Provocative Propositions

In the hyperactive and challenging world in which we all live, it is becoming harder and harder for business leaders to find time to read, reflect and gain insight from the many valuable sources at our disposal.

In "Provocative Propositions", The Beacon Group attempts to fill that void by offering our opinion, often rather pointed, on a wide array of issues we believe are relevant to leading a modern organization.

The articles are catalogued into 12 categories so you can quickly and easily find a topic of particular interest. We then offer three easy steps under the heading "In Our Opinion" to help business leaders take action on the key themes.

Simply click on the category and read away.

Unintended Consequences
It’s unusual to find a company where simple business practices of the best companies are explained in plain English.
  • Spend more money on training.
  • Let your employees take risks and make mistakes.
  • Don’t nickel and dime your organization.

Usually, leaders focus on more complicated concepts, supported by equally complex case studies. But the concepts above are pretty simple. You’ve heard them all before. You are aware that doing these things produces an energized organization driven to growth and profits.

Yet they don’t get done.
  • It’s not the right time.
  • It won’t work in our organization.
  • We face unusual market circumstances.

All reasons, or excuses, not to execute these simple concepts in your organization.

The Fact is most companies do the exact opposite of industry leaders when it comes to managing employees, promoting talent or simply running the business.

The Problem is businesses stick to one-dimensional management models and never consider the “feedback effects” of decisions.

The Outcome is organizations take one course of action and are surprised by the results which are never as clear cut as they were expected to be based on their one-dimensional mindset.

The Solution is to avoid overcomplicating business situations. Consider your organizational actions and examine any potential side-effects. In his book, “What Were They Thinking?” Jeffrey Pfeffer suggests the term “norm of reciprocity”: the generosity that you provide will be returned to you by your employees.

In light of such a simple concept, it is a wonder the book is subtitled “unconventional wisdom about management”. Really, there aren’t any revelations in this book… but it begs the question: Why don’t we witness Pfeffer’s business practices more frequently in our corporate careers?

“Feedback Effects”

Every business decision has a consequence. Too often, managers see a problem, but don’t consider the consequences of the remedies they choose. Let’s use cost control during an economic downturn as an example. A typical corporate solution would be to implement a cost-freeze, a headcount freeze or perhaps start cutting wages in an effort to lower spending.

Little concern is provided for the fact that disgruntled employees may stop going the extra mile for your company. Neither does it account for employees that may intentionally sabotage a company by withholding information or slowing down their pace of work… and don’t discount this possibility, because it actually happens whether it is out in the open or done more covertly.

Race to the Bottom

“A pernicious race to the bottom”… That’s what Pfeffer calls it.

He uses traditional newspaper companies as an example. Facing growing competition from web news sources and other forms of media, newspapers have resorted to reducing editorial staff and minimizing investigative reporting. In spite of this, papers have to maintain the same page count to keep up advertising revenue. As a result, unique print content is replaced with standardized newswire articles which can also be obtained from those very news websites stealing readers or even from competing publications.

What is the sense in making your product more bland? What were they thinking?

Penny Smart, Pound Foolish

Another example can be found in the actions of the electronic products retailer, Circuit City, last year.

In a move that would make Donald Trump jealous, the company fired its 3,400 top sellers, those at the higher end of the pay scale.

Sales took a sharp drop and Circuit City posted a $207 million 3Q loss in late December. Meanwhile, sales at rival Best Buy surged by 52%.

The lower-pay scale staff at Circuit City, who were supposed to fill the void, apparently just did not have enough experience in closing sales. Neither were they finding much success in upselling products or attaching warranties to purchases.

It seems obvious in hindsight, but Circuit City’s management didn’t assess the “feedback effects” of layoffs beyond cost reductions.

In Our Opinion
The Beacon Group’s Keys to applying unconventional management wisdom

The Beacon Group has 3 key points for following “unconventional management wisdom”.

Cost cutting is failure - Look at cost-cutting as a blunt instrument. It is an indication of management failure. At this point, you have set your organization’s “norm of reciprocity” in reverse. You had better come up with an act of generosity to get it going forward again.

Unintended consequences - Pfeffer talks about a number of unintended consequences for each business decision that is made. Most of the time, management doesn’t care to see these unintended consequences. Take some time to brainstorm these matters. Make it a goal to consider at least five unforeseen events for each major organizational decision.

Question trends - Pfeffer challenges several widely held conventional assumptions in this book. (i) Longer hours don’t necessarily pay off. (ii) Spying on your employees may not necessarily make them more productive in the workplace. (iii) Letting your employees manage their benefits may not be the best idea if you want to make them more productive. These are just some of the trends and assumptions you should be challenging in your workplace. Just because many other companies manage in this fashion, doesn’t mean you need to follow.
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