We Are Not Family in the Workplace

You hear it all the time – “I love my job. We’re like family there.” It’s true that a workplace setting may sometimes resemble a family. You spend a lot of time together. You have parties together, go out to lunch, celebrate successes. Sometimes people in the office even get nicknames like Aunt Betty.

But there are big differences between a family and a business. Here are just two: a business has the goal of making a profit. And it can choose who gets to stay and who goes. With family members, for better or worse, you’re just stuck with them.

This family mentality, while it may sound inviting to outsiders and help with employees’ morale, is actually not what you want to encourage in a workplace. Yes, you can keep your parties and celebrations and encourage good relations and positive morale among co-workers. But the overall goal is to build a high-productivity team – not a happy family.

Let’s take a look at Netflix.

Netflix has 81 million subscribers and grew its revenue from $1.2 billion in 2007 to $6.8 billion. This pioneering company has changed the entertainment industry. Its history, place in our society and future is fascinating. You can read all about it in the New York Times Magazine article this past weekend, “Can Netflix Survive in the New World It Created?”

But there was a point early on when the company’s survival was in question. In 2001, after the internet bubble burst, Netflix had to lay off 50 of its 150 employees, cutting its staff by one-third. And what happened? The people who were left had to work harder, but were actually happier.

Founder and CEO Reed Hastings and former head of HR Patti McCord thought it was because they “held onto the self-motivated employees who assumed responsibility naturally.” They said office politics disappeared overnight.

Since then the company strives to maintain what Hastings calls its “high performance” culture. A lot of companies pay lip service to that value, but at Netflix, they mean it.

Netflix captured its culture in a slideshow the company produced in 2004. (And that has been viewed 14.5 million times.) This 124-slide, simply produced show includes the company’s philosophy of hiring, And firing.

“Like every company we try to hire well.”

“Unlike many companies, we practice: adequate performance gets a generous severance package.”

“We’re a team, not a family. We’re like a pro sports team, not a kids’ recreational team. Netflix leaders hire, develop and cut smartly, so we have stars in every position.”

The analogy of the kids’ recreational team versus the pro sports team is perfect to capture the mentality I’ve seen so often in my practice with GlassRatner. I mention a few stories in my book, “How Not to Hire a Guy Like Me: Lessons Learned from CEOs’ Mistakes.”

There was the company where the CEO’s grandmother was on the payroll, but whose primary responsibility seemed to knit the CEO socks. There was the beloved “Aunt” Tess who handled payroll, helping herself to the salaries of several non-existent employees every two weeks.

I’ve seen many companies that run more like a kids’ recreational team. Everyone gets a trophy and we love the ladies who brings the snacks!

But in real life, people who don’t perform get cut from the team. And the job of CEOs and senior management is to field the best team possible. Netflix does that early on by recognizing mediocre talent and paying them to get off the team.

Zappos has a similar philosophy for cutting people quickly who aren’t going to be the best team members. They famously use “The Offer,” giving new employees the opportunity to receive $2,000 to leave rather than starting the job.

Last year, Zappos had a large increase in turnover when 18 percent of the company took buyouts, an extension of “The Offer.” Zappos was unfazed, according to this article in The Atlantic, “Why Are So Many Zappos Employees Leaving?”

“We have always felt like however many people took the offer was the right amount of people to take the offer, because what we really want is a group of Zapponians who are aligned, committed, and excited to push forward the purpose and vision of Zappos.”

That’s the kind of team you want to build. A pro sports team. Team members who don’t perform can and will be cut.

Work-Life Balance: The #1 Thing to Offer

This is part two of a two-part series on the growing importance of offering a work-life balance to employees in your company.

To compete in recruiting the best new employees and to retain your current employees, you need to offer work-life balance programs, as I discussed in my last column.

So how do you go about doing this? Is it going to cost you a lot of money to implement these programs and result in lost productivity? It doesn’t have to.

The number one consideration for work-life balance is flexibility. That’s what many potential employees value most. Being chained to a desk from 9-5 with a strict two-week vacation policy every year is an old-fashioned and outdated model.

imagesWork-Life Balance and Flexibility

Here are a few ways to bring flexibility to your workplace. And surprisingly, many of these measures result in increased productivity as your employees are happier, feel more independent and motivated.

  • Offer flexible schedules and telecommuting

Stagger starting and quitting times if appropriate. Some people prefer to start work earlier or later to avoid the traffic during rush hour or to leave earlier in the day to exercise or be with their children.

While some jobs can’t be performed at home, many can be done better outside an office so consider telecommuting some or all of the time. Salespeople who spend a good amount of time on the road could be more productive catching up between sales calls by going to their home office or working in a coffee shop rather than making an appearance in an office.

One PR firm in Atlanta allows all employees to work from home every Friday. They are still connected to each other online. Many of them feel that they are more productive at home than in their shared office.

Make it easy for employees to take off a few hours one day to attend a school event, and make up the time at home or on a different day.

  • Be flexible on PTO

I’ve written before about companies that put no limits on vacation time. Maybe that doesn’t work for your company but you can make sure employees have enough time to take off to recharge their batteries. Increase their PTO each year, even if it’s just by a small amount, to motivate and retain employees.

  • Be flexible and understanding about family emergencies

Allow unpaid leave if an employee has a health crisis, a family emergency or is caring for a sick relative. Chances are good that few employees will need to take advantage of this benefit, but just knowing that it’s an option makes employees feel better about working for your company.

  • Provide child care options if possible

If your company is big enough and demand warrants it, check into setting up an on-site childcare facility. Or partner with one nearby and provide a discount to your employees.

Employees Like to Feel Heard

To best meet the needs of your employees, consider conducting a survey to ask them what they would like to see added to your company. That has the added benefit of allowing employees to feel like their opinions are being heard and considered by management.

Just remember, the key is flexibility. When your employees feel that your company is responsive to their needs and their desire for flexible working options, they will be happier and more productive employees. And that is always good for your bottom line.

Short-Term Pain, Long-Term Gain

For almost 40 years, I’ve been working with distressed businesses to create value for stakeholders. Unfortunately, the one common theme is that at some point during its life cycle all companies will experience financial difficulties caused by our economy or by management making the wrong decisions. Some companies will experience these difficulties more than once.

It’s how the companies deal with these issues that determine whether they survive or become a statistic of another failed business. The same could be said for individuals — how we deal with adversity can determine our survival or success.

I come from a humble, poor background. We were so strapped for cash that we had to borrow money to bury my WWII veteran father in 1964. Thanks to Social Security, my sister and I received death benefits until we were 21. To make additional money, I mowed lawns at age 12, sold peanuts at football games and had a paper route. The entire family chipped in to help with finances.

Many families also implement survival strategies for the greater good of its members. Some cut out dinners in restaurants so their daughter can go to cheerleading camp. Others drive their cars for 200,000 miles so the family can live in a nicer home. One parent works a day shift while another works at night so they can always have one parent with the children and save on daycare.

We deal with short-term pain for long-term gain.

The same concept goes for the companies I work with. My job is to educate people at these failing companies and implement survival strategy. It’s a tough, stressful job because it does involve people’s lives. I know what it’s like to struggle financially and I don’t wish to take anybody’s job away.

However, generally a turnaround does involve cutting jobs, reducing pay, closing plants, changing products or product lines, and sometime firing senior management that made the wrong decisions. Companies must change direction to survive.

Just look at all of the companies throughout the years that have changed for survival — Coca Cola, GE, Home Depot, General Motors, Chrysler, banks, insurance companies, probably even your company. All of these businesses have made tough decisions for survival. Unfortunately, some don’t. What ever happened to the buggy whip and wooden wheel businesses?

Yes, it’s always tough when people lose their jobs. But I learned to view those necessary job cuts in a different way. Years ago I was driving my son Sam to school. He asked me what I was doing that day. I told him that I had a rough day ahead of me because I was going to Philadelphia to lay off 200 people and close a division of a company. He looked at me like I was an ogre and asked how the kids of those laid-off parents would be able to afford camp, get baseball gloves and enjoy candy (now with kids of his own his concerns still lie in these three areas).

I told him that by laying off 200 people and closing one plant, I was saving 600 jobs and keeping the company alive. Certainly what I had to do was terrible for some people, but it was for the greater good. If I didn’t let 200 people go today then I’d have to let 800 go next month.

The strategy worked. Less than a year later, the chain was merged into a national retail chain and jobs were restored as the footprint expanded. It was another case of short-term pain for long-term gain

Another analogy of a turnaround is that of being in an accident and going to the emergency room. The dedicated doctors and nurses sole goal is for you to survive. Hours of surgery, many stitches, amputation of extremities may be in order. Later, the patient goes to the plastic surgeon, buys a wig or obtains a prosthetic. But, we survive thanks to these dedicated folks. Short-term pain for long-term gain.

All of us individually have made decisions that involved short-term pain for long-term gain. And companies have to do the same.

Crazy Is As Crazy Does So Keep It Wrapped Up

Turnaround is a very high stress game. I don’t mean for me – it’s my job to stay calm, cool and level-headed and avoid letting the CEO do anything rash while he’s worried about losing his business and life.

But the CEO isn’t the only person at a company stressed out by a turnaround and with the ability to do something stupid. Every employee has the potential to set off and do something idiotic, embarrassing and detrimental to a company’s successful emergence from a crisis.

That’s why, as the CEO, president or leader, you have got to maintain your composure. Do not blow off steam publicly, do not be seen to publicly rant and rave and do not be an idiot in the light of day. Employees will follow your example. If you need to blow off steam go to the gym, get a punching bag, go to the driving range or the shooting range or join an underground fight club. Just keep it under wraps.

In times of no crisis, if employees see you taking cash from the register or inventory from the warehouse, they’ll think it’s okay to do the same. You’re the leader.

In times of crisis, when they see you lose your head and freak out, they will follow suit. At the very least, they’ll become disillusioned and less productive, which is the last thing that a company needs in crisis. While going through a crisis, a company needs to operate at the highest level, churning out the best widget at the fastest rate (pending the crisis isn’t in production) and doing its best to stay ahead.

And you don’t have to be a CEO to be a leader. If you’re a manager or just a regular employee, you can set an example as well. Though it’s hard to make your calm contagious the same way your panic might be, just maintaining your stability and work ethic will show others that this is the right course of action.

I’ve talked about crazy Charlie before, who tried to stab his mother in one of the more hostile corporate takeovers I’ve been involved with, and as a result of his crazy actions, the deal to sell the company fell through.

Crazy people doing crazy things – especially in crisis – is ruinous. Keep your head, lead by example and deal with problems immediately. You don’t need mutiny on a sinking ship if you’re hoping to stay afloat.

What’s the craziest thing you’ve seen an employee do?

Different Experiences in the Public and Private Sectors

Over the course of the last few months, I’ve had three organizations/businesses bother me in connection with one product sold by one company that we’ll call Round Pals. I found their intersection to be particularly interesting.

Private Company 1

The first organization was a competitor that we’ll call Big Guys. Big Guys wrote a cease and desist letter to Round Pals for using an image online that legally belonged to Big Guys. The cease and desist letter was very well-worded, firm but polite and said, “We would never intentionally infringe on the copyrighted materials of other companies and we believe that Round Pals wouldn’t either, which is why we know that, having brought this infringement to your attention, you will stop using our intellectual property.”

Round Pals immediately stopped using the material and wrote to tell Big Guys exactly that. All was professional and cordial. No harm. No foul.

Private Company 2

The second company was the manufacturer of a major product sold by Round Pals; we’ll call this manufacturer Safe Co. In trying to negotiate for a better price on Safe Co.’s product, based on purchases of the exact same Safe Co.-manufactured product elsewhere, Safe Co. became concerned.

As it turned out, Safe Co. was not selling the product for what Round Pals was getting it for elsewhere, and Safe Co. wasn’t sure how Round Pals was finding the product for so little. However, Safe Co. handled its concern and correspondence in a professional way, despite believing that this, being a safety product, was a major issue. We all really appreciated the way that Safe Co. (so far – the issue remains unresolved) has handled this issue.

Government Agency

And then there was the government agency. Boy was the government agency and its representatives horrible.

They threatened, they intimidated, they bullied, they badgered.

They were rude. They were manipulative. They were unkind. They were unprofessional.

I’d say I’ve never seen anything like it, but as a turnaround professional, I see this all the time.

It was terrible dealing with this government agency because they didn’t care about time or money wasted – they just cared about ticking things off their check lists and moving on. But only moving on between the hours of 8 a.m. and 4 p.m. In the intervening hours they couldn’t care less.

We repeatedly asked this government agency for documented proof of our errors and supposed wrong-doing. We asked to see the regulations. But they had none. Indeed, they misquoted their own documents and regulations, and sent us a 160+ page document about something other than what we were talking about and doing when we asked for clarification on our alleged error.

It was borderline pathetic.

The Moral of the Story

I’ve said it before and I’ll say it again and again and again. We have got to run government more like a business.

There are plenty of problems with the private sector, yes, but when I have private sector problems, I mostly find myself working in professional environments with mutual respect for time, money and energy. We also usually come to fair and amicable solutions to our problems. Not everyone ends up happy all the time or with what they want (often times this isn’t the case), but it’s amazing how different the approach and attitudes can be. Not always, but frequently enough that I found these three instances all revolving around one product a particularly illustrative case.

Do you have any examples that run notably in favor of or counter to my point?

The Rotten Ratio: Sales = Debt

Every industry and business has interesting ratios and rates that are relevant to it. For e-commerce, returns are around 8%; the average conversion rate on a Google Adwords advertisement is 2%, and so forth. I’m sure you can think of some in your business.

In my business, we have a ratio, too: one I call the Rotten Ratio.

The Rotten Ratio is when sales equal debt.

Take a second to think about that: sales equal debt. Believe it or not, I have a number of companies in this situation.

But how does something like that happen? Why do I keep getting hired at this rotten sweet spot?

Well, when business is good and sales are going up, companies decide to buy a new factory, or purchase new equipment -or Ferraris – you know, whatever the necessities are. In order to do this, they borrow money, which at the time makes sense when they look at their sales and growth.

However, as they tend to do, especially when companies and their leaders get distracted, sales slow down, yet that debt is still there. In efforts to sustain their perceived growth, companies take ill-advised steps, which sometimes include more borrowing. At the very least, they don’t pay their debt down, and with sales continuing to slow, they don’t get any closer to doing so.

Numerous warning signs should likely have tipped off CEOs, owners and boards off to the impending crisis that’s coming their way, but as I often say, no one calls me and says, “Lee, I’m going to have a crisis three weeks from Thursday.”

By the time sales and debt meet, it’s become clear to many CEOs that they need to bring in a professional, so when I arrive and start looking over financials, I notice time and time again that sales do indeed equal debt: the Rotten Ratio.

Though you should know that things are turning sour before your sales and your debt numbers meet, by the time they do it’s a pretty good indicator that you’re going to need to change the way you’re doing something and take some drastic steps to resolve your company’s problems. When that happens, seek professional help. Oftentimes it takes a professional to make the truly huge and hard decisions that will save a company.

Remember, turnaround isn’t pretty. We often have to amputate a leg to save a company, and when you’ve just moved into a shiny new factory, selling it off seems like the biggest backwards step and the one thing you’re not willing to do. But that’s why, as a CEO, you have to check your ego at the door, admit you’ve made a mistake (or multiple mistakes) and do whatever needs doing to save your company and the jobs of those who depend on it.

When you’re moving towards the Rotten Ratio, get proactive.

Have you ever seen the Rotten Ratio? What other reasons do you think a company might find itself in this position?

Dr. Freud Says, “You’re Distracted!”

Life is distracting. I know it, and you know it. Hey, it’s life, and we have to relish the distractions. Life isn’t business, after all. Business is a part of life.

When the distractions include the marriages of our children, moving to new homes, graduations, holidays and everything else that comes with life, that’s great – and we probably shouldn’t call those distractions. We should call them life.

But in my line of work I don’t find that it’s this part of life that either results in or compounds the troubles of a turnaround.

I Give Up

I got a call the other day from a client who said, “Lee, I think I’m just going to file for bankruptcy tomorrow. I can’t keep up with this, and I don’t know what to do. It’s too overwhelming, and I’m done.”

It was at that point that I lit my  cigar (not really, I don’t smoke) and asked my client to lay down on his couch (we were, after all, on the phone, and I couldn’t very well have him laying on my couch).

I’ve learned over the years that my job is – in large part – the job of a psychoanalyst. I have to break through what a client is telling me is bothering him and get down to what the real problems are.

Let’s Go Deeper

As I asked my client to tell me what was really going on and what was really overwhelming him, he said that the business was the problem: payroll wasn’t going to get paid, creditors were barking at the door and everyone seemed despondent. Those are pretty standard problems in a turnaround – after all, it’s what I was doing there in the first place.

But why all of a sudden could he not handle the pressure and the issues? Why did he want to give up and file for bankruptcy when I’d told him that we would get through this turnaround without the need?

As it turns out, the issues weren’t really about the business. I pushed a little more and learned that this client’s father’s health had just taken a bad turn and that he was having other problems at home.

He was prepared to handle the issues the business was facing because he knew I was there at his side to take care of them, but what he wasn’t prepared for was handling the business and the rest of life’s more challenging distractions at the same time.

He didn’t realize that I was there to support him through those issues, too.

Have Someone to Turn to

No – I didn’t become his drinking buddy or commiseration pal, but I did use my Dr. Freud skills to listen to his issues and show him that whatever else was happening, he could place the burden of his business on me. It would be my problem to bear in the meantime because that’s what I do best.

When you find that work has become too overwhelming – especially when things are going wrong – consider the fact that you may be distracted by a lot of life’s other challenges. Maybe you should talk to someone and maybe you should lean on some of the key people in your life to take the burden off of you.

How do you deal with distractions and focus when you really need to?