Why don’t my people just do what I say?
It’s a common refrain among my executive clients. Life at the top would be so much easier, if only “they” would “get it.”
In fact, your employees probably _are _doing what you say. You just may be saying things you don’t intend. It’s often not your broad proclamations that give direction; it’s the little things you do that have the biggest impact.
Your actions encourage and discourage behavior
Remember when you were a front-line employee. Executives’ actions were relentlessly scrutinized. A late arrival, a smile, or a nod could introduce chaos. A CEO I worked with was looking over his marketing department’s latest campaign. He frowned at a storyboard before strolling away.
Unknown to him, the team saw the frown, scrapped the campaign, and spent the weekend reworking everything from the ground up. When he found out, he was flabbergasted. He never thought a simple frown would change the team’s direction.
Your reactions to employees and their work will send signals. Remember this! If you notice yourself frowning or smiling, nodding or shaking your head when it may send the wrong message, stop. Think about the message you may have sent, and say or do whatever it takes to make sure your audience knows your intent.
Watch your words, too. A joke may not be a joke. A consulting firm’s Managing Director smiled and quipped “Remember, if you’re not here Sunday, don’t bother coming in Monday.” He was smiling. Everyone knew he was joking. And as one team member later told me, “I felt like I had to come in Sunday. Sure, he was joking. But he’s the Managing Director. Maybe it’s not 100% a joke.”
You lead by demonstration
Of course, the Managing Director was there Sunday, thus insuring everyone would know weekend appearances are mandatory. Your actions will, by demonstration, always be the most significant way you communicate standards of behavior and priorities to your company. The Managing Director cared deeply that his people have an outside life, and said so on many occasions. But his coming in on weekends spoke louder than his words in signaling acceptable behavior.
What you don’t do also matters
What you don’t say out loud, the actions you don’t acknowledge, and the signs you don’t show send powerful messages, as well. The messages sent by omission are harder to detect. After all, theres nothing there to examine! But there are things your employees might expect that aren’t forthcoming.
If you don’t acknowledge people, it can send a message that you don’t value their contribution. Different people need different acknowledgment. For some, it’s public recognition. For others, it may simply be mentioning “Hey, you did a really great job.”
If you don’t give feedback when someone does a poor job, you send the message that their performance is fine. If someone is screwing up, they deserve to know as early as possible. Otherwise, they’ll walk away with a message that does neither of you any good.
Common courtesy is increasingly rare, and its absence communicates a subtle lack of respect or lack of individual concern. A simple “Please,” or “Thank you” with a smile and direct eye contact takes only a couple of seconds. If you don’t have time even for that, then people will (rightly!) conclude they aren’t important enough to warrant your attention.
Making decisions in isolation quickly lets people know you don’t trust them. I have worked with companies in which the senior managers are very open with their big decisions, and other companies in which “we can’t tell them that” is a common refrain. As far as I can tell, involvement signals faith that your employees have something of value to contribute. When that involvement is missing, the message of distrust is loud and clear.
Not sharing bad news sends the message that everything is fine. It’s easy to keep bad news quiet, for fear of hurting morale. But framing bad news as a reason to rally builds a team instead of breaking it down. Shared challenge is the stuff of bonding. Use it!
A Great Business Leader Knows His Impact
Matsushita, one of history’s most successful businessmen, knew the impact he had on everyone around him. As this story shows, he even appreciated the messages conveyed by what he didn’t do.
The father of $75 billion empire, Matsushita was revered in Japan with nearly as much respect and reverence as was the Emperor. And he was just as busy.
One day, Matsushita was to eat lunch with his executives at a local Osaka restaurant (Matsushita Leadership by John Kotter). Upon his entrance, people stopped to bow and acknowledge this great man. Matsushita honored the welcome and sat at a table selected by the manager.
Matsushita ate only half of his meal. He asked for the chef, who appeared in an instant, shaken and upset. The Great One nodded and spoke: “I felt that if you saw I had only eaten half of my meal, you would think I did not like the food or its preparation. Nothing could be less true. The food and your preparation of it were excellent. I am just old and can not eat as much as I used to. I wanted you to know that and to thank you personally.”
Concrete next steps
If you find yourself under the magnifying glass, here are ways of mastering the situation.
Don’t get caught off guard. Schedule five minutes at the end of the day to review your day, note who you came in contact with, and simply ask yourself what messages you sent.
Use the magnifying glass deliberately. At the start of the week, choose a message you want to communicate by example. Spend a moment or two identifying exactly where you can send the message, and how you have to behave to send it. Then do it.
Check for messages of omission. During your daily review, ask yourself who you didn’t contact, but who might have expected it (you may not know who at first, but over time, you’ll learn). What message does the lack of contact send? What message will rumors of what you did do send to those who didn’t see/talk to you?
Review company systems. To make sure you’re sending the same message as your company, review the systems once a year or so. Review your compensation plan: what does it communicate about company goals? What behavior does it encourage? Discourage? Review your decision making and feedback processes. Ask yourself if you’re omitting anyone or anything in those areas.
How you describe something—the words you use—can dramatically affect perception. That’s the entire principle behind the business concept of “market positioning” as laid out in the seminal book, Positioning by Ries and Trout. Call Government insurance claims adjustors “death panels” and you can get a populace up in arms. As long as you don’t call private insurance claims adjustors the same thing, that framing can easily be used to get people extra-scared about government health care funding, while quietly directing attention far away from the private insurance adjustors who routinely find reasons to refuse or limit claims for necessary procedures.
Today I’ve noticed a business practice that uses a clever description to engage in the purest form of class warfare I’ve ever seen.
Class Warfare Meets Janice
From what I can gather, when people use the phrase “class warfare,” they are referring to one socioeconomic class deliberately targeting another socioeconomic class for purposes of exploitation or taking what they have, ultimately without really doing anything to deserve it.
Let’s think this through. How do you know someone is in financial straits? Well, if they are having trouble making ends meet, and occasionally overdraw their bank balance.
Let’s consider a not-so-hypothetical “Janice,” who uses the same bank as I do. Janice is a house cleaner, who lives month-to-month with barely enough to pay her bills. Janice has a larger-than-expected automatic payment go through her checking account for $350. The bank charges a $35 overdraft fee, plus $5 every three days as a “continuous overdraft fee.” There’s an amount of money Janice is expected to pay back ($350), and the bank has temporarily allowed Janice to use that money. They not only charged a 10% immediate fee, but they are charging a 1.42% fee every three days, and they expect to receive the money back.
IN WHAT UNIVERSE IS THIS NOT A LOAN???
And on an annualized basis, $5/3-days on a $350 balance is $608 per year. $608 interest on a $350 balance is a 174% effective interest rate. If you fold in the $35 initial fee, that brings the interest rate to 184%.
184%. And by calling it a “fee” instead of a “loan,” the bank gets to charge 184% interest.
And note: this is the most reasonable way to model the situation. If Janice had paid the $350 back the next day, she would still have been charged $35 for a 1-day loan, which is an effective interest rate of 3,650%. Yes, you read that right. By paying back her loan after one day, she was charged 3,650% interest.
These People are Stealing Janice’s Money
Who gets that money? The rich people who own the bank.
If this isn’t the purest, most exploitive, outrageously usurious example of class warfare, in which the rich target those who are explicitly out of money and charge them fees that make Mafia loan sharks look like amateurs by comparison, I really don’t know what is.
So what’s the solution? Well, other than a return to the early 1980s, where banks paid interest and didn’t charge fees, and when overdraft fees were more like 18%/year at the most, I don’t know. Apparently that scenario is considered to disastrous and horrible to contemplate (at least by the banks).
Maybe it’s time to nationalize the banks. Please. Because private banks are destroying America. I’m sure my conservative friends will have all kinds of reason why this is a bad idea. They will shriek and tear their hair out because I am suggesting something that is so UNFAIR and SOCIALIST. But then, having enough money so they don’t get overdrawn, they are never routinely charged 36,000% interest on their overdraft loans. Instead, they scream bloody murder at the thought of having their top marginal tax rate increased by 2-3%, because that’s so horribly crippling that no sane $150K/year person should have to bear that unspeakable horror. And as for Janice and her 184% bank loan, well, that’s just the penalty she pays for the crime of being poor. I agree there’s crime being committed to here—not legally, but morally and ethically—and it sure isn’t coming from Janice.
CORRECTION In the first revision of this article, I erroneously wrote that the $5 “continuous overdraft” fee was weekly, and Janice’s effective interest rate for a yearlong overdraft was 74%. Further reading of the bank’s fee schedule reveals that it is every 3 days, not weekly, thus bringing the interest rate to 174%.
The final bullet point? Carry out any other purpose for which the information was collected.
Please face it: Silicon Valley, that supposed bastion of libertarian respect for individual rights, is no such thing. It’s a collection of disingenuous, deceptive, liars who are happy to write multipage privacy policies for PR purposes, which have no teeth whatsoever.
Be very, very careful of anything you put on a computer you don’t own. And I’m sure that the license agreements we agree to when we buy our computers and install Windows or Mac OS X will contain similar escape clauses if they don’t already.
Corporations seem to be nothing if not explicitly immoral. It is very sad to watch.
I’m sure you have never asked someone to work for free. But just in case you know someone who has—or if you’ve ever been asked—here’s the kind of thing you really should say.
Today I received this letter:
Hello Mr. Stever,
I am writing to you on behalf of XYZ, a non-profit, CSR project of ABC (a $4 billion conglomerate operating in 16 countries). … We bring together advisors and speakers from some of the top business schools in the world… we are committed to building local intellectual capital and leveraging a business model that ensures sustainability and relevant development opportunities to our present and future business leaders.
To begin a relationship, we would be interested in having you as one of the subject experts for our Webinars to conduct a live complimentary webinar on a topic of your choice, and also offer you to write exclusively on our blog<.
I find your request confusing. I am a professional, who has spent several hundred thousand dollars and several decades developing my expertise.
While I believe I might have valuable content to offer, the key word is “valuable.” You say that you are a project of a $4 billion conglomerate, yet your business procedure seems to be asking people such as myself to work for free. That doesn’t sound like partnership; that sounds like crass exploitation. You have the money to pay your vendors, you would just rather have them work for free.
That is not the kind of business practice I stand for or am interested in. If you are training entrepreneurs, it is a business practice you should object to as well—any entrepreneur who does not make sure they are well-paid for their product will quickly go out of business. I strongly suspect that neither you nor the CEO of your organization work for free. I can only follow your lead and decline your offer, in favor of clients and partners who believe in paying for the value I provide.
Simple math is a great way to understand a system’s behavior. I picked up this trick from Warren Buffett’s writing and speaking. Warren often figures out which mathematical elements drive behavior of a stock or industry, and then uses that to set a boundary on his investment decisions. He gave a great analysis in February 2000 of why the first internet bubble had to pop. Three weeks later, it did.
His analysis depended entirely on noting that valuations in the internet companies were assuming profit growth of 15%, while the economy as a whole was growing at 2.5%, and profits were remaining a constant share of the economy. As he put it, “mathematically, that relationship can not continue to hold. I don’t know what will collapse, I don’t know who the survivors will be—and there will be many of them—but I do know that eventually the house of cards will tumble. It has to.”
The Simple Math of Wealth Inequality
Thomas Pitteky’s new book about income inequality is apparently making a big splash. I haven’t read it, yet, but I’ve been told he is very sympathetic to my point of view. Here’s my analysis, before reading the book.
I’ve long held that the driver of wealth inequality is much simpler than policy, philosophy, or ideology. It’s simple mathematical fact, given our tax rates.
I finally ran some numbers.
Starting position: rich own 25%, everyone else, 75%
Overall tax rate on everyone else, 39% (25% federal + 14% FICA)
Overall tax rate on the Rich, 17% (mainly capital gains)
Assuming the Rich can get an average ROI of 15%, while everyone else 10%
(a reasonable assumption, given that the entire class of high risk/high return investments requires one to be an accredited investor. I.e., rich.)
With these assumptions, in 50 years (say, 1960 to 2010), the income distribution goes from rich 25%, everyone else 75% to rich 85%, everyone else 14%.
If we assume that both groups get equal returns on their money, rather than the rich getting higher returns, we still go from 25/75 to 48/51 in just 50 years
The Rich Get Richer, Purely By Virtue of Ownership
As long as the overall tax rate on the rich is lower than the overall tax rate on the poor, even independent of the range of investment opportunities available (and the rich also have enough money to have a portfolio of large-enough bets that a single winner will ultra-increase their net worth), the rich will eventually own everything.
This is independent of whether they work harder, whether they are more committed, whether they “create jobs,” or anything else. It’s purely based on their after-tax rates of return. (And as for them being job creators, note that to the extent that they can lay people off, their rates of return will increase. Hiring decreases it.)
I don’t understand why this simple mathematical fact never comes up in these discussions.
Even If The Rich Allocate Capital Poorly, They Still Win
If you run the numbers, it doesn’t matter if the rich get below-market returns. Berkshire Hathaway, Warren Buffett’s company, has only gotten market-level returns in recent years. But he’s still owning more of the economy than you are, every year.
The tax rate differential is high enough that Warren Buffett’s interest income still has a better after-tax return than you have on your entire income.
A friend on Facebook posted an article about New Jersey outlawing Tesla’s direct-to-consumer car sales. My friend was decrying how Gov. Christie is being anti-free-market. And I agree 100%.
From what I’ve been able to see, it’s pretty clear that the big conservative political donors hate free markets. What they love is whatever give them, personally, the ability to get more wealth. By “free market” they mean “don’t do anything that interferes with my personal ability to make money.” For example, the Koch brothers compete by using their money to alter laws so they win. They don’t compete by being better businessmen.
When it comes to competition, they hate it and undermine it at every opportunity, unless they’re the winner.
When it comes to level playing fields (supposedly the bedrock of markets), they hate it.
When it comes to producing the best product at the lowest cost, they hate it.
When it comes to contributing to the infrastructure they use freely that was funded by the public, they hate it.
Business People Should Loathe Competition
It’s a real education to go to business school and ask: how much of this education is devoted to finding ways to gain a market advantage without actually having to do a better job? The answer: most of it. It’s called “business strategy.” We teach our students how to be anti-competitive and anti-free-market, all in the name of free markets.
This works, however. It works because with the right playing field, pitting anti-free-market forces against each other results in more efficient companies through market selection of companies that are fundamentally better than other companies. This produces better ultimate outcomes for the consumers and society who created the markets to begin with.
But never miss the critical point: free markets work because the players are all trying to gain market advantage by doing a better job than each other. The players themselves are not striving to have a fair market, they’re striving to win and eliminate the competition (and thus the market).
It’s the job of government to make sure the playing field is level enough to keep enough market participants that the market continues to function. Players all want monopoly, government wants thriving market participation.
Mr. Christie’s error is that he’s acting as a businessman. That’s not his job. His job is to take care of all his constituents overall, not just the business ones.