Work Matters

  • Mintzberg in the WSJ: Get Rid of Executive Bonuses

    Today's Wall Street Journal has a simply brilliant argument by management theorist and guru Henry Minztberg titled "Get Rid of Executive Bonuses."  I think it is brilliant because it marries the results of  diverse and compelling research from many corners of academia with a concise and logical argument.  It also is consistent with Dan Pink's argument I mentioned recently that many of the assumptions beneath the way we run organizations are based on little if any evidence — but rather are articles of faith.  As always, I also love Mintzberg's boldness.  The heart of his argument, and you must read the nuances, is that three of the assumptions about the logic for executive bonuses clash with the weight of the evidence:

    A company's health is represented by its financial measures alone—even better, by just the price of its stock.

    Performance measures, whether short or long term, represent the true strength of the company.

    The CEO, with a few other senior executives, is primarily responsible for the company's performance.

    Mintzberg then digs into a topic that Jeff Pfeffer and I talk a lot about in our chapter in Hard Facts on "Do Financial Incentives Drive Company Performance?  That is, what kind of people does your performance evaluation system attract and what kind does it drive away?   Here is what Mintzberg, note how he turns the argument that "if we don't pay these people bonuses, we won't have enough good people."  I quote:

    Actually, bonuses can serve one purpose. It has been claimed that if
    you don't pay them, you don't get the right person in the CEO chair. I
    believe that if you do pay bonuses, you get the wrong person
    in that chair. At the worst, you get a self-centered narcissist. At the
    best, you get someone who is willing to be singled out from everyone
    else by virtue of the compensation plan. Is this any way to build
    community within an enterprise, even to foster the very sense of
    enterprise that is so fundamental to economic strength?

    Accordingly, executive bonuses provide the perfect tool to screen
    candidates for the CEO job. Anyone who insists on them should be
    dismissed out of hand, because he or she has demonstrated an absence of
    the leadership attitude required for a sustainable enterprise.

    Of course, this might thin the roster of candidates. Good. Most need to
    be thinned, in order to be refilled with people who don't allow their
    own needs to take precedence over those of the community they wish to
    lead.

    I confess that some his arguments even make me squirm, and I also am concerned because he doesn't really spell out what system might replace bonuses.   But his last argument (especially the part I have put in bold letters) really appeals to me, in part, because one of the best definitions I ever heard of an asshole executive is that he or she consistently puts his or her needs and wants ahead of the company and colleagues.  Mintzberg is making a compelling argument that the current system seems largely designed to attract and create exactly that flavor of asshole!

  • Dan Pink on Why Financial Rewards Suck for Motivating Performance

    Dan Pink makes a compelling case in his Ted Talk that financial rewards undermine performance in tasks that require creativity and complex problem-solving.  As he says in the talk, this strong evidence about the negative effects of financial rewards runs counter to the assumptions embedded in nearly all major economic theory.   As other research by psychologists on confirmation or "my side"  bias shows, we human-beings have a tough time hearing and believing evidence that runs counter to our beliefs.

    P.S. Sally, thanks for telling me about this research.

  • Parking Tickets for Assholes

     AHole Parking Tickets
    I have been digging through old emails, as I had fallen behind do the press of my book deadline and other craziness, and came upon one from Jim about youparklikelikeanasshole.com.  It isn't exactly a wildly active blog, but I quite liked the "notices" or parking tickets you can download on the cite, they could come in handy.  You can see the main one above, but better copies are available at the cite.  

  • Jeff Pfeffer on the Misguided Lust for Outside CEOs as Saviors

    Jeff Pfeffer has an inspired post over at BNET in which he reviews the evidence — and tells some evidence-based stories — about how companies that become enamored with the magic of an outside CEO who can ride in on his or her white horse and save the day are deluding themselves.  Jeff relies in part on Harvard Business School Professor's Rakesh Khurana's well-crafted Searching for the Corporate Savior.  As Pfeffer notes, and as we discuss in our book Hard Facts, that — although there are very vivid stories of outside saviors, notably Gerstner at IBM, the track record for outsiders is generally weak.  As one example, Boris Groysberg's research on GE executives who became CEOs of other companies found that, on average, their new companies performed well-below the industry average. This effect was especially pronounced when their past experience did not fit those skills required for the new company (This finding was reversed when there was a good fit. Boris reports that a good fit was associated with performing about 15% above the expected industry average, something called "annualized abnormal returns;" while those companies that had a GE CEO who didn't fit performed about 40% below average). 

    The upshot, as Jeff and I suggested in The Knowing-Doing Gap, is that the best CEOs and other bosses have the experience and skill required to run their businesses — and insiders have an upper-hand in the typical case.  Compare Xerox's former CEO and now Chair Anne Mulchay to HP's fired Carly Fiorina. Anne had numerous different jobs at Xerox and had been there more that 20 years. And she is widely praised by insiders as a good listener.  Note that Carly not only had a tendency to become bored with the details of running HP's business, Fortune reported that she had never had any P&L responsibility in prior jobs before becoming HP CEO. Moreover, Carly, although brilliant, was known to be a lousy listener when it came to talking to insiders, and instead preferred  to rely on consultants. When Mark Hurd came in, one of the first things he did was to fire hundreds of them.  During Carly's reign, I once was at Silicon Valley party where I was talking with a disgusted high-ranking HP insider who was complaining that Carly — who is charismatic and inspiring — was perfectly suited to politics because there are no real deliverables, which fit her skills perfectly!  I guess Carly figured that out too, as she is now running for the U.S. Senate in California.

  • The Roar of Sports Car Engines: 100% of Women — But Only 50% of Men –Respond to a Maserati With Increased Testosterone Levels

    I put up what I thought was an amusing and not especially original post on Wednesday afternoon that described a study showing that men who drove a new Porsche — but not an old Camry — responded with increased testosterone levels.  It got picked up by something called Hacker News and was on the top of their list of hot items for hours (I don't really understand how this thing works). The result was that it drove 5000 or 6000 hits to my blog and generated 35 comments there. By now, after some four years of blogging, I have learned that it is impossible to know what will take off.  And although it is fun when it happens, I have learned that when I stick to what feels interesting and authentic to me, I have the most fun and learn the most.  But based on reactions to my two testosterone posts, this is clearly something people seem to be interested in and I confess the research on it intrigues and bewilders me.

    So, to add to my posts here and here, I have one more study about cars and T levels to add to the mix. Following a link that appeared in one of the Hacker news comments, there was a related study described over Telegraph.com in the UK, headlined Sound of a sports care engine arouses women.  Here is how the study is described "The 40 participants listened to the recordings of a Maserati, a Lamborghini
    and a Ferrari, along with a Volkswagon Polo, before having a saliva specimen
    collected."     I have much less information about the nuances of this research than the other two studies, but on the face of it, the evidence seems to be that women respond more strongly than men to the sound of cars and to different cars. Note this excerpt:

    The results found 100 per cent of female participants had a significant
    increase in testosterone secretion after listening to the Maserati, compared
    to only half for men.Men fared better at the sound of a Lamborghini, with 60 per cent showing a
    testosterone increase. Psychologist David Moxon, who conducted the study commissioned by motor
    insurer Hiscox, said: "We saw significant peaks, particularly in women."

    "The roar of a luxury car engine does cause a primeval physiological
    response." He added the sound of an average car engine actually led to a decreased level
    of testosterone.

    I promise this is my last post on T levels for a long time.  I just couldn't resist this one.

    P.S. Check out Ellie's comment. She raises excellent points about the legitimacy of this research. I am trying to contact the David Moxon to see if he can share the original data and research report with us, l hope he answers. Once again, to be clear, the other two testosterone studies were published in a top peer-reviewed journal, and while they are imperfect, they are carefully done, the authors are careful not to overstate claims, and they acknowledge flaws and alternative explanations for their findings. 

  • More on Testosterone Levels: Driving a Porsche vs. Toyota Camry

    A couple weeks back, I put up a post on Testosterone Levels, Top Dogs,and Collective Confidence, which described a study showing that groups enjoyed more collective confidence when the people with higher levels where at the top of the pecking order and those with lower levels are at the bottom (compared to "mismatched groups" where the top dogs had low levels and the underlings had high levels).  There were some extremely thoughtful comments on that post, including a comment that "T" levels, as researchers call them, are heavily influenced by situational factors. Well, to that point, it turns out that — as I learned from the always useful BPS Research Digest –  that this article was one of a set published in a special issue of Organizational Behavior and Decision Processes on "The Biological Basis of Business." I read through the table of contents for the issue, and came upon a study that just cracked me up on the effects of driving a Porsche vs. a Camry.

    It is called "The Effects of Conspicuous Consumption on Men's Testosterone Levels" and was conducted by Gad Saad and John Vongas of Concordia University.  Here is roughly what they did (I am focusing on the first of the two studies in the article). They had 39 young heterosexual men drive both "a 2006 Porsche 911 Carrera 4S Cabriolet estimated to be worth over $150,000" and a "a dilapidated 1990 Toyota Camry wagon having over 186,000 miles,"  each for an hour,split evenly between city and and highway driving.  They randomly assigned subjects to driving either the Porsche or Camry first.  They took a total of six  "T" samples from each young man at various stages on the process. Most crucial for our purposes are the changes in "T" that occurred after driving the Porsche vs. the Camry, but also relevant are the two "baseline" samples taken before and after the experience.

    The effect was that driving the Camry did not seem to lead in a significant change in T levels, but — no doubt to the delight of many people and perhaps the disgust of many others — the young guys who drove the Porsche experienced significant and substantial increases in T levels after driving the Porsche (in the final sample of 31 guys, 8 were excluded from the day analysis because their samples were tainted by excessive excessive blood in their mouths). 

    Here is the key table:

    Porsche vs. Camary

    I am not sure if these results are completely obvious and trivial or completely shocking and crucial.  I always had a sneaking suspicion that the "manly" feeling that comes from driving a sports car was nonsense promoted by car companies. But I guess it may have some truth.  Also, I want to commend the researchers for demonstrating a lot of creativity and for — despite the straight and serious academic writing — producing one of the most entertaining academic studies I have read in a long time. 

    P.S. Here is the citation: G. Saad, J.G. Vongas / Organizational Behavior and Human Decision Processes 110 (2009) 80–92

  • Your Lack of Planning is Not My Emergency

    I have no idea who first said this, but I've always liked it. I first heard it from my friend and co-author Jeff Pfeffer. Unfortunately, it reflects a hallmark of a certain of bad boss. They keep their people in a constant state of suspense and paranoia because they keep springing one vile surprise after another on them — and then act like their followers are difficult or incompetent when they resist or protest such absurd last minute demands.

  • ARSE Passes 210,000 Completions: Have You Taken The Test Yet?

    The Asshole Rating Self-Exam (or ARSE) appears in The No Asshole Rule at the end of Chapter 4.  It actually isn't called that in the book, it is just described as "Self-Test: Are You a Certified Asshole?"  But Guy Kawasaki got a hold of it right after the book was published and the great people at Electric Pulp put in a format that works well on the web — and Guy came up with the ARSE acronym (His capacity for fun language never ceases to me amaze me).  So many people have taken the ARSE that several times a year, someone I never met will walk up to me and introduce themselves with a number ("Hi, I am Sandy, and I am a 1, I am really a very nice person" or …. "Hi, I am Phil and I am a 9, so I am a borderline certified  asshole.")

    The ARSE seems to be going strong. I just got an email from Emily at Electric Pulp who tells me that it has now passed 210,000 completions (213, 659, with an average score of 7.09 — indicating the average test taker is a borderline certified asshole or has sued it to identify one).  I still take it now and then for myself, and my score fluctuates between a 2 and 7, depending on my mood.  And I confess that when I am dealing with an asshole, I will take it on his or her "behalf."  I once completed it for a certain unnamed colleague, and I scored him a 17 on the test (indicating a "full-blown certified asshole.")  No wonder I feel sick whenever I have to deal with him. 

    P.S. Emily also reports that the ACHE — the Asshole Client from Hell Exam — is up to 12, 472 completions.

  • Treating Organizational Practices as Prototypes: A d.school course for Stanford Graduate Students

    Debra Dunn, Kris Woyzbun, and I are teaching our course on Organizational Practices as Prototypes (MS&E 287)for the third year in a row at the Stanford d.school.  This is a small course — just 12 students — focused on applying the design process to organizational behavior issues.  In past years, our students have worked on improving the experience of JetBlue customers who have delayed flights, improving the employee onboarding at IDEO, developed prototypes for improving employee performance feedback at Mozilla and Cooliris, and — as you can see here in BusinessWeek — helping to revamp the all hands meeting at Timbuk2.

    This year, we have the first two projects planned and are in the process of lining-up the third and final one.  The first project, led by d.school stalwart and design star Perry Klebahn, will be short one focused on how to recruit and design jobs for the new generation of knowledge workers.   The aim of this project, in addition to getting the class to jump right into the challenge of designing organizational practices the first day, will be to teach students the design thinking process and involve students in an intense "get to know you" exercise. 

    The second project will be with JetBlue and we will be working with Sam Kilne for the third time. Sam is fantastic at setting-up things so that students have great access to JetBlue employees, is very responsive to students questions, and gives fantastic feedback.  The topic this year is developing means so that JetBlue employees can provide timely and useful feedback and suggestions to management — a project we are calling "reinventing the suggestion box."  

    As you can tell, this is a hands on class, where the emphasis in learning by doing, and in that vein, developing prototypes that organizations actually implement. Alas, it is only open to Stanford graduate students (although I promise occasional updates here). The details are here. Class meets 3:30 to 5:00 MW at the Stanford d.school. If you are interested in applying, please send a resume and an pitch about why you want to join the class to both Debra and me (our emails are found on the link).

    P.S. The official name of the class this year is "Prototyping Change in Entrepreneurial Firms." 

  • Asshole Boss of the Year?

    There is always a lot competition for this title. But (courtesy of Gawker and a tip from Scott), Vadim Ponorovsky, who owns the restaurant Paradou in Manhattan, appears to have won the prize.  Here is the email he sent to his staff, which was forwarded to Gawker:

    To All,

    Please read this email carefully. This is the last time we will be discussing this.

    This weekend, saturday and sunday we had 451 customers. Guess how
    many emails we collected? 60? 80? 40? No. None of those. We, or more
    acurately you, collected 2 emails. Thats less than half of one percent.
    2 fucking emails.

    WHAT THE FUCK IS WRONG WITH YOU ASSHOLES?!?!?! How many times do we
    have to tell you how important it is that you collect emails. Everytime
    we have a slow night and you make no money and you sit there bitching
    about how you make no money, remember its because youre fucking lazy
    motherfuckers. YOU SHOULD ALL BE FIRED IMMEDIATELY!!!!! ALL OF YOU,
    INCLUDING THE HOSTS!!!!

    Let me guess, youre probably sitting there saying "Vadim is such a
    fucking asshole. How dare he speak to me like this. I dont need this."
    Youre right, you dont, so why dont you get the fuck out. Any and all of
    you.

    Youre probably sitting there saying "How dare he speak to me like
    this. How dare he not have respect for me". Youre right there also. I
    have absolutely no respect for any of you. Why? Because every fucking
    day, all of you continue to show that you have absolutely no respect
    for me or Alex. So if you dont respect us enough to do the little that
    we ask you to do, then GET THE FUCK OUT YOU FUCKING LAZY DISRESPECTFUL
    ASSHOLES!!!!!

    Effective immediately, any server or host who fails to collect at
    least 20 emails per week, will be fined $100. Anyone failing to collect
    at least 20 emails for two weeks in a month will be fired immediately.
    No matter what. No matter who you are.

    You dont want to do your job, you dont want to do what we ask, you dont belong at Paradou. Go find another place to work.

    How dare you disrespect Alex and me this way. How dare you completely ignore what we ask of you time after time after time.

    I am sick of all this shit, you bunch of fucking children. This is
    what I have to deal with at 6AM?!?!? I wouldnt tolerate this from my 13
    year old, and Im sure as shit not going to tolerate it from any of you
    assholes.

    You give no respect, you get 10 times back.

    If you can top that, let me know.

    P.S. There are all sorts of subsequent actions here, from a defense by the owner (with more F words and a claim that he practicing Reagonomics) and apparently there are death threats against him.  See here, here, and here.