Archive for May, 2007

Help! We’ve Spun off the Organization Chart and Can’t get up!

May 20, 2007

What in the world is going on in this company? Who does what? Who reports to whom? Who is responsible? Who can answer my questions? I have never seen anything like this. One thing is eminently certain – middle managers have taken the fall again

The organization structure no longer resembles a pyramid. It can now best be described as being made up of three parts with a pyramid at the top. Lying beneath this structure there is a small sphere that is spinning out of control. Under that sphere is a huge elongated rectangle.

It’s all part of the newest strategy for reorganizing our entire corporation into business units. Of course this reorganization means bringing on lots of new high powered executives as well as their assistants and cronies.

It all seemed to happen overnight, after some senior level meeting somewhere. Oh sure everyone got the all employee memo’s announcing the arrival of Mr. X and Ms. Y as well as notices of the endless reorganizations and title changes. But so many things were happening at once that no one really had any time to think about it. To make things worse, the cost of all this new “heavy artillery” had to be offset somewhere. You guessed it! Many long-time and knowledgeable employees and managers were sacrificed in short order on the altar of the new business model.

In the old days, a company was structured by function. You had a president or CEO. That function determined the strategy, set the agenda and coordinated the senior staff that represented the major functions of the company: Sales, Engineering, Manufacturing, HR, and Accounting etc. Each in turn, contributed to this overall strategy by managing their groups to attain the desired overall company goals. The senior staff was encouraged to work together toward an overall end. It was supposed to be all for one and one for all. Reporting lines were clear, simple and easy to follow.

Through time, companies started buying other companies and putting together conglomerates that could leverage combined resources and reduce overall costs. This was sometimes painful but a natural result of market capitalism. Maybe they added a headquarters unit to the mix but the organizational structures remained basically the same. Reporting lines were still clear, simple and easy to follow.

But something new seems to have occurred here. I will refer to it as the “virtual company” concept. Now enter the “Business Unit Leaders,” the new mini-CEO’s who are each managing a product, product line or group of customers. Each leader has his or her personal strategy and agenda. They are charged with leading their business units as if they were separate business enterprises. In a perfect world, this would all work out fine provided that each leader had a dedicated team to support these agendas. But of course it’s not perfect world! It’s the corporate world and there is only one “real” company with a finite set of resources. Now one might think that these mini-companies would exist only as “virtual” enterprises created on paper by the accountants. Not so fast! This time the finance folks aren’t the only ones with headaches trying to figure this all out. Although, supposedly “virtual,” these enterprises are producing nightmares for everyone else.

The Business Unit Leaders (BUL’s) report to Corporate CEO as do all of the other traditional functional heads of the company. Beneath that layer are the AVP’s and directors whose allegiance may lie with a function, a business unit, or whoever brought them into the company. This is the pyramid at the top of the new three part structure. Within the elongated rectangle at the bottom of the structure lie the salaried and hourly employees, the people who perform the real day-to-day work of the company. Squeezed between the pyramid and the rectangle is the spinning sphere containing the remaining middle-management.

The dust had not even settled from the reorganization when the turf wars and the power struggles for resources began. The Business Unit Leaders and their minions started getting into the pants of the purchasing and operating functions claiming that these functional areas were really there to support them and therefore their property. The functional VP’s fought back because they had overall responsibility and were held accountable for the functions. Then the BUL’s began to argue amongst themselves as to what product lines or customers belonged to each unit. Accommodations had to be made to all parties to keep everyone happy. The employees in the large rectangle had to be divvied up.

God forbid that those within the pyramid actually get involved in the day-to-day work of the company. They are the great thinkers after all and their personal staffs exist to support them. Since someone has to be held responsible for those inside the rectangle, it is the middle managers who have become the pawns in this new game. The Orgchart software has been working overtime ever since, of course with fewer boxes left to move around.

The functional middle managers that are still around now find themselves reporting to one or more business units as well as their functional leaders. This means reporting in to two or even three different individuals at various locations some of whom might even be at different levels within the organization. There are hard reporting lines, strong dotted lines and weak dotted lines. Managers once in charge of departments that performed a particular function, now see their staffs split and serving different business units and even performing different functions. Some of their former subordinates still sit at the same desks but now report directly to a manager a thousand miles away while another who sits right next to them reports to yet a different manager. This is all compounded by the fact that the BUL’s have been allowed extricate themselves and their personal staffs from corporate headquarters and manage from remote locations. It has become a “virtual” three ring circus. We have now become a so-called “highly-matrixed” organization. Reporting lines are no longer clear, simple or easy to follow.

One can imagine what it is like to try and figure out who does what or who can answer a question. Not only are many of the veterans gone from the organization but the “newbie’s” in the pyramid are not even aware of the valuable knowledge and experience that left the company with them. No matter, they just expect those that are left to fill in the voids as if nothing had happened at all. Managers now spend the majority of their day switching from one conference call to another. The rest of the day is spent trying to figure out what is going on. The amount of once productive time now wasted on duplicate efforts and wild goose chases is tremendous. The pyramid seems to have an insatiable need for information about the smallest details.

Finance has been pulling out their hair trying to account for all of this on a business unit basis. With employees on different payrolls, in different locations and constantly changing on the organization chart, keeping up with the dynamic is a massive undertaking, particularly with a reduced accounting staff.

Even HR seems to be confused and succumbing to the “matrix.” The annual performance appraisal system has now been amended to allow a manager to be reviewed by multiple “superiors.” Personality clashes, conflicting directives and unclear objectives abound. Those inside the spinning sphere are getting dizzier by the day. Many are beginning to spin off into space.

I believe that there is a biblical quotation about the inability of serving two masters – maybe it should have said “multiple” masters. Maybe the corporate bible says something else.

Most employees feel as though the company they once knew has just disappeared and been replaced with a tremendously confusing and complex bureaucracy run by remote controlled robots. What greater good was to be accomplished by all of this? Change for the sake of change? Was there any planning for all of this? If you’ve read “160 Degrees of deviation: The Case for the Corporate Cynic”, you know that I have always given a company 20 degrees for having good intentions. Is this just another example of good intentions gone awry?

I am no economist or organizational theoretician. I am certain that I will be criticized for not seeing the “Big Picture” here. Guilty as charged! I only know what I have observed and it is not good. We’ll just have to let the record reflect the opinion of “The Corporate Cynic.”


The Consultant got the Goldmine and We got the Shaft

May 15, 2007

Not that there is anything inherently wrong with it, but going to work for a company recently put together by a venture capital outfit can present many frustrations and daunting personal challenges. The downsides can only be compounded if the newly appointed president has no experience in leading a large multi-plant enterprise and whose claim to fame is nothing more than the fact that he had some prior history with the company and had made a capital investment in it. As for the managers and employees who have not made a monetary investment, however, I am not exactly certain what the rewards are other than a paycheck and benefits. Rest assured that one will more than likely be expected to work even harder than those that have. Never be swayed by the “opportunity to earn bonuses based upon results” line in the offer letter. During the years that I spent there, we never saw a dime. Someone else, though, struck gold!

We had assembled a new plant management “team” that represented a mix of both new as well as some long-time employees of the firm. A considerable number of years of experience were represented. The general manager and plant superintendent had both been recruited from large national corporations in our business. Everyone was in their mid to late forties.

I am not certain that everyone on the team was really aware of the new ownership structure of the company. I had been apprised of the change prior to my hire as was the GM and superintendent. None of us were really given any other details. The old timers at the plant had made it through a series of ownership changes over the years and it seemed almost transparent to them. They just kept on keeping on. Someone had to keep the wheels turning. This had been an ongoing business.

The first year was really chaotic. The plant was a mess, the machinery neglected and the workforce unruly. I was hired as controller and chief administrative officer. The books were in a modicum of order but there was very scant HR or administrative support. As an amateur corporate archaeologist/anthropologist, I had noticed that at one time in the not too distant past, the operation seemed to have functioned as one would have expected for a mid-sized business enterprise. It looked like it had been a fairly well-oiled machine. As I blew the dust off the policy manuals and corporate records that I found hidden here and there, I would see the name of our president listed as one of the high ranking officers. All of the other officials were gone. What had happened here during the previous few years? It was like one of those science fiction movies where astronauts return to earth after a nuclear war to find gangs running wild in the ruins of New York City.

Our team was putting in horrendous hours. Saturdays and even Sundays were spent trying to regain control of things. We rarely saw the president although our GM continuously voiced frustration about his requests for resources being denied as well as the meddling of the president in the day to day operations. The GM was constantly bombarded by complaints from the top regarding the amount of overtime, low efficiency in production and poor quality. We were making do with what we had and even beginning to make some progress despite being on the edge of burnout. Our operation had broken even financially at the end of the first year.

It was at the one year anniversary and possibly because of it, that we were advised that a consultant had been hired by the venture capital group. The consultant was being brought in ostensibly to “evaluate” our plant’s performance and help the president drive the company. We were ordered to make ourselves available for a meeting with this guru who was advertised as having worked at one time for GE (Oh boy!). He had already met with the president and the other top officials and now it was our turn.

Al was a disheveled looking, shriveled up old codger but his presence was definitely foreboding. His speaking voice, tone and mannerisms were reminiscent of Alfred Hitchcock. That is why I’ve named him “Al.” Staring around the conference table, Al was silent as he shuffled papers and began to pass them out. No one spoke until he finally broke the silence.

“Allow me introduce myself, “he wheezed,”I have been commanded by the board of directors to help get this company on the right path. I have full authority here. I have already met with your president and we have developed a plan.” A plan! Great! Tell us more!

“The first thing you’re going to learn is the value of discipline.” The value of discipline? What could he mean by that remark? To whom was this being directed?

“I have developed a project list. These are items needing immediate attention. I expect them to be completed in thirty days. Strict adherence to the due dates is required. There will be no deviation.” Al handed out the lists. You could see the eyes of the GM, plant superintendent and maintenance manager grow large with disbelief. “How are we supposed to do all of this within 30 days?” asked the plant superintendent, “The place is still a mess and there aren’t any resources. We’re just starting to get the equipment back into acceptable condition.”

“There are twenty-four hours in a day and seven days in a week! I will return next month and expect to see progress.” replied Al, “I’ll hear no more of your excuses. You must learn to stop being “victims” and start taking control!” The meeting was promptly adjourned. Excuses? Victims? What an inspiring speech! Is that how GE did things?

After the shock of the meeting had dissipated, the team returned to the grueling hours. It was “all hands on deck.” Even the plant superintendent was seen with a paint brush in hand. The GM was rather silent during the entire period. I sensed that there had been some rather confrontational meetings between the GM, president and Al.

Around the end of the 30 day period, I was working in my office when Al suddenly appeared at my door. “Your plant has negative working capital! I’ll expect a full report!” He then disappeared. I stopped what I doing and grabbed my financial statements. I located Al in an upstairs office and detailed in black and white that we did not have nor had experienced negative working capital. “I must have misread the statements,” he replied. “You’d best keep tabs on that!” He then returned to whatever he was doing. Where was this guy getting his information from?

Interestingly enough, we never had a follow up meeting to review Al’s 30 day plan. Perhaps Al lacked “discipline” in that area? Two more months passed and our net income had remained flat. I believe that we had reached a point where there was no more to give. Or so I thought!

Al had been meeting with the president and the senior staff during this period. We were not informed of what was transpiring during these meetings but since I was the controller, I did get to see the consulting bills from Al. The fees were outrageous. But not as outrageous as Al’s next pronouncement. It was mandatory cost cutting time! The GM was forced to offer up the plant superintendent and several technical employees. Shortly thereafter, the GM himself was gone and replaced by a much lower paid plant manager. We were back to square one again and beginning to regress. Now the staff had to multi-function as well as multi-task. Everyone was stretched to the limit. It was time for another awe inspiring “excuses” and “victims” speech from Al.

The new strategy from the top seemed to be trying to bring in new business that could be produced under less than optimal conditions. This meant lots of concessions to customers in terms of pricing, give-backs, and gobs of overtime to fill emergency orders. Profits remained flat. The new plant manager began grousing about lack of resources and meddling by the president. Déjà vu! Al’s consulting fees increased.

The next time we saw Al was a month or two later when the news hit that there had been a walkout at our plant in Kentucky. These treasonous and “excuse” mongering “victims” had probably never learned the value of discipline either! After the troops were coaxed to go back to work, Al made a tour of the plants to ensure that there were no other mutinies on the horizon. Both the plant manager and I were called into the conference room. The president was there as well but he seemed disconnected from the forum. We assured Al that everything seemed OK other than the stressing out of the management, indirect labor and technical teams who were working hellacious hours to keep the business going. We did NOT want to sound like “victims.” It was at this point that Al looked across the table at me and asked, “Have you read Fish?” (Was this guy for real?) I did not answer but later handed Al the check he had requested for the prior month’s fees. It was a whopper!

Al became a staple at our plant and would now sit in on the monthly staff meetings. It soon became obvious that Al was in for the long haul. That’s when we began to notice something peculiar. He was actually dozing off during the meetings. No one dared to say a word or even tried to awaken him. We’d make several loud noises in attempts to stir him but his naps could last a half hour or so. When he did wake up, he acted as though nothing had happened. I am no medical professional but I do not believe that he suffered from narcolepsy. He was simply bored! Al was always quick on his feet, however, when it came to requesting his payments. It almost seemed that his visits were mere pretenses to make collection calls.

Al was never pleased with the financial results (no one would have been) but was totally disinterested in our explanations of the root causes of additional costs or performance failures. These were merely more excuses offered by the victims. Al’s “cures” would involve the launch of a new initiatives or programs, but there was never any mention of providing support other the definition of his latest “buzz word” or acronym. “Executing is what you’re paid to do!” would be parroted constantly by both Al and the president.

One got the sense that Al and our president had a cordial relationship but totally different ideas about how to run a company. AL would prescribe the initiatives alright but after he left, the president seemed to have his own ideas and priorities. The plant manager and the rest of us were always caught in the middle. It was like living in two different worlds.

Al had the big ideas and the president wanted to micro-manage everything and have it done on the cheap. As time passed, the company became more schizophrenic and dysfunctional. The turnover in plant management was unbelievable. We all joked about installing “revolving doors” on the office. The consulting fees kept rolling on. We could have really used those funds at the plant.

Hindsight is always 20/20. As a self appointed historian, I have my own views on what transpired at this place. As for the motivations of both Al and the president, I have my own opinions as well. I could write another entire book about it and just might at that. Those of us that stuck it out for a few years did develop a real sense of “ownership.” Our “investments” were paid in long hours, lost weekends, forgone vacations and a tremendous amount of stress. By God, we virtually lived there! It was like fighting a long drawn out war with short supplies, poor leadership and no end in sight. In retrospect, we were more like refugees than victims. As for the rewards, you’ll have to talk to Al. He’s waiting for his check.

A Bombshell from the “Double Secret” Handbook for bad Executives

May 3, 2007

The Supreme Committee must have been working overtime on this chapter. Well, maybe not. I’m sure some minion was assigned to this. I found this chapter taped behind one of those pictures of a soaring eagle on the wall of an empty office.

Chapter 4 Great Performances with Performance Appraisals

It’s that time of the year again! The dreaded performance appraisal forms are stacked up in your inbox. You’ve managed to amass a large contingent of direct reports with a massive organization beneath them. It’s a true reflection of your power and prestige in the organization. But now all of that has created a lot of work for you. What nonsense! You already know who you’re good employees are – and the bad ones as well. How dare Human resources burden you with useless paperwork! You have many more important things on your mind, like building an even larger empire. Hmm, that might result in more of these cumbersome forms to fill out. Keep reading, we have a solution for that.

This is an annual event and probably the only time of the year Human Resources has any real power whatsoever. For some strange reason, your boss may have bought in to this tripe so there is really no way to avoid it. But there are ways to mitigate the drudgery and perhaps even use it to your advantage.

Dealing with the paperwork:

1. If your boss is a stickler for completing reviews on time, insist that your direct reports review their employees in accordance with the timetable set by HR. Do not allow them any slack. You’ll score points if your department turns in all of their appraisals either on or ahead of time. This is all non-valued added activity. Evenings and weekends provide perfect opportunities for your staff to work on these.
2. Remind your direct reports that the sum total of their employees’ overall ratings must be distributed in a nice bell curve. HR loves that stuff. You know that the traits, behaviors and attributes of any group of human beings are distributed that way. You learned that somewhere. Have your direct reports complete a summary sheet and keep you updated. If the results do not fit the curve, press your subordinates until they do. Just make sure that those you have chosen to be the “winners” and “losers” are rated as such.
3. Insist that your direct reports complete their own appraisals as well, particularly if the forms are complicated and require a lot of thought. You don’t have time for that. Let your subordinates think that they are actually having a say in the assessment of their performance. You can make them change it all anyway if you don’t like what they’ve written. The key here is to get all of these forms off of your desk and into someone else’s hands.

Dealing with goals and developmental plans for your own staff:

Goal setting

Never mind that the instructions on the form state that goals should be concrete, measurable and attainable. Who is in charge here anyway? The goals you set for your direct reports must be intentionally vague. You need to keep them guessing as to whether or not they are doing a good job. If you provide concrete goals, your staff will focus on them. If vague, they’ll work harder on everything!

Measurable? You’ll be the judge of that! How are you supposed to manage without exercising your personal discretion? You know how quickly people fall in and out of favor with you. Sometimes it’s even on a daily basis. It’s important that you measure personal loyalty too – and there’s not even a section for that on the form. As we all learned while coming up through the organization, people turn into suck-ups, saints and workaholics during the five or six week period prior to their annual appraisal. You’ve practiced that yourself during your rise to the top. Do not allow your staff to get away with that! They’re supposed to act that way all of the time.

Attainable? There must be “stretch.” Your staff needs to go for the gold! If the results exceed expectations, you’ll be able to take most of the credit anyway. If they fail, it’s their own fault.

Developmental plans

1. Make sure that you are not on the hook for any tasks associated with any developmental needs of your direct reports. After all, they need the development and they can take care of it themselves. If they need a seminar or training, let them find it. You may or not approve it. That’s your prerogative.

2. Remember, these reviews also give you the opportunity to “counsel” your staff about their personal habits and behaviors. Do not put any of this in writing. Plant seeds, wink, and nod. You can conveniently forget about all of this later if you need to.

Conducting the appraisal meeting:

1. Always schedule the meetings at the last minute, when your subordinates are off guard or tired and worn out. Make sure that you’re fresh and well prepared. Talk fast and try not to let them get in a word edgewise. The goal is to get them to sign off on the form and get it back to HR as quickly as possible.

2. Members of your staff who argue or refuse to sign their appraisals claiming that the reviews are not fair portrayals of their performance do not deserve to be part of your team. Their unflinching belief in your innate ability to judge them cannot be called into question. If they have somehow managed to amass documentation in an attempt to refute your assessment of them, you must question how they are spending their time. They are paid to work and not to waste time keeping records to defend poor attitudes.

3. However, you do not need issues with HR during this time so diplomacy is the key. Sometimes a little “sweet talk” goes a long way. A veiled threat may even be needed to straighten out a real malcontent. At any rate, start making plans now to expunge them before their next appraisal.

4. Remember, get the forms signed, sealed, delivered and forgotten about. You’ve done your job.

Whew, that was a lot work! Now it’s time concentrate on you. The annual executive “bonus” distribution is being considered right now. You have five or six weeks to become a suck-up, saint and workaholic. It will be over soon. Good luck!