Marina Gorbis's Blog, page 1314

To Improve Sales, Pay More Attention to Presales

At a time when CEOs are in a constant quest for growth, there is a promising but often overlooked opportunity available close to home: presales. Distinct from marketing and sales operations, presales provides a specific set of activities that lead to qualifying, bidding on, winning, and renewing a deal. In our work with leading companies around the globe, we have found that companies with strong presales capabilities consistently achieve win rates of 40–50% in new business and 80–90% in renewal business—well above average rates.

Presales requires a dedicated team of experts split into roughly two-thirds for technical activities (crafting solutions to customers’ problems) and one-third for commercial activities (managing deal qualification and bid). These activities have two to three times more impact on revenue generation than generating leads. Souping up the presales engine can yield a five-point improvement in conversion rates, a 6–13% improvement in revenue, and a 10–20% improvement in the speed of moving prospects through the sales process. Despite this level of potential impact, presales doesn’t get much airtime in the C-suite—even though it gets a significant chunk of company resources, typically accounting for 30–50% of overall commercial headcount.

If you’d like your organization to take better advantage of presales and reap the advantages that result, here’s how to do so—at each stage of the sales journey:

Identifying Leads

Opportunities have exponentially increased for salespeople, thanks to digital innovations, more systematic RFPs, and the pervasive use of inside sales for lead generation. But more does not equal better. To achieve the ideal qualification rate of roughly 50%, today’s best-practice organizations rely on advanced analytics to identify opportunities early in the sales cycle and prioritize the most desirable ones. They use techniques such as propensity-to-buy modeling, micro-market targeting, account-level opportunity assessment, and churn prediction to separate the high-quality, high-probability opportunities from the rest.

One presales team helped a building materials supplier improve its qualification rate by using order histories of existing customers and analyses of prospective markets. From this data, they developed a list of prospective “ideal customers” most likely to buy the company’s products. Identifying which customers to pursue helped increase bid and bid conversion rates, resulting in a 3–5% improvement in win rates.

Submitting Bids

The root cause was inadequate presales allocation. The company’s technical presales experts were not assigned to the highest-opportunity bids, and there were frequent disruptions to their assignments (e.g., being reassigned to the priority du jour).

To turn things around, the company developed a staffing approach that gave an at-a-glance picture of the availability and skillsets of presales staff a quarter out. It redesigned and simplified its bid review and approval process, and instituted a mechanism that allowed key account managers to provide suggestions and recommendations to the presales team immediately following a bid submission.

This new approach helped the company staff 15 percent more deals with presales resources and anticipate 30 percent more “must win” deals (for the same number of total presales resources). Sales reps’ time on proposal development was cut in half.

Closing Deals

The key to closing deals is presales’ ability to shape conversations with the client to position the company’s solution as the ideal one. This approach is not about developing a “smoke and mirrors” pitch, but rather investing the time to have a deep understanding of the client’s needs (met and unmet) and then highlighting those elements of the solution that can address them.

This is precisely what a European telecommunications company did when it merged its mobile and fixed-line store networks to increase cross-selling opportunities. The company assigned presales “store rangers” (experts in both mobile and fixed-line options) to roam the stores and speak with customers. This had the dual benefit of increasing sales with individual customers and providing training for the full-time store salespeople. On days when a ranger was not on site, stores used videoconferencing to patch in a live presales expert to answer questions, help configure a new service, and even fill out paperwork. After a year, this approach resulted in an increase of 30% in overall sales for the store network.

Renewing Deals

While “presales” might imply that their work is finished once a sale is made, the best companies have presales teams that are active after the sale as well. Great sales reps have always tried to anticipate customer needs and to deliver on them consistently. But top-notch presales teams can help advance from anticipating customer needs to predicting them with greater precision, recommending what the sales force should sell to specific customers, and providing expertise.

Such tactics helped one U.S. insurance company improve customer retention rates by 20%. On presales’ recommendation, the company implemented a new call-center system that went beyond displaying a customer’s history (e.g., tenure and claims record). Additional analytics also assessed the customer’s real-time emotional state and predicted the likelihood of keeping or losing the customer if the issue was not resolved immediately. The system also recommended the conversational style the agent should use, such as a “soothing” or a “just the facts” approach. This helped bridge cultural differences between American customers and

call-center agents based in the Philippines.

Presales can also accelerate sales pipeline velocity by anticipating what will trigger a renewal, standardizing tools to ensure best practices across the sales team, and automating processes to send alerts and recommendations in advance of a contract’s renewal date. Companies that do this well can recommend special offers and promotional deals that will encourage a quick renewal—and even close the deal before an RFP is open to competitors.

When it comes to driving sales growth, quality trumps quantity. And that requires companies to improve the quality of their presales engine.

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Financial Rewards Make People Suggest Fewer but Better Ideas

Employees have proven to be a valuable source for innovative ideas. Which is why more companies are testing crowdsourcing initiatives and other ways to encourage people to innovate. Offering financial incentives has, for a long time, been one way to do this. But the research on whether rewards actually yield more innovation is mixed. On one hand, rewards can motivate employees to speak up; on the other, they bring in a flood of ideas that aren’t really actionable. In the pages of HBR, we’ve said to focus on culture instead of cash and to avoid offering big rewards for innovation, because luring employees with flashy prizes can kill intrinsic motivation.

In 2010, one large Asian information technology services company decided to run an experiment to see if rewards could actually improve and encourage employee ideas. People could already submit suggestions through an internal system, but the company wanted to test whether rewards would lead to better ideas. The results of the experiment were studied in a recent discussion paper out of the Centre for European Economic Research. The authors, Michael Gibbs, Susanne Neckermann, and Christoph Siemroth, found that when financial rewards were on the table, more people contributed — but on average, each person submitted fewer and better ideas.

The project arose when Gibbs learned that a former student of his at the University of Chicago was in charge of value-creation initiatives at the company (kept anonymous for confidentiality reasons) — and that its internal system (the “Idea Portal”) provided a dataset on employee ideas. He asked if he could use it for research. “This was quite exciting as most research on creativity is field research based on interviews, and is done by psychologists,” said Gibbs. “The opportunity to do statistical/analytics research on new ideas is quite rare.”

The company randomly assigned 19 teams (roughly 11,400 employees) to either a treatment or control group. The treatment group would receive rewards for ideas that were accepted for implementation. These rewards came in the form of points that could be used at an online store. (The points program already rewarded employees for things like good performance, project completion, and job anniversaries.) If the idea was accepted, each member of the contributing team got 2,000 points, which was worth about “2.2% of monthly after-tax salary for lower level employees.” And people could earn more if the client gave a good rating.

Only higher-level management and those managing the rewards program knew about the experiment, which lasted 13 months. Aside from the incentives, nothing changed about the process: Employees submitted ideas through the Portal (individually or in groups of up to three), a supervisor reviewed them, and a panel of senior managers decided which to share with clients. Those accepted by clients would be implemented, and their results tracked.

The hope was that by offering rewards for accepted ideas, employees would focus on ones that directly benefited clients instead of ones that improved internal processes — and that people would go through the Portal instead of trying to implement ideas on their own.

Analyzing the Idea Portal data from before, during, and after the experiment, the authors found that when rewards were introduced, more people participated, but there were fewer submissions per person, and these were higher quality ideas — meaning they were more likely to be shared with a client or implemented, or they had a high estimated profitability — than those from people who weren’t offered rewards. Employees at all levels were able to come up with valuable new ideas. The authors said the fewer ideas per employee couldn’t be explained by motivational crowding out, or the idea that extrinsic motivators (money) undermine intrinsic motivation. Instead, offering pay for accepted ideas seemed to focus people on producing better ones.

“It is often argued that incentives ‘crowd out’ intrinsic motivation, but we found the opposite,” said Gibbs. “Our view is that this issue is often misunderstood. Incentives can easily undermine intrinsic motivation, including creativity, if they reward the wrong outcomes or behaviors. But if they reward the right ones, they certainly can reinforce creativity.”

Younger employees had more ideas than older ones (after controlling for things like tenure), but tenure was positively correlated with the quality. The authors hypothesized two potential effects: those with longer tenure went for “low hanging fruit” while new employees took a more experimental and fresh approach; or longer tenure meant a greater understanding of clients’ strategies and business needs, leading to better ideas. Gibbs said the latter was more consistent with their findings. And although higher level employees generally had higher quality ideas, this effect topped off at the highest managerial ranks. Among executives, whose work is less client-focused, there were fewer ideas and they had less financial impact.

Interestingly, ideas with more authors were more likely to be shared with a client and accepted for implementation, reinforcing the research on the benefits of working in groups (as long as they’re not dumb). And the authors also found that once the experiment was over, people still continued to participate and suggest higher quality ideas, reflecting a “habituation” effect that could be explained by raised awareness of the Portal or perhaps a change in how people thought about innovation.

The paper’s main takeaway is that financial rewards can get employees to innovate, and can possibly fuel a more innovative culture. But if you want ideas that bring actual value to your company, and don’t want to be inundated with a bunch of mediocre ones, tailor the rewards so employees know what to reach for. As for the company in the study, the authors said that after reading their analysis, it rolled out the incentives program to the entire organization.

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You Might Be the Reason Your Employees Aren’t Changing

We all need a coach. Research we conducted at VitalSmarts shows that 97% of employees readily admit to having a “career-limiting habit” — some behavior that will forever hold them back, unless they can learn to change it.

Consider the example of a CFO we worked with who had his heart set on landing the CEO job when his boss retired. He acknowledged that his tendency to belittle people publicly was holding him back — and he was right. One day, his boss (the incumbent CEO and a former professional athlete) brought him into his office to “coach” him. “You’re arrogant and cruel,” he said. “If you don’t fix those things you’ll never be seen by the board as anything but a technician — and a dangerous one at that.”

The CFO was deeply embarrassed and vowed to change. But, he didn’t. When he was passed over for the CEO job, he resigned in anger.

This example isn’t uncommon. Our research shows that coaching rarely works. Fewer than one in five people who make a concerted effort to change some career-limiting habit actually do it. But even worse, most managers expect their coaching attempts to fail. And worse than that, most recipients of coaching give themselves little chance of real change.

In one study, we asked managers who had just finished coaching a direct report to rate the likelihood that the person would actually change. Fewer than 10% were willing to wager on success. Next, we asked those who had received advice how likely they thought they were to make effective use of it. While they were a bit more optimistic than their bosses, only about a third had high hopes.

Like the ill-fated CFO, many of us are “coached,” but few of us are changed by the experience. Why? Because of these three common — but fixable — mistakes:

Lecturing rather than interviewing. Whether people change is largely determined by why they change. And they are most successful at changing when they choose to change. This is where coaching attempts can create problems. “Coaching” is often imposed rather than invited. Successful coaching assiduously avoids any approach that might provoke resistance to the attempt at change. When we feel something is being imposed on us — even if it’s for our own good — our natural reaction is to resist.

If you’re trying to help someone change, your first consideration must be to approach him or her in a way that enhances, rather than dampens, motivation. Typically, as in the case of the CFO mentioned above, people are already aware that they should change. They may even want to change, but they aren’t changing. So we waltz in with five more good reasons why they should change. We deliver a pithy sermonette and we distract them from choosing to change by instead igniting rebellion.

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My colleague David Maxfield and I recently did a field experiment that demonstrates this problem and its solution. (See the experiment here.) We had a couple of teenage boys approach smokers in public and ask if they knew smoking was bad for them and if they would like information about why. They had few takers and met a lot of resentment. These folks neither wanted nor needed more information; they already had enough reasons to feel bad.

In the second round, the boys instead approached smokers to ask for a light for their own cigarettes. Not only did the smokers refuse to help the boys smoke, but — in a surprising reversal of reaction — they began lecturing the boys about the evils of smoking. Finally, the boys said, “You’re telling me that I shouldn’t smoke, but what about you?” Most of the subjects then confessed that they wanted to quit. Our experiment replicated one Ogilvy and Mather performed in Thailand; we conducted our own because we wanted to see the effect on a more heterogeneous group of Western smokers. On the day they carried out the original campaign, calls to smoking cessation lines in Bangkok went up by 40%.

It bears repeating: effective coaches ask more questions and give fewer lectures. Your job is to help people uncover and strengthen motives they already have. Think of your coaching conversations more as interviews than as sermons and you’ll be far more successful.

Motivating rather than enabling. We all have an inherent bias in judging what it will take to help people change — overvaluing motivation.

For example, if we’ve got a colleague — like our CFO friend — who demeans people, we assume the problem is a basic character deficit. Perhaps he’s just a sadist. Maybe he gets a kick out of flaunting his power or intellect. If we have a colleague who tends to procrastinate, we might assume the problem is basic laziness. Or, if we have a colleague who avoids making presentations, we might admonish her to “have some courage, for crying out loud!”

The problem is that when we assume that most issues are a simple matter of motivation, we commit what psychologists call the fundamental attribution error — that is, attributing behavior primarily to dispositional factors (“He’s too timid,” “She’s so aggressive,” etc.). Great coaches don’t make this mistake. They start by addressing ability barriers instead. For example, if someone struggles with procrastination, a good coach might suggest tactics for better managing interruptions. In the case of our CFO friend, his coach helped him recognize his own emotional triggers, which eventually helped him overcome his habit of public personal attacks. If you try to motivate people who lack ability, you don’t create change; you create depression.

Focusing on the actor and ignoring the context. We’re often blind to the many forces that create and sustain certain behaviors, so we tend to focus only on the ones we can see — for example, the CFO biting people’s heads off. But this is dangerously naïve and largely ineffective. Of course we need to address the person’s motives and abilities. But we also need to address four powerful sources of influence: fans, accomplices, incentives, and environment. Someone may feel emboldened to behave badly if:

a respected board member gives him a thumbs up after an ill-tempered outburst (fans)
those who disapprove say nothing (accomplices)
he continues to be promoted and rewarded in spite of (or in his mind, because of) his behavior (incentives)
unreasonable goals and deadlines keep him in a constant state of anxiety and fatigue — undermining his emotional reserves (environment)

These four factors can confound even the most resolute people in their efforts to change. But our study shows that when all of these sources of influence are engaged positively in the effort, the likelihood of rapid and sustainable change increases tenfold.

The CFO in this example did eventually change. He went on to become a leader who elicited deep loyalty and affection from many. Success came as he acquired new skills, distanced himself from unhealthy enablers, connected with people who modeled the behaviors he wanted to embrace, and removed himself from a context that overtaxed his ability to stay emotionally healthy.

In short, coaching works when it amplifies one’s own motivation, enhances ability, and equips people to address their context when it inhibits their ability to change. When it fails to do that, it simply doesn’t work.

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Women Directors Change How Boards Work

We know that getting more women on teams can boost performance. The examples are numerous: Citing private internal research of 20,000 client teams, EY’s vice chair Beth Brooke has said that the more diverse teams had higher profitability and great client satisfaction than non-diverse teams. And professors Anita Woolley and Thomas W. Malone have learned that increasing the number of women on a team also increases its collective intelligence.

Yet when it comes to one of the most important “teams” a company has — its board of directors — the United States seems to have hit a ceiling of about 16% women, with little by way of national efforts by government or business to increase that number.

Whether one agrees with quotas as a mechanism for an increase or not (spoiler: men are less likely to), a new look at Norway, which has a mandatory quota system of 40%, is helpful in understanding why having at least three women on a board is important. And while research about financial performance is still in its infancy — Catalyst has found a strong correlation between the number of women on boards and in the C-Suite and ROI and ROE of company returns — we’re starting to learn more about the important ways women are changing the inner workings of boards.

Aaron A. Dhir, an associate professor at York University’s Osgoode Hall Law School, has done extensive research for his forthcoming 2015 book, Challenging Boardroom Homogeneity: Corporate Law, Governance and Diversity. Professor Dhir did a qualitative, interview-based study of Norwegian corporate directors, looking deeply into the experiences of 23 Norwegian directors, men and women who had appointments both pre- and post-quota. He wanted to understand, from the directors’ point of view, the actual meaning and effects of the quota’s impact, from cultural dynamics and decision making to the overall governance approach of the affected boards. Focusing on the human side of governance, he makes several observations, some familiar and others surprising.

First, many women brought to the boardroom, and to decision making, a different set of perspectives, experiences, angles, and viewpoints than their male counterparts. Board members also observed that female directors are “more likely than their male counterparts to probe deeply into the issues at hand” by asking more questions, leading to more robust intra-board deliberations. Most women appeared to be uninterested in presenting a façade of knowledge and were loath to make decisions they did not fully understand (something recent McKinsey research suggests might be fairly common). Board members observed that female directors tended to have a different style of engagement, seeking the opinions of others and trying to ensure that everyone in the boardroom take part in the discussion.

Outsider status and independence were also particularly powerful forces in board dynamics, helping to open up close ties and expand and rearrange social bonds between directors, the CEO, and high-level management. The quota also forced a movement away from closed social groups and in-group favoritism — that is, people tapping only their own networks. One question for future research is whether women, over time, lose their outsider status and the effects of that status.

Interestingly, Professor Dhir found that the concern about being stigmatized as a “quota woman” was not experienced by the women who became new board members, particularly because there was a critical mass and not token representation.

Taken together, Professor Dhir identified seven consequences of gender-based heterogeneity for boardroom work, board governance, and group dynamics:

Enhanced dialogue
Better decision making, including the value of dissent
More effective risk mitigation and crisis management, and a better balance between risk-welcoming and risk aversion behavior
Higher quality monitoring of and guidance to management
Positive changes to the boardroom environment and culture
More orderly and systematic board work
Positive changes in the behavior of men

This doesn’t mean there weren’t challenges. Some included more prolonged decision-making, less initial bonding, and additional conflicts due to the increase in different perspectives. Management had to get used to being deeply and fully prepared for the questions being asked.

In addition, diverse boards that were not properly managed created distrust and dissatisfaction. In part this is due to a common bias groups have. Homogeneous groups don’t come to better solutions, as Columbia University’s Katherine W. Phillips, the Paul Calello Professor of Leadership and Ethics, and others have found. They’re simply convinced that they did. Heterogeneous groups, on the other hand, come to better solutions. They just don’t think that’s the case.

There is heated discussion about the various mechanisms in place, and proposed, to include more women on boards. Amidst the debate, what seems clear, as Professor Dhir indicates, “the forced repopulation of boards along gender lines has disturbed the traditional order of corporate board governance systems, dislocating established hierarchies of power and privilege in key market-based institutions.” In other words, having more women does change the dynamics of a board and its governance. The Norwegian experience has provided a window into what might happen if and when board leaders and companies elsewhere decide to seriously commit to making sure their boards are truly diverse, moving consciously from homogeneity to heterogeneity.

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Marketing Is Dead, and Loyalty Killed It

So, you’ve worked your way up the corporate ladder to become Chief Marketing Officer. Pat yourself on the back – you deserve it! All done? Good. Now, please accept my condolences. Your job is obsolete, and unless you turn yourself into a Chief Loyalty Officer, you’re sure to eventually be replaced by one.

Want proof? Look no further than Apple’s record-smashing earnings release last month. We all know the colossus of Cupertino has amazing products and is constantly working on new ways to dazzle and disrupt, from the Apple Watch to Apple Pay. But the earnings report makes clear that intense loyalty to the iPhone– 87% loyalty, to be precise – is what really drives its success. Instinctively, we all know that, because we can all think of someone who pre-orders every new iteration of the iPhone before the shine has faded from the previous one. That kind of extreme loyalty inspires confidence in others, which in turn drives new sales – 74.5 million new phones last quarter – without Apple having to lift a finger. Indeed, aside from a few television spots and billboards here and there, Apple pretty much ignores marketing and advertising.

Of course, not every company is Apple. Letting the products do all the talking won’t work for everyone. But here is the takeaway that can work for every brand: try de-emphasizing traditional marketing and focusing on loyalty instead.

For most people, the word “marketing” summons up a single-minded focus on selling products – a one-sided endeavor. But one-sided doesn’t work in a world where social media has given consumers a megaphone just as powerful as that of traditional marketers.

Instead, there is loyalty, which requires communicating brand values that people want to be affiliated with. Consumers today have many options, and more than ever they choose particular brands to communicate something personal about their own beliefs and priorities. The best way to establish and reinforce common values is to create content that’s so highly specific it defines not only the brand, but the customer.

Take Chipotle, the good guys of fast food. Their produce is local, the meat is free of hormones and antibiotics, and their cheese comes from pasture-raised cows. But the company’s reputation for being the socially conscious, thinking person’s lunch is about more than just the food. Last year, the company started its “Cultivating Thought” initiative, in which writers such as Toni Morrison and Malcolm Gladwell write short texts that appear on the company’s cups and a dedicated microsite. The idea didn’t come out of the CMO’s office, or from a hotshot agency – it came about because Jonathan Safran Foer had nothing to read in Chipotle one day. This is loyalty talking, not marketing. Chipotle is devoting significant resources to something that won’t make the company any money directly, but that is an act of good faith, perfectly targeted to its customers.

J. Crew is another company that successfully uses content to define itself and its customer. The company’s blog is a master class in cozy chic, effortlessly affluent and gently outdoorsy. (If this blog were a person, its favorite activity would be sitting around an outdoor fire on a crisp fall evening, roasting homemade marshmallows on fragrant cedar sticks.) Recently, the blog featured a story about the history of the fisherman’s sweater, a nature photographer’s photo essay about working all over the world in one of the brand’s puffy vests, a how-to guide on caring for cashmere sweaters, and studio tours with designers. The content is beautiful, creative, and most importantly, it has a distinct personality that has nothing to do with shilling.

Customers keep coming back to J. Crew, Chipotle, and Apple because being a loyal fan of the brand reassures them that they are succeeding in being a certain kind of person. People expect convenience from a transaction, but what they crave is meaning. A marketer’s thundering from the top of a mountain like the voice of God will be quickly spotted for what it is – a disconnected jumble of hollow words bouncing along the canyon walls. Building loyalty is much harder work, and it requires not only valuing customers, but liking them enough to have a conversation every day. Bringing passion and excitement to that conversation requires genuine enthusiasm for your own products and mission. The Chief Loyalty Officer’s job isn’t about asking, “What should this company say?” It’s nothing less than answering the question, “What should this company be?”

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Making (a Little) Progress on CEO Pay

Since companies can’t seem to solve the divisive problem of exorbitant CEO pay on their own, legislation may well turn out to be the best fix. Here’s how it’s starting to help in various parts of the world, though there’s still a lot of work to do.

SEC registrants in the U.S. — public companies, mutual funds, investment advisers, transfer agencies, and broker dealers — are required by the Dodd-Frank Act (passed by Congress in 2010) to conduct shareholder advisory votes at least once every three years on compensation for board members and the highest-paid executives. Investors have used this process to voice their concerns, which is all to the good (it puts pressure on companies to change their practices), but the votes are nonbinding. In 2012, for instance, shareholders said no to almost $15 million in compensation for Vikram Pandit at Citigroup and to almost $6 million for Fernando Aguirre at Chiquita Brands. Even though both CEOs received their packages, against investors’ better judgment, they’ve since been forced out for their disappointing performance.

Shareholders in the UK have had advisory votes on pay since 2002 — but the British government has tightened the rules even more. For a little more than a year, UK public companies have had to prepare an annual remuneration report, and shareholders’ votes on the policy behind it are binding. If a company fails a vote, it can’t implement any of the proposed compensation changes — it reverts to the last approved pay scheme.

While many European companies have their own say-on-pay regulations — Belgium, France, Germany, Italy, the Netherlands, and Switzerland, for instance — the European Commission has proposed increasing shareholder power across the board. If the legislation is adopted, all EU-listed companies’ remuneration policies will be subject to binding shareholder votes every three years.

Australia has gone even further, with its “two strikes” policy: If 25% or more shareholders vote “no” on a company’s remuneration report at two consecutive annual general meetings, that triggers a vote to spill the board. And if this second resolution is passed, all directors (except the managing director) must stand for re-election within 90 days. This legislation, among the strictest in the world, has helped shareholders not just find their voices but exercise their muscle.

Just a few months ago, there was a first strike against Newcrest Mining, Australia’s largest gold miner. At its latest annual general meeting, 45% of shareholder votes went against the remuneration report for several reasons, including horrible performance on the share market and billions in write-downs on one of its mines. Here was the real clincher: Newcrest announced that the new CEO could, with bonuses, earn 62% more than his predecessor — and a larger base salary, at $2.3 million, than his counterparts at the much larger miners BHP Billiton and Rio Tinto.

First strikes have also occurred at Uranium producer Paladin, company car fleet manager McMillan Shakespeare, Seven Group (which has major media holdings, among other diversified interests), and engineering services company UGL.

Shareholders are OK with turning a blind eye to CEO packages when the profits of their companies skyrocket. But when fortunes change, they hasten to put the brakes on executive remuneration. Government action has given them more power to do that.

No board wants to receive a “fail” from shareholders, whether that vote is advisory or binding.  It hurts the company’s reputation not only with investors but also with suppliers, customers, and the general public. But legislation ratchets up the urgency, and a recent cross-country study for the U.S. Board of Governors of the Federal Reserve shows that it’s actually starting to work. From 2003 to 2012, growth in CEO compensation was much lower (5.5%, on average) at firms that were subject to say-on-pay laws than at those that weren’t (8.1%).

So, expect more laws.

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Assessment: Should We Pursue This New Project?

Giving Effective Feedback When You’re Short on Time

Virtually all of the young executives I work with want to be good managers and mentors. They just don’t have the time — or so they believe. “I could either bring in a new deal, or I could take one of my people out for lunch to talk about their career,” a financial services leader told me recently. “In this industry and in this market, which one do you think I’m going to pick?”

Good question. It’s not easy to help your employees develop even as you take advantage of every business opportunity, but you can make coaching easier on yourself, in part by giving feedback efficiently.

Once you’ve identified that you need to give feedback to a direct report, you can make that process more efficient in three ways.

Create a standard way in. For the majority of managers, providing feedback — particularly constructive feedback — is stressful and requires significant forethought. How should you bring up the bungled analysis, the hurdles to promotion, or even the meeting that went unusually well? Like chess masters, we spend most of our time contemplating the first move. That’s why the key to reducing the time you spend mulling over and preparing for each coaching conversation is to have a standard way in: a simple, routinized way to open discussions about performance.

Keep it simple, and announce directly what’s to come. A straightforward “I’m going to give you some feedback” or “Are you open to my coaching on this?” gets immediate attention and sets the right tone. It will make it easier to prepare for the game if you have your opener ready. Furthermore, your direct reports will become familiar with your opener, and that will help them be attuned to and hear the feedback more clearly.

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Be blunt. The number one mistake executives make in coaching and delivering feedback to their people is being insufficiently candid—typically, because they don’t want to be mean. If you’ve ever used the phrase “maybe you could . . .” in a coaching conversation or asked one of your people to “think about” a performance issue, there’s a 99% probability you’re not being blunt enough. But the more candid you are, the more likely your coachee is to hear your message, and thus the more likely you are to have impact, and quickly. The trick to being candid without feeling like an ogre? Be honest, be sincere, be personal — while addressing the issue head-on.

The best feedback I ever received came a few years into my career, directly after a terrible meeting I had with senior management, in which I had been both unprepared and defensive. As we rode down in the elevator afterward, my boss said quietly, “Next time, I expect you to do better.” Don’t dance around the issues, and don’t let the person you’re coaching do so either.

Ask him to play it back. If your feedback doesn’t end up sticking, you’ll need to deliver it a second time — and a third, and a fourth — all of which takes your valuable time and managerial energy. To avoid the need for encore performances, check to make sure you’ve made an impact on the first go-round by asking the person you’re coaching to paraphrase what he heard. If your coachee can clearly explain to you — in his own words — what he needs to change or do next, that goes a long way to ensuring he’s gotten the message. You’ll then know that the conversation is over and you can get back to other things. If the message is muddled, you can correct it immediately. In either case, you’ve limited the need for future follow-up.

By doing these things regularly (perhaps even daily), you’ll not only save yourself and your coachee time, but your employees will feel that you’re not just their boss, but a coach. They’ll sharpen their skills and stay motivated. And for any manager, that’s time well spent.

This post is excerpted from the HBR Guide to Coaching Employees .

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What Everyone Should Know About Office Politics

Nobody really likes office politics. In fact, most of us try to avoid it all costs. But the reality is that companies are, by nature, political organizations, which means that if you want to survive and thrive at work, you can’t just sit out on the sidelines. If you want to make an impact in your own organization, like it or not, you’re going to need to learn to play the game. That doesn’t mean you have to play dirty, but .

In our HBR.org series on office politics, we asked experts to provide insights and practical advice for navigating the political playing field in any organization. Together, these pieces offer a solid foundation for learning the rules of engagement.

First, it’s important to understand why playing politics is so unavoidable. Work involves dealing with people, and people are, whether we like to admit it or not, emotional beings with conflicting wants, needs, and underlying (often unconscious) biases and insecurities. Our relationships with our colleagues — with whom we both collaborate and compete for promotions, for a coveted project, or for the boss’s attention — can be quite complex. Not everyone is friend or foe; many people are somewhere in between. And more people than you might think are lying to get ahead or gossiping as way to exchange information, vent their frustrations, and bond with co-workers when they don’t trust their leaders. Put all of this together and you’ve got a highly politically-charged work environment.

So, what can you do to navigate this dizzying maze?

Let’s start with an approach for three common scenarios that many of us will have to deal with at some point in our careers: 1) When you’re mad about a decision that affects you; 2) When you need to make critical comments in a public forum; and 3) When a colleague goes postal on you. It helps to have guiding principles to call on when you find yourself in one of these situations, keeping in mind that the context of the situation determines how you should proceed.

While these are common scenarios, there are lots of other minefields you’ll come across in your organization. Perhaps you’re dealing with a boss who’s a control freak. Or, maybe you’re knee-deep in the politics of a family business, when you’re not actually part of the family. Even the most seasoned executive, who’s worked long and hard to build trust and political capital, can make the wrong move and lose years’ worth of ground in an instant. Perhaps you’ve made a very public mistake that requires an apology. It’s important to admit your flaws, fix your mistake, and reclaim respect.

Further Reading







HBR Guide to Office Politics

Communication Book
Karen Dillon


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Women have a unique set of challenges when it comes to navigating office politics. Research shows that women are more likely to become nervous and uncomfortable in meetings when interpersonal conflicts and other political challenges arise. And women executives say they believe politics present a particular dilemma for them: On one hand, they feel uncomfortable engaging in quid-pro-quo behavior and political maneuvering. On the other, they acknowledge that it’s all but impossible to operate above the political fray. Some of the most effective practices that help women become more politically savvy include finding a sponsor within the organization, treating politics like a game, doing some advance “political homework” before important meetings, and learning to lobby for yourself. After all, the most savvy women and men alike know how to promote themselves without looking like a jerk.

No matter what the challenge, one of the surest ways to improve your political prowess is to strengthen your emotional intelligence — it’s a key differentiator between star performers and the rest of the pack. If you recognize any of these telltale signs in yourself, don’t wait until it’s too late to address the problem. And at the end of the day, remember: when it comes to standing out in your organization and carving out a bigger leadership role for yourself, you’re never too experienced to fake it till you make it.

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The Taxi Industry Can Innovate, Too

On a recent trip to Manhattan I found myself being driven by an Uber driver who was obsessively following directions from his GPS. I grew irritated, convinced that the route we took was less than direct and far more congested compared to the path an experienced cabbie would have taken. I’ve loved using Uber since it launched in 2009, but my fondness for it has begun to fade.

My experience doesn’t necessarily signal a trend: Uber and Lyft remain popular with consumers, and with investors, who recently valued Uber at $40 billion. The ride-sharing startups are in the process of thoroughly disrupting the taxi industry.

But it’s far too early to eulogize the taxi industry. As my experience shows, a bad experience or two can cause individuals to rethink their fondness for the service. And if cabbies start playing a smarter defense, they may be able to more effective battle back against Uber and Lyft. Here’s how.

First, stop pushing for regulation. Instead, focus on deregulation. While Uber deserves kudos for being innovative, let’s be truthful: Its success has come from creatively exploiting a regulatory loophole. Uber argues that it is a rideshare service, not a taxi service. What’s the difference? Taxis cruise the streets seeking fares, while ridesharing services don’t, relying on apps to arrange a form of carpooling (wink, wink). As a result of this minor distinction, Uber has successfully argued it should be immune from taxi regulations.

Not being categorized as a taxi provides rideshare companies like Uber, Lyft, and Sidecar with a key pricing advantage. Taxis are required by law to charge pre-approved prices. In contrast, since Uber is a rideshare service, it has complete flexibility to raise and lower its prices based on demand. As a result, Uber undercuts taxis during off-peak times and charges premiums during high demand periods. Implementing surcharges not only increases profits, but also helps smooth out the traditional supply-demand imbalance that anyone who’s tried to hail a cab in a rainstorm has experienced. (Higher surge prices curb customer demand while also increasing the supply of drivers, since more drivers want to work during periods when they can charge more.) Archaic regulation has made taxis sitting ducks for ridesharing services.

Taxi companies are defensively lobbying to regulate ridesharing services. This is a bad idea and won’t work. Typically, more competition leads to deregulation. Consider the regulation-to-deregulation evolution in the long distance telephone market. AT&T once had a monopoly on long distance service and was thus regulated by the government. When Sprint and MCI entered the market with innovative offerings, the need for regulation vanished – competition ensured good service and fair prices. This exact scenario is occurring in the taxi market. Ridesharing is here to stay and as a result of this competition, it’s time to deregulate. Every car service should be allowed to set whatever price they want.

Copy Uber’s surge pricing model: Peak and off-peak is a standard pricing model used in hotels, airlines, even commuter trains. It’s a perfect way to deal with demand swings. Taxis should use it, too—and they should advertise it, by advertising current prices (+10%, -30%, etc.) on their cab-top digital billboards. This would allows taxis to benefit from flexible pricing in a key area where they still have a monopoly: on-street pick-ups.

Employ a new pricing model: It’s important to emphasize that for both taxis and rideshare companies, price is only a small component of profitability. Distance is as – if not more – important. For both businesses, a 10 mile trip is more lucrative than, say, a 1 mile one. Given this truism, companies should creatively use price to focus on per trip profitability. Riders, for example, can input their origin and destination into an app and receive a customized quote that takes into account the profitability derived from longer distances (i.e., discounted prices for longer trips). Another option is a Priceline style system: riders can bid a price (say, 85% of normal fare) for a pre-defined trip. It may make sense for a driver to take 85% of a normal fare for a 10 mile ride, for instance, compared to playing the lottery of “how far will the next fare go?”

Companies that use price to boost per-trip profitability will enjoy what economists term cream-skimming. They’ll attract profitable long haul rides while inferior (from a pricing perspective) competitors get stuck with low-profit, small-mileage fares.

Emphasize differentiation: Taxis should poke straight at a key side effect of the ridesharing model: Uber and Lyft drivers are inexperienced. It’s great that ridesharing enables part time drivers to pick up extra cash as a side job. But their inexperience means they rely too much on GPS. There is value in being driven by someone who has accumulated hard-earned knowledge of various routes and traffic patterns. At least in Manhattan, I’ll now always take taxis.

Develop an app: Taxi companies need to realize that people love using their smartphones. It’s simple: offer this convenience or lose business.

Uber’s growth and valuation has skyrocketed through a combination of innovation, excellent execution, and an anemic response from the taxi industry. Is Uber’s recent $40 billion valuation too high? It depends on the response of the taxi industry. A few straightforward initiatives by taxi companies – simply deregulating prices, for instance–makes Uber’s long-term ability to deliver profits that justify that valuation far from a slam dunk.

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