Brother, Can You Spare $1.84?

Unemployment figure is out this morning – 8.1% – triggering memories of conversations with people who lived through the Great Depression.  One of my favorites was from a couple who had just been married when the bottom fell out in 1929.  Every morning she sent him off to look for work with his daily rations  – two cigarettes (this was before the Surgeon General’s report, of course) and a dime for coffee.  They said people really did ask, can you spare a dime.  And although a dime meant something, there was plenty of sharing going around.

Fast calculation using 2007 averages: $1.38 for the coffee and .23 per smoke.

Brother, can you spare $1.84?  Just doesn’t have the same feel.  I wonder how much sharing will happen this round.

Arrogance, Greediness, Fear – Oh My!

If the economy isn’t improving, neither is the stuff of the headlines.  Downsizings are bad enough: some can’t be helped and some are probably long overdue if the company is to achieve adequate productivity.  It’s the ones where the golden parachutes are opening and nothing’s trickling down the food chain that sadden me.  And of course there’s always Bernie Madoff.  And Illinois Gov. Rod Blagojevich.  And the suicides – German billionaire speculator Adolf Merckle  the latest. Gordon Gekko must be chortling in his celluloid grave.

Arrogance, greediness, fear – oh my!  The lions and tigers and bears that threaten to bring our world to collapse are on the prowl.

They are a cycle because they are cut of the same cloth: the greedy denial of reality, the arrogant illusion that you are the only one of importance in the world.  You can’t have the infantile arrogance and greediness without the fear that leads to worse and worse decisions.  And the evidence says it’s rampant in what e think of as our leaders.

Arrogance, greediness, fear: it’s always a down cycle when these rule.  The things that go bump in the night reside inside.  Time to out them.

Open Letter to President-elect Obama

Dear President-elect Obama,

Welcome to the ranks of Chief Executives, those of us, large and small, at whom the buck stops. I voted for you, not just because I agree with so many of your values but because you have a compelling Vision.  And that’s what it’s going to take to get this enterprise called the USA back on track. Like any other CEO, I’m also here to offer my advice, based not only on my own experience but that of those CEOs whose companies we’ve worked with.  I’ll keep it short and sweet, just the big three.

1. Keep preaching the Vision.  People are starved for inspiration – they’ve been operating at a deficit for years.
2. Keep an equal concern with the inside of your company and the outside – what you probably think of as foreign and domestic relations.  This is one world but don’t be like the shoemaker whose kids have bare feet.
3. Keep showing your humility.  America doesn’t want a king – it never has.  That’s why we don’t really like dynasties, even though we occasionally elect them.  Be human and let us all learn to trust you.

The economy will continue to have its ups and downs (though it will recover quicker, imho, if you support grassroots creative entrepreneurship over bailing out the over-privileged.)  There will be conflicts and disputes and civil wars in places near and far where people are angry and have no hope of a better life.  And there will be injustices, big and small, because since that apple tree in the Garden of Eden there have always been temptations and people willing to trade away their integrity for them.  You will have no control over these things so just do your best and try not to succumb to the illusions of power. Focus on what you can do to make this country a Best Place to Work, a Best Place to Live and a Best Place to Be.  Support what gives us opportunity, not only for prosperity of the pocketbook but also of the soul.  Help us be the change we want to make.

The Bailout – Enron End Run Revisited

I was going to write something on the bailout but when I started thinking about it, I realized I’d already written what I wanted to say.  This was originally published in 2002.  The situation is just more of the same (snafu, for the literary) so I’m going to recycle it here.  My submission was entitled Enron End Run.

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The media update us hourly on the Enron situation about courts and lawyers, documents and shredders. They ask a lot of quality journalist questions, but I have one. How did Enron make such bad decisions? After all, they could afford the best executives money (stock options, deferred income, perks, golden parachutes, etc.) could buy.

Rarely are decisions made alone. Even when the guy (and in the US, it’s usually a guy) in charge wants something, there’s usually a team that needs to agree to it.That’s called getting “buy-in,” a rather unfortunate term considering the price that Enron execs will likely pay at some time in the future. Within a series of decisions, you’ll find a series of interactions of the people who make them, of opportunities for correcting a runner who’s straying out of bounds.

Any executive team decision is just one stop on their problem-solving mission. But when you analyze the series of their decisions, you see patterns that repeat, patterns woven of the interactions of the key players on the team. And at Enron, as at so many corporations, that team was missing a few key players.

A good executive team is diverse. Not in the sense of political correctness, necessarily, but in the sense of recognizing the value of differences in people’s styles, what team theory refers to as their Roles, as opposed to the things they do on a day-to-day basis, their tasks. One simple way in which diversity serves a team is that of the ten team roles, there are three that serve to contain action, to stop and think of the consequences, to converge on the true path of the team’s mission. In other words, getting things done in a business environment requires power and control. Enron had plenty of power. What they lacked was effective control.

I’m not much of a football fan, but I have a good friend who explains what I want to know in language I can relate to. Today I asked him about end runs. Are they common, I asked, wanting to know if they are as performed as often on the field as apparently they are off the field. Enron is not the first, nor will it be the last, playing the game this way. He explained that there are maybe six or so end runs in a season and that many teams don’t even do one because once you’ve done one, you’ve bent the rules enough to cause others to wonder if you can ever straighten them out again. I was intrigued when he told me that sometimes it is only two or three people on the team who know that they will be attempting an end run. I wonder how they make this decision. Is it in the passion of needing to win at all costs or is it thought out? Are the pros and cons given voice? And does anyone know how many team members were involved in the decision and how many just went along with it because it was a winning play?

Regulation, de-regulation, re-regulation: none of it helps when the problem lies in management. FASB, GAAP, IRS: all just letters, as in “the letter of the law,” worthless without the spirit and intent of the law. The new rules to come will further regulate “balance sheet partnerships” but will do nothing to insure against the poor decisions made by an “end run” team.

According to team theory, certain roles serve to move the ball, to further the overall goals of the team. Others focus the effort to move the ball in such a way as to end up winning the game. Without focus, the ball moves out of bounds and while the referee might miss this occasionally, sooner or later it’s going to be caught. In a professional football game, this pattern is caught in practice before the game. A player who constantly and needlessly runs out of bounds is not going to do well. The idea is to move the ball within the boundaries required. The better someone is at that, the better the player. The better the players, the better the team.

Did Enron have someone there who could provide the control over the power that the key players had? CBS News reported that they did. Robin Hosea, a senior accountant, worked in the benefits department. She apparently reported that some Enron departments were spending employee benefits money without approval from her department. She said she reported this to her superiors and was told to keep quiet. She was soon laid off. If money was spent this way, it constitutes a criminal offense. Her job in the company was to work on the team as a control agent. She was, in part, there to focus the efforts of the management on moving the efforts of the organization forward while keeping within the boundaries required. When they ignored her, they lost that essential focus. They lost the containment they so sorely needed.

Capitalism is arguably the most effective economic system ever developed but unbridled capitalism is based on greed. Now there is nothing wrong with a little healthy greed. That’s what motivates for-profit companies. But greed is powerful. If it is allowed to range unchecked, it will eventually destroy everything around it.

Governments are supposed to place various constraints on what actions a company may take in order to protect the welfare of the rest of society. Sometimes they work, sometimes they don’t. Far more effective are the constraints that an ethical, diverse management team, with its interplay of forces of power and control, places on itself. Without control to balance it, a team with an excess of power almost inevitably sets up the kind of conflict that led to the Enron collapse.

Enron executives were simply trying to make money. Most of them probably believed they were abiding by the letter of the law. In the end though, the company collapsed. Just consider what would have happened with that same kind of power and drive under tight and disciplined control, constrained and focused not by broad laws that regulate all companies but by cooperation with team members who were also interested in the long term interests of the company. Instead of free-ranging action with an eye on the short-term, they would have been focused and directed, power under control, to accomplish what they wanted without paying such a high price. It might have taken longer but it would have cost them – and their victims – a lot less in the end.

Everyone’s a Hiring Manager

Today, in Pennsylvania at least, everyone’s a hiring manager.

I ran into an old friend at the NY HRO show last week and he asked me why there’s been so much about politics in my blog lately.  I hadn’t really thought much about that.  After all, this blog is about leadership and ordinarily I don’t get to select the chief executive of just any organization so it seemed logical.  But today it seems more than just logical.  It seems, well, just.  As in justice.

Today’s the day that ordinary people, the ones who work for someone else and have never had the responsibility for hiring someone, get to have some say in who we hire for our next president.  The hiring process isn’t that much different than any other (except for the assessment part) – sourcing (networking really works well here!), scrutiny of resumes, multiple interviews, references, the winnowing of the field – all leading up to the final selection.  The difference is, today we are all equal.  Everyone, whether CEO, manager, solo entrepreneur or line worker, gets the same power in the hiring process.

I voted early this morning.  I’m a hiring manager today.  I hope you are too.