Good to Great…or Just Good?

Jim Collins, author of award-winning book Good to Great, identified eleven companies who he and his research team felt had taken the step to become ‘great’ organizations. He felt these eleven companies all possessed the following characteristics: use level five leadership, first who then what, confronting the brutal facts, the hedgehog concept, and the ability to build the company’s vision.

But as the article mentioned, how did the possession of these five characteristics make each company successful, Collins fails to explain this, he only says that each of the eleven companies have all five in common. Two other errors Collins and his team made were data mining and mistaking association for causation. Data mining is the process of collecting and searching for patterns in data and then once the patterns are found, using them to formulate explanations that are considered to be underlying causes or principles. So Collins found the patterns and then tried to use them to explain greatness, rather than explaining what makes a company great and then finding examples that would support his claim. The second problem with his research was his confusion between association and causation, which goes along with data mining, because he didn’t back up his finding with examples, but rather tried to tie the companies he thought were great to commonalities between them all.

I feel like the study is backwards, and many of the characteristics he mentions that determine whether or not a company is ‘great’ or just good are just products of a great system within a company. So he found great companies and looked at their make-up and then said that the reason why they were great was because they possessed such qualities, but in reality, the characteristics show because the company is already doing a great job.

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Published in: on October 20, 2009 at 8:18 PM  Leave a Comment  

Evidence-Based Management

If there is so much evidence and research stating what can make an organization successful and what is sure to leave an organization in shambles, then why don’t all managers follow these guidelines so they too can be successful? If managing a company was this easy, every organization would be successful because management wouldn’t need to put any thought into their everyday activities and decision-making; with everything mapped out for them by previous studies and research they would have automatic success.

So what are the reasons why managers make decisions that don’t follow what the evidence tells them? The article discussed numerous reasons; I found the following to be the most interesting and prevalent among management I have observed: Managers trust their own experience more than research; Managers make decisions that capitalize most on their strengths; Managers make decisions based on the newest hype and marketing; Managers are overly influenced by ideology. Many managers have definitely been around awhile and have experienced a whole lot, so sometime they have a tendency to think they know it all, and that they way they have been doing things is the right way without a doubt. Managers also seem to make decisions based on the advantages the decisions will have for their own strengths and how they will look based on the outcomes. I feel like one of the biggest influences on management decisions is marketing. Marketing is all around us and can be very influential because they push their idea very strongly typically continue to push until you agree with them or buy into what they are selling. Sometimes it can be good for managers to look at marketing because it can tell them what the people want, but it should not be the sole factor used to make decisions, just a supplement.

The article also mentioned benchmarking as a great source of evidence, and I agree, but I think you must closely evaluate every aspect of what the benchmark company is doing that got them their results. Because if you only look at one or two of their business strategies and try to copy that, you won’t have the same results because you could be missing a piece of why they became successful. So if managers what to look at another manager to benchmark their actions, they need to analyze everything that might have an impact on the success or failure of the decisions being made.

I really agree with a line from the article stating, “Evidence based management is conducted best not by know-it-alls, but by managers who profoundly appreciate how much they don’t know.” This is so true; those managers who are willing to question their own views and older mindsets are much more likely to succeed because times change, which means the way managers make decisions should change as well. You never know everything, so it’s best to always be open to other opinion and thoughts around you so you can take from them what you want in order to make the best decision possible.

Published in: on October 20, 2009 at 7:59 PM  Leave a Comment  

Effective new product team leaders

I found this article very informative, and very valuable to those accepting or being placed into leadership roles, as it discussed the role of cross-functional teams in new product development. By reviewing and working on many of the points brought up in the article, people can learn to work together on a team and flourish in the team setting.

Two of the qualities of successful teams that stood out the most to me were teamwork and trust, between both leadership and team members. I think these are two of the most underrated and most overlooked aspects of successful teams, but they are the roots that must be prevalent in order for a team to succeed. If the members of a team can’t trust their leader or each other nothing will get accomplished because everyone will always be wondering whether or not the others are doing what is best for the team, or pursuing personal goals. Trust then leads to teamwork because if people don’t trust that they can depend on the people they are working with then there will never be cohesion with the team members.

I also think it is very important for members to be able to communicate to overcome obstacles and conflicts, and interact with people of diverse backgrounds. If people can’t communicate their problems, or problems they see around them, then work will gridlock and people will soon be overcome by the negativity. They will continue to bottle up their feelings and it will begin to eat away at their insides until one day they can’t hold it in anymore and they will most likely say something they don’t really mean out of anger. It is also so important to be able to interact with and work with people from diverse backgrounds. This helps us to understand why people act the way they do, what might make them respond in a positive or negative manner, and how they work best with others. Many people don’t realize that we are all so different, and we tend to assume everyone works the same and will react the same in similar situations.

By taking into consideration some of the points brought up in the article it can truly help teams become more successful and can teach individuals how to become better team members, which is so important, because a majority of the work we do these days consists of working with a team or at lease interacting with others to get the job done.

Published in: on October 13, 2009 at 7:34 PM  Leave a Comment  

Sins of Commission: Be careful what you pay for, you may get it

Paying employees based on commission is a very tricking subject, and if done incorrectly it can encourage negative attitudes in the employees, because it is only human to do whatever it takes to make the most money possible. It can make the employees feel like they need to lie, cheat, steal, and work individually rather than as a team in order to get paid the most. In many companies where employees are paid on commission it becomes a competition on who can make the most, and employees lose sight of the real outcome they should be striving for, which is overall company success.

I feel like a commission system has the opportunity to successful and useful, but only if developed and operated correctly. It has the ability to now only pay employees for putting in hard work and going above and beyond, but it also shows them that they are successful and that their work is appreciated. If the culture in an office stresses teamwork and encourages the employees to work together to accomplish sales and work-related tasks, then incorporating a commission system might be successful because the employees already tend to work together.

Companies need to focus on the real outcome, which is customer satisfaction and overall company success, so if the employees can’t focus on the big picture then it is definitely a good idea to stay away from commissions. The first thing that will come between a team and its members is individualistic work and feelings towards work; I suggest that employers first encourage and stress team work, and then they can move to a commission system if they feel it necessary.

Published in: on October 13, 2009 at 7:33 PM  Leave a Comment  

Arrow Electronics Case Study

CEO Stephen Kaufman was facing a few challenges at Arrow Electronics, the two largest being his performance evaluation system and the retention of his key employees. Be looking at the system he has created he might be able to solve these problems, or at least put his finger on why they are occurring.

Kaufman’s performance evaluation system just helps to prove the point that evaluations are a waste of time and energy, because they aren’t fairly conducted and rarely distribute valuable information for the employee and management to use. Kaufman set up his system to make sure the results were normally distributed, ranking his employees from 1 to 5. He also required each employee get at least two 2’s on their evaluation, and tried to manipulate the scores so the average was always a 3. This shows that his system was guided by biased objectives and was developed more for statistical use rather than logical and informative reasons. The evaluations also tended to contradict themselves; there would be positive comments on the performance of the employee but they would still on receive scores of 3 and there would be many areas they needed to improve.

Arrow also tried hard to make their employees the best, by providing them with exceptional training and giving them numerous opportunities for advancement. But where Arrow lacked was it the compensation aspect of the job. They would recruit employees right out of college and give them great training, and it wouldn’t be much longer before the competition would attract the young workers but offering them much more money. Arrow decided they couldn’t increase the new workers’ pay because it would exceed that of many workers with much more seniority, even though the incoming workers were proving to be much more successful and deserving of the raise.

I think Kaufman either needs to scratch the whole evaluation system or he must totally revamp it and make the necessary changes. First he needs to start off by changing his scoring system, so it will actually give honest, constructive feedback to his employees. I think it might also help to give more frequent observations on a much more informal basis so the employees know how their work is perceived and what they need to work on before their annual appraisal comes up. As far as retaining their employees, I feel like Arrow needs to use merit based raises so the employee who is producing the most and is most effective will receive the highest raise, no matter what the employee’s seniority is. But the only way these merit based raises will be successful and fair is if the overall evaluation system is fair and is measuring what it’s supposed to and in the correct way.

Published in: on October 13, 2009 at 7:32 PM  Leave a Comment  

SAS Institute Case Study

Could and should the institute maintain its unique approach to pay and other practices? And could it expect to continue to thrive in a world in which software talent was a scarce commodity?

They have a good long term customer base because customers are entitled to all upgrades and updates so this makes for a stable set of repeat customers. Their turnover rate for customers is very low, so they can always count on having an available market and steady sales coming in. They also rely heavily on opinions and concerns of their customers. They often ask them what they think of new products or updates and whether or not it would be something they would be interested in. I think this is a large reason why they are successful, because it lets the customers know they their opinions are valued, and it allows SAS to market and produce exactly what the customers want. Another aspect of the company I think is an advantage is the interaction upper level managers have with the employees. Managers aren’t just there to supervise and critique the employees; they have a specific role in helping to produce a product. The CEO of the company also makes a huge difference; James Goodnight makes a point to interact with the employees and let them know that their concerns matter. He does a great job of impressing his employees so they in turn feel like they can and should go impress the customers.

I think there are a few areas SAS can evaluate and determine where changes need to be made, but they have a pretty decent structure for a system which is a great place to start. They need to take a very serious look at their recruitment process and make sure they are accepting the candidates who fit best with the company philosophy and values. If being a “fun” environment is important to the company then they need to really look at different personalities of the applicants and compare their fit. I think their bonus program is smart; if they have a good year they are willing to give bonuses, but if not then they need to be safe and do what is best for the company as a whole. If the employees are motivated by intrinsic factors then they will strive to do better because it makes them feel better, which in turn will constitute for more bonuses.

I feel that if SAS carefully looks at the following categories they can make their company as successful as possible: Listening to customers, treating people fair, motivation and trust that people will work hard, long term outlook, recruitment/selection, compensation, environment, outsourcing, performance management, training, and career development. By looking at these different aspects of their company structure they can talk as a whole and figure out what will be best for everyone.

Published in: on October 6, 2009 at 9:11 PM  Leave a Comment  

Nordstrom Case Study

When Nordstrom saw a year where net income did not increase many people started coming up with reasons as to why this had happened. I feel like a majority of the blame can be placed on the system in which the employees are a part of. Management tried to use a “sales per hour” system to foster competition, but it had an opposite effect on the members of the sales team. People began stealing each others’ sales and led to less teamwork and more individuality and selfishness. Employees began spending much longer hours at work in order to try to attract more customers and increase their sales number; this led to employees becoming overworked and burnt out which led to less productivity. So I feel like Nordstrom’s goal to increase sales through employee competition might have been a good idea but since it wasn’t thought out all the way and administered correctly it backfired on the management team.

I think it’s important for management to begin repairing relationships between the employees and to encourage them that the way they will be most successful is by working as a team. They can still keep some sales goals, but it can be rewarded on the basis of the sales group as a whole striving for a certain level of sales. By giving the entire team something to work for, Nordstrom’s customers will benefit in the long run because employees will be helping each other complete sales rather than hoping a sale doesn’t go through. Employees are being judged and rewarded on behaviors that management shouldn’t be promoting. If everyone would take a new look at what is really going to make the company most successful all stakeholders would see greater, more desirable outcomes.

Nordstrom can start by reorganizing their whole sales structure and convincing the employees that teamwork is what is really expected of them and that the only way the company will truly be successful is if they stop with the negative competition. It isn’t healthy for the company or for the longevity and job satisfaction of the employees. Sooner or later they won’t be able to handle the negativity surrounding them and they will leave.

Published in: on October 6, 2009 at 8:18 PM  Leave a Comment  

Specialty Medical Chemicals Case

Carl Burke and Specialty Medical Chemicals is facing several problems, some of which have to do with a decrease in profits and some dealing with his management team and their attitudes and level of commitment to the business. After analyzing the situation Burke decided to hire Laura Wells to interview each manager and take a look at the ways the management team was behaving and any personality issues that may be interfering with the operations of the company. Then from her observations Burke would determine if he needs to hire anyone else, fire any existing workers or just reorganize what he already has.

I think Burke’s decision to take a look at everyone’s behaviors in respect to the standards of the company is a smart decision; it is important for him to make sure everyone is doing what is expected of them and if they aren’t, then something needs to be done. If Burke doesn’t do something, and do it soon, there could potentially be major consequences for the company, because if the management team isn’t on the same page and performing as expected it is nearly impossible to succeed as a company. But although I feel it was the correct move to re-evaluate his management team, I don’t know if Burke went about it the right way. I think by hiring Wells to come in and do the work he may have lost some of the trust of his employees; it may have been better if he had done the interviews himself. Another reason why this would have been a good idea is because in the interviews he could have addressed his concerns right away with the employee, instead of getting the information from someone else. Wells could have perceived their answers differently than Burke would have, which could lead to some mistakes when he later decides who to fire or move to a different position.

I also think that before Burke decides to fire anyone and hire from the outside he should consider training his existing managers, because totally starting over with a new management team might be more expensive and devastating than just trying to work with what he already has and mold them into ideal managers.

Published in: on September 29, 2009 at 10:58 PM  Leave a Comment  

Chapter 6 Extra Reading

Before reading this article I had formed my own opinions on the successfulness and usefulness of performance reviews, but those opinions have now changed and I think there are some substitutes that could potentially have better outcomes. In some organizations the evaluating managers don’t objectively review the employees which, for obvious reasons, tends to have a negative impact on the employees and the organization’s overall productivity and success. They intimidate employees and make them feel like they have no say in their evaluation process and what they need to improve on. Another aspect of performance reviews that usually upsets employees is the fact that pay isn’t really based on performance; sometimes it depends on who the manager likes the most or who they have a closer friendship with. Another problem with performance reviews is that they are generic; every worker is judged on the same scale, rather than taking individual characteristics and situations into consideration. Sometimes this is good because it can be perceived as fair since everyone is held to the same standards, but in some circumstances it might need to be a little more specific to each individual.

At the company I work for we do a monthly performance review which in my opinion has many benefits, but the way they are conducted needs to be reanalyzed in order to be seen as more successful in the eyes of the employees and for the overall company success. One benefit of a monthly review is that it keeps the employee aware of the level of performance the manager feels they are at, so when it comes time for their yearly appraisal they aren’t shocked by any of the feedback. It allows the manager and the employee to settle and concerns or issues before they become too big of a problem with serious consequences, such as termination. It also allows the employee to set goals each month and get the manager’s feedback on whether or not they accomplished those goals, or how they could have went about reaching them in a more successful manner. One thing I don’t like about performance reviews is that they are definitely subjective, and if the manager doesn’t administer them fairly then they are a waste of everyone’s time and energy, and will only upset the employees. I have also began to see that many of the managers think it is a waste of their time to conduct these reviews, so rather than taking them seriously and really observing the employee, they give every employee the same rating and same comments just to have something to turn in. This serves no purpose; the employees begin to realize what is happening and become aware that their actual performance isn’t even being rated, so motivation and work performance suffer.

This being said, my opinions on performance reviews have changed in the sense that if they are going to be used a company then managers need to be trained on how to use them correctly. They can be a very important tool in helping employees learn and develop; from my experiences they are useful to me when my manager is honest with me and works with me to exceed standards and be the best I can be.

Published in: on September 29, 2009 at 10:03 PM  Leave a Comment  

Southwest Case Study

Southwest Airlines is known for cheap and simple air fares, excellent customer service, hard working and dedicated staff, and relaxed and fun work environment. When other airlines started to catch on to Southwest’s customer attracting techniques, they became “copy cats” and gave SWA some major competition. Without these advantages people began to question why it would be in their best interest to fly Southwest; the people at Southwest are what keep me coming back. Southwest began implementing different ideas to beat out the competition such as non-stop flights, short-haul flying, quicker transition between flights which led to less time on the ground, and minimizing flight delays. Even still executives continued to search to be the best.

I think Southwest was looking for answers in all the wrong places and the real answer was right in front of them and was actually already in action. They have incredibly devoted and outgoing employees who make the extra effort to interact with customers and make their experience with Southwest one to remember. In my mind this is the best asset a company can have; if they have a staff that is willing to go the extra mile to satisfy customers then the world is the limit and everything will begin to fall into place. So rather than changing business strategies and focusing on external factors, Southwest needs to continue working on the internal aspects and make it a priority to deliver the best service possible.

People who have already flown Southwest know the level of service they can expect each time, now Southwest needs to work on how they can attract new customers since other airlines are using similar practices. By exceeding each guest’s expectations they will continue to get repeat customers, and word of mouth might be the most effective way to get new people in the door. They could implement a referral program to give people an incentive to tell their friends about the excellent time they had at Southwest.

Published in: on September 22, 2009 at 9:29 PM  Leave a Comment