Tuesday, March 27, 2012

CEO salaries should be related to performance, not Wall Street

It makes sense that the biggest paychecks would go to those who make the biggest decisions which impact the most people, especially when the decisions impact the long-term competitive position and viability of the company.

It does not make sense that those same decision-makers are rewarded gigantic raises ten times the regular employees' raises when the decisions result in 25% greater loss from one year to the next.

If an employee's performance yielded similar results, she would be fired. It does not make sense that CEOs with poor results get rewarded outlandish pay increases instead.

The latest was published in the Kansas City Star today with this headline: Sprint’s Hesse gets 31 percent pay boost as Overland Park carrier’s losses continue (article)

The article says Hesse's decisions led to a 25% bigger loss this year than last, and his decisions are not helping turn the company around. However, the stock price has gained 22% this year. It trades below $3. It shouldn't take much for it to get a 22% increase.

Is Hesse's raise tied to the stock price or to the company's overall performance?

It appears this is another example in which the CEO's performance is not measured or rewarded in the same manner as others'.

Why not? Furthermore, why would CEOs whose performance at one company fails be highly sought after at other companies? That makes no sense but it a topic for a different day.

Sprint is the largest private employer in Kansas City, so its CEO getting a significant raise makes news around town. So many people in the area have worked for Sprint, it almost always comes up in conversation. Sprint has laid off so many people over the years, they're one of the biggest causes of the regions growing entrepreneurs. They also are well known for their culture of mediocrity. In fact, the culture of mediocrity is so commonly known, some employers will not hire former Sprint employees because of it.

When the CEO's decisions have led to greater losses year after year, and no end is in sight, it is unreasonable to reward him. It is certainly unreasonable to reward him with millions of dollars while his fellow employees get no raises, layoffs, and bad reputations. Sure, Hesse won't have to work again, but if he wants to, he will land another highly lucrative gig. His Sprint coworkers, however, have difficulty landing great jobs in Kansas City because of the culture he fosters.

That is wrong and Hesse and his peers should have the integrity to hold themselves accountable for it.

Apparently, the only people who will hire employees with reputations of mediocrity and poor performance are Boards of Directors. If the CEOs and Boards won't hold themselves to a high standard of excellent performance, the employees and customers need to.

If Sprint were to cultivate a culture of integrity and excellence, Hesse could actually earn the salary and bonuses with integrity.

It is time for CEO pay to be aligned with company performance as it relates to all of its stakeholders, not just its stockholders. It is time for CEO pay to be based on results instead of short-term stock price fluctuations. It is time for CEO pay to be earned with integrity.

On a personal note...
I began my career with a division of Sprint, the publishing division. We published the phone directories, and, we loved it! The company made money, hired great people, grew at a reasonable pace, and fostered a culture of excellence. Many of us remain connected today, with annual reunions in the summer and around the holidays. I share that in the interest of full disclosure and also to show that not all Sprint is bad. Well, Sprint sold that division a while ago when it needed cash. But, it was great until then. I am a former employee who loved working for the division I was with, current customer who has had superb service, and stockholder who is unimpressed with a 22% increase.

What do you think?
Are you ready for CEOs' pay to be tied to performance?

Thursday, March 22, 2012

All-In All Star of the Week: Elena Delle Donne

In a time when many young, pretty co-eds opt for fame over family and everything else...when being famous is a more common goal than being talented...when shady character is the foundation for a fan base, it is refreshing to meet Elena Delle Donne.

Elena Delle Donne is worth knowing. As Robin Roberts of ABC's Good Morning America said, "She chose family over fame and achieved both."

In 2008, Elena was the top woman's high school basketball player in the country. She signed to play at the University of  Connecticut, the #1 program in the country. After moving to the university from her home in Delaware, Delle Donne stayed just two days. She left school, left the team, and left town.

Many girls her age dream of being a celebrity on television all the time, but Elena gave up the chance to be a star at UConn. She was skewered in the media for leaving the program without publicly explaining herself.

She moved to the University of Delaware, just twenty miles from her family's home. It turns out, the reason she left Connecticut was to be closer to her family, especially to her big sister. Her older sister, Lizzie, was born deaf, blind, autistic, and with cerebral palsy. Elena says Lizzie is the strongest person she knows. Although she gave up several national championships, Elena says, "National championships are huge and every team wants one, including Delaware, but there's a lot more to life than basketball. Lizzie is my role model, my angel, my everything."

At a time when frivolous people are celebrated, Elena Delle Donne is gaining fame by being true to herself, by seeing the bigger picture of life, by being All-In.

Enjoy this video, from ABC News. You will be glad to know about Elena Delle Donne, the All-In All Star of the Week.

Since basketball is part of the story, you might enjoy knowing that Delle Donne and her team earned the first post-season victory ever by a Delaware basketball team when they beat Arkansas-Little Rock 73-42 last Sunday.

Third-seeded Delaware (31-1), ranked # 8 in the Coaches Poll, won its 21st in a row. The only game they lost the whole season was December 29, 2011.

They made it through the first round on the NCAA tournament but lost to Kansas Tuesday, ending the season 31-2. Delle Donne had 34 points in that game and remains the nation's leading scorer. She's only a junior, so maybe she'll be the All-In All Star of the week a year from now.

Way to go, Elena Delle Donne! Congratulations to you, your family, and all the Blue Hens and their fans!

Tuesday, March 20, 2012

When employers cross the line with Facebook

A colleague's son recently interviewed for his first professional position in anticipation of his May 2012 graduation. The interviewer asked general questions about Facebook, then turned to her computer, went to Facebook, and asked the son for his login ID and password. Since his profile and wall were private to the prospective employer, she wanted to log in to see his activity.

Does that cross the line? What would you have done if you were being interviewed and your login information was requested?

Does requesting login information for current employees cross the line too, or is that different?

I realize employees spending company time on social sites could be problematic on several levels--poor work performance, lack of teamwork, low productivity. But, is it the company's business how employees spend their non-company time?

If you don't want your coworkers or employer to know about your kids, hobbies, vacation, friends, friends' kids, family, family issues, is it their business to force you to reveal such things?

My perspective is that the issue really is about the company and its culture.

First, if company were utilizing the employees' skills well, there would be no time for Facebook during the work day. Also, the employees would not be interested in wasting time if their time were being used well.

Second, if the managers knew their people better, demanding logins would be unnecessary. Managers who show interest in their people can learn about kids, family, friends, hobbies, interests, etc. If employees feel the need to keep their lives secret, that says something about the lack of trust for their managers and the organization. Or, perhaps the employee's hobbies are illegal or immoral?

Third, as a manager or employer, once you learn private information, you may be responsible for it. You might shoulder the burden of an employee's sick grandparent now that you know there is a big fundraiser. Or, you might become witness to legal battles between exes. Or, you might learn about lifestyles that are not common in your organization. Learning more than people want to reveal is not always advantageous for the company.

If an interviewer asked me for my Facebook login, I would request theirs first. After all, I would want to see just who I would be working with and how they spend their time. Do you think the interviewer would provide it? Me either.

What do you think?
Is requiring Facebook login information from job candidates and current employees over the line?

Friday, March 16, 2012

Has Google lost its credibility?

Google has been held up as the darling of corporate culture and employee engagement during the last five years, often to the point of annoying corporate leaders who can't install slides, fancy phone pods, and free cafeterias for their employees. Sure, they love their people as much as Google does, but without emulating Google, they felt like amateurs when it comes to employee engagement.

My company does not emphasize employee engagement over other stakeholders for that reason, among others.

Google, with their generous free time for brainstorming, time off for volunteering, on-site hair salon and daycare, attracted the best and brightest technically savvy employees as it grew. Now, the culture is different. They still have the premier perks, but they have been losing talented people.

Apparently their emphasis on employee engagement has veered. 

Was it overshadowed by emphasizing customers and customer service instead? According to agency investigations, no.

US and international agencies have been investigating Google for installing cookies on some customers' computers and phones, even when customers set the devices to block cookies. The Wall Street Journal contacted Google about the practice last month and reports that Google has now stopped it. (SOURCE:  Google in New Privacy Probes, Wall Street Journal, March 15, 2012)

Google went behind its customers backs to sneak access where they were not welcome. Clearly, they are not focused on customer relationships. It seems they are not focused on employee relationships any more either.

Has the advertising dollar taken over? Google is trading up at the moment, but unless it aligns its focus on all stakeholders instead of just one, investors, the stock will not remain where it is over the long-term.

What do you think?
Has Google lost its credibility?

Monday, March 12, 2012

Do you pay employees to watch March Madness?

Whether you like it or not, chances are your employees, coworkers, and peers are being paid to watch college basketball this month. If you work at ESPN or Sports Illustrated, that might not surprise you, but if you work in non-sports related fields, the amount of lost productivity might be jarring.

Outplacement firm Challenger, Gray & Christmas, Inc. estimates that March Madness could attract more than 2.5 million online visitors per day, each spending an average of 90 minutes watching games. Challenger estimates in their somewhat tongue-in-cheek annual March Madness report that employers will end up paying distracted workers about $175 million over the first two full days of the tournament. (SOURCE:  Challenger, Gray & Christmas march 1, 2012 Press Release)

In addition to Challenger Gray's estimation, an MSN survey revealed 86 percent of respondents said they plan to devote at least some time during their work day to follow games, scores and updates.

Obviously, March Madness is not going to be the downfall of the American economy.

Just as obvious is the fact that workers are distracted from their jobs for the next few weeks. It might be time to embrace the Madness and plan for it.

  • Are project timelines going to be jeopardized? Perhaps they could be adjusted? Or, extra quality control measures might need to be activated this month.
  • How could you benefit from the tournament? Use it as a bonding experience within the office. Schedule game watches over lunch or after work, stream score updates, create your own tournament using company trivia instead of basketball. Or, hold your own basketball tournament.
Anticipate the productivity loss, monitor it so it does not get out of control, and embrace it if you can. As an All-In leader, if your employees love college basketball and get wrapped up in it, don't fight their enthusiasm. Capture it!

Saturday, March 10, 2012

The BBQ joint is doing something right

When customers enter Kansas City's Gates Bar-B-Que restaurants, they are greeted with a loud, "Hi, may I help you?" From behind the counter, employees holler their desire to help as soon as customers arrive, and they don't stop until the dining order is provided.

Honestly, it can be a little intimidating to new customers--in the way Starbucks orders are intimidating at first. It also can be annoying because the greetings ring loudly every time someone enters, so if you are dining, you can still hear it.

The goodness of the greeting far outweighs the negatives.

At least at Gates, customers know they are welcome. They know the employees are eager to take their order and prepare their meals. How often do you feel the opposite?

How often do you wonder if the employees are actually told to leave their brains at home and simply follow a procedure manual upon arrival at work? Many seem to have the attitude, "I'd love this job if it weren't for the customers!"

I'd rather hear, "Hi, may I help you?" a million times than feel like I'm annoying just by showing up.

When companies take care of their customers, we're likely to return. Thus, taking care of one stakeholder, the customer, benefits all stakeholders. Employees have jobs, suppliers get business, investors get a return, and local communities get a thriving contributor (hopefully).

The BBQ joint is doing something right alright: they are eager to please their customers with service, and their food is great too.

What do you think? Share your thoughts...