Monday, April 03, 2017

How To Kill A Successful Company: A Short Guide

Several years ago, a company I worked at, which was well respected in the industry, experienced a traumatic shock. It was sold. The company had been founded almost a century earlier, and although it had undergone a few changes in ownership, had continued to grow and become extremely successful. The ownership which had been in place since the late 60's was perhaps its most successful incarnation. At the time I was hired in 1990, there was a actually a waiting list for many of their positions, starting with the file room and stenographers (yes, they had actual hard files and stenos). The president of the company was strict by most standards. He believed in being on time, working until your lunch or break. At the same time, employees were respected, well compensated up and down the entire company hierarch with an excellent insurance plan.

There were also small non-quantitative "bonuses" which added immense value to being an employee there, such as an outing to the track. The company would shut down for the day and take everyone to the races (the company owned box seating), lunch at one of the upscale restaurants, along with anniversary lunches, gift cards, and turkeys at Thanksgiving. The white collar employees, such as myself, had individual offices. Each morning the company president would come by and greet each employee. He would check to see that the trash cans had been emptied the previous night, the carpets vacuumed, light bulbs changed, office furniture was in good repair, and everything was in working order.

True, there were a few downsides, such as their refusal to modernize when it came to technology as fast as some would like (although, at the time, the company was slightly ahead of the technology curve within its industry) and there was a professional dress code for everyone. They lacked a professional HR person (the person they had in that position also was in charge of building maintenance, the mailroom, shopping for supplies, and filing up the soft drink machine). There was also a departmental rivalry which encouraged to mistrust the other departments; a "dog-eat-dog" mentality, which was extended to include individual employees within each department so that fellow employees were to be viewed more as "frienemies". Stenos were given quotas with a chance at a small bonus. But, nevertheless, there was a strong work ethic and the president was someone you could easily respect.

After the president retired, things changed rapidly. There were fewer and fewer pay raises (even COLAs), updates in technology slowed to virtually nothing. Building maintenance became nearly nonexistent. Gone too were many of the small perks such as an outing to the race track, luncheons and turkeys. There was greater emphasis placed on intercompany competition. Employees were subtly encouraged to steal fees from fellow employees (especially if they were in another department). Employees were expected to lie to clients when it came to issuing remittance checks (the company would hold the checks for approximately ten days, sometimes longer), or find ways to beat the attorneys down on fees and to get clients to go along with changes in terms which would, of course, benefit the company's (but not necessarily the employee's) bottom line. Ultimately, the company's reputation took a nosedive.

Some employees excelled at this and were rewarded with better claims. Some didn't, or simply wouldn't go along. They were either fired or forced out be being given poor quality claims with no opportunity to make money. Everyone was on a small base salary plus commission, which had been reasonable and a person could make a good living. In fact, most lived off of their commission checks and banked their base salary. However, the company used this as an excuse to forego COLAs, and they often adjusted the draw upward, making it harder and harder to earn a commission. This applied to stenos as well as inside and outside salespeople (outside salespeople were also responsible for making personal "adjustment" visits usually covered a territory that was several states wide and covered huge geographic distances. They were compensated for overnight stays, given a company car plus per diem). Eventually that too stopped. They were still expected to meet quota---bringing in new business, calling on existing clients, and making personal contact with debtor businesses. The toll became too much for everyone, and so began a period of constant turnovers, and with it, the quality of claims (which, naturally meant fees and overall income for everyone dropped). However, "favorites" still continued to earn top dollar since management could still farm out the best claims or volume to chosen individuals.

It soon became a very depressing place to work, but among the veteran employees, they had so much time invested in the company and had been out of the job (and technology) market for so long, felt they were trapped. Of course, management itself continued to make money hand over fist, which only increased the general animosity, and with it, productivity declined. Many of the benefit and insurance packages were either eliminated or cheapened for everyone except management. Everyone started simply going through the motions. It didn't take long for leading clients to leave either. Employee innovation or suggestions were ignored or rejected out of hand; after all, what could "mere" employees, some with more experience and/or education than even the senior most management, possibly know? At one point a management consulting firm was brought in. Employees and management were surveyed, interviewed, and finally brought together for the verdict. The result was that management was completely out of touch---with the employees, with the industry, and with each other. However, management faulted the consulting company for not doing an adequate job, and certain employees for "sabotaging" the project. Yet everyone knew the truth, whether or not they wanted to accept it.

In time, the company embraced technology ("embraced" is a little too strong of a term. It was more like being made to shake hands your worst enemy after a fight). Several in upper management had left by this time, along with much of the senior personnel. But by this point, the technology was too little too late, and the company was quietly put on the market despite transparent lies from senior management to the contrary. Again, management showed how out of touch it was by initially valuing the company based on its previous glory and not its current reality. Eventually the business was sold at a fraction of its original estimated worth. The match, however, turned out to be one made in Hell. Management did its best to place a positive spin on the sale, which I suppose was all it could do. Promises were made about no major changes, vast improvements to come, no layoffs, more advancement opportunities, better income potential, but some of us knew better and a few even said so. These were two completely different companies from two unrelated industries, with completely different philosophies internally and culturally. But, hey, everyone got a free coffee mug with the new owner's logo on it and a $25 gift card! Apparently loyalty can be bought, and at bargain basement prices too!

The company became a small American cog in a global European based machine. We were managed by individuals thousands of miles away who had little or no understanding of American business practices and knew nothing of our industry. It wasn't long before the white collar staff lost their coveted offices in favor of open cubicles. The income structure was changed too, but not for the better. The "disconnect" attitude was replaced with a "stepchild" attitude. We were expected to conform to a structure and philosophy which simply didn't work. We had to adapt to a computer system which was incompatible with everything we did, and on prescheduled timetables which were unrealistic. Long term employees---veterans---were seen not as assets but as liabilities and were viewed with an air of suspicion. Thus came the next exodus, be it willingly or enforced.

So, how did I fare? Well, I had been one of the employees who looked out for fellow employees regardless of their department or role. I openly opposed any and all internal conflict. I refused to take advantage of my attorneys or of the clients (however, if there was a way we all could mutually benefit, I was all for it). I was seen as a "shop steward" or employee liaison. Employees came to me on a regular basis to discuss problems with supervisors, management or other employees. I often served as the conduit for new ideas to improve work conditions, improve productivity and so forth. Management, rather than appreciating my role, which was at their behest, actually feared it. They did everything they could to force me out, from verbal harassment to cutting my income my over 1/3 at one point. Somehow though, I always made money. In fact, I was lucky enough to collect the single largest recovery in my department's 90+ years history (and the second largest in the company's history) and collected the most total fees earned in the company's history. I was also one of the most requested managers to handle certain clients exclusively; this, despite routinely being given the worse claims.

But, if you want to really know how I fared and what it was like, here's an example for you. It is an email exchange which was sent out shortly after we were acquired by the new division Vice President. So, here is goes: "Start with a cage containing five monkeys. Inside the cage, hang a banana on a string and place a set of stairs under it. Before long, a monkey will go to the stairs and start to climb towards the banana. As soon as he touches the stairs, spray all the other monkeys with cold water. After a while another monkey makes the attempt with the same result. Pretty soon when a third monkey makes the attempt, the other monkeys will try to stop him. Remove one monkey and replace it with a new one. The new monkey will see the banana and want to climb the stairs. To his surprise, the other monkeys beat the snot out of him. Another attempt and another attack. He knows that if he tries to climb the steps, he gets assaulted. Next, replace another monkey with a new one. It gets the same treatment. The previous newcomer even participates in the punishment with equal enthusiasm. Continue the process until all of the original monkeys have been replaced. The new monkeys will continue to attack anyone trying to climb the steps and retrieve the banana, but without knowing why they are doing it. Nevertheless, no matter how hungry they are, no monkey will approach the steps". The intent was to tell everyone that the "old ways" of doing things was gone, but that's not how it was taken by most of the employees (someone in new management had previously commented that trained monkeys could do our jobs).

After a few minutes of thought, I fired off a reply and for good measure, copied all the same people as he did. Here's what I said, "That works until the monkeys decide to organize their efforts. One goes for the banana. One serves as lookout, and the other three wait to beat the bejeezus out of the asshole with the water hose. They split the banana and laugh and laugh". A few years later, I was promoted to Special Projects Coordinator to the President---an Assistant Vice President position within the new company. My role was improve the workplace efficiency and working conditions, evaluate individual and departmental performances, assist with HR functions, help resolve any workplace conflicts (I was a certified mediator), in addition to my existing position as the senior Legal Manager in the department. It was a role I enjoyed (and the additional compensation was nice too).

The point to all this is that employees aren't liabilities to be used and discarded. Employees, especially those who've been properly developed, are essential to the success and longevity of any company. To be dismissive, condescending or arrogant in dealing with an employee is to sow the seeds of the discontent and that may eventually affects the bottom line, not to mention the life of the company no matter its standing in a given industry or how old it is. I am not, of course, saying that management should jump on every suggestion, but it should keep its eyes and ears open as to what the employees are saying or not saying, as the case may be. Is there a specific issue which keeps coming up? Is there a trend to comments or suggestions? How are the attitudes? What are other companies, both in and out of your industry, doing to improve worker moral? Are the employees being engaged?

Ask for their ideas---and be willing to implement the better ones. Nobody knows the job better those who do it day in and day out. When I was in the military, on Command Staff, I was taught to always praise in public and criticize in private (something this company rarely did). Acknowledge everyone's contribution. Treat everyone, from the lowest individual on the totem pole to your peers, as equals. Be fair in your criticisms, praise, and especially in compensation. And in this world of global competition and connectiveness, accept that one size doesn't fit all, be it in the product or service you're selling or how your company functions. Learn to appreciate the little nuances. While cubicles were the norm for our new parent company in their European or Asian offices, they weren't here in the US. Personal offices were seen as a source of professionalism and of accomplishment, plus they added in our ability to do our jobs, which were often highly stressful, in quiet. The loss of those offices I think set the stage for what would be the death kneel of the company which would come just a few years later. Lastly, if there is an employee, no matter how much they may earn, who doesn't fit in, be it bullying, domineering, temper tantrums, inappropriate behavior, or being abusive, don't be afraid to terminate that individual. It's one less stressful and potentially harmful situation eliminated, and that allows for a more smooth running department or company, which means a more productive department or company.

No comments: