Tuesday, September 20, 2011

Company Morale Impacted by Uncertainty

In the midst of the worst economy of modern times, banks have been particularly hard-hit. Caught up in the sub-prime mortgage fiasco, banks are now getting squeezed by the new “Dodd–Frank Wall Street Reform and Consumer Protection Act,” while their every attempt to increase a fee or two is met with howls of indignation.
            With little near-term hope of improving their bottom line, the big players like Citigroup and Bank of America are looking under every figurative and literal rock to find savings, as well as ways to improve revenues and profits.
            Apparently finding insufficient new revenue and savings, Bank of America CEO Brian Moynihan last week announced that overall employment levels at the bank “would be reduced by 30,000 over the next few years.”
            Pretend you’re an employee of Bank of America and you read that. Which part of that statement would bother you most? Is it the fact that 30,000 people at your company are likely going to lose their jobs, including maybe you? Or is it the implicit uncertainty as to when the axe will fall? For me, it would be the latter.
            I think sure knowledge of impending doom is preferable to uncertainty that bad news will occur at some undetermined point in the future. It’s akin to being a pre-adolescent, in trouble with Mom one afternoon for breaking a window, and then hearing her ominous threat, “Just you wait until your father gets home!” It’s a postponement of Judgment Day.

Understatement of the Year
My candidate for understatement of the year would be the lead sentence in the Sept. 19 Wall Street Journal article about the cuts: “Morale quickly turns ugly after a company warns about layoffs – even if the job cuts won’t happen for a while.” I would change that to read: “…especially if the job cuts won’t happen for a while.”
            One analyst quoted in the article says that he doesn’t know “anybody who’s not looking for another job” there. No surprise. That would be a natural reaction to such gross uncertainty.
            The trouble is, in this lousy economy, there are not 30,000 open jobs out there to which these people can jump just for the asking. So they sit. And they’re not happy. And they’re not likely feeling too loyal toward Bank of America.
            From the Journal article, we also learn that “managers have tried to send short notes to reassure employees but it seems they are nervous about their own positions.” No kidding. How can you, as a manager, encourage your employees to have confidence in and trust the institution when you don’t yourself, suffering the same uncertainty as they are?
            Look, I understand that Moynihan is as much in the dark as anyone else about the state of the economy going forward and whether the fortunes of his bank will improve next quarter or even next year. He can’t very well enact immediate job cuts, lest it make the organization non-functional and further worsen its business case.  

Self-Fulfilling Prophecy
But at the same time, he has created a self-fulfilling prophecy of doom. In such circumstances, even his most talented people are not going to be at their best, focused less on the job at hand than on whether and when the axe will fall on them.
            He didn’t ask me, but if Moynihan wanted my advice, I’d have told him to hold this one closer to the vest. The Journal article quotes an analyst speculating that he made the announcement to mollify Wall Street. I sure hope not. It wouldn't have made much sense if that were his purpose. In this climate, with BAC stock stuck at historic lows, the announcement didn’t cause so much as a blip in the price.
            Better that he work through the implications of near- and long-term strategies regarding job cuts – if, in fact, he and his executive team determined that to be the wisest path. Clearly, a cut of such magnitude (representing more than 10 percent of the total workforce) implies some drastic changes in the way the bank is going to do business.
            Perhaps they’re planning to get out of some businesses, or maybe some geographic areas. That’s where his public statements ought to have been focused: on the business changes he is planning and their likely personnel impacts.
            It is near impossible for a company of its size to inform the internal audience before going public. So there should have been a concerted effort to inform the affected employees at the same time as the public announcement, while providing them with as much information as possible while answering as many questions as they had.
            A dismal internal morale already pervades Bank of America. But having the CEO operate with greater certitude and a sense of urgency is far more effective in retaining employee focus and commitment than the aura of uncertainty that Moynihan cast last week. The company is going to need as much employee focus and commitment as it can get if it’s ever going to be successful again.

Wednesday, September 7, 2011

Actions Speak Louder


Humor works best when it contains a grain of truth – which is probably why I got such a hearty laugh from this Dilbert cartoon from late last year.

Yes, the “pointy-haired” boss at the center of Dilbert’s on-going storyline is an extreme and farcical version of the clueless manager, the kind of a manager who peruses the latest best-selling business book for new ideas, while ignoring all that goes on around him.
            We might infer here that he read that his best, most important communications are through his actions. We’ve all known people like this – though I hope, for your sake, that your boss isn’t like this guy.

Satirized Bosses
He stands there, coffee mug in hand, and claims to be a role model his employees should emulate – or at least admire – all the while wondering why it isn’t so. He reminds me of the Michael Scott character in NBC’s “The Office” or Bill Lumbergh in the movie, “Office Space,” managers in title alone.
            Lumbergh ostentatiously parks his Porsche in front of the “Initech” offices as though it will inspire his employees to strive for the same for themselves. He presents himself with a phony aura of concern when, in fact he has none and, in the film, is singularly focused on cutting his department’s payroll.
            Scott is the kind of boss who thinks his weird sense of humor endears him to his staff when the opposite is true. He is blind to his oafishness and lack of genuine empathy for his employees.
            Bill Lumbergh and Michael Scott, like Mr. Pointy-Hair, have been elevated to management positions and conclude that they have license to be thick-headed bores, out of touch with the daily struggles and challenges their employees face. They are full of false bravado derived from their belief that their job title alone bestows upon them unique vision and wisdom.

The Peter Principle
Unfortunately, in many places, that’s true. People are elevated up the management chain for a number of reasons, not always the right ones. It’s the “Peter Principle” in action: “every employee tends to rise to his level of incompetence.”
            So Mr. Pointy-Hair probably read his new management book and concluded that his employees need to pay more attention to his non-verbal cues since, he imagines, he’s such an amazing guy with so many talents that should be emulated. But he skipped the lessons about engaging them in the first place, giving them reasons to trust him. He fixated on the desired end result of reverential and attentive employees.
            The other truth embedded in the cartoon is that the employee has a role in communications. Organizations that cultivate that truth by encouraging two-way communications are far more likely to be successful in the long run than the business that sees communications as a one-way, top-down affair.
            In fact, communication is an in-the-trenches kind of thing. The boss that is the best role model is the one who models the behaviors he/she expects to get from employees. They never tell their people what they want them to do and be. Rather, they demonstrate it through their own actions. 

Cases In Point
Over the past three-plus years, this blog has cited numerous examples, including:
  • McDonald’s former CEO, the late Ray Kroc, who often visited franchises and, before setting foot inside, would pick up litter in the parking lot.
  • Former Southwest Airlines CEO Herb Kelleher, who pitched in loading baggage on and off planes when he saw that a crew was short-handed or the plane delayed because of it; or he helped out at the gate check-in, if he happened to be in the airport and saw that the lines were getting too long.
  • The paper machine manager, who walked his plant twice a day and came to understand deeply, and on a personal level, the challenges his employees faced, as well as their insights and ideas for achieving greater productivity.
  • Paul O’Neill, former US Treasury Secretary and former CEO of Alcoa, who inculcated a doctrine of safety throughout Alcoa, increasing worker trust and, at the same time, productivity.
  • The manager of the luxury hotel who, in his first six months on the job, worked in every department of the operation and came to understand the many daily challenges that his employees faced in assuring customers’ stays were pleasant and enjoyable experiences.

There are many others, but the common thread throughout is that these managers and leaders made it central to their jobs to learn as much as they could about their operations and employees as a path to getting the best performance out of them. These people saw themselves as part of the larger team, not above it.
            Employees emulate their managers and leaders when they feel there is a genuine sense of interest in them. As a result, they come to trust their leaders and see them as authentic role models.