Is it really the good?

I have personally never even heard of the book Good to Great, but what is particularly interesting is how fast a book can become a valuable source for information when there has been no empirical proof that it is true.  Being a person of math and numbers, and wanting a definite answer and reason for everything, I can see why Niendorf and Beck wanted to review the book and its implications on the business world.

The main point is that they have no actual data that supports their claims of the five key components to having a successful business.  Just because current successful companies share some common threads of operation does not mean that those threads are what makes them a success.  There are many more factors that can result in the success of a company.  The key factors that lead to GTG failures in providing evidence was the ideas of data mining and association v causation. 

In both, they neglected to find hard evidence that any situation or event that actually lead to a successful company.  Dont get me wrong, i think that there a definitely some positives that can be taken from this book.  I dont think that i should be completely written off as a book of no value; it should be considered a book with good suggestions and ideas for a company to get a jumping off point.

Group Think

The article I read this week was about the concept of group think.  Basically, it is the notion that all the people working in a particular group all just simply agreed with the common ideas of the group and did no think outside the box or from a different perspective.  Group think, as stated in the article, can lead to decisions being made that had detrimental effects. 

Without all the information, how can there ever be a clear and factual answer or solution.  The CIA is supposed to be one of the best intelligence gathering organizations in the world.  How can it be that an organization that is supposed to be one of the most well functioning groups in the world, be the biggest users of “group think”.  I think in most companies there comes a time when the people there begin to get complacent with their current work, either because it is not what they want to do, is not intellectually stimulating, or they are just lazy.  However, the company cannot just look beyond this complacency, they must take action and quickly to ensure that the group think is destroyed. 

Not looking beyond what is right in front of you can have serious consequences like in the article on Iraq.  A willingness to actually go and be proactive in a company and find all the pertinent information is what is needed in order to make educated and knowledge decisions.

Commission or Bust

The article by Jeffrey Pfeffer about the troubles that the follow the use of a commission system is another in a smattering of article that discuss the backlash that commission systems face.  In this article however, he also give some really good examples of not only large scale companies that have tries to use a commission system as well as larger companies. 

What I got from this article is that there really is not a good example of a successful commission system.  With every commission system there are the downfalls.  Most notable the fact that the employees uses this system to get the most amount of money by doing the least amount of work.  There is also the fact that people are no longer working to benefit the company but to benefit themselves.  It is hard to maintain an intrinsically motivated sales staff when the only thing they are interested in is how much they can make and not how much they actually like their job. 

So when a company is initiating a commission system in their company because they have motivation issues they should not do it because it “offers a mirage of a quick fix”.  They should really take a look at their company system and culture and see where the problem actually lies.  As the article says, “be careful what you pay for, you may get it”, the good, the bad, and the ugly.

Arrow Electronics

For the last couple of weeks I have been reading articles about the pros and cons of performance evaluations and commission incentives.  With the huge success and longevity of the electronic’s company Arrow, i really wasnt anticipating reading this case study about the turmoil within.  Basically, the question is whether or not their current commission and review system should be maintained or a new system brought in. 

In my opinion, i have yet to see a commission system that has benefited both the company and the employees.  Commission does not motivate to make the company do better only themselves and arrow is no different.  Furthermore, their attempts at creating a new system of performance review has serious downfalls.  First of all, there is no clear expectations as to what each category means.  Also, the CEO Steve Kaufman puts this added pressure on the managers to maintain a certain quota of people who are below and above average.  The fact that each person is required to have a score of 2 in at least one category has a dramatic effect on how everyone is scored.

With no consistency in the system at Arrow, there are no clear expectations in a persons work or on how they are reviewed.  In my opinion I think that the best option would be to have some other sort of incentive plan that eliminates the commission system and the performance review.  Of course no one system for works for every body, it all depends on the system and the culture of the company.

Team Leaders

This week I read an article about what kind of strategies effective team leaders use to develop new product.  They begin by giving a list of basic things that an effective team leader will need and have.  To simplify those things they are: good communication skills with team members and outside factors, having an internal locus of control or taking responsibility for the goals of the team, actively involving all members of the groups, having a good support system, and a good balance of technical and human interactions . 

However, these teams are not just all the same people from the same department.  They are cross-functional groups, including people from every aspect of the business: engineering, manufacturing, marketing, and production.  These groups are created to work together and develop products faster and cheaper.  Also, a key to this function is that fact theses leaders should be actively communicating with each other about all aspects of the project and divulging pertinent information.  One of the major downfalls to a lot of companies is the fact that each department keeps their knowledge under lock-and-key and dont share information with others whom it might be beneficial to.  These team leaders should be creating an environment that goes beyond the bullsh*t of the office and openly discuss issues.

In general, the article makes great points about how an effective team should look like and function.  The key is to have a group of people from all areas who have the communication skills and leadership abilities to foster productivity and product development.

Nordstroms

Who knew that under the facade of extraordinary service was a darker side of the high end fashion scene at Nordstroms Department stores.  I for one have always thought so highly of the, in my opinion, overly priced clothing store.  It was a place that the rich and credit extended people went and received the most lavish service of all the department stores.  However, after reading the case study about the dissension that is occurring among the sales staff, i have started to see the high end fashion store as just another place where they want your money at any cost.

The main point of the case study is that Nordstroms’ sale employees are either not reporting all the hours they have worked or have been told not to report all the hours.  I my opinion the reason why they are not wanting to report all their hours is because of the commission and promotion system that they use.  There are definitely situations in which a commission program can be a motivator to do your best work and better the company.  However, in this case the employees are not motivated to better the company but only to do what is best for them.  Their SPH program (Sales Per Hour) is not what I would consider a good motivator but more of a stress and possible job liability. 

I am not saying that all of the extra services that Nordstrom’s provides are not a necessary or desirable asset to the company.  What i am saying is that not paying people for the work that they do because they are afraid that it will hurt their SPH numbers is not a good system.  There are parts of the system that I think are good for the employees and the company.   For example, the fact that they promote from within offering manager positions to those who have worked hard and deserve it.  Also, i dont think that they should change the system to the point that it will affect the treatment of the customers and what the outstanding service they already provide. 

I think my main question is how can a company with some notoriety have so many underlying problems?  Also how can there be so many complaints from one branch and not in others?   I think that it really stems from the management.  The fact that each store has its own sort of creative freedom to run the store how they see fit I think is where the problem starts.  Therefore, they have created these silos of discontent and satisfied employees.  For a company that is still run by some of the original Nordstrom Family, how could they not know that there was so many problems within the company?  Also, should other department stores still be using Nordstrom as the epitome of a successful operation?

SAS Institute

After reading the case study about the SAS Institute I am about ready to pack up and head off to Cary, North Carolina.  This is because they are a business of not only equality but one of individual responsiblity.  In today’s business world, it is hard to find and work for a company that has the same goals as your own.  One that stresses the importance of holding yourself accountable and having the intrinsic motivation to do and work to your fullest potential.  SAS is one of those institutions. 

The question that chief executive Jim Goodnight and VP of human resources David Russo are asking themselves is can we maintain this type of organization structure and still be competitive.  In my opinion, they most definitely can.  The have created a culture of trust, fun and one where employees hold some stakes in the company.  Their main philosophy is one that requires the fair and equal treatment of all employees.  Furthermore, they do not believe in performance reviews.  Instead, the top managers are more focused on coaching and mentoring.  Instead of having yearly performance reviews, they actually have quarterly conversations with their employees about their progress.  What? Actual conversations between employees and managers are possible and in fact are showing to be more successful than annual reviews. 

There is also the idea that they have developed a system in which all employees are able to function in successfully.  That is, the company provides their employees with all the necessary tools to do their jobs right the fist time and without much intervention.  The company’s main concern is the satisfaction of their customers and their employees.  They are able to stay successful because each employee knows exactly what their expectations are from the first day of work.  There are no questions about what they should be doing each day, and they have created an environment in which every person sets their own attainable goals and works to their fullest everyday. 

In general, i dont think that Goodnight and Russo have anything to worry about with their company and being able to maintain their growth and success.  They have an extremely low turnover rate, satisfied employees and customers, the ability to promote from within and have quality employee recommendations, as well as maintain a broad and diverse market of products.

Sierra Medical Chemicals

The case study of Specialty Medical Chemicals is one that is seen all to often in companies.  The introduction of a new CEO can be nerve-racking for not only the existing employees but also for the CEO.  With any management change, there arise fears of job security, loyalty, and motivation.  The key however, is for the CEO to try and build open lines of communication with employees and encourage them to be as active in the company as possible.

This is what Carl Burke tried to do at SMC; creating weekly management meetings, talking directly with sales people, research the business industry, and looking for potential growth.  Which is why he brought in Laura Wells.  He was trying to fix whatever growth issue they were having.  However successful they have been in the future, they were not growing.   In my opinion, the first step would be to kick the VP of product development in the butt and make expanding the market to biotech and generic drug companies as soon as possible.  It is a huge market that is being left untapped because they take too long to develop. 

Furthermore, I think that Laura’s approach to a potential restructuring of the company is a smart one.  Basing her analysis off of a person’s work history, psychological analysis, and behavior Carl can get a better understanding of each person individual strengths and weakness.  If carl and restructure the company so that everyone is aware of the personalities they are working and what strengths and limitations each person has, the more successful the people and the company will be.  Overall, I believe that restructuring is essential and that the company will be successful in the future.

How Good Are You?

This week i read an article about performance reviews.  Basically, it bashed them and all that the mean and do when used by company to rate their employees.  Honestly, I completely agree that performance reviews are negative to corporate performance; limiting the already few pen lines of communications that already exist in the business world. 

Furthermore, those giving the review and those being reviewed take two different positions on their meaning.  How can something that is being interpreted differently be effective?  Furthermore, I believe that performance reviews do not promote growth within and among employees.  If, in the end, most people get good ratings and a slight boost in pay there is really no incentive to work harder or be better than we already are.  From my own personal experience with performance reviews, and being rated on a scale of 1-5, I have fallen victim to the “what can you do better” and “here are the problems I have seen in your performance” comments. 

Although, I am still victim of the performance review, I have made myself aware of how to make changes immediately and address issues when they happen instead of waiting for the dreaded meeting.  I have opened the lines of communication with my coworkers in hopes of creating an environment where everyone is free to make comments and suggestions.

Southwest Airlines: The People’s Company

Southwest Airlines has well been the epitome of a customer service, low fare organization.  From personal experience I can say that i have always had excellent customer service with fares that were drastically lower than any other airline.  The reason for Southwest’s success with its customers is because of its internal success with its employees.

By constantly satisfying its employees it is able to have the work more, for less money, and with more accuracy and precision.  The company has also stream-lined it entire system by flying to mainly underserved  cities, using only one type of plane, not including on-board meals, make fewer shorter flights, and staffing only what is necessary to get the job done. 

This kind of employee and customer satisfaction can only be the reflection of a motivated and empowering management team.  By not only making their management have one “field day” a month, where they go out and work the front lines, they also create “culture committees” with in the company.  management realizes that the flight itself is not the product they are trying to sell; it is a fun, friendly, creative service that is what they market and continue to successfully produce for their customers.

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