There are still some leaks in the advice given. One, it might well be that an employee's skill set has suddenly increased in market value, or that the employee has essential knowledge but genuinely has a better offer from a competitor. Telling her to "wait three months until the next review process" will probably lose that employee.
Two, the general tone of the advice is "plan things well in advance" (compensation, structural adjustment etc.). The fact is that you can never plan everything well enough in advance, especially things like structural adjustment. The article doesn't address what to do when your plans inevitably "collapse in the presence of the enemy".
Three, it is a fact that you can't simply fire an executive just because it is obvious to the wiser people in the company that he's incompetent. He will have plenty of friends and will be sure to raise hell for it. This is a sure way to get lots and lots of politics, and of the most unpleasant sort too. Oftentimes, the only reasonable solution is a "structural adjustment" - create a sinecure for the guy where he has few responsibilities and can safely slide into irrelevance.
-> Telling her to "wait three months until the next review process" will probably lose that employee.
Is that really the kind of employee you want? The minute you cave in, you start setting a dangerous pattern. I guess this is where your leadership skills should come into play and you convince the employee to wait. In the mean time you could perhaps plan to transition the employee to a better role/ add further responsibilities so that she feels like she has gotten something. And come appraisal cycle, you better reward her for sticking by you. Anyway, thats how I would do it.
What "kind" of employee are you referring to? The "kind" that feels they are not fairly compensated for their skills?
Asking someone to wait several months is asking them to place their faith in the fairness of the company and to trust that they will be rewarded for their trust and faith at the "normal" time. An employee's ability to trust in the company is going to be highly dependent on the company's past behavior, make sure your employee's have reasons to trust in you before you ask them to. A company needs to earn this faith, it'd be foolish to expect it blindly.
Also, the employee knows that she will not have the same negotiating advantage when the alternate offer expires. If anything, the whole episode will be a disadvantage by then.
I was referring to the kind that constantly keeps trying to get offers from elsewhere and uses that that to keep renegotiating their pay/ position. Of course you need a trustworthy environment and taking such a stand for everyone might actually build that.
Haven't you heard? The naive "loyal" employee doesn't exist anymore [1]. Now "permis" are basically contractors that chose company benefits over the extra cash. This means they are a lot more mobile and expect market value for their labor. If you can't react to this then get used to working with people who have lower market value, and replacing them when they're worth more.
They don't owe you anything if they work for you. They're not family. Welcome to the free market. Try not to die.
[1] well, indoctrinated people still do but they're probably not going to leave the place they're currently serving life at
Your insertion of the word "naive" makes this difficult to refute. But if I may rephrase by removing that word, I do think that loyal employees exist. I've been with my current employer 14 years with no plans to leave (as have the other 3 managers in my area, plus many employees). My wife has been in her company for 10 years.
There's much more to having a job you enjoy than just pay. Having one free of politics (as is my office) is important to me. Having a team that one gels with is also very important. I'm spending half of my waking life at work: I want to enjoy it.
If one is truly objective then they were covered in my "permis" statement. As you say, money isn't the only concern but one of many. And one can even stay a long time if the current place of employment continues to be the best overall deal.
But "loyal"? This is not rational. You should never be more loyal to some party than that party is to you. If you are then you've been indoctrinated. You've been had. It's fine to work somewhere a long time because you feel it's currently the best place to meet your overall objectives. It's not ok to work somewhere because "you owe them" or "they've been good to me in the past".
Being somewhere 14 years is certainly an "employee smell" if you will. Usually when someone stays that long it's because they have a misplaced sense of "family", believe their market value to be low (they could be correct), etc., etc. Not because they think it's the best overall deal out there.
Only if that employee feels that the compensation policy is not fair to begin with and that that employee does not stand a fair chance of having their skill-set properly evaluated.
It looks like you have to be a master in politics to minimize the politics in your company.
Keep your guard up at all times. Any attempt at being nice may be interpreted as permission for god knows what. It read a bit like "The Prince" by Machiavelli.
vgr presented this as "Information Parenthood" in his newsletter:
In other words, the "interpreting reality" part of leadership is rather like parenthood. Call it "information parenthood." You have to sustain a happy bubble for others. At the same time, as a leader, your own parent is reality itself, and it isn't a very nurturing one. Drunk and abusive Father Reality, not nurturing Mother Nature. Constantly facing the doubts and uncertainties of unfiltered realities, while protecting others, can be brutal. When things get hard, you will want to scream, "Why am I the only adult around here?"
So, I'm missing something from here: be a leader. Lead. When CFO-guy starts telling people you're grooming him for COO, you'll have to reply that, no, you're not (unless you are, but it doesn't appear so in the article). CFO-guy will be let known that the leadership skills shown in his recent actions clearly shows that he's not mature enough to be the COO. But most likely, if you're a leader, he'd know not to tell people he's being groomed unless he knows that's the case and knows you'll agree with him letting people know.
A very real path to lots of politics is creating a power void for others to navigate in by not acknowledging and respect the power you have.
The problem is that it's more like the old telephone game. The CFO might not have explicitly told anyone else that he/she is being told that they're being groomed for the COO, but by the time it gets around the grapevine that could very well be what comes out.
What about increased compensation transparency? Better communication? Fostering a collaborative environment in every sense possible?
Politics is always a misunderstood interpretation of other people's motives. "He's just in it for the money." "She only thinks of herself." These statements are too general and not true. A person could not live a whole life like that, it won't work.
People want to collaborate, they just don't know how. Seek to understand other people, then help them understand your perspective, and you start knocking out politics
Never forget the reverse side of this kind of compensation: it's a brake in the way of compensating outstanding performance. That intern that conceived, championed and shipped the FogCreek job board that ultimately brought in $1 million ? Joel wavered in circles for 4000 words before explaining he only got thanks. I wonder if he stayed at Fog Creek.
This type of compensation structure might work for programmers, but I think it would be extremely problematic to implement for many other classes of employees essential to a successful company. Specifically, this wouldn't work for people who function within a highly mercantile ethos, for whom the exertion of leverage in negotiation, political connections, and aggressively tiered performance-based compensation are expected and customary as a key determinant of compensation.
These dynamics, which generally offend the sensibilities of engineers and people who are accustomed to perceiving the world in highly deterministic, logical ways, play to the strengths of "sales sharks," marketing professionals, regional/channel managers, etc. It is not in these people's interest to have salaries transparently tiered, disclosed, or roughly equal for identical classes of role. If these people couldn't do some combination of (manipulate | persuade | flatter | schmooze | arm-twist) someone into giving them higher compensation, they aren't very good salespeople.
They would come to see a business with Fog Creek-like political conditions governing compensation as having perhaps noble goals, but not competitive compared to other opportunities at other companies. However, a successful company needs a certain amount of these people in order to grow.
Rigidly-structured salary policies often remind me of no-haggle car companies. Sure, it's good for the unmotivated, but the best will probably go elsewhere.
> Similarly, if you manage a junior employee and they ask you about their career development, you can say what comes naturally and generally get away with it.
Somehow, the wording of that statement makes me reluctant to work for the author as a junior employee.
His point was that you can be more open and easy going with junior employees. Letting an ambitious programmer lead a project of his own is pretty low risk.
There's also much more room for creating opportunity for one person without removing it for someone else.
In a business there's usually only one spot for a COO, but you can have many senior developers. Therefore the stakes are lower, because other members of staff don't see an opportunity vanishing when a promotion to senior dev is announced.
He's saying that a junior employee, who isn't experienced with corporate politics will take your advice to heart and that'll be the end of it. With the executive team, they're much more likely to use that advice as political ammunition, so you should be careful with what you tell them when they ask for more responsibility.
Oh, his point is perfectly clear - I particularly like the example that follows. It's just the choice of words is so unfortunate as to obscure the rest of the message.
For what it's worth, though, he underestimates the harm that a politically naive junior employee might be capable of wreaking - by simply being ignorant of political undercurrents that might exist.
The author raises some valid points, but I would add another important basic principle: Maintain constant open and honest communication with the entire company.
Simply interacting with employees either in person or through e-mail updates every once in a while goes a long way toward making people feel appreciated. Employees do want to hear about the company's latest big sale, the possible new direction for the company, etc. in a personalized or semi-personalized manner. Furthermore, these things provide a motivation boost and unified company vision, as well as open up the possibilities of feedback from lower level employees.
At least he used the term "minimise," rather than "eliminate." There are certain problems that exist among people, particularly in organisations beyond a certain size, that simply cannot be solved or mitigated entirely, no matter how much you may want them to be.
In the end, only the first piece of advice - "hire people with the right kind of ambition" - really matters. You have to build the right kind of organisational culture from the beginning.
A few points to add:
1) I would take a page from 37 Signals' general mantra and suggest that one should really try to avoid unnecessary hiring where marginal productivity of labour cannot be clearly shown to exceed marginal cost of labour, and try to keep the organisation as small as possible. Not only does the likelihood of "politics" increase proportionately with the size of the organisation, but there is a lot more room for strategic machinations and more time for people to contemplate how to grab a larger piece of the pie when they occupy roles or hold titles that don't _really_ need to exist, strictly speaking.
If a company people that would likely be trimmed in a downturn purely on the basis of general "uncertainty," rather than an objectively steep and protracted decline in sales, it's gone too far off the staffing cliff. This is particularly true in technology. Really, don't hire more people than you need just to feel like you're running something big.
This element tends to be well-considered when a company is very small, but usually forgotten once it gets to "mid-size" (say, 75+ people -- I know that's still "small" from many people's point of view, whatever).
2) One of the most persistent and agonising problems I have seen in my experience is small companies (say, 25 people or less) that--led by executives that come from mid-size or large-business management cultures--reproduce, in a fractal manner, the same kinds of pathologies that afflict large organisations.
Systems and processes that can be replicated at decreasing marginal cost are an essential and unavoidable aspect of significant business growth, but can be far more harmful than they are beneficial if enacted prematurely. I've seen companies of ~20 people with ~5 VPs, I've seen complicated and overblown and overly abstract departmentalisation methodologies imparted on companies of a dozen people, and, my favourite, the pervasive belief that if you blow big dollars on certain kinds of investments that are conceivably beneficial to a large company (six-figure accounting systems or project management systems), you will make big-company revenue.
I cannot believe how many times I have seen it claimed that a company of 1-2 dozen people should buy an enterprise-level project management suite because "that's what the big guys use." Yeah, well, that has no imaginable evidentiary relationship to what you should be using.
This idea that problems can be solved with ambitious throwing of fistfuls cash at them is naive and misplaced, and tends to warm the plate for a lot of political dynamics to play out.
Once people see that major strategy and/or purchasing decisions are made on the basis of bling or something read a half-hour ago on Delta in-flight magazine on return from Acapulco, they see the entire decisionmaking process of upper management as wide-open for gaming, as it is clear from that point that the primary objective of anyone seeking anything is to define and nurture a perception in the manner of textbook marketing.
Even worse, it even incentivises otherwise benign people to more cynical behaviour by setting undesirable common denominators; if you don't game the system, somebody else will. There are some people that have never had a cynical thought, and there are some people that always have cynical ulterior motives, no matter how benign and transparent the organisational culture, but it's the middle 80% of the bell curve -- the ordinary human being, who is pragmatic and given to occasional, circumstantial opportunism -- that you're really moving in the wrong direction by showing them that government-by-vague-impression, or worse yet, cargo cultism, does in fact drive most of the significant decisions.
3) In general, organisations with engineering-driven cultures (in the sense that engineering defines the primary discursive space and the central agenda) tend to do better with politics than sales-driven ones.
However, this must be balanced with the reality that to get high sales performance, you need to harness a lot of the kind of ambition and energy that only sales sharks have. If they feel marginalised or undervalued in an overly nerdy company that, from their point of view, spends much of its time on technical navel-gazing and twiddling its thumbs, they won't stick around long.
"As defined by Andy Grove, the right kind of ambition is ambition for the company’s success with the executive’s own success only coming as a by-product of the company’s victory."
I'm not sure I agree with this part. Yeah, I think it's important for the executive to not seek personal objectives at the expense of the company's, but it's unreasonable to expect them to look out for the company's interests before their own.
- Be incredibly thoughtful/diligent when it comes to new hires.
- Make sure to set compensation/promotion/responsibility expectations very early on.
If you can get all of the issues on the table during the hiring process (or shortly after the new hire starts), then you can probably preclude a lot of heartache down the road.
Two, the general tone of the advice is "plan things well in advance" (compensation, structural adjustment etc.). The fact is that you can never plan everything well enough in advance, especially things like structural adjustment. The article doesn't address what to do when your plans inevitably "collapse in the presence of the enemy".
Three, it is a fact that you can't simply fire an executive just because it is obvious to the wiser people in the company that he's incompetent. He will have plenty of friends and will be sure to raise hell for it. This is a sure way to get lots and lots of politics, and of the most unpleasant sort too. Oftentimes, the only reasonable solution is a "structural adjustment" - create a sinecure for the guy where he has few responsibilities and can safely slide into irrelevance.