Which way out?

Looks like 25% or so of the executives whom surveyed companies have identified as “high-potential” leaders plan to exit their respective companies within the next 12 months. Oops!  (Not sure how they actually got to this number – would you be telling your CEO of your plans to get-outta-Dodge?)  My guess:  the number is probably much higher.

So, is it too late for intervention? Can these organizations salvage the situation? 

The same survey indicates that an additional 21 percent (so now we’re looking at 45% total) of employees today (yes, your employees!) identify themselves as “highly disengaged,” and this percentage has risen, alarmingly, by about 300% since 2007.  Perhaps these statistics would be different today if more companies were doing some basic things a bit better, and if one of the foundational principles of “Lean Thinking,” respect for people, were at the core of their best people practices.

The CEB goes on to describe some tactics which companies might want to implement to re-engage and more effectively manage high-potential employees (though more progressive organizations might actually want to call them associates or team members):

• Stimulate — Emerging leaders need stimulating work, recognition and the chance to grow. If your company doesn’t provide these, they can quickly disengage.
• Test — Explicitly test candidates for internal promotion for ability, engagement and aspiration to make sure they’re able to handle the tougher roles as their careers progress.
• Manage — Having line managers oversee high-potential employees only limits their access to opportunities and encourages hoarding of talent. Instead, manage these high-potential employees at the corporate level.
• Challenge — High potential employees need to be in positions where new capabilities can — or must — be acquired.
• Recognize — High potential employees will be more engaged if they are recognized through pay, so offer them differentiated compensation and recognition.
• Engage — Incorporate high-potential employees into strategic planning. Share future strategies with them and emphasize their role in making them come to fruition.

Now, for you Lean Thinkers reading about these “new” insights, the CED prescription doesn’t really sound all that revolutionary, does it?  Maybe different words, yet very similar to what Lean Leaders actually do when they engage in “manager standard work.”   My guess is that Lean implementation, done the right way with people and continuous improvement in mind (not just thinking about tools), still has a long way to go in most North American companies.  Especially in those which will find the the CED survey and Harvard Business Review article revealing to them something which they apparently don’t already know.

The recruiting process to identify your company’s new CFO has been thorough and professionally executed. Your search committee, your retained search firm, and all key stakeholders were fully engaged from the start. It went smoothly, quickly, and in fact, better than you expected, given these turbulent economic times. You vetted the top players in your industry, and a few outsiders who contributed some creative insights and energy into your deliberations.   And now you’ve narrowed your choices down to three, but one is clearly a standout.

It’s time for crafting and extending the offer.  And, as SVP Human Resources, it’s your job to figure out “now that we’ve given the nod to Samantha Pink – by all measures our best candidate – how are we going to convince her to move for this job?”

Oops. Too late. Anything you do at this point to “convince” Samantha will rarely amount to more than just rolling the dice. The “convincing” process should have begun the day she came onto your radar screen as a potential candidate.  Paving the way to structure an offer which your selected candidate will eagerly accept must begin long before you’ve arrived at this moment. And I would argue that it is one of the most critical components of the executive search process.

The simple truth is that candidates today, particularly at the Vice President level and above, are becoming extremely selective in terms of the companies and positions they’ll consider for career opportunities. So many variables now enter into the career-move equation that it’s easy for a prospective employer to get blindsided at almost any turn.  Consider such factors as corporate financial uncertainties, executive personal, family and financial concerns, and dramatic real estate market upheavals across the country, and it becomes even more important that you do a lot of things right along the road to attracting the best new leaders to your organization. Too many mistakes on your part and you’re sunk; it’s not easy to recover with an offer of a big title or promotion, or even a major bump in compensation.

So instead, as my colleague Stephen Covey wisely preaches, “Begin with the end in mind.” Here are some strategic ideas you may want to consider:

1. Clearly define exactly what it is that makes you the employer of choice in your market space.

It’s a major hook for top candidates, and you’ll need this ammunition during your courtship process, and again at offer stage. Identify the factors which the executives and associates who work for you find so attractive that they simply wouldn’t consider going anywhere else.  Share and relate in your candidate discussions.

Also, realistically understand and prepare to address any concerns or perceptions, valid or maybe even not so valid, regarding your weaknesses (financial, legal, market, product, etc.). Johnson & Johnson, for instance, has a factory out there that just isn’t making the grade right now. It’s creating massive recalls of children’s medication and a PR disaster. J&J needs to be openly discussing this problem with anyone they’re recruiting, right from the very start – and describing how they’re fixing the current situation and preventing recurrences.

Above all else, prepare yourself with extensive market intelligence to answer, over and over, the ultimate (and sometimes never directly asked, but always there) candidate question: “I’m happy and well-paid where I am. Why should I leave and make the move to your company?”  Hint: your corporate culture, also mentioned by Groysberg (below) could have a lot to do with it.

2. Don’t write a job description; create a “career opportunity blueprint” which communicates how and why the candidate can, will want to, and will, do great things working in your business.

About 50% of today’s corporate job descriptions are meaningless. For the most part, these comprise laundry lists which somebody long ago downloaded from the Net and keeps on inserting into what should be meaningful strategic tools for business planning and growth.  And the other half, well…  

According to Harvard University’s Boris Groysberg, one of the top three mistakes executives make when changing jobs is believing this stuff. Well, actually he writes: “assuming that the given job title and description accurately reflect the position.” Is it possible that the employer creating such a document is at least partially at fault for this misunderstanding?

All too often, job descriptions share a common problem: They lack strategic focus. They concentrate on the tasks the manager is expected to perform and the activities he or she must engage in. There are lists of specific duties, responsibilities, personal characteristics and so on. But these descriptions are severely lacking in the most critical element of all: the performance objective.

To attract dynamic, performance-driven executives to your organization, position blueprints must focus on desired outcomes for your company, not on the tasks required to get there. Each position must be defined in terms of how it contributes to your company’s success. This is what allows the executive to understand how he or she contributes to the business unit. It strengthens the commitment between the executive and the company, empowers better decision making, and aligns the executive as a true stakeholder in desired outcomes.

And it communicates how and why the candidate will be able to do great things by working with you in your business. Could be the tie-breaker that lets you win over your next “A player.”

3. Treat each candidate as you would your best customer, and serve her well.

How much do you think Zappos.com knows about each customer?  About their best customers?  I’d bet it’s a lot more than name, address and shoe size.  And how does Tony Hsieh utilize that information to make each customer’s experience more personal, more memorable and more valuable?

Strive to make each candidate’s experience personal, memorable and valuable as well, at each step of his or her interaction with you. Well before that offer stage, you need to understand the individual’s decision factors which will play into offer acceptance, and reduce the possibilities of turn-down. The professional and personal factors, the intellectual and emotional ones, those which are clearly communicated and obvious factors,  and also those so deeply hidden they  rarely surface out into the open. But they’re all there, and they’re all very real to each and every candidate. Make them real for your recruiting team as well.

So how many school-aged children do Samantha Pink and her spouse need to worry about in case of a relocation? What’s his career like and how do his plans fit in with the couple’s long-term personal and financial goals? How will they manage his career transition?  Of course they own a home, and most likely in a top neighborhood where other C-level executives choose to reside.

Have you already begun to do some advance networking with your C-level contacts and your local HR colleagues in anticipation of confidentially introducing Johnny Pink around before he begins his own job search?  Have you had someone on your team dig into the details of how difficult it will be for them to sell their home, and determine what neighborhoods near your corporate HQ would provide a similar lifestyle experience  (including schools) for their family?  Or, have you explored potential temporary residence options in Samantha and Johnny’s home town, as well as in yours?  Have your prepared to discuss executive commuting options for one or the other, or even both, as an alternative to full immediate relocation for the family.  And how about yet other alternatives in the event their high school basketball star adamantly resists relocation before finishing out his senior year?

It’s never going to be possible to anticipate every scenario which could potentially block your number one candidate from accepting even the best and greatest compensation and lifestyle package you can put together.  But the degree to which you’ve effectively listened and understood, researched and prepared, from those first moments of your executive candidate interactions, you’ll be way ahead of the game.

Finally, to actually address my colleague’s question which prompted this mini-essay: No is the answer.  There is no magic. We’re all Muggles here. If your top candidate needs to sell her home and will not take a loss on the sale, which therefore requires you to subsidize the cash deficit with a sign-on bonus or stock options or restricted stock, then that’s what you’ll have to do.  Trust me: she will walk away from your “the best we can do” compromise offer. Move onto candidate number two.

And that’s the way I see it.

In his role as CEO of Adam Zak Executive Search, Adam Zak recruits “A” players.  Then, in their new executive roles, these talented individuals go on to make their new companies simply excellent. Adam has been using his uncommon expertise to help clients improve their businesses operationally and financially for almost 20 years. Find him at http://Twitter.com/LeanThinker.

Adam’s new book, Simple Excellence: Organizing and Aligning the Management Team in a Lean Transformation, will be available in November, 2010, from Taylor & Francis/Productivity Press, publisher.

The first three paragraphs of this article appearing in today’s San Francisco Business Times caught my attention because of how seriously inappropriate it is to “dub” any initiative which will result in the elimination of 538 people as an operational excellence plan.   Who did the “dubbing?”

UC San Francisco, which faces a daunting budget deficit in this and coming years, is envisioning a restructuring that could slash up to 538 jobs over the next three years.

The game plan, dubbed “Operational Excellence,” could eliminate up to 35 central administration positions, up to 225 jobs in IT, 100 in human resources, 95 in finance and 83 in research administration, for a total of up to 538, according to a report sent to UCSF’s senior management in early April.

The proposed three-year plan aims to re-engineer internal organizations and processes, “transform” the IT department, integrate “service teams” in HR, finance and research administration, and create or save additional revenue through efficiency.  Read more: Restructuring at UC San Francisco could chop 538 jobs – San Francisco Business Times: 

(Note: I’m not an SF Business Times subscriber so I asked a Bay Area colleague to read me the rest of the story this morning; it didn’t get any better).

Why do some today still persist in equating business and operational improvement efforts with personnel cuts?  In a truly operationally excellent environment it’s all about continuous improvement and respect for people.  This way of thinking is just, as my Lean colleague Mark Graban puts it, L.A.M.E thinking!   We saw some of the same previously when the Wall Street Journal published a front page story about Lean apparently gone wrong at Starbucks. Why won’t this misguided thinking just die?

In his report of March 24, 2010, An Update on UCSF 2011: A Focus on Operational Excellence, UC San Francisco Chief Business Officer John Plotts sets a much clearer and more accurate tone regarding the true meaning of improvement efforts:

It is important to note that while the challenges in front of us demand immediate attention, it is in the University’s best interest to view these challenges as an opportunity to commit to a new way of doing business that encourages the continual examination of what we do and to ask, “Why do we do this? Is there a better way?”

By dedicating ourselves to continual improvement – this year and in the years to come – we can be sure that UCSF is well run and that our resources are supporting our top priorities:  patients and health, discovery and education.  Committing to excellence in all we do will allow UCSF to be the best university we can make it.

Bravo, Mr. Plotts, for being a Lean Thinker, And that’s the way I see it.  Adam Zak

Executive Engagement, the Lean Executive Way

Your executive search was a smashing success.  Done in record time. Attracted the interest of top players in your market sector. Interviewed the best of the “A players”. And won over Sarah, a true global leader and supply chain visionary, who’s ready to jump in as your new executive vice president of operations in just a few weeks’ time.  Now comes the really tough part:  making sure that Sarah becomes a long-term success in her new role by getting her fully engaged from that very first day on the job.  

1. Deploy search process intelligence strategically.  During the course of the recruitment we gather a tremendous amount of information about the candidate’s strengths, development areas, career and personal objectives, etc. We share these insights with the new hiring manager in a post-search debriefing. Used to build a pro-active development plan for the new executive, this kind of early collaboration helps the newly-hired executive rocket to a fast start and immediately address mission-critical issues, while also more rapidly assimilating into your company’s culture.
2. Sarah wants specific feedback early and often. And so does the new “A player” executive you just brought on board. Just-in-time performance reviews, based on the concept of PDCA (plan-do-check-act) found in Lean & Six Sigma thinking, are possibly the best coaching and feedback system designed for high-performance individuals. Feedback  - specific, relevant and timely – (delivered as quickly as manageable after the activity), presented informally and from a mentoring perspective, just simply works. These are coaching and mentoring opportunities which allow the new executive to more clearly grasp the senior leaders’ perspectives on strategic and tactical problem solving, customer relationship priorities, operational issues, and the information channels that keep the business running along.  Plan for this kind of informal performance feedback mechanism, and executive religiously.  Your “A players” thrive on it.
3. But you promised me I’d be running the whole show in six months!  Well, didn’t you?  Managing the new executive’s expectations for opportunities, promotions and specific responsibilities is critical to his or her immediate engagement and long-term success.  Sarah came in to our client’s organization with excellent capabilities and high ambitions for herself.  The company’s CEO took the time on a regular basis to help her calibrate those ambitions with her achievements, against those of her peers, as well as relative to the company’s expectations for her.  The result: a more team-focused and realistic understanding of how everyone’s ambitions and contributions build corporate growth, profitability and sustainability.

1. “Customer/client focus for the sake of the customer/client;
2. A habit of collaboration;
3. A focus on the medium-to-long term, on relationships rather than transactions;
4. A default stance to transparency, except where illegal or injurious…”

So what might this look like in terms of the day-to-day interactions you have with your (trusted) executive search advisor?  Ask yourself these questions: 

1. Does my executive search consultant (ESC from now on…) focus on me and my needs – professional and personal – or on himself? How do I know that?
2. Does my ESC seem motivated by his internal drive to do the right thing by me, or instead by his firm’s internal metrics and performance carrots and sticks?
3. Is my ESC competitive and innovative in that he’s constantly looking for better ways to deliver service, as contrasted with simply competing with other search providers for my business? Is he continually bringing new knowledge and fresh insights and experiences to me?
4. Does he demonstrate a belief that continued focus on defining and solving my problems is more important than just filling in boxes on my organization chart?
5. Do the ESC’s systems, processes, procedures and operational models effectively meet my needs or requirements ( a means to a successful recruiting outcome), and if not, are they discarded or reformulated until they do?  Is he continuously learning and improving his own professional skills and expertise in order to be able to do that?
6. Perhaps most importantly, does he listen to me, seek to clearly understand the issues I’m facing, and deliver strategies for creating solutions that will positively impact the growth and profitability of my business?

The company involved was a new executive search client and they were running into problems with their Lean implementation.  Turns out they had been working for over a year with an outside consulting firm to assist them in the transformation process, but they didn’t seem to be making any real progress.  And they weren’t really sure why that was the case. My client contact, the CEO, called me in to discuss the problem and propose solutions.

Part of the standard work I do when beginning a new search (I created a trademarked search methodology called pdcaSearch(R) in which we use Lean principles to drive the executive search process) is to uncover the root cause of the problem I’m being asked to solve. In this case it became very clear that there were ”multiple internal owners” of the Lean initiative, but there was no clear accountability for its success or failure.  The VP of Manufacturing had a small team of the outside consultants assigned to his “projects” and so did the VP Engineering. As did the VP of Supply Chain; and the VP Finance, and so on. 

The CEO had given each executive broad latitude and they were running with it. But all too often it seemed that an “improvement” in one area of the business soon became undone as another “improvement” elsewhere changed the overall operational dynamics of the organization. What Manufacturing improved became “unfixed” by the latest Kaizen event conducted in Engineering the following week. So naturally, Manufacturing Kaizen teams came back to the same area in subsequent weeks for a do-over.  This had been going on for almost a year and had devolved into an embarassing “Keystone Kops-like ” effort which I initially dubbed “catch-and-release Kaizen.”  The trout fishing devotees among you will immediately know what I mean.

Well, I fixed the company’s problem by recruiting a new VP of Continuous Improvement, an individual skilled in the principles of operational excellence and policy deployment. He quickly helped align objectives, resolved competing priorities and turned the focus of the improvement initiative onto value streams instead of functional silos.  Kaizens became more strategic, value-added events.  The new Lean VP continued to rely on a select group of outside advisors who could complement his own expertise, but he very rapidly sent the majority of the Kaizen Kowboys packing back to the ranch from whence they had come.

And that’s the way I see it.  Adam Zak

A recent survey conducted by one very large jobs board indicated that among their respondents, “…almost half don’t use external agencies at all…” and that their results and interviews with experts indicated “…a move away from over-reliance on external recruiters…”  Perhaps a self-selected survey sample, but none-the-less, informative. 

And finally, author and search industry insider Joesph Daniel McCool, in his July 2008 interview with HR Magazine, apparently finds a “real disconnect” between executive recruiters and hiring organizations, claiming that “corporate satisfaction with executive recruiters has fallen under 50 percent for years.” 

Other industry pundits portray a more optimistic future for executive recruiters, and certainly our own small boutique firm has never been busier. But I do believe that a transformation is indeed necessary and already underway within my profession.  Because there is a disconnect between what executive search clients want and what executive search clients are getting. The transformation is being driven, in other words, by the recalibration of clients’ (customers’) executive search expectations. 

During my executive candidate interviews one of the most critical questions I ask is a very simple one: “What do you want?”  From that one question, and during the process of subsequently clarifying its response in the most detailed fashion, I obtain the clearest possible vision of what this talented individual expects to achieve in his or her next executive role, career and lifetime, and also from our immediate relationship. 

As HR professionals in conversations with our external search partners, how often do we ask ourselves this same question, to clarify exactly what we want?  Because, after all, whether it’s a retainer, contingency or some hybrid fee structure, the least important thing we ought to be thinking about is the manner in which we’re going to pay.  What we expect from the relationship is much more critical. So here’s a short list of issues (questions) we should be pondering:

1. As an executive search customer, am I truly seeking a relationship, or do I just want to get this transaction done?  What’s the difference, really, for me personally, and for my organization? Have I considered the implications of my decision?  Have I communicated this with my stakeholders?  Have I been honest and transparent about this with the firm I’ve selected for this task?
2. How will I assess the value I receive from my executive search partner during the course of the search engagement?   Do I just want to recruit absolutely the right person for this role, or do I need something else? Can I clearly define and communicate what that “something else” is? Is my search partner capable of delivering on this expectation?  Will they want to deliver on this expectation?
3. If the search does not conclude with an actual placement, will this have been a total waste of time and money?  Under what circumstances could the search still be considered a success?  Will the other elements of my value expectation (as considered above) have been delivered? What does the future of our relationship look like with our search partner?
4. If the search ultimately proves that our internal candidate is really the best of the best after all (think Bank of America, December, 2009), will I and we (our organization) still have gotten what we wanted? How so? If not, why not – after all, the vacant chair has been filled? Has this been a positive experience with our partner firm, or a negative one?  What does the future of our partnership look like? 

Perhaps I’ll add more questions in future posts. For now let me conclude with some observations related to the accounting and legal professions.

All of the major and mid-market accounting firms in the U.S. today are very capable when it comes to preparing corporate tax returns and performing financial audits for their clients.  And they consider this their bread-and-butter business.  And how about law firms?  Certainly they can handle product liability lawsuits and the patent infringement issue that pops up from time to time.  But is this all that these professional service firms do for their clients?  What else do they offer, can they offer? What else are they doing to deliver value?   Is there some structure within which both they and their clients can derive the long-term, mutually beneficial value that both ultimately desire?  And how does this relate to your strategic executive recruiting game plan? 

Tune in next time for an introduction to the concept of trusted search partner.  So for now, that’s the way I see it. Adam Zak…

(Author note: this blog post was originally published last week on the new Human Capital Institute’s (HCI) Talent Acquisition Community blog.  I’ve been invited to write a guest posting which will appear on the HCI site every couple of weeks or so.  Please be sure to visit the HCI Web site for lots of other great articles related to talent acquisition and many other topics on the cutting-edge of HR thought leadership).

I’d like to offer a suggestion to help you with this task.  Keep this one guiding word in mind:  “simple.”

I believe that by keeping things simple, as simple as possible, in both your personal and professional life, you will be able achieve “simple excellence“ in everything towards which you strive. “Simple excellence”  is a key theme to which I will return again in 2010 and throughout the coming decade in my speaking, writing and of course, my Lean executive search practice.

As a Berkshire Hathaway shareholder of many years, I’ve been listening to Warren Buffett for a long time. My notebooks are filled with his words of wisdom gleaned from annual meetings I’ve attended. My bookshelves are weighed down considerably with books and magazine articles by and about him.    While I’m certainly not the first to have uncovered some of Warren’s ”secrets” to investing, I’ve also discovered a treasure trove of his thoughts on human nature and the non-Wall Street side of life , which he’s shared with us through quips and comments over the years.  Guess what?  There’s a lot of simple excellence here. 

So without further delay, some quotes from the Oracle of Omaha to help keep our 2010 New Years’ resolution making simple and excellent.

 “The best way to own common stocks is through an index fund.”

Simple investing leaves you time to do other things in your life.  Allow professionals to do for you what they’re better at doing than you are. Yes, there is truth in the concept of core competency. And no, not all outsourcing is bad. But it takes thought and purpose to achieve simple and excellent results, in operations and supply chain as well as in investing.  Berkshire Hathaway is itself something akin to an index fund. Thanks Warren, for keeping it simple to understand what you (and therefore I) own. But I’ve got to ask, are you really, really sure about the Burlington RR thing?

“I want to be able to explain my mistakes. This means I do only the things I completely understand.”

I’ve never heard about Warren employing the “5 Whys” technique, but he is legendary for drilling down to root cause. In all his investment decisions (and, even more importantly, in his decisions not to invest) Buffett focuses on breaking complex businesses into simple, understandable components. In setting out our objectives and making our resolutions for 2010, how can we more effectively focus to gain true understanding?

“Making money isn’t the backbone of our guiding purpose; making money is the by-product of our guiding purpose. If you’re doing something you love, you’re more likely to put your all into it, and that generally equates to making money.”

As Lean Thinkers we are called to deliver value to our customers, both external and internal. Isn’t that really the simple and excellent underlying purpose of all the principles and practices we espouse and adhere to?  Are we thinking the same way about our careers and also the lives we lead outside those careers? Simple, focused goal setting  – on the right goals, for the right reasons – makes sense and leads to excellence.  A business, or an individual, who sets goals and objectives on delivering value will be rewarded financially when others benefit from their receipt of that value.

And, finally, how often do we consider that the simple pleasures of life might perhaps offer us deeper and more lasting satisfaction than we could ever hope to derive from the many gadgets and gizmos and toys we’ve been accumulating in an attempt to achieve happiness and fulfillment?  Are we truly engaged in something?  Are we respecting those who surround us in our personal and professional lives?  Hey, are we having fun?  Some final thoughts from Warren:  

“I have simple pleasures. I play bridge online for 12 hours a week. Bill [Gates] and I play, he’s “chalengr” and I’m “tbone”.“ 

and…

“I just naturally want to do things that make sense. In my personal life too, I don’t care what other rich people are doing. I don’t want a 405 foot boat just because someone else has a 400 foot boat.“

 And that’s the way I see it.  Happy New Year.  Adam Zak

The people we do business with constantly tell us that our ability to deliver customer service is critical to their experience of satisfaction with our companies, our products and our services.  BAM! Bust A Myth – Delivering Customer Service in a Self-Service World,  by Barry J. Moltz and Mary Jane Grinstead, clearly and effectively communicates how each organization competing in today’s market place can develop its individual definition of “good customer service” and then put into practice those systems and processes which help make it a reality.  

Barry and Mary Jane demonstrate that no matter what our business, be it manufacturing energy saving solar panels, flying passenger airplanes, or conducting executive searches for Lean CEOs, delivering customer service which is appropriately tailored to the needs of each of our unique customers is at the core of our long-term viability and success.  

In this quick and easy-to-read text (just over 200 pages),  the authors dispel many of the common customer service myths that many early entrepreneurs, and even Fortune 1000 companies, often cling to  -  many times because the fog of anecdotal “evidence” overwhelms the truth.  Some examples I like are:  Myth #2: The customer is always right;  Myth  #10: Unhappy customers tell their stories to more people than happy customers do;  Myth #12: Customers don’t care about great service -  they just want the lowest price possible; and perhaps my personal favorite, Myth #17: Customer service systems should focus on trouble shooting – if it isn’t broken, don’t fix it.

This last Myth personally hit home because of my own strong belief in the Lean & Six Sigma principles which are at the core of  continuous improvement philosophy and culture so necessary today if our companies are to thrive in this competitive market place.   In fact, Barry and Mary Jane strongly advocate at every turn that you go see for yourself  what’s really happening on the front lines of your business (in Lean terminology, “go to the Gemba, or workplace”), a concept so  familiar to Lean practitioners all over the world.  

In summary, BAM!  is: well-written with a light touch of humor, offers good insights into situations to which we can all relate, and presents practical suggestions for solving a broad range of customer service issues.

And that’s the way I see it.  Adam Zak

A bonus -  paid to the CEO or anyone else in the business -  is nothing more and nothing less than a single component of a compensation package, which may also include base salary, paid-time-off, and various kinds of benefits and nice perks. Remember all those neat company cars GM, Ford and Chrysler used to (still do?) dole out free-of-charge to their “leaders.”  And it’s no secret, of course, that any form of compensation is open to potential manipulation if a manager or executive and/or her cronies are less-than-ethical in how they conduct business. But why single out and demonize the bonus?

Because, let’s face it, compensation – yes, even bonuses – is what you receive in return for your labor on behalf of the organization which employs you. Some labor is more valuable to the organization, some less so. There are measurements and judgments involved in figuring this out at all levels up and down the organization chart. It’s pretty complex stuff, kind of like figuring out what the actual financial benefit of that last Kaizen event or Six Sigma project you completed REALLY was. How exact a science is that?

If we eliminate bonuses from the compensation package we’re still going to need some way of differentiating the value each individual contributes to the organization. Perhaps this can be accomplished via the salary mechanism, but this just implies a much wider range of salaries. And salaries present the disadvantage of being, typically, fixed for the duration of a year or so. Now of course we could make salaries variable, adjusting them periodically based on someone’s perception and interpretation of the value contribution for each individual. But if we get to that stage I’m thinking that all we’ve really accomplished is simply engage in word play, creating a fixed and “variable” component for salary. Sounds like a bonus to me.

No, the answer isn’t to demonize the bonus. It’s to create a more accurate and transparent way of measuring and valuing the contribution each individual – CEO, CFO, CMO, and anyone (everyone?) charged with making in impact on the business – makes to the organization, and then rewarding her for that contribution. This is the real challenge which needs to be addressed and, unfortunately, Mr. Mintzberg offers us no guidance in this area.

I’ve been in the executive search profession for about 20 years.  And not one single new Lean Manager or Director, Operational Excellence VP, Chief Operating Officer or President I’ve ever recruited has neglected to ask me about my client’s bonus plan for the new positions they were undertaking.

Let him or her who has never expected or earned a bonus speak now, please. How about you? 

And that’s the way I see it.    Adam Zak