance managers seem to try and gather all the information that is available for the purpose of creating more reports.

High maintenance managers seem to live for the opportunity to present reports on their own and their teams activities. It is not uncommon for these managers to have multiple drafts and even multiple dry runs on presentations and reports that they will be presenting to their reporting structures. They are experts at crafting an activity report (or just about any other type of report) that not only conveys what has been done, but also does it in such a way as to amaze and astound their management with the images, prose and flow of the presentation. It seems how things are said and done are just as important, if not more so than what was actually accomplished.

Contrary to what you might expect it has been my experience that high maintenance managers do not want to make all decisions. They do however want to be involved in all decisions. They will want to understand how the decision was arrived at and the logic that was used. They will ask detailed questions and probe the arcane aspects associated with the decision. There were always a great many “your decision” questions, and they were usually phrased as “I would like to know…” While the high maintenance manager may not make all of the decisions, through this type of process they do in effect control the decision making process.

It might sound as though I have found high maintenance managers to be untrusting of their teams. In all honesty, I really do not believe this to be the case. I think it stems more from the idea that these types of managers are driven by the perception that since they are nominally in charge that they must be in the middle of all that is going on. They must be aware of, understand and try to control all that is going on as it pertains to their realms.

I am not advocating or even saying that leaders are not or should not be aware of their team’s activities. I am saying that good leaders need to provide space for their team members to operate in. Team members should not be fully autonomous, but they do need to have some sense of self direction if they are to grow into the next generation of leaders. The leaders that I have been associated with were good at providing objectives and guidelines. The managers that I have worked for usually provided tasks and instructions.

I have spent a little time describing some of the traits and attributes of high maintenance managers. I am sure there are more. There are other items such as rigorous justifications associated with approval processes. Another favorite of mine is the repeated forwarding, with comments, of just about every email and piece of correspondence that they receive. It seems that since high maintenance managers crave information, they assume everyone else does too.

So how do you deal with a high maintenance manager if you happen to find yourself in one of their group’s? Their demand for awareness and involvement will not go away. Refusing or ignoring their involvement usually only increases their demands to be involved. And as my dad was so fond of telling me, he might not always be right but he (like the high maintenance manager) was always boss.

I have found that there was never any way to satiate the demands of a high maintenance manager, but that there were usually ways to contain them. One of my favorite ways was what I referred to as the preemptive information strike. Since they were information junkies, I found that if I would provide an information set to them prior to them asking for it, I could invariably provide them a less intensive information set and avoid the detailed review.

I also found that I could work to create an information format or structure that again would be less time consuming and information intensive. I would look to try and create a “bulletized” information / feedback format that would enable me to provide the desired information while at the same time creating a jointly agreeable structure that would reduce my reporting time.

I am sure there are other methods for dealing with high maintenance managers. I have only highlighted a couple of tactics that seemed to work for me. High maintenance managers by their nature are demanding of their team members’ time. This is a trait that is difficult to change. Refusing their information and report requests usually only succeeds in having the requests changed to demands. And the demands usually become for ever more intensive detailed information.

High maintenance managers are a fact of business. For whatever reason they have adopted an informational management approach that they believe works for them. Team members will need to understand this and be flexible enough to adapt to this management style. It is difficult if not impossible to get managers of this type to change, but it is possible to find ways of satisfying their demands while at the same time limiting their informational intrusion into the actual conduct of the business. While that may not be the optimal solution it is an effective way of dealing with high maintenance managers, and still accomplishing your goals.

The Color of Information

What did we do before we had color printers? I can remember when color printers first started to make their appearances in the office. They were big. They were expensive. They were only supposed to be used for specific documents. They were aggressively guarded by the administrative assistants that had responsibility for them and they couldn’t be used without special permission. That is obviously no longer the case. Color printer sizes and prices have come down to the point where the old black and white only printers are now a thing of the past. Color is so ubiquitous on both our screens and our printing that we appear to have become fully dependent on color to convey our information. While I do utilize color in my documents and presentations, I can’t help but feel that many managers may have now become so dependent on the color code of information that they may no longer feel the requirement to understand the actual underlying values of the information.

It seems that what was once provided to management as data is now provided as colors. Instead of quantifying a performance issue, we are now providing a “traffic light” condition sound bite. It is now condition “red” for issues and adverse situations, condition “yellow” for potential problems, and situations where there are no imminent threats – condition “green”. I understand the need to distill down information to make it more manageable, but I don’t think you can properly run a business based on the colors of a traffic light. I am concerned that we are now into the same thirteen second sound bite mentality for managing our businesses as we are in when we watch the 5:00 news on television.

This “just give me the high points” three-color approach to management has a tendency to indicate to the team that the desire of management is not to get too deeply engaged in the issues of the business. It appears that management is becoming interested only in the performance of the business, not in how the business is running. If the team feels that management doesn’t want to be too deeply engaged in the business, it will not be long before that sentiment is reflected throughout the team as well.

Some of my first experiences in management were working for an executive who was extremely knowledgeable about the businesses that he had responsibility for. As such, he demanded that his management team know at least as much, if not more about the business than he did, if they were to be value add to both the business and management chain. As such these businesses were relatively well run and profitable. An in depth understanding of the issues, data, finances and how the business worked was required in order to maintain the high level of performance of the business.

With a “three-color” approach to management, leaders are communicating that they in fact do not want to know as much about the business as the management team and all that they are really interested in is “stop”, “go” and “caution” status of the business. Where in the past it was required that the management team have a greater in depth knowledge of the business than the knowledgeable leadership team to provide value add to the business, the three-color management approach now calls into question the value add of an unknowledgeable leadership to the business.

It is a long leap from the proliferation of color printers and presentations to indicting business leadership for seemingly removing themselves from the detail associated with the running a business and its management process. I have stated in the past that metrics, be it tabulated data or color codes, only point you in the direction of the issues and more importantly point you in the direction of the potential solutions. Three-color metrics would seem to only point you at the issue without the value add of any direction toward a potential solution. As an example, with all the other inputs that are required to drive a car, a successful trip anywhere would be doubtful if traffic lights were your only source of information.

I guess I am still of the old school that good business leadership requires a leader that is well versed and knowledgeable about the business they are leading. A good leader needs to understand not only the performance of the business, but how the business works. To extend the traffic light – automobile analogy a little further, a leader may not need to know how the car works in order to drive it, but a leader will definitely need to know how it works if they are ever going to be called on to fix it.

Follow the Money

Organizations today come in many forms and structures. They can be created along geographic lines, product lines, markets and even customers. In most major corporations today there are usually aspects of each of these organizational structures present. This has given rise to the organizational “Matrix”. While this structure probably was not the basis for the popular movie trilogy, it can be comparably confusing.

The drives to specialize and push repetitive labor intensive functions into low cost labor environments and to take advantage of low cost manufacturing while streamlining supply chain operations have resulted in an organization structure where ownership for the business and its associated processes is fragmented, while the responsibility for the overall solution usually remains centrally vested. Despite all of this diversification and fragmentation of the business structure, there is one thread running through the business that enables the business leader to draw it all together and drive the solution.

Follow the money.

No organization within the corporation does anything for free. They have people, equipment and overhead that they need to pay for. The way they sustain and pay for these items is to provide or “sell” their particular service to you as the business owner. In this corporate structure, certain specific functions may not report to the business unit (Matrix) but they are funded by it.

Over time it is possible for these business funded functional groups to assume and believe that they are in fact entitled to the ongoing funding of the business group. They normally have multiple businesses providing funding to them in addition to delivering on their own organizational commitments. It is possible for them to lose their focus and begin to deliver what they chose and prioritize to provide, not what the business has chosen and required of them.

This should not the case.

As the business owner it is your responsibility to require performance from all aspects of the business, whether they are internal or external to the business or corporation. And just as is the case with external suppliers, the way this is accomplished with Matrix reporting internal providers is with money. Setting clear expectations of deliverables, requiring year over year efficiencies and business improvements, and yes in some instances refusing to pay (fund) unacceptable performance are some of the tools that can be used to assure desired performance of the Matrix group.

In today’s Matrix based organizational environment the business owner may not and probably does not own all of the aspects and functions that go into running the business, but more often than not they still own the checkbook. And while they may not have direct reporting control over the prioritization and performance of those Matrix organizations, no group (internal or external) is “entitled” to their funding. Today’s business owner needs to understand and remember that they can no longer simply direct other organizations on what needs to be done. They also need to understand that they are not at the mercy of internal organizations and must pay whatever is required by the functional group. They can and must remind the Matrix organizations that if the desired work is not performed, that the business will in return stop paying (for) them, just as they would any other under-performing supplier. The health and performance of the business should always more important than any of the functions that supply and support it.