Monthly Archives: May 2009

The New GM And The New Chrylser Will Not Survive

           Chrysler and GM will emerge from bankruptcy with completely new looks.  The logic is that the new Chrysler and the new GM will be in a much better position to compete companies like Toyota.  As GM vice chairman Bob Lutz put it, “We will be smaller, leaner and we’re going to be a powerhouse.”  Unfortunately, that doesn’t have a chance of happening because Chrysler and GM have not dealt with the one issue that got them into this position in the first place–their management style–the way they treat their employees who do the work that the company gets paid for.  Both Chrysler and GM have a long history of top-down management that uses fear as a motivator–the people at the top are treated like royalty and the people at the bottom are treated like third class citizens–it’s part of the DNA of these companies and Ford’s too, for that matter.  Until these companies address this fundamental issue, they are doomed to eventually be run out of business.

          An employee focused management style has been the competitive edge of the Japanese automakers all along.  They’ve even tried to point this out to the executives running the American auto companies, but nobody listened.  In an August 11, 1980 issue of Fortune magazine, an executive vice president of Honda was quoted as saying, “…capital investment alone will not make the difference.  In any country the quality of the products and the productivity of the workers depend on management.  When Detroit changes its management system [the way it treats its employees], we will see more formidable American Competitors.”  Since then, the Detroit automakers have dramatically changed how the build cars, but they have not addressed the one issue that allowed the Japanese automakers to take over the American auto industry–their management style–the way they treat their employees who do the work that the company gets paid for.

Future Government Aid for the Auto Industry Needs to Focus on Creating Sales, not Cutting Costs and Closing Plants

After emerging from bankruptcy, the American auto industry is no doubt going to need more government help in the form of loans in order to succeed.  If the government truly wants to see the industry get back on its feet, it needs to focus on the revenue stream of these companies—bringing money into these companies through sales of their products.  Instead of putting more money into the hands of incompetent auto executives, the government needs to put this money into the hands of the consumers.  Two friends of mine came up with the following plan to make this happen:

 

            For example, let’s say the federal government decided to allocate an additional $20 Billion in loans to help the auto industry.  Instead of giving the money directly to the auto executives, the government could offer a $10,000  cash back rebate to every consumer who buys a new GM, Chrysler or Ford (Ford should not be penalized for refusing to accept government help) car within six months.  This would create immediate sales of 2,000,000 new cars and give the auto industry the jump start it needs to succeed.  The same amount of revenue would still flow into the auto industry, but they would have to earn it by doing what they’re in the business to do—building and selling cars.  It would also help speed our nation out of this recession.

 

            This program would be easy to monitor, easy to implement, provide instant results and it would create an instant cash flow for the industry.  The details of this program are listed below:

 

            Implementation

  • One cash back rebate per tax payer with a valid social security number.
  • Must purchase (or order) a new car within six months, free to choose between General Motors, Ford, and Chrysler.
  • An application for the rebate is made to the federal government after the purchase with proof of purchase, copy of registration, and basic documentation proving residency and tax-paying status.
  • Rebate check would be direct deposited within two weeks into designated checking/savings account.
  • The rebate of $10,000 could be used for ANY purpose including paying down the car loan, buy another car (even an import), buying Christmas presents, paying down bills, or paying down an upside down mortgage. Anything at all.

Results

  • Creates competition between General Motors, Ford, and Chrysler to offer even deeper deals
  • Ordinary citizens would benefit directly.  Consumers who decided to participate would also feel a sense of patriotism for helping out one of our most American of industries.
  • The incentive would be to buy smaller cars… it buys more of a car, but they are free to buy any size car they want.
  • The cash rebate would help fuel our economic recovery by also allowing this capital to move directly into our economy.
  • Fraud should be easily monitored. 


This would give the auto industry the shot in the arm that it so desperately needs and would provide a much needed jolt for our economy.  What’s there not to get here?

 

Chrysler and GM: A Classic Case of Top Management Failure

The headline to an article in a February, 1968 issue of the Wall Street Journal read something like, “Domestic Automobile Sales Down, Foreign Automobile Sales Up; Japan Could Be Big Player Someday.”  Today, some 41 years later, with Chrysler and GM going into bankruptcy, are we in a position to fully appreciate the profoundness of that headline.  The Japanese automakers took on the mighty US automakers on their own turf and in a little over 40 years took control of the American auto industry.  What’s more, they made it look easy.

 

            This begs the question: Why was it so easy for the Japanese automakers to walk in and take over?  The answer is simple.  The senior executives running the American auto companies were completely and totally out of touch with the basics of making and selling cars—they lacked hands on knowledge and experience in dealing with front line employees, customers, suppliers and technologies.  This made for pretty easy pickings for the Japanese auto executives who were well schooled in those same basics.  Consequently, when the Japanese automakers moved in, the American automakers had nothing to counter with.  For the Japanese, it was like fighting a battle where your counterparts had no weapons.  And now, as Paul Harvey used to say, “You know the rest of the story.”

Why Not Take The Fast Track Out Of This Recession?

Right now there’s not a lot of excitement in America, and rightfully so, because there’s not a whole lot to get excited about—the economy is awful, people are still losing their jobs and homes continue to be foreclosed.  Everyone would like to see this recession end sooner than later, but all indications are that it will end later—much later.  When you think about it, this whole scenario is pretty depressing.

 

            This begs the question: is there anything that can be done to speed this process up so that we can begin to see light at the end of the tunnel?  The answer is yes and it’s really quite simple, but the executives running American businesses must abandon their century old practice of top-down management and replace it with company-wide collaboration.  The assumption behind top-down management is that the people at the top possess all the necessary knowledge to make decisions that are in the best interest of the business.  That assumption is no longer true.  It’s the employees on the front line—the people who do the work that the company gets paid for—who possess that knowledge.  They’re the ones who understand how the business works and they know what needs to be done to fix things.  So, why not take advantage of this wealth of knowledge. 

 

            For example, let’s take a look at a story that was reported in the New York Times on May 21.  According to the article, the economic downturn really hit the engine manufacturing business of SRC Holdings this past November to where the plant was faced with a six month gap in orders.  As Jack Stack, the chief executive of SRC put it, “the entire plant collaborated on how to schedule their workloads—they basically had to take eight hours out of their work week to save money until we could bet back on a full schedule.  Because everyone knew the numbers, they scrambled to find new products and clients…to fill the gap faster.  The result was that we lost money in December and January but we were back to full employment in February.  And we didn’t do this through the old command-and-control method (top-down management); everybody knew the gravity of the situation, and all the great ideas came from within.”  This is what company-wide collaboration can do for any company if senior management will just allow it to happen.

 

            If a company wants to jump onto the fast track to recovery like SRC Holdings, all its senior management needs to do are the following three things sincerely, consistently and well:

 

  • Ask the rest of the employees for their help.  Let them know that everyone is in this together and that they hold the key to getting the company on the fast track out of the doldrums.
  • Listen to their ideas.  These are the people who understand the nuts and bolts of the business.  They know what’s wrong and they know how to fix it.
  • Empower them to take action.  Give them the backing and support they need to put their ideas into action.

          If more businesses in America would abandon their top-down approach to managing and adopt this collaborative approach which is used by not only SRC, but  also by companies like Harley-Davidson, Southwest Airlines and Toyota, it would bring a sense of optimism, excitement and hope back to America and we truly would be on the fast track out of this recession.  For more details on how to make this happen, check out my latest book, Instant Turnaround!

 

 

Negative Bosses Are A Luxury Most Businesses Can’t Afford

bookinstantturnaround100 with borderInstant TurnaroundNegative bosses who make nasty comments to belittle or suppress those who work for them are a tremendous drain on the productivity of a business.  The problem is that negative comments are hurtful and almost always ruin people’s days.  When this occurs, it immediately sucks away people’s energy and now they are no longer able to apply their best effort toward doing their job.  A friend of ours who is a manager recently told us that he receives at least one degrading email a month from one of his superiors.  “When this happens,” he said, “I completely shut down for the rest of the day.”  Let’s assume that 29 other employees received similar emails from that same person.  If each of them responded by shutting down for a half-day, that’s 15 days of lost productivity each month all because of one thoughtless email!  The message here is: If you have negative people working at your company, especially if they’re in supervisory or managerial positions, don’t ignore them.  You need to find a way to get them rehabilitated or get rid of them because they’re a luxury you simply can’t afford.

Uh-oh?  Wait!  What if I’m the negative boss?  In that case, let’s take a look at the facts.  There isn’t one research study that shows how being a negative boss has a positive impact on productivity and the bottom line.  In fact, being a negative boss has the exact opposite effect: It increases turnover, absenteeism, employee theft, the number of sick days taken while it great decreases morale and productivity.  In their book, The Invisible Employee, Adrian Gostick and Chester Elton estimate the cost of employee turnover alone in America to be 1.7 trillion dollars annually.  So, if you insist on being a negative boss, you’re doing yourself a great disservice.  It’s like shooting yourself in the foot—your performance review takes a big hit because your employees aren’t working anywhere near their potential.

So what’s the secret for getting employees to work up to their potential?  That’s why we wrote Instant Turnaround!  We wanted to show managers at all levels how to capitalize on something we learned nearly a century ago from the Hawthorne Studies, but have chosen to ignore: The simple act of paying positive to people has the dominant impact on their productivity.  This means that the better you treat people, the harder they’ll work.  If you want to get people excited about coming to work and working hard all you need to do are the following simple things consistently and well:

  • Be yourself and let the real you shine through.  There’s no room for arrogance if you expect to get your employees excited about working hard.  Arrogance breeds mistrust and people don’t work hard for bosses they don’t trust.
  • Say “thank you” often.  People absolutely love to work hard when their efforts are appreciated.  On the other hand, they slow down quickly if they feel they’re being taken for granted.
  • Treat people like they really are your most important resource.  Ask their opinion on things, actively listen to what they have to say and take appropriate action when necessary.  In other words, let them know that you really do care about them.
  • Be nice.  Say or do something that brightens the day of each person you come into contact with—smile, greet them by name or compliment them about something they’ve done.  Being nice is what makes people like you and they have to like you before they’ll get excited about working hard for you.
  • Encourage your employees to be themselves and express their uniqueness—this encourages them to turn their work into fun.  Fun is extremely important because it releases excitement which enables people work even harder.  There can be no sustained hard work without excitement.
  • Spend lots of time out on the front lines working right alongside your employees.  This enables you to keep your finger on the pulse of the business and it sends a very clear message to front line employees that you respect them and what they do.

So, if ou’re a negative boss or if you have a team, department or sales force that’s underachieving, give these six bullet points a sincere try.  You’ll be amazed at the speed of the turnaround and how quickly your employees step up to make you look good as their boss.

Have American Business Executives Lost Their Compass?

          Far too many American business executives are using the state of the economy as an excuse for doing nothing to get us out of this recession.  They’re sitting back and waiting for something to happen rather than taking the initiative to make something happen—they’re waiting for the economy to get better, for economic stimulus money to be doled out, for credit to loosen up and for the federal government to do something. While they’re waiting, they’re hunkering down, tightening their belts, laying people off and looking for additional ways to cut costs.  The problem is that these are the very actions that will prolong the current recession rather than shortening it.

 

            There’s something grossly wrong with this picture.  This is not the business mindset that has made America the great country that it is.  It’s as if American business executives have lost their compass.  Now is the time when they should be demonstrating their leadership by putting American businesses on the fast track out of this recession.  They can do this by focusing their attention on the one resource available to their businesses whose behavior they can influence—their employees—the people who do the work that their companies get paid for.  The better these people are treated, the harder they’ll work and the harder they work, the quicker the company’s revenue stream begins to grow and that’s what the fast track out of this recession is all about.

 

            In our new book, Instant Turnaround! Harry Paul and I provide a detailed program for making this happen.  The beauty of this program is that anyone who chooses to implement it won’t have to wait a month, six weeks or a year to see results; things will start turning around on the very first day.  What’s more, this program is easy to execute, there’s absolutely no risk, it costs nothing it drives productivity and revenue through the roof and everybody wins.  Those executives who choose to implement this program will immediately put their companies on the fast track out of this recession and look like heroes.  Those who don’t will soon be wondering why they’re the only ones still in a slump.                                    

 

What Adrian Gostick Has To Say About Instant Turnaround!

bookinstantturnaround100Adrian Gostick’s Blog Posted the Following Review About Instant Turnaound!

“Harry Paul (co-author of Fish!) and Ross Reck (of Revved!) share some great insights in their new book, Instant Turnaround!. Their finding is that people regulate their effort based on how well they believe they are being treated at work. We can corroborate that with our research for the second edition of The Carrot Principle. We found globally that a sense of “well-being” at work was one the top two drivers of employee engagement. In other words, when employees believe their manager and company cares about them, they’ll put in more discretionary effort—which is exactly what you need in this economy.

Harry and Ross say that you can tell if you are using fear as a motivator—which is actually de-motivating in the long term. Ask yourself these four questions:

1.     Do my employees look like they are glad to see me?

2.     Do my employees smile most of the time?

3.     Do my employees eagerly make eye contact with me?

4.     Do I feel my employees have my best interests at heart?

If you answer no to one or more of these questions, it means you are using fear as a motivator. And that means your department is underachieving, which is costing you on your performance review.
Instant Turnaround! is a fun, quick read—great for an airplane ride—and will give you plenty of fuel to keep you motivating in these difficult times.”

Another Five-Star Review for Instant Turnaround!

www.WebAndNet.com posted the following review of Instant Turnaround! on May 14, 2009:

 “Iwas surprised that I actually like this book. Usually small, motivational books like these, I consider junk.

Anyhow, this is really a book about company culture, not really about turnaround. It tells through an easy-to-read story of how to motivate by being nice, being trustworthy. Getting employees to like going to work.

This is a fun, fast read. It’s a fun read because it captures the essence of a positive-happy culture by telling an easy-to-read story.

The problem with this type of book, typically written by consultants rather than management, is that it assumes all employees prefer to be productive and like their work and are trustworthy. These are factors that are ingrained within the individual well before their first day at work. And employees are wanting; which means some employees want more than others and are willing to take more. It’s not so easy.

Basically, a leader will be able to motivate if he originally has staff that has potential and wants to be motivated. Alexander the Great wouldn’t have been, except he had a great army his father gave to him. Lou Gerstner (of IBM turnaround) wouldn’t have his turnaround in culture success, except, as he states in his book, he already had top people. Part of the hard part of how to do turnaround is knowing whether one has good staff to begin with and who to keep.

Nevertheless, because this book is a charming read, it’s easy to remember its material, which is why I give it a 5 star.”

The High Cost of Poorly Trained Bosses

In their book, The Invisible Employee, Adrian Gostick and Chester Elton estimate the cost of employee turnover in America to be 1.7 trillion dollars annually.  That’s a huge drain on American businesses.  They also cite studies which point out that the biggest single reason people quit their jobs is the behavior of their immediate bosses–they were either abusive, didn’t care about them, didn’t listen, didn’t notice or appreciate what they did or were only out for themselves.  Believe it or not, there’s good news in all of this.  If American businesses would simply teach their supervisors and managers how to interact more positively with the people who work for them, they could reclaim the lion’s share of that 1.7 trillion dollars.   We’re talking about basic behaviors like being nice instead of nasty or indifferent, noticing the things employees do and saying thank you.  These behaviors don’t sound all that profound, but if the majority of supervisors and managers in America effectively executed these behaviors, it would fatten the bottom lines of American businesses by more than a trillion dollars–now that is profound.

The Power of Kindness–a Lesson for Bosses

When it comes to impacting people’s lives, nothing is more powerful than kindness.  As Albert Schwietzer once said: “Constant kindness can accomplish much.  As the sun makes ice melt, kindness causes misunderstanding, mistrust and hostility to evaporate.”  Leo Buscaglia put it this way: “Too often we underestimate the power of a touch, a smile, a kind word, a listening ear, and honest compliment or the smallest act of caring, all of which have the potential to turn a life around.”  Henry James echoed these sentiments when he said: “Three things in human life are important.  The first is to be kind.  The second is to be kind.  And the third is to be kind.”  Kind acts are what we were put on this planet to do.  They require very little effort, but they have the power to change people’s lives.  On top of that, kind acts have a homing quality; they always seem to find their way back to the person who performed them.  Highly effective bosses have figured this out–kindness is a big reason for their success.