Bob MacDonald on Business

Sage Advice for Superior Business Management

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Success is often Determined not by How You Work, but by the Environment in Which You Work

February 8th, 2015 · Business Management

Only when the work environment is conducive to growth, development and achievement can an evolution to your success be possible

This past week an international team of scientists announced a discovery that provides the most concrete evidence yet to validate Charles Darwin’s theory of evolution that he propagated in his 1859 book, On the Origin of Species. Darwin Darwinargued (as did many other scientists of his time) that a constantly changing environment triggers evolution of a species whereas an unchanging, stagnant environment produces an evolutionary dead-end.

The scientists drew this contemporary conclusion after discovering a 2.3 billion-year-old (almost half the age of the earth) fossil-bearing rock buried deep in a seabed off South America. (Don’t ask me how they found the goddamn thing!) The microorganism fossils discovered in this rock were exactly the same structure as microorganisms living in deep seabeds today. The significance of this scientific “aha” is that, when microorganisms are stuck in an unchanging environment, they will not evolve even when given billions of years to do so.

So what’s the lesson to be learned here? What does Darwin’s theory of evolution have to do with achieving success in business? Even though Darwin never lectured at the Harvard School of Business, his theory does have relevance to evolving success.

For those who have the desire to build a successful career, it is important for them to be in an environment that not only allows but also triggers their evolution. If they are not in such an environment, then they have about as much chance as those microorganisms to advance and evolve. Zero.

The first question for you to raise, then, is this: Am I in a job and working for a company that has an environment that allows and encourages potential and opportunity for personal growth and development? If the answer is no, then you better get out from under that rock or 2.3 billion years from now you will be doing the same thing you are now and still looking for success.

But how does one assess their environment to determine if success is even possible? That’s a good question and the only way to really find the answer is to constantly evaluate the cultural environment, viability and potential of the company for which you work. Unfortunately, the answers will not be found in the past or even current performance and reputation of the company, but only by exploring and understanding the very fundamentals of how the company is managed and led. Even if the company has achieved success in the past, if it now seems to be going down the wrong path, then you should consider seeking your own path.

The good news is that employees themselves are in the best position to determine the future direction of the company and the potential opportunity for their own career growth. The key is to be observant and brutally honest about what is seen and experienced in the workplace.

The cultural environment of a company starts and ends with the attitude and philosophy of management. What type of organizational culture is management seeking to build? Do they even care about creating a positive culture? Or is it something to which only lip service is given? The answers to these questions will go a long way toward helping you determine the security of your employment and the potential for your future success.

Obviously, the place to start is to determine if the management of a company is ethical. The use of the term “ethical” in this case is not about lying, cheating and stealing. If that is the modus operandi of management then the answer is simple. For the purposes of this piece, ethics refers to the attitude and operating philosophy of management. Do they speak with forked-tongue? Do they talk the talk of good culture, but operate in a closed, self-serving fashion?

A good example of management lacking sound ethics is a management group that incessantly talks about how important the employees are to the success of the company, but when black clouds are sighted on the horizon, the first actions of management are to “downsize” and “outsource.” When challenges arise, managers lacking true ethics quickly herd unsuspecting employees to the twin altars of downsizing and outsourcing, where they are sacrificed to the pagan gods of illusory profits.

If you work for a company where management holds the belief that costs will be reduced and profits increased when important functions (and the people doing them) are outsourced to those with no knowledge of the company and with no concern for its future or the future of its people, then it is reasonable to question the environment for change and growth.

Let’s be honest and acknowledge that there are no requirements for management to be open and all-inclusive in their actions and most companies are not that way. But, that does not make it right or, for that matter, the smart way to develop long-term success. And, such an attitude does not bode well for your evolution.

Those who build business cultures that generate employee job security and opportunity are those who do the right things that are not required to be done; this is the essence of ethical leadership. They rise above average, commonplace leadershipBusinessEnvironment because they know that building healthy organizational culture is crucial to the success of the company and to their own future. That is the type of company that people not only feel comfortable working for, but more importantly, one in which they can see their careers evolve and thrive.

Of course, it is possible climb the corporate ladder working for a company that does not create an environment that encourages and stimulates change – many do – but to do so, an individual must be willing to sell their soul to this type of soul-less leadership. That may be okay for a while, but you really have to ask yourself if you want to live your life that way. And, in all likelihood, your future and that of your company will be put at risk.

Here are a few tips and telltale signs to use to determine if you work in an environment that will allow you to grow, evolve and be successful.

Communication – Is the management of the organization open and honest in their communication with all employees? Is information about the company considered the exclusive purview of management? Is information provided on a regular and reliable basis? Are employees constantly caught off guard by the actions of management? Is the dreaded rumor mill the primary source of information for employees?

Trust – Do management actions build an atmosphere of trust? Are management actions – especially as it applies to employees – honest, constant and consistent? Can management pronouncements be taken at face value or do employees feel they have to question and read between the lines to determine what they really mean? Are employees comfortable trusting their future to the actions and interests of management?

Parallel Interests – Do employees believe that management makes an honest effort to align the interests of the company with those of its employees? If the company is successful, do the employees believe they will share in the success their efforts helped to create? Is the success of the organization the success of all or is it management that takes both the credit and the spoils for any success?

Power Sharing – Is power concentrated rather than shared? Is the management group so insecure and controlling that they must actually define themselves as the “leadership team?” Are employees given the responsibility for tasks, but not the tools or authority to achieve them? Do employees come to feel that what they do – unless they fail – is not recognized by management and that they are really powerless to make a difference?

Employee Value – Does management constantly talk about how important employees are but treats them only as pawns? Are employees the last to know and the first to be blamed, downsized or outsourced? Does management speak of respect, but take actions that often denigrate the value and importance of the employee?

And The Moral of the Story …

If you are serious about your future and success, it is incumbent upon you to take control of your future and make sure you are working in an environment that will allow you and your talents to evolve. There is no security in allowing others to control your future. Taking control of your future starts by putting yourself in a workplace that gives you the opportunity to evolve into the success you seek. And that means making a choice about the roads before you.

If you find yourself working for a company with a stagnant or closed environment – unlike our little friends the microorganisms locked in a rock for billions of years – you need to recognize you are in the wrong place. You have two choices. You can give up and give in and just hide under a rock. Or you can proactively search out the type of  environment that will allow you to evolve and be successful. Just remember success is not always determined by how you work but where you work.

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Aetna Insurance Learns Important Lesson – Pay For What You Want To Get

February 1st, 2015 · Business Management

Operating on the cheap  especially with workers is a recipe for higher costs and lower profits.

There was a telling article (at least I thought it was) in a recent issue of The Wall Street Journal. The story focused on the giant insurance company Aetna, Inc. that announced it was increasing the minimum pay of its workers to $16 an hour and that it would also begin to subsidize health insurance costs for its lowest paid workers. Aetna estimated that these changes will impact as many as 7,000 workers.The Aetna CEO Mark Bertolini was quoted in the article taking credit for what he called a forward-looking and compassionate attitude demonstrated by this action.

I applaud these measures and give Mr. Bertolini the benefit of the doubt (of which there is much) that his motivations are Mark Bertolini(1)sincere and well-intended, but at the same time have to ask: Where have you been all this time?

Is the CEO not at all embarrassed to admit – let alone promote the fact – that a white-collar company like Aetna has 7,000 workers earning less than $16 an hour? In fact, the move to increase minimum pay to $16 per hour represents as much as a 33 percent increase for most of the workers. Meantime, subsidizing health care costs (and remember Aetna is a health insurance company) will save these low-paid workers up to $4,000 a year, money that was coming out of their already low pay.

As welcome as these changes are, they should be put into some perspective. Aetna estimates these pay and benefit adjustments will increase company expenses by $25 million per year. That is no small sum, but keep in mind that Aetna’s projected revenues for 2015 are $62 billion and operating profits are estimated to be at least $2.4 billion. So these increased costs represent less than one percent of company profits. And what does Aetna expect to receive in return for these increased costs? Well, in reality, the executives ruling Aetna don’t believe it is going to cost the company anything. The Aetna CEO admitted that the annual turnover costs for these lower paid workers is $120 million and he believes the higher compensation will allow the company to attract better quality workers, improve productivity and significantly reduce turnover. Dah!

The end result of this action taken by Aetna is good, but the hypocrisy inherent in the motivation for the company to act grates like a sandpaper diaper. Mr. Bertolini pretentiously offered this explanation, “It’s not just about paying people, it’s about the whole social compact. Why can’t private industry step forward and make the innovative decisions (like I have) on how to do this?” It is good that Mr. Bertolini has discovered his “social conscience,” but disappointing that he did not seem to care about 7,000 of his employees earning wages at the edge of poverty until he figured out that it was actually costing Aetna more in increased expenses and reduced profits than what the company saved by treating employees on the cheap.

There is another telling point in the Aetna action: In further justifying the decision to increase the pay of low-income workers Mr. Bertolini said, “We’re preparing our company for a future where we’re going to have a much more consumer-oriented business and Aetna wants a better and more informed workforce.” Ah, so here is the leader of one of the largest health insurance companies, serving hundreds of thousands of customers, not only admitting that thousands of his workers have been earning barely a minimum wage, but also that there has been little focus on customer service. The logical conclusion is that something else must be motivating a company that previously cared little for its workers or customers, to change.

You don’t suppose that Obamacare – that compels companies to compete for business on an open exchange – had anything to do with the decision of Aetna to become more “customer-oriented?” And that to do so, the company needed to attract and keep workers motivated to put in the effort to provide better service? Na! These actions had nothing to do with competing under Obamacare; they did it because it was about the “social compact” obligations Aetna recognized it has with its employees and customers. Would you like to buy a bridge?

There is no intent here to single-out Aetna and mock the hypocrisy it has exhibited, because the company is the rule, not the exception. There seems to be an abiding belief held by the executives of most companies that funds used to recruit, train, develop and compensate workers are a cost, not an investment. Companies will often tout their investments in research, technology, equipment and plants, while, at the same time, highlighting efforts to control and reduce labor costs. The attitude is to go first-class on the things that are intended to bring success, but to go steerage-class when it comes to the people who make the things work. Attracting, training, motivating and rewarding labor (people) should be considered just as much of an investment in the success of the company as buying new equipment; but rarely do company executives embrace that view.

It’s strange that executives understand that going on the cheap for research, technology or equipment can result in higher costs and lost opportunity in the long run, while not recognizing that going on the cheap when it comes to employees can have the same result.

This attitude was observed first-hand when, for a number of years, I served on the board of directors of a fast-growing national restaurant chain. The company was well-led by the executives and has grown to over 1,000 restaurants nationwide. As well as the company has done, it missed the opportunity to do even better, by falling into the trap of viewing “labor” as a cost, not an investment. It is a mindset that can be especially counterproductive when the employees are the face of the company, such as in the restaurant business.

No one at the company or on the board questioned the company expending millions in food research, new concepts for its restaurants, advertising and marketing; these were all viewed as investments in the company’s future. At the same time, members of the board were fixated on controlling and reducing labor costs. The directors, who were each being paid well over $100,000 per year (for four meetings)voiced no concern that the vast majority of the 15,000 restaurant employees were being paid at minimum wage levels.

Quite to the contrary, any hint of an increase in minimum wage by any state or the Federal government, would move the board to apoplexy. For the directors, any suggestion of an increase in the minimum wage was considered more threatening than an outbreak of Ebola in the restaurants. Employees were viewed as a cost, not an investment; and anything to control or reduce that cost was good. Despite the fact that annual employee turnover hovered at 130 percent and that costs for recruiting and training a constant parade of new employees that ran into the millions of dollars each year, there was no willingness (or ability) on the part of the directors to connect the dots.

It has long been my belief – and I started a company to prove it – that when it comes to a company’s success, people are more important than things. Companies have a better chance to stand out from the competition, achieve ultimately lower costs and be more successful if the employee is viewed as an investment, not an expense. I learned from experience that when employees are considered and treated as a major asset and an investment in the future of the company, they will respond accordingly. When a company has a culture that treats employees with respect, is willing to invest in their development and compensate them for the value they add, then high-quality workers are attracted. And these workers become motivated, loyal and productive.

And the Moral of the Story …

When the leaders of a company adopt the belief – as a core of the culture – that employees are an investment rather than a cost, they discover that not only do overall costs decline, but the return on the company’s investment in the employees generates a return far greater than any other investment the company could make. Maybe, just maybe, Aetna is learning this lesson.

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Being Successful is Not Something You Buy Into – You Have to Own it

January 25th, 2015 · Business Management

Success is more likely and enjoyable when it is as personal as you are.

“Success” is the third most searched word on Google; right behind sex and money. The concept of becoming successful in life or business is such an all-consuming desire in our lives – some would say obsession – that more has been written on how to attain it than any other subject.

You would think, therefore, that when you combine the desire to be successful with the billions of words written about how to achieve success, it would be fairly easy to attain. But it’s not. And that’s because, all too often, we allow others to define our success.

The vast majority of those who say they want to be successful and are willing to pay the price to achieve it, fail. Why? key-to-successBecause most of what is said and written about success is intended to get you to buy into a vision of success as they define it, and the actions they say you need to take to be successful. It’s “they” from beginning to end.

This is an erroneous approach to achieving success that, as often as not, leads to failure because it’s not “you.” True success is not determined by what others want you to “buy,” but by what you own as a part of what you are. Success comes as the by-product of a life lived from the inside out; not from the outside in. Success comes from internalized ownership of what you want to be and a determined drive to achieve it. Success should be yours, not something someone else has tried to sell you.

It may seem incongruous, but the single greatest impediment to achieving success is the inability of the person seeking it to independently define just what success means to them. When we allow others to define our success, we are, in effect, abdicating control of our lives. Think about that. How can we ever be successful if we allow others – parents, teachers, bosses or peers – to define that success and the actions we should take to achieve it? Obviously, if we don’t personally define it for ourselves, we’ll never know how to achieve it, or even if we achieved it.

It seems that everyone has their own ideas about success and we are barraged with briefcases full of definitions, some no better than mere notions. It starts with parents who lovingly, yet persistently apply their image of success on their children. Be it sports, grades, competition with peers or the schools we should attend, we are constantly bombarded with the success expectations of others. The intentions are good, but the results can be disastrous.

We’ve all heard the horror stories of parents who push their children to achieve “success” as a proxy for their own perceived failures: the mother who literally thrusts her little girl into beauty contests; the dominant father who takes his kid out of high school to be a pro golfer; the star quarterback driven by the expectations of others.

Parents like these and many other adults go through life leading the famous lives of quiet desperation and unhappiness because they are led to think of themselves as “failures.” In most cases the perceived failure is in reality only a failure to live up to someone else’s expectations of success. (Or maybe they finally recognize what a wasted life it is to be a banker!).

There are legions of “successful” people who demonstrate dissatisfaction with their success by committing seemingly strange acts of personal self-destruction. This comes from either not having a strong enough personal self-worth to define their own brand of success, so they feel “guilty” and become trapped in a quest for success that fits the definition of others, but not theirs.

I would not attempt to define or quantify success for you, but I do encourage anyone to do so on your own terms. I have discovered that no matter how you define success or what level of success you may seek, the philosophies, techniques and actions are the same whether you define success as being the very best bus driver in the world or the very best fighter pilot.

The first step to achieving real success is to understand that allowing others to define and structure that success is the Successshortest road to failure. The first thing to do is forget everything every one has ever told you about success. Clean your mind of the expectations of others. Ignore my ideas of success along with all the other ego-saturated books of business leaders. Certainly all the ideas you’ve heard about success are good background, but they only serve that purpose.

What you need to do is call a meeting of your most trusted advisors; those who you know for certain care about you and your success above all others. So, call a me, myself, and I meeting. Ask them to help you define what success really means to you. Don’t let them get away with any BS here. This is a once-in-a- lifetime opportunity to be completely and totally honest, so don’t let them miss the opportunity.

From this point, it may seem like defining your own brand of success is a simple process, but it is not. First of all you have to eliminate everyone else’s definition of success; create your own definition. Defining success is difficult because so many confuse the rewards of success with success itself and they are not the same. Ask anyone to define success and most often they will mention fame, fortune and power as the preeminent criteria for success. It is important to recognize that these are the rewards for a successful career, not success itself. Success is about what you achieve, not what you receive. Ask yourself: Does the achievement of fame and fortune make me successful? Or do I achieve fame and fortune because I am successful?

It is incorrect to define success by identifying the rewards of success. For example, I have always felt it to be a poor definition of success to say my goal is to achieve fame as an actor. My viewpoint is that success is more fulfilling when defined by deciding to become a great actor. The point is you have a much better chance to become famous if you first become a great actor than you do if your goal is only to be famous. It’s a mistake to start a business to get rich. Start a business to take advantage of an opportunity others do not see, if you do that, riches will follow. Take on a job to be the best at doing it, don’t target that promotion, target those things that will earn you the promotion.

And the moral of the story is …

When you take it upon yourself to define your own brand of success you have your one and only opportunity to take control of your future. Success is the happiness you achieve by knowing that you have done what you wanted to do, not what others defined for you to do. When you have defined your own brand of success you free yourself to be yourself. Unlike others who have allowed others to define them, you become free of peer pressure and expectations of others. You have the freedom to own your future. This freedom will give you the opportunity to be what you want to be and that is the best definition of success. And the moment you define it, is the moment you’ll get closer to it.

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