All Posts in Business Ethics

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Some unidentified genius recently coined the term “Tinkerbelle economics.” It’s the philosophy that says the financial markets would be healthy right now if everyone would just believe they’re healthy.

Sadly, as we all just learned, wealth in the financial marketplace has to be backed by real assets or it goes away, Tinkerbelle notwithstanding. Hidden somewhere deep inside the most arcane, securitized, credit-default-swapped mortgage-backed derivatives are real houses — assets which, when they lose value, destroy the card-houses built upon them.

Investors, though, are good at finding new assets that do have value — whether real or Tinkerbelle doesn’t matter, at least for awhile.

So when you see the DJIA finding its floor, it means investors are figuring out where to put their money. It doesn’t mean the economy of employment, production, and purchase of real goods and services has found its floor.

It hasn’t. In a healthy economy, employment drives spending, which drives production, which drives more employment. This cycle drives just as well backward as forward, though, and when economic growth is a Tinkerbelle nobody believes in, less employment drives less spending, driving less production, driving less employment.

It’s basic economics — the discipline Thomas Carlyle called “the dismal science,” although it’s far less dismal than the exercise most readers of this column are going through at the moment — either preparing for a large round of layoffs or dealing with the aftermath.

Layoffs are about hard choices — hard enough that when deciding who stays and who goes, your employee rankings just might prove to be worth less than worthless. Here’s why:

Compare two IT professionals. One can look at situations creatively, working actively with business leaders to turn a new idea into a new reality. The other knows how everything you have is put together and knows how to go in efficiently to tweak things, fix small bugs as they’re discovered, make minor enhancements, and in general keep things running.

In the normal course of events, if you had to rank the two employees, you’d think in terms of the marketplace and career potential, probably giving the first employee a higher rank.

This isn’t the normal course of events. If you’re preparing a round of layoffs, it probably means your company has decided to adopt a defensive posture — to ride things out until the economy improves, rather than take the risk of trying to aggressively exploit the defensive postures of your competitors. Defense usually leads to shutting down most big development and integration projects or putting them on hold until the time again comes for the business to pursue expansion opportunities.

As usual, “best” really means “best fit.” In your new circumstances, the maintenance programmer is starting to look a whole lot more attractive.

You’re going to have to re-rank your employees. Most won’t be affected by the exercise too much. There are some, though …

There is, for example, the sysadmin known as PiN, as in Pain in Neck. You know who I’m talking about — the guy who communes with the servers and can bring a failed one back on line by placing his hands on each side of the box and coaxing it.

He’s also the one who loudly declares staff meetings to be wastes of time, IT’s standard operating procedures to be wastes of storage, and most of his co-workers to be wastes of carbon.

Under normal circumstances you’d rank this character near the bottom, make it clear his future depends on his ability to work and play well with other human beings, not just with technology, and consider terminating him as a gift to the rest of the team.

Now? Now, you just might decide your best choice is this unlovely alternative: You’re going to offer PiN a bribe. To wit:

“This is your lucky day. Right now, we need your technical skills more than we need to get rid of your personality. On the other hand, I’m going to be too busy to deal with any more complaints about you.

“So here’s the deal: Every month end, if I haven’t heard any new complaints about you, you’ll get a check for $1,540 — that’s a thousand bucks after taxes. The deal is good for a year. But it’s for no complaints at all. Period.

In a year, you can explain that now PiN has no excuses. He’s proved he can behave decently when he chooses to.

Or, you might figure he’s worth more money now, and make the deal permanent.

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|In: Business Ethics|Last Updated:

One of the most questionable ideas in this year’s presidential campaign is the asserted importance of “standing up to entrenched interests.”

It does, to be sure, have a resonance that stirs the soul. One hears the phrase and imagines an accompanying chorus of angels.

Now imagine you’re interviewing an executive candidate instead. The imaginary angels vanish, replaced by the ghostly visage of Don Quixote.

Last week’s column explored the questions we might ask Senators McCain and Obama if we could give them job interviews (“A conventional approach to executive interviewing,” Keep the Joint Running, 9/8/2008). Let’s continue pushing the metaphor.

Candidates, be they political or business-executive, who claim they’ll stand up to the entrenched (or special) interests are either grandstanding, or … well, about the best that can be said for them is that they are victims of a false dichotomy. The proper response to entrenched interests is neither standing up nor caving in, not least because “the entrenched interests” isn’t singular, or even a small number.

If you look at political history in more than a completely superficial way, you’ll see an inescapable pattern: What those who achieved important results did with special interests was manipulate them, playing them against each other.

And if standing up to one proved necessary, as in the case of Teddy Roosevelt standing up to the trusts, the lesson is clear: Stand up to just one, and have most of the rest lined up on your side when you do or you’ll look like one of those cartoon characters who’s been run over by a steamroller.

In your company, the “entrenched interests” are such individuals and groups as: Accounting, the Marketing Department, Sales, the Board of Directors, shareholders, and whatever regulatory bodies oversee your industry.

If you were to interview an executive candidate who told you he or she would stand up to these constituencies, I trust you’d have the wisdom to choose someone less likely to destroy the company. What you want to hear is that the candidate will listen to them, understand their priorities, and find ways to move the company forward in ways that harmonize their interests — ManagementSpeak for playing them off against each other.

And another thing: Metaphorically speaking, Senators McCain and Obama are internal candidates no matter how much they claim to be “Washington outsiders.” Given the extent to which both are promising change, they had better be internal candidates. If that isn’t clear, think about interviewing an external candidate for an executive position, who says, “I’m going to shake things up, clean house, and make big changes.”

“Oh, really?” you might plausibly ask. “How do you know shaking things up, cleaning house and making big changes is what we need to do?”

Compare that to an internal candidate — one who knows How Things Get Done Around Here — who makes a similar claim. You’d have two questions for this candidate: (1) In their estimation, what most needs shaking and cleaning; and (2) how they would go about it.

“I’d stand up to the special interests,” is, for any internal candidate, a disqualifier, for this reason: Everyone is a special interest and the most successful are the most entrenched. The only way to stand up to the special interests is to stand up to everyone. That’s the opposite of leading.

Politics, whether corporate or national, is first and foremost a game. As with any game it has players, rules, objectives, strategies and tactics.

Those who play this game play it to gain advantages (not to win, since the game never ends), and they do what they do because they think it will help them.

Anyone who is serious about changing things recognizes that to do so they will have to change something about the game.

In business (and, we can wish, in government) the process is called “root cause analysis.” So with internal candidates what you want to hear is clarity about what needs the most attention, what the key leverage points are, and how that candidate would go about using them to achieve planned changes.

For example: One of the most important pieces of legislation passed in the last hundred years was the Civil Rights Act of 1964. Lyndon Johnson, who got it passed, was not known for being a nice person.

What he was known for was his skill in playing special interests against each other.

He was, that is, a consummate politician. To be the president of this country, or of a corporation of any size, that’s a big part of the job description.

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