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Mismanagement 101

Donít make the same mistakes that Enron, WorldCom and Tyco made

By Stephen Aranoff and Robert FitzPatrick

Companies such as Enron, Tyco and WorldCom were empires built upon false facts, grandiose dreams and fear. All are representative of situations where the higher-ups know exactly what they want to do and hear, and peril to you if you tell them what they donít want to hear Ė so many individuals participate in the upward spiral by feeding a daily dose of tall tales in order to personally survive and prosper.

Companies like these donít get where they are without the top executives demanding dishonesty. At the very least, weíve all recently been discussing floundering companies and situations in which this message isnít as clearly stated, but still, there is an unhealthy pattern of ignoring "from the ground up" truths and concerns, and keeping information and thinking from the bulk of the organization! Sometimes itís masked as "they should have known," however, mostly, this is an excuse for not doing it Ė because somebody really didnít want it to happen.

Avoiding Bad Management
So, what can we say about and learn from the above situations? Weíve attempted to distill it down to a Top 10 Ideas that should be easy to remember and go a long way to avoiding Mismanagement 101:

ē Donít shoot the messenger! Whatever else you think, the person bringing the bad news is unlikely to be the one responsible for it. And it never really goes away unless everybody that knows it is eliminated!

ē Beg for Bad News! It isnít enough to just accept hearing bad news when it comes, even when you really do act upon it. Leaders must go out of their way to encourage people to tell them what is really going on. If the company is run where it is assumed that everybody is "one rung too low on the totem pole to know anything," that is exactly what happens! One innovative way of handling "managing down" is to have multiple levels of an organizationís staff in meetings and ask the lowest ranking employee what they think first. This way everybody doesnít hear their bossís statements first, and then just go along for the ride. If not, once the "top" has set the tone, the troops will likely just go along.

ē Have a Board of Directors and make sure that your corporate board is independent from the officers of the company. Boards provide useful information and expertise, even in small companies, that make their value far greater than their cost in time and dollars. But, it is far too easy to pack the board so that management has its way. Without using the otherwise good outside visibility and expertise in the marketplace that a board brings, and by rubber-stamping managementís limited vision, what happens isnít always best for the stockholders, customers and employees. Everybody, including the CEO, needs to be accountable to someone.

ē Corporate Boards should not condone bad management style! No matter what else they do, corporate boards should be brave enough to stand up to CEOs that act more like tyrants than the communicators that they must be to succeed. Even when short-term results appear to be good, allowing tyrants to ruin companies in the long run, while reaping short-term bonuses for themselves, can no longer be tolerated. Doing nothing is tantamount to not meeting your fiduciary responsibility as a Board member.

ē Bad Leaders eventually get caught! Unfortunately, many Boards donít act fast enough. Fortunately, most bad leaders eventually get caught. When they do, not only do they get dragged down, but the organization tends to drag down the key supporters of the prior regime along with them. Bottom feeders like nothing better than to save themselves by aggressively helping the new team. In todayís world, formal authority isnít enough to make it; moral authority must be used to gain the organizationís help in meeting its goals.

ē Vision Matters! A recent column discussed the difference between Mission Statements and Vision Statements. Statements appear to be taken as management down. Visions are shared and implemented in all areas of the corporation. Without employee buy in, how can you achieve the best possible performance? In a situation that we once witnessed, a supplier won a contract that was four times the value of the previous largest one it had won by giving a potential client open access to every employee in the company. Wandering around the facility and talking to people at random convinced this client that he could trust the destiny of his own company to the supplier company because everybody that he met talked the same language, from the technician in the factory to the CEO!

ē Central Control doesnít work! To achieve the best out of each employee, they must have the authority to act, not just the responsibility for a particular job. Without authority, it is impossible to do the right thing in a timely manner. Who knows better than the person on the line what is genuinely needed for success? If your company has been following a shared vision, workers know what is expected of them and know that they are welcome and encouraged to ask for help when it is needed. Asking for help is not a perceived sign of weakness in such companies.

ē Customers and employees arenít dumb! A key manager once told me that his products worked fine until customers started to use them. Another suggested that the employees shouldnít read outside industry sources because they had too many other things to worry about. More outside knowledge allows a company to succeed because every employee has a chance to learn from others, rather than just regurgitate the company knowledge, whether true or not.

ē People should be rewarded for their behavior. We donít mean threats for perceived bad behavior or mistakes, but positive recognition, thanks and even bonuses to those who articulate the company vision and do their job well, even under adversity. Itís amazing how small rewards are remembered far more than their cost.

ē Promote Group Success! Set up procedures that allow the entire team to feel good about company successes. While looking to learn from the vast information base that can send important news about problems and concerns upwards, donít forget that the whole organization can be energized by learning about company successes, such as new customers, new orders, biggest sales, new lines being added and the like. Making all employees feel a part of success as well as failure brings out their best for the company. D

Sept2003, Digital Output

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