However, while these changes in an organisation can be difficult for the employees (no one likes to see collegues lose their jobs), senior management often dont cut back on their pay packets or their perks, thereby creating an us and them culture in a business.  If senior management don’t walk the talk, they run the risk of undermining the culture of a business.

I was chatting the other day with a friend who was reflecting on what was happening in the business that he worked for.  He was talking about the “death by a thousand cuts” approach management was taking to making people redundant.  He said it felt like every week someone was let go and he was just wondering when it would be.  Funnily enough, he said that a number of people in the business were holding out just to get a package – amazing what people do.

However, in the same breath he mentioned that he felt like there was one rule for the senior management and another for everyone else.  Senior management were known for always travelling business / first class (even on the shortest of trips), using limo’s rather than taxi’s, only staying at the best hotels and dining at the best restaurants.  He also mentioned that he had heard of one manager ensuring his international trips went over weekends and then using that weekend as a company paid skiing holiday.

While management often do work hard, they must remember that they are not playing with their own money but the shareholder’s money.  Every dollar not spent by the company can be used to retain employees, not passed onto the customers in the form of price increases, or can be returned to the shareholders in the form of a dividend.

I always remember a what a Director at McKinsey and Co said to us young consultants about something as trite as breakfast.  He said that we should have breakfast in a cafe on the way to a client’s offices rather than in the hotel.  Why, because it is essentially the same food at less than half the price and why should the client pay for our laziness?  And he was right.

So what should management do?  Well first and foremost it should walk the talk.  If they are trying to drive down the costs of a business, they should start with how they operate.  They should be seen to be reducing their own spend and doing things more cheaply.  Fly economy class.  Take taxi’s rather than limo’s.  Eat at good but not the best restaurants.  Stay of 4 star not 5 star + hotels.  And most importantly, don’t take liberties with shareholder’s money.

It can be hard to justify price increases to customers when management may be seen to be indulging a little too much from the corporate trough.

Here is the complete list of the top 10 CEO’s who never went to college according to OnlineBestColleges.com.

1. David Oreck
2. Richard Branson
3. Andrew Carnegie
4. John D Rockerfeller
5. Henry Ford
6. Steve Jobs
7. Walt Disney
8. John Paul DeJoria
9. Barry Diller
10. Bill Gates

Check out the full article at http://www.onlinebestcolleges.com/blog/2009/top-10-ceos-who-never-went-to-college/

If the company does not do this, it runs the risk of disenfranchising their employees and their customers.

The first thing a company must do when tightening its belt is make sure that it is even across the business.  Many businesses are closing departments and firing staff.  However, what they should not be doing is increasing the perks for the executive team – like adding secretaries for senior management, holding expensive retreats at 5 star hotels and continuing to fly business class when it is not needed.  If a company does this, it creates and us and them culture and the employees will lose faith in the management team.  This is not good – especailly in these tough times!

The second thing a company must do is make sure that it is seen to be tightening its belt – especially with its customers.  Whether a company likes it or not, the customers are probably hurting in these economic times and if a company maintains or increases its prices, it is important that they are not seen to be wasting money on internal extravagences – like expensive conferences or management retreats. 

Nothing can disenfranchise a customer more than to be asked to pay more for a product and serivce and then to see those additional fees not being used to improve products and services.  Your business reputation will last long after the financial crisis is over.

We all remember what impression the CEO’s of Ford, GM and Chrysler had on the US public when they flew in private jets to Washington to ask for money!  Not a smart move.

This approach has a number of ripple effects on a business. 

Firstly, the image of the manager will be tarnished.  They will be seen as weak and not able to address important issues head on.  Secondly, the other employees will be looking over their shoulder and wondering if they are going to find out at any moment that they dont have a job.  Thirdly, in tough times, working on a great culture is very important but this approach does not bring a team together, it drives them apart.  Finally, the  employees who did find out that they may not have a job in the future are likely to start looking for a new role and will not be that effective in the short term.

The approach that the manager should take is to have a one on one discussion with each of the effected people before the meeting and to let them know that the changes are occuring.  The manager should then be very clear about whether the effected people have a job at the end of the period.  If not, they should be offered a package.  Finally, the manager should allow the effected people not to attend the meeting as this will save them from embarassment when their colleagues find out the changes.

Tough time require management to get tough and face issues head on.  Hiding behind emails and power points is not the way to approach tough decisions.

One of the hardest things for management to do is be open and honest about the position of a business.  In the early days of realestate.com.au, when the business was on the brink of running out of money,  we took the clear step of being very transparent on how the business was running.  We would hold weekly / fortnightly team meetings (all employees) and we would let them know how we are going with collections, cash, expenses and so on. 

We purposely engaged them in the business.  We knew that they had to understand where the business was going and the challenges we were facing every day.  We did not shy away from the tough discussions – infact we embracd them openly. The reason for this was simple – it was only as a collective team that we would be able to win.  The employees understood why it was important to do somethings and not other things.  They took ownership of the business and helped steer us in the right direction.

In todays environment, this approach is more important then ever.  Businesses around the world are going through tough times and for many senior management, it is easier to revert to the “cone of silence” and discuss, amongst a small group, where the business should be heading.  These discussons often involve cutting expenses (read people). 

The problem with this approach is that everyone in the business has a good idea what is happening.  By driving it underground, the rumours fly and productivity (and repect for management) decreases.  This then leads to more cost reduction being required and the vicious circle continues.

Management should be open and honest on the situation of the business.  No one will be surprised – we all know that the economy is in a tough place!  Through engagement and openness, management will find that they have an easier time during what is a very tough period.

This got me to thinking, can a CEO really manage a business from his / her desk or do they really need to get out amongst the people?

This answer is very simple for me … they have to roll up their sleeves and get out there amongst the people. Whether they like it or not, management is all about people and just sitting at a desk doesnt make that task any easier, in fact it makes it much much harder.

When a CEO becomes rooted to a desk (or even worse, an office), they become totally disconnected from the business. The information that they are given is often filtered by those around them and they are often playing political games. Therefore how can the CEO get a real feeling for what is happening in the business. In addition they get branded by people in the business as being disconnected from what is really happening and potentially not really caring.

I found that when i was a CEO i gained the most from walking around and asking questions. I got to find out what was happening on the front line and most importantly what the customers were thinking of the business. I also got to know the people and for me this was one of the most important outcomes. They learned that they could approach me directly without fear or favour. This helped me understand what was really happening.

Managing from a desk is like managing in the ’80′s …

I think that there is a different way to run a business and one the leads to faster decision making, more responsibility passed down through the ranks and the result is a place where people get on with it, take leadership for their actions and things happen!

They say a fish rots from the head and i think this is the same with any business and the culture within the business. What a CEO and the management team do is then reflected through out the business as being the right thing to do and people (especially aspirants and politicians) will copy their actions. Therefore i think it is critical that the CEO learns to trust their gut and make rapid decisions based on knowledge and experience gained over time. If they do this, then others will follow.

In the REA Group i tried to make decisions as quickly as possible knowing that they wont always be right. I think we got it right around 8 out of 10 times. The other thing that we pushed through the group was the mantra – “seek forgiveness, dont beg permission”. I felt that if people in the business realised that i trusted them to make a decision and get on with it, they would, most times, get it right and more importantly, the business would be seen as being responsibe to market and customer needs.

Now i know that this is hard for some managers to do however if you are a real leader, rather than a manager, you will release some of the control that you naturally want to exert and give those thoughtout the business the chance to shine. You just may be surprised at the results you acheive.

By Alain Fontaine, Luxembourg

I can’t avoid thinking of the Peter Principle. Check out this Wikipedia article if you don’t know it:

http://en.wikipedia.org/wiki/Peter_Principle

And definitely get yourself the book! I consider this book as one of the must-reads for any leader.

I also think that if you have a sufficient number of worker bees and aspirants, there will be no place for politicians. Although politicians might not be kicked from top-down, by the leader, they will have no support from the base (bottom-up) and starve anyway.

Finally, you can create very dangerous mutations of the above styles. Let me introduce the:

Worker-Bee-Politician : someone who THINKS he’s a good worker-bee and actually believes that his career success is due to his good work, whereas it’s only due to his real politician-style way of doing things.

His body would actually show real signs of overwork and his brain would think they come from actual work done for the company, whereas nothing of it is true. He lives in a completely imaginary world, believing his co-workers admire him for the tough job he does, whereas everyone sees his real face, except himself. But he doesn’t care, because in the leader position he thinks he is, he just kicks everyone else out of this bubble some obscure portion of his brain created.

He cannot understand at all why top management seems to be unhappy with him, because he’s so confident in what he does that he would even accuse top management to be unaware of the real challenges. The Worker-Bee-Politician is often a true one-man-show who magically avoids most control and supervision, and is able to create a parallel world in a real company. That is where the true danger comes from.

Worker Bees- These are hard workers who are happy with their lot in life and have few long term leadership aspirations beyond doing a good jobs and putting bread on the table for thier family. 

Survivors – These are not so hard workers who do what is necessary to survive in the business and are either looking for something else or see work as a means to end – an enjoyable life.

Aspirants- Employees in this group truly aspire to be leaders in a business and believe that hard work and doing a good job will get them recognised.  They let their work to the talking for them.  Not everyone in this will become a leader in the business however their aspire to get there.

Politicians - Employees in this group also aspire to be leaders however they often look for opportunities to climb the corporate ladder by shamelessly promoting themselves, sometimes at the costs of others, and often are divisive in the business in an attempt to curry favour or use wedge politics to get themselves noticed.

I have come across people in each of these groups during my working life.  The funny thing is that people often clearly fall into one of these categories although they often dont know it themselves.  Of course as the CEO you want a great combination of Worker Bees and Aspirants in the business and should ensure that the Survivors and Politicians are shown the door as soon as possible. 

The challenge is that the survivors are easy to spot and KPI’s often help weed them out while the politicians are harder to deal with, especially when they may be good at the work they do.

The real theme of this post is what impact does strong leadership have on these groups.  I think strong leadership allows the Worker Bees to get on with their lives, Survivors are weeded out, Aspirants are recognised and promoted for the great work they do and Politicians are starved of the much needed political opportunities and therefore are just measured on the work they do, not the politics they play.

However, it is interesting to see what happens when there is weak or no leadership in a business.  This doesn’t really impact the Worker Bees as they just on with their job and continue to deliver.  The Survivors stay around longer than they should as people are not weeding them out fast enough and the result is that mediocrity becomes OK in a business. 

Most interestingly, the Politicians get the much needed oxygen and rely on form over substance to move ahead in the business.  The real losers are the Aspirants.  They don’t like to play the political games or more likely don’t want to play the political game and therefore either start to look for other roles or become disengaged from the business.  They chat amongst themselves and the culture in the business changes.

The point is, in selecting a leader (at all levels – not just the CEO), it is important that they can lead and lead well.  I will talk more later about what makes a good leader.  The question for you is … are you a Worker Bee, Survivor, Aspirant or a Politician?

I am not sure “teach” is the right word to use.  I think that you can not create a culture however you must use your best efforts to shape the culture.

Now shaping a culture is quite difficult, especially once you go through 150 or so employees.  (I have 350 employees today).  Therefore it is important that while you are small, you get the basis of the culture right and as part of that, get the core values right.

So, firstly you must decide what type of organization you want to run.  It can be open and egalitarian, it can be hierarchical, it can be dictatorial – it is up to you.  Why?  Well for one simple reason – what you do will determine what is acceptable behavior.

We see it in all walks of life.  It is ok for the US Government to spy on its citizens so what do we see Hewlett Packard doing – spying on its Board members and even the press.

So, what ever you want the place to be, live it in everything you do.  It is by experience that people learn what is right and wrong within the organization.  Work on your lieutenants as they must also live the culture.  If you it right, it will spread like wildfire.

So take my business.  I think it should be egalitarian so i don’t have an office, i don’t fly business and the rest economy, i don’t have any special favors – we are all equal.  We openly value great ideas not position.  I openly chastise those that try to ingratiate themselves with me and we praise great ideas – no matter where they are from.

Other things i do is travel to other offices and just work there for the day amongst the team.  I take people to lunch, shout them beers and just let them know, by action, that i am a normal guy and very approachable.

The best form of teaching is to live the culture and being a CEO, you are always under the spot light …