“May you live in interesting times” is supposed to be a Chinese curse from years gone by. The idea is the unfortunate victim of the curse will experience disorder and trouble in their life. It may not be a Chinese curse at all but the quote has captured many people’s imagination over the years. People struggle to deal with ever more complexity and relentless bad news these days from a variety of media. As the going gets increasingly difficult it seems to me that trust is breaking down at many levels of organizational life. This makes resolving the already challenging problems even more difficult. Let’s take a classic situation a CEO in a turnaround situation faces.
- The recent earnings report misses analyst expectations. The stock takes a beating. The pressure to act decisively and be soon to do so is enormous.
- The CEO promises big changes. Employees tremble knowing full well what this often means. It is usually very unpleasant in the short run. Surprisingly it often is worse for the employees left than those who leave.
- Partners are usually already unhappy at this stage. The company is making less money. Of course they are also. They can expect further pressure on their margins as the management team seek to restore the company to improved profitability.
- Many people are looking over their shoulder and living in fear. Who is going to lose their job? Who is going to have to lay off staff in their business? Few people want this.
- If the situation is really bad (and it often is if the problems have festered for years) a few people are actually hoping they will be laid off to get a generous severance payout. The work environment is fairly toxic at this stage.
- This negative feedback loop is hard to break with external and internal stakeholders reinforcing each other’s negative perceptions. Social media has really changed the game in this regard. Executives have far less ability to shield shareholders, analysts and employees from negative feedback. Twitter, LinkedIn, newsletters and blogs provide new forums for interested parties to hear the “word on the street”.
The situation I describe is surprisingly common due to the hugely competitive, rapidly changing and disruptive nature of the tech industry. If you don’t believe me check out the scathing commentary from employees in most large tech companies in retreat on glassdoor.com. Even wildly profitable firms like Microsoft have their challenges. How do once mighty companies lose their sense of purpose and loyalty of their staff? The reasons vary by organization. A couple of trends spring to mind though.
- Arrogance: Past success prevents execs from seeing the flaws in their business models or product portfolio. Look how quickly RIM has fallen from grace in the past few years after dominating the smart phone market originally.
- Politics: It is remarkable how executives with business units in constant decline or departments with huge amounts of waste are able to nominate others to take the fall for their mistakes. This breeds cynicism and a culture of form over substance. So much talking. So little results! So much destruction of shareholder value! These leaders kill their organizations ability to rebound because employees don’t trust them.
- Executive turnover: Some companies seem addicted to reorganizations. This can lead to a culture where employees follow instructions blindly. Survival versus excellence is the name of the game. Don’t rock the boat! Pursuing strategies tried a couple of times already under different leadership really hurt morale as well.
It’s easy to identify and describe the problems. What about some solutions for CEO’s and their boards!
- Be decisive and patient: Make big changes and give them time to work. Organizations with small groups of employees “disappearing” on a regular basis kills morale and breeds fear. If big changes are required so be it. Make them and move on! You cannot get the best from people who work in fear.
- Listen: People understand that bad results require tough decisions. It is important that key stakeholders understand the reasons for change. It is even more helpful if people can see the long-term pay back from the tough decisions taken now for future growth.
- Communicate: Blogs, intranets, conference calls etc are all valuable. Even better is to develop a personal rapport with people through more intimate forums like town halls, walking the floor or partner road shows. Context is key to help people understand strategy and direction.
- Lead from the front: In Japanese culture senior leaders make larger sacrifices than employees to give leadership. Huge pay raises to a select few while the majority get a minimal raise (if any) undermines leaders standing with their shareholders and employees. The recent shareholder activism against outrageous bonuses to executives in London & Wall Street is here to stay given the projected financial challenges over the next few years.
- Play to win: It’s hard to rally the troops when you typically play defence.
It is hard for organizations to differentiate themselves through extraordinary customer experience if many key stakeholders are having a very unpleasant one. That said, the best things in life don’t come easily. No pain, no gain! For better or for worse (and probably both) life is going to get a lot more interesting for most of us as 2012 progresses……







