Thursday, August 11, 2022

You're Doing It Wrong


This is a longish post, but I hope it's a beneficial read.

Most organizations have very talented individuals who can accomplish tremendous things; however, that talent generally goes to waste because employers are essentially doing it wrong resulting in sub-optimal performance. Yes, there are very successful businesses out there by conventional standards, but underneath the success are several anchors dragging them away from being the best that they can be. 

Here is the original sin - In 1968, Dr. George Land and Beth Jarman conducted a longitudinal study of 1,600 3-5 year olds using a standard assessment test. The results: 98% of 3-5 year olds tested at the “creative genius” level. Five years later, the same children with the same test – 32% tested at the “creative genius” level. Five years later, the same kids with the same test – 10% tested at the “creative genius” level. Only 2% of adults test at the “creative genius” level.

We’re actually born creative geniuses, it’s how we’re originally wired; however, schools and work beat it out of us. Our brains are quite capable of maintaining that creative genius as we age, but, in most cases, we’re literally re-wired to not be creative. Though our education system is largely to blame for destroying our innate creative genius, employers finish it off. 

One of the issues in organizations is that we ask the wrong questions that lead to decisions that muffle optimal performance, but larger than that, because we ask the wrong questions, we implement processes and systems that institutionalize de-humanizing practices. Here are a few examples of the wrong questions and alternative questions that will result in better decisions for everyone:

Wrong: Where do I cut costs?  (This leads to bad decisions, chief among them - layoffs)

Right: Where are my dollars most effectively spent to achieve my goals? (This leads to correctly allocating resources toward true priorities that usually retains employees)

Wrong: Is this a good investment? (This leads to speculative analyses that are often out of context when comparing against alternative investments)

Right: Does putting money here more effectively meet my goals? (This aligns priorities with resource requirements and it includes the correct context for a decision)

Wrong: Do I have the right staff? (Again, context. Right staff for what?)

Right: Have I effectively matched my staff's talent, skills, training, education, willingness, and philosophy with my goals? (Aligns priorities with people and context)

A few lifetimes ago, I was a district manager for a large convenience store chain where my contrary approaches to business resulted in outstanding results, often by asking the right questions. District managers and store managers were bonused on year over year growth in operating profits (adjusted for uncontrollables like street construction in front of the store, etc.). If this was the case, what was the right question to ask to get to the most beneficial course of action? In my case, I asked the question, "what is the cost of an additional dollar of revenue?" The costs were always operational costs since the "below the line" costs were outside of our control, things like corporate cost allocations against each store, taxes, insurance, and the like.  I taught my store managers to do a marginal cost analysis that revealed the true cost of a new dollar.  Some stores had a marginal cost as low as 74 cents, which meant it cost 74 cents to bring in an additional dollar. On the other hand, I had a store that had a marginal cost of $1.14, meaning that it cost a $1.14 to bring in that additional dollar, not a good deal. The good news is that we could easily identify which P&L line items were the culprits and fix it.

I won awards for best operating profits though my zone (district) had the highest in-store salary costs. This runs counter to what most leaders are taught and what they practice in their businesses. Why did I have the highest in-store salary costs? Because I fully staffed my stores and paid well for assistant managers and third shift staff. Assistant managers were hard to come by because of evening and weekend hours and third shift employees set up the stores for the next day. Back then, there was no paying at the pump, you had to come into the store and that's where we made our money; margins on gasoline were razor thin. If the store was set-up properly and clean, the per transaction average was higher, thus higher revenues against a fixed cost of labor equaled a greater operating income - in finance this is called operating leverage. Most leaders don't get this - spending more on labor to INCREASE profits.   

Layoffs can only be seen as a total failure for several reasons. A lack of planning and foresight, the wrong priorities were pursued, employees weren't utilized correctly, and so on. Yes, external factors can severely affect a business; however, it's really just a priority shift requiring a countervailing strategy to offset the external factor. If the only reaction is layoffs, then the priorities were never correct. Repurposing talent and skillsets should be happening all the time, but is not the case in most organizations, which results misaligned missions, strategies, priorities, and worst of all, sinking employee morale and engagement. 

The job of a leader is people, not the work. Hiring and development of staff is at least 50% of a leader's job, at any level. My proudest moments as a leader were when I was able to coach, mentor, and develop my employees out of their jobs and provide a higher path that suited the trajectory of their careers. I hired a project manager who actually came out of HR's reject pile (another sad story of corporate America, the abdication of hiring to sterile applicant tracking systems) who eventually became a VP in a few short years. I was able to get another team member his VPship in two evaluation cycles in which he became the youngest VP in the division (over 5,600 people). I had three contractors who were completely unfamiliar with banking upon their hire with whom I taught banking and we put together a very accurate second line of defense risk model for our credit portfolios. But, that's not what made me the proudest. What made me proud was that all three contractors landed full time positions in the company.

My philosophy has always been not to force fit people into roles, but to create a role around their particular talents, skills, experience, and most of all, their aspirations. My job as a leader, whether a formal role or not, is to fully support people...and the work will take care of itself. I don't prescribe how to do anything (unless there is something specific like compliance and regulatory requirements), I give the mission parameters and let the boots on the ground make the real time decisions and trust their judgments.    

If we transformed our organizations to truly be about people, not in a slogan or mission statement, but in the day to day business, we would see a tremendous uplifting of human beings and oh, by the way, profits. We can do better, by a long shot.