"Oops! 13 Management Practices That Waste Time and Money (And What to Do Instead)"

We ran across this terrific book by Aubrey Daniels in a Wallace Immen article in Friday's Globe and Mail. We hope you all run out and buy the book. We sure did!

From Friday's Globe and Mail, Saturday, Jun. 06, 2009 04:10AM EDT

When times are tough, managers are expected to reach into their bag of tricks and pull out the ones that will motivate employees.

Unfortunately, the ones that managers resort to all too often turn out to be illusions that backfire, inadvertently rewarding bad behaviour and punishing good.

Knowing more about human behaviour can help managers avoid such blunders, the Atlanta-based president of Aubrey Daniels International told Wallace Immen. Here are excerpts of their conversation:

These behaviours you call mistakes are things that most managers believe in. Why have the failings been so difficult to see?

People who develop management theories understand money, but they really don't understand people. For instance, most managers think of raises as positive reinforcement, but the problem is that money doesn't automatically inspire people to work harder. A manager who understands positive reinforcement will do things that make people feel more enthusiastic about what they are doing and make them want to do more. Just saying, "Wow, you did a great job" or giving a high five when someone has a good performance could motivate them more than a raise at the end of the year.

What do managers need to understand better?

It's up to managers to get to know the underlying motivating factor of every single one of their employees. But tell that to the average manager and they will say, "I can't do that. I don't have the time. I have too many people and I have too much on my plate." Managers who don't take the time to observe and ask their employees what would motivate them to put in their best effort are going to be wasting a lot of time dealing with unenthusiastic workers. The easy way to find out what employees want is to ask them. As a manager, you should make the point that your success depends on how successful they are. And you can make that point by asking something like: "How can I help you be successful?"

Bonuses have gotten a bad reputation lately. Is there a way to use them effectively?

There is a place for bonuses, but only if the contribution the employee makes to the organization is in excess of the money you pay them. However, when they are an expected part of compensation, and executives at a company like Merrill Lynch demand them in spite of the fact that the organization lost billions, they are just a waste of money. Another total mistake is retention bonuses. For instance, AIG was giving hundreds of employees big bonuses for staying with the company in spite of the fact it is losing money and getting millions in government bailout funds. If you have to pay someone to stay loyal to the company, then you have issues so serious that the employees are going to leave as soon as there is no more bonus money. The main job for managers is to inspire people to want to be there, to feel good about the future of the organization and the way they are treated.

How can you build enthusiasm if the outlook remains grim?

To make employees motivated to do better, you've got to increase positive reinforcement. Get everyone together and be open about the problems the company is facing and ask for their help in coming up with solutions. People will pitch in if they think their efforts could save their jobs. But, all too often, managers don't want to hear what they have to say. Someone comes up with an idea that could save a few dollars and they say, "No, that's not going to help us. That's silly when we need to save big money." But thinking about something that will save a dime is the same behaviour that can find ways to save a million dollars. If you don't encourage one, you are not going to get the other. Just say: "Every day, spend some time thinking about how can you do your job better tomorrow."

A lot of companies are downsizing but you say it should only be used as a last-ditch effort. Why?

I don't argue with the need to downsize because of the rapidity of changes in the economy and technologies that can make your work force too large. But the issue is how you do it. Too many companies use downsizing as the first thing they do when they get into trouble, but it should be the last thing. The biggest blunder Circuit City did was look for the immediate financial saving [it] could get in 2007 by firing all of its sales employees who were making more than the median pay rate. But that meant they fired their best sales people. That short-term decision obviously was wrong in the longer term. This year, the whole company went bust because of falling sales. Companies eliminate jobs and outside vendors and then obsess about how to make the limited resources they have more productive when they are being stretched to the limit. That's negative reinforcement. If you scare people into doing things - because if they don't, they'll be fired - at some point, they'll stop trying to do anything more than they have to, figuring they'll probably lose their job anyway.

Aren't some of these changes going to be harder to implement in this challenging economy?

Just the opposite. The chaos that companies find themselves facing is a good time to change management policies to make them more effective. If, for instance, you are going to be freezing salaries, use this as a time to rethink annual raises and bonuses. Any future rewards of money should be on the basis of pay for actual, immediate performance. Not only will you get more for your money, but you'll find employees will find it more motivating.

What are the best insights you've gained about motivating in a tough time?

At the moment, it is not so easy to see accomplishments. The future is looking unsure, clients may be holding back, sales are harder to come by, it can be harder to make things happen with smaller budgets. This is a time to celebrate even small successes. Any sale is a big deal. Any victory is a big victory. We should be congratulating not only those who achieve success but the people who helped others accomplish successes, and find ways to make accomplishments as visible as possible. Motivation should not be some management secret. Ideally, you will get every employee involved with you in finding ways to help themselves and others find ways to do better each day. There are millions of ideas that people have. If they feel valued and appreciated for their contributions, they are going to want to tell you about them. And they will give you full effort, no matter what the economy.

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Getting it right
Aubrey Daniels identifies 13 management practices that waste time and money, and prescriptions for how to change them:

Employee of the month

What's wrong with it: It acknowledges just one employee and leaves out the rest.

How to right it: Acknowledge achievement when and where it happens.

Stretch goals

What's wrong with it: Employees end up exhausted and frustrated if they fail to reach lofty targets.

How to right it: Set achievable short-term goals; chart employee progress month by month.

Annual reviews

What's wrong with it: Universally despised by managers and employees; ignored the rest of the year.

How to right it: Give immediate management feedback whenever employee excels or falls short.

Ranking employees

What's wrong with it: Even if there is little difference between employees, some end up at the top of the list and others at the bottom start to think of themselves as also-rans.

How to right it: Set performance benchmarks all employees are expected to reach.

Rewarding negatives

What's wrong with it: Awards for having zero defects or no accidents actually encourage people to do as little as possible to avoid potential incidents.

How to right it: Recognize actual accomplishments and contributions.

Merit raises,automatic bonuses

What's wrong with it: Once given, a raise is permanent, but it is unlikely to motivate continued future improvement. Bonuses are seen as entitlements even when performance is poor.

How to right it: Pay for performance or revenue sharing that must be earned each year.

Good news, bad news

What's wrong with it: In a mixed message, people forget the praise and obsess over the negative instead.

How to right it:: Praise and criticism should come in separate discussions.

Sandwiching good and bad

What's wrong with it: Wrapping criticism between layers of praise means two positive messages are lost as employee focuses on the negative.

How to right it: If there is an issue, be straightforward with it.

Overvaluing smart people

What's wrong with it: Treating smart, talented employees as privileged undervalues the potential of others.

How to right it: Encourage training and provide promotion opportunities for all employees.

The budget game

What's wrong with it: Tedious, time-consuming divvying of resources makes everyone ask for more than they expect.

How to right it: Budget according to what departments can prove they need to get results. Reward those who do more with less.

Promoting unlikable people

What's wrong with it: Managers may have to deliver tough messages in grim times, but distrusted and threatening managers will have employees performing out of fear rather than enthusiasm.

How to right it: Promote people who are well liked and can get results through co-operation.

Downsizing

What's wrong with it: Staff cuts mean people get stretched and organizational performance may decline to the point that you have to rehire staff.

How to right it: Layoffs should be the last thing done after exploring employee suggestions for cost savings to spare their jobs.

Mergers

What's wrong with it: Most often decisions are made based on economics rather than looking at the potential clashes of corporate culture.

How to right it: Get affected employees working together to develop a common mission and procedures everyone can support.