How to Think Your Company into a PR Mess

<We've come to expect inhuman treatment by the airlines. As the carriers struggle to stay afloat, we have learned to live with the results of their short-sighted cost cutting. We strap ourselves in seats that have all the comfort of the rack, pay outrageous fees to hazard our checked luggage will arrive when we do, and purchase snacks that must have been deemed unfit for penal institutions. Given the way flight attendants have been treated by management, we know that the skies will be anything but friendly.

But hotels are different. We usually have a choice, so we’re lured with amenities and promised the best service. It is, after all, called the hospitality industry. Advertisements often include pictures of friendly staff members, eager to please.

I don’t really care about fruit baskets or complimentary continental breakfasts, but I do want a clean room and pleasant interactions with the hotel staff. We all know that in a service industry, the attitude of employees has an enormous impact on quality, and the way employees are treated is mirrored in the way they treat customers.

Apparently, the management of Hyatt Hotels knows this too. In the career section of their corporate website, under pictures of smiling and satisfied employees, they entice prospective job candidates with the offer, “Discover your place to shine in our warm, respectful, and inclusive culture.”

I owe a debt of gratitude to Hyatt, because I’m alway looking for good examples of bad thinking in business. If they had set out to illustrate every flaw in conventional management thinking, they couldn’t have done a better job. And as if to illustrate how flawed paradigms can lead to a succession of self-defeating decisions, their attempts to mitigate their public relations disaster has created an even bigger one.

I can see how it happened in my mind’s eye. Well intentioned managers are gathered in a conference room with a spread sheet projected on a screen. It shows that occupancy is down and room rates have been cut, so margins are being squeezed. Finance is driving for expense reduction and somebody comes up with the idea of outsourcing housekeeping. The business model shows that the savings go right to the bottom line. It’s hard to argue with the objective logic of the decision.

But another manager, perhaps from HR, raises the objection that it will be difficult to train the new staff. This objection is addressed logically with the suggestion that the current housekeepers train the new employees. When somebody suffering from a short spasm of empathy raises the further objection that the housekeepers may be unwilling to train those that are taking their jobs, one of the more creative members of the group comes up with the idea of telling them that the new people are just substitutes for those on vacation. The meeting adjourns with everyone comfortable that they have executed their responsibility for prudent financial management.

The thinking may be logical, but it’s a perfect example of how costly an exclusive focus on measurable objectives can be. By viewing the employees as no more than a cost, management lost sight that they are also human beings capable of both thought and independent action. Of course, they weren’t going to go quietly, and inevitably their story would find its way to the press.

The morality of tricking long term employees into training their replacements and then firing them may be an issue for the managers and their consciences. But the idiocy of the decision from a long term business perspective ought to have Hyatt’s shareholders up in arms.

Not only did management forget that employees are people, they somehow missed the populist anger against large corporations welling up in the country. Apparently, they also forgot they were in liberal Boston and even more liberal Cambridge, where the rights of working people are held sacrosanct. The resulting boycott of the hotel by the populist mayor, governor, and even the taxicab drivers may have been an unintended consequence, but it should have been anticipated.

And, of course, the logic also obscured critical interdependent relationships. No attention was paid to how employee relations impact customer relations, or how the “talk” on the website ought to match the managers’ “walk.”

Focusing on numerical objectives and driving for cost reductions may be conventional wisdom, but it creates tunnel vision. So management also missed that the company they outsourced to has a record of labor law violations and of employing illegal aliens, but the  Boston Globe didn’t.

This morning, Hyatt announced they will now give the laid off housekeepers either a job with an outsourcing company or career training, and will continue to pay them their original salary for the near term. If there was some soul searching at the company, the search didn’t go very far. Predictably, the housekeepers aren’t simply interested in a job or in the money. They want their original jobs and their relationships with their coworkers back. They want to “shine” in Hyatt’s “warm, respectful, and inclusive culture.”

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A Tale of Two Stores

Imagine my joy. On the plane to Chicago, I had read a review of Thomas Pynchon’s new book, Inherent Vice, and in the taxi from the airport, I saw one of the large chain bookstores just a block from my hotel. I anticipated the novel would transport me far from the blandness of one more hotel room.

When I entered the bookstore, I was greeted by a young lady eager to help. I asked her about the book and she took me over to the wall of best sellers. After scanning the shelves for a couple of moments, she informed me that they didn’t have it. When she left me to my own devices, another customer, having overheard our conversation, directed me to the shelf it was on. As I walked toward the cash registers with my book, I passed a section not ten feet away with hundreds of copies of the book prominently displayed.

We’re learning from brain science how flawed both our perception and our thinking can be. While we tend to focus on breakdowns in complex areas such as strategy, we can be remarkably thick when it comes to even the simplest of things.

I’m not talking about the young lady, for I suspect she did the best she could with what she had. I’m talking about the decisions of management, when it comes to the allocation of resources for staffing, training, or technology. Further evidence of just plain bad business judgement was apparent when I went to pay for my book.

There were two banks of cash registers. One had apparently not been used for quite a while, because boxes of books were haphazardly piled on the counter. The other bank had five registers marked with large numbers, but only two were staffed. A long line of customers waiting to pay snaked through several aisles.

It seems to me rather short-sighted to make people stand in line to give you their money, rather than making it as easy as possible. But there we stood, waiting and waiting, as the line inched forward. Soon we were grumbling to one another about the torture we were forced to endure.

Several customers simply gave up and left. Others told their fellow sufferers that they would never come back to this store. When it was finally my turn to pay, I couldn’t resist suggesting to the cashier that making people wait that long wasn’t good for business. He readily admitted that the store was always horribly understaffed.

What could management be thinking? Most likely, the same thing lots of business managers think during hard times: we need to cut costs. Labor is one the few variable costs, so it’s just common sense to reduce staff. Similar decisions are made in business everyday.

But such a decision will potentially cost far more in the long term than it will save in the short term. There’s no shortage of available labor, so doubling the number of cashiers couldn’t possible cost more than another twenty-five or thirty dollars an hour. With a two story building in a prime shopping area of downtown Chicago, such an expenditure is insignificant. And I heard enough people swear to never return to the store that the cost of lost business was at least several multiples of that twenty-five to thirty dollars.

But there is an even more profound flaw in management’s thinking. While a greeter at the front door is a nice touch, in my case it ended up detracting from my satisfaction as a customer. It doesn’t appear that anyone fully empathized and anticipated the entire customer experience, from beginning to end. If they had, the greeter would’ve been trained to locate books or at the very least have a handheld computer that would locate them for her.

In fact, I bet there’s an iphone app that would enable her to tie into the store’s central computer system, and the cost would be as insignificant as adding a couple of more cashiers. If management had walked a couple of blocks down the street, they would’ve found an Apple store where they could buy the technology. They would’ve also found a retail experience that was brilliantly managed from start to finish.

After finally completing my purchase, I went to the Apple store just to look at the new iphone.  Again, I was greeted at the front door, but then I was escorted to a specialist, who took me over to the iphone area, knowledgeably answered all of my questions, and in short order convinced me to buy the phone. He then set the phone up, taught me how to use it, and even downloaded the owner’s manual on to the phone.

The phone itself is enticing, both technically and aesthetically. Even the packaging is a treat. When it came time to pay, there was no line to wait in. My specialist had a handheld computer that managed the transaction and emailed me my receipt. Apple has created not only a great product, but a a great customer experience. I have to believe that strong empathy with the customer guides all of the company’s decisions, from product design to retail layout and staffing.

Brain science teaches us how just focusing on the numbers leads to trading off the long-term for the short-term, no matter how reasonable the anticipated cost savings may be. It also teaches us how buying decisions are driven emotionally and how important empathy is to building satisfying relationships with other people, customers included. But one doesn’t need sophisticated brain scans to see what better thinking will do for a business. Just stroll down Michigan Avenue and stop in both the bookstore and the Apple store.

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5 Tips for Failing Miserably as a Manager

There are many articles on tips for succeeding as a manager, but there aren’t any for those managers aspiring to failure. The benefits of failure are many: the chance to move away from a material lifestyle to a more parsimonious one, the free time to pursue the increasingly popular hobby of rummaging through dumpsters, and the opportunity to bond with other like-minded souls at the unemployment office, to name just a few. My research in brain science proves that these following tips are guaranteed to make any manager fail to achieve the results they intended:

Check with Your People Frequently to See If They Need Help.
Not only will this suck up huge amounts of your time, it will distract you from the more value-added strategic work you should be doing. Even better, though, it will drive your people nuts. Given their perspective, they’ll misinterpret it as you checking on them because you don’t trust their competence. They’ll become resentful and passive, ensuring that the performance of your business spirals downward.

Give Direct Feedback on Performance.
Even if you think it’s constructive, they won’t. Because it conflicts with their self-image, they’ll either reject the feedback or reject you. If it comes across even the least bit punitive, they’ll growl at you with aggression and be motivated to do exactly what the feedback tells them they shouldn’t. In other words, if you tell them “You could be better at punctuality” this will ensure that they won’t show up to work at all.

Set Stretch Objectives.
If they’re really a stretch, there’s no way people will be able to achieve them, and they’ll become so frustrated that they’ll stop even trying. Because the objectives come from you, rather than from them, you can bet they won’t be a good fit with the job. Plus, if you insist on managing only by the numbers, without reference to an aspirational vision, you’ll guarantee that people don’t use the emotional part of the brain. It will both sap their energy and bar them from accessing the past learning that allows them to make better decisions. So if you tell them to reach for the stars, they’ll instead reach for a sledgehammer with your name on it.

Focus on Behavior, Not Attitude or Intent.
If you tell people specifically what to do and don’t address the thinking behind the behavior, you can ensure they’ll do it badly. Without that overarching understanding, the behavior won’t fit the specific situation they find themselves in, different behaviors will conflict with one another, and they’ll be executed unwillingly. When AT&T insisted that operators say, “Thank you for calling AT&T,” their snarkiness reached new heights.

Install Tight Control Systems to Ensure the Right Behavior.
Control systems may just be the best tool for a manager that wants to fail. They signal that employees aren’t trusted to do the right thing and so demolish their loyalty. They’re costly and tend to squander resources, like the one that insisted on reports filed for even a fifty-dollar expense when it cost seventy-five dollars to process it. If they’re particularly irksome, employees will waste countless hours figuring out how to subvert them. Best of all, control systems eliminate any need for employees to feel they’re personally responsible for doing the right thing.

With proper attention to these tips, most managers should find themselves free to pursue other career options in a matter of months. There is a danger, however. In direct opposition to what we’re learning from brain science and management research, a number of organizations believe that this is the right way to manage. Should that be the case in your company, you may instead find yourself rapidly promoted up through the ranks in direct proportion to the lack of results you’ll achieve.

You’ll make a boat load of money in the short-term and sink the company in the long-term. The Board of Directors will eventually have to fire you, but you’ll leave with a nice severance package. Hey, everybody in finance has been doing it with proven results so why not you?

You’ll have to forego the camaraderie of the food bank and the carefree life of the homeless. But the mind is a wonderful thing. If you close your eyes and imagine hard enough, imported pate can taste just like the dog food the wiped-out shareholders in your company are forced to eat.

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