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    Entries in Organization (59)

    Wednesday
    Feb012017

    CHART OF THE DAY: Piles and piles of cash

    Lots of noise and stress lately that comes from a political transition and in this case a transition to a philosophy that is a dramatic departure from at least the last eight years, (if not longer). I did my one and only (I promise) take on the most controversial happenings (so far), on Monday, but I wanted to hit one more quasi-political issue, but also one that impacts work, business, and potentially jobs.

    Namely, the staggering amounts of cash that many of the largest American firms are holding, and in particular, the increasing levels that these firms have 'parked' in overseas accounts (ostensibly to avoid paying US corporation income tax on the funds). 

    Here's a reasonably recent chart (from last September) showing some of the larger companies and overseas cash piles, (courtesy of CNBC), then some comments for me after the data.

     Three quick takes on this stockpile of overseas cash (and large cash reserves by corporations in general)

    1. American companies are holding about $2.5 Trillion (that is with a 'T') in overseas cash, which is more that 10% of the US annual GDP. Tack on the close to $2.0 Trillion, (that is another 'T'), in cash that US companies are holding domestically, you have about $4.5T in cash that is essentially doing nothing to build business, increase investment, hire more people, etc. Lots and lots of arguments for why this is the case, (not all of them political in nature), but I think we all can agree that this tremendous cash hoard represents untapped potential for growth.

    2. The main reason that American companies cite for parking so much cash overseas is the relatively high US corporate tax rate of 35%. It is by most analyses the highest corporate rate among developed economies. So when you combine a high tax rate, an additional surplus of domestic cash for many large companies, and still low by historical standards borrowing costs, many of the largest US companies are content to sit and wait and stare at their cash piles.

    3. Finally, many economists predict that a lowering of tax rates and a surge in repatriation of corporations overseas cash probably would not spur the kind of economic stimulus that many expect. Many of these firms would use substantial portions of this cash on stock buyback programs and increases in their dividend rate. These actions primarily benefit shareholders rather than the broader economy. Besides, some argue, if these companies had better ideas to invest this cash (new facilities, R&D, hiring more people, etc.), they would just do that.

    Sure, I know that most organizations, particularly smaller ones, would love to have the problem of not being able to figure out what to do with all their excess cash laying around. But all this cash is certainly not a great sign for longer term economic growth, increased innovation, and enhanced employment opportunities.

    It is going to be interesting, if a little wonky, to keep an eye on corporate tax rates, repatriation deals, and just what ends up happening to these Trillions in the next few years. I suspect that whatever happens, it will have a pretty significant impact on US GDP, growth, employment, and more.

    Happy February.

    Monday
    Jan302017

    On corporate reactions to current events

    I don't think I need to recap the series of political and policy events here in the USA over the last few days that have seemingly set thousands if not millions of folks (and almost EVERYONE) on Twitter afire.

    In the aftermath of a contested, contentious election, the first days of the administration have been, depending on your point of view, either a colossal and dangerous train wreck, or simply the expected result and consequences from a series of campaign promises/threats that have been acted upon.

    Since it doesn't matter to you what I think about these actions, and no matter what I think I would not change anyone's mind anyway (and I am not really interested in changing your mind. Make up your own mind), I'd rather make a couple of comments on what I have seen from the many 'corporate' responses to the events of the last few days.

    From what I can observe, there have been three major categories of 'corporate' response, (or non-response), to the recent Executive Orders from the new President.

    1. 'We' (meaning the corporation, even though I would suspect that the individual CEOs that are penning these responses are not really able to consult or poll all of their employees in just a day or two), are 100% in opposition to these policies, and we are actively working to see them overturned or ended. We are donating to the ACLU, providing free services to those affected (see Airbnb), and want everyone to know that we are NOT COOL with this. This has been the response from many high-profile companies, many of them from the tech space.

    2 'We' (again the corporation), have a culture of openness, inclusiveness, tolerance and fair treatment towards all. We support all our employees regardless of race, ethnicity, religion, sexual orientation, etc.. We will extend direct services to our employees who may be impacted by these policy changes. This is sort of a toned down version of response 1, focusing more on their internal people and their families. It could be seen (and has been by some), as the more pragmatic CEO/corporate response, particularly for organizations that have business and dealings with the various arms of the Federal government. See Elon Musk/Tesla for a decent example of this approach.

    3. Nothing publicly announced at all. This is actually the majority of organizations I would think. For every big tech company CEO who has issued a statement or a Tweetstorm condemning the recent events and policy changes, there are 100 if not more organizations who are not commenting on it at all, or at least not publicly. There a a million reasons to do/say nothing publicly as a CEO/organization, and saying nothing does not mean necessarily that the CEO/organization does not object or rebuke these new policies.

    Wait, I just thought of a potential 4th response. The one where the CEO comes out openly and aggressively in support of the recent Executive Orders on immigration, placing him or herself in line with the new President an Administration. Note, a quick scan of headlines while drafting this post has resulted in zero examples of this actually happening. Doesn't mean it hasn't, but I have yet to find any CEO/organization, (at least a national brand), coming out in support of these policies.

    I know what you might be saying, that this particular policy change and set of orders are SO egregious, so un-American, so divisive that there is no way, no person, no CEO, no organization could support them. In fact, they are such an affront to what we like to think makes America a great country that it really is not controversial at all to come out strongly against them. And you might be right be that.

    Why think about these 'corporate' responses/stances to current event, particularly as and HR/Talent pro?

    Because once the CEO of the organization takes a public stand on issues as divisive as these, it sets down a kind of organizational culture marker that will be just about impossible to ignore or alter in the future. When the CEO comes down hard in opposition (or support) of these kinds of flash point debates, and if he/she commits organizational resources (time, money, products, services), on one side or another, the message gets pretty clear, pretty fast.

    And no matter what side of this (or the next big issue) that the CEO does come down on, (and one last reminder, I am not telling you what I think about this, or what you or your CEO should think), there is almost certainly going to be a cohort of stakeholders, (employees, customers, candidates), that are not going to see eye to eye with your CEO, and by extension, your organization.

    And that might be fine by you, as and HR/Talent leader, to have this element of the organization's DNA and culture laid bare such that employees and candidates that find themselves in stark opposition to the accepted (or at least stated) views will naturally begin to self-select out. They either will resign, will start looking for another job, or decide not to apply in the first place. Either way, you have maybe saved yourself some time in trying to answer the 'Is he/she a 'fit' for the job here' question.

    But that is not really the point, at least not the main point. The word 'divisive' implies that at least some people are on the other side of that divide from you. And I think we have to be very careful that we don't forget that. Because the next 'divisive' issue might not be so clear cut. It might not be so obvious which side your CEO and your organization should be on, (assuming both of those things matter). The next issue might have very cool-headed, rational, logical people on completely opposite sides. And should both of those kinds of people be welcome in your organization?

    Lastly, and this is I swear the end of this (too long) post, you also as an HR leader should probably ask yourself this question:

    Is a person's opinion on the current political debate of the day a valid, predictive, appropriate screening question for employment at your firm and whether they meet the criteria for the ever tricky idea of organizational 'fit'?

    Have a great week. Be good to each other. 

    Friday
    Jan202017

    The Wisdom of Jeff Van Gundy - Part VIII

    Time to revive an old series on the blog, and one of my favorites - on the (continuing) Wisdom of Jeff Van Gundy.

    Since it has been a while, here's a little refresher on just who Jeff Van Gundy is, and why management, leadership, and organizational culture types should listen closely to what JVG has to say about performance, talent, and team dynamics.

    JVG is currently an NBA analyst and announcer for ESPN, previously he was the head coach of my beloved New York Knicks, as well as the Houston Rockets. He was successful as a coach, but may even be a better fit for broadcasting, as he over the years has shown consistent insights into the game, coupled with humor, irreverence, and fun that makes games in which he is broadcasting essential viewing for NBA fans.

    We've covered many of JVG's insights on the blog in the past, (good examples are here and here), and while listening to JVG recently being interviewed on ESPN's (Zach) Lowe Post Podcast, he had this nugget of enlightenment about the importance of conflict amongst team members, and how it is necessary (often), to drive performance improvement.

    Here's the JVG quote, and then a quick comment from me:

    (Some context, Lowe and JVG were discussing if players who are 'bad' or who have abrasive personalities should have that held against them when judging their performance) 

    JVG - To me, it is not about are you 'easy' in the locker room, it's are you right. If you are causing tension for the right reasons at the right times, to help spur your team to confront their issues, and their problems and you're willing to be confronted as well about your own issues and your own problems, then tension is a good thing. 

    This idea that everything should be happy go lucky in a locker room when you are a mediocre team, I disagree with. It's hard to get from mediocrity to average then from average to pretty good and from pretty good to good and then from good to great if there's no conflict. Conflict puts everybody's cards on the table. If you are causing tension for the right reasons at the right times and you are willing to be coached as well and confronted as well then I think tension is a good thing.

    A really interesting, and I think accurate, assessment of how conflict, how an occasional 'difficult' personality type on the team, and the tension and butting of heads that that kind of a person can cause should not be immediately looked at as a negative.

    In NBA basketball, and probably in your organization as well, there are plenty of folks who think their performance and their contribution is perfectly acceptable, and their position on the team is totally secure. They may even be your 'top' performers. But even they, probably, need to be challenged from time to time. Even they need to examine their own performance at least once in a while.

    And in basketball, and again, probably in your shop too, it often takes a gruff, difficult, hard to get along with personality type to force people into that kind of self-examination. And often in basketball, and for the final time, at 'normal' workplaces too, the tendency is to immediately point the finger at Mr. or Ms. 'Difficult' and ostracize them, (or simply get rid of them), for rocking the boat.

    As JVG reminds us, when a team of any kind aspires to do more, to do better, to achieve great things, some conflict along the way is not only inevitable, it is likely essential.

    Think about that the next time you are wondering what to do to make that hard to get along with person who likes to find the issues in what is going on around the office to simply pipe down and get along.

    Maybe they're not actually the problem after all.

    Have a great weekend! 

    Friday
    Aug052016

    Where workforce planning, talent attraction, and facilities strategy meet

    Quick shot for a busy summer Friday, (isn't every Friday now a busy Friday?), and a quick reminder on just how important workforce planning and talent attraction and acquisition challenges are towards making big, hairy organizational decisions like 'Where should we build the factory?' and 'Should corporate HQ be in some massive office park in the suburbs (near the affluent towns where all the C-suite lives), or within the city limits, (where the millennials all want to live?).

    Take a quick Friday or weekend read of this piece from the New York Times titled "Why corporate America is leaving the suburbs for the city' to get a feel of how these dynamics and interplay between HR, talent, culture, and organizational strategy are playing out for companies like McDonald's, Motorola,  and General Electric.

    An excerpt from the piece (and you really should read it all):

    For decades, many of the nation’s biggest companies staked their futures far from the fraying downtowns of aging East Coast and Midwestern cities. One after another, they decamped for sprawling campuses in the suburbs and exurbs.

    Now, corporate America is moving in the other direction.

    In June, McDonald’s joined a long list of companies that are returning to downtown Chicago from suburbs like Oak Brook, Northfield and Schaumburg.

    Later this month, the top executive team at General Electric — whose 70-acre wooded campus in Fairfield, Conn., has embodied the quintessential suburban corporate office park since it opened in 1974 — will move to downtown Boston. When the move is completed in 2018, the renovated red brick warehouses that will form part of G.E.’s new headquarters won’t even have a parking lot, let alone a spot reserved for the chief executive.

    Why are these companies heading back into the central, urban areas that many of them exited for the (literally) greener pastures of the suburban corporate office park back in the last 20 - 30 years?

    Like we do for everything else, it's time to blame the millennials. More from the Times piece:

    The headquarters of Motorola Solutions will start moving to downtown Chicago on Aug. 15, though more workers will stay in suburban Schaumburg than move to the new offices near Union Station. But for the first time in half a century, top executives from the company will again be in downtown Chicago.

    “Where you work really matters,” said Greg Brown, the chief executive of Motorola Solutions. “No disrespect to Schaumburg, but customers and new hires didn’t want to come to the suburbs an hour outside of Chicago. We wanted energy, vibrancy and diversity, and to accelerate a change in our culture by moving downtown.”

    “This was the right thing in terms of strategy,” he said. “Millennials want the access and vibrancy of downtown. When we post jobs downtown, we get four or five times the response.”

    On the surface, it all makes sense, and isn't really all that complex. These companies and others are finding it harder to draw the new, often technical talent they need to some far-flung corporate outpost an hour from the city center whose primary draws are things like 'good schools' and 'ample parking' - things that don't often attract childless, Uber-preferring younger workers.

    But HR folks that have dialed in their workforce planning and talent attraction strategies to help inform the CEO and COO on matters such as these can't simply rest now that they have made the big call to relocate the company HQ back into the city. Eventually these new workers start to get a little older, start to think about wanting the things that make the suburbs attractive in the first place - the schools, the Whole Foods, the 1.2 acre lawn, etc. 

    What happens then? Does the organization head back out to the 'burbs? Do you keep a 'millennial-friendly' presence in the city regardless? Workforce planning has always been important, it is just getting harder I think than it used to be in the past.

    The best HR/talent advisor needs to have a little bit of cultural anthropologist in them I think, to better inform their organization's workforce and talent plans with at least an educated guess on what things outside of work are going to be important to the people that do the work. And where they want to live might be the most important of all.

    Have a great weekend!

    Also, in case you missed it - BIG news from the HR Happy Hour Show this week, read all about it HERE.

    Monday
    Jul112016

    Is it a great company culture or just a collection of great talent?

    Lots and lots of folks like to push 'culture' as the primary driver of organizational success. I have written and presented pretty extensively on why I think that's wrong. Check any of my 'Rock-Paper-Scissors' posts in case you are interested.

    One of the many reasons I get a little skeptical about this 'cult of culture' is that by its very nature culture is hard to define, to measure, and hard to draw any kind of a direct (or even a dotted) line from culture to actual results. I'm not saying it's impossible, but just really, really, tough.

    But another reason why culture gets too much emphasis is how easy it can be to confuse a great culture with what is really just a collection of great talent. This challenge was discussed, I think very effectively, on of all things an NBA podcast I was listening to recently, by ESPN writer Kevin Arnovitz on the July 6 episode of The Lowe Post Podcast.  Lowe and Arnovitz were discussing the recent decision by NBA star Kevin Durant to leave the Oklahoma City Thunder and join the Golden State Warriors - a team famous for their 'culture'.

    Here's Arnovitz' observations on culture v. talent, then some comments from me after the quotes:

    On an NBA team is culture permanent? Or is it really just transient? Is it this fancy word people like us to describe what is really just a concentration of good talent, but it seems like culture? But actually what it is is just really good basketball players there? Which is why they (the Warriors) win, it's not because they have any special connection to the community of San Francisco like people like to talk about. 

    Steve here - I think these observations are spot on, especially in a business setting like an NBA team where individual talent and excellence plays such a critical role in organizational success. Said a little differently, it is almost impossible to achieve the highest level of team success in the NBA without at least one superstar player, and one or two other All-star caliber players. You simply can't win without that talent level no matter how fantastic your team's culture may be.

    And I know that I get a fair bit of heat from folks for trying to make these kinds of HR/talent points using sports analogies, as some folks think that an NBA team and its dynamics offer little to us to learn from, back here in the real world. But I continue to think that they are valid ones to make, especially as more and more organizations and work teams have to rely on ideas, innovation, creativity, and quite simply talent, in order to succeed in a hyper-fast, hyper-competitive world.

    Ask yourself some of the questions about your organization that Arnovitz hints at.

    What would really drive increased performance at your shop? More talented people? Or a somehow 'better' culture?

    Which one of those levers is easier for you to influence? To measure? To replicate?

    This isn't about me trying to convince you that culture = bad and talent = good.

    It's about making sure we keep both in mind, (along with Strategy, if we really want to get back to my Rock-Paper-Scissors take).

    When you put 4 of the best 10 or 12 best basketball players in the world on the same team you are going to win A LOT of games. If at the same time you have a great culture, you may win one two extra games.

    But the great culture without the great players? Good luck in the draft lottery next year.

    Have a great week!