Monday, February 17th, 2014
People who find stupid actions a source of amusement usually focus on celebrities, real or faux, and politicians.
Not me; I focus on the business world.
The first of two standouts this week is AOL, which decided to change the 401K matching plan to save money.
Moreover, CEO Tim Armstrong moved his foot from his mouth to deep in his throat by blaming the needed cost savings on Obamacare and supporting unusual cases like two women with complicated pregnancies.
When the employees screamed and the poop hit the media fan Armstrong and AOL swiftly backpedaled and reinstated the old policy.
A few years ago occasional contributor Matt Weeks wrote about the “startup social contract” and the repercussions when it’s broken.
If the workers and/or the exec team come to disrespect, disbelieve or ignore this social contract, the company is lost.
Although Matt wrote about the contract in terms of startups, it applies to enterprises of all sizes and ages.
While AOL’s actions were ill-advised, Goldman Sachs was just plain stupid, although they were encouraged by the sponsoring student group.
The conference, Women Engineers Code, or WECode, which was organized by an undergraduate student group at Harvard, featured stacks of cosmetic mirrors with the Goldman Sachs logo, a photograph posted to Instagram shows. The Instagram user also said that the bank brought nail files to the event.
One of the attendees wondered if the swag represented “sexyfeminism or gender stereotyping”
I can assure her it didn’t.
To quote a senior manager I’ve known for years, “given the choice between stupidity and malice aforethought the cause is almost always stupidity.”
Flickr image credit: The Columbian
Wednesday, March 21st, 2012
Last December a post entitled Top Ten Reasons Why Large Companies Fail To Keep Their Best appeared in Talent Forbes and about a month later another contributor boiled the 10 reasons down to one (with 2 parts),
1) Create an organization where those who manage others are hired for their ability to manage well, supported to get even better at managing, and held accountable and rewarded for doing so.
2) Then be clear about what you’re trying to accomplish as an organization – not only in terms of financial goals, but in a more three-dimensional way. What’s your purpose; what do you aspire to bring to the world? What kind of a culture do you want to create in order to do that? What will the organization look, feel and sound like if you’re embodying that mission and culture? How will you measure success? And then, once you’ve clarified your hoped-for future, consistently focus on keeping that vision top of mind and working together to achieve it.
Yesterday’s Ducks in a Row focus was Greg Smith and his resignation from Goldman Sachs. Greg resigned because he felt the culture had deteriorated to the point that he could no longer ethically tell candidates that it’s a great place to work—Goldman’s focus is squarely on maximizing their own profit and clients be damned. (The story is all over traditional and social media.)
At the end of his resignation Greg says,
Make the client the focal point of your business again. Without clients you will not make money. In fact, you will not exist. Weed out the morally bankrupt people, no matter how much money they make for the firm. And get the culture right again, so people want to work here for the right reasons. People who care only about making money will not sustain this firm — or the trust of its clients — for very much longer.
The bold is mine and that thought fits the “if you learn nothing else…” admonishment.
But I will go a step further—
You can’t attract great clients without great talent, so even if you make money in the short-term you will die in the long-term—bereft of both talent and clients.
Great culture attracts great talent; great talent attracts great clients; great clients spend great money—over and over and over.
Flickr image credit: Samuel Mann
Tuesday, March 20th, 2012
If you are in touch with any media, traditional, new or social, you are probably aware that Greg Smith resigned last Wednesday from Goldman Sachs; resigned very publicly in the form of an op-ed piece in the NY Times.
The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.
Smith was executive director and head of the firm’s United States equity derivatives business in Europe, the Middle East and Africa, but for years he was deeply involved with Goldman’s recruiting efforts.
I knew it was time to leave when I realized I could no longer look students in the eye and tell them what a great place this was to work.
Because of the recruiting video he wasn’t quite the anonymous 33-year-old midlevel executive described, but now his comments and opinions are on everybody’s mind.
(You can read Lloyd Blankfein and Gary Cohn’s response to the resignation here.)
Backing up one’s ethical beliefs means putting your money where your mouth is, which may be a difficult concept for many players and commentators in the financial world to understand.
Mr. Smith is making a considerable financial sacrifice in publicly criticizing Goldman. Most Wall Street employees sign nondisparagement and nondisclosure agreements before they join a firm. If Mr. Smith did, Goldman may take legal action and refuse to release stock options he has accumulated. Mr. Smith may also find it difficult to find work on Wall Street after such a public resignation.
But if I were an employer I would work particularly hard to bring Smith into my organization.
After all, how often do you have the opportunity to hire a moral compass that has already been tested and proven accurate?
Flickr image credit: Brett Jordan
Saturday, October 9th, 2010
Today’s offering includes three fascinating examples of lousy leadership at work, two explanations of the worst traits of lousy leadership and a review of a remedial book for lousy leaders.
The first example of lousy leadership is personally embarrassing, not because it’s about me, but because in January 2008 and again in April I lauded this lousy leader for creating a great culture. Little did I know. The lousy leader is Sam Zell and his hand-picked executive Randy Michaels, now CEO, created a culture that rivals or exceeds anything you’ve heard about on Wall Street.
Randy Michaels, a new top executive, ran into several other senior colleagues at the InterContinental Hotel… After Mr. Michaels arrived, according to two people at the bar that night, he sat down and said, “watch this,” and offered the waitress $100 to show him her breasts.
And it went downhill from there.
Next we have a pair of lousy leader brothers, Sam and Charles Wyly, who have avoided paying taxes on hundreds of millions of dollars by using trusts and tax haven-based shell corporations. And these two Texas swashbucklers are sure that the upcoming election will see an end to their problems.
“I think it’s good politics to beat up on big companies and rich people,” said Sam Wyly. Soon, he said, “the election will be over, and this will be forgotten about, or lost, be shut down, be gone, will be nothing.”
The third is Goldman Sachs, a company stuffed with lots of lousy leaders. Not another article, but a recommendation to watch CNBC’s Goldman Sachs: Power and Peril when it repeats October 26 at 8pm ET in case you missed it last Sunday.
Greed is a constant hallmark of lousy leaders. According to Andrew Lo, an MIT professor who researches the relationship between neuroscience and economics, greed actually has a chemical basis.
“When a person acquires resources, chemicals are released in the brain that cause the sensation of pleasure. Greed is simply the addiction to that release.”
Can corporate culture turn good leaders into lousy leaders?
Organizations have more power to direct employee ethical behavior of than we previously knew.
That’s the bottom line of new research from the University of Washington Foster School of Business that demonstrates, for the first time, the relationship between moral intuition—a reflexive perception of what is right and wrong—and moral behavior.
Finally, the perfect gift for lousy leaders—a copy of Marshall Goldsmith’s new book, Mojo: How to Get It, How to Keep It, and How to Get It Back If You Lose It
Flickr image credit: http://www.flickr.com/photos/pedroelcarvalho/2812091311/
Monday, July 19th, 2010
According to a post in Forbes by Gregory Unruh, citing one at Motley Fool, many corporations include “ethical waivers” in their corporate Ethical Codes of Conduct, including Goldman Sachs, ExxonMobil, Citigroup, Altria and many others.
Waiver clauses leave the door open for companies to violate their own code of ethics if executives and the board decide it’s a “good” idea. In effect, waivers are a “code of ethics safety valve,” the metaphorical opposite of a blow-out preventer. Why have them? Waivers will just cause problems; a corporate code of ethics is created and designed to limit management decision options to ethical choices. Usually it’s not a problem, but ethics can sometimes impinge on profits. Corporations and their shareholders don’t like to miss out on profits, so the safety valve allows them to sacrifice their ethics if the price pressure is high enough.
Why am I not surprised?
Both authors do an excellent job lambasting the idea that if it pays enough ethics can be waived, so I’m not going to restate the obvious.
Granted, it does take Board approval to use the waiver clause, but that doesn’t seem to be a problem.
Enron’s Board waived the Code of Ethics that prohibited self-dealing by corporate officers and approved off-balance sheet “special purpose entities” and we all know the result of that.
Again, no surprises; not when so many companies put profits, share price and looking good ahead of everything.
What did surprise amaze flabergast, me was that the Goldman Board has issued no waivers.
Confronted about this waiver, a Goldman spokesman responded to blogger ZeroHedge by saying: “The ethics code, including waiver provision, was required under [Sarbanes-Oxley] (Note: It’s not.). No waivers have been requested.”
Isn’t it nice to know that Goldman considers all their actions over the last few years to be ethical.
Wow! I’m not just surprised, I’m speechless.
Flickr image credit: http://www.flickr.com/photos/saeba/3479264260/
Saturday, November 28th, 2009
When I remember all the years I spent convincing executives that culture wasn’t an idea propagated by consultants with an eye to their bottom line I have to laugh—otherwise I’d probably cry.
These days, culture is on the front page and front line of everybody’s’ mind, credited or blamed for company success and failure.
Take Goldman Sachs (please!) and its ‘culture of sharing’, which is good, except it doesn’t seem to extend to shareholders, and the coming bonuses are as obscene as always.
Google is a touchstone for any conversation about corporate culture. Inside The Mind Of Google is a multi-part, in-depth look at the company starting December 3 on CNBC. Get ready for it by taking this quiz and find our how much you know about Google.
Companies know that hiring an executive, or merging companies, that aren’t at least culturally synergistic is often a road to disaster, so organizational psychologists are finding ways to scientifically evaluate the fit; of course, as soon as the tools are developed people will find new ways to game the system.
And then there’s Asana, a startup that has a “…grand vision of de-Dilbertizing corporate culture by creating technology that enables a workplace to function with greater efficiency and a minimum of miscommunication.“ But as the article points out, technical solutions don’t neutralize pointy-haired bosses.
Finally, take a look at what happens when you don’t just add windows, but actually move the entire office outside.
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Image credit: nono farahshila on flickr
Friday, August 1st, 2008
Yesterday I asked, “What else does Wall Street and the financial industry do besides cripple corporate strategic efforts?”
They fight for self-regulation, assuring watchdog agencies and Congress that they are good guys that should be trusted to do the best thing and that the economy will tank if any kind of control or regulation is enacted—and they win.
They win based on the money spent to focus the efforts of well-connected lobbyists on stopping cold, or at least significantly watering down, any legislation or rules that might offer protection to us—the people who keep them all in BMWs and champagne.
Wall Street and the other financial services industries aren’t alone in this, every industry does it, but the money guys seem to be exceptionally successful—until something blows up. Then, when public outcry is loud and tempers are hot, Congress has the leverage to pass anything—whether it fixes the problem or merely makes them look like they care.
Deregulation was one of the prime factors in the S&L mess in the eighties; earnings pressure combined with personal greed fueled many of the recent corporate financial fiascos—think Enron, WorldCom, Adelphia Communications, Citigroup, Goldman Sachs, J.P.Morgan Chase, Deutsche Bank, and others.
And now, of course, we have the Sub-prime debacle with which to contend.
And after each of these, Congress, the SEC and others all run to add laws and rules to prevent it from happening again.
The repercussions from the latest snafu (Navy term meaning ‘situation normal—all f*ked up’) are reverberating through the credit markets making it more than difficult for corporations, small business and just plain folks to access it.
Who will step into the breach to provide investment and liquidity?
Private equity and big hedge funds—both with even less regulation and even larger egos and greed factors than more traditional Wall Street firms.
“But a landgrab by big hedge funds and private equity firms might create new problems. The Securities & Exchange Commission and the Finance Industry Regulatory Authority oversee investment banks to some degree, and the Federal Reserve is moving in that direction. But hedge funds are largely unregulated and aren’t bound to make any disclosures to anyone but their investors. Even that information is often incomplete. A move by hedge funds into traditional corporate finance would mean even less transparency than exists on Wall Street now.”
It’s a sad fact that the 214-year-old force that was instrumental in building the most powerful industrial nation on the planet could be just as instrumental in presiding at its demise.
Understand, it’s not that I have much faith in government regulation, but have seen little-to-no proof that self-regulation works—it’s too much like having the fox care for the hen house.
So-called government intrusion is the result of the inability of various industries to “self-regulate” for any reasons other than short-term profit, doing as much they can get away with and pushing the boundaries beyond what’s reasonable.
So you tell me, how can we get well-reasoned laws that aren’t defeated or seriously watered down by special interest groups and industry lobbyists before the crisis?
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Image credit: pinkfloyd CC license
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