INSIGHTS

Social Responsibility vs. Damage Control

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CVS recently announced their decision to stop selling tobacco products in their stores. They said they felt it was hypocritical to sell cigarettes behind the counter next to the smoking cessation products.

By their own estimation, this decision could cost them $2 billion in sales, but they felt they would make it up in new customers, with a polished image of their brand as the company that put their customers’ health above all else.

Their move was met with near-universal praise from everyone up to the White House and their stock prices increased by 2.9 percent in the week following the announcement. It was widely regarded as an example of how social responsibility and profitability were not mutually exclusive concepts.

When social responsibility is managed irresponsibly

However, not all companies have been able to manage socially responsible actions as well. This week, Adidas made an announcement that should have had the gay community cheering—but it didn’t: they decided to hire Tom Daley, the British diving champion who had recently divulged he had a boyfriend, to represent the firm’s new NEO line of clothing.

This news would have been met more warmly by the gay community, had it not come on the heels of the bad publicity Adidas received when it recently banned the word “gay” from its customizable line of shoes. Many felt the company’s use of Daley was simply pandering to a wealthy demographic it had offended, and Adidas didn’t get nearly the mileage out of the PR that they could have.

 Paula Deen’s sorry apology

Another disastrous example was celebrity chef Paula Deen’s admission she had been suffering from diabetes, but had not disclosed it for years until she began representing a diabetes drug for Nordisk.

 Tweeted Anthony Bourdain, a long-time critic of Deen’s high-fat, high-sugar recipes: Thinking of getting into the leg-breaking business, so I can profitably sell crutches later.

Compounded with the fact that Deen’s announcement came at the same time she had admitted using racially offensive language in a lawsuit, her socially responsible act was seen as self-serving by the public, and her brand has yet to fully recover.

Honesty is the best (and most profitable) policy

Consumers can smell a rat. If they sense that a company has done the right thing for the wrong reasons, it can be worse than if the company had done nothing at all. CVS showed how important transparency can be when announcing a socially responsible act.

They acknowledged that a healthcare company selling tobacco products had been a major disconnect and also were honest about their overall corporate strategy, which led to building trust and confidence in the consumer.

Social responsibility doesn’t have to equal sacrifice. Doing the right thing can be as profitable for a company’s bottom line as it is for the social good. However when ulterior motives and hidden agendas come into play, it can be a PR disaster. By embracing social responsibility and standing by the courage of our convictions, we contribute to our own personal gravitas as well as cementing the credibility of the company.

What are you doing to encourage social responsibility at your company?

The “Spillover Effect”: What the Lunchroom Says About Your Company

By Jane Cho

The lunch cafeteria in my New Jersey high school was populated by several different cliques: the athletes, the cheerleaders, the math club kids, the metalheads, the theater crowd, the all-black-wearing smokers. As a Korean-American teenager in the ‘80s, I had a perm, Aqua Net-sprayed bangs and friends in several different groups. This was unusual, since most students tended to stay within their own cliques. (I was what social scientists refer to as a “code switcher,” someone who communicates and moves adeptly between different identity groups.) The racial divides in my high school certainly played a role in how cliques were formed, and influenced the perception of in/out group identity. 

Unfortunately, these kinds of social and racial barriers tend to persist into adulthood and often become more difficult to traverse. Many corporate cafeterias resemble the high school lunchrooms of the ‘80s, dotted with groups segregated by race, status, or social identity. These persistent divisions have real consequences, both for individuals and for the bottom line of the companies where they work.

A new study on the racial wage gap by researchers Elizabeth Ananat, Shihe Fu and Stephen L. Ross found a link with geography—the larger the city, the larger the racial wage gap. The study was recently published by the National Bureau of Economic Research.

They suggest that the racial wage gap might have more to do with what economists call “spillovers,” patterns of social interaction that are influenced by race, rather than overt prejudice. A “spillover effect” describes the way that the informal sharing of valuable information in social settings influences how things work. Lunches, drinks after work, parties, company ski weekends—these are often the places where business is done, careers are made, and strategic connections advantage those who are able to access those often-closed networks

Though blatantly exclusionary clubs have mostly gone out of fashion and hard-fought legal protections are in place for targets of discrimination, minority groups often still struggle to access the closed social enclaves reserved for the powerful and well connected. 

Where minority groups are less successfully integrated, they are more likely to miss out on the benefits of “spillovers,” where tacit knowledge sharing opportunities are so beneficial to those who have access to them.  This applies to groups that are traditionally in the majority, like white men, if they are in a group where they are the minority. 

Researchers have long established the business case for leveraging diverse talent. Many effective strategies have helped business leaders unlock the complexity often associated with diversity and capitalize on the advantages of a diverse team. Businesses that do not take full advantage of spillover effects for all their employees pay a price in lost opportunity.  In other words, there is a huge benefit to the Spillover Effect, and it can directly affect career success, personal wages, company profits, productivity and innovation.  When organizations lack the strategy or tools to bridge divides across diverse groups, individuals lose out on opportunities and companies lose out on tapping into talent and fresh ideas.

A view of the lunchroom in any organization can be a powerful indicator of the informal organizational context, revealing the implicit values and norms that influence individual behavior. Where and with whom people sit to eat lunch might signal how comfortable individuals feel about crossing lines between diverse groups. 

In the emerging field of social networks analysis, researchers are establishing the power and importance of informal relationships. Theories of network diversity and tie strength have implications for how individuals approach career development and its impact on organizational commitment, employee engagement, and work satisfaction.

Take a look around your lunchroom.  What does it look like? Is it reminiscent of high school cliques or is it a desert wasteland, empty of people because they hide out at their desks? Most importantly, what does your organization do to create and take advantage of the “Spillover Effect?”

In an upcoming article we’ll look at the power of mentoring and other strategies you can use to get employees to take their trays and walk bravely across the lunchroom.

What’s your “Executive Presence Quotient?” (EPQ™)

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By Jacqueline Farrington

To be recognized as a leader, you first have to build the perception that you are one.  Leadership roles often elude professionals due to the absence of “executive presence.”(EP)  It accounts for 26 percent of what it takes to get that promotion, according to a recent study by the Center for Talent Innovation.  Presence alone won’t get an individual promoted, but the lack of it will slow, if not stop, career progress.  What are you doing to boost your EPQ?  The study revealed that gravitas, appearance, and communication are essential components that affect executive presence.  Over the next few weeks, we’ll be looking at each of these behaviors and putting the research into pragmatic suggestions and tips for how to raise your EPQ. 

Gravitas and Executive Presence

Gravitas is the primary building block of EP, according to 67 percent of senior executives polled in the survey.  But what exactly is gravitas?  The Oxford dictionary defines it as ‘speaking with weight, power or authority.”  Establishing gravitas indicates to your organization that you have the credibility and authority to be a leader.  So what enables a leader to speak with weight, power or authority?  The research discovered that executives view gravitas as a compilation of six core characteristics:

·       Confidence and calm under pressure

·       Acting decisively—making and standing by tough choices

·       Integrity and speaking truth to power

·       Proving emotional intelligence

·       Reputation and standing

·       Vision

This week, we focus on “Confidence and Calm Under Pressure”

After Capt. Chesley B. “Sully” Sullenberger III’s US Airways Flight 1549 plane was hit by a flock of birds, both of its engines stalled and the plane began a rapid descent, while smoke began to fill the cabin. His initial thoughts were, “this can’t be happening, this doesn’t happen to me.” As he realized the plane would never make it to the runway, he recognized, “I need to come up with a plan,” and decided his best chance was to land the plane in the Hudson River. All 155 passengers and the crew aboard the plane survived.

The ability to remain calm and confident under extreme stress is a critical component of establishing gravitas.  79 percent of executives believe this is crucial for women and 76 percent believe it’s a must for men.

While most of us won’t ever have to land a stalled plane, we do experience moments of extreme stress.  Having the presence of mind, confidence, and courage in your abilities or convictions—be it in front of your boss or your Board—does indeed earn you more respect and the benefits that come with that.  

 How do these leaders do it?

Remaining calm under extreme pressure is a combination of two things: what happens in our brains and what happens in our bodies.  In order to tackle those tough situations, we need to work both from the inside out and the outside in.

The Inside Out

In recent years, neuroscientists have been able to observe what happens inside the brain when people, like Captain Sully, are forced to make decisions and act under pressure. You might assume that these leaders don’t feel fear or are somehow less scared than the rest of us, however, that’s a false assumption.  Fear is an automatic response to what the brain perceives as danger, generated automatically by the fear centers of the brain, such as the amygdala. As New York City Mayor Rudolph Giuliani reflected on his experience on 9/11:

“I would say to myself, ‘I am going to do what my dad said. I am going to pretend I am calm. If I pretend I am calm, I can think better for everyone else and also that will give everyone else an example to remain calm.’ The best thing you can do in an emergency is just remain calm or pretend you are. You are going to be able to think much better, you are going to be able to think, “How do I make this better?”—Morning In America, Vol. 314

What, then, allows leaders to make effective decisions in extreme duress?  How do they keep their fear from turning into paralysis or panic?  Scientists have found that a crucial element is the ability to balance primitive, intense emotions against a more rational and deliberate thought process. This balancing act is known as metacognition—a sort of thinking about thinking.

Pilots call this skill “deliberate calm,” because staying calm under extremely stressful circumstances requires both conscious effort and regular practice.  Captain Sully had logged over 25,000 hours of flying.  He believed in his and his team’s ability to safely land the plane.  With our coaching clients, we call this “confident uncertainty.”  While Captain Sully didn’t have all the answers and there were many variables he couldn’t control, he focused on what he could control and what was the best action to take to safely land the plane.  Rather than giving in to panic, paralysis and the “inevitable” crash of the plane, he asked himself, “How can I solve this problem?” He focused on action—what could he do next to improve the situation?

Of course, we’re not all pilots, but we are often forced to act in a crisis: tough questions from the Board and shareholders if profits are plummeting in a turbulent economy, managing the PR fallout from a failed product launch. Captain Sully was able to calmly tell his passengers to brace themselves for the landing on the Hudson River. By showing his personal calm and control, he was able to model behavior for the passengers and crew, averting panic in the cabin and allowing for an orderly exit from the plane, ensuring safety for all. Similarly good leaders can model behavior for their company. If you appear to have things under control, it will inspire confidence in everyone else that things will turn out all right.

Having the mindset of “confident uncertainty” allows us to recognize that we have the ability to look past the primal instinct of fear and thoughtfully decide how we need to think about a situation. Rather than focusing on the fear, metacognition allows us to rationally assess our options, focus on what we can control, and then settle on the best option. When we trust in our capabilities, track record, and expertise, we remind ourselves that we have the ability to effectively manage difficult or unprecedented problems.  It allows us to remain calm when every cell in our body is screaming for us to panic.

The next time you’re faced with an extremely stressful situation, remind yourself of the skills and experience you have to help you problem solve.  Tell yourself, “I may not have all the answers, or be perfect, but I do have the ability to choose how I want to respond to this situation, rather than react.” This is where having a high EPQ is key. Your executive presence can make the difference in people’s perception of whether the plane is crashing or landing safely. 

In an upcoming article we’ll look further at the power of mindsets to help you remain calm under pressure as well as how to work from the “outside in” and use your body to keep the panic at bay.

 

 

Microsoft Restructuring Memo: The Good and the Bad

By Jacqueline Farrington

Last week, after months of speculation, Microsoft CEO Steve Ballmer confirmed what many had suspected—that Microsoft was planning a major restructuring of its company. Ballmer’s memo, entitled “One Microsoft” detailed how the company was going to consolidate departments to create a more holistic Microsoft experience, similar to Apple’s offerings, instead of having its various products ensiled in their own worlds. The strategy has been labeled as everything from “necessary” and “risky” to “too little too late” to everything in between.  

A 2013 Gallup report on “The State of the American Workplace” showed the importance of employee engagement. Over a two-year period they found that companies where 9.3 engaged employees outnumbered every disengaged employee showed a 147 percent increase in earnings per share (EPS), where companies that had only 2.6 engaged employees to every one disengaged employee saw a two percent drop in EPS. So, the message is clear that keeping the faith with your employees is essential for a company, especially in times of turmoil.   

A major change announcement always has a huge potential to send shockwaves through a company (not to mention its shareholders). How the announcement is handled is critical to reassuring everyone that the ship is being righted and not sinking. If people believe that the ship is taking on water, top talent may start heading for the lifeboats. How well did Ballmer announce the restructuring in his memo? Let’s take a look.

The good:

Transparency. There’s an old saying in the financial services industry: you don’t lose clients because you lose their money; you lose clients because you don’t talk to them while you’re losing their money. Ballmer was smart to get out in front of the story. By prepositioning the company for what was ahead, he was able to allow the employees to prepare mentally for the changes and head off some of the concerns they might have.  Granted, there were rumors floating around about Microsoft’s plans for months, but too often companies don’t communicate anything about a reorg until after the fact, as though they have something to hide. Not only are such delay tactics bad for morale, they fuel the rumor mill, create panic, motivate top performers to polish their resumes, and make recruiting top talent from outside virtually impossible. Telling it to your team straight means employees will feel they are a part of the process instead of being steamrolled by it, and that ultimately means greater buy-in to the change.

Vision. Ballmer uses the memo to provide a vision for where he wants to take the company: “one strategy, one Microsoft.” He makes a clear case why these changes are necessary for the survival and growth of the company and doesn’t leave the impression that these are arbitrary changes handed down from the top. He reminds his team of the company’s original vision, “to help people realize their full potential.”  Inspirational leaders are future focused while at the same time reminding their teams of their historical narrative and the accomplishments they’ve achieved. This invites them to buy in and commit to being part of the rebuilding effort.  We have delivered many great products and had much success in market, but we all want more.” Of course, it may have been more effective had he specifically addressed some of the company’s recent challenges (Windows 8 anyone?), which would have gone a long way to fostering even greater trust and involvement among employees—but more about that later.

Specificity. The high-level view of the restructuring is important, but what most employees will be looking for in this memo will be how this is going to impact them personally. Ballmer does a nice job in providing an overview of how the reorganization will impact leadership roles and reconfigurations of teams, among other changes. Obviously, he can’t specify down to an individual employee level how this will impact them, but he can give them a pretty good idea of what this restructuring is going to look like. Specificity demonstrates to employees that the situation is under control, that there’s a plan in place, and that the leader is in charge.

Ballmer’s memo was far from a perfect “10” though. Here are the areas most lacking:

The bad:

Jargon. Maybe every Microsoft employee is secretly an MBA (or plays one on TV), but that’s seriously doubtful. Ballmer uses “MBA 101” jargon to excess in his message. Not only do you start to ask, “What, exactly, is he talking about?” but it’s easy to wonder if he’s purposefully overusing business jargon as a way to smokescreen readers. The answer is, “Probably not,” but why give even the possibility of appearing disingenuous if you don’t have to?  Using plainer language would have created a greater sense of transparency and assured the memo would create more clarity than confusion.  Here’s just one example:

“As a global company with literally billions of diverse customers in an accelerating business environment, we must have a clear strategic direction but also empower employees closest to the customer to make decisions in service of the larger mission. This is tricky in a big company, but it is the key to higher levels of productivity, growth and customer satisfaction.” 

Um…is he actually trying to say one clear strategy will empower employees to make decisions?

Brevity. At more than 2,600 words, brief this memo is not. The length alone can easily cause readers to miss important points.  As with the overuse of business jargon, verbal excess will create some question if he’s really saying anything or just trying to bury problems under an avalanche of words. Enough said.

Engagement.  Nowhere in the memo does Ballmer actually ask employees to get involved by sharing their ideas or suggestions. He asks them to buy into the plan and to get on board with it, but what about input or feedback? There is no call for comments, discussion, submission of ideas, or anything else that will make employees feel a part of the reorg instead of merely being caught up in the chaos. When employees feel involved, they tend to buy in, and the more engaged employees are in any undertaking, the more successful it will be. By not encouraging more actual involvement, Ballmer misses an opportunity to create greater buy-in.

Responsibility. The elephant in the room of this memo is what brought Microsoft to restructure in the first place. Ballmer didn’t need to belabor past mistakes, but a short summation of why Microsoft was heading down a path that ended in a cliff would have helped justify why the reorganization was necessary. It might put to rest the argument, “If it ain’t broke, don’t fix it.” It may also have helped engender trust in the employees. The ability to say, “Hey, we screwed up. I need your help in getting back on track,” goes a long way in establishing a bond with your employees. Besides, they’ve already witnessed the recent product failures for themselves, so it’s not really telling them something new—it’s just owning it.

Change is the one of the hardest things for leaders to manage and massive change is massively harder. How you present the change is the first and maybe most crucial step to how the change is going to play out. It will be fascinating to see how things play out at Microsoft.

What’s your reaction to Microsoft’s announcement? Has your organization gone through its own reorganization lately? Are there any lessons you can learn from Ballmer’s approach (good or bad), or is there anything you could teach him?

Share your thoughts and experiences here.