Winning: The Answers: Confronting 74 of the Toughest Questions in Business Today (8 page)

Y
ou ask for three factors—but you really need twice that many “gold stars” to earn the grand prize of being a preferred employer. And it
is
a grand prize, because when you build a company where people really want to work, you’ve got your hands on one of the most powerful competitive advantages in the game, the ability to hire and field the best team.

But before we give you our six ways to arrive at that fortunate place, a reply to your question about how long the preferred employer process takes.

The answer is easily years, and it can be decades or more. That’s just the way it is with corporate reputations—they’re built annual report by annual report, career story by career story, crisis by crisis (because every company has one or two of them), and recovery by recovery. It probably took IBM about thirty years to earn its gold-standard reputation in the ’70s, less than a decade to lose it when the company stumbled, and then about a decade more to rebuild it to where it is today.

In today’s media-saturated world, however, there is a major exception to the generally slow pace of reputation building. Companies can become preferred employers virtually overnight thanks to a “buzz factor,” which is as potent as it is fast acting. In a technology-based company, buzz usually comes with an exciting breakthrough or otherwise paradigm-altering new product or service. Google, eBay, and Apple are perfect examples. Buzz, however, can also come from having a glamorous or prestigious brand, like Chanel or Ferrari.

But the buzz factor is as rare as it is precarious. Apple had it with the Mac, lost it when other PC manufacturers leapfrogged them, then recaptured it (plus some) with the iPod. This entirely common story explains why most companies have to become a preferred employer the old-fashioned way, grinding it out over time.

Here’s a checklist to assess your company’s progress.

First, preferred employers demonstrate a real commitment to continuous learning. No lip service. These companies invest in the development of their people with classes, training programs, and off-site experiences, all sending the message that the organization is eager to facilitate a steady path to personal growth.

Second, preferred employers are meritocracies. Pay and promotions are tightly linked to performance, and rigorous appraisal systems consistently let people know where they stand. As at every company, whom you know and where you went to school might help get you in the door at a meritocracy. But after that, it’s all about results. Now, why does all this make a company a preferred employer? Very simply, because people with brains, self-confidence, and competitive spirit are always attracted to such environments.

Third, preferred employers not only allow people to take risks, they celebrate those who do, and don’t shoot those who fail trying. As with meritocracies, a culture of risk taking attracts exactly the kind of creative and bold individuals that companies want and need in a global marketplace where innovation is the single best defense against unrelenting cost competition.

Next, preferred employers understand that what is good for society is also good for business. Gender, race, and nationality are never limitations; everyone’s ideas matter. Preferred employers are diverse and global in their outlook and environmentally sensitive in their practices. They offer flexibility in work schedules to those who earn it with performance. In a word, preferred companies are enlightened.

Fifth, preferred employers keep their hiring standards tight. They make candidates work hard, requiring an arduous interview process and strict criteria around intelligence and previous experience. Admittedly, this factor is somewhat of a catch-22, as it is difficult to be picky
before
you become an employer of choice! But it’s worth the effort, as talent has an uncanny way of attracting, well, talent.

Sixth and finally, preferred companies are profitable and growing. A rising stock price is a real hiring magnet. Beyond that, though, only thriving companies can promise you a future, with career mobility and the potential of increased financial reward. Indeed, one of the most intoxicating things a company can say to a potential employee is, “Join us for the ride of your life.”

As we said at the outset, the best thing about being a preferred employer is that it gets you good people—and that launches a virtuous cycle. The best team attracts the best team, and winning often leads to more winning.

That’s a ride that you and your employees will never want to get off.

W
hat you describe is one of the most common and destructive problems in business, and in society, for that matter—the lack of candor. No matter where we travel, we hear about organizations that are slowed down and gummed up by the very human tendency to soften hard, urgent messages with false kindness or phony optimism. This tendency is particularly prevalent when it comes to communicating about poor performance. Very often, bosses don’t come right out and tell underperformers how badly they are doing until, in a burst of frustration, they fire them. That’s terribly unfair to the person at the receiving end and often very disruptive to the business itself.

But lack of candor doesn’t just pervade performance evaluations. It cripples lots of conversations, many about how and when and where to spend scarce company resources. Yes, these kinds of conversations can be sensitive, politically loaded, or complex, or all of the above. But they’ll simply be better if they’re candid.

So, what can you do? The only option we know of is having the guts to start using candor yourself, even if you have limited power in the organization. When people use double-talk, push back with questions that cut through the nonsense and probe for reality. Ask, “What are you really trying to tell us?” or say, “What I hear you saying is…” and deliver the straight message yourself for confirmation.

Introducing candor to an organization, of course, is not without risk. In fact, it can be a total shock to the system, and being the first one to use it can get you killed, that is, marginalized or thrown out. But should you decide to get candid anyway, go slow and use humor when possible. In the best-case scenario, your candor will eventually be rewarded with candor in return—and sometimes the change is faster than you would imagine. As soon as many people experience candor, they can’t understand how they ever did business without it.

Y
ou may feel squeamish using candor with people who look like your parents, but rest assured that “old people” hate jargon, ambiguity, and double-talk just as much as you do. In fact, having suffered through it at work for decades, they will most likely applaud your efforts to be straight, especially after the shock wears off.

Shock—because without doubt, there will be a rough period of adjustment once you start talking directly and honestly about performance and results. Most people—no matter what their age—just aren’t accustomed to it.

Use it anyway. In the end, candor always works, and it always makes work better. Once you dispense with mixed messages and phony performance reviews, a team never fails to become faster, more creative, and more energetic.

And frankly, candor is your job. In fact, once you become a manager, it’s your obligation to let everyone who works for you know exactly where they stand. That’s how you build the best team—and win.

Your question, by the way, is by no means unusual. We’ve heard every possible excuse for avoiding candor—it goes against politeness in Japan, for instance, and egalitarianism in Sweden. But by far, the age issue you raise is the most common reason for discomfort.

Let go of it. Some “old folks” might object at first, but the good ones have been waiting longer than you think for straight talk to arrive.

Y
ou ask about Sweden, but we’ve heard this question in dozens of countries, from Germany to Japan to Mexico. We’ve even heard it in the United States, with its relatively flexible labor laws. There, people ask the variation, “How can I apply differentiation in my company? We never fire anyone—we can’t.”

It’s just not true. Differentiation can be applied anywhere—if it’s done right. Yes, there are always people who claim at the outset that the system won’t work in
their
culture, but over time, they come to see how differentiation not only helps employees improve their lives, it changes the competitive game. And they come to understand how differentiation isn’t at odds with any particular national character or set of labor laws. In fact, quite the contrary.

Look, differentiation raises hackles, as you mention, because of its firing component. The irony is, once the system is in place, it hardly ever ends up with managers terminating anyone. That’s because differentiation forces companies to implement regular, candid performance appraisals so that a 20-70-10 curve can be established. When people are told during these appraisals that they are in the bottom 10 percent, they usually move along of their own accord, more often than not finding jobs that fit them better. Almost no one wants to stay where they are at the bottom of the barrel.

Meanwhile, the rest of differentiation does its powerful work. Great performers get rewarded in their souls and pocketbooks, usually increasing their zest to achieve even more, and middling performers get the development and training they need to deliver better results and increase their opportunities for growth. It really is a system where individuals win and the company does too.

That said, it is true that differentiation is an easier sell in some countries than others. You mention legal issues with firing in Sweden, a prospect that immediately sends most managers running for cover. And when we were in Stockholm recently, we heard a lot about the cultural value placed on egalitarianism, not exactly a 20-70-10 kind of concept.

Even in such situations, where differentiation appears to be a challenging cultural fit, managers shouldn’t balk. You may have to go more slowly, put more effort into it, and pay more to people with whom you part ways. But the benefits far outweigh these costs. Start by introducing honest appraisals, making sure they are conducted at least twice a year. Let people know where they stand—with no sugar coating or double-talk. Make candor a real organizational value. Talk relentlessly about why the rigorous personnel evaluations at the core of differentiation matter so darned much. After all, they field the best players, and everyone knows that the team with the best players wins.

And who doesn’t want that—even in Sweden?

W
e might have bad news for you. Strategy is strategy, whether the company is large or small. It’s that killer idea—a “big aha” as we call it—that gives you a sustainable competitive advantage. Put another way, strategy is just a winning value proposition, that is, a product or service that customers simply want more than the other options out there. Beyond that, strategy is all in its execution—and on that front, small companies actually have something of an advantage.

Now, we don’t blame you for feeling as if most of the advice on strategy that you hear today applies mainly to big companies. It’s all so complex, as if strategy is some kind of high-brain scientific methodology. In fact, with the arduous, intellectualized number crunching and data analysis being promoted, well…you’d
have
to be a large company to have the people, time, and money to attempt it.

Don’t bother. The more you grind down into details and different scenarios, the more you get tied up in knots. Look, once you have your big aha, strategy is just a general direction. It’s an approximate course of action that you revisit and redefine according to shifting market conditions. It’s got to feel fluid—it’s got to be alive!

Small companies—and large ones—can actually come up with their strategy just by probing five key questions. What does the competitive playing field look like? What have our competitors been up to lately? What have we done lately? What future events or possible changes keep us up at night with worry? And given all that, what’s our winning move?

This relatively fast, theory-free process obviously doesn’t require an academic textbook or consultants to complete. In fact, it requires only a team of informed, engaged employees who can dream big and debate intensely—and ultimately emerge with a dynamic game plan.

Then it’s time to implement, and that’s when small companies really have it made. When there are only one hundred employees, or even a thousand, it is just so much easier to communicate strategy and get people excited about it with a shared, contagious intensity and spirit of can-do. And once the strategy is launched, small companies, like little powerboats, are able to adjust direction more quickly than corporate ocean liners. They can also hire faster, make decisions with fewer bureaucratic hurdles, and generally see their mistakes (and fix them) sooner than hulking rivals.

With that said, small isn’t totally beautiful when it comes to strategy. Here’s the rub: with constrained resources, you have to be right more often. Big companies can take a lot of swings; they can afford to invest in one or two or three big ahas that don’t work out. By contrast, one big strategy mistake can put a small company out of business.

The imperative for small companies, then, is to hold their value proposition to a higher standard. They really have to make sure they’ve got something singular—a new idea with a patent, a breakthrough technology, an extremely low-cost process, or a unique service offering. Whatever—it just has to have the power to attract customers and make them stick.

And when they do, small companies can celebrate a strategy that’s winning, knowing they did it without all the charts, graphs, reports, studies, and big fat stacks of PowerPoint slides that no one really needs, not even the big guys.