Because I am insatiably curious I always wonder why things happen as they do. So when I read Susanne’s post on the business mandate to do more with less, I started thinking about what got us to this point.
Unlike most failures—which are typically orphans—this particular fad has had a lot of misguided executive “parents” who are still clinging firmly to their faulty and abusive idea.
Lean and Mean
Let’s start with the whole “lean and mean” business craze of the eighties. As with any of the fads that periodically infect the business world, it began with a self-appointed “leader” who took the military phrase “lean, mean fighting machine” and customized it for the business world. This is the kind of image that white-collar men (and they were all men) who spend most of their time sitting in offices like to throw around so they can feel powerful by associating themselves with men who are leaner, meaner, stronger and tougher than themselves.
Next this person spread his message through books, speaking opportunities and the then-flourishing horizontal business press (Forbes, Fortune, The Wall Street Journal, Business Week). Their editors fell all over themselves opining on the wisdom of an organization that ran fast and hard because no one wants to head up a fat and lazy company. Also, you can sell a lot of newspapers, magazines, and advertising space by embracing a new trend and making your readers feel inadequate for not knowing about it.
The two predictable results were:
- Layoffs, which equated hard-working employees with lazy drones leaching the company’s profits. Too many employees equaled fat and slow and thus not to be tolerated.
- A lot of M&A activity designed to offload “underperforming” divisions and subsidiaries. These mergers and acquisitions resulted in even more layoffs and outright shutdowns. Whole towns took a big hit when a factory closed its doors so the company could run lean.
The mean part happened sort of organically. It took quite a long time for anyone to recover their common sense and notice that no company ever shrank its way into market dominance.
The Startup Mentality
The startup mentality also played a big role. Venture-funded startup companies don’t have a lot of money to run on and they have to get the most from every dollar spent. Under those conditions, it makes sense to have each employee be as productive as possible.
The smart founders hire experienced workers at every level from senior management on down and fill in with outside services until they can afford to hire employees. The not-so-smart ones rent space in fancy expensive buildings, buy Herman Miller office furniture, hire a lot of expensive executives who can’t do much themselves, cater their lunches, and confuse a Superbowl commercial with a marketing plan. Then they make up the difference by ordering their employees to do more with less.
In a startup everyone works hard because it is in their best interests to do so. They have a “piece of the action” through stock option grants and they want those options to be worth as much as possible so they can get their shot at the American Dream. Really smart startups give out stock options to everyone and get a fully committed workforce in return. Does this make for some abuses? Sure. Not everyone can or will work 80-hour weeks but that doesn’t mean these folks can’t make a big difference for a small company.
Ridiculous Executive Compensation Plans
Third, we have Ridiculous Executive Compensation Plans. These RECPs mean that the big money goes to the guys at the top while hard-working employees are lucky to receive a piddling cost-of-living increase. These Top Men are fully committed to making their quotas, delivering on their goals, fulfilling their objectives and otherwise meeting the terms of their contracts so they can get an enormous payout. They will pursue this plan even if it kills everyone underneath them.
Do more with less is the inevitable result. If the company is small and running on a shoestring, this seems to be the only option. It’s not really but doing more with less is easier than thinking of new and creative approaches. If the company is big and run by a CEO with a nine-figure compensation plan, everyone must work harder with less so he can have more. And more. And more. It’s a pretty simple equation.
These CEOs have no problem with under-funding essential operations, laying off people who are absolutely necessary, denying required resources to the remaining workers, forcing everyone to work 50-, 60- and 70-hour workweeks, and demanding a loyalty they are completely unwilling to reciprocate. It just seems like a good business plan to them because, well, it works for them.
And it does work for a while. It can even work for years. A long and deep recession like the one we just lived through, can add many years to the lifespan of an abusive fad. Sooner or later, though, people wise up.
The economy improves and new jobs open up elsewhere. A new technology or industry creates an inflection point and the old monolith topples. People figure out how to live without abuse. They learn why it’s good to live without abuse. Heck, even the Israelites escaped from Pharaoh’s slave masters because wandering in the Sinai desert was better than one more day of building pyramids under the overseer’s lash.
Will the “do more with less” mantra run its course and be replaced by a new fad? Of course. When will that happen? Who knows? It will take someone smart, successful and charismatic to get that message across. I guess we’re still waiting for a business Moses.
I was reflecting on one of the corrosive consequences of this mentality.
What happens when a company runs “lean and mean”? Jobs get amalgamated. Over time, job functions run together as people pick up added responsibilities that are outside the scope of traditional functions. E.g., a sales person could pick up marketing responsibilities, or a mechanical engineer might also gain quality tasks, and so on.
Over time, of course, these amalgamated jobs crystallize in the minds of hiring managers, becoming “hard and fast” requirements for when they need a new person. Taking a conceptual step back, however, these new requirements cannot POSSIBLY be met… because these jobs are unique to the company; by definition, no person from the outside will have the requisite skill set.
But we’re assured there’s a “shortage”.
That’s a very good point, David. There’s another element, too. Because an individual picks up another job doesn’t mean that he or she has the first idea how to do it. Because a sales person takes on marketing responsibilities doesn’t mean that he or she knows how to do marketing. And there’s no one to learn from because the marketing person is gone. This job amalgamation may seem like a good idea but it results in people from one discipline doing a bad job of something in another discipline because they don’t understand it.
But think of all the money in salaries that is being saved!
Most of today’s corporate *cough cough* leaders don’t see past that.
No, they don’t, David. Because you can put those numbers down in black and white on a spreadsheet and total them all up. But you can’t quantify the time spent by new and inexperienced employees coming up to speed with no mentor to help them, or opportunities that are lost because there was no one to follow up, or contacts that were never made by people who were laid off, or products that were never developed because the lab was empty. These shadow numbers go uncounted while execs chase quarterly profits. And that’s why no company every shrank its way to greatness.