The Fusion Factor

What We Have Here Is a Failure to Communicate

Bob Kustka — Thu, 23 Apr 2009 08:54:06 -0700

One of my most significant lessons came early in my career, when I was put in charge of a large-scale employee attitude survey as an HR Manager at the Gillette Company. Overall, the feedback was strongly positive with 93% of employees saying that they would recommend the company as a good place to work, and positive response rates over 50% in 17 out of 18 categories. The only category that fell below 50%? Communication. Only 47% of our employees at that time thought we did a good job at communicating, but we were still 3% higher than the national average! I have had the opportunity since then to work with many leaders across a variety of industries and functions, and, though I have worked with leaders who were great communicators, I have to admit that they were in the minority. So why do leaders fail to effectively communicate to their employees? Let me give a few of my observations:

They don’t think about it. The leader is focused on his or her core competency, and communicating with their employees is an afterthought.
They don’t think that it is important. “What’s the big deal?” they think, “People will eventually find out what they need to know.”
They make assumptions. One technology leader told me that he thought the average employee in his organization would have little interest in the strategic plan behind a new product launch. I convinced him to share (what he could) at a company-wide meeting, and he was overwhelmed by both the level of interest and the enthusiasm he received.
They don’t care. Unfortunately, I have seen leaders that suffer from such egos that they care little for those in their organizations.
They don’t know how. Communication does not come naturally to them, so they avoid it.
They are afraid of conflict. Sometimes leaders need to communicate difficult messages that will draw responses that they don’t want to deal with, so they do nothing instead.
They do communicate, but they fail to take the time to anticipate their audience and carefully craft their message, and communicate poorly as a result.

Technology today has allowed us to receive our information like never before. There is wider distribution, instantaneous access, and deeper levels of information available. Communication is not an easy task. Even in close, personal relationships, we forget to keep someone informed or communicate in a way that leads to misunderstanding. Communicating to larger audiences requires that much more careful thought.

AIG – Where Can I get a Job like this?

Bob Kustka — Mon, 16 Mar 2009 12:38:46 -0700

AIG, the largest insurer in the U.S., is now 80% owned by the U.S. government as a result of $170 billion in taxpayers’ money paid as a bailout. They announced last week that they would be paying $165 million in bonuses to executives, many of whom were directly responsible for the management of business units that caused the company failure.

The company’s defense of these bailouts is that these are already agreed-upon contractual arrangements, and that these bonuses are needed to keep “skilled executives.” Wrong, wrong, and wrong again.

First of all, if the company didn’t have performance metrics in their contracts to trigger bonuses, they are financially negligent. Bonuses should be rewarded only when an organization meets its performance objectives. Contractual agreements may have to be reworked in this case, and the accountable executive should be open to that for the sake of the continued welfare of AIG and the fairness to the U.S. taxpayer.

Second, if these are “skilled executives” that have driven the company to the brink, perhaps they need to reexamine the skills that they have been attracting and rewarding.

But most importantly, can any of these executives, whose obligation is to protect the best interests of the organization, look in the mirror and say, “I deserve this bonus?” They should volunteer en masse to forego these bonuses and any others until the company returns to an acceptable margin of profit.

CEO Pay – Relative Worth or Entitlement?

Bob Kustka — Wed, 25 Feb 2009 14:49:57 -0800

What determines CEO pay? While there is competition to attract the best leaders, there is no shortage of supply, as there are legions of senior executives who would eagerly move into the CEO’s office in a heartbeat. While the CEO is clearly one of the most valuable players in the company, should her compensation be over 300 times what the average worker makes? And what should her value be if the company is not profitable? In a study of 2007 executive pay, total compensation of the highest paid executives grew by 20.8% while revenues grew by just 2.8%. Where’s the value?

With Barack Obama recently setting caps on the compensation for CEOs whose companies take government bailout money, there is much discussion about CEO pay. I believe that CEO pay has spiraled out of control. While all of the factors I discussed have had varying levels of influence, executive pay has transcended relative worth. CEOs expect to be paid more each year and their boards of directors and compensation committees react to that level of entitlement. Should we cap CEO pay? My answer is a resounding NO. Let the market continue to establish worth, but steps should be taken to better manage the process and the spending. These steps include:

Creating scorecards for CEOs and other top executives that will grade them on both financial performance measures and other metrics that enhance the long-term growth of the organization.
Eliminating “Golden Parachutes.” Offer reasonable severance packages that represent enhanced formulas from your standard severance, but eliminate highly rewarding failure.

It will take time to realign the compensation, but making the process more transparent and holding both executives and boards accountable for performance will ultimately achieve that result.

Visit http://www.thefusionfactor.com/ceo-pay.html now to read the full-text article about this important issue.

Employee Free Choice Act – Not Really Free Choice

Bob Kustka — Tue, 03 Feb 2009 17:00:06 -0800

Labor union activity is increasing significantly in the current economic environment, making a piece of proposed legislation more troubling to me than it might have been a year ago. Legislation is pending in the U.S. Congress that will change the way we have governed the formation of labor unions in our country for the last 60 years. The Employee Free Choice Act, which passed in the House of Representatives, would make two significant changes in the National Labor Relations Act. First, it would eliminate the secret ballot. Currently, if 30% of employees sign a card indicating they are interested in forming a union, a secret ballot is held that is overseen by the NLRB. The new legislation would recognize the union if more than 50% of employees signed the card, and would eliminate the voting process. Secondly, once the union is recognized, both parties have 130 days to reach a collective bargaining agreement. If they fail to do so, a federal mediator will be appointed to determine the terms of the contract.
EFCA would eliminate a fundamental staple of democracy in this process: an election. Supporters of the bill contend that under the current law, employers have the opportunity to intimidate employees to vote against the union in an election. What they fail to point out is that election by secret ballot allows all employees to vote their “free choice” without either employer or union knowing what they voted, thanks to the safety of the secret ballot.
In the past, both companies and unions have been known to intimidate or make unsupportable promises. Doing so constitutes an Unfair Labor Practice, and should not be tolerated. But eliminating the right of employees to vote in a secret ballot increases the possibility that unions and other employees may intimidate employees to vote for the union. All employees deserve the opportunity to learn both the company and the union position and then to vote their real free choice – EFCA would greatly diminish this opportunity.

So who wins and who loses if EFCA becomes law? If you are an employee, you lose the ability to listen to what each side has to say and the right to express yourself in a secret vote. If you are an employer, you lose the ability to learn that there are issues that potentially need to be addressed and you forfeit the opportunity to educate your employees on the issues. Unions are the only winners here, as they have the ability to “un-level” the playing field in their favor. Two out of the three constituencies are losers.
Do we need EFCA to help employees who want to unionize do so more easily? Factor this in, according to the Bureau of Labor Statistics, labor unions in Massachusetts added 80,000 new members in 2008. So tell me again, why do we need this legislation?

The Headcount Fallacy

Bob Kustka — Tue, 13 Jan 2009 16:32:00 -0800

In tough economic times such as we are currently experiencing, organizations are desperately seeking to reduce their costs. It is not surprising therefore, when they announce cuts in their headcount.

But a key factor in this equation is how these organizations managed, or mismanaged themselves to this level of desperation. Companies that announce large scale cuts are trying to make a statement that they will be leaner, meaner and more profitable to their shareholders. Are they truly?

Factor This In...

If they are a well managed company, why do they have so many positions that they can eliminate in a short amount of time? Well managed firms should constantly be assessing both the competency and the productivity of their workforce. Second, who will do the work of the displaced employees? Will those remaining merely need to do more or will less get done resulting in either reduced services to the customer or lower overall productivity? Do they have a plan to outsource services or better utilize technology for productivity enhancements? Will it achieve greater efficiency or get an acceptable return on investment? The fallacy is that headcount reductions do not necessarily improve an organization.