Management

Let me begin this with the caveat that sometimes I am unfortunately a jerk to do business with. I have been unreasonable and abusive to suppliers, and on too many occasions have been a pretty unpleasant guy to do business with.

But in watching my own company’s interaction with difficult clients from the service provider perspective, I have come to realize there is a high price to pay for being a jerk, and I have often just hurt myself and my company by not operating in a real spirit of cooperation with those I buy from. Businesses perform best in a real atmosphere of cooperation, which has made me more focused on creating real partnerships with those I buy from.

In any service business you should anticipate demanding clients, and being demanding is not a bad thing. Demanding clients are doing you a favor by making your operation continually improve performance. Clients that are honest and direct about their needs help suppliers build their capabilities and expand their own business. And as the book says, “a complaint is a gift”. I appreciate a client that lets me know when we are not performing so I can fix the situation.

But there is a big difference between being demanding, and being abusive. Cross the line to abusive and you create a dysfunctional relationship, and ultimately nobody performs to their best. Sometimes even good people unwittingly slip into the abusive category due to the many pressures of the workplace. You have crossed the line if you are doing the following:

1. Scream as your normal mode of communication with your supplier.

2. Consistently call your supplier at home very early and/or very late because that’s when you get your best work done.

3. Insist your supplier work on major holidays just to prove their loyalty to you. Certainly, emergencies do happen that require attention over holidays, but forcing people to leave their families and work just because you have the power to do so is a bad idea.

4. Continually disrespect your supplier’s time. Certainly a good service provider should do their utmost to accommodate their clients’ schedules, but if you consistently show up an hour late for conference calls, cancel meetings at the last minute as a matter of practice, and basically leave people continually waiting for you, you have crossed the line.

5. Abuse your supplier financially. This includes continually grinding suppliers for discounts just because you can, refusing to pay bills for no good reason, demanding additional discounts before you pay a bill because you are holding the supplier hostage financially, and otherwise forcing your supplier into a situation where they lose money working for you.

6. Use your supplier as a scapegoat to the boss. Too often people are afraid to accept responsibility for their own actions and find it easier to blame a supplier when a mistake occurs.

7. Steal from your supplier. Time is money, but too often people have suppliers spend a lot of time preparing proposals, plans, bids, and ideas when they have no intention to purchase – then take that intellectual capital and use it without any form of compensation.

If your relationship with a supplier has reached a point where you constantly have to be abusive because of their failure to provide adequate service, it’s best to do everyone a favor and fire them.

Ultimately, there is a high price to pay for being a jerk. While there are always companies willing to work for abusive clients (especially in this economy), they are seldom best in class. Or, because of the burnout factor of working with abusive clients, companies ultimately migrate the junior teams to the worst clients.

Over the years I have unfortunately had to “fire clients” that I could have really helped, but the dysfunctional relationship was too harmful to my organization. In the end, abusive clients end up working with substandard suppliers. Sometimes you even encounter companies that have nurtured abusiveness within their organization to the point it becomes a dominating feature. In the advertising industry there are a few clients renowned for being mean, and the most talented agencies refuse to work for them.

Being a jerk is also a dangerous professional move. Over the years I have known a number of notoriously abusive individuals working on the client side that lost their jobs, only to discover that their nasty reputations made finding employment very difficult.

The client that is demanding – but reasonable and professional – always gets the best work. Being nice makes people want to do their best for you. It costs nothing and pays big dividends. And with that said, I am going to endeavor to take my own advice. Wish me luck.

I was very pleased to see new government regulations on credit card companies. It was lack of regulation that put the world in our current precarious financial situation, and putting some controls around the massive, faceless credit card companies is a great move.

To be fair, I have had some good experiences with some credit card companies. I have had an American Express card for almost thirty years, and with a few bumps have found their customer service to be consistently good. I have had a Chase Freedom card for a couple years, and have also found them to be top-notch. But unfortunately others have not performed so well.

Last October I cancelled a credit card from Bank of America I was not using very much. As always, I paid the balance in full, and notified the company I was cancelling the card. And I never heard from them again, until last week, when I received a letter that I was past due for $187.00. Confused, I called to inquire what was happening. The customer service representative explained that they had no record I had cancelled the card, and in December they billed me the $50 yearly card membership fee. Since they did not send me a statement, I was unaware of this. In three months this $50, with interest and penalties, had grown to $187. (Normally you would have to borrow money from someone named Vinnie Brokenose to get this kind of deal.) I explained that I had cancelled the card, and therefore should not be expected to pay. And since they had never sent me a statement, I also had to assume they knew I had cancelled the card and this was just a technical error. The representative agreed with me, and noted that it especially made sense because there were no charges after October. But unfortunately it was not within his power to credit the charge or the fee.

For the next 45 minutes I went through credit card hell. They switched me from rep to rep – much in the same way car dealerships keep bringing more people in to try to close a deal. Nobody had the power to credit the amount, and they began to negotiate with me.

“Sir, we can credit the $50 fee, but we will need you to pay the $137 in penalties and interest”, came the first offer.

“Absolutely not”, I replied. “If you acknowledge that I didn’t owe the $50, then why should I pay the penalties and fees”, a rationale I had to repeat at least five times, each time with my voice elevating.

“Sir, how about this? We will credit the interest and fees, but you pay the $50?”

“No”

“What if we were to just charge you a $25 administrative fee?”

“No”

It was quite clear this was a game that they continually played. Regardless of whether or not the customer owed them money, they would cajole, negotiate, and threaten just to make a few bucks. It’s a sleazy and evil business model that corporate America should not be participating in. Ultimately, I wore them down and they credited the entire amount, but I could not help but think of what would have happened if my elderly parents had been faced with this situation. This kind of business model preys on the weak, and companies that participate in it should be forced to pay a high price.

I have been a frequent critic of Netflix’s really silly and insulting habit of “throttling”.  Essentially if you are a frequent Netflix user, they tag your account making it more difficult to get the newest releases.  Put a new release in your queue and you are often greeted with “long wait” or “very long wait”.  This allows Netflix to ship the newest releases to customers that watch fewer movies or are new to the service.  While most brands seek to reward their best customers, Netflix takes the opposite approach and penalizes customers that stick with them  so they can make a little more money on customers that at least inititially use them less.

There are a few options to solve the problem.  One approach is to open a new account under another family member’s name.  I opened an additional Netflix account under my wife’s name and all the new releases are miraculously available.

Another option is to use Blockbuster’s online service, which works about the same as Netflix and is priced similarly.  Blockbuster’s potentially clear advantage is that they allow you to use the stores and the online service under one account, but I have not been in a video store since the days of VHS, so this was of no interest to me.  I tested Blockbuster’s online service against Netflix and found the following -

• I put five identical new releases in my Netflix and Blockbuster queue.  Netflix listed all five as ”long” or “very long wait”.  Blockbuster listed one as long wait, and was able to ship all the others immediately.  Good job Blockbuster.
• However, Blockbuster took two to three days to get the DVDs to me – versus one day from Netflix. 
• On average, Netflix’s site is much easier to navigate and use.

So if you are getting throttled and want the newest releases, and don’t mind waiting an extra day or two, Blockbuster is the way to go.  Of course, I cannot assure you that Blockbuster doesn’t also engage in throttling once you become a big user.

And despite my disappointment over Netflix’s bad customer treatment, I maintain my Netflix account, and I should also admit, I am a stockholder and a big believer in the long term prospects for the company.  One reason I stick with Netflix is their wonderful download service.  If you install the right piece of hardware (I use both an HD Tivo and a Samsung DVD player, but there are now many options) you can choose from thousands of movies to download direct to your television, and it is all included in the price of your membership.  (To be fair, Blockbuster now offers this service, with different terms, and I have not tried it.) But it was Netflix that really pioneered and scaled the idea, and I believe that just as the video store is practically obsolete, we are approaching a time when DVDs will be largely eliminated in favor of downloading and streaming.  Netflix, Apple, and perhaps Amazon are in prime positions to capitalize on this development, and I own all three stocks.

While Apple builds terrific proprietary hardware that allows you to stream their entertainment, Netflix has taken more of a Microsoft approach, working with multiple consumer electronic companies to allow downloading via their equipment.  Netflix is also doing some interesting deals with the studios, agreeing to delay certain releases on DVD on their site to allow the studio more initial profits by selling DVDs, but in exchange getting the rights to release earlier than the competitors via downloading.

All these moves were apparent when Netflix released earnings a few weeks ago.  Strong profits have driven the stock price up $12 a share in just the last month.

Ultimately, I think their practice of throttling is short-sighted, but they are doing so many other great things with the company that I remain a long-term believer.  In the meantime, Blockbuster is trying to catch up, but they are years behind, and they are saddled with a lot of real estate and an old business model to dispose of.

Terrorists seek to disrupt through fear. And the more afraid they make us the more apt we are to act emotionally and irrationally because of this fear. Since 9/11 we have acted irrationally when it comes to air travel, and the failed Christmas plot has really driven us into frenzy that is causing us to take ridiculous actions. If next time terrorists threaten a shopping mall, then I assume we would develop irrational fears and actions to protect malls. And soon the terrorists are essentially in control, as fear has driven us to change our lifestyles. There is a big difference between taking reasonable methods to protect our security, and completely altering our lifestyles because of fear.

I would argue that there is a more subtle, but perhaps even more dangerous kind of terrorism going on courtesy of the American media. Unfortunately fear drives viewership, and the media thrives on any story that makes us afraid. Consequently most of our legitimate journalists have been replaced by these new media “terrorists” that seek ratings by filling us with fear, anger, and distrust. They operate from both the left and the right, spewing rumors and innuendo that keep people glued to the screen. When much of the population is convinced that our President is actually a socialist foreign-born Muslim that favors killing off the elderly, people naturally get afraid. It also spreads panic when people are convinced that the world will end in the next few months due to global warming, that Pakistan and North Korea are preparing nuclear strikes, and that the flu vaccine is deadly. Certainly global warming, nuclear weapons, and public health are important issues that need to be discussed, but the terrorists in the media are less interested in public discourse than they are sensationalism.

I think it is quite possible that the ranting and fear mongering that now typifies mass media is having an incredibly negative long-term impact on society. The truth is that for most of the world, this is the best possible time to be alive. While the human race is far from perfect and we face many massive problems, the large majority of mankind lives happier, healthier lives than those that came before us. But that doesn’t make good news. Nor does all the incredible work that is going on around the world that will solve these big problems.

These media terrorists might not blow up airplanes or plant roadside bombs, but I suspect they are even more effective than Arab terrorists at destroying optimism and people’s spirits. Luckily these kinds of terrorists are easier to identify, and easier to eliminate than the ones that live in caves in Pakistan. We need to eliminate them by turning the dial, refusing to buy their ridiculous books, complaining to the companies that support them with advertising, and flatly rejecting their terrorist messages designed to crush our spirits.

As the major retailers go cautiously into the holiday season hoping for a rebound, there is one huge national retailer that is experiencing tremendous growth and profitability – Goodwill. The thrift store now has over 2300 stores and 2 billion in sales! I’m not sure this is necessarily good economic news (what does it mean if America moves from Saks to Goodwill to do their Christmas shopping), but congratulations Goodwill!

As we continue to wade through the financial morass primarily caused by incompetent and greedy bankers, it is particularly disturbing to note that we have not only failed to take steps to fix a broken system, but we have actually made it worse.

Our government had to pay the financial tab to rescue banks “too big to fail” for fear that if these banks went down the economy would collapse with them.  In fact, in some cases the government actually forced big banks to become bigger. And a year later what do we now have? Banks really, really too big to fail. Consider the statistics….

Fifteen years ago the top five banks in the US controlled about 11% of the banking industry.

Today the top three banks control a little over 10%.

So we have reduced competition among big banks by 40% and essentially handed over a large segment of the economy to even larger more bureacratic institutions that are primarily known for their failures.

Though I recognize the need for big banks (my company needs and works with one), we should seriously question continued governmental support of a massive financial infrastructure controlled by a few – be they banks or any other huge financial institutions.  Companies that do business on a national or international scale and have complex banking needs are well-served by mega-banks, but the lifeblood of small business and local economies remains with the local bank.  The local community depends on local financial representation that knows the city, and the businesspeople that make the city work, as opposed to an economy ruled by policies set thousands of miles away based on factors that have nothing to do with local conditions.

But unfortunately the public, and government, have short memories.  Instead of passing proper legislation and taking the right steps to prevent another economic melt-down, we have breathed a sigh of relief that it didn’t get worse, and allowed the massive financial machine that caused the mess to grow even more ominous.

If you manage people, or spend any significant time around groups of people, you are undoubtedly well-versed on the “Conflict Avoider”.  While the Conflict Avoider might be a terrific individual and good at their job if they are in the right position, they can cause tremendous damage to an organization if they are placed in the wrong position, especially in our current economy.

Conflict avoiders have a hard time undertaking difficult actions, and in today’s business environment where optimal performance is essential they can severely impact the bottom line.  Conflict avoiders hate to discipline or fire people, so as managers they are much more tolerant of expensive mediocrity.  They also tend to build weak teams, as they favor harmony in the workplace over the more-difficult-to-achieve high performance department.  They detest having to call a client to collect money, sometimes going as far as covering up for a delinquent receiveable, so they can temporarily avoid difficult interaction with clients and management. They hate to be the bearer of bad news to the client or the company, which creates an entirely new set of issues as either party proceeds in business with a false sense of security.

From management’s perspective it is essential to quickly identify Conflict Avoiders and move them out of key positions that require strength, coach them to be more aggressive, or if possible find positions in the organization where their “softer touch” is an asset.  Too often, upper management suffers from their own brand of conflict avoidence, as it is easier to ignore than fix the problem.

I know that when you are working in the trenches, it’s often difficult to have a perspective on what your boss notices.  Many bosses are unfortunately like me; distracted, aloof, short tempered, running between meetings and phone calls.  And accordingly it is easy to imagine that your boss has a somewhat limited awareness of what is going on directly around them, as if concentrating on the big picture somehow makes it impossible to see the small picture that surrounds you.

But most of the time that is not the case.  While there are many exceptions, most people did not get to be the boss by ignoring the little things. While the boss may choose not to directly address the fairly minor good and bad actions of employees, there is a very good chance that they do notice almost everything, and these observations may ultimately be very positive or negative to your career.  A few things that I (and most bosses) consistently notice :

• When you come to work.  I have a big window in my office that looks out over the building entrance.  Often while I am on phone calls I watch as employees enter the building.  I know who is consistently late.  I also know who leaves for extended coffee breaks and long lunches, and who leaves early.  On a positive note I know who shows up on time and puts in the hours.
• Your writing and communication skills.  I notice if you write intelligent and concise emails and letters as opposed to rambling diatribes.  I notice if you have a personality and the confidence to greet me and your co-workers.  I really notice if you have charisma – as it is one of the most difficult attributes to find in business.
• Your interest level in the business.  I notice if you are a student of the business; someone who takes the extra time and effort to really learn how the company operates.  And I especially notice if after really learning the business you have thoughts and ideas about how to improve things. I notice good ideas.
• Enthusiasm.  I notice and really appreciate it if you have it.
• If you are a whiner.  Whiners easily stand out. If you focus on problems without solutions you make an impact on me – and not a positive one.
• Ambition.  I like ambitious people, especially if they are willing to do the work to achieve their ambitions.

And that is just a partial list.  Sometimes I notice silly, yet in some way very significant things. A month ago I watched as two employees walked by a sack of garbage that was in front of the building entrance.  A third employee returning from lunch stopped to pick up the garbage and discard it.  My immediate reaction was that either the first two did not respect the company or they were incredibly lazy.

My big point is that your boss probably notices the little things too, and the little things can often have a big impact on your career.

In these tough economic times we should all make use of every resource we have available, and accordingly it’s probably a good idea to revisit the idea of closing Guatanamo Bay.  Sure, our little Carribean torture palace has been an insult to the very concept of what it means to be American, an international embarassment,  and an afront to human dignity, but is that any reason to abandon a perfectly good prison!  Perhaps we were just imprisoning and torturing the wrong people.

These economic times have revealed an entirely new kind of Weasel that is probably best sent on an extended tropical vacation.  A few candidates…..

Stewart Parnell, President of The Peanut Corporation of America, ran the filthy food company that is now responsible for nine deaths and over 600 illnesses in one of the largest salmonella outbreaks in history.  In true Weasel form, Parnell and his plant manager Sammy Lightsey pled the fifth, refusing to take responsibility for their incompetent management that continues to threaten our entire food supply.  Since his plants were filled with roaches, rats, and mold, he would probably find Guantanamo downright luxurious by comparison!  Of course sending an executive to Guantanamo might seem extreme, but consider the crime.  If an Arab terrorist had poisoned our food supply, killing and injuring hundreds of people, what would we have done?

And why not make Bernie Madoff his bunk mate?  Hmmm, wonder who would be the wife and who would be the husband?  The 70 year old Madoff will go down in history as the perpetrator of one of the biggest Ponzi schemes in history, robbing hundreds of people of over 50 billion dollar, and further progressing the collapse of our financial market.  If a terrorist had planted a bomb in the NY Stock exchange and cause the market to lose $50 billion dollars, what we we do to that terrorist?

The sad fact is that aside from 9/11, the worst damage that has been inflicted on America came not from terrorists, but from home-grown incompetent, dishonest, greedy Americans that have reeked havok on the country.  Lets send them south!

These are crazy times in the workplace, and I suspect it is going to get worse over the next few months.  Financially-challenged companies are rushing to lower overhead with massive lay-offs, and even relatively healthy companies are taking the opportunity to closely analyze expenses and overhead.  It is easy to get caught in the crossfire and find yourself cleaning out your desk.  A few simple hints on how not to be a casualty and live a relatively sane life during the financial crisis:

• Don’t overreact, and get the facts.  A good friend of mine runs a very successful company that is actually expanding during this crisis. He is taking advantage of the fact that some of his poorly run competitors are not doing well, and he is hiring key employees that have been layed off.  Despite this fact a rumor started in his company that they were in trouble, and now he has to spend valuable time convincing people they are not getting fired.  Don’t listen to rumors or naturally assume your job is on the line.  It causes needless angst.   Get the facts from people that really know. [click to continue...]