Have you read yet the story of Talia Jane?

She is a customer service rep at Yelp, whose pay puts her right down there with Walmart and bank tellers.

“I got paid yesterday ($733.24, bi-weekly) but I have to save as much of that as possible to pay my rent ($1245) for my apartment that’s 40 miles away from work because it was the cheapest place I could find that had access to the train, which costs me $5.65 one way to get to work. That’s $11.30 a day, by the way. I make $8.15 an hour after taxes.” (Minimum wage in San Francisco is $12.25 an hour.)

She was fired two hours after writing an open letter to Yelp CEO Jeremy Stoppelman on Medium.

Yelp, of course, says the letter had nothing to do with her termination.

Stoppleman has a solution.

“The reality of such a high Bay Area cost of living is entry level jobs migrate to where costs of living are lower. Have already announced we are growing EAT24 support in AZ for this reason.”

Stoppleman’s solution seems to be to kick out everyone who doesn’t earn a fat salary — how dare “them” have the temerity to want to enjoy the pleasures and opportunities of life in San Francisco/Silicon Valley.

That said, I’ve never understood why Walmart, banks, Yelp or all those who follow in their footsteps, pay their front-line people—the actual “face of the company”— what can amount to starvation wages in urban areas and then are surprised when those same people lie, cheat, steal or speak out publicly.

Tony Hsieh, of Zappos fame, Costco and Trader Joe’s are a different story.

What it comes down to is that the further away from contact with customers the greater the money, perks and benefits.

Crazy.

Flickr image credit: Javier Morales

It’s amazing to me, but looking back over nearly a decade of writing I find posts that still impress, with information that is as useful now as when it was written. Golden Oldies is a collection of what I consider some of the best posts during that time.

The effort to flatten management has been going on for awhile culminating in the idea of totally eliminating it and culminating in holacracy . I’m not impressed. Read other Golden Oldies here

How flat should an organization be?

How well do “self-starters” manage themselves?

Crucial questions for startups and small businesses, since how they are addressed can make or break the company.

Often the most important hires made when a company wants to grow are in sales.

Founders and owners often have technical, marketing or business backgrounds and many have a tendency to shrug when it comes to sales.

They see hiring salespeople as no big deal—there is an assumption that as long as they have a good track record in their previous sales position and understand the new product they can manage themselves.

If this sounds off base to you, you’re right, it’s not that simple. To use a real-life example, I had a client who thought that way.

The CEO hired “Jack” (before my time), a salesman with a fantastic record selling a parallel product to the same market.

The CEO personally taught Jack the product line and explained what the company was working to accomplish and then pretty much gave him free reign.

In the year Jack was with them he sold only two accounts, spent a good deal of his time on marketing and managed one large client; commissions totaled only $15K.

When he left he went to work in a field completely unrelated to anything he’d done before and in a market about which he knew nothing. In his first year at the new company he earned over 125K in commissions.

The difference was management.

Based on his track record both the CEO and Jack assumed that he could manage himself.

However, Jack didn’t have, and didn’t create for himself, the structure, accountability, etc., necessary to be successful.

During his exit interview he admitted that although he had no knowledge or training in marketing, he spent substantially more time than he should have because it was new and exciting.

After the CEO and I had fully analyzed what happened he concluded that the failure was 80-20, with the 80% his responsibility.

Hind sight is 20/20 and my client believes that if he had taken the time to do what was needed, instead of expecting Jack to completely manage himself, that he would still be with the company and doing a spectacular job.

The important lesson here is that “self-starter” does not mean “self-managed.” Even the best will need direction, structure, and accountability in order to perform brilliantly.

I’ve read multiple articles on holacracy, including Tony Hsieh actions at Zappos, but I believe that most people enjoy working for good managers and that they excel more and grow faster.

Of course, the operative word is “good”.

Image credit: iamwahid

Jim Heskett is a very smart guy. At the beginning of each month he asks a question of his readers, then publishes a summation of the general ideas expressed the comments at the end of it.

The topics are always timely, of great interest and the conversation lively.

This month he asked about something that is on many founders’ minds thanks to Tony Hsieh actions at Zappos.

The question was, Is the Time Right for Self-Management.

Here is the summary. I believe you will find it of great value to read all the comments if you are considering adopting/adapting it for your company or just intrigued by the idea.

When and Where Will Holacracy Work Best?

Holacracy, or self-management, is an interesting concept and not entirely new. It can work, but only under the right conditions. And its applications will be limited. That’s what one might conclude from reading responses to this month’s column.

The more thoughtful of them provide a primer on applying the concept. Deborah Nixon’s comment echoed several others when she said the idea has been around a long time in other forms, by other names. “The larger an organization becomes, the tougher one model is to implement. The time has always been ripe for self-management and there are always people who will poke up their heads and insist on managing themselves. But it isn’t a quick fix.” Others cited its long-time application in the London taxi system (Andrew Campbell), the hospital ER (M Iqbal Gentur B), and even Aboriginal societies in ancient Australia (Kai Akerberg).

Stephens Jr., who loves the idea, said, it does not come without extensive time, cost, and involvement in employee development. “I not only say yes (to the question of whether the time is right for self-management), but ‘it’s about time.'” Dyan Porter added, “Holacracy strikes me as a positive way to manage professionals, especially in flat organizations where job advancement is limited.” Brooks Tanner commented, “Regardless of its level of success at Zappos, this form of organization is the way of the future. The rapidly increasing complexity and unpredictability of our world is such that only a highly distributed decision-making structure will be able to adapt and respond effectively, she continued. “Most of us don’t think a centralized planning type economy makes sense. Why should it make the most sense for organizations?”

Others saw limited potential in the concept. As Edward Hare put it, “There are some people capable of managing themselves in a larger organization … but many who can’t… This strikes me as another of those ‘ideas’ promoted by consultants and academics. ” Frank Fabela added, “Holacracy in its form of each individual taking responsibility for their own self-management is absolutely necessary, however it is the responsibility of ‘managers ‘ to ensure effectiveness of the organization through coordination of those objectives. Pure holacracy … absent management is destined to fail.” Krishnan Mak was more succinct when he said: “Culture will eat Holacracy for breakfast.”

Many comments addressed conditions under which Holacracy might work best. “It might not be for everybody,” wrote Maria Rosa Serra, “but if you hire employees aligned with your values and pay them fairly, it seems an interesting proposal for both the company and the individual.” Juan Manuel Salas Guevara commented that the challenge in Holacracy “is a strong communication process from the top level of the organization that enables each member to understand the company’s vision.” Charlie Efford added that “The key to self-management becoming embedded is changing the mindset of the management team. Most corporations haven’t made this shift.” Denis Collet suggested “it’s all about clear goals and deliverables, and the metrics for success. Absent of these it’s bound to fail.”

Personally, I agree with Krishnan Mak when he said, “Culture will eat Holacracy for breakfast.”

Image credit: HBSWK

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

The Bay Area is touted for being the best place in the world for startups; the place that all others try to copy.

But is it really the best place?

I live in Washington State, just across the river from Portland, Oregon, AKA, Silicon Forrest. Lots of startups including a few that have jumped ship from San Francisco.

Tilde joins startups like Simple, Panic, and Sprint.ly, which have already set up shop in the city. Big-name companies like Salesforce, eBay, and Airbnb have also opened outposts here in recent months.

New York State offers cushy lures and there’s a lot more to the state than just New York City.

START-UP NY, Governor Cuomo’s groundbreaking initiative, is transforming communities across the state into tax-free sites for new and expanding businesses. Now, businesses can operate 100% tax-free for 10 years. No income tax, business, corporate, state or local taxes, sales and property taxes, or franchise fees.

Detroit should be up for consideration, too, thanks to Dan Gilbert, Quicken Loan’s billionaire owner who bought 60 skyscrapers totaling nine million square feet.

He has brought 12,500 employees with him to downtown, and along with other private investors is funding the construction of a light-rail system that will connect the central business district with the neighboring Midtown district. Through his umbrella company, Rock Ventures, he formed a start-up incubator called Bizdom and a venture-capital firm, with some of the funded companies already expanding into other Gilbert-owned office space.

Or you might prefer the new Las Vegas being guided by Tony Hsieh, using $350 million of his own money, because he deeply believes that some of the best ideas come from the unplanned interactions of dissimilar people.

He has brought 12,500 employees with him to downtown, and along with other private investors is funding the construction of a light-rail system that will connect the central business district with the neighboring Midtown district. (…) Around the same time, the Las Vegas city government was also about to move, and Hsieh saw his opportunity. He leased the former City Hall — smack in the middle of downtown Vegas — for 15 years. Then he got to thinking: If he was going to move at least 1,200 employees, why not make it possible for them to live nearby? And if they could live nearby, why not create an urban community aligned with the culture of Zappos, which encourages the kind of “serendipitous interactions” that happen in offices without walls?

One thing all of these areas have in common is diversity; because living costs are lower their populations reflect real-world attitudes and concerns, as opposed to the more homogenized views of the wealthy, super-educated white males that dominate the Bay Area.

More on them next Tuesday.

Image credit: HikingArtist

Culture is recognized as the “make or break” for companies of all sizes, so it’s logical for bosses at all levels to look for insights on creating and retaining a winning culture.

Zappos and Southwest are often held up as icons of good culture, but they also know that sustaining their culture doesn’t happen by accident—it takes consistent hard work at all levels.

They know that certain behaviors and actions must be actively managed, as well as made visible to the organization at large.

Companies with the most effective culture seek out and continually reinforce what Charles Duhigg, author of The Power of Habit: Why We Do What We Do in Life and Business (Random House, 2012), calls “keystone habits.” A keystone habit, Duhigg has noted, is “a pattern that has the power to start a chain reaction, changing other habits as it moves through an organization.” Companies that recognize and encourage such habits stand to build cultures with influence that goes beyond employee engagement and directly boosts performance.

The inherent problem that accounts for why these cultures are rarely created and, when they are, don’t have the lasting power bosses would like to see is a long way from rocket science.

The problem is, in fact, extremely simple.

Culture is more talked than walked.

Good cultures require well-thought-out, planned conscious effort.

And not just at conception, but for as long as they exist.

And sustained, well thought-out, planned, conscious effort requiring ongoing hard work is not the hallmark of most companies from startups through the Fortune 50.

Flickr image credit: David DeHetre

Everyone has an opinion on Snapchat turning down a $3 billion offer from Facebook (here’s the thinking of others who have been there), but the comments that caught my eye were from Gary Burnison, Korn/Ferry’s CEO, who focused on the cultural aspect.

Burnison said that based on his company’s experience, “…people are hired for what they know, they are fired for who they are.”

Very true, but it shouldn’t come as a surprise, as I said five years ago when I wrote Culture Trumps whether Hiring or Acquiring.

The problem is that managers often ignore culture, because they believe they that theirs is ‘right’ and the other will change. It’s not a case of you/your company being right and ‘her/them’ being wrong, it’s a case of the pieces don’t fit—and 98% of the time you should see it coming.

The power of culture has been at the forefront of many discussions, with top CEOs focusing on culture above everything, including strategy. When his investors wanted to cash out, Tony Hsieh knew going public would destroy the culture, so he sold Zappos to Amazon instead.

Burnison also said, “I never thought I would see culture trump money with $3 billion on the table.”

I did, but I thought it would take a lot longer before a CEO, let alone a founder, had the insight to understand that a successful culture is priceless.

Flickr image credit: Neil T

Mortgage originators are rarely great places to be, whichever side of the desk you are on.

The exception is Quicken Loans.

Quicken Loans was rated highest in customer satisfaction among mortgage originators in 2010, 2011 and 2012, according to J. D. Power & Associates. The company has also been ranked in the top 30 of Fortune’s “100 Best Companies to Work For” for 10 consecutive years.

What makes Quicken different?

Founder Dan Gilbert’s and CEO Bill Emerson’s focus on intentional culture—emphasis on ‘intentional’.

“If you don’t create a culture at your company, a culture will create itself,” Mr. Emerson said in a phone interview. “And it won’t be good. I sometimes hear people say ‘We don’t have a culture at our company.’ They have one. But if it hasn’t been nurtured, if no one has spent on any time on it, you can assume it’s the wrong culture.”

Call it Intentional Culture.

Of course, intentional culture comes in two flavors—positive (good) and negative (bad).

Tony Hsieh at Zappos is a master of good culture; Bob Nardelli is a master of the opposite.

If you aren’t sure how (or if) your own culture is intentional you should ask yourself the following questions.

1. What are the primary features of my group’s culture?
2. How did it happen, i.e., who originated it?
3. Does it reflect values in which I believe?
4. Does it drive the actions and attitude I want from my team?
5. Are new people coached in the culture and current people reminded, so it permeates our business every day?

Then ask yourself what you can do to enhance the best parts and realign/correct any parts that have gone astray.

Flickr image credit: Rodney Campbell

Yahoo CEO Marissa Mayer started a brouhaha recently when she ended the company’s policy of allowing staff to work from home; many insiders said it was a good move, because remote workers weren’t performing.

However, low productivity and lack of accountability is a management problem, so if she only brings people on-sight without directly dealing with the underlying management problems the results probably won’t improve much.

Hubert Joly, the new Best Buy CEO, dumped the ROWE culture in favor of 40-hour on-site workdays for the headquarters staff as the best way to boost performance in the turnaround; he also wants to  sure that everyone knows they are dispensable (himself included).

However, nothing I’ve seen indicates that the work wasn’t getting done, so dumping ROWE may prove of questionable value.

Tony Hsieh thinks on-site is better not because of accountability, but because “companies with strong cultures outperform those without in the long-term financially. So we’re big, big believers in building strong company cultures; note that Zappos’ business lends itself to having all its staff on-site.

Whereas IBM has a strong, unified culture in spite of being a global company with thousands of employees who work off-site.

Bottom line: It’s not a matter of on or off-site; it’s a matter of the strength of the culture, which is dependent on the skill of the management.

Flickr image credit: Gidzy

Last week I told you about an entrepreneur who insisted that a new winery was a business, not a startup and why I thought that was ridiculous.

Based on his thoughts, Zappos was not a startup nor was it scalable, but I’m sure that founder Tony Hsieh and acquirer Amazon have more than a billion reasons to disagree.

Now comes Milk& Honey, another startup that sells shoes online—a business using e-commerce; not exactly revolutionary, but one that is scalable and, once it proves itself, a prime acquisition target for someone like Zappos/Amazon.

In Ms. Howard’s case, that meant starting a business with her sister, Ilissa Howard, 39, in a field where neither had any business experience: fashion.

Make that two fields. Milk & Honey Shoes, their shoe company that allows women to design their own stilettos and pumps with the click of a mouse, is also an e-commerce business despite the fact that the sisters had zero tech expertise when they began.

Yes, they added a major tweak so that customers can design their own shoes, but even that isn’t original, Shoes of Prey is a direct competitor and Nike and Converse do it for sneakers.

What’s more, the sisters did the original funding from their savings; Milk & Honey, started in 2011, has already doubled sales, the company is profitable and they are now looking for investors.

Just as entrepreneurs come from many backgrounds, startups come in many flavors.

It’s a good lesson that applying labels and limits to human creativity, let alone human will, is a losing proposition at least 99% of the time.

Flickr image credit: Milk & Honey Shoes

Customer loyalty is a top priority no matter what you are selling—especially in retail.

Just ask Tony Hsieh, whose focus on Zappos’ workforce created the platinum standard of customer service that yielded a storied (and envied) level of customer engagement and loyalty.

The most important component by far is customer engagement. “Retailers should ask themselves, ‘how do I create a partnership with the consumer?’ instead of pulling one over on them,” says Harvard Business School senior lecturer José Alvarez. Many customers see loyalty programs as a way of being ambushed by the retailer.

Many retailers see smartphones as a successful way of engaging customers—but are they?

I have to wonder if they are taking into account the real numbers.

50.4% of the US population uses smartphones

• Asian Americans 67.3%
• Hispanics 57.3%
• African Americans 54.4%
• Whites 44.7%

Now take a look how the money breaks down.

48.5% of all smartphone handsets are Android, while Apple is at 32%, yet I constantly see product and service offers that require an iPhone.

Stop & Shop recently rolled out Scan It! Mobile, an app that turns a customer’s iPhone into a mobile scanner and checkout.

Gender-wise, smartphone use is nearly identical, 50.9% women 50.1% men, but age is a different story, with two out of three 25-34 year-olds having smartphones.

Marketers consistently target the younger demographic, but do they really have the money or are “Millennials the most screwed generation?”

The median net worth of households headed by someone 65 or older is $170,494, 42 percent higher than in 1984, while the median net worth for younger-age households is $3,662, down 68 percent from a quarter century ago, according to an analysis by the Pew Research Center.

I’m a long way from being any kind of expert, but it seems to me that basing a loyalty/customer engagement model on smartphones, let alone iPhones, doesn’t make much sense when viewed through the lens of actual usage and related income stats.