Poking through 11+ years of posts I find information that’s as useful now as when it was written.

Golden Oldies is a collection of the most relevant and timeless posts during that time.

It’s said that money is the root of all evil, but there are plenty of evil people with no money and lots of wealthy people who do enormous good. I think it’s more accurate to say that greed is the root, since people will do anything to satisfy it. And often, what they do is perfectly legal — but legal doesn’t mean either ethical or moral.

Read other Golden Oldies here.

I’m no happier about the AIG and other bonuses paid to screwed up Wall Street banks, but I’m not sure why any of us are surprised.

“In the largest 25 corporate bankruptcies between 1999 and 2002, while hundreds of billions of dollars of investor wealth and over 100,000 jobs disappeared, the Financial Times found the “barons of bankruptcy” made off with $3.3 billion.”

Giant compensation packages, guaranteed bonuses and platinum parachutes are excused by Boards and executives as necessary to attract the “best and brightest,” but here’s what’s really going on.

The ‘names’ demand outsize compensation/stock options/guaranteed bonus/etc. in order to validate their ‘brand’.

Those responsible for hiring not only meet the demands, but even exceed them in an effort to attain or sustain the company’s reputation as a better home for ‘stars’ — the more stars you have the greater the bragging rights — mine’s bigger than yours in high school locker room talk.

Now let’s consider the folly of this attitude.

Those hiring often seek a name brand in the mistaken belief that the brand comes with a warranty that guarantees good results.

But no matter who you hire you’re actually paying for their past performance, which is always influenced by

• • circumstances—boss and company positioning in its market and industry
  • environment—culture and colleagues;

and let us not forget that minor factor

• • the economy.

The hiring mindset is that everything the brand accomplished was done in a total vacuum and dependent only on the brand’s own actions, therefore changing every single surrounding factor will have no impact on performance.

Put like that it sounds pretty stupid, doesn’t it.

This is one of the prime reasons that so many CEOs bring their ‘own team’ over when they move, as do managers all the way down the food chain—they know they didn’t do it alone.

CEOs aren’t like movie and rock stars whose very names draw consumers into spending money—nobody ever bought a product from GE because Jack Welch was CEO, nor do they carry Jobs iPods—so why pay them that way?

Moreover, assuming that performance occurring during an expansion is a valid yardstick for performance in general, let alone a downturn, is sheer idiocy.

You have only to remember the difficulties faced by people whose management skills were honed between 1991 and 2000, the longest expansion in our history. When the recession hit in March of 2001 they had no experience whatsoever of how to drive revenue or manage in a down economy.

That recession and the previous one in 1990 lasted only 8 months each. The longest recession we’ve had was 2 years, January-July 1980 and July 1981-November 1982, and that one had a 12 month break in it. This means there are a very small number of managers with any actual experience managing in anything even close to what’s happening now.

The current recession officially started in December 2007, so it’s already 15 months old and the end isn’t in sight.

What experience makes these folks the ‘best and brightest’ for today’s world?

Just why the hell are companies still guaranteeing oversized compensation and exorbitant exit packages when now is definitely the time to pay for future performance—no guarantees.

Image credit: flickr

Monday was about dealing with jerks in your workplace and yesterday about managing lazy co-workers.

What about bosses? Where are they? Why is it being left to workers to deal with problem co-workers?

Over the years (decades, actually), I’ve heard all the excuses — ‘I can’t be everywhere’, ‘I’m working on it’, or the ubiquitous ‘I’m busy’.

Those are the “good” excuses; here are the bad ones — ‘they’re really good at [whatever]’, ‘they’re a friend/relative of X’, ‘they’ve been here since the beginning’, and, in some ways, the worst ‘deal with it’.

Being self-motivated and self-managing should not include having to manage your colleagues.

That’s the boss’ job and why they make the bigger bucks.

I’ve never forgotten what Terry Dial, who eventually became vice chairman of Business Banking at Wells Fargo, told me decades ago when I was a recruiter, “People are 90% of our costs as well as the key to customer service and satisfaction. The only thing that should take priority over hiring a new employee is keeping a current one.”

That hasn’t changed in all these years.

Which begs the question, what are the bosses doing?

Avoiding direct interactions by hiding behind social media and chat apps, just as they hid behind email and, before that, memos.

Sometimes it’s because they are promoted in spite of not being a “people person,” which has nothing to do with whether they are extroverts or introverts.

Good bosses know that when someone is messing up, hurting or one of the other myriad causes of less than optimum behavior, it’s their responsibility.

Period.

No ifs, ands, buts, or excuses.

Image credit: Jordan Davis

              (see the full Infographic at Business Insider)

Poking through  13+ years of posts I find information that’s as useful now as when it was written.

Golden Oldies is a collection of the most relevant and timeless posts during that time.

People. Whether at work or in your personal life, how you choose to respond to people is usually the make or break of any situation. That is especially true when dealing with someone’s negative actions.

Read other Golden Oldies here.

I’m in love — with a man I never met, never spoke to, never followed or chatted with online.

His name is Rich Waidmann and he’s founder and CEO of Connectria Hosting.

I love him because when he started his company he consciously set out to make it a great place to work.

That means it’s a job requirement at his company that every employee treat everyone else with courtesy and respect as well as “going the extra mile” to take care of people in the community who are less fortunate

Then his company did a survey and found that

More than half (55%) of 250 IT professionals in the US. surveyed said they had been bullied by a co-worker. And 65% have said they dreaded going to work because of bad behavior of a co-worker.

Waidmann believes it shouldn’t be that way so he’s starting a No Jerks Allowed movement in an effort to encourage better cultures.

Way back in 2007 Stanford’s Bob Sutton wrote The No Asshole Rule: Building a Civilized Workplace and Surviving One That Isn’t, but looking at the stats I’m not sure how much good it actually did.

And considering the fact that companies are shoehorning more people into less space something needs to change.

The Talmud says, “We do not see the world as it is. We see the world as we are.” Moreover, it’s often as we are that particular day, or even minute, and even as we change, minute to minute, so do others.

Jerks are known to lower productivity and kill innovation, so a lot of good information on identifying and dealing with jerks has been developed since Sutton’s book came out.

Contributing to that effort, here are my four favorite MAP attitudes for dealing with jerks.

• • Life happens, people react and act out, but that doesn’t mean you have to let their act in.
  • Consider the source of the comment before considering the comment, then let its effect on you be in direct proportion to your respect for that source.
  • Use mental imagery to defuse someone’s effect on you. This is especially useful against bullying and intimidation. Do it by having your mental image of the person be one that strips power symbols and adds amusement. (Give me a call if you want my favorite, it’s a bit rude, but has worked well for many people.)

And, finally, the one I try to keep uppermost in my mind at all times

• • At least some of “them” some of the time consider me a jerk—and some of the time they are probably correct.

Image credit: Connectria

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here.

A couple of years ago Dick Costolo explained why startups needed to hire “brilliant jerks” in order to succeed.

It’s stuff like that, especially from people like Costolo, that gives people permission to act like jerks.

Why?

Because people who tend to be jerks are usually delusional enough to believe that they’re brilliant.

But what about those who are brilliant (or what passes as such these days) and act like jerks?

Well, why not?

All they are doing is living up to expectations and, like Pavlov’s dog, the more free passes they get the more they will believe their actions/attitudes are OK.

In my life I’ve been around a lot of real brilliance and they had certain traits in common.

Without exception, they loved sharing their knowledge, building up those around them and helping them grow — no matter who.

That’s what truly brilliant people do; that’s why they are remembered.

The same goes for everyone who does the same.

Whereas the jerks are ephemeral and soon forgotten.

If they are remembered, it’s for what they did, as opposed to how they acted.

Steve Jobs is a good example, as is Jeff Bezos.

Think about it; what’s the likelihood that the brilliant jerks in your world are in the same league?

Image credit: HikingArtist

I’ve made my own hiring errors, as have we all (anyone who claims otherwise is lying).

So when interviewing, we have a few company-wide mantras (for lack of a better term) to guide us.

I find this one goes a long way to ensuring we don’t get caught up in people’s past, rather, it helps us focus on attitude and potential.

“The main ingredient of stardom is the rest of the team.” — John Wooden, basketball player and coach

Look at all the people who were stars at places like Goldman Sachs or Google, such as Marissa Meyer, or GE’s Bob Nardelli (who nearly destroyed Home Depot), who were unable to maintain their level of performance outside the culture, systems and management of that specific company.

That’s why it’s always dangerous to hire stars — more than anything else they are a product of their environment.

Image credit: Lee Haywood

Poking through 11+ years of posts I find information that’s as useful now as when it was written.

Golden Oldies is a collection of the most relevant and timeless posts during that time.

You can not imagine the thrill when I see the stuff I passionately believe in mirrors the beliefs of people I hold in high regard, such as Fred Wilson, who knows and has experienced far more than I ever will. It’s a definite high.

Read other Golden Oldies here.

A few days ago Fred Wilson wrote about the importance of culture and fit.

Some entrepreneurs and CEOs buy into “hire the best talent available” mantra. That can work if everything goes swimmingly well. But as I said, it often does not, and then that approach is fraught with problems. The other approach is hire for culture and fit. That is the approach I advocate.

That’s the same approach I’ve advocated for decades.

What many forget is that “the best talent available” refers to whoever will perform best in your culture as part of your team and focus on your company’s success.

Too many founders, CEOs, other execs and even lower level managers seem to hire for bragging rights instead.

I wrote about hiring and culture here last Sept and included a link to an article I wrote for MSDN way back in 1999 that explained how to use your culture as a screening tool when hiring.

I’ve always told clients that the fastest way to success is to always hire the right person at the right time and for the right reasons.

Good hiring is like cooking Chinese—80% of the time used is spent prepping and the balance doing.

There really are no shortcuts; especially not hiring other people’s stars.

Not to sound self-serving, but I’ve been surprised at how closely the ideas I’ve always believed in parallel Wilson’s thoughts.

Image credit: HikingArtist

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here.

A few years ago I wrote that good bosses need to be part shrink in order to deal with imposter syndrome and real programmer syndrome (for lack of a better term).

Now, there’s a third mental quirk to add to that list; call it high performer expectations syndrome.

Founders have notoriously high expectations of themselves and everyone they hire.

Those expectations are great motivators as long as things are going well.

However, those same high expectations, both external and internal, can have a negative effect on the best people — including the founder.

What we found essentially is this: When the going gets tough, favorites are more likely to quit. […]  When people walk in with high expectations and they begin to falter and experience setbacks, they have two options. They could persist and try to grind it out, or they could take the easier route that might preserve their self-esteem, be less embarrassing, and exit.

Founders and other high-performance team members aren’t likely to quit, although massively hyped stars are another matter.

Most high performance people know they are fallible, so the hit to their self-esteem is more internal and they are less likely to personalize public embarrassment — both attitudes that usually respond positively to “we’re all in this together” team support and coaching.

Stars, however, typically have a strong belief in their infallibility and a high sensitivity to public embarrassment — not a combination that lends itself to team support or coaching.

Good bosses take care of their people and themselves.

They also meld high expectations with a strong culture; one that makes glitches and even failing a learning experience that leads to both company and personal growth.

Image credit: HikingArtist

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here.

If I have to listen/read one more time about value/importance/etc of hiring “stars” or the “best” whatever I think I may scream. Or, better yet, shove the words/premise down the appropriate throat.

While I, and a small minority, have tried to debunk this mindset we haven’t made much progress.

So here’s an article from Scott E Page, the Leonid Hurwicz collegiate professor of complex systems, political science and economics at the University of Michigan, Ann Arbor.

Perhaps you’ll pay attention to him.

Why hiring the ‘best’ people produces the least creative results

While in graduate school in mathematics at the University of Wisconsin-Madison, I took a logic course from David Griffeath. The class was fun. Griffeath brought a playfulness and openness to problems. Much to my delight, about a decade later, I ran into him at a conference on traffic models. During a presentation on computational models of traffic jams, his hand went up. I wondered what Griffeath – a mathematical logician – would have to say about traffic jams. He did not disappoint. Without even a hint of excitement in his voice, he said: ‘If you are modelling a traffic jam, you should just keep track of the non-cars.’

The collective response followed the familiar pattern when someone drops an unexpected, but once stated, obvious idea: a puzzled silence, giving way to a roomful of nodding heads and smiles. Nothing else needed to be said.

Griffeath had made a brilliant observation. During a traffic jam, most of the spaces on the road are filled with cars. Modelling each car takes up an enormous amount of memory. Keeping track of the empty spaces instead would use less memory – in fact almost none. Furthermore, the dynamics of the non-cars might be more amenable to analysis.

Versions of this story occur routinely at academic conferences, in research laboratories or policy meetings, within design groups, and in strategic brainstorming sessions. They share three characteristics. First, the problems are complex: they concern high-dimensional contexts that are difficult to explain, engineer, evolve or predict. Second, the breakthrough ideas do not arise by magic, nor are they constructed anew from whole cloth. They take an existing idea, insight, trick or rule, and apply it in a novel way, or they combine ideas – like Apple’s breakthrough repurposing of the touchscreen technology. In Griffeath’s case, he applied a concept from information theory: minimum description length. Fewer words are required to say ‘No-L’ than to list ‘ABCDEFGHIJKMNOPQRSTUVWXYZ’. I should add that these new ideas typically produce modest gains. But, collectively, they can have large effects. Progress occurs as much through sequences of small steps as through giant leaps.

Third, these ideas are birthed in group settings. One person presents her perspective on a problem, describes an approach to finding a solution or identifies a sticking point, and a second person makes a suggestion or knows a workaround. The late computer scientist John Holland commonly asked: ‘Have you thought about this as a Markov process, with a set of states and transition between those states?’ That query would force the presenter to define states. That simple act would often lead to an insight.

The burgeoning of teams – most academic research is now done in teams, as is most investing and even most songwriting (at least for the good songs) – tracks the growing complexity of our world. We used to build roads from A to B. Now we construct transportation infrastructure with environmental, social, economic and political impacts.

The complexity of modern problems often precludes any one person from fully understanding them. Factors contributing to rising obesity levels, for example, include transportation systems and infrastructure, media, convenience foods, changing social norms, human biology and psychological factors. Designing an aircraft carrier, to take another example, requires knowledge of nuclear engineering, naval architecture, metallurgy, hydrodynamics, information systems, military protocols, the exercise of modern warfare and, given the long building time, the ability to predict trends in weapon systems.

The multidimensional or layered character of complex problems also undermines the principle of meritocracy: the idea that the ‘best person’ should be hired. There is no best person. When putting together an oncological research team, a biotech company such as Gilead or Genentech would not construct a multiple-choice test and hire the top scorers, or hire people whose resumes score highest according to some performance criteria. Instead, they would seek diversity. They would build a team of people who bring diverse knowledge bases, tools and analytic skills. That team would more likely than not include mathematicians (though not logicians such as Griffeath). And the mathematicians would likely study dynamical systems and differential equations.

Believers in a meritocracy might grant that teams ought to be diverse but then argue that meritocratic principles should apply within each category. Thus the team should consist of the ‘best’ mathematicians, the ‘best’ oncologists, and the ‘best’ biostatisticians from within the pool.

That position suffers from a similar flaw. Even with a knowledge domain, no test or criteria applied to individuals will produce the best team. Each of these domains possesses such depth and breadth, that no test can exist. Consider the field of neuroscience. Upwards of 50,000 papers were published last year covering various techniques, domains of enquiry and levels of analysis, ranging from molecules and synapses up through networks of neurons. Given that complexity, any attempt to rank a collection of neuroscientists from best to worst, as if they were competitors in the 50-metre butterfly, must fail. What could be true is that given a specific task and the composition of a particular team, one scientist would be more likely to contribute than another. Optimal hiring depends on context. Optimal teams will be diverse.

Evidence for this claim can be seen in the way that papers and patents that combine diverse ideas tend to rank as high-impact. It can also be found in the structure of the so-called random decision forest, a state-of-the-art machine-learning algorithm. Random forests consist of ensembles of decision trees. If classifying pictures, each tree makes a vote: is that a picture of a fox or a dog? A weighted majority rules. Random forests can serve many ends. They can identify bank fraud and diseases, recommend ceiling fans and predict online dating behaviour.

When building a forest, you do not select the best trees as they tend to make similar classifications. You want diversity. Programmers achieve that diversity by training each tree on different data, a technique known as bagging. They also boost the forest ‘cognitively’ by training trees on the hardest cases – those that the current forest gets wrong. This ensures even more diversity and accurate forests.

Yet the fallacy of meritocracy persists. Corporations, non-profits, governments, universities and even preschools test, score and hire the ‘best’. This all but guarantees not creating the best team. Ranking people by common criteria produces homogeneity. And when biases creep in, it results in people who look like those making the decisions. That’s not likely to lead to breakthroughs. As Astro Teller, CEO of X, the ‘moonshoot factory’ at Alphabet, Google’s parent company, has said: ‘Having people who have different mental perspectives is what’s important. If you want to explore things you haven’t explored, having people who look just like you and think just like you is not the best way.’ We must see the forest.

Scott E Page

This article was originally published at Aeon and has been republished under Creative Commons.

Image credit: HikingArtist

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here.

KG Charles-Harris, who has written here in the past, shared a Medium post from Brandon Evans explaining how/why startups are mostly minimum wage (or less) jobs.

For instance, 50% of founders are making less than $6 an hour.

After raising $15 million Evans company reached a million in revenue the first year and tripled that each of the next three, but when Evans wasn’t interested in raising another $20 million he was fired.

Our investors are great guys and were doing their job. But that job is to maximize the returns for their investors. Homan Yuen in his VC Math post clearly shows why VCs are almost exclusively focused on unicorns (or those rare $1B+ exits). For them to generate an acceptable financial return, they typically require 2 to 3 of them per fund. “Small” $50 million or $100 million dollar exits do little for keeping their investors happy.

What those “small” companies do do is drive the economy and create jobs, obviously a goal of little-to-no interest to VCs and those who invest in their funds — despite their talk to the contrary.

Even an IPO isn’t a guarantee for enormous founder wealth, as shown in the recent SendGrid IPO.

On the other hand, two of the three cofounders no longer own as much as 5% of the company: Tim Jenkins, and Jose Lopez. Both are still listed on the company’s website as engineers who work there. The biggest winner in this IPO among the three cofounders is Isaac Saldana. He still owns 4% of the company and, at $18, his stake is worth $33 million.

Not that $33 million is anything to sneeze at, but Foundry Group was the big winner walking away with $171 million.

It’s interesting to note that SendGrid seems to have put as much effort into its culture, via its four pillars, known as the four H’s: honest, hungry, humble and happy, as its growth.

“We’re so ridiculously over the top with it, it would absolutely scare you away. If these things didn’t resonate with you, you wouldn’t come to SendGrid because you’re like, ‘OK, these guys are like a cult with those four values. That’s not for me, I’m out,” CEO Sameer Dholakia said.

“I’ve been in software and high-tech for 22 years. I know a lot of absurdly talented professionals who would hate SendGrid. It would literally be their seventh Hell because there is nothing humble about them,” he said. “And that’s OK. They’re absurdly talented and in other cultures they can thrive where it’s a star-centered culture. Great! But they would hate us.”

Any one of those values, let alone all of them together, seem to be in short supply at most of the recently headlined unicorns.

And contrary to many in the startup world, values do scale if the focus goes all the way to the top. This is how you do it, according to Sameer Dholakia, SendGrid CEO

• Keep values simple so employees will remember.
• Make them distinctive to attract people who support them. Not everyone will or should fit.
• Be conscious of behaviors that impact the values and reinforce them.

The second is where most founders fail, because they aren’t willing to walk away from stars, AKA brilliant jerks.

Of course, many founders are members in good standing of the brilliant jerks club, but SendGrid is proof that you neither have to hire them  nor be one.

Image credit: HikingArtist

It’s amazing to me, but looking back over more than a decade of writing I find posts that still impress, with information that is as useful now as when it was written.

Golden Oldies are a collection of what I consider some of the best posts during that time.

Money. Everyone’s favorite subject that no one wants to talk about. Especially when it comes to work, as in, “what were you making previously” and “what are you looking for now?”  

Tomorrow’s post focuses on a new law enacted in Philadelphia and New York City that has the potential to change that entire, unwanted conversation, forcing managers/companies to focus on the future, as opposed to history.

Read other Golden Oldies here.

In a post last week I asked for opinions on the ideas presented in a series of articles in Business Week on managing smarter but especially one that claims that “treating top performers the same as weaker ones is ‘strategic suicide’” and said I would add my thoughts in a future post.

Bob Foster left two interesting comments (well worth your time to click over and read). Regarding pay for performance he tells the story of a company where everybody from the CEO down all quit.

“Taking on the task to salvage the company, I hired new people that met unusual qualifications: they had to be qualified for the job they were applying for; they had to be unemployed and available immediately; they had to work at sub-standard wages; they had to work while knowing the company could close at any minute; and they had to work without supervision. The team that came together produced a highly successful company, and it was not because of high pay, or performance bonuses (there were none). The team stayed together, and performed, because of mutual respect, trust, appreciation, and consideration—people were ‘valued.’ To me, this is the truest form of ‘pay for performance.’”

I agree that trust was one of the key ingredients in what Bob accomplished, but it wasn’t the only one—or maybe I should say that it needs to be based on fairness and honesty.

Bob says the pay was ‘sub-standard’, but I assume that it was universally sub-standard relative to position and experience. If he had chosen to pay part of the team, say 10% more than their peers, the team wouldn’t have coalesced.

And that is exactly why I disagree with the idea of paying top performers, AKA stars, big sign-on bonuses or higher salaries than their peers.

• Based on my own experience, 98% of star performers become stars as a function of their management and the ecosystem in which they perform. Change the management, culture or any other parts that comprise that ecosystem and the star may not survive.

• Just as a chain is as strong as its weakest link there is no star in any sport, business, media, etc., who can win with a team that is subject to constant turnover and low morale.

Consider this common example.

Two people are hired at the same time with the same background, same GP0 and similar work experience, but with the one exception. One graduated from a ‘name’ school and the other from a community college. Starting salary is $50K, but the manager adds a 20% premium to the first candidate’s offer on the basis that she must be better to have gone to that school.

Neither candidate lived up to their potential because the manager made poor choices. In doing so he set both up to fail but for different reasons; one thought she had it made and the other that he was low value.

Merit bonuses fairly given for effort above and beyond acceptable performance levels make sense as long as they don’t come at the cost of developing new talent.

But one problem with ‘pay for performance’ is the pay often comes before the performance, but there are others and I’ll discuss them more Thursday. In the meantime, here are links to five posts from 2006 that give more detail on the trouble with stars.

Stars—they’re in your MAP

More about stars and MAP

Rejects or stars?

Star compensation

Retaining Stars

Image credit: sxc.hu

There were several interesting comments on the original post; check them out.