How Gratitude Decreases Burnout at Work

 

As Thanksgiving approaches, we should consider the role that gratitude plays not only for our personal well-being, but for the engagement we create among our employees at work.   Amber Kersten and her colleagues have published a new paper in the Journal of Personnel Psychology titled, "Paying Gratitude Forward at Work."  The scholars studied more than 350 employees from companies in the Netherlands, Germany, Finland, Belgium, and Malta.  They found that work-related gratitude is associated with lower levels of exhaustion and disengagement.   In short, those employees who are more thankful and appreciative about elements of their worklife tend to have lower levels of burnout.  Moreover, they found that interpersonal helping behavior (i.e., do people go out of their way to assist others at work?) plays a crucial mediating role in this relationship.  In other words, "gratitude stimulates interpersonal helping behavior, thereby alleviating disengagement."  

Can leaders cultivate a culture of gratitude in their organizations?   Kersten and her co-authors point to a paper by Ryan Fehr and colleagues that recommend certain human resource initiatives that can cultivate employee gratitude.   First, Fehr and his co-authors suggest employee appreciation programs.  Second, they recommend that organizations consider facilitating contact between workers and those customers (internal and external) who benefit from the work that they have done.  In other words, help people see the impact that they are having, even when they don't always see the impact on a day-to-day basis.   Third, offering employees constructive developmental feedback and opportunities to advance their personal development also can enhance gratitude at work.   Together, these three interventions can create a culture of gratitude that goes beyond simply recognizing people for their efforts from time to time on an ad hoc basis.   

Rethinking The Push to Sign Customers Up for Your Loyalty Program

Source: www.technologyinsights.com

Black Friday is almost upon us.  As consumers shop at many retailers, many people will be asked if they are members of the company's loyalty program.  If not, associates will ask customers if they would like to join.  Do loyalty programs add value?  Clearly, most retailers seem to think so.  Yet, I'm always intrigued by the retailers that don't have loyalty programs.  Consider Trader Joe's, one of the most successful grocery retailers in the world.  They have developed a cult-like following without offering customers a rewards program of any kind.  

Recent research suggests that companies might want to rethink the standard approach to loyalty programs.  Scholars Wayne Taylor and Brett Hollenbeck conducted a fascinating study of a major home improvement retailer's loyalty program. Thye examined transaction data for more than 10,000 customers at five store locations over two years.  15% of these customers were members of the retailer's loyalty program, which only offered customers rewards for purchases in a particular product category.  The scholars found that customers do spend more when they join the program, but the cause-effect relationship is unclear.  Did customers spend more because they became members, or did they become members in advance of making some planned major purchases?  Overall, the scholars don't see a substantial positive impact on profits from signing new people up for the program.

Interestingly, however, the scholars do find that a certain subset of customers do deliver additional profits when they become new members of the retailer's loyalty program.  The customers that reside a considerable distance from the retailer's store locations, but in close proximity to a rival's store locations, tend to be quite valuable as new members of the loyalty program.  In other words, loyalty programs work best when they induce customers to switch.   Otherwise, the rewards simply eat into your margins on purchases that would otherwise occur at your stores anyway.  For marketers, the results imply that one could and should focus direct marketing efforts on specific customers in particular locations when trying to increase membership in a loyalty program. 

Customer Experience: Does it End with a Bang?

HBS Working Knowledge reports on interesting new research from Professor Julian De Freitas. He has studied customer journeys, and he finds that a strong memorable moment at the end of a customer journey can help shape a very positive longlasting impression.   As I read about the research, I was reminded about an article I read some years ago regarding Ritz Carlton's legendary customer service.  At the hotel firm, employees are allowed, and even encouraged, to spend up to $2,000 to address a customer's problem.  That holds even when the issue is not the hotel chain's fault, but instead involves  a customer error.   Now, not every firm can empower its employees to spend that much money.  Most firms don't have the margins that Ritz Carlton has, nor do they have the customer lifetime value that the luxury hotel chain generates.  Thus, firms might have a much lower limit.  Still, the concept is fascinating, because it often means that a customer's experience can end with a very memorable positive moment, rather than a frustrating memory.  

Consider a family that enjoyed a terrific stay at the hotel, but then managed to lose their son's favorite toy.   No matter how great the customer service was during the visit, the family will have a negative memory associated with that vacation.  It's not the Ritz Carlton's fault, but it still is a disappointing memory that tarnishes the entire experience.  Interestingly, the $2,000 rule enabled employees to transform that disappointment into a "big bang" positive moment which left a longlasting impression.  Micah Solomon explains in this Forbes article: 

The Rescue Of Thomas The Tank Engine (And Creation Of A Customer For Life)

This summer, a family with a two year old son spent a weekend at the Ritz-Carlton’s Dove Mountain Resort outside of Tucson. As the guests were packing up to leave for the airport the mom realized her son had lost his favorite Thomas The Tank Engine toy.

She found two Ritz employees, Jessy Long and Nathan Cliff, and explained what was at stake: that this Thomas toy was her little boy’s favorite and the loss would be heartbreaking for him. Jessy and Nathan couldn’t locate the lost Thomas train anywhere, but realizing how much this mattered to the guests agreed together that something must be done. After the guests left the property for their flight home, Jessy and Nathan drove to a toy store and purchased an absolute dead ringer of the original train for the little boy.

Then, they composed a note in longhand to the boy–in the voice of Thomas The Tank Engine himself –telling a sweet tale about the extended vacation Thomas had taken after being accidentally left behind. The account included adorable pictures (see above) of Thomas exploring the property, cooking in the Ritz-Carlton kitchen, and more. Four days after the disappearance of Thomas, he arrived by mail to a family that was, understandably, blown away, and that has shared the story at every chance they can find on Facebook and elsewhere, proclaiming that “The Ritz has earned our business for years to come!

Your Brain on Zoom: Not Good?

Fortune's Orianna Rosa Royle reported this week on a new study by Nan Zhao, Xian Zhang, J. Adam Noah, Mark Tiede, and Joy Hirsch, published in Imaging Neuroscience.  The research examined the brain activity of people engaged in Zoom meetings vs. in-person meetings.  The scholars discovered that face-to-face interactions led to enhanced brain activity.    They wrote that,  "the exchange of social cues is greater for the in-person condition."  Specifically, the scholars reported:

Findings from this investigation suggest that differences occur at the visual sensing level (mean and standard variation of eye contact duration); the behavioral level (coherence and diameters of pupils); the electrocortical level (theta oscillations); the neuroimaging level (contrast between in-person and on-line faces); and the dyadic neural coupling level (coherence between neural signals in the dorsal parietal regions).   

Co-author Joy Hirsch told Fortune, “Zoom appears to be an impoverished social communication system relative to in-person conditions. Overall, the dynamic and natural social interactions that occur spontaneously during in-person interactions appear to be less apparent or absent during Zoom encounters.”  She concluded, "“Online representations of faces, at least with current technology, do not have the same ‘privileged access’ to social neural circuitry in the brain that is typical of the real thing."

What does it mean for those of us who do engage in hybrid work?  We have to think carefully about the type of work being done virtually vs. in-person, and we have to focus on the intensity of the collaboration required during meetings.  Some types of collaboration may be more suited to in-person interaction.  Moreover, we must consider how virtual engagement with others may affect our ability to read social cues and ultimately how the ability to read those cues impacts our ability to build effective working relationships.     

Does Your Personality Shape Your Investment Strategy?

Source: www.towardsdatascience.com

Kellogg Professor Zhengyang Jiang, LSE Professor Cameron Peng, and DePaul Professor Hongjun Yan have written an interesting new paper titled, "Personality Differences and Investment Decision-Making."  They found several significant links between personality characteristics and the strategies individuals employed when making financial investment choices.  

First, they found a link between neuroticism and investment decisions. Neuroticism refers to a "tendency toward emotional instability and psychological distress including anxiety, depression, self-doubt, and other negative feelings." Jiang explains to Kellogg Insight that, “People with high neuroticism tend to be the ones who invest less in the stock market, even after we control for the other types of individual differences. People with lower neuroticism tend to take more risks and buy more stocks rather than safer bond assets."  

Second, the scholars discovered that openness is another personality trait that matters. In other words are people "intellectually curious, willing to try new things, and aware of their feelings?"  People who rate high on openness tend to invest more in equities and less in fixed income assets.   

Third, the examined whether certain traits make people more likely to follow the crowd with regard to investment choices.  The scholars discovered that, 

"Personality traits also shape how investors react to the behavior of people in their social circles. The study revealed that both neurotics and extroverts are more likely to adopt a certain investment when it becomes popular among the people around them, but their path to this decision is likely different.

'An extravert derives utility (and pleasure) from interacting with others and tends to copy their investment decisions after such social interactions,' the authors write. Neurotics may also copy their friends, but 'one possible explanation is that more neurotic investors have more fear of missing out (FOMO), and therefore tend to follow the crowd.'”

What does it mean for us as individual investors, as well as for the investment firms and financial advisers interacting with us?   The scholars conclude that we need to look beyond demographic attributes such as age or wealth, or typical questions about people's aversion to risk.  Understanding our personality can help us determine whether we might be making suboptimal decisions at times.  

Chrysler's Brand Strategy

The title of this post may be a bit misleading. After all, these days, one really has to wonder whether Chrysler even has something that resembles a brand strategy. Several weeks ago, we heard from David Kiley at Business Week that the company was considering creating a new brand, Ram, which would cover its line of trucks (currently sold as Dodge Ram trucks). You would think the firm needs fewer brands, not more. Now, we hear again from Kiley that they are working with ad agencies on a concept whereby they would try to position Chrysler as an upscale brand, up there with the likes of Cadillac. Really? How will Chrysler achieve this, particularly given its poor reputation for quality and the dearth of exciting new products in its pipeline?

Clearly, Chrysler understands that it has a need to distinctly position its brands. For years, the firm sold Dodge, Chrysler, and Plymouth cars that were nearly identical. The brands had no distinct meaning. The firm killed off Plymouth, an understandable move given the brand confusion. Now, it's trying to position Chrysler as something quite different than Dodge. Again, conceptually, this makes sense. However, you have to have the product to support the positioning. You can't just use marketing and advertising to create a new brand positioning in smoke and mirrors like fashion.

Here's a thought... if Fiat wants to come up with distinct positioning for its various brands, why not make Dodge the truck brand, and Chrysler the car and minivan brand? That fits more closely with the product portfolio as it currently exists, and it doesn't stretch either brand to be something completely foreign to how it is currently perceived by consumers. Moreover, you wouldn't be worrying about selling cars under both brands that are essentially identical automobiles.

Risks of Using AI in Human Resources

Source: https://inc42.com/

Artificial intelligence has the potential to transform the way much work is done in the human resources divisions of companies. For example, Nickle LaMoreaux, IBM's chief human resources officer, told Fortune, “We’ve got over 280 different A.I. automations running inside HR right now. That’s what is different here. It’s making HR more human because we’re spending time on things that matter.” Fortune reports that IBM saved 12,000 hours in 18 months by applying artificial intelligence to a series of human resource tasks.  However, Paige McGlaufin has written an excellent article for Fortune highlighting several critical risks that may emerge as artificial intelligence transforms the way human resources departments do their work.

1.  The potential for bias:  Several companies have learned that artificial intelligence tools exhibit a bias against certain groups of employees or job candidates.  

2. The potential for data leaks:  Firms will have to be highly vigilant to be sure private information about employees and job candidates does not get leaked and misused by others.  

3.  The potential for relationship breakdowns:  Efficiency clearly can be enhanced using artificial intelligence.   However, one has to ask:  Will that efficiency have a detrimental impact on the social connections that are crucial to getting work done and retaining employees?  McGlaufin writes, 

"But that efficiency could come at the cost of interpersonal connections. Imagine a scenario where A.I. tools fully administer the hiring and onboarding process: “If I’m a new employee and A.I. is getting my materials and my laptop, onboarding, and online tutorials, I don’t feel connected to the organization,” says Dustin York, a communications professor at Maryville University. That could spell trouble for retention. “I can easily leave and go somewhere else.”

4. The potential for employee  pushback regarding AI tools:  Many employees exhibit an aversion to the use of artificial intelligence tools for certain tasks.  Julia Dhar, director and managing partner at Boston Consulting Group, told Fortune:   “Change doesn’t come super comfortably to human beings. And if executives and leaders are consistently out there only saying that this change is exciting and energizing, you’re unlikely to bring people with you."  

Low Quality Feedback Harms Employee Retention Efforts

Source: Thrive Global

Kieran Snyder, CEO of Textio, and Mallun Yen, CEO of the Operator Collective, have published some fascinating results of a study they conducted regarding employee feedback. You can read about their findings in this article they have written for Fortune, and you can examine their complete report here.  Synder and Yen describe how they studied feedback at one large organization in depth:

To explore this, we looked at the performance reviews of a large, international enterprise organization across a variety of roles. The data set contains performance reviews for more than 13,000 employees across two annual review cycles. Because we have two years of data, we can see whether an employee in the Year 1 data set is also included in the Year 2 data set. In other words, for each employee, we can see the quality of their written performance feedback, as well as their retention or attrition outcome the following year.

People who received low-quality feedback were more likely to leave the organization than people who received more actionable feedback. What’s more, this impact is causal, not just correlational: Our analysis controlled for potentially confounding factors such as numerical performance rating and employee tenure. People who received low-quality feedback were 63% more likely to leave their organizations than everyone else. This held true whether they were high, middling, or low performers.

Snyder and Yen go on to make a crucial point about some managers' unwillingness to provide direct feedback.  Trying to avoid a confrontation can be problematic. Some managers try to "soften" their feedback in ways that are detrimental to long-term employee retention.  They write: 

Shying away from giving direct feedback also causes employees to quit. Even when feedback is provided, it may be provided in conflict-avoidant and indirect ways. The practice of hedging, where the feedback provider couches their intended feedback in less direct language, is common... “I think” was by far the most common phrase used in hedging feedback. By introducing feedback with an “I think” statement, the manager is communicating that their point of view might just be a matter of opinion and that they might not be fully committed to it. This is problematic even in positive feedback, as the manager inadvertently communicates doubt about the praise they’re giving. For example, by saying “I think you did a good job on that presentation” rather than just stating that the report did a good job.

It matters. People who get performance reviews containing “I think” hedging statements were 29% more likely to leave the company within a year than everyone else.

So much attention has been placed on whether to eliminate annual performance reviews, or to alter various employee ranking systems. In some ways, we might be missing the most important point about developing our people - namely, the quality of the feedback (and the language we use in offering that feedback) matters a great deal regardless of the timing or the format in which we provide that feedback.  We have to overcome the tendency for conflict avoidance and train our managers to provide actionable, constructive feedback even when those conversations might be difficult.  

Is Office Chitchat an Unproductive Activity?

Source: NBC

Several weeks ago, Rachel Feintzeig wrote an article for the Wall Street Journal addressing the issue of productivity and distractions at home versus in the office. I found the end of the article quite interesting. One interviewee notes that she "remembers walking into her office complex every day at 9 a.m. to face the long warm-up: colleagues exchanging hellos, putting away their lunches, filling up coffee cups. 'Nothing really got done that first hour,' she said. 'That was our work-life balance, right there.'” The interviewee continued her commentary by talking about the value of just getting right to work:

Same thing at the end of the day, as people wound down, she said. If she wrapped her work early, she felt unable to leave even though the job was done. Starting a remote job last year, she found the idea of working, and breaking, on her own time thrilling. “You don’t have to go up to everyone and go, ‘How was your weekend?’ ” she said. “You can just get to work.”

Whatever we think about the remote work debate, this story suggests that some people are misunderstanding the value of informal non-work-related talk at the office. Catching up about others' lives, children, or weekend activities over a quick cup of coffee is not "unproductive" chatter. It's an important part of how we build relationships with others, and those relationships can be crucial foundations for getting real work done.

Recent research examined the impact of "office chitchat." Scholars Jessica R. Methot, Emily H. Rosado-Solomon, Patrick E. Downes, and Allison S. Gabriel have found that office chitchat can certainly be distracting. However, they also found that, "Small talk enhanced employees’ daily positive social emotions at work, which heightened organizational citizenship behaviors (OCB) and enhanced well-being at the end of the workday." For more on this topic, see Lindsay Mannering's article for the New York Times titled, "The Awkward But Essential Art of Office Chitchat."

The Relationship Between Leader Tenure and Organizational Performance

Source: https://fs.blog/open-closed-minded/

Can CEOs stay in office too long?  Do lengthy tenures often lead to poor performance?  In an influential paper published in the 1990s, Donald Hambrick and Gregory Fukutomi argued that CEOs experience "seasons" of their tenure.  Performance increases as they learn during the early years.  In those initial years, they are more open to experimentation and alternative viewpoints.  If they stay too long, leaders become entrenched in their views, closed-minded, and less open to dissent.   They begin to believe their own press clippings if they have been quite successful.  They tend to overly attribute the organization's success to their own prowess, rather than recognizing the positive impact of other members of the organization, favorable industry dynamics, or even good fortune.   Perhaps most alarmingly, long-tenured leaders may be more likely to engage in unethical conduct because they are not subject to adequate oversight, monitoring, and control by ineffective boards of directors. Boards may be so impressed by performance during the early part of a CEO's tenure that they grow more lax in their oversight.  They engage in excess deference to these long-tenured leaders. Hambrick and Fukutomi wrote:

At some point, the positive effects of a CEO's continuing tenure (primarily in increasing task knowledge) are outweighed by the negative effects. Job mastery gives way to boredom; exhilaration to fatigue; strategizing to habituation. Outwardly, such executives may show few signs of this malaise because they may have been well socialized in the importance of keeping up executive impressions and appearances. However, inwardly the spark is dim; openness and responsiveness to stimuli are diminished. The continuing incumbency of these executives is dysfunctional for the organization. 

Recently, Markus Schmid, Francois Brochet, Peter Limbach, and Meik Scholz-Daneshgari published an empirical paper in The Accounting Review examining this hypothesis.  They concluded that the average S&P 1500 firm experiences a positive relatiohship between CEO tenure and firm value for the first 14 years of a leader's tenure.  Then, performance begins to decline.   In short, they confirm the main hypothesis proposed by Hambrick and Fukutomi.   

Schmid and his colleagues offer some important qualifiers though. They find that the decline in performance occurs mostly in highly dynamic industry environments.  In those situations, the decrease in performance starts around Year 11.   In stable environments, performance may plateau, but it doesn't experience this dropoff.  The scholars also discovered another interesting point of variability. They wrote:

"Our results show that firm value peaks earlier during a CEO’s tenure for leaders who are less adaptable to change, namely specialist CEOs with relatively low general managerial skills, relatively older CEOs, and those who were appointed internally, while it peaks later for generalist CEOs and increases over tenure if they are younger or were appointed from outside the firm."

Newest Published Case Studies!

My newest case study and teaching note is now available in the Ivey Case Collection. The case focuses on Viking Cruises and examines their entry into the expedition cruise segment. Great case about the power of making strategic tradeoffs.

This publication comes in addition to several other recent case studies that I have published. You may wish to take a look, particularly if you are teaching courses in strategy or leadership/organizational behavior.

• Tractor Supply Co.  (co-authored with David Ager) 
• Executive Decision Making At Zola (co-authored with Amy Edmondson)
• Boeing 737 MAX: Company Culture and Product Failure
• Case Companion (an online tutorial regarding how to analyze a case study)

Coddling Employees vs. Fostering Learning & Improvement

Source: https://sabrinabakare.com/zone-of-discomfort

Alexandra Buell and Lindsay Ellis have written a startling Wall Street Journal article that is sure to receive a great deal of discussion this week.  I'm grateful that they have written this piece. The article is titled, "‘Feedback’ Is Now Too Harsh. The New Word Is Feedforward." The subtitle is: "More companies are ditching anxiety-inducing corporate lingo for what they see as gentler terms. Reviews become ‘connect’ sessions.'" Buell and Ellis write:

Employers around the country have good news for workers who dread chats about their performance: Feedback is on the way out.  Many companies, executive coaches and HR professionals are looking to erase the anxiety-inducing word from the corporate lexicon, and some are urging it be replaced by what they see as a gentler, more constructive word: “feedforward.”  Feedback too often leaves workers feeling defeated, weighed down by past actions instead of considering the next steps ahead, but “feedforward” encourages improvement and development, its proponents say... Companies are also banishing another negatively charged term: “review,” which they are replacing with “connect” sessions, coaching, self-reflection and opportunity discussions."

My initial reaction:  Are you kidding me?!?!?!   I certainly understand how employee reviews can be counterproductive at times.  Many managers struggle to provide evaluations and improvement recommendations effectively.  Employees sometimes become defensive, fail to acknowledge their own weaknesses, and do not heed the advice of their managers.  Yes, we have to improve the way we provide recognition, praise, and constructive criticism to employees.  There is no doubt about that.  I commend those experts in human resources and executive coaching who are working on these critical challenges.  However, there's a fine line between getting better at these important managerial processes and simply coddling employees.  It sure seems as though we might be crossing the line in some organizations.  Moreover, many employees may simply look at these changes in terminology as window dressing.  If they perceive the wording change as such, they may grow more cynical and skeptical about their leaders.  Trust and employee engagement may actually erode in those organizations.  In short, we may be doing more harm than good when we use terms such as "feedforward"or "opportunity sessions."  

Giving and receiving feedback induces anxiety and stress in many individuals.   We have all experienced it. However, our goal should not be to eliminate all discomfort in these difficult conversations. Some level of discomfort is critical to the self-reflection and learning process. We have to confront the truth, not run from it. Avoiding all discomfort should not be the goal.

I'm reminded of something my dissertation adviser and mentor, David Garvin, used to say to me as I worked on my thesis, developed my first case studies, and learned how to teach. He would quote Dr. Peter Carruthers of the Los Alamos National Laboratory:

“There’s a special tension to people who are constantly in the position of making new knowledge. You’re always out of equilibrium. When I was young, I was deeply troubled by this. Finally, I realized that if I understood too clearly what I was doing, where I was going, then I probably wasn’t working on anything very interesting.”

In short, David would remind me that discomfort was natural when receiving feedback. Being asked to make countless revisions in my work was frustrating at times. David would remind me of how far I had come thanks to the suggestions and recommendations of others. I'm thankful for all that constructive criticism early in my career. I benefited greatly from it.  I'm glad others strove to maximize my learning, rather than striving to minimize my discomfort.  

Lies, Lies, Lies: Hiring Managers and Job Candidates

Fortune's Paige McGlaufin and Joseph Abrams reported this week on some rather shocking survey results.  Resume Builder polled 1,600 hiring managers, and 36% of those individuals acknowledged they had lied to job candidates. McGlaufin and Abrams write, "Of hiring managers who admit to lying, around 75% say they lie during the interview, 52% in the job description, and 24% in the offer letter."  Moreover, many of these respondents indicated that they deceived candidates quite often.  Why do so many hiring managers lie?  The authors write,

"Some reasons hiring managers gave for lying include protecting sensitive company information, covering up negative company information, exaggerating benefits to attract job seekers, and generally making the job sound more attractive to find better candidates. What these managers falsify also varies—the most common lies are about the job’s responsibilities, growth and career development opportunities at the company, and company culture."

We have heard so much lately about the lack of trust and engagement among employees in many companies.  We've attributed these poor outcomes to a variety of leadership failures, but I've rarely read about how the problem may begin BEFORE the employee actually starts the job.  If someone is lied to during the hiring process, and then discovers the deception while on the job, they are highly likely to become disenchanted.  Many will simply quit.   In fact, the survey respondents indicated that roughly half of the employees who were deceived eventually quit the organization when they discovered the lies.

This article caused me to consider the incentive structure that these hiring managers likely face.  How are they measured and rewarded?  How does their ability to fill positions quickly affect their compensation and promotions?  By focusing on incentives, I'm not suggesting that we should excuse the unethical behavior.  However, we cannot simply hope to hire more trustworthy recruiters. The problem is not simply the ethics of certain individuals.  Given the widespread deception, we have to think systemically about the causes of the problem.  If we don't change the incentives, and the broader culture around recruiting, then the lies will likely continue.  

Tractor Supply Podcast and Case Study

Thank you to Joe Weisenthal and Tracy Alloway for having me on the Bloomberg Odd Lots podcast to talk about my latest HBS case study co-authored with David Ager.  The podcast episode is titled, "Why Tractor Supply is One of the Most Interesting Retailers on the Planet"

Will Rao's Thrive After Acquisition by Campbell's?

This week, Campbell's announced the $2.7 billion acquisition of Sovos Brands, a firm whose most famous and successful brand is Rao's.  If you aren't familiar with the brand, you should be.  It's simply the very best tomato sauce sold in the United States, and frankly, there shouldn't even be a moment of debate.  I should know.  As the son of Italian immigrants, I grew up never eating tomato sauce from a jar. We had a huge vegetable garden, and my parents grew tomatoes and made their own sauce. Still today, I grow my own tomatoes and store sauce for the winter, though I don't jar enough to last the entire year. When I have to purchase sauce, there's only one brand that I will purchase in a jar - Rao's marinara sauce. As a fan of the brand, I'm hardly alone. Ben Cohen of the Wall Street Journal writes, "Rao’s deliciousness is undeniable. Bon Appétit magazine called it “the best jarred pasta sauce there ever was.” When the Washington Post convened a panel of taste-testers, the judges tried a dozen brands and declared Rao’s their favorite."   Rao's is hardly a bargain though.  It's a premium brand.  A 32 ounce jar of Rao's currently sells for $10.29 at Stop & Shop.  You can purchase a 24 ounce jar of Ragu for $1.99.   Now you might think that I'm crazy to pay that kind of a premium for tomato sauce, but you would be wrong.  It's absolutely worth it! 

The Campbell's acquisition may be beneficial, but it understandably generates some concern.  Campbell's is known for selling a very affordable line of soups.  How will the premium brand Rao's fare within the Campbell's portfolio?  The company's track record of acquisitions is decidedly mixed.  In the late 1960s, it acquired Godiva's chocolates.  That brand thrived under Campbell's ownership for many years, but ultimately, the company divested Godiva because it didn't fit very well with the other products in the portfolio.  More recently, the company divested Bolthouse Farms at a steep discount to the price they had acquired the brand for just seven years earlier.  

The question remains whether valuable synergies exist between Campbell's and Rao's.  Why are these firms more valuable together than apart?  Can Campbell's manage the brand more successfully than it has already been managed?  That seems unlikely, given the parent company's lack of recent familiarity and success with super premium brands.  Moreover, they aren't buying a brand in distress; they are purchasing a brand that is already performing at a very high level.

Any attempt to drive synergies must be taken with caution as it may dilute the quality of the premium tomato sauce brand. For now, Campbell's has assured customers and investors that it won't change the taste and quality of the popular tomato sauce. Still,  we should expect some pressure to justify the acquisition premium by creating synergies.  That pressure can be counterproductive at times when mainstream companies acquire much more premium brands.  

Why Too Many Goals Can Be Counterproductive

Increasingly, organizations face pressure to achieve a range of goals, extending well beyond profitability and shareholder value maximization.  Many people note the benefits of this broader perspective.   Interestingly, though, Dartmouth Professor Pino Audia's work highlights one potential negative effect of defining too many goals as an organization.  Here's an excerpt from Kirk Kardashian's feature on the Dartmouth Tuck School of Business website regarding Audia's research:

Conventional wisdom says setting goals is a good practice, because it helps people and organizations accomplish their priorities. But it’s not that simple.  “Ironically,” says Pino Audia, Professor of Management and Organizations at Tuck, “having too many goals can make corporations less accountable.”   Audia has come to this perspective after 15 years of researching when organizations learn from failure, including writing a new book on the topic: Organizational Learning from Performance Feedback: A Behavioral Perspective on Multiple Goals (Cambridge University Press, 2021). One of his main contributions to the field of organizational behavior is his discovery that people show a tendency to form self-enhancing assessments of their performance. This tendency thrives in situations where performance metrics are ambiguous, giving people the latitude to see their own performance in a good light, even if others might assess it more harshly. “The proliferation of corporate goals creates greater ambiguity,” Audia explains, “and that creates greater latitude for self-enhancing assessments of performance.”

What does Audia mean by self-enhancement?  He argues that many business leaders don't learn effectively from failure because they find ways to convince themselves that they did not fail.  They try desperately to maintain their positive self-image in the face of disappointing results.  The establishment of a diverse range of objectives facilitates this self-delusion!  If many goals have been defined, they might point to the strong performance on a few of those goals, while trying to ignore or downplay poor performance on a range of other objectives.  Kardashian writes that, "a key feature of self-enhancing decision makers is that they are cognitively agile in the sense that they change the parameters used to assess performance to reach more favorable assessments."   Sadly, this "cognitive agility" means that leaders and organizations don't learn from failure as effectively as they should.  

Do Leaders Know What Employees Really, Really Want?

Source: www.lovetoknow.com

Fortune's Phil Wahba has written an intriguing article titled, "Too many CEOs don’t know what their workers need. Employee ‘engagement’ surveys can make the problem even worse." Wahba starts by giving an interesting example from Starbucks. He points out that former CEO Howard Schultz often took great pride in the tuition assistance program offered to company employees. Wahba writes:

It turns out that for many Starbucks “partners,” as the company calls its employees, tuition help at an online university wasn’t that crucial. They’ve proven to be far more interested in prosaic matters such as flexible scheduling, work conditions, and more predictable hours—the kinds of issues that have a much greater short-term impact on their income and quality of life.

Wahba goes on to critique employee engagement surveys administered annually by many organizations.  He notes that many questions are fuzzy and unclear.  The responses do not necessarily provide clear direction as to how leaders should change policies or behaviors.  At times, companies present the data in ways that make things appear better than they actually are.  He gives the example of firms that sometimes lump "4" and "5" responses together when reporting the data.  Of course, a "4" might be quite different than a "5" response.  Moreover, while the overall mean might look good on a particular question, certain subsets of the employee population might be responding much more negatively.  Finally, leaders don't always close the loop by communicating clearly to employees how they are making changes based on the survey results.  Employees think to themselves, "Why are we doing this? Are they actually taking our views into consideration? Is it just a waste of time?"  

Wharton's Peter Capelli offers a simple suggestion: ask managers to talk to their reports! He tells Wahba, "You could have supervisors actually go talk to people. Employees are usually not shy about telling their direct boss what’s going on."  In short, there's no substitute for one-on-one communication in which managers listen to employee concerns and then circle back to address them.  No survey can replace those valuable conversations.  

Will Disney Sell ABC, Other TV Networks?

Source: NBC News

In an interview with CNBC yesterday, Disney CEO Bob Iger acknowledged that Disney may divest its struggling legacy TV businesses. It may also seek a "strategic partner" for ESPN.  Reporting for CNBC, Lillian Rizzo and Alex Sherman wrote:

Disney is going to be “expansive” in its thinking about the traditional TV business, leaving the door open to a possible sale of the networks. “They may not be core to Disney,” Iger said, adding the creativity that has come from those networks has been key for Disney.

The press coverage regarding Iger's statement has focused on the decline in the traditional television business, particularly as more and more people "cut the cord" regarding cable television.   I think that's only part of the story though.  One can ask whether the legacy TV networks, such as ABC, ever belonged in the Disney portfolio.  

I've been teaching case studies about the Disney corporate strategy for two decades.  For the most part, Disney has always been a positive example of an effective diversification strategy with powerful synergies among the various divisions.  However,  the ABC acquisition (mid-1990s) has always been a more contentious issue.  What is the argument for Disney owning ABC?  Does Disney have a more powerful competitive advantage because it owns ABC?  It's not easy to see why it would.  If you examine Disney's stock performance during Michael Eisner's tenure, you can see two contrasting eras.  Prior to the ABC deal, the Disney stock outperformed the S&P 500 by a wide margin during Eisner's tenure.  After the deal, Disney stock underperformed the market during the second half of Eisner's tenure as CEO.  

While ABC does have studios that develop programming, it's first and foremost a broadcast network.   Acquiring a broadcast network is essentially forward integration for Disney.  My students and I have always debated whether there is a persuasive argument for vertical integration here.  Does Disney need to own ABC to have effective ways to distribute its content?  Hardly believable.  Disney has highly attractive content that clearly would be of interest to many different distribution partners.   Does Disney have negotiating leverage with other distribution partners because it owns ABC?  One might think so, but on the other hand, Disney may have some challenges when it comes to selling content to outside partners.  If you were another broadcast network, wouldn't you wonder why Disney was trying to sell great content to you, rather than putting that content on its own broadcast network?  When you forward integrate, you create potential conflicts of interest because you are now competing with your own customers.  Finally, could Disney achieve many benefits of collaboration without having to own ABC outright?  It would seem so.  After all, Disney and ABC worked together for years on a contractual basis when the network aired the Disney movie each Sunday evening for years.  Disney CEO Michael Eisner even used to introduce the movies on the network long before the company acquired ABC.  It would seem that contracts, partnerships, licensing deals, and the like could enable the Disney and ABC to collaborate effectively without having to be part of the same corporation.  

In sum, Disney divesting the legacy networks might be the right strategic move, but not because people are cutting the cord.  It might be the right move because the case for synergies was far weaker than ever acknowledged.  

Calculating the Cost of Meetings

Source: Getty Images

Kaz Nejatian, Chief Operating Officer of Canadian e-commerce company Shopify, has created a meeting cost calculator for his organization. Nejatian developed the software program to calculate the cost of meetings during a company hack-a-thon. According to Nejatian, meetings per worker have declined by 14% this year, and productivity has risen.  Bloomberg's Matthew Boyle describes this innovative new approach to curtailing excessive meetings:

The Canadian e-commerce company has rolled out a calculator embedded in employees’ calendar app that estimates the cost of any meeting with three or more people. The tool uses average compensation data across roles and disciplines, along with meeting length and attendee count, to put a price tag on the event.

A typical 30 minute endeavor with three employees can run from $700 up to $1,600. Adding an executive — like Chief Operating Officer Kaz Nejatian, who built the program during a company-wide hack day — can shoot the cost above $2,000.

As I read about this article, I contemplated why excessive meetings sometimes take place.  Many reasons exist - positive and negative.  For example, sometimes leaders really are trying to give a range of people an opportunity to provide input, and they are involving others to build buy-in for a course of action.  On other occasions, though, leaders are simply engaging in what Michael Watkins calls the "charade of consultation." In other words, they hold the meeting to make it seem as though they are soliciting input, but in fact, they have already made up their mind.  It's all a show.  Another reason we have excessive meetings in many organizations is that managers want to avoid accountability and responsibility.   They call others to meetings so as to avoid being put on the spot if a plan goes awry.  They intentionally create a "when everyone is responsible, no one is responsible" culture.  Without a doubt, many unnecessary or unproductive meetings take place every day in organizations.  

Is there any danger though in trying to reduce the number of meetings?  First and foremost, some issues are better hashed out as a group, rather than in one-on-one conversations or email threads.   If we eliminate meetings, but simply replace them with a long set of email threads, we may not truly be increasing productivity.  In fact, we just be shifting our time from one form of communication to another, and one that is perhaps more inefficient.  Second, successful implementation of key initiatives requires a great deal of coordination.  Moreover, it requires a strong shared understanding of the plan, something that may not be achievable without critical meetings.  Third, employees may come to feel as though decision-making processes are not fair, if they are left out of the deliberation process.  If they don't feel as though they have been given voice, then they may not commit and buy into the plans being enacted.   Finally, plenty of learning can take place in meetings, as junior employees soak in knowledge from discussions and analysis undertaken.  Moreover, they watch how others conduct themselves, make presentations, and answer hard questions.  This on-the-spot learning may be lost if too many meetings are eliminated.  

In sum, the goal is admirable.  We all can identify many unproductive meetings we have attended.  However, we need to remember that most things we do require input, support, and collaboration with others.  We do few things alone in organizations.  Meetings serve as important coordination mechanisms in many cases. 

A Gen Z Board of Advisers at The Body Shop

Source: HR Exchange Network

What's the average age of the Board members of your company?  For many companies, that average is much higher than the average age of their customers, and higher than the employee population as well.  You can see where decisions made by the Board might not always be informed by up-to-date thinking about the values, goals, beliefs, and needs of Gen Z and Millennials.  What can companies do to bridge this gap?  Orianna Rosa Royle has written an interesting piece for Fortune about one firm's attempt to address this issue.   In her article, she describes The Body Shop's Youth Collective advisory board. 

Other companies have tried similar structures, but not always with as much success as anticipated.  In the worst cases, employees view these advisory boards as all for show, without any real substance.  The Body Shop has structured the board and its process in ways that increase the likelihood of securing valuable input and constructive criticism, while building trust with employees.   First, 50% of the members come from within the company, while the other half are from external organizations.  This balance seems very important.  The internal members have a strong vested interest in the organization's success.  Meanwhile, the external members provide a valuable outside perspective, and they perhaps feel safer speaking up with their concerns or feedback.  

Second, not every issue comes before the advisory board. Royle writes that The Body Shop "avoids drawing on their expertise unless a problem needs out-of-the-box thinking that the older leadership team can’t crack."  In other words, align the issues brought before the advisory board with the core purpose of that group.  Don't simply try to replicate the conversations that a board of directors might have.

Third, and perhaps most importantly, The Body Shop has outlined the ground rules and shared norms for this group in a very clear manner. Most importantly, everyone has a voice, and there's a commitment to listen and consider each opinion in a genuine manner.  That doesn't mean the group always gets their way.  The Body Shop executive and board of directors member Chris Davis notes, “Do we always listen? Yes. Do we always act? No. When we don’t, we explain why. When we do, we explain why—that’s part of the deal.  There will always be feedback and full transparency so it’s clear that everybody is heard.”  In short, The Body Shop has tried to create a fair and legitimate consultation process.  Fair process means giving people voice and considering their views genuinely, but not taking a vote and making decisions democratically.  In the end, creating a strong perception of procedural fairness means explaining decision rationale, and specifically why leaders acted on the group's recommendations or why they chose not to do so.  If you don't create this perception of a fair and legitimate process, people will stop offering their input.  Trust will be broken.