• 11 minute read

     

    Holacracy.

    Maybe you’ve heard of it…and maybe you haven’t.

    But if not, according to the inside jacket cover of Brian Robertson’s 2015 book on the subject: “You will.”

    Holacracy, Robertson insists, is a “revolutionary new system for running companies.” And businesses that choose to adopt it, he assures his readers, will enjoy “efficient communication, effective meetings, less red tape and fewer roadblocks, [and] crystal clear lines of responsibility and accountability.[1]

    Well, that all sounds pretty good to me.

    So this week, a closer look at Robertson’s book, Holacracy: The New Management System for a Rapidly Changing World. What it is, how it works, and what it may (or may not) mean for managers.

     

    Distributing authority

    Businesses, Robertson laments, are stuck. “We haven’t seen any robust alternatives or significant improvements to our modern top-down, predict-and-control ‘CEO is in charge’”[2] – a way of managing that at one point he likens to a “dictatorship.”[3] Furthermore:

    Even with the best intentions and great leaders, a top-down authority system leads almost inevitably to a parent-child dynamic between the boss and the employer.” (p. 22)

    But Holacracy counters these tendencies, Robertson assures us, through something he calls “distributive authority.”[4]

    Inspired by the sort of “self-organization” that occurs in cities and other communities as they grow and develop, Robertson argues that organizational power can be successfully transferred from people (the old way) to a “process” (the new way). No more bosses in charge, and no longer will subordinates have to wait around for directives. According to management by Holacracy, employees at all levels have the power to make their own decisions.

    And with distributed authority, no one has the right to tell anyone else what to do.[5]

     

    Jargon

    Before going any further, I should point out that Robertson’s book is a little heavy on the jargon.

    In addition to this idea of “distributive authority,” he also assigns new terms to some very old and familiar organizational concepts. For instance, people don’t have “jobs” in the Holacratic organization. Instead, they fill one or more organizational roles. Nor do employees belong to a specific “department,” “group,” or “team” (although Robertson still makes liberal use of that latter term). They belong instead to one or more organizational circles.

    Here are a couple of other terms you would need to become familiar with, were you and your organization to adopt Robertson’s management system:

    • What a link is, including the differences between a Lead link, Rep Link, and a Cross link
    • What distinguishes a role (which can be “expressed” or “energized”) from an accountability (which is “enacted”), and a domain (which is a “property right”)
    • What constitutes the general company circle, and how it differs from the anchor circle, as well as other super-circles and sub-circles
    • What a core circle member is, as well as the duties of a circle’s facilitator and secretary
    • What the governance process is, and how it differs from the operational process

    And finally, you would need to know what a tension is. This is Robertson’s term for what you or I might call a “problem” or “conflict.” Tensions aren’t identified and then fixed or resolved, like problems are, either. Instead, they are “sensed,” and then “processed.”

    If it all sounds a little confusing, it can be. And on occasion, it results in the sort eye-rolling management-speak that you might expect. For example:

    As a lead link, rather than directing the action, you hold the space within which the purpose of the circle can be fulfilled, and you keep out issues and concerns that are not within the scope of that circle.” (p. 51)

    When you fill a role, you gain the authority to take any action you deem useful to express that role’s purpose or energize one of its accountabilities, as well as you can with the resources available to you, as long as you don’t violate the domain of another role.” (p. 80)

    With the foundational structure created through governance, Holacracy provides further operational distinctions, rules, and lightweight processes that help a team get work done together and express their roles.” (p. 87)

    Nevertheless, Robertson insists it is all worth it. As he explains:

    Change your language, change your culture.” (p. 176)

     

    Meetings

    New language notwithstanding, Robertson’s aim in developing a this management system is nevertheless worthwhile and commendable, in my opinion. And that aim is:

    To make work easier.

    In attempting to break the centuries-old lock that management by hierarchy has had as the default management paradigm, Robertson hopes to rid for-profit organizations of needless bureaucracy, unnecessary red-tape, and stifling indecision. Which is great. If you know something needs to be done, and have what you need to get started, you no longer have to wait for a manager’s approval.

    Just do it.

    Where things get a bit tricky, however, are in those instances when it’s unclear what needs to be done.

    Or who should do it.

    Or how it should be done…or by when.

    And these, of course, are the sorts of questions/conundrums that enterprises of all shapes and sizes grapple with on an almost constant basis. For example:

    • Maybe you know what needs to be done, but you aren’t sure if it’s your decision to make?
    • Or maybe you know something needs to be done, but you don’t know what exactly..?
    • Or maybe you know what should be done, but you also know it would directly impact/disrupt the work of someone else, perhaps adversely…
    • Or maybe you know what you need to do, but you simply lack the resources to do it…

    According to Robertson, all of this can be most efficiently and effectively accomplished in meetings – provided, of course, that those meetings are efficient and effective. As a result, much of the practice of management by Holacracy seems to boil down to getting used to two (2) new meeting types, and their very specific procedures and protocols. They are:

    1. Governance meetings – These are gatherings at which decisions are made regarding who is responsible for doing what. Need someone to update the corporate website with favorable press reviews on regular basis, for example? No problem – that particular responsibility can be assigned to a specific “role” in a governance meeting.
    2. Tactical meetings – These meetings concern “everything that happens outside of governance,” as Robertson puts it – or are about “getting things done.”[6] They provide a forum in which progress is monitored, priorities are set, metrics are reviewed, “tensions” are acknowledged (and hopefully “processed”), and the work of individual circle members is coordinated with the efforts of the rest of the organization.

    There is, as might be expected, much to know and understand about how these two types of meetings are run.

    For example, in governance meetings there is a “check-in” and “closing” round, as well as time set aside for “agenda building.” Decisions are made using something called the “integrative decision-making process,” which includes specific rounds for presenting proposals, clarifying those proposals, reacting to them (and their clarifications), and then amending those proposals, and/or objecting to these amendments, and finally “integration.”[7] Tactical meetings also have a check-in and closing round, as well as a “checklist review,” “metrics review,’ “progress updates,” “agenda building,” and “triage issues.” What can and cannot be said at various points in these proceedings is also strictly defined. Feedback, input, or responses of any kind—“cross talk,” as Robertson terms it—is often prohibited.[8]

    But it’s all worth it, Robertson assures us. These stipulations are part of “protecting the process” he insists, which is absolutely necessary if Holacracy is to work for you.

     

    The circles of the organization go round and round

    And yet if it all of this seems a bit involved, or unnecessarily complicated, you might be forgiven for thinking as much.

    According to “work-life management expert” and early Holacracy-adopter David Allen, you should prepare yourself for an extended learning curve if you go with Robertson’s system. As Allen writes in the book’s forward:

    I did (luckily) have an intuition that exploring Holacracy was going to be a five-year project.” (p. x) [9]

    But no matter – so long as it works, right? Indeed, the more curious/troubling admission made by Allen is this:

    There are times when many of us would love to prove Holacracy doesn’t work. It’s easy to blame the process as the perpetrator of our discomforts. … What is wonderful is that the model doesn’t care. As a matter of fact, getting rid of it [Holacracy] is totally acceptable and allowed, within the model.” (p. xi)

    Hmmm.

    Maybe it’s just me, but the book’s forward seems an odd time to bring up the apparent unpopularity of Holacracy, not to mention entertain the possibility of abandoning it. But don’t look to Robertson to disagree. As he later writes (p. 167):

    Holacracy isn’t for everyone.

     

    3 Contradictions

    There is also the problem of contradiction.

    For those of you who follow my blog, you are probably well aware that my main complaint with management advice books is that they all too frequently engage in contradiction, or make paradoxical assertions – often without any apparent awareness of having done so.

    [For some examples of this phenomena in other books, click here. Or here. Or here, or here, or here, or here…or here. For why it happens so often, click here.]

    Robertson’s text is no different. For example:

    • On page 21, he argues that the successful implementation of Holacracy requires adopting a “Holacracy constitution,” which he describes as the “the core rulebook for the organization.” Nevertheless, he also insists that “you don’t need to read it” (p. 22), and does not include its text in his book. (It is, however, available as a free download.)
    • On page 145, Robertson informs readers that it is not possible to adopt certain parts of Holacracy—like the meeting formats—while ignoring others. It is not a “bolt-on” technique, he explains[10] – or at least not if you want to reap its full benefits. And yet on page 181, he has this to say:

    “I’ve heard of companies that successfully used [Holacracy’s meeting format] in place of their general staff meetings even though they were not running on Holacracy.”

    • And then on page 25, Robertson makes the sort of overtly paradoxical claim that I’ve found to be quite typical of modern management advice books in general. As he asserts: “Holacracy liberates those within the organization to be simultaneously more autonomous and more collaborative [my emphasis].”[11]

     

    Hierarchy nevertheless?

    But my primary objection to Mr. Robertson’s management system is that it seems to fall short of its stated objective. And that is:

    To do away with hierarchy.

    As Robertson’s repeatedly insists, Holacracy transfers organizational power from people to a process. However, on page 39 of his text he argues that “when we distribute authority…we distribute it not to individual humans, but to the roles that they fill.” But if authority is distributed to roles, and people fill those roles, how is this really any different?

    Alright, so it seems people still have the power according to management by Holacracy – albeit based on their roles. So to whom is organizational power “distributed”? A careful reading of Robertson’s text offers a few hints. For example, on page 107 there is the following:

    …the duty of prioritization means you can get a lead link involved in prioritization questions and expect others to align with the lead link’s decisions.

    And from page 134:

    The Holacracy constitution requires that individuals align their operational decisions with any strategies specified by a circle’s lead link…

    In other words, these “lead links” seem to have some of the powers/authority traditionally associated with managers. For example, not only do lead links set priorities, they also play an important role in determining organizational strategy, and can expect others to fall in line and support that strategy. Lead links are also responsible for role assignments within the circle – much like managers decide who does what in their own organizations.

    Apparently I am not the only one to make this comparison. On page 50, Robertson points out that readers shouldn’t “confuse [the lead link’s role] with the role of a traditional manager.” As evidence, he points out that lead links do not have the power to fire someone (although they may remove someone from a role), and they do not determine compensation.[12]

    Still, if there is any similarity between management by Holacracy and management by hierarchy these lead links would seem to be…well, the link. For instance, the lead link for each circle is not elected, but appointed – and the person/role responsible for that is—you guessed it—the anchor circle’s lead link. And that individual is typically whoever decided to make the switch to Holacracy in the first place – usually the CEO, business owner, or company founder.

    This detail is significant because the person with the power to adopt Holacracy also has authority to undo it all. According to Robertson:

    “For adoption by a CEO… He or she can retain the right to “unadopt” Holacracy at any point and go back to the old way of running things…” (p. 152)

    In other words, while it is the CEO who “cedes power” by agreeing to adhere to a Holacratic constitution, he or she can pull the plug on the whole experiment whenever he or she wants.

    And that is something in all likelihood that is not lost on the rest of the organization.

     

    Testimonials

    So perhaps there is a “hidden hierarchy” lurking beneath all of Holacracy’s fancy new terminology, and strictly defined meeting protocols? Robertson seems willing to concede as much:

    Holacracy uses a different type of hierarchy than we’re used to, for a different purpose.” (p. 48)

    But the better question might be: Does Holacracy actually work?

    Well, so far as I can tell, the jury still seems to be out on that one.

    For instance, as of this writing David Allen still runs his company according to Robertson’s method. That organization, The David Allen Company, is an executive coaching firm offering services based on the Getting Things Done (GTD) work-life management system.

    But there is also Evan Williams’ experiences to consider. Williams was a co-founder of Twitter, and is currently CEO of Medium – an online publishing platform. On the jacket cover of Robertson’s book, Williams effused: “Holacracy creates clarity.” However, in March of 2015 his company choose to abandon Holacracy after just a few years. At that time, Williams was quoted as saying:

    [Holacracy] had begun to exert a small but persistent tax on our both effectiveness and our sense of connection to each other. For us, Holacracy was getting in the way of the work.”[13]

     

    By far the highest profile (and largest) company to have adopted Holacracy, however, is Zappos – the online retailer founded by Tony Hsieh.

    In 2013, Zappos began its own implementation of Robertson’s system. Many in the organization opted to leave at the time of Holacracy’s adoption – and in the eyes of some, turnover remains relatively high at 29%. Notably too, in 2015 Zappos also fell off Fortune’s list of “100 Best Companies to Work For” for the first time in 8 years. Nevertheless, the company did achieve their profit goals for that year.[14]

    More recently Hsieh has decided to focus efforts on transforming Zappos into a “Teal” organization—or one characterized by “self-management”—even as the company continues to adhere to Holacracy’s procedures and protocols. In a 2015 memo to employees, he wrote:

    We are going to take a ‘rip the Band-Aid’ approach to becoming Teal organization…in order to eliminate the legacy management hierarchy, there will effectively be no more people managers.[15]

    Management by Holacracy aside then, it would seem that—in Hsieh’s opinion at least—shaking the last vestiges of hierarchy is not as easy as Robertson makes it out to be.

     

    Robertson’s Rules of Order?

    To be honest, I’ve never worked in a Holacratically-managed organization.

    Nor have I seen one up close.

    So far be it from me to say whether Holacracy will prove to be the “revolutionary new management system” of the future that Robertson’s book claims it will be.

    Nevertheless, I applaud Robertson’s efforts. In addition to hoping to make work “easier,” his stated aims of making organizational conflict less personal, and more professional, and ensuring that everyone within an organization is heard and taken seriously—even the lone dissenter—is to be commended.

    And according to some, at least in this one respect it seems to be working. As one Zappos employee put it:

    The structure of the meeting forces each person to…say what they want. Before I might’ve thought something and wouldn’t have jumped in.[16]

     

    So perhaps what we’re looking at here is a new way of conducting meetings – an updated version of that classic Robert’s Rules of Order.

    Recall that this was the little book penned in 1876 by U.S. Army officer Henry Martin Robert, and which offers detailed instructions on how meetings might be run orderly and efficiently. In it, Officer Robert codified such now familiar concepts/protocols as making a motion, holding a debate, putting a motion to a vote, and majority rule. And back then, much of what he wrote might have struck some as a bit “jargony” too.

    But when it comes to eliminating managers and management by hierarchy altogether, it is my opinion that Robertson’s paradigm comes up short.

    As far as I can tell, the CEO or business owner still holds most of the power in the Holacratically-governed organization. This individual retains the authority to set goals, determine strategy, prioritize work, and make role assignments throughout the organization (even if only indirectly). And should things not go his or her way, this individual might “un-adopt” Holacracy at any time.

    To rid organizations of hierarchy altogether, it seems we may just have to wait for something else to come along.

     

     

    See you next Friday.

     

     

    Endnotes

    [1] Roberston, Brian. Holacracy: The New Management System for a Rapidly Changing World. 2015. (Henry Holt and Company: New York), inside jacket cover.

    [2] Ibid., p. 11.

    [3] Ibid., p. 18.

    [4] Ibid., p. 91.

    [5] Ibid., p. 53-54.

    [6] Ibid., p. 87.

    [7] Ibid., p. 72.

    [8] Ibid., p. 70.

    [9] It is perhaps interesting to note that at the time of it’s writing, Allen and his own organization were only three years into that project.

    [10] Ibid., p. 58.

    [11] I first encountered this phenomena in the management advice book classic In Search of Excellence (1982) by Tom Peters and Robert Waterman. In it, the authors argue that “excellent” companies exhibit “simultaneous loose-tight principles.” That is, they are “both centralized and decentralized,” and “on the one hand rigidly controlled, yet at the same time allow…autonomy.” They also are “simultaneously externally focused and internally focused,” and seem to obey something Peters and Waterman call “the smart-dumb rule.” None of this, of course, really makes any sense.

    [12] Robertson, op. cit., p. 53.

    [13] “Management Changes at Medium” by Jennifer Rheingold. Fortune (online), March 4, 2016. http://fortune.com/2016/03/04/management-changes-at-medium/.

    [14] “How a Radical Shift Left Zappos Reeling” by Fortune (online), March 4, 2016. http://fortune.com/zappos-tony-hsieh-holacracy/.

    [15] Ibid.

    [16] Ibid.

     

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  • < 1 minute read

     

    Happy Independence Day to you and your families. I’ll be back next Friday with a new post. 

     

     

     

     

     

     

     

     

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  •  

    This week, another exception to my usual blog topics of management and workplace-related issues.

    (However, considering access to affordable healthcare concerns virtually all U.S. workers and their families, I feel such an exception is warranted.)

    So for today’s post, an open letter to Senate Majority Leader Mitch McConnell and his Republican colleagues on Capitol Hill.

    In it, I expose a flaw in the GOP’s proposed healthcare bill…a flaw it shares, ironically, with Obamacare.


     

    Dear Senate Majority Leader McConnell:

    You and your Republican colleagues in the Senate are on the verge of making a mistake.

    If enacted, “Trumpcare” will fail for the very same reason the Affordable Care Act (aka “Obamacare”) is currently failing.

    Allow me to explain.

    The Senate/GOP plan—like Obamacare—represents a “market-based solution” to the challenge of providing all U.S. citizens with access to affordable healthcare. But for any market-based solution to work, the market itself must meet certain, very specific criteria. Unfortunately, healthcare markets do not meet those criteria, and never will.

    Specifically:

    1. Consumers must be able to enter and exit the market of their own free will.

    As any economist can tell you, markets simply don’t work if you are forced to participate.

    Think of it this way: If you need new jeans, but feel they’re over-priced, you could wear the old ones (or something else) until prices drop, or they go on sale. There’s nothing forcing you or anyone else to buy anything, so jean prices more accurately reflect actual demand. In the case of healthcare, however, this is rarely (if ever) true. If you suffer an attack of appendicitis or break your arm, for example, you’re forced to participate in the market whether you like it or not. You can’t wait until doctors lower their prices (or for the next open enrollment period). As a result, prices in healthcare market will always be inflated. Consumers will always pay more than they should, and suppliers will always be able to overcharge – and the market will never be truly efficient.

    And yet the current Senate plan—like Obamacare—fails to account for this.

     

    1. Price information must be made available to consumers for the products/services they’re planning to buy BEFORE they buy them.

    For a market to function at all, consumers must know how much things cost. This is obvious enough. For example, imagine trying to comparison shop for those jeans if no one’s willing to tell how much they charge?

    Now under the proposed Senate plan (just like Obamacare), consumers would of course have access to pricing information prior to purchasing a healthcare plan. But this is only the half of it. Given that most of these plans have a deductible (often quite high), consumers must be made aware of how much specific health services cost as well, and prior to purchasing those services.

    So, for instance, before selecting a particular treatment (like a mastectomy), a consumer needs to first know how much the surgeons and hospitals offering this procedure charge in order to get the quality care that they can afford. But under the current Senate plan (just like ObamaCare) this information will be difficult, if not possible to obtain – either because physicians/hospitals aren’t required to disclose it, or because they honestly can’t say, since each patient case is unique. Nevertheless, a market cannot function efficiently under such circumstances.

    And yet the Senate plan—like Obamacare—fails to account for this.

     

    1. Consumers must be able to understand what they are purchasing.

    Few of us are trained physicians. Yet this is what we would need to be in order to make truly informed healthcare choices. In the patient care market, however, consumers have always had to trust someone else completely (either their doctor, or their insurer) to tell them what specific care they do, or do not need. But a market cannot function efficiently when this is the case.

    And yet the current Senate plan—like Obamacare—fails to account for this.

     

    1. Consumers must not be impaired, or otherwise prevented from behaving rationally.

    For a market to function efficiently, consumers must have the mental and emotional capacity to act in their own best self-interest. They must be “of sound mind and body,” in other words. But healthcare consumers are often anything but. Try making a careful, reasoned decision with a dislocated shoulder, for instance. Or try shopping for a healthcare plan while you think you’re having a heart attack. Again, a market cannot—nor will it ever—function efficiently if consumers are under duress while making healthcare decisions.

    And yet the current Senate plan—like Obamacare—fails to account for this.

     

    To summarize, healthcare markets do not meet several of the most basic criteria necessary for markets to function efficiently. A market-based solution to the challenge of providing affordable healthcare to all will therefore never work.

    In light of this, I would urge you and your colleagues to pursue a more tried-and-true approach. For example, you might consider some version of a “single payer” system that works so well in many other countries. The Medicare model that is very popular with millions of voters in this country (including Republicans, independents, and Democrats alike) is another possibility.

    Thank you for your time, and please let me know if I can be of further assistance to you in this matter.

    Kind regards, etc., etc.

     


     

    Your thoughts?

    Otherwise, see you next Friday…

     

     

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  • June 23, 2017

    3 minute read

     

    For those of you familiar with my “Unconventional (mis)management non-wisdom” series of posts, you know that I devote each installment to some tried-and-true management principle, or pearl of management “wisdom.”

    Specifically, I take pains to cast it into doubt, or otherwise debunk it.

    For instance, in the past I’ve called into question such “indisputable” management dogma as:

    (You can click on each to link to the specific post.)

     

    So why do I go to the trouble? Is it because I have an axe to grind with the corporate world? Or do I just enjoy throwing stones at glass houses (or maybe that should be “corner offices”)?

    Actually, far from it.

    It’s simply the best way I can think of to demonstrate how very little—if anything—is known about good management, and its practice.

    Consider it:

    • Maybe managing is still a relatively new—and therefore unexplored—science…
    • Maybe some core management principle (or principles) have yet to be discovered and/or described…
    • And maybe that’s why for every pearl of management “wisdom” you might come across there’s a successful business person, CEO, or manager who offers a compelling argument for engaging in precisely the opposite behavior

     

    Take the importance of pre-screening job candidates based on their résumé, for example – which is the subject of this week’s post…


     

    “I never read a résumé…”

    It perhaps goes without saying that résumés are widely considered to be critically important to landing that dream job (or at least getting your foot in the door).[1] A professional résumé cannot be stressed enough according to consultant Judi Roo, because “well-written résumés produce results.”[2]

    That’s not to say that recruiters spend a lot of time reading them, however. According to a recent article in the Harvard Business Review, the average time your future ex-boss spends looking over this document is around six seconds.[3]

    Nevertheless, read them they do.

    As The Harvard Business Toolkit explains, résumés are a critical part of the screening process, if for no other reason than to ensure prospective job candidates possesses the necessary qualifications.[4] And once an interview has been scheduled, it is furthermore seen as good practice for those conducting the interview to become familiar with each candidate’s résumé, or CV. According to the website Ask A Manager, any interviewer or hiring agent who doesn’t do this to prepare is just plain “bad.”[5]

    So in light of all this, it is interesting to hear Barbara Corcoran’s thoughts on the matter. Corcoran is a successful American businesswoman, investor, speaker, consultant, syndicated columnist, and author. But many of you probably know her better as one of the celebrity judges on ABC’s reality-TV show “Shark Tank.”

    And in a recent edition of the “Corner Office” series published by The New York Times, she had this to say:

    “I never read a résumé until after the interview because you never know who wrote it, and you can be fooled by it. If you read a résumé, the interview is nothing but a business small-talk session confirming stuff you just read.”[6]

     

    See you next Friday.

     

     

    Endnotes

    [1] “7 Unconventional ways to land your dream job” by David Williams. Forbes (online), July 23, 2104. https://www.forbes.com/sites/davidkwilliams/2014/07/23/7-unconventional-ways-to-land-your-dream-job/#4375ff2a1582. Retrieved June 22, 2017.

    [2]“The Importance of a Well Written Professional Résumé” by Judi Roo. https://www.linkedin.com/pulse/importance-well-written-professional-resume-roo-resumes-judi-roo. Retrieved June 22, 2017.

    [3] “Yes, Your Résumé Needs a Summary” by Jane Heifetz. Harvard Business Review (online), July 28, 2015. https://hbr.org/2015/07/yes-your-rsum-needs-a-summary. Retrieved June 22, 2017.

    [4] Harvard Business Essentials Manager’s Toolkit, Subject Advisor: Christopher Bartlett. (2004), Harvard Business School Press: Boston, MA, p. 25.

    [5] “Interviewers who haven’t even read you résumé” by Alison Greene. Posted February 4, 2012. http://www.askamanager.org/2012/02/interviewers-who-havent-even-read-your-resume.html. Retrieved June 22, 2017.

    [6] “The Power of a Positive Attitude,” by Adam Bryant. The New York Times (Corner Office Series), June 4, 2017, p. B2. https://www.nytimes.com/2017/06/02/business/barbara-corcoran-shark-tank.html?rref=collection%2Fcolumn%2Fcorner-office&action=click&contentCollection=business&region=stream&module=stream_unit&version=latest&contentPlacement=3&pgtype=collection&_r=0.

     

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  • 2 minute read

     

    As many of my regular readers are by now well aware, I have a problem with contradictory or paradoxical management advice.

    I have, after all, devoted an entire series of posts to the topic, which you can link to by clicking here.

    But contrary to what you may think, it’s not just that I find this phenomena to be annoying.

    Or frustrating.

    No – my intent in bringing this issue up again and again (and again) is because it’s the best way I can think of to demonstrate how very little—if anything—is known about good management, and its practice.

    I mean, think of it. If physicists or astronomers contradicted themselves as much as management “experts” do, how much stock would we put in those sciences? (For instance, imagine an astronomer insisting that “the sun revolves around the earth,” and then immediately offering evidence that the earth revolves around the sun?)

    And yet not only do management scholars and “scientists” engage in this sort of contradiction all the time – they seem to be either completely unaware that they are doing so, or simply don’t care.

    So before I get to this week’s paradox – I’d like to offer you the following thought to keep in mind:

    Maybe managing is still a relatively “new”—and therefore unexplored—science. Maybe some core management principle (or principles) have yet to be discovered and/or described.

    That would certainly explain why no one can seem to get their story straight when it comes to how best to manage a group of people. It would also account for all of the contradiction and paradox I’ve found in the management advice literature over the years.

    It might even explain why good managers are so hard to find.

    Alright, so much for the preamble. For this week’s installment, an example from Adam Grant’s 2013 bestseller Give and Take


     

    Give and Take

    Admittedly, Mr. Grant’s book isn’t about managing or management specifically. Instead, it’s part of a growing body of self-help literature focused on achieving personal success in one’s career, and in life.[1] Or, as the book’s jacket describes it, Give and Take is about “the secret to getting ahead.”

    (Presumably, though, managers would like to “get ahead” just as much as anyone else does.)

    So with this in mind, I offer the following for consideration:

    • In his text, Grant makes a strong case for being what he calls a “giver,” as opposed to a “matcher” or “taker.” The data suggests, he insists, that those at the top of the “success ladder” are generous people (p. 7).
    • But givers don’t get to the top if they’re giving just to be “nice,” or “altruistic,” Grant adds (p. 10). Those who put others before themselves fair no better (and often end up worse off) than the matchers and takers. Instead, givers who succeed “are every bit as ambitious [my emphasis] as takers and matchers.” (p. 10).
    • Nevertheless, on page 26 Grant contradicts himself. Any giving you might do that is motivated by ambition or the desire to succeed, he now asserts, will likely backfire:

    But if you do it [become a giver] only to succeed, it probably won’t work.

     

    See you next Friday.

     

     

    [1] “’Self-help’ books set to fill publishers coffers in 2014” by Viv Groskop, The Guardian (online), Dec. 28, 2013. https://www.theguardian.com/books/2013/dec/28/self-help-books-literature-publishers-growth. Retrieved June 15, 2017.

     

     

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  • June 9, 2017

    4 minute read

     

    Recently, The New York Times published a list of the 200 best paid CEOs in the U.S. So for this week’s post, a few highlights from their rankings…

    According to The NYT study (which was conducted on behalf of the news organization by Equilar), total compensation for top executives increased in 2016, after slipping the previous year. On average, pay packages for these CEOs increased by 16% relative to 2015. The average American worker, on the other hand, saw about a 2.5% percent gain in real wages.[1]

    The big winner in 2016 was Thomas Rutledge, CEO of Charter Communications (a telecommunications company that you probably know better as Spectrum) according to Equilar.

    Rutledge received a total compensation package of $98,012,344 last year, including a base salary of $2,000,000; cash bonuses totaling $7,651,397; stock awards of $10,086,658; stock options worth $77,980,740; and $283,549 in perks and other rewards.

    Number two in the rankings—Leslie Moonves of CBS—made almost $30M less. He received $68,594,646 in total compensation, including $3,500,000 base pay, $32,000,000 in cash bonuses, $31,946,942 in stock, and $1,147,704 in other rewards.

    Here are few other highlights from this list:

    • Nike CEO Mark Parker clocked in at #5 ($47,615,302 in total compensation) which probably comes as no great shock to you given that company’s success. What may surprise you, however, is that he was beat out for the #4 position by the Estee Lauder CEO, Fabrizo Frida ($47,691,779).
    • Safra Catz of Oracle was the highest paid female CEO in 2016 according to the study ($40,943,812 in total compensation), and the only woman to crack the top 10 (she was #8). Interestingly, Catz’s co-CEO at Oracle, Mark Hurd, made a bit more than she did ($41,121,896) – enough to earn him the #6 spot.
    • Howard Schultz, the well-known CEO of Starbucks, came in at #44 ($21,815,498 in total compensation) according to Equilar, putting him just behind current Wal-Mart CEO C. Douglas McMillon ($21,841,988).
    • Pepsi beats Coke when it comes to be executive pay, it seems: Pepsico CEO Indra Nooyli received $26,168,597 in total compensation (#30), while Coca-Cola CEO Muhtar Kent received $16,028,941 (#67).
    • Secretary of State Rex Tillerson was awarded $25,144,255 last year as CEO of Exxon Mobil (#31), before assuming his current duties. And a company you may recall from the Bush years, as well as the more recent Deepwater Horizon disaster, Halliburton’s CEO David J. Lesar, received $17,441,226 in 2016 (#92).[2]
    • The CEOs of health insurance companies were among those well represented in the top 200. Universal Health Service’s CEO Alan Miller received $19,823,149 (#59), Aetna’s Mark Bertolini received $18,653,231 (#74), and UnitedHealth Group’s Stephen Helmsley received $15,695,513 (#121).
    • And so were the CEOs of pharmaceutical companies: Regeneron Pharmaceuticals (#18), Johnson&Johnson (#50), Biogen (#90), Vertex (#93), Merck (#97), Pfizer (#98), Biomarin Pharmaceuticals (#100), Bristol-Myers-Squibb (#101), Amgen (#104), Abbott Laboratories (#111), Eli-Lilly (#139), and Gilead Sciences (#165).
    • And yes, Mylan’s much criticized CEO Heather Bresch even made the list (#188). She was awarded $13,269,928 in total compensation in 2016 – a year in which her company opted to raise the price of her company’s EpiPens by nearly 500%.[3]
    • Finally, Goldman-Sachs CEO Lloyd C. Blankfein received $20,204,374 in total compensation (#55).

     

    Notably absent from these rankings were such celebrity CEOs as Tim Cook (Apple), Mark Zuckerberg (Facebook), and Elon Musk (Tesla).

    As The Times points out, this can be attributed to the variety of ways in which executive compensation might be calculated. For instance, Equilar includes the full value of a stock grant in the year it was awarded, whereas others will spread the value of these grants over a multi-year period.

    One of the organizations that does this is Bloomberg, and their 2016 list of the 10 best paid CEOs is worth comparing to Equilar’s. According to their assessment, both Mr. Cook and Mr. Musk make the cut – receiving $150,036,907 (#2) and $99,744,920 (#5) in total compensation, respectively. And in fact, the only CEO to make the top 10 on both lists was CBS’s Leslie Moonves. (He came in at #9 according to Bloomberg.)

    But no matter how you slice it, all of these CEOs are extremely well compensated. And this, of course, is a source of growing frustration for most Americans. According to a 2016 study conducted by the Stanford Business School, seventy-four percent of Americans believe CEOs are overpaid…even though that same report found most Americans underestimate how much executives receive:

    “The typical American worker believes a CEO earns $1 million in pay…whereas median reported compensation for the CEOs of these companies is approximately $10.3 million…” (p. 4)

    Finally, it is perhaps worth noting that 50 years ago, the average CEO “only” made 20 times what their employees earned, according to The Times’ article. Today, it stands at around 350 times the average American worker’s salary – which The Times reports is $37,632 according to figures maintained by the AFL-CIO.

    And Mr. Rutledge?

    Last year he made 2,617 times that amount.

     

    See you next Friday.

     

    Endnotes

    [1] https://www.bls.gov/news.release/empsit.nr0.htm. Retrieved June 8, 2017.

    [2] In the run up to the 2003 Iraq War, Halliburton was awarded a $7 billion no-bid government contract. The organization was later accused of overcharging the Pentagon. From: http://news.bbc.co.uk/2/hi/middle_east/7444083.stm. Also, investigations carried out by the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling found that Halliburton was jointly at fault along with BP and Transocean. Halliburton subsequently pleaded guilty to destroying evidence after the April 2010 disaster. From: https://en.wikipedia.org/wiki/Halliburton#Sale_of_KBR. Both retrieved June 8, 2017.

    [3] “Painted as EpiPen Villan, Mylan Chief Says She’s No Such Thing” by Katie Thomas. The New York Times, Aug. 26, 2016. https://www.nytimes.com/2016/08/27/business/painted-as-a-villain-mylans-chief-says-shes-no-such-thing.html?_r=0. Retrieved June 8, 2017.

     

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