Outten & Golden: Empowering Employees in the Workplace

Archive for the ‘CEO Performance’ Category

Poor Leaders Can Decrease Worker Productivity By Up to 40 Percent

Tuesday, December 21st, 2010

Mark Harkebe

As Newswise reports, based on employee engagement research by Florida State University business school professor Wayne Hochwarter,

recession-based uncertainty has encouraged many business leaders to pursue self-serving behaviors at the expense of those that are considered mutually beneficial or supportive of organizational goals.

This plays out in behaviors that Hochwarter’s team classified using the biblical Seven Deadly Sins as a framework.  While the percentages attached to each of those “behavioral sins,” based on feedback from more than 700 mid-level workers, is interesting, what appears further down in Newswise’s article caught my attention more from a productive workplace standpoint: FSU found that employees with leaders who committed any of these “sins” said they cut back on their contributions by 40%.  Notably, they were also:

  • 66% less likely to make creative suggestions, and
  • 75% more likely to pursue other job opportunities.

Hochwarter’s findings tell me that workplace qualities that some leaders might consider as soft (or at least far down on the totem pole of what they need to worry about day to day), such as trust, respect, and fairness, are not just “nice to do’s” – they have a real impact on product/service delivery and quality, and company spending on recruiting and retraining.

This is one of the reasons that Winning Workplaces revised our Top Small Company Workplaces award application for 2011 to take a more in-depth look at how things like rewards/recognition and employee leadership development strategies impact business results.  Year after year of our small workplace award program, we see that happier, more highly engaged employees lead to better outcomes, while the opposite lead to a path of lower profitability and competitiveness in the marketplace.

This post is cross-posted on the Winning Workplaces Blog.

About The Author: Mark Harbeke is Director of Content Development for Winning Workplace. He helps write and edit Winning Workplaces’ e-newsletter, IDEAS, and provides graphic design and marketing support. Mark holds a bachelor’s degree in journalism from Drake University.

Time For More Executive Hard Time?

Monday, November 1st, 2010

Image: Bob RosnerAngelo Mozilo, co-founder of Countrywide Financial, a.k.a. No-Income-is-too-Small-For-Us-to-Give-You-a-Mortgage, agreed to pay $67.5 million dollars to avoid a federal civil fraud suit about to go to trial.

I know what you’re thinking, let’s hold a bake sale for Angelo. He clearly must be hurting. But chances are slim that you’ll see him at any soup kitchen, because he pocketed many times that amount of money in salary and perks before he drove his company into the ditch.

But it does raise an interesting question: Why isn’t the government going after Lehman, WAMU and other high flying executives from corporations that went into the toilet over the past few years? Especially when top executives pocketed so much cash from the deception and fake profits?

We’re not talking Salem Witch Trials. I’m simply suggesting that we start skimming off some of the cash that these executives skimmed off of all of us. I know this sounds drastic, but the top guys from Enron actually went to jail for their misdeeds.

Why are we suddenly so timid when it comes to the billions that these fat cats are sitting on?

This is especially confusing to me because of the rush by State Attorney’s General to sue over the recently enacted health care reform bill. Why aren’t our public officials going after the banking swindlers for the huge stockpiles of money that they extracted from all of us?

I would have thought that Attorneys General would at least understand the Willie Sutton rule. Mr. Sutton, the famous bank robber was asked why he robbed banks. He replied, “Because that is where the money is.”

Isn’t it time that we went where the money went? Anything short of a major offensive here sends a simple message to all that crime pays. That would be the worst message to come out of the pain of the past few years.

About The Author: Bob Rosner is a best-selling author and award-winning journalist. For free job and work advice, check out the award-winning workplace911.com. Check the revised edition of his Wall Street Journal best seller, “The Boss’s Survival Guide.” If you have a question for Bob, contact him via bob@workplace911.com.

The Entitlement Poster Child for 2010

Monday, August 9th, 2010

Image: Bob RosnerHave you heard about Mark Hurd, the superstar who turned around HP? He was on track to earn $100 million payday for his efforts. Until he was shown the door last week.

Turns out that he had falsified payments to a contractor. Corporate sleuths determined that approximately $20,000 of expenses reports relating to this contractor were in question.

Okay, here is a guy earning millions of dollars in annual compensation. Millions. We’re still not exactly sure the nature of the relationship with the contractor, but I’m guessing she’s cute.

Hurd is married. Strike one.

Hurd clearly has some boundary problems between what’s work related and what isn’t. Strike two.

But the strike three is still hard to fathom. Hurd fudged and faked it so the company would pick up the expenses for wining and dining his contractor BFF.

Why does a guy earning millions of dollars fake expense reports that amount to chump change given his salary?

Entitlement.

To me this exemplifies everything that’s wrong with corporate leadership today. These are not people who are upholding a corporate trust. These are people who believe that their needs should be taken care of by their corporate benefactor.

Who have such an exalted view of their own contributions that there is nothing that they’d be too squeamish about charging to the company.

The best part of all of this? Hurd was repeatedly described by the press as being a “button downed” kind of guy. If this is the button-downed one, imagine the corporate swingers.

I don’t really care what Hurd did. But I find it interesting how many corporate executives talk about entitlement as a problem for their employees. But I think this could lead to a great new catch phrase for executive malfeasance, “Have you Hurd?”

About The Author: Bob Rosner is a best-selling author and award-winning journalist. For free job and work advice, check out the award-winning workplace911.com. Check the revised edition of his Wall Street Journal best seller, “The Boss’s Survival Guide.” If you have a question for Bob, contact him via bob@workplace911.com.

Shareholders Move to Curb Extravagant Pay for WellPoint CEO

Wednesday, June 16th, 2010

headshotWilliam H.T. Bush – a WellPoint board member and President George H.W. Bush’s younger brother — collapsed at the annual shareholder meeting the other day, just as the health insurer’s CEO, Angela Braly, was trying to explain to angry shareholders why profits are up but the company’s reputation is in the tank. Thankfully, Bush improved enough to go home from the hospital, but the meeting never recovered. Braly refused to continue after paramedics wheeled Bush out, so she got away without answering any of the tough questions about her company.

Shareholders never got to ask why WellPoint and its Blue Cross plans in 14 states look like a train wreck to 34 million uneasy customers. Before Bush collapsed, the AFL-CIO, Connecticut’s public employee retirement system and other shareholders criticized WellPoint for abusing consumers, funding a duplicitous campaign to block health reform, and misusing premium money to give indefensible compensation packages to top executives. In 2009, Braly’s pay jumped 51 percent to $13.1 million. Many of us didn’t get a raise at all last year. Ten percent didn’t even have jobs.

Shareholders at the meeting didn’t get answers to some other big questions on the minds of investors. Why did legendary stock picker Warren Buffett, the world’s third richest man, dump 1.3 million shares (worth about $70 million at today’s price) of WellPoint stock during the first quarter. Buffett knows a little bit about money. What’s the deal? And what’s up with the company’s outrageous submission of inaccurate data to get California regulators to permit premium increases as large as 39 percent for individuals this year? And why is the company driven to pursue sleazy policies, like targeting patients with breast cancer for fraud investigations, and then calling President Obama a liar for saying the practice should stop? Is that really in the interest of the owners of $23 billion worth of WellPoint stock? Most investors want WellPoint to make money, not enemies.

Maybe Braly wasn’t worried about how things would look because her P.R. team decided shortly before the shareholders meeting to drop plans to webcast the event. Only reporters who attended in person could observe. Just like the health insurer Cigna did at its annual shareholder meeting last month, WellPoint shut out the media to minimize the impact of embarrassing questions.

Greed has made WellPoint completely lose touch with the founding mission of the nonprofit Blue Cross companies it acquired over the last 15 years (in California, Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri, New Hampshire, New York, Nevada, Ohio, Virginia and Wisconsin). The Blue Cross plans, once seen as a refuge for each state’s sickest residents, have been transformed by Braly and her ilk into cash machines to satisfy the unbridled greed of Wall Street and corporate executives.

Rather than accept responsibility for the insurance industry’s unwillingness to slow the growth of health costs through tougher negotiations with doctors, hospitals and drug makers, Braly and her industry peers prefer to just keep raising prices, cutting benefits, denying care and boosting their profits and compensation. They serve the needs of the high rollers on Wall Street instead of millions of Americans.

The good news is that more shareholders are refusing to accept WellPoint’s unconscionable behavior and are taking action. The evidence of that came at the meeting when shareholders adopted a resolution to limit excessive CEO compensation by giving themselves an advisory vote on executive pay during the company’s annual meetings. Among the shareholders who demanded more “say on pay” was Connecticut State Treasurer Denise L. Nappier, who controls investments for the $23 billion pension plan for state employees. Similar proposals were defeated by WellPoint shareholders in 2008 and 2009, but the tide has turned.

The grotesque compensation paid to insurance CEOs costs more than the face value of their pay packages. It also exerts unhealthy influences on CEOs’ decisions about company finances and health care policy even when customers’ lives are at stake. That’s why shining a light on companies like WellPoint is so important.

Even by the standards of people who believe that it’s okay to do just about anything to make money, WellPoint consistently goes too far. Their turbo-charged greed is out of control, and their lack of any moral compass is shocking.

About The Author: Ethan Rome is executive director of Health Care for America Now and served as deputy campaign manager in HCAN’s 2009 successful campaign to win comprehensive health care reform. Rome has been a grassroots organizer, political activist, and strategic communicator for progressive issue and electoral campaigns for more than 20 years.

Companies That Care About Workers' Rights: Apply Now to be Named a 2010 Top Small Company Workplace

Thursday, December 17th, 2009

Inc. magazine and the nonprofit I work for, Winning Workplaces, have partnered to find and recognize exemplary workplaces; those that motivate, engage and reward people. A model workplace can offer a critical competitive edge, ultimately retaining employees and boosting the bottom line.

Together, Inc. and Winning Workplaces will identify and honor those benchmark small and mid-sized businesses that offer truly innovative, supportive environments, thus achieving significant, sustainable business results.

“Growing, privately held companies have always excelled at competing based on the people they employ,” states Jane Berentson, Editor of Inc. magazine. “Their innate ability to innovate is woven throughout their cultures, including the way they manage and motivate their employees. Inc.’s partnership with Winning Workplaces is a great opportunity to fully recognize private company excellence in supporting their human capital.”

Click to apply for Top Small Company Workplaces 2010“Winning Workplaces is thrilled to partner with Inc. as we honor truly exemplary organizations who have created workplaces that are better for people; better for business; and better for society,” said Gaye van den Hombergh, President, Winning Workplaces. “These organizations are an inspiration to business leaders looking for ways to leverage their people practices to create more profitable and sustainable companies.”

The application process is open through January 22, 2010. To apply, go to tsw.winningworkplaces.org. The Top Small Company Workplaces will be announced in a special issue of Inc., which will be available on newsstands June 8, 2010, and on Inc.com in June. An awards ceremony, honoring the finalists and winners, will be held at the national Inc. On Leadership Conference in October 2010.

About Inc. magazine
Founded in 1979 and acquired in 2005 by Mansueto Ventures, Inc. magazine (www.inc.com) is the only major business magazine dedicated exclusively to owners and managers of growing private companies that delivers real solutions for today’s innovative company builders. With a total paid circulation of 724,110, Inc. provides hands-on tools and market-tested strategies for managing people, finances, sales, marketing and technology.

About Winning Workplaces
Winning Workplaces (www.winningworkplaces.org) is an Evanston, IL-based not-for-profit, whose mission is to help the leaders of small and mid-sized organizations create great workplaces. Founded in 2001, Winning Workplaces serves as a clearinghouse of information on workplace best practices, provides seminars and workshops on workplace-related topics and inspires and awards top workplaces through its annual Top Small Company Workplaces initiative.

About the Author: Mark Harbeke ensures that content on Winning Workplaces’ website is up-to-date, accurate and engaging. He also writes and edits their monthly e-newsletter, Ideas, and provides graphic design and marketing support. His experience includes serving as editorial assistant for Meredith Corporation’s Midwest Living magazine title, publications editor for Visionation, Ltd., and proofreader for the National Association of Boards of Pharmacy. Mark holds a bachelor’s degree in journalism from Drake University. Winning Workplaces is a not-for-profit providing consulting, training and information to help small and midsize organizations create great workplaces. Too often, the information and resources needed to create a high-performance workplace are out of reach for all but the largest organizations. Winning Workplaces is changing that by offering employers affordable consulting, training and information.

What Do You Believe About Work That Is Wrong?

Monday, October 12th, 2009

After fifteen years of writing Workplace911 and its predecessor Working Wounded I’ve concluded that there are a lot of myths about work. I thought it would be fun to tackle some of the bigger ones in this week’s blog. Check out my list below and send me some of your favorites.

It’s impossible to be overpaid when someone else signs the paycheck. Let me offer a short translation of this rule—as long as someone is willing to pay you a ridiculous amount of money to work for them, then you aren’t overpaid because they have established a market for your services. I disagree. Corporate salaries are absurd. Cost cutting, layoffs and a myriad of other organizational sacrifices should float more than just the boats of the CEO and a few top executives. I’m no Marxist, CEOs do deserve a big paycheck when they are successful. But this escalator only seems able to go up.

Greed is good. The biggest problem here is that when Oliver Stone came up with this mantra for his Gordon Gekko character in the movie Wall Street it was meant as parody. Yet I hear some variation of it whenever I talk to traders, salespeople, etc. Henry Ford, hardly a commie himself, once said that only a fool holds out for the last dollar. I think wretched excess is a terrible way to run a company.

The bigger the jerk, the better the boss. Probably my favorite quote on management came from President (and General) Dwight Eisenhower. He once said, “Hitting people over the head isn’t leadership, it’s assault.” Sure jerks do get your attention and possibly results over the short term. But most employees will flee at the first chance they get. There are just too many sane bosses out there to continue to slave away for a jerk.

You’ve got to be first to market. Microsoft seems to me to be the only company that consistently puts second-rate products on the market and lives to tell the tale. The rest of us have to pick our spots and often the first to market position can’t justify launching a crappy product. So it often pays to wait.

Innovation is the middle name of American corporations. Despite rising productivity, I believe that corporations in the U.S. are running on fumes. Don’t believe me? Listen to most people talk about the management of their companies. It’s not a pretty sight. I see far more innovation right now coming from abroad and from the not-for-profit sector and I think it’s time that corporations started walking their talk.

Corporations are drowning in regulation. Tyco, Enron, WorldCom, etc. left in their wake Sarbanes Oxley and a host of other regulations. Undoubtedly Lehman, Goldman Sacks, etc. will leave their mark too. There is a lot of talk now about how corporations are being held back by senseless regulations. I hate filling out government forms as much as the next guy, but these laws came into place because of abuse by corporations. And in order to maintain the trust of the average investor these regulations need to remain in effect, no matter how much whining you hear from big business.

The bottom line isn’t just the bottom line. If I’ve learned one thing as an observer of business and the founder of four corporations, it’s that there are many bottom lines for a business. In addition to economic there are also social and environmental considerations. The financials really only are a part of the picture. The sooner that corporations take a broader view of the bottom line, the sooner they’ll begin to fully reach their potential.

About the Author: Bob Rosner is a best-selling author and award-winning journalist. His web site, workplace911.com, contains a comprehensive archive of strategies for surviving today’s workplace. He is a fan of Workplace Fairness and can be reached via bob@workplace911.com.

CEO’s Home Isn’t Where Your Heart Is

Monday, July 6th, 2009

CEO used to equal rock star.
 
Okay, it’s not as bad as it was in the ‘80’s when even non-business magazines had smiling CEOs on the cover, but I still think most of us want our CEO to have a certain amount of star quality. Call it the Trumpification of the corporate world. 
 
Who would you rather have leading your company? Casper the friendly ghost or a Genie who can make all of the company’s wishes come true (even if he does have a comb over)? Let’s face it, shy and retiring just doesn’t cut it when you’re responsible for the livelihood of lots of people. When it comes to effective CEOs, bigger always seems better. Or does it?
 
Arizona State University’s Crocker Liu and New York University’s David Yermack have a really interesting take on rock star CEOs and how much they can cost a company. Even better is the creative way that the two professors came up with to study this issue—they compared the size of the CEO’s home with corporate performance. Call it entitlement, focusing on the wrong things, an inferiority complex, short man’s syndrome or a bunch of guys spending other people’s money—this study found that we all pay when the CEO literally lives in a castle.

Let’s start with the numbers. In 2004, the median home price for CEOs was $2.7 million.
Compare that to the median price for all homes in U.S., $195,200. The average size of the CEOs home, 5,600 square feet. Heck, if you are a titan of industry, wouldn’t you want 4.5 bathrooms? Actually I’m shocked the number isn’t at least 7, if you are so darn important, how could you possibly use the same bathroom more than once a week? Come on, these are really important people. (Okay, I’ll attempt to reduce the sarcasm for the remainder of this blog.)
 
But the study gets really interesting when it examined 12 percent of the S&P 500 CEOs with homes that were larger than 10,000 square feet or were on at least 10 acres of land. The companies that were run by this group of landed gentry lagged the S&P 500 by 25 percent over the three years following the home purchase.
 
That bears repeating. The biggest CEO houses significantly increased the odds of poor corporate performance.
 
I’m guessing that those of you reading this article are in one of two camps right now. The first group is ready to storm the Bastille and scream about CEOs living large off the sweat and tears of the rest of us.
 
But I’m sure there are also readers who still believe that a big ego is a necessary part of the mix. That these two professors, and me, are making a mansion out of a molehill. I may be, but you may feel differently after you read this.
 
Approximately a third of CEOs exercised stock options and sold shares in the year before they bought a home. Consistently the shares peaked right before the purchase. Given the brouhaha over backdating stock options, I find it fascinating that the stock prices tended to peak so consistently just before a mansion was purchased. Maybe that big house isn’t something that was earned but rather something that was scammed.
 
Ironic isn’t it. Putting a CEO in a mansion, more often than not, puts you in the poor house. 

About the Author: Bob Rosner is a best-selling author and award-winning journalist. For free job and work advice, check out the award-winning workplace911.com. If you have a question for Bob, contact him via bob@workplace911.com.

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