Advice From the Top

by Del Leonard Jones

   Resist the urge to stay in the past. General Electric was once on a pedestal like Google, Apple and Amazon today. Change is the only constant.

   Like a football team after a Sunday game, study film. Find deficiencies and figure out how to fix them.

  “If you can fix it with an existing player, then do. Otherwise, get a new quarterback, right?”

   Combat the resistance with compassion. Companies have a proud past and employees don’t want people coming in to “fix what’s broken.” From their point of view, nothing is broken.

  “The culture at Home Depot was embracing. They knew each other, they grew up together, they toiled together, they won together. I was an unknown, an aberration.”

   Be human, visible, approachable. Meet everyone. Practice deep immersion. Try to gain confidence early on.

   Expect a landscape strewn with people who are arrogantly or belligerently dug in and unwilling to listen. Expect resistance and upheaval in certain areas.

   Expect some to say, "No way, I'm going to leave." Expect others to say, “I agree that we need a strategic change, but I don't want to go through it and I'm going to leave." Some will say, "I'm with you. I want to help." Lastly, some will say, "I'm going to stick around because you, too, will pass."

  “The more you talk about the strategy, the better. Of course, success helps.”

   The biggest mistake is doing nothing.

   Enhance the core, extend the business and expand the market. These three E’s provide consistency and a calming effect.

   Some see such strategies as the flavor of the month. They put it under the category of banners and bull. Rightfully so. Change comes through consistency and resolve and the unwavering articulation of a strategy.

  Did you know?

  Nardelli was an average student, a star athlete, an altar boy, a Boy Scout, class officer, yearbook editor and ROTC cadet. Dreamed of playing in the NFL.

  Transformed GE Power Systems into a $20-billion-a-year unit. In 2000, lost a three-way race to replace retiring Jack Welch as GE CEO.

  When the inmates run the asylum

  — Vineet Nayar, HCL Technologies CEO 2007-13 on worker democracy

   Command-and-control is the easiest management style. It’s not the most productive. The democratic, accountability model is difficult, it weighs heavy on management, but it’s productive.

   India is the world’s largest democracy, but it’s easier to introduce workplace democracy in Europe and the USA.

  “In India we control our kids until age 27. We run their lives until they get married. As a society, the U.S. is more open to workplace democracy.”

   When management became more accountable to shareholders, companies became better. It didn’t create chaos, it created value. Shareholders don’t tell businesses what to do, but there’s more accountability.

   The same principle applies to workplace democracy, especially in knowledge businesses.

   Bosses can’t be voted out by the rank and file. However, management’s duty is to serve the workers just as elected officials are there to serve the public.

  “Nelson Mandela and other great political leaders understood that their job was to enable people to find their own destiny.”

   Corporate democracy isn’t a recipe for anarchy and chaos. Don't destroy the hierarchy. Increase the accountability of leadership to employees.

   Employees can open a trouble ticket on anyone in the company, on a manager, on anyone. A response is required.

   Don’t permit certain departments to become gods in an organization, don’t permit fiefdoms.

   As CEO, own up to personal weaknesses. Make your 360-degree feedback public to all employees. Encourage senior managers to do the same. Leaders must overcome the fear of having their flaws exposed.

   The mantra is no longer “the customer is always right.” Employees create value for the customer. Customers patronize companies where employees are most important.

  “When I travel on an airline, it’s not the CEO who makes a difference.”

   Democratic companies fire under-performers. People are given more opportunities to succeed, but the outcome for slackers is the same.

   Managers who get negative feedback gravitate to other jobs. Inside the system of democracy, they come to know they are bad managers.

   Good managers will remain to nurture employees and allow them to create more value.

  Did you know?

  Nayar joined HCL as a management trainee in 1985. Holds bachelor's degree in technology from G.B. Pant University ('83), and an MBA from XLRI-Jamshedpur ('85). Both schools are in India.

  Likes adventure sports. Has done glacier trekking in Europe and New Zealand. Favorite scuba destination: Hawaii.

  When a food fight is in order

  — Clarence Otis, Darden Restaurants CEO 2004-13 on gaining market share when the pie shrinks

   Resist reducing the staff if it erodes the customer experience. In a recession, people dine out less. An anniversary or birthday is more dear. Don’t leave a bad taste in mouths.

   Consumers return when the economy improves, but they’ll long remember a bad experience.

   Pay attention to companies outside your industry. Walmart has the supply chain. Marriott has brands that are positioned differently. The auto companies have a range of models from entry level to mid-tier to luxury. Do the same. Emphasize value in a recession.

  “Companies that win position themselves to serve customers and strengthen their offer.”

   There’s risk in putting products on sale. It becomes the price customers expect to pay. Pump out coupons and lose the ability to command a regular price.

   Good employees stay longer during recessions. Take advantage of that. Deemphasize new employee training and layer on advanced training and development.

   It’s a good time to replace under-performing workers.

  Did you know?

  Otis is the son of a janitor, and homemaker. Read almost every novel and biography at the public library in Watts by the ninth grade.

  Received the Horatio Alger Award, which recognizes individuals who overcome adversity to achieve.

  When he became CEO of Darden Restaurants in 2004, he was one of eight African Americans ever to be chairman and/or CEO of a Fortune 500 company.

  Owns one of the USA’s leading private collections of African-American art.

  Darden Restaurants has more than 1,500 restaurant locations and more than 150,000 employees, making it the world's largest full-service restaurant company with brands like Olive Garden and LongHorn Steakhouse.

  Reject 99 out of 100 opportunities

  Jeff Rich, Affiliated Computer Services CEO 1989-2005 on the discipline of M&A

   There are a zillion reasons to reject a deal. An overpriced company, unhappy employees, an unmotivated workforce, deteriorating financial conditions, a management team that wants to cash out.

  “Walk away if anything makes you feel uncomfortable in your tummy.”

   Guard your ego. Those who have to prevail overpay. Those who want only to run a bigger company – not a more profitable one – fail.

   The best time to buy anything, including companies, is when no one else is. There aren’t a lot of sellers at depressed prices, but be patient. If prices stay down, financial pressure to sell builds.

   Have your people stake out acquisition candidates. Watch the lobby from the parking lot before and after closing. Do people get to work early and leave late? Are they stampeding out the door at 4:30, or is there a steady stream that starts at 5 and ends at 7 or 8 or 9?

  “Is there a work ethic, or does it run like a bureaucracy?”

   Synergy is over-rated. It’s OK to identify cost savings and revenue opportunities, but synergy is often pure dumb luck.

   Beware when the management team wants millions to put in the bank. It's OK to give them a little money to tuck away, but make s
ure they're motivated to stay and do good things.

   Everyone should be smiling when closing the deal. Beware if someone is unhappy.

   Acquisitions lead to job cuts. Be straightforward about that. Mergers are healthy for the economy and lower the cost of delivering a product. People accept the truth, but they won't accept uncertainty, or evasiveness.

  “The stupidest thing a CEO can do when there’s a merger is stand up and say ‘nothing is changing.’’’

   A lot of acquisitions fail for two reasons: Buyers overpay, or there is a poor cultural fit. Anyone can buy. The hard part is integration.

   Cultural fit means the two organizations must share the same purpose, the same operating philosophy.

   Sometimes they just don't like each other. The AOL-Time Warner merger went bad due to a clash. Beware of East meets West, dot-com millionaire meets corporate lifers.

   The two merged companies can't have different pay scales.

   Have senior people at the new company rank all other senior executives. Are they A, B or C players? Identify the clear winners and losers.

   Watch retention. If good people start to leave, expect problems in sales, client satisfaction and, ultimately, financial performance.

   Advice to employees: Expect job cuts, a lot of cuts if the merger is with a direct competitor.

   Each employee must find out what's happening to the company, their division and themselves personally. This is a free market for labor, and those who don't feel secure, should take action and find another job.

  Did you know?

  Rich had completed 66 transactions by 2003. Affiliated Computer Services was itself acquired by Xerox in 2010.

  A high school hockey star, quarterback for the Goodrich High School Martians football team.

  Raced in the "Hotter Than Hell 100" bike race in Texas, has ridden cross-country on a Harley, rafted on Costa Rican rivers, climbed 14,265-foot Castle Peak in Colorado.

  Don’t let our daughters dumb down

  Sally Ride, first American woman in space 1983 on keeping girls interested in math and science

   Don’t succumb to stereotypes. Take encouragement from parents, teachers, counselors, anyone who says “science is for girls.”

   It starts in sixth, seventh and eighth grade. If a girl dumbs down, it will probably be in middle school.

   Consider attending an all-girl high school. It can build confidence.

   Introduce a girl to the coolest female engineer at your company. Let them know that not every scientist is a 65-year-old guy with a lab coat and pocket protector and looks like Einstein.

   Show them the cool things that they can do in engineering.

   There are obvious differences between men and women. But in 1970, law school was 5% female, med school was 8% and business school was 4%. You could have concluded that women don't make good lawyers or doctors.

  “Years ago, women were rare in national orchestras. One explanation was that they had less wind power. They did blind auditions and the number of women increased.”

   It’s hard to do gender-blind hiring. Do gender-blind initial screening. Managers can be made aware that they have preconceptions.

   Businesses that want good female employees should be involved in education even if educators object. Competition is good, vouchers should be considered, as should anything that holds the schools’ feet to the fire.

   On the job, there can be very serious forms of discrimination for which there is legal redress. There are more subtle forms that women might not notice or think about until they accumulate over time. Use judgment. Sometimes it’s best to take the high road, have a little sense of humor and let things roll off your back.

   We have a problem with boys, too. Seventy percent of the D’s and F’s are given to boys, and they account for 80 percent of dropouts. Women now earn more graduate degrees.

  “You can work on two problems at once. You don’t stop research on breast cancer because heart disease is so deadly.”

  Did you know?

  Ride’s worst school subject was seventh-grade home economics, when it was required of girls.

  “Can you imagine having to cook and eat tuna casserole at 8 a.m.?”

  Still the youngest American (32) in space.

  Attended Westlake School for Girls on a tennis scholarship. Achieved national ranking. Considered professional tennis.

  Died of pancreatic cancer in 2012.

  Still more to do

  Rachel Robinson, widow of Jackie Robinson on the state of corporate diversity

   There have been African-American CEOs such as Richard Parsons, Clarence Otis, Kenneth Chennault, Rodney O’Neal, Ursula Burns – Barack Obama – but opportunity in the ranks remains unequal.

   Young African-Americans know who runs companies, how often people get promoted, if there are salary gaps. Some take on a challenge, but most avoid hostile environments. The interaction between people at a workplace has an impact on productivity. Those who feel a part of the operation and are respected by colleagues do better.

   Advice to new hires: Develop a strong presence to succeed, yet don’t be arrogant. Jackie Robinson was fundamentally a humble person, he had a deep spiritual depth and a belief in God. He was aggressive on the field. Off the field, he was a different person.

   Use various characteristics in different situations.

   Some companies and people give diversity lip service. Others are sincere, just as there were those who attacked Jackie Robinson, and others who rooted for him in a big way.

  “Jackie excelled to show them that they were wrong. He knew he had to meet the challenge for our race.”

   African-Americans should not get special favor once they’re on the job. Then, it’s up to them to produce. Neither should they be dismissed or treated poorly.

   Some fast-food restaurants have an all African-American staff at one location and all-Hispanic at another. Airlines staff planes with flight attendants who are all young, or all middle-aged. That can reduce problems in communication. It’s positive unless it’s used to shut others out or close opportunities. It’s a good tactic if used to keep things harmonious.

  Did you know?

  Rachel Annetta Isum met Jackie Robinson in 1941 at UCLA. They have fifteen grandchildren.

  Career nurse, primarily for the mentally ill. Named assistant professor of nursing at Yale, 1965.

  Jackie played for Brooklyn Dodgers 1947-56. Inducted into Hall of Fame, 1962. Died in 1972 at 53.

  Never, never, never settle

  T.J. Rodgers, Cypress Semiconductor founder on fighting lawsuits

   Class-action lawyers get up in the morning and look for stocks that have gone down. They sue. They will go away for $8 million, or cost you $1 million in legal fees looking for a smoking-gun memo.

   90% of companies settle to get it behind them, which has created a thriving corporate litigation industry. Don’t give away money if you’re innocent.

   Don’t capitulate to profiteers. Don’t be an easy target.

  “Porcupine is a bad lunch.”

   Pay up if the suit has merit. Otherwise, settling is the same as paying ransom to kidnappers except that fighting lawsuits is easier because nobody’s life is at stake – only money.

   Lawyers advise burning documentation and deleting email. That’s wrong advice. Keep it all and let opposing lawyers go fishing. They can talk in court about the inch of bad stuff, but you can take a week talking about the good.

   CEOs should get deeply involved in trials. The minute a CEO lets lawyers make the decisions, the company is being run by a rookie, surrogate CEO. A lawsuit is a corporate action and unless you bring all disciplines and intelligence of the company, you're probably going to lose.

   Trust juries but be prepared to educate them. There can be bad verdicts, but it’s worth the risk.

  “Trials can create damaging publicity, but the minute we
abandon fact and law, we’re cavemen.

   Have a “mom" policy, which means explain the company to juries and potential shareholders as if they were your mothers. If mom wanted to invest, we wouldn't just give her the minimum information required by the Securities and Exchange Commission. We’d tell her again and again until she understood.

   Lobby for the British system, where the loser pays legal expenses.

  Did you know that Rodgers likes to opine. A sample:

  Taxing the one percent moves money and investment decisions away from proven job producers to Washington amateurs.

  Corporate welfare should end.

  Washington is the enemy of Silicon Valley.

  Immigration is not a zero-sum game. Skilled immigrants don't take jobs from U.S. natives, they create them.

  Diversity should be achieved through the pursuit of talent no matter what package it comes in.

  Interest rates should be decided by computer, not by the humans of the Federal Reserve.

  Be Krafty

  Irene Rosenfeld, Kraft Foods CEO 2006-11 on taking charge in a transition

   Lead from the head and the heart.

   Come up with a mission statement like “Making today delicious.” The statement is a powerful rallying cry.

   Encourage employees to act like owners. Have them spend money like it’s their own. Cost cutting should be a means to an end – and that end is growth.

   An owner doesn’t have the time to sit in a meeting going through 100 pages of documents, so neither should workers. Keep it simple. Be nimble.

  “It’s hard to get up every morning and say “Cut this cost.” You need to feel like your work has a higher purpose.”