Who knows best?

Some corporations and some managers behave in ways that communicate that they know better than customers, employees, or other constituents.  Here are a few stories from the news that describe the consequences of such behavior when the individuals whose “best interests” were handled in parental fashion cried “foul!”

Not like a good neighbor

The stated intention of State Farm Insurance was to keep costs low for its policyholders.  State Farm learned many years ago that some auto body shops were using non-original equipment (non-OEM) parts without informing either State Farm or the car owner, and often charging as if the parts were original equipment (OEM).  OEM prices are often set at monopolistic levels.  State Farm worked to improve the quality of the non-OEM parts industry by contributing to the formation of the Certified Automotive Parts Association (CAPA), and State Farm is confident of the quality of parts certified by CAPA.  By requiring the use of non-OEM parts in the repair of insured vehicles, State Farm succeeded in keeping repair costs low for policyholders. 

Some policyholders sued State Farm for breach of contract because the company failed to disclose that non-OEM parts were being used for repairs.  In October, State Farm lost this case, and faces the payment of damages totaling $1.2 billion.  Policyholder costs are likely to rise.

Have you made decisions that you are convinced are in the best interests of others?  How do you communicate those decisions?  Do those who benefit know and understand what you did and why you did it?  Do you allow customers to choose for themselves or do you make decisions for them?  Who do you think is in the best position to make selected decisions? 

What risks?

We were amazed when we read a research report in the October 6 issue of the Journal of the American Medical Association.  A 1996 survey about smoking in China revealed, among other things, that smoking in China is on the rise; one in twenty smokers in China were unaware of the connection between smoking and chronic heart disease; and the average smoker spends about 25% of income on cigarettes.  While the results of this survey should call for significant tobacco control initiatives in China, we’ll see what the government there decides to do.  After all, they just spent $1 billion to celebrate their 50^th anniversary.

What responsibility do you feel you have to disclose risks to individuals who may not perceive those risks?  What consequences are likely to occur as a result of policy decisions you’ve made, but have not disclosed?  How informed do you want your customers, employees or other constituents to be?  What are you doing to inform them?  

Miller time out

We read in the October 4 issue of Forbes that a former Miller Brewing Company executive, Jerold Mackenzie, was awarded $26.2 million because his attorneys convinced a jury that Mackenzie’s boss at Miller deceived him since 1987.  That’s when a corporate reorganization reduced the size of Mackenzie’s department, and he expected a downgrading of his job.  His boss reassured him that his position wasn’t affected, but a downgrade actually was in the works, and when it was done, Mackenzie wasn’t informed about it.  His skills made him valuable to Miller, and his salary and perks weren’t adjusted when the downgrade took place.  He finally learned about the downgrade in 1992, and was devastated because he knew that downgraded executives rarely bounced back at Miller, and he was now older, and faced diminished job prospects elsewhere.  A few months later, he was fired for an unrelated matter.  He sued on the basis that Miller was duty bound not to deceive employees to induce them to act to their detriment.  The case is still under appeal.

Have you ever decided not to tell someone bad news out of fear of their response?  If you were in Mackenzie’s shoes, or those of his boss, what would you have done, and what would you have wanted to do?  What guides your decisions about keeping employees informed about how changes impact their careers?  As a manager, do you feel a responsibility to counsel employees about their careers, or do you believe that individuals have the responsibility to manage their own careers? 

Naptime

We were in the middle of a big yawn when we read an article titled “More Bosses Encourage Napping on Job” in The New York Times (10/13/99).  We perked up long enough to read that when Burlington Northern Railroad first authorized napping on the job two years ago, they required conductors and engineers to radio their intention to nap back to headquarters.  That approach totally failed, and the company now lets employees decide when they need to nap, and when it’s safe to do so.  Many white-collar companies have set up nap rooms, and encourage 20 to 45 minute breaks.  We look forward to a book coming out this month titled “The Art of Napping at Work”, and may consider ordering the “executive napping kit” from The Company Store.

It’s no surprise that few naps were taken when the employees at Burlington Northern were required to call attention to their napping at headquarters.  Once allowed to make adult decisions, we assume that employees are able to work out with their colleagues ways to remain sharp and focused while at work, even when that entails taking a quick nap. 

It’s Hell Managing Organizations

We’ve restrained ourselves from entering the HMO debate as long as we could.  News throughout October made it irresistible.  We also need to disclose that our current health plan is administered by Aetna.  Class-action suits were filed in October against Humana, Inc. and Aetna, Inc., accusing the plans of withholding vital information from its members.  In the case of Aetna, it seems that certain individuals in employer plans were unaware that the pay of doctors varies when they prescribe a drug or treatment that falls outside Aetna’s guidelines (The Wall Street Journal, 10/7/99).  The lawsuit claims that employees need to know the physician pay arrangements so they can weigh their doctor’s advice more accurately, and explore other treatment options.  This looks like another case of potentially incomplete disclosure.  We wonder what happens next if Aetna disclosed physician payment arrangements to employers, but employers chose not to disclose that information to employees.  We continue to hate class action lawsuits, and find it no surprise that these cases came up as Congress was debating the Patient’s Bill of Rights.  Aetna’s chairman, Richard Huber, is leading the fight against this “assault”.  We found it fascinating to read that Huber defines Aetna’s role as an administrator, carrying out the wishes of its customers, the employers.  Also, if medical mistakes are made, it’s the doctor’s fault.  Maybe the solution to the health care problems is to cut out the little-value added role of too many administrators.

What role does your organization play and does that role add value?  When challenged about how you carry out your role, is your behavior defensible?  Have you surrendered roles to others?  Do you blame others for your troubles? 

Loud voices

Body slam

Jesse Ventura’s popularity in Minnesota dropped 19% (Minneapolis Star Tribune 10/4/99) following reports about his comments in Playboy about religion and the Tailhook participants.  It seems that while Minnesota residents like Ventura’s plain speaking, they no longer like what he’s saying and prefer that he keep some opinions to himself.  Every Saturday night during October, Garrison Keillor has featured a segment with someone playing a fictional Ventura for the audience of A Prairie Home Companion on PBS radio.  No matter how outlandish the radio portrayal, the comments of Ventura himself achieve new levels of bluntness and offense.  Stay tuned to see what the Minnesota voters do next time around.  Maybe political correctness will reverse in favor of candor.  In the meantime, as Ventura remains active in the Reform party, he’ll remain on the national scene for all of us to examine.

As a leader, how clearly do you communicate your opinions?  Which opinions do you keep to yourself?  Are you aware of when you offend others?  Do you care?  How do you assess your behavior as a model for others?

Touching a nerve

Jeorg Heider captured attention throughout Europe in October when his Freedom Party captured 27% of the vote in an Austrian general election.  Heider touched the nerves of Austrian voters who are concerned about increased immigration, and an austere government budget (BBC News, 10/5/99).  Heider promises an “Austria for Austrians.”  Heider once praised Hitler’s orderly employment policy and called SS veterans “decent men of character.”  Austrian Chancellor Viktor Kilma now faces the challenge of forming a government that will work, while not allowing Heider too active a role.

Do you disagree strongly with someone you work alongside?  How do you find ways to collaborate?  How do you air those disagreements?  When you speak on behalf of customers or other constituents, have you captured what’s important to them?  Do you provide solutions that work?  Are you vulnerable to dissidents when your solutions take too long or involve choices that may be for the common good, but harm selected members?  How do you protect yourself and your organization from the power of those dissidents?

Voting for recognition

Visit http://www.myboss.com/ to explore the entries in the Worst Boss of the Millennium contest.  You can enter stories until 11/29 and can vote each week on the stories selected by a panel of judges.  The winners each week will be entered into a final vote-off from 12/6 through 12/10/99.

Which of your bosses have been the best and the worst for you?  Considering your current direct reports, which of them would rate you best or worst, and why?  Have you asked employees how they rate you?  Will they give you an honest assessment?

Blowing smoke?

Getting to know us

We read in the San Francisco Examiner (10/14/99) that Philip Morris launched a new corporate website that states “there is no safe cigarette” in one section, and that “cigarette smoking is addictive.”  On further investigation, we learned that Philip Morris has embarked on an advertising campaign costing about $100 million intended to remake its corporate image.  Within a few days, we viewed a television ad that focused on the company’s philanthropic activity for the benefit of battered women.  The new homepage summarizes their initiative: “We are committed to acting responsibly as a company and to making a difference in the communities where we live and work.  We invite you to get to know us better.”  Advertising worked for the company to promote its tobacco products.  We’ll see if the new ad campaign succeeds in making the company’s image more positive.

How do you manage your image as a company or as an individual?  What perceptions do your constituents have, and do those match or mismatch your own?  How do you call attention to the aspects of your image that you want to achieve top-of-mind awareness?

Follow Up

Never-ending stories

Here are selected updates on stories covered in prior issues of Executive Times:

Ø      A summer intern at C-SPAN radio contributed greatly to those of us who enjoy listening to the Lyndon Johnson tapes (see our May 1999 issue).  As a result of a careful cataloguing effort, we can now search the tapes for specific individuals named or participating in discussions with the president.  Visit www.c-span.org and search for one of your favorite characters of the mid-sixties and listen to the conversations involving that person.  We’ve enjoyed listening to the conversations with or relating to J. Edgar Hoover.  If you’ve been taken to the woodshed by your boss, try listening to what we call “The Poor George Series”.  Sort the discussions using the name “George Reedy” and hear all 57 taped conversations between President Johnson and his press secretary, Mr. Reedy, from January through September 1964.  Listen to Johnson berate Reedy for his poor job performance and feel better about your own woodshed experience.

Ø      When we described Carly Fiorina’s new job as CEO at Hewlett-Packard in the August 1999 issue, we didn’t know the details of her compensation package.  The Wall Street Journal estimated on 9/22/99 that her compensation is valued at $80 to $90 million.

Ø      Our April 1999 issue explored the challenges Don Carty faces at American Airlines.  We read in October in multiple papers that 190 Reno Air pilots have sued both American Airlines and their union over seniority.  Meanwhile, Carty blames competitors for capacity problems (The Wall Street Journal 10/6/99).  The challenges seem to be increasing for Carty.

Ø      While investigations into secrecy problems at Los Alamos National Laboratory continue since our June 1999 report, the Department of Energy announced a policy that all employees need to report any romantic liaisons with foreigners, unless it’s a one-night stand.  (The Washington Post, 9/2/99).

Ø      Eckhard Pfeiffer, who stepped down from Compaq (see our May 1999 issue), is now chairman of Intershop Communications Corporation, a role that does not involve active management.

Ø      After reading our October 1999 issue, a reader informed us as to how they pronounce “Daimler-Chrysler” at the German headquarters: the Chrysler is silent.

Legacies

He changed our world

Akio Morita, co-founder of the Sony Corporation died in Tokyo in October, after a long illness.  As The New York Times reported (10/3/99), “More than anyone else, it was Morita and his Sony colleagues who changed the world’s image of the term ‘Made in Japan’ from one of paper parasols and shoddy imitations to one of high technology and high reliability in miniature packages.”  He built a cultural bridge between the United States and Japan that made both countries stronger and more successful economically. 

Shareholder champion

With a reputation in the 1980s as one of the toughest American managers, Martin S. Davis launched the successful careers of many other top entertainment executives.  At Gulf+Western and Paramount Communications, he demanded results and wouldn’t tolerate shortcomings from executives including Michael Eisner, Barry Diller, Brandon Tartikoff and Jeffrey Katzenberg.  Shares in companies under Davis’ leadership increased at rates double that of the overall market under his leadership.  His decisions, like those of successful executives in other public companies, produced great returns for investors.  He died of a heart attack in early October.

Reading

You say you want a revivolution?

We hate made-up words like “revivolution”, the term that James A. Belasco and Jerre Stead coined to describe the process of renewal through revolution.  We’re slogging through their latest book anyway, Soaring with the Phoenix:  Renewing the Vision, Reviving the Spirit and Re-Creating the Success of your Company.  What we like about the book includes the case studies, and some of the practical exercises that an executive can complete to implement what the authors describe in the book.  The stories are long enough to understand and select what works and what doesn’t.  Many of the exercises should ease the ability of a manager to apply the knowledge quickly.  Unless you gag too much on made-up words, give this book a try.

Simplicity

One of the best books we’ve read all year is Ethics for the New Millennium written by the Dalai Lama.  We’ve hated the Y2K hype so much that we almost took a pass on this book because “millennium” is in the title.  We’re glad we read it, and recommend it highly.  The Dalai Lama calls for a spiritual revolution that entails an ethical revolution.  Some quotes: 

“…meeting innumerable others from all over the world and from every walk of life reminds me of our basic sameness as human beings.  Indeed, the more I see of the world, the clearer it becomes that no matter what our situation, whether we are rich or poor, educated or not, of one race, gender, religion or another, we all desire to be happy and to avoid suffering.”

“Given our basic premise that ethical conduct consists in not harming others, it follows that we need to take others’ feelings into consideration, the basis for which is our innate capacity for empathy.  And as we transform this capacity into love and compassion, through guarding against those factors which obstruct compassion and cultivating those conducive to it, so our practice of ethics improves.  This, we find, leads to happiness, both for ourselves and others.”

Conflicting roles

Early in high school, we were introduced to Boswell’s Life of Johnson and realized quickly that the biographer was as much a character in the story as the subject.  Unfortunately, the same situation holds true in Edmund Morris’ new book Dutch: A memoir of Ronald Reagan.  By creating a fictional character of himself, Morris is able to present a “you are there” effect throughout the biography.  So far, we’ve read the reviews, and peeked into a few paragraphs through the excerpts in Newsweek, but are likely to wait for another biography of Reagan and read more about the depths and heights of Ronald Reagan and less about his biographer.  We suggest you take a pass as well.

More Executive Times

December issue

We’ll expand our Reading section in the December 1999 issue to recap our recommendations from prior issues, and add suggested books for holiday giving.  Let us know if you’d like someone to receive a complimentary copy of this special issue.

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