Information on management best practices is more accessible than ever before; so much so that managers are expected to be continually learning more and honing their skills. But what happens when the tips you pick up are wrong?
For an individual, a ‘no debt’ policy is an admirable thing. But for a profit-making business, it’s short sighted.
If your business earns 8% on invested capital and you have an opportunity to borrow money at 6%, it’s bad business not to do it. By definition, any project that earns above your cost of capital is profitable and worth considering, borrowing costs notwithstanding.
When times are tough you have to tighten your belt.
Cost containment and productivity gains are worthy goals at all times. But while these efforts can increase your profit margins, they do nothing to increase your revenue. Often, the impact on revenue is negative.
If you have a cost containment problem, then go to work on it. But if your problem is falling revenue, cost containment isn’t the answer. Revenue growth usually requires investment, and business leaders can’t be afraid to make the hard decisions necessary to secure the long term viability of the firm.
Here’s how one company inadvertently killed itself with excessive cost-cutting.
Open concept offices are more effective.
For the same reason an open door policy doesn’t work for you, it doesn’t work for your employees. People need to be left alone. It takes only a single ‘hiya’ to pull someone off their task, and can take ten minutes or more for them to get back into the zone.
This doesn’t mean Partition City is the answer, either. There’s usually a good compromise somewhere in between, where people are grouped strategically (not necessarily by department) but where traffic in front of one’s desk is kept to a minimum.
Don’t launch a project without a strong business case.
Sometimes the nature of a project means that building a strong business case is more difficult and more expensive than a trial launch. Sometimes, when the ROI is known to be in the triple or quadruple digits, delay for the sake of refining those estimates isn’t worthwhile. These are times when it’s okay to just jump in.
We frequently see business leaders reject proposals because the ROI isn’t quantified and thoroughly studied, even when intuitively they know the ROI is enormous. Sometimes the cost/benefit analysis on a cost/benefit analysis just doesn’t add up.
In order to make good decisions, you need to know what customers want.
Hooey. Customers don’t know what they want. Nobody wanted an iPad before Apple invented it. Henry Ford said that if he’d asked his customers what they want, he’d have ended up building a faster horse.
Customer surveys and focus groups never lead to great products. Strategic marketers — which all business leaders are, to some degree — know better than their customers what will sell. Stop chasing data and start leading your industry.
Have any questions about management, or want to find out how Gravitas can help you lead your organization to success? Write to us.
It’s hard to know what’s right and wrong these days. Management theory advances at a rapid pace and modern managers are expected to keep up.
A learning culture is a good thing, but there’s a hidden risk to being too open to new ideas: you can pick up some bad habits. Here are ten examples of bad ‘best practices.’
An engaged and effective executive will have an open door policy.
There are basically two things wrong with an open door policy. First is that you’re being constantly interrupted, which is a major detractor from productivity.
Second is that it conditions your reports to come to you when they ought to be handling things on their own. They involve you in everything because they can and because they enjoy the feeling of being on the ‘inside’ with you. The result is that you spend your day talking instead of working. It can be fun and it can feel like work, but it isn’t. While you’re being dragged into the weeds, nobody is steering the ship.
Instead of an open door, try holding visiting hours, or get in the habit of closing your door when you need time to focus.
If it didn’t produce a measureable result, it failed.
Good managers are always asking, “what’s the ROI on this.” At the same time, good managers know that ROI can sometimes be impractical or uneconomical to measure.
It’s a good thing for a business leader to have a ‘show me the metrics’ mentality, but there are times you need to be flexible, too. The direct ROI of a specific Coca-Cola campaign or Mercedes-Benz billboard is never known, but you can bet those firms aren’t writing them off as failures.
Don’t let your metrics mantra become a straightjacket. Too many good projects get binned that way.
Well-run organizations hold periodic employee reviews.
High quality, frequent feedback is an absolute prerequisite for employee engagement. And employee engagement represents your biggest opportunity for productivity gains.
Conventional wisdom is to formalize this feedback in periodic ‘employee reviews.’ These are usually counterproductive because of the politics and protocol of formal evaluations. Nobody ever hears anything surprising and no one ever learns anything new. They make managers appear out of touch and cause resentment.
The better way is to give feedback every day, or as close to it as possible. When you see something good, point it out straight away. The converse applies, too. We all know this is the way to motivate change in people, but for some reason it’s not how we do it in the workplace. Imagine if you tried to manage a child or coach a baseball team relying primarily on periodic reviews. Feedback delayed is feedback denied. When you do a good job of giving honest and frequent feedback, periodic reviews become unnecessary.
When you’re considering a candidate, you have to interview them at least once to make sure they’re for real. You also have to do reference checks to make sure those are for real.
But after that first interview, after you’ve had a chance to verify that the person really did do and achieve all they claimed on their resume, further interviews don’t help. On the contrary, they illuminate no further objective information about the person while giving you lots of subjective data that will negatively affect your judgment.
The best indicators of a candidate’s chance of success are his or her past accomplishments. The resume tells that story adequately. Functional tests are also very effective at determining a person’s abilities. Multiple rounds of interviews aren’t.
Read more on the problem with conducting too many interviews.
Generous compensation leads to lower turnover.
The evidence clearly indicates this isn’t true. Financial incentives motivate only in the short term. People don’t stay in a job they hate just because it pays well. Inclusion in the team, recognition from peers and superiors and the feeling of doing important work are all more closely related to turnover than compensation.
