Marina Gorbis's Blog, page 1399
June 20, 2014
Everything You Didn’t Know You Wanted to Know About the Pallet Industry
Taking a cue from a recent Cabinet magazine story, NPR's Planet Money takes you into the weird and wonderful world of pallets. Yes, those big, flat structures that hold products for transport. The story goes like this: For decades, the standard in the pallet industry was stringer pallets, which forklifts could pick up from two of the four sides. But then an Australian company came up with a new version that could be lifted from any side. Great, right? Not so fast. This updated model, made by a company called CHEP, was about twice as expensive to buy. So CHEP did something kind of genius: It rented out the containers and then picked them up once a shipment was delivered. That's why they're painted bright blue, and the company even holds contests for employees who can spot and bring home pallets that were somehow left in the wild.
While this is all well and good for CHEP and companies like Costco that use its pallets, the Cabinet story also reveals a bit of an ugly side to the business. Traditionally, pallets didn't necessarily "belong" to anyone, so people could make money by collecting unused pallets, refurbishing them, and selling them for profit. You can imagine what happened when people started doing this with CHEP's new blue inventions.
Hachette JobAmazon vs. Hachette: The Battle for the Future of PublishingKnowledge@Wharton
Amazon: Gotta love it. Or hate it, depending on where you stand on the ebook-discount fight being waged on your laptop and tablet. Knowledge@Wharton gets a nice little debate going in this explainer about Amazon’s tactics to force publisher Hachette to get with the program. The personae include Wharton management professor Daniel Raff, who points out the dangers of Amazon’s growing control over cultural products, and venture capitalist David Pakman, who takes the kind of position a venture capitalist would, namely that publishers need to wake up to the realities of the digital world. “Digital markets produce much lower profit per item,” Pakman lectures us. Publishers must therefore rebuild their cost structure by doing such things as “moving to a less fancy office and lowering [managers’] salaries.” Photos of David Pakman’s desk and an estimate of his salary were unavailable to the Shortlist at press time. —Andy O’Connell
Maybe NotDoes Innovation Always Lead to Gentrification? Pacific Standard
Every struggling city hopes to grow an “innovation district” that will populate its old brick warehouses with teams of brainy entrepreneurs. But when innovation of this kind comes to cities, the price of everything goes up, and the poor and middle class are displaced, often without benefiting economically. “Innovators don’t create affordable housing,” Kyle Chayka writes in Pacific Standard. “They have little incentive to build a more equitable community.” Instead, they merely reproduce their own kind. He argues that cities should take a holistic view of innovation zones, setting them up so as to ensure sustainable, organic growth that’s woven into the pre-existing urban fabric, rather than simply plopping them “onto an empty-looking post-industrial neighborhood.” Educational institutions should be guaranteed space in these zones at low rents. That way, cities can have a shot at energizing not just the latte class but the entire population. —Andy O’Connell
A Chilling EffectGM Recalls: How General Motors Silenced a Whistle-BlowerBusinessweek
We've been hearing a lot about GM's efforts to encourage employees to speak up these days. But as Businessweek points out, the 325-page Valukas report provides clues about how deep the problems were and what the company’s culture really felt like: "On page 93, a GM inspector named Steven Oakley is quoted telling investigators that he was too afraid to insist on safety concerns with the Cobalt after seeing his predecessor 'pushed out of the job for doing just that.'" That predecessor is third-generation GM employee Courtland Kelley, who was ignored when he regularly pointed out safety problems. Management moved him around the company to the point where, according to a former colleague, "He still has a job — but he doesn't have a career."
Beyond StereotypesA Portrait of Europe's White Working ClassFinancial Times
What happens when an entire population is, as the FT's Simon Kuper reports, "hit by deindustrialisation, economic crisis and the crumbling of the welfare state"? And, while we're at it, what happens when it's "typically depicted either as a joke or a threat"? Kuper's deeply reported piece, stemming from a recent report by the Open Society Foundations, examines Manchester's Higher Blackley neighborhood, a place where people want to work but can't find steady jobs, and from which they don't want to move because of their strong community ties. In fact, everyone interviewed by the OSF wanted to work. But among the problems is one that should be instantly recognizable: "Younger mothers, in particular, wanted 'local, flexible work that fitted in with children’s hours.'"
"Still," writes Kuper, in reference to commonly held stereotypes, "blaming poverty on bad behavior is appealing, because it implies that all the government has to do is fix people’s behavior. There’s no need to raise the minimum wage, provide affordable childcare or improve mental-health services."
BONUS BITSA Debate About Robots (and Ebooks for All!)
This is Probably a Good Time to Say That I Don’t Believe Robots Will Eat All the Jobs… (Marc Andreessen)
Dear Marc Andreessen (Alex Payne)
Building Digital Libraries in Ghana with Worldreader (Medium)
Write Umbrella Agreements to Foster Innovation and Avoid Regret
You’re an executive of a clothing retailer and your marketing team detects a new trend that you’re well-positioned to feed. But your agreements with your suppliers prevent you from moving quickly.
Or you’re an auto-industry executive and you’re excited by a new technology that you could easily build into your latest model—but contracts with suppliers make such an innovation an impossibility this year, and maybe even next year.
In industry after industry, companies set themselves up for regrets and, sometimes, money-wasting conflicts when they form relationships with other businesses such as suppliers and dealers. They get locked into detailed agreements that turn out to be poorly aligned with their aspirations and that provide no room for innovation when markets change.
But there’s a solution: More and more multinational corporations are experimenting with creating meta-agreements that spell out their aspirations. In studying these business agreements over the past decade, I’ve found that they represent a radical advance from business as usual. They help address the problems of traditional business relationships, allowing the parties to understand one another’s values and restructure their interactions in real time. In so doing, they provide room for joint development of innovative ideas in response to new circumstances and opportunities.
There’s a lot of variety in how these umbrella agreements are structured and implemented. Unfortunately, many of them are inadequate, either because they contain vague, unwieldy language or unenforceable rules, or because they’re still too inflexible. In order to be effective, umbrella agreements must articulate companies’ values and their expectations for other firms’ behavior in language that is binding and enforceable, while providing mechanisms for revisiting aims and tasks.
Consider the failed merger of Deutsche Bank and Dresdner Bank, which would have formed the largest bank in the world. The parties had an umbrella agreement for a merger of equals, but it left too much unsaid—it failed to specify how the deal should work in practice. One month after announcing the agreement, Deutsche Bank clarified its expectation that Dresdner’s division of investment banking, DKB, would be sold, either in parts or in its entirety. Dresdner was blindsided—its understanding of the umbrella agreement with Deutsche Bank had been that investment banking was an essential part of the overall deal. Deutsche Bank accused Dresdner of inflexibility. The agreement was called off.
In order to structure a business relationship to foster innovation and avoid regret, business partners must follow several specific steps. They must:
commit to working jointly; for example, parties must commit to the scope and boundaries of their agreement, the duration, and the resources that they are willing to bring into their joint action;
understand and articulate their own corporate values (for example, a company might be strongly focused on avoiding excessive risk) and explicitly include those values in the umbrella agreement;
specify how and when, on a regular basis, the partnership’s business performance will be reviewed (for example, monthly, quarterly, or annually) and what kinds of flexibility will be built into it;
spell out who interacts with whom across the companies—for example, the national account director will interact with the sourcing director, while the business manager interacts with the category manager and sales reps interact with store managers; and
establish notification requirements and clear means, such as task forces, for resolving issues around prices, volumes, performance monitoring and other detailed matters.
Effective umbrella agreements are in use by such consumer-goods retailers such as Walmart, Tesco, and Rewe, which have tended to structure their agreements with companies such as Procter & Gamble, Unilever, and Kellogg so as to encourage the manufacturers to maintain flexibility and embrace opportunities for innovation.
Each year between September and December, grocery retailers and manufacturers of laundry and cleaning products enter into annual negotiations to structure frameworks that spell out their aspirations and values as well as specific rules with regard to how the counterparts wish to work together. Retailers and manufacturers specify how they intend to create value by addressing consumer needs and how value will be distributed between them, while leaving details such as prices and volumes to be agreed upon later.
Retailers’ agreements with manufacturers might include clauses like these:
Both parties have the right obtain competitive offers at any time.
The agreement can be renegotiated annually if one party wishes.
The manufacturer and retailer will share industry knowledge with each other.
Mutual notification is needed for all future capital investment and R&D.
Subcontracting is permissible, but only with the other party’s consent.
The parties agree to implement continuous stock replenishment based on electronic data interchange.
Wholesale prices are determined unilaterally by the manufacturer, and retail prices are determined unilaterally by the retailer.
Payment must be made in 30 days and delivery costs are paid by the supplier.
Invalidation of one or more clauses will not have any effect on the umbrella agreement as a whole (unless the clause is of major importance).
Every complex, multilayered, continuing business relationship that’s subject to a changing environment would benefit from a well-crafted umbrella agreement—one that’s constructive, positive, and forward-looking and allows the counterparts to embrace new opportunities.
Focus On: Negotiating
Negotiating Is Not the Same as Haggling
Negotiate from the Inside Out
To Negotiate Effectively, First Shake Hands
The Simplest Way to Build Trust
CMOs and CEOs Can Work Better Together
When Deborah DiSanzo took over as CEO of Philips Healthcare in May 2012, she knew that engineering would continue to drive innovation. But she also realized that the company needed to develop greater marketing muscle to drive a commercial transformation. As she put it, “Our markets are going through dynamic change. Who should lead our transformation? It must be marketing. Marketers need to know where their markets are going and where their customers are going, and then lead the rest of the organization.”
DiSanzo started by consolidating an astounding 600 different marketing titles into eight consistent job areas with specific and clear areas of responsibility. She also took the unusual step of installing three CMOs who could help provide detailed insights into three of the main business groups of the company. And she put marketing in charge of an organization-wide growth program.
The changes in healthcare – consolidation, restructuring, regulation, spending pressures – that are necessitating a transformation at Philips Healthcare are a subset of a series of powerful forces in the business world that have catapulted marketing from an often-isolated support function to a critical capability for driving above-average growth. Marketing has become increasingly essential for discovering meaningful insights, designing strategies and offers based on them, and delivering them to the marketplace. We have seen these forces at work in many different industries around the world, requiring a decidedly closer working relationship between the CEO and CMO.
The CMOs will need to be much more attuned to the business objectives and strategies of the company in general and the CEO in particular, while the CEO must become more immersed in the customer perspective. In our experience, there are specific steps CEOs and CMOs can take to develop a working relationship that is dynamic and useful.
Here are our recommendations for the CEO:
Give the CMO a seat at the executive table. The CEO can raise the CMO’s profile and communicate the heightened importance of marketing in a number of both formal and (often just as important) informal ways. Giving the CMO a clear role in the strategic planning process is a good start. It’s a practical way not only to inject a customer perspective into the core planning activities, but it also provides the CMO with the big-picture business perspective. The CEO can also make it a point to elicit marketing’s point of view on customer issues during strategy discussions, and carve out time for one-on-one meetings. “We are always on the agenda of the executive team and are a significant part of the leadership meetings,” says Bert van Meurs, CMO of Philips Healthcare Imaging Systems.
Tariq Shaukat, CMO for Caesars, agrees. “One thing that [CEO] Gary Loveman has done is make it clear to me and to others that he views marketing as a core driver of the business. And as such, marketing is involved with the business reviews, strategy sessions, and financial reviews too.”
Informal practices can be even more helpful. At Essent, the Dutch energy company, CEO Erwin van Laethem provided practical guidance to his CMO. “My CEO could read the company like a book,” says Dorkas Koenen, Essent CMO. “He’d warn me at the right time and place, and say, ‘Hey Dorkas, look out. This will probably happen if you don’t do that.’ That was very helpful.”
These actions alone, however, aren’t enough. While marketing budgets have been steadily rising as a percentage of firm budgets since 2011, many CMOs still lack real authority over decisions that most affect the customer, since most are delivered through touch points not owned by marketing. The CEO can help by putting the CMO in charge of important initiatives and granting veto power on certain decisions that impact customers. For example, at Essent, the CEO changed the reporting structures so that all people in the company with a marketing role reported to the CMO, which in one fell swoop provided the CMO with a significant set of resources. In yet another example, Caesars took the step of centralizing marketing and sales budgets, as well as decision rights, under the CMO.
Make the CMO the “bonding agent” that connects the organization. When making a purchase decision, customers use an average of six different channels, which are often managed by different parts of the organization. That series of interactions – or “customer journeys” – highlights a crucial issue in today’s business world: brands need to work across multiple functions to deliver a coordinated and consistent experience. Companies that excel in delivering on those customer journeys can increase revenue growth 10 – 15 percent and lower costs to serve 15 – 20 percent.
The CEO must establish a method that lets the CMO work effectively with other executives.Phillips Healthcare’s DiSanzo addressed this issue by developing a process that takes a product from concept to the marketplace. That process incorporates operations, customer service, R&D, clinical specialists, sales, supply chain operators, and service teams. Marketing is the “glue” that integrates those elements across the entire process by providing consistent oversight, expertise, and guidance.
Become an active marketer. “So much of the CEO’s job is actually marketing the company,” says Shaukat of Caesars. “They’re one of the primary people defining the company to consumers, investors and the business community.”
Caesars CEO Loveman participated in a two-day quarterly marketing council session, which brought together all the senior marketers in the company. “It is critical for the CEO to be a part of the creation of our marketing strategies and not just be a recipient of them,” says Shaukat. “He has to invest the time and energy not just reading documents but really problem solving.” Loveman worked with marketers to break through issues, brainstorm solutions, and provide thoughtful feedback on various marketing initiatives.
At Essent, van Laethem took a personal role in finding marketing talent and in many cases interviewed people for senior roles. At Philips Healthcare, DiSanzo meets with her CMOs every two weeks.
While the onus is on the CEO to create the environment and structure that puts the CMO in the best position to succeed, we have found that CMOs can do three things specifically to support his/her CEO and drive above-market growth.
Develop—and stick to—a marketing blueprint. Most companies have a marketing plan; surprisingly few have a plan for marketing. Done well, however, a marketing blueprint details how marketing will deliver against the company’s business goals. It specifies what gets done, by whom, in support of what, over what period of time, and makes explicit connections among marketing activities, target goals, and corporate business goals. The marketing plan also has explicit links to business and operating plans within the organization so that, for example, manufacturing is prepared to support the volume increase that marketing is planning to spur, or sales forces are staffed and trained to handle new product launches.
When properly formulated, the plan not only tracks progress on near- and medium-term goals but also tracks long-term corporate health. Using brand equity trackers and marketing mix models, for example, the CMO can deliver reasonable estimates of long-term brand effects. This insight is critical in helping the CEO understand corporate health over the longer-term. For new CMOs, we recommend putting this blueprint in place within 90 days of taking office.
Connect the CEO to the customer. The CMO needs to provide a deep and detailed understanding of the customer to the entire organization based on rigorous analytics. Key performance indicators (KPIs) that integrate customer insights relevant to growth need to be incorporated into the executive dashboard. In particular, we’ve found that focusing on the consumer decision journey (http://mckinseyonmarketingandsales.com/winning-the-consumer-decision-journey) allows CMOs to develop a clear picture of behaviors, moments of influence, and battlegrounds. That level of insight is invaluable to the organization and particularly to the CEO.
Some CMOs take this notion of connecting the CEO to the customer a step further by making it a point, for example, to include the CEO in at least one customer visit per month—whether at a retail store, or listening in on a call center operation. Ford decided to create a mechanism that lets the head of social media connect directly to Ford’s CEO, Alan Mulally. One day, this Tweet caught the team’s attention: “I’m a Volkswagen/Audi guy and I’m driving this new Edge Sport, and I think it’s pretty cool.” The social media head asked the Tweeter for his phone number, and he was still taking the test drive when he received a call from the CEO himself, thanking him for considering Ford’s Edge Sport.
Expand marketing’s influence across the organization. While the CEO can establish the cross-functional mechanisms across the organization that set the CMO up for success, it’s up to the CMO to make them work. Since the CMO often does not have authority over relevant functions (e.g. sales, operations, IT), it requires being able to work well with other leaders to influence outcomes. That can sometimes be an uphill battle.
Whether deserved or not, marketing often has a reputation as something of a luxury, with an indeterminate “value add.” This is largely because marketing’s contribution to a company’s success is not well understood. “Marketing too often is a black box,” says Essent CMO Koenen. “You should bring all the leaders in and make them owner of a marketing program. It was particularly important to work with Patrick Lammers, my CCO (Chief Customer Officer), to turn around the organization. I think that’s probably the most important thing that we’ve done here at Essent.”
The marketing team at Starwood Hotels & Resorts Group also offers a good example of cross-functional cooperation in action. The group set out to design the ideal customer experience across its brands (from the St. Regis to Sheraton Four Points) and touch points, from the concierge stationed in the hotel lobby to social media. By coordinating the brand experience across functions, assigning which departments would control the different touch points, customizing content delivery across the company website and mailings, and most importantly holding themselves accountable for the results, Starwood was able to substantially increase share of wallet from their customers.
The C-suite can seem like an unstable place – just look at the high CEO and CMO turnover rates, and the recent proliferation of new roles such as Chief Digital Officer and Chief Customer Officer. But the demands of the business remain unchanged: delivering above-market growth. While roles will need to adapt to the needs of each business, the CEO-CMO partnership should form the foundation of any company’s successful growth strategy.
Special thanks to Tim McGuire, Tim Koller , and Liz Hilton Segal.
Signs You’re Being Passive-Aggressive
When was the last time you did any of the following at work?
You didn’t share your honest view on a topic, even when asked.
You got upset with someone, but didn’t let them know why.
You procrastinated on completing a deliverable primarily because you just didn’t see the value in it.
You praised someone in public, but criticized them in private.
You responded to an exchange with, “Whatever you want is fine. Just tell me what you want me to do,” when in actuality, it wasn’t fine with you.
Whether intentional or not, these are all signs you’re being passive-aggressive. Whenever there is a disconnect between what you say (passive) and what you do (aggressive), you fall into that camp. And while it’s easy to recognize a passive aggressive co-worker — the colleague who is agreeable to your face but badmouths the idea behind your back or the sarcastic direct report whose constant retort is “but it was just a joke” — recognizing one’s own passive-aggressive behaviors at work can be quite difficult.
Take Chris, for example, a senior marketing executive that I coached. When we discussed the 360 feedback he’d received as part of a leadership development program, he was shocked at what his colleagues wrote about him:
“You never quite know where Chris stands on an issue. He’ll agree to one thing in a meeting but then do something completely different in the follow through. That can make it hard to trust him.”
“While Chris is a really nice guy, I wonder if he’s really honest with his views. He’ll say he’s fine with some thing but you can just tell he’s not and he’s saying that just so we can move on.”
“Chris makes backhanded comments about the quality of someone’s work or idea without directly addressing the issue with the person. It comes off as snarky. It’s not what you’d expect of a leader.”
While Chris admitted that there was some truth to what was described, he bristled at the thought of being perceived as passive-aggressive. Yet that’s exactly what he was.
Over time, passive-aggressive behavior is a slippery slope that breeds mistrust and chips away at your credibility. Being known as passive-aggressive will not serve you well in your career. Fortunately, it’s possible to change your behavior. Though it requires a commitment to self-development and a willingness to get out of your comfort zone.
Here are five strategies to consider:
1. Recognize the behavior. It’s important that you recognize which circumstances or situations drive you to be passive-aggressive. Knowing what they are helps you consciously explore other ways to respond. Start by thinking about the circumstances that bring out these behaviors: Who was involved? How did the situation unfold? How did you react? What happened? Do you see a pattern? Chris recognized that when he felt like his contributions were not valued or like he wasn’t being heard, he resorted to a passive-aggressive stance. This particularly true in leadership team meetings where Chris felt like he had to defend marketing’s role, value, and resources to the rest of the organization. He had a hard time understanding why he was always being tested.
2. Identify the cause. There is likely an underlying cause for your passive-aggressiveness — it can be a fear of failure (a desire for perfection), a fear of rejection (a desire to be liked), or a fear of conflict (a desire for harmony). It’s critical to understand the root of the issue so that you can address it head on and determine whether your fear is warranted. For Chris, the root cause was a fear of conflict and the belief that if others valued him, they wouldn’t push and question him and his group. In effect, Chris equated any sign of conflict with not being valued. Yet, nothing could be further from the truth. Others questioned marketing because they saw it as a critical part of the business and wanted to ensure its success. When Chris realized how his beliefs were driving his passive-aggressive behavior, he saw how important it was to change his default response.
3. Be honest with yourself. Once you understand the underlying reasons for your behavior, you need to be honest with yourself about what you really want. Continuing to veil or deny your feelings will only perpetuate the passive-aggressive response. What is it that you truly think? What is it that you really want to say? What outcome are you hoping for? Then think about how to express that desire in a direct, but respectful, way.
4. Embrace conflict. A large part of letting go of passive-aggressive behavior is accepting that conflict happens. Conflict at work (or anywhere) is not necessarily a bad thing if you make an effort to move through it productively. Seek mutual understanding (not to be mistaken with mutual agreement) of each other’s positions and recognize that even if you don’t agree with someone, it typically does not mean that the relationship is in jeopardy. By accepting that engaging in conflict enhanced what his division had to offer rather than derailing its work, Chris more readily took part in those interactions. Instead of shutting down the exchanges by offering a fake agreement or withholding critical feedback, he respectively disagreed and asked questions to better understand his colleagues’ perspectives.
5. Get input. Working on any behavioral change is hard. It’s easy to be overly critical of your own efforts or simply disappointed that you’re not seeing enough progress. For that reason, it’s important to check in with others on how you’re doing. Share what you’re working on with a few folks that you trust. Periodically, ask them how you’re doing. Do they get the sense that you’re just talking the talk, or actually walking the walk? Chris’s road was not an easy one and every now and then he defaulted back to his passive-aggressive response. But over time, those occasions became more and more rare as Chris focused on being direct and clear in what he wanted to communicate. Some of his confidantes did a good job holding him accountable, even going as far as kicking him under the table during team meetings if he started showing the passive-aggressive behavior that he’d worked so hard to shed.
Managing your own passive aggressive behaviors is about getting rid of the incongruity between your internal dialogue — what you think — and your external actions — what others see and hear. Not only will aligning your thoughts with your actions build trust with your work colleagues; you’ll increase your own self-confidence and trust in yourself. And there is nothing passive-aggressive about that.
Focus On: Conflict
Manage a Difficult Conversation with Emotional Intelligence
Choose the Right Words in an Argument
Why We Fight at Work
Don’t Hide When Your Boss Is Mad at You
Flextime Is Declining, But “Flex Around the Edges” Is Up
Earlier this year, San Francisco and Vermont passed legislation that allows workers to ask for flexible work schedules without fear of reprisal. Are such “right to request” laws indicators of a rise in flextime? Or do they reflect a fear that flextime programs are being eliminated?
The answer seems to be a confusing “both.” New research from the Families and Work Institute (FWI) and the Society for Human Resource Management finds an “on the one hand, on the other hand” contradiction.
The good news is that some forms of flexibility — mostly allowing workers more control over when they start and end their workdays and more opportunities to telecommute — are on the rise. Since the FWI’s 2008 National Study of Employers, employers have continued to increase such options as control over breaks (from 84% to 92%), control over overtime hours (from 27% to 45%), and time off during the workday when important needs arise (from 73% to 82%).
At the Center for Talent Innovation (CTI), we call this “flex around the edges.” In interviews and focus groups conducted during the depth of the Great Recession, we found that companies that gave a little got a lot back: Employees reported greater engagement in their jobs, higher levels of job satisfaction, stronger intentions to remain with their employers, less negative and stressful spillover from job to home and vice versa, and better overall mental health.
Extended flextime, such as job sharing, part-time work, and sabbaticals, is an even stronger employee magnet. But these more substantial flexible work arrangements are being reduced. According to the 2014 FWI study, employers have slashed options that involve employees spending significant amounts of time away from full-time work, including sharing jobs (down from 29% to 18%), sabbaticals (from 38% to 28%), and career breaks for personal or family responsibilities (from 64% to 52%).
CTI’s global research into off-ramps and on-ramps — voluntarily leaving your job for a period of time and then returning — has found that flextime is a necessary tool for firms that want to remain an employer of choice in both developed markets and emerging markets, as well as for employers who want to retain existing talent and attract new talent coming into the workforce.
Among Gen Y talent, for example, having the opportunity to pursue an advanced degree, burnish their skills, expand their perspective by participating in a pro bono project, or simply take time out for reflection about their career path is key in choosing an employer: CTI research shows that 89% of Gen Ys stress the importance of having flexible options. “It’s critical to accessing the next round of workers,” explains Raafni Rivera, human resources manager of Employee Engagement Solutions at Cisco, whose Extended Flex program permits workers to take unpaid breaks of between 12 and 24 months.
More substantial opportunities for flextime are also crucial to retaining employees, especially those who are new parents or are dealing with eldercare issues. In our Off-Ramps/On-Ramps research, the vast majority of employees who left work for a period of time to focus on these personal commitments want to return to their career track: 89% of off-ramped women in the U.S. want to resume their careers, with similar numbers in Germany, Japan, and India. Yet, in all cases, barely half succeed. Meanwhile, some 69% in the U.S. say they wouldn’t have off-ramped if their companies had offered flexible work options, such as reduced-hour schedules, job sharing, part-time career tracks, or short, unpaid sabbaticals.
Retaining this pool of dedicated, experienced talent was the reason accounting firm EY launched a program formalizing flexibility nearly two decades ago. As recounted in a recent New York Times article, the accounting giant was losing women at a crucial moment in their careers — when they were eligible for big promotions, which happened to coincide with when they were starting families — and at a rate that was 10 to 15 percentage points higher than men. Now, the firm reports, women leave at a rate that is just two percentage points higher than men — and some 20% of men also sign up for the program.
We’re at a tipping point. As the economy continues to recover and workers have more choices about where to bring their talent and experience, companies must reconsider their inflexible stance on flexible work arrangements. What’s good for their top talent is also good for their bottom line.
Threats on Your Left Are Scarier than Those on Your Right
People tend to sense greater risk from a threat if it is to their left, rather than to their right, according to a series of studies by Himanshu Mishra, Arul Mishra, and Oscar Moreno of the University of Utah. For example, in research conducted in Bucaramanga, Colombia, pedestrians crossed a one-way street 4% faster if the traffic was approaching from their left and sat 17% farther from a threatening-looking homeless man in a row of outdoor chairs if the man was to their left. The reasons are unclear, but the effect may be due to brain structures that give people greater ease in perceiving left-to-right flow. The researchers point out that the findings could have implications for insurance companies: For example, consumers may be more willing to buy insurance if maps show that an earthquake-prone area is situated to the west (left) of their home cities.
Is the World Cup Worth the Billions Brazil Invested?
With the World Cup in full swing, Brazil’s streets are full of cheers for athletes from the 32 countries competing for the win. Yet the jury is still out on whether Brazil will win in the long run for hosting these events or whether it will become a failed and embarrassing episode in the country’s history. There are three main categories of investment worth evaluating:
Investing in a positive image. Brazil has long been touted as being able to host the best parties in the world, and so far, Brazil has not disappointed. The streets are beautifully decorated, and a festive air has been evident both in the opening ceremony and in the events. FIFA has reported that almost all of the three million tickets have been sold, and the stands have been full of cheering fans, saving Brazil from the issue of empty seats that plagued the London Olympics two years ago.
But is it likely that this will improve Brazil’s image and increase tourism, which is often cited as a benefit of hosting mega-events? The answer is sobering: There is mixed evidence (see this study and another) that tourism increases significantly in the long term or that it offsets the costs of tourism-related improvements to hotels, attractions, and infrastructure.
What is more, the damage that can be caused to tourism by unrest can more than outweigh the benefits of being an attractive place with a good party atmosphere. While many of the recent protests in Brazil’s biggest cities are moving out of the spotlight, those in Sao Paolo have been the biggest issue facing this mega-event so far, clashing with the bright and cheerful atmosphere in the rest of the country and serving to remind fans that there are bigger issues at stake than the ultimate victor of the competition. The strike of the city’s public transportation workers has also created major disruptions to spectators and has embarrassed Brazil on the world stage. This may end up having a greater impact on Brazil’s image as a safe and stable place to travel to or invest in.
Investing in urban infrastructure. Brazil is reported to have spent $11 billion to $14 billion on preparations for the World Cup. Most of this has gone to the construction of stadiums (both new builds and refurbishments) and the construction of supporting infrastructure in the 12 cities hosting events around the country. This is a huge sum for any urban project, and it is clear that residents have expected this outlay to produce significant improvements. Mega-events typically try to offset the cost of investment against long-term benefits, such as improved transportation, increased investment in the country, and improved sports facilities. The cities that have been most successful investing in mega-events have integrated these plans into a long-term strategy for redevelopment, entwining plans in the ultimate objectives of the residents of that city. Barcelona, for example, used the 1992 Olympics to rejuvenate the city, which resulted in a significantly improved urban core.
However, the legacy and benefits of mega-events are notoriously difficult to measure, and it is exceedingly unusual for the full cost of a mega-event to be recovered, even when accounting for better infrastructure. The construction for the World Cup has been over budget and late, and while this is par for the course for many mega-events, it doesn’t mean that it is a good investment. Sadly, eight workers lost their lives during the construction, a disturbingly high number for the industry and another black mark for the event in the glare of the global media spotlight.
Investing in sport. One of the benefits of hosting the World Cup is that the games are held in a number of different cities, meaning that the distribution of funds is spread more widely across the country than is the case with the Olympics, which are concentrated in a single city. Ideally, this should allow the opportunity to bring elite sporting facilities to a number of areas throughout Brazil, providing opportunities for developing young athletes and increasing access to the much-loved national sport of soccer.
While this is certainly the case for some of the stadiums that have been built in Brazil, many of the facilities have been criticized for being built in remote locations that do not have major sports teams. These may nevertheless serve to catalyze local regeneration if the legacy plans are realized. But given the opposition that many of them have faced, it will be a long and difficult challenge to transform and maintain these facilities. A number of other cities have faced similar challenges after mega-events: The Athens 2004 Olympic Games are often cited for having created a number of white elephants, or empty stadiums.
Brazil may still be able to capitalize on some of its investments in the World Cup, but there are a number of signs that it may have missed its golden opportunity to make a significant difference in the lives of its citizens by giving the urban infrastructure a major coordinated boost. There is certainly a risk that the country will be left with empty stadiums and good memories, rather than any material impact.
It’s not too late for the Olympics, though. There is still time for Brazil to make significant strides in consolidating its plans and delivering on the legacies promised. The concerns of the public raised in recent protests should be heeded, and organizers should really think about the value that can still be achieved.
June 19, 2014
When to Go with Your Gut
Gerd Gigerenzer, director of the Max Planck Institute for Human Development, on how to know when simple rules and snap decisions will outperform analytical models. For more, read Risk Savvy: How to Make Good Decisions.
Why Women Don’t Negotiate Their Job Offers
Research shows that women are more reticent than men to negotiate their salary offers. For instance, one study of graduating MBA students found that half of the men had negotiated their job offers as compared to only one eighth of the women. This general pattern has been replicated in survey studies of working adults and in laboratory experiments. It begs the question: Why? Is this a “confidence” problem? Is negotiation a skill for which men are simply better socialized than women? Why leave money on the table?
Researchers have examined the why, and the answer has more to do with how women are treated when they negotiate than it has to do with their general confidence or skills at negotiation. Numerous studies have been conducted in which participants rate their impressions of employees who negotiate for pay and of employees who let the same opportunity to negotiate pass them by. The researchers then compared people’s willingness to work with that employee after evaluators saw him or her negotiate, or not. If evaluators were less inclined to work with the same employee after seeing him or negotiate, we deemed that the “social cost” of negotiation.
In repeated studies, the social cost of negotiating for higher pay has been found to be greater for women than it is for men. Men can certainly overplay their hand and alienate negotiating counterparts. However, in most published studies, the social cost of negotiating for pay is not significant for men, while it is significant for women.
The results of this research are important to understand before one criticizes a woman — or a woman criticizes herself — for being reluctant to negotiate for more pay. Their reticence is based on an accurate read of the social environment. Women get a nervous feeling about negotiating for higher pay because they are intuiting — correctly — that self-advocating for higher pay would present a socially difficult situation for them — more so than for men.
But here’s a twist: we love it when women negotiate assertively for others. It’s just when women are negotiating assertively for themselves — particularly around pay — where we find a backlash. Unsurprisingly, research also shows that women perform better (e.g., negotiate higher salaries) when their role is to advocate for others as opposed to negotiating for more for themselves. Men’s behavior and the ensuing social effects don’t shift much depending on whether they are advocating for themselves or others.
OK. So, we shouldn’t blame women for being more reticent than men to negotiate for higher pay. But, is there anything that women can do about it? Thankfully, yes.
The answer is to use a “relational account” — or what I have learned from Sheryl Sandberg to call a “think personally, act communally” strategy. Using a “relational account” or “I-We” strategy involves asking for what you want while signaling to your negotiating counterpart that you are also taking their perspective. So, how does it work?
First, you want to explain to your negotiating counterpart why — in their eyes — it’s legitimate for you to be negotiating (i.e., appropriate or justified under the circumstances). Sheryl says that in her negotiations with Facebook, she told them, “Of course you realize that you’re hiring me to run your deal team so you want me to be a good negotiator.” Sandberg wanted Facebook to see her negotiating as legitimate because, if she didn’t negotiate, they should be worried about whether they’d made the right hire.
Second, you want to signal to your negotiating counterpart that you care about organizational relationships. After pointing out that they should want her to be a good negotiator, Sheryl recounts saying, “This is the only time you and I will ever be on opposite sides of the table.” In other words, “I am clear that we’re on the same team here.”
In experimental research testing evaluators’ impressions of alternative negotiating scripts, we found that relational accounts helped women both get what they wanted and make the impression that they wanted to make. For instance, one successful relational account that we tested was very similar to Sheryl’s, but was written for a more junior employee: “I don’t know how typical it is for people at my level to negotiate, but I’m hopeful that you’ll see my skill at negotiating as something important that I can bring to the job.” Note that I’m not suggesting that women use these scripts word-for-word. Come up with an “I-We strategy” that makes sense in context and feels authentic to you.
When the explanation for why the woman was negotiating seemed legitimate, people were more inclined to grant her compensation request (as compared to when she was simply negotiating for a higher salary without that explanation). When her script communicated concern for organizational relationships, evaluators were more inclined to work with her. Indeed, there was no significant difference in the willingness to work with a female employee who negotiated using a relational account (“I-We” strategy) as compared to female employees who let the opportunity to negotiate for a raise pass. Variation in the negotiation scripts did not significantly influence the evaluations of male negotiators.
I should highlight that not every legitimate explanation for negotiating helped women. For instance, conventional wisdom in the negotiation community has been to negotiate for a raise when you have another job offer. We tested multiple negotiation scripts based on an outside offer — even ones suggesting that the offer just dropped in the employee’s lap. Unfortunately, in all of the outside-offer scripts we tested, the suggestion that the employee would leave if the offer were not matched seemed to undermine the impression that the employee cared about organizational relationships. As a result, evaluators reported being more willing to grant a woman with an outside offer a raise, but they were disinclined to work with her (as compared to if she let the opportunity to negotiate pass). The outside-offer scripts had no significant effects on the evaluation of male negotiators.
The key to a relational account (or “I-We”) strategy is to explain why your counterpart should perceive your negotiating as legitimate in terms that also communicate your concern for organizational relationships.
I should acknowledge that this idea of using “relational accounts” or “I-We” strategies drives some women crazy. It makes them feel like they are bending to unjust stereotypes or simply being inauthentic. I sympathize with that reaction. We were surprised while doing the research that it would be so hard to make the backlash effects go away. But, every movement needs its idealists and pragmatists, and I am playing the pragmatist here.
It is good advice for any negotiator – male or female — to ask for what they want in terms that their counterparts will perceive as legitimate and mutually beneficial. But for women, it is especially helpful because it unburdens them from the social costs of self-advocating. By sharing this research, I hope to shed light on this bias. Most people don’t want to discriminate. With more self-awareness as negotiators and evaluators, we can work to close this gender gap.
Focus On: Negotiating
Negotiating Is Not the Same as Haggling
Negotiate from the Inside Out
To Negotiate Effectively, First Shake Hands
The Simplest Way to Build Trust
Manage a Difficult Conversation with Emotional Intelligence
I once worked with a leader — we’ll call him Karl — who needed to have a difficult conversation with an underperforming (but key) team member. To prepare, Karl built ammunition by creating a list of the employee’s shortcomings. He sensed that the interaction would end poorly and he felt extremely anxious about it.
Workplace conflicts like this one are often unavoidable. Just as you disagree with your spouse, your best friend, or your parents, at some point you are likely to disagree with someone at work. Many leaders, like Karl, choose to approach situations of conflict with logic: if a team member isn’t pulling his weight, get proof; if your office mate makes an egregious mistake, take note of the ways her mistake breaches company policy.
But while logic is an important aspect of conflict resolution, it is only part of the equation. Emotions cannot be ignored. In fact, research suggests that suppressing your emotions – deciding not to say something when you’re upset – can lead to bad results. Have you ever yelled at your spouse or child after a frustrating day at work – a frustration that had nothing to do with him or her? That’s what psychologists refer to as “emotional leakage.” When you bottle up your feelings, you’re likely to express your emotions in unintended ways instead, either sarcastically or in a completely different context. Suppressing your emotions is associated with poor memory, difficulties in relationships, and physiological costs (like cardiovascular health problems). Emotions matter.
When Karl came to me with questions about his upcoming meeting, I walked him through a plan based on the principles of emotional intelligence. This plan would help him acknowledge logic and emotion during the meeting.
First, I suggested that Karl recognize the emotions at work in the situation. Karl knew how he felt – he was extremely frustrated. However, he also needed to consider the emotions of the underperforming employee, who likely felt scared and threatened. Perspective-taking is essential to effectively navigating conflict. When they sat down, Karl suspicions were confirmed: he could tell from her crossed arms and facial expression that she was already on the defensive.
Second, Karl needed to assess the impact of those emotions on his behavior and the behavior of his employee. Emotions are double-edged swords. Everyday negative emotions help us stay analytical and task-focused. During a conflict, though, negative emotions can result in criticism and nitpicking (just the type of thinking that Karl had been engaged in). Positive emotions support big picture thinking, brainstorming, and creativity. But if we’re not careful, we can start looking at the world through rose-colored glasses and lose track of reality. With the power of positive and negative emotions in mind, Karl began his conversation by highlighting the reasons why he wanted to keep the underperforming employee in his office. He introduced positivity into the discussion, which helped them listen, relax, and engage in problem solving before approaching negative topics.
Third, Karl and I discussed the importance of understanding the swirling cloud of emotions present during this workplace conflict. Emotionally intelligent leaders are aware of what causes their emotions, and they also think through what outcomes are most desirable. While planning for the meeting, Karl began to wonder why: Why were they each experiencing frustration and defensiveness? Why was the employee underperforming? During the meeting, he shared his observations. He asked open-ended questions, hoping compassionately to understand what was happening for the employee. “How are you feeling about your current projects?” he asked. When she noted that she was bored, he continued, curiously. “Why is this happening? What are some of the key skills that you’d like to be cultivating?”
Finally, Karl needed to manage the emotions of the situation by deploying strategies that would lead him to his objective – keeping the employee in his office, and creating a plan to improve her performance. In this case, that meant scheduling the meeting over coffee in the atrium (this helped to encourage open conversation). Also, when the employee came up with overly optimistic goals, Karl logically demonstrated the seriousness of the situation, all the while praising her initiative. In the end, the employee felt that she was being treated fairly – Karl had listened intently and was open to her ideas – and together, they came up with a plan of action.
Emotions aren’t just the result of a workplace conflict. In fact, emotions usually are the conflict. They need to be acknowledged and planned for. Recognizing emotions, assessing their impact on thinking, understanding them, and managing them is a roadmap for navigating through those often-murky (and anxiety-provoking) waters.
Focus On: Conflict
Choose the Right Words in an Argument
Why We Fight at Work
Don’t Hide When Your Boss Is Mad at You
When and How to Let a Conflict Go
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