Bob MacDonald on Business

Sage Advice for Superior Business Management

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Without the Power to Make a Difference, There is Little Incentive to Participate

May 17th, 2015 · Business Management, Effective Leadership, Improving Your Business Leadership

The essence of power is not the power itself, but in the license it grants the holder of power to make a difference and influence the outcome of any situation.

Many in business seem to believe that the accumulation and retention of power is the objective of the game, but that misses the point. Power should not be seen as the goal, but as a tool that can be used to achieve goals. The most effective leaders do not seek to SharePoweraccumulate power so they can do great things; instead they share the power they have among their followers, so they can do great things. They know that when power is constricted or consolidated in the hands of the few, it excludes the many from feeling empowered to make a difference, destroying their incentive to participate and work toward the objective.

A good example of how people act when they feel empowered or conversely, powerless, can be gleaned from voter turnout in national and local elections. The New York Times reported that the national voter turnout of 36.3 percent for the 2014 federal election was the lowest in 72 years. In the three largest states – California, Texas and New York – less than a third of those eligible to vote did so.

Voter participation in state and local elections is even more abysmal; often less than 20 percent of those eligible exercise their franchise to vote. When slackers were asked why they didn’t vote, the vast majority reported they sat out the election because, “They didn’t believe their vote would make a difference.”

Compare that result with this one:  it has been estimated that 71.3 percent of active members of organized special interest groups turn out to vote in support of their cause. In the 2012 recall election of Wisconsin governor Scott Walker (he won), 57.8 percent of eligible voters cast a ballot. This was the highest participation rate for a gubernatorial election not on a presidential ballot in Wisconsin history.

The point here is that when people feel important and that they have the power to make a difference, they will become involved and make the effort to make a difference. But when people feel no sense of power to make a difference or influence the outcome of a decision, they lose interest. They lack incentive to contribute and basically sit on their hands. When this happens, the leader – no matter how much power he or she may have in theory – is, in reality, powerless to achieve the sought-after objective.

Many in the business world long for power—so they can keep it for themselves.


More often than not, the politics of the typical business organization is driven by an addiction to power and the personal success it is perceived to bestow. This is not bad in and of itself, but a problem emerges when those who do acquire power exhibit little understanding for the real power of power and fail to use it effectively. It is as if power for power’s sake is the only goal.

This tunnel vision thinking is clearly evident when looking at the traditional “organizational chart.” These charts are structured in the form of a pyramid, with the CEO and senior officers at the pinnacle, unmistakably sending the signal where the power resides. The message is that the lower one is on the pile, the less power they possess. The problem with most companies is not that power – or the lack of it – is expressed this way, but that the leaders of the organization believe that when it comes to power, this is the way it should be.

When the culture of the organization revolves around the concentric acquisition and accumulation of power, those down the line begin to feel powerless to make a difference or influence the success of the organization. As this happens they withdraw, lose interest and lack the incentive to make the extra effort for the benefit of the organization.

Power Hoarders Should Know Better

What makes this cycle of power so incongruous is that most of those who have power in the business world know that the constriction and husbanding of power among the few is counterproductive to the overall success of the organization. One of the most discussed and praised techniques of successful management is “employee empowerment.” While virtually everyone in a business leadership role professes to recognize the value of employee empowerment, it is almost always more talk than action.

In survey after survey a large majority of employees who express dissatisfaction with their job cite lack of respect for their effort and the absence of an opportunity to offer input that could make a difference. In short, they feel powerless and that’s a bad feeling to have in an organization that puts a premium on power.

Why Not Empower Others to Make a Difference?

If empowering employees is recognized as the right thing to do, why don’t more managers do it? The chief reason managers fail to empower others is the mistaken belief that giving up their hard-earned power to others will, in some way, make them less powerful. They don’t understand the difference between sharing power and relinquishing it. When employees are empowered by the leader, what is transferred is not the authority of the leader, but the real essence of the feeling of power: that magical recognition that one is respected for their talent and that they can make a difference.

The leader always retains the power of their position, but when the leader is willing to share the benefits of that power with their followers it creates a feeling of empowerment. It is the feeling of empowerment that builds loyalty to the leader, encourages participation and incents the follower to do the best they can—not only for themselves, but also for the leader and the company. It’s not that everyone wants the power and responsibility to make the decisions – most don’t – but what they do want is the feeling that they are important to the leader and the company. And they have that feeling when they feel empowered to make a difference.

It Costs Little and Gains so Much to Empower Others

All it takes is the right attitude and a few simple steps for a leader to empower their followers.

  • It starts with respect. When the manager exhibits the same level of respect for the powerless as they do for the powerful, the powerless become empowered. Respect is empowering and it comes down to simply acknowledging and recognizing the value and contribution of the employee. How hard is that?
  • Participation is a key element of empowerment. How can one feel empowered if they are excluded from the process? When a person’s opinion, thoughts and ideas are SharePower3sought out it signals they are valued and this is highly empowering. It does not mean the employee makes the decision, but when the leader shares power by including them in the process of making the decision, they are empowered.
  • The ultimate feeling of empowerment for an employee is when they are recognized for their contribution and allowed to share in the value they helped to create. Conversely, it is a sure sign of powerlessness when an individual works hard and contributes to the success of an organization, only to have others take the credit and accept the rewards. When a corporate culture is based on shared effort, recognition and rewards, the more those involved will feel empowered. And when empowered they will be incented to participate.

It all comes down to this simple maxim:  Power is a powerful tool when a leader uses it to empower others.

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The Secret to the Joy of Firing Someone

May 10th, 2015 · Business Ethics, Business Management, Effective Leadership, Improving Your Business Leadership

How to make firing someone cathartic for you and the one fired

Donald Trump may take perverse joy in scowling “You’re fired!!” on his mindless reality show, The Apprentice, but unremorsefully humiliating an employee is not a perk for being boss, it’s an imbecilic caricature of what a businessman should be.

The truth is that the process of involuntarily terminating someone’s employment can be Trumpdistressing for both the terminator and terminated. Unless the firing is “for cause,” who among us can feel good about putting a person – usually with a dependent family – on the unemployment lines? What sense of fear and uncertainty washes over a person who comes to work in the morning with a job and goes home at night without one?

I was fortunate in my business career not to have to fire a large number of people before I learned how to do it the right way. The experience used to be just as traumatic for me as it was for the person being terminated. Even when it was clear that a person was not performing up to acceptable levels, I would fuss and fret, delay and rationalize the decision until it became an unnecessarily painful event for the employee and me.

The HR Rulebook Teaches the Legal Way to Fire, but not the Right Way

The beloved HR people and their loathsome lawyers feed you all the “dos and don’ts” when it comes to firing an employee, but these are just techniques and processes designed to ward off office upheaval and litigation. They will counsel you to do it yourself, do it in person, have a checklist, don’t sugarcoat your words, follow company procedure, document the process and, believe it or not, have a lawyer present.

These are all good recommendations when the intent is to protect the company and head off a lawsuit, but they also seem predicated on the assumption that the action will come as a complete surprise to the employee. Notably lacking in this scenario is any indication of compassion or concern for the employee. It’s no wonder, then, that the typical firing is so often a downer for all concerned to say nothing of the terrible message it sends to other employees.


My contention is that firing an employee does not have to be that way. Sure, it’s important to protect you and the company against unwarranted litigation over the firing, but it is also possible to fire someone with compassion and understanding that, at the very least, will take the edge off the process. Believe it or not, it may even be possible to make termination a positive experience for all concerned.

Two steps to successful firing

It was only after I learned two important principles that the process of terminating an individual’s employment became a palatable, if not positive experience.

First of all, if the person being terminated was surprised by my action, it was my fault. I deserved to feel bad. It meant that I had failed as a manager to consistently and effectively communicate my dissatisfaction – using specific examples – with the individual’s performance. I learned early on that people could not read my mind or even my body language concerning their performance on the job. It may have been clear in my mind that the individual was not doing the job, but unless I made my impressions very clear to the employee, I was failing in my responsibility and should not have been surprised that they were surprised when they were fired.

Once I understood and accepted this responsibility to the employee and the time came to sit down and pull the trigger on the firing, there was no surprise on the part of either party. I may not have looked forward to firing the employee, but I no longer felt guilty about the process.

The second principle to successful firing may seem counterintuitive, but it is perhaps the most important element to creating a positive environment in the entire process. I discovered that many individuals who deserve to be fired are actually relieved to be fired. I know that does not make a lot of sense, but it is true. I would fret and anguish over having to fire an employee, yet when the meeting came about, I was surprised at the sense of relief exhibited by many employees. It was as if they had been waiting – even wanting – for the event to happen.

What I learned was that most employees know better than anyone how they are performing in the job. When a worker is in over their head or is simply not motivated to do the job, they know it and it puts a tremendous amount of pressure on them. There is the FakingItuncertainty over how long they can continue to “fake it” and the anxiety wondering when they will be “caught” and held accountable. They are not happy in the job and this causes their effort to spiral downward even further. Of course, they are not going to raise their hand and advertise their failing, but they definitely are looking for a lifeline. Also interesting is the fact that the longer it takes for the boss to “liberate” them from the job, the less respect they have for the boss. And this creates unnecessary tension when the firing finally comes.

I came to understand that if the entire process leading up to and the actual firing itself is handled in an open, honest fashion and with compassion, then the actual firing of an employee can be a positive experience. Really, it can be. When the boss has done all that should be done to support, assist and communicate with the employee, they can be comfortable with their decision. From the worker’s perspective the burden and uncertainty of being in a job they know they are not or can’t do effectively is taken off their shoulders.

Showing Compassion Lessens the Conflict

In essence, once I learned to approach the firing process from the perspective of the employee it put me in parallel with their concerns, fears and feelings and went a long way toward making the termination process more cathartic than conflicting.

It is not always the case, but more often than not the situation of poor performance calling for termination is because a good person has been put in a bad job. Most good people want to do a good job, but they often find themselves in a job that does not fit their interests, talent or experience. This creates increasing anxiety and fear, driving performance even lower. However, when the boss comes to the under-performing employee more in the role of a liberator than an exterminator, there is more relief than regret.

My experience taught me that if I approached the firing process more as a supportive counselor than a bearer of bad news, the experience was always more positive than negative. I learned that the best approach was to be totally honest about their current performance being unacceptable – and this should not have been a surprise to them – but that I wanted to help and support them in the effort to find a new job – either within the company or outside.

Two things this approach did not include were washing my hands of the process by turning them over to HR for the usual prepackaged legalize “termination package” or suggesting that I would be less than honest if contacted by another perspective employer. But what I did promise was that I would help and support them in finding a new job that better fit their skills and interests.

It may seem fanciful to some, but by following this approach to firing someone, more often than not the person would thank me. Not for being out of a job, but for being out of a job that was more stressful for them than their lack of performance was for me. They respected and appreciated that I stood up and did what they should have done themselves. Such a reaction almost made me look forward to the joy of the next firing — even though I was not Donald Trump.

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Grading Employees Fails the Grade

May 3rd, 2015 · Building Better Business Managers, Business Management, Effective Leadership, Employee compensation, Improving Your Business Leadership

The traditional method of employee “performance reviews” has not only lost its effectiveness (if it ever was), it has become counterproductive.

I don’t know about you, but for me it made no difference whether I was the “reviewer” or the “reviewee,” the ritual of the annual job “performance review” always struck me as akin to evaluating the past and appraising the future based on the ruminations of a demented soothsayer. In short, they were, at best, a waste of time and most often they did more harm than good.

That is unfortunate because “performance meetings” between a manager and a subordinate can be a powerful tool for cooperative relationship-building, Review2increasing morale, instilling motivation, rewarding effort and ultimately, enhancing performance. No matter what the level of the job or responsibility, everyone wants honest feedback on his or her performance.

Yet, employees for the most part look upon a looming “annual performance review” with trepidation; they’re unsure how the boss views their effort and work. And the truth is that most managers see conducting the annual performance review of each employee as a burdensome chore, rather than an opportunity to communicate and build a deeper level of trust and respect with the subordinate. These dichotomous feelings of both the employee and the manager materialize for the simple reason that the traditional concept of the annual performance review is fatally flawed.

Rethinking the Employee Review

The artificial and sometimes awkward annual sit-down with the boss to have one’s job performance “rated” with such clear and defining terms as “outstanding,” “above average,” “satisfactory” or “needs improvement,” has been used to assess the performance of employees for generations. But it has outlived its usefulness – if it ever had one.

One specific weakness of the grading approach is that the subordinate’s future is dependent on the caprice of the boss. It is a two-way street as well, because often the one doing the rating seeks to avoid direct conflict with the employee and does not want to “hurt their feelings,” so there is a tendency to “over-rate” the performance of the employee. And that disingenuousness on the part of the manager can end up causing even greater problems.


These negative dynamics inherent in the traditional performance review system only leads to confusion and frustration for all participants. When the employee feels the assessment of the boss was unfair or inaccurate, there is little or no recourse and this directly impacts their morale and effort. When the manager is less than candid about performance –especially if it has been poor – it makes it difficult to take corrective action in the future. There is no question that this system is inefficient, ineffective and hangs on only because it is ingrained in the long-established corporate HR mindset.

Beginning to Recognize that Grading is Failing

The good news is that companies are beginning to recognize the weaknesses in the traditional performance rating exercise. The bad news is that they don’t seem to know how to fix it. This conundrum was brought home in a Wall Street Journal article. The Journal article aptly pointed out, “As companies reinvent management by slashing layers of hierarchy or freeing workers to set their own schedules, performance ratings with labels like “on target” stubbornly hang on.” The article pointed to a long list of some of the largest companies – Gap Inc., Adobe Systems, Intel Corp. and Microsoft – that recognize the weaknesses inherent in the traditional performance review process, but seem stymied in their efforts to create a better system. The problem is that these and other companies are locked into the past and are trying to patch fixes on an intrinsically bad system, when an entirely different approach is needed.

There is a Better Plan that can Make the Grade

How would you like to be in a school that not only conducted open-book testing, but also allowed you to grade your own test? Schools that have experimented with this approach have discovered that students given this freedom and responsibility were not only more serious about the effort, but ended up learning more. A variation of this approach was used for performance rating by one company I know and the results were amazing.

What the company did was to turn the “performance review” upside down by conveying the responsibility for assessing the performance of the employee to the employee. Not only did the employees end up more involved in the process, they established higher standards of performance and were more demanding on themselves than any manager could reasonably ever be.

Here is how it worked:

At the beginning of each year the employee was asked to list the five most important goals and objectives they had for their job in the upcoming year. Then they were asked to enumerate the specific actions they would take to achieve these objectives. Next, the employee was asked to list his or her three greatest strengths and weaknesses. Once these strengths and weaknesses were cataloged, the employee was asked to identify three specific efforts they would make to leverage their strengths and an equal number to correct any weakness. For the final step the employee was asked to write two or three paragraphs summarizing what they would be able to report as their performance at the end of the year.

This entire process was in collaboration with and support of the manager. This put an onus on the employee to be the ones setting the standard of performance and accountability. Once all was agreed to, both the employee and the manager signed the “plan of performance.” Then each quarter the manager and the employee would have a brief meeting to discuss the activity and progress the employee had established and committed to achieve. If adjustments were needed, they could be made at that time. At the end of the year there would be an “annual review.” in which the employee – not the manager – would take the lead. In effect, employees would “grade” their own performance based on the goals and objectives they had set for themselves.

The reality is that we know better than anyone if we are performing well. What the company discovered was that by using this approach to “self-directed performance reviews,” the employee set higher standards, had more of a sense of personal accountability and made a greater effort to meet established goals. Allowing the employee to set their own goals and performance standards within the job was a great lesson in empowerment and personal responsibility. It also fostered a feeling of trust and respect between the employee and the manager. This in turn promoted collaboration between the manager and the employee, with the manager in a support, rather than demand role.

This “open book” approach to performance review may seem like Pollyanna to those locked into the constraints of the traditional graded performance review system, but there are two things in its favor – it works and the old system has failed. Not only is this new approach simpler, it eliminates conflict and uncertainty while involving the employee in a way that makes them part of the process, not its victim. In short, it gets a passing grade.

 

 

 

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