Saturday, October 1, 2011

Are You Too Knowledgeable?

When I begin working with a new client, one of the first things I do is to interview their stakeholders. This helps my client and me to learn more about their most effective behaviors as well as those that are potential areas for development. After doing many of these over the years, I've learned to look for certain things that might signal a developmental need.

Interestingly, there is one strength that is often mentioned that I like to pay attention to; particularly when it is consistently mentioned by stakeholders. Although it is an important one, this strength can cause some problems with the relationships the leader has with peers, direct reports and others.

You might be surprised to learn what this potentially problematic strength is. Are you ready? This wonderful – but often detrimental strength is knowledge. Not wisdom or understanding, but subject and/or technical knowledge.

Do you pride yourself on what you know? Do you constantly let others know how much you know? When you put too much emphasis on your knowledge as a source of influence, the following negative consequences can occur:

Listening stops: When you believe you know all of the right answers, you stop listening to other's ideas. This stifles creativity, and can be a source for flawed decision making.

Respect declines: Your respect for other's knowledge and opinions might deteriorate. They feel it, and morale suffers. They may stop respecting you and others around them.

Delegation is absent: Since you know more than others, you might think you are the only one who knows enough to get the work done.

Learning is lacking: Since you aren't delegating, your direct reports aren't challenged to do new things. If they aren't challenged, they aren't learning and developing.

You're working too hard: Knowledge can be such a burden. Not only does it require you to keep up with all of the new knowledge, it may keep you from delegating because you are "the only one who knows enough to get the job done".

Winning is the only option: Compromise or collaboration may be out of the question. Your knowledge reigns supreme, and you know you are always right. Dissention, alternative ideas, or different thinking may not be tolerated.

Promotion is not likely: Your reliance on knowledge may prevent you from developing wisdom, understanding, intuition, respect for others, compromise – all of which are needed to succeed in the upper levels of leadership.

Knowledge is necessary for leading. Over-reliance on your knowledge can be a career derailer. Temper your knowledge with listening for understanding, respecting others' opinions, delegating and trusting others to get the work done, being open to learning new things, compromising and collaborating. Your leadership abilities will soar!

Thanks to Mary Jo Asmus / Aspire-CS

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10 Incredibly Stupid Things Networkers Do (Or Don’t Do) That Short Circuits Them

As an Executive Coach with over 30 years of experience, I'm continually asked, "Why isn't my networking working?" Here are a few things to check up on.

  1. You have one of those "spam blockers" on your e-mail that requires people to fill out a form and ask for your permission before your e-mail will go through. Disable it now! If you're job hunting and employers want to reach you, forget it if you make them work to get to you. There are plenty of other candidates out there who aren't as fussy as you are. Put up with a little spam to make life easier for those you want to hear from — or you probably won't hear from them.
  2. Having a home phone number that is answered by other people. Make sure your networking information only has a cell phone — and you answer it promptly and check messages frequently — if you have anyone living at your house other than you. This includes a spouse, who may either forget to give you an important message, or become aggressive in trying to "help" you get the job. Make sure you and only you have control over your phone.
  3. Having a funny message on your voice mail. "Hi there. We're making mad passionate love right now, but we'd love to talk to you when we're done," or, my favorite, "They're coming to take me away…hee, haha, hoohoo, hee" is very funny for your closest friends (maybe), but inappropriate for employers to hear. And, folks, your child on the answering machine is cute only to you, and, perhaps, the grandparents. No one else wants to hear it.
  4. Not having business cards. Get them now. Make sure your name, a mailing address, phone number and e-mail are all on there. Have 1,000 made. Don't use those flimsy computer printer cards. You can print your own if you have a very good printer and use heavy cardstock, but get them professionally cut (about $6.00).
  5. Not having a concise statement of who you are and what you do. While you may do many things in life and in your employment, if you can't be put into a mental "box" in about 30 seconds people will write you off. Be sure you can pinpoint what your main professional function in life is. If you can't, get help.
  6. Dressing inappropriately for networking events. Obviously, you're going to dress differently for a singles event designed to generate dating from a business event designed to generate new business or make professional contacts. Make sure you know the rules of attire for each event, and don't dress in any way that makes you seem less than professional.
  7. Grabbing a table or a corner with your friends and camping out there. You're there to meet new people. Meet them!
  8. Excessive alcohol. A drink or two can loosen you up enough to network well. Five or six drinks can start a reputation as a lush. Carefully watch your alcohol intake. And keep in mind even the best event has very limited food. Eat before you go to an event to counterbalance the alcohol you're probably going to consume. One glass of wine on an empty stomach can be too much for some folks.
  9. Reeking of cigarette smoke. If you must persist in smoking, please make sure you're well aired-out before you come into an event. Smoking is a major turn-off for employers, prospective business partners and most of the rest of the sane world.
  10. Reeking of perfume or cologne. I strongly suggest not wearing either perfume or cologne at all, and being incredibly careful about scented hairsprays, lotions and body washes. Many people have severe allergies. Someone who reacts to you by sneezing and coughing in your presence isn't going to help you in any way. They will avoid you. Of course (see number nine above) if you must continue to smoke, a little cologne smell is probably marginally better than smelling like a stale ashtray. But don't marinate in it, please!

These tips will help to make you a better networker. One tip not included above is to join the appropriate LinkedIn Groups. Please feel free to both invite me to connect with you and join my LinkedIn Group, "Getting Employed."

John Heckers is an Executive Coach and Transition Coach in Denver, Colorado. His personal blog, has many more great articles.

Thanks to John Heckers / Careerealism

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9 Ways To Be Innovative When Your Boss Isn’t

A common complaint that I hear when I run innovation workshops is this, 'I have plenty of really creative ideas but my boss just isn't interested in trying anything new. What can I do?' Let's leave aside the possibility that this view is itself distorted and take it at face value. It is a tricky situation that most of us will experience at some time. What can be done? Here are some approaches that can prove helpful:

1. Understand his objectives and motivations.

Selling an idea is like selling any other product. You have to understand the needs, motives and priorities of the customer. What are your boss's 'hot buttons'? What are the issues that really worry hime or her? Is they motivated by pride, ego, money, career advancement, power, recognition or do they want an easy life?  If you can discover their goals and motivations then you can try to present your idea in a way that plays to them. Stress the outcomes of the idea that will help him or her in one or more of these fields.

2. Understand his decision making style

How does your boss make decisions? Does he prefer numbers, reference from trusted sources, evidence of proof elsewhere, avoidance of risk, logic or emotion? Does he make quick decisions or does he like to chew things over for a while?

A recent article in Harvard Business Review by Williams and Miller identified five different styles of decision maker. If you know which style fits your boss then you can tailor your message to give it the best chance of success.

3. Align your idea with corporate objectives

It will help if you can show that your idea fits with current corporate objectives. Show clearly that the suggestion will benefit the larger organization.

4.  Choose the right time

Don't barge into your boss's office at the end of a hectic day and buttonhole him with your great idea. Chances are he will simply say no.  Instead ask him for some time to discuss an important issue and mention the benefit. "Can you spare 20 minutes first thing tomorrow morning to review an idea to significantly improve departmental productivity?" Don't give the idea away now – you need his full attention to cover it properly.

5.  If he is risk averse sell risk avoidance

Sell the benefits of the idea and try to match them to his needs and priorities. Show that you have thought about the risks, costs and downsides. If your boss if risk averse then stress the risks of not implementing the idea. "If we don't seize this opportunity now, other departments could step in ahead of us and gain an advantage."

6. Don't ask for approval, ask for suggestions

With some bosses it is better not to present a fully formed plan but simply to introduce the concept and ask for his input and advice. Do this if he prefers to discuss things and shape them rather than review and approve. This way you can let him form his version of the idea and claim the credit. You will have the quiet satisfaction of knowing that it came from you.

7. Build a coalition of supporters

With some ideas it is better to gain some initial support before asking for approval. Who do you need on your side to help push the idea through? Have a chat with them first.

"I checked with Betty in IT and with Bob in HR and they agreed that we can resource this if it is approved."

8. Try the company suggestions scheme

If your boss shows no interest (and probably never will) then you can always try the official suggestions scheme. The evaluator may see the merit of the idea. In any event it is registered and that means it can be discussed in the open.

9. Build it anyway

This is the ultimate act of confidence and bravado. Do it in your own time as a 'skunk works' project and then you can demonstrate the prototype to garner support. Present it as a fait accompli and boldly shrug off any notions that it needed prior approval.

There is considerable evidence that middle managers block innovations. So if you want your idea to succeed you will need a clever way of gaining approval. Don't give up; your organization needs innovators!

Thanks to Paul Sloane / Life Hack / Stepcase Limited

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When Working Memory Kicks In

Unless looking for lost golf balls, that hold up games –  stay with a thing until you find it. The brain's working memory kicks in to land life-changing dreams, when you GO FOR IT. On the flip side of waiting for windfalls – winners run with What if … possibilities – and working memory lands new deals.

When Working Memory Kicks In

How so?

An autistic teen ran for his chance, from a basketball bench when his team lost yet another devastating shot.  J-Mac wondered what if he could score – in spite of the fact he'd never before been allowed off the bench.  With all hope to win lost, the coach pointed to J-Mac, who suddenly shocked an entire nation.  As if Magic Johnson shot, he scored 20 points in the final four minutes. Working memory kicked in and an autistic teen won the title for Greece Athena High School. Nobody except this alert teen expected it. In fact, when denied a place on his dream team, J-Mac  agreed to serve as water boy, cheer leader, and captain just to participate.

In Spite of Setbacks Hold Onto a Dream

A resilient what if question led J-Mac to win gold on his first time off the bench, and the same brain equipment will kick in for you. Working memory triggered a best selling book with Daniel Paiser titled,  The Game of My Life: a True Story of Struggle, Triumph and Growing Up Autistic. You may not end up on CNN as J-Mac did, but imagine a novel initiative stoked.

Wins rarely take as long as people think, and often come with more missteps than most expect. J-Mac put it this way, "My first shot was an air ball. Then I missed a lay up., and then as soon as the second shot, as soon as that went in, I started to catch fire."

Think like a Genius

Ask what if, and jump in with two feet? Yes, power up both sides of your brain, as J-Mac did in last few seconds of that losing game. From the second he suited up, J-Mac expected gold. Others saw an autistic player enter an already lost game.  J-Mac spotted an opportunity and his working memory did the rest to set up a win.

Forget Past Failures

Rather than focus on regrets, rev up winning brainpower as this teen did, by mentally reinventing novel approaches to problems that hold others back. What if questions open success opportunities, one brain cell at a time. Stoke curiosity for what could be, and your brain's creative capability begins to convert ordinary steps into winning strategies.

Brain gurus would say J-Mac generated new neuron pathways to achieve his dream. Whatever you call this mental reboot, it takes less effort and adds more dividends to a day than most people predict. What if you triumphed, as J-Mac did, over one challenge today?

Unlike your brain's basal ganglia that defaults into boring routines and slides you into ruts, the working memory springs you forward to triumph in life-changing opportunities. Worth a risk?

Thanks to Dr. Ellen Weber / Brain Leader And Learners

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Help Out

Don't just visit when you spend time with your team members. Help out. Do little things that help them get their work done. 

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Discrimination At Work Not Necessarily A Bad Thing

Discrimination at work isn't necessarily a bad thing.

I overheard a conversation the other day between two employees at a local restaurant. One of them said, "I am so sick of our boss. He is always discriminating against me for coming in a few minutes late or not getting my work done as fast as Joe."

The second employee turned to the first and said, "It serves you right. Show up on time. Do better work. It's not really that hard."

I held my laugh in until I was out of earshot, but it seems like I hear this kind of thing more and more. People feel like they are entitled to a job or that all kinds of discrimination are bad/wrong/evil.

Not true.

See, we won't discriminate against you for your age, gender, etc. But work performance? I can discriminate against you all day long.

"Discrimination" isn't a blanket defense for poor work habits. Just an FYI.

Ben Eubanks is an HR professional by day and an HR blogger at by night.

Thanks to Ben Eubanks / Careerealism

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Who’s Your Most Important Customer Or Client?

Question: Who is YOUR most important customer or client? Who immediately comes to mind?

Your number one client or customer is YOUR BOSS or manager (unless of course you ARE the boss, running your own company).

Your boss or manager IS a customer — your number one customer — the one who is responsible for your performance reviews, your compensation increases, your assignments. Your boss BUYS your time and pays you a salary for that time, expecting exceptional, on-time service, and solutions to problems and challenges.

Your boss can be your biggest fan, your staunchest supporter and your number one advocate — allowing you to achieve great things — but only if you TREAT THEM as your number one client. Mistreat them, disrespect them or ignore them, and your boss can be the one who blocks your success, withholds important information and makes it tough for you to achieve optimum performance.

How would you self-assess the quality of your relationship with your boss or manager?

What are THREE THINGS you can do in the next 30 days to improve that relationship?

What is ONE THING you can do this week?

What action can you take TODAY to improve that relationship?

Andy Robinson, founder of Career Success Partners, is a leading authority on career success and a 15-year career coaching veteran.

Thanks to Andy Robinson / Careerealism

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Punctuation Saves Lives!

It's Saturday, so instead of our usual writing tip we'll have some fun. The image below appeared on Deborah Ng's Google+ (Google's social network) stream yesterday. Nice huh?

For those who can't see the image, the first line says: "Let's eat grandma!". The second line says: "Let's eat, grandma!". And the conclusion: "Punctuation saves lives!".

If you have similar images about the English language and want to see them featured on the blog you can send them to We might make this a regular column.

Thanks to Daniel Scocco / Daily Writing Tips

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The 3 Core Elements Of Delegation

Without delegation no organization can function effectively. Yet, lack of courage to delegate properly, and the knowledge of how to do it, is one of the most general causes of failure in organizations.
—Lester Urwick, Elements of Administration
Building Team Power
Every time you delegate work to a teammate, three inescapable core elements of delegation are in play. Authority, responsibility, and accountability form an integrated process and must be applied by you as a unified whole.

Authority Can Be Delegated

As a leader, you can transfer pieces of your formal authority to another teammate when assigning a task to that person. In essence, you can deputize your teammate to take action on your behalf within the boundaries of the delegated (transferred) authority.

Authority chiefly comes from the power of position. The more authority you have, the greater your ability to delegate higher-level, more meaningful and challenging tasks to others to help them learn, develop, and grow.

Responsibility Cannot Be Delegated, but It Can Be Assigned

As a leader, you can assign responsibility to another teammate in terms of the results that need to be achieved. However, you need to keep in mind that you only assigned responsibility to your teammate.

If your teammate "fouls up the thing royally," your manager will censure you, not your teammate. In short, you can never fully hand off any of your responsibilities to someone else. Assigned responsibility should be made in terms of the goals or results to be accomplished, not the detailed specifics for doing the job.

Accountability Means Obligation

Accountability is the moral compulsion felt by a teammate to meet the goals and objectives of an assigned task. As a result of accepting a task assignment, your teammate in effect gives you a promise—either expressed or implied—to do her best in carrying out the activities associated with it. Having taken on the task, your teammate is obligated to complete it, and thus is held accountable by you for the results produced.

Adapted from Building Team Power: How to Unleash the Collaborative Genius of Teams for Increased Engagement, Productivity, and Results by Thomas A. Kayser

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10 Rules For Writing Numbers And Numerals

How do you express numbers in your writing? When do you use figures (digits) and when do you write out the number in words (letters)? That is, when do you write 9 and when do you write nine?

1. Number versus numeral. First things first, what is the difference between a number and a numeral? A number is an abstract concept while a numeral is a symbol used to express that number. "Three," "3″ and "III" are all symbols used to express the same number (or the concept of "threeness"). One could say that the difference between a number and its numerals is like the difference between a person and her name.

2. Spell small numbers out. The small numbers, such as whole numbers smaller than ten, should be spelled out. That's one rule you can count on. If you don't spell numbers out it will look like you're sending an instant message, and you want to be more formal than that in your writing.

3. No other standard rule: Experts don't always agree on other rules. Some experts say that any one-word number should be written out. Two-word numbers should be expressed in figures. That is, they say you should write out twelve or twenty. But not 24.

4. Using the comma. In English, the comma is used as a thousands separator (and the period as a decimal separator), to make large numbers easier to read. So write the size of Alaska as 571,951 square miles instead of 571951 square miles. In Continental Europe the opposite is true, periods are used to separate large numbers and the comma is used for decimals. Finally, the International Systems of Units (SI) recommends that a space should be used to separate groups of three digits, and both the comma and the period should be used only to denote decimals, like $13 200,50 (the comma part is a mess… I know).

5. Don't start a sentence with a numeral. Make it "Fourscore and seven years ago," not "4 score and 7 years ago." That means you might have to rewrite some sentences: "Fans bought 400,000 copies the first day" instead of "400,000 copies were sold the first day."

6. Centuries and decades should be spelled out. Use the Eighties or nineteenth century.

7. Percentages and recipes. With everyday writing and recipes you can use digits, like "4% of the children" or "Add 2 cups of brown rice." In formal writing, however, you should spell the percentage out like "12 percent of the players" (or "twelve percent of the players," depending on your preference as explained in point three).

8. If the number is rounded or estimated, spell it out. Rounded numbers over a million are written as a numeral plus a word. Use "About 400 million people speak Spanish natively," instead of "About 400,000,000 people speak Spanish natively." If you're using the exact number, you'd write it out, of course.

9. Two numbers next to each other. It can be confusing if you write "7 13-year-olds", so write one of them as a numeral, like "seven 13-year-olds". Pick the number that has the fewest letters.

10. Ordinal numbers and consistency. Don't say "He was my 1st true love," but rather "He was my first true love." Be consistent within the same sentence. If my teacher has 23 beginning students, she also has 18 advanced students, not eighteen advanced students.

Thanks to Michael / Daily Writing Tips

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A New Approach To Decision Making: When 116 Solutions Are Better Than One

A New Approach to Decision Making: When 116 Solutions Are Better Than OneMaking sense of Philadelphia's City Council district map resulting from the 2000 Census is a head-scratching exercise. District 5 is shaped like an armored bulldozer extending its blade to scoop up a piece of District 7. District 10 looks like a lizard, twisting around the Northeast and taking a bite out of District 6. And District 7 doesn't appear to be a district at all, but four or five strung together like beads.

"Many people consider these districts some of the worst in the country," says Steven O. Kimbrough, Wharton professor of operations and information management, who recently participated in a nationwide contest sponsored by Philadelphia geospatial software firm Azavea to draw a better map of the city's districts. One of the issues involved in redistricting is gerrymandering, the practice of drawing district boundaries for political advantage. This makes gerrymandering hard to define precisely: Is it removing the house of a potential opponent from the definition of a district? Is it adding a neighborhood of politically generous campaign contributors to a particular district? Is it gerrymandering to concentrate members of a single ethic group into one district or, conversely, to split them up among many districts?

As Frederic H. Murphy, Kimbrough's fellow team member and a professor of marketing and supply chain management at Temple University's Fox School of Business, testified during the contest, "gerrymandering is like pornography; you recognize it when you see it." A good assumption, and one widely accepted, is that districts should be as compact as possible. They should look more like turtles than snakes (or salamanders); their parts should all be close together, rather than far apart.

Even with the best of intentions, districting problems can be difficult to solve because they are so complex, says Kimbrough, who specializes in computational intelligence. The key to finding the best solution, he suggests, is to start with not one but many good solutions, and let decision makers tweak plans from there. This may sound like common sense, but finding a pool of good solutions is easier said than done with mapping and zoning problems because of the number of variables involved. "It's never been possible to generate multiple good solutions," Kimbrough notes. "The standard methods at best give you a very small number of plans."

Now Kimbrough and a team of researchers say they have found a way to generate multiple high-quality solutions to complex problems. Using a genetic algorithm that mimics evolution and natural selection, they essentially "breed" solutions, creating potentially endless variations from just a few good beginnings. Their method holds implications not just for the drawing of political boundaries, but for a myriad of zoning dilemmas in the business and public sectors -- from mapping out fire districts and streamlining sales regions to discovering a better way to collect trash and design distribution systems.

"The genetic evolutionary approach can find attractive solutions that you are never going to find otherwise," Kimbrough says.

Kimbrough and Murphy teamed up with Nicholas Quintus, a graduate of Temple University's geography and urban studies department, and Ram Gopalan, a professor in the business school at Rutgers Camden, to test their methods in Philadelphia's mapping contest. Dubbed "Team Fred" after Murphy, who assembled the group, they used several different methods to find good solutions to the districting problem (see Team Fred's approach to the redistricting project here).

One of these methods involved starting with a computer-produced good solution and modifying it by hand, based on trial-and-error and human judgment, in search of the most compact solution, according to the rules of the contest. Another of these methods involved starting with computer-produced good solutions and modifying them by another computer program using a genetic algorithm in search of many -- "a plurality" of -- good solutions. Remarkably, this automated approach discovered 116 legally valid, high quality solutions, none of which broke up any of the existing 66 wards in the city.

Team Fred, like all other teams, was only allowed to submit one plan to the contest. It submitted the manually produced plan, which won in the category of most compact. That sufficed for a win in the contest, but the team notes that many of the 116 plans discovered by the computer are fundamentally better approaches, because they are better at honoring existing neighborhoods.

The best-drawn political districts should satisfy three main criteria, Kimbrough states: Their populations should be about equal; they should be contiguous, meaning they are not split into pieces; and they should be compact. However, political districts also must take into account many ambiguous elements, such as neighborhood identities or natural boundary lines. As a result, districting problems are difficult to solve using mathematical models alone.

"In the end, there are a lot of human judgments that go on here," notes Murphy. "What really is that neighborhood? Can you split the wards?.... Generating one solution is not a good idea because there are all these side issues that you can't represent mathematically. This always happens, whether in political districting or in commercial applications."

A Philadelphia resident, Murphy became interested in the city's districting problem after watching the bitter political infighting in 2001 that led to "one of the most gerrymandered political layouts possible." Knowing that the districts would be redrawn after the 2010 Census, he hoped to find a way to harness modern technology to offer a better solution. "I said, 'Well, the computing power is 100 times more powerful [than before]. Let me see if I can do Philadelphia.'"

But using classic computer models meant deriving one solution at a time. "The computer spits out a solution, and you take it or leave it," Murphy says. "You generate other solutions by putting in other assumptions, but it's a process that doesn't fully inform you of everything that's nearby as a potential solution."

A 'Family Tree' of Approaches

That's where Kimbrough's genetic algorithm came in. Using classic computations, the team created three maps that met a minimum standard of criteria. Kimbrough then used those solutions as "parents" and bred 50 more solutions. Each of those 50 was mutated to have six "children." Kimbrough sorted the results, making the top 50 solutions the "parents" of the next generation. This was repeated for 2,000 generations, and the entire process was repeated several times. "There are about 100 billion possible solutions. Most are pure junk," Kimbrough notes. "The genetic algorithm examined much less than 1% of these 100 billion solutions, but it did so intelligently. Most of the solutions it examined are also junk." But scattered throughout the "family trees" were occasional winners. Kimbrough set aside the best of the best -- less than 1/100th of one percent -- to search for the final cut.

Quintus then played a pivotal role -- turning the strings of numbers into maps using geographic mapping software. Although all the solutions selected by the genetic algorithm met the minimum criteria, not all made sense from a local perspective. Some maps split natural communities or disregarded historical neighborhood identities. "I was looking at every map with my urban studies background and my Philadelphia knowledge," Quintus says. The best maps included "a community of interest aspect to it -- the idea that you're either preserving some true neighborhood boundaries or you're preserving ethnic concentrations, [reflecting] how people identify themselves as a community within the city."

Team Fred's approach could be used for any type of business problem requiring mapping or zoning, according to Kimbrough: It could help cities draw better districts for emergency services such as fire or police. Adding criteria, such as travel time from one side of a district to another, for example, could help a delivery company reorganize to save on gas costs. Trash haulers could find more efficient routes; sales teams could map out better territories. Better police precincts and service districts for other emergency services could be constructed, as could better sales and distribution areas. Travel costs and times can be reduced, benefiting everyone. It would help "any time you have spatialization and you're trying to figure out where to put what."

The two-step approach of starting with multiple high-quality solutions and then narrowing down also puts control back in the hands of decision makers. "This applies perfectly well to business decisions, this philosophy of using computing and mathematical modeling to get a good set of things, recognizing that you don't have everything in there. Then you do the horse trading," Kimbrough says.

That's the beauty of this method, Team Fred suggests: By starting with a large number of high-quality solutions that meet basic criteria, decision makers have a better chance of negotiating some of the finer details that make a difference. "You need the computer because there's so much complexity," Murphy states, but "it's the interaction and the learning from each other that's the critical element."

In today's tech-focused business world, putting human decision makers back in the picture could be the biggest innovation of all. "Quite often in business situations, people are too trusting of the numbers," says Murphy. Team Fred's methodology "involves sophisticated computing, but a process that keeps the human involvement central to coming up with the final solution."

Thanks to Knowledge@Wharton / Wharton School of the University of Pennsylvania

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Winning In Two Worlds: Supply Chain Flexibility

Even before the recent global downturn, a two-speed world was emerging. Its hallmarks: a slow rate of growth and high per capita income in developed regions such as Europe and North America, and far faster growth in emerging economies with low per capita income, such as China, India and Brazil. Now, after the most significant recession since the 1930s, these divergent growth patterns have become even sharper, with implications for every aspect of a global company's operations.

A key challenge will be to create flexible and adaptable supply chains that can serve both types of markets while optimizing sales and margins. In high-growth emerging economies, this means delivering rapidly increasing volumes of low-cost and sometimes low-margin products profitably -- even in the face of poor infrastructure and convoluted distribution channels. In the low-growth developed economies of Western Europe, the United States and Japan, companies must defend or steal market share by providing better, faster innovation and exceptional service without sacrificing profit margins.

In this article, experts from Wharton and The Boston Consulting Group (BCG) discuss how companies can make their global supply chains more flexible and responsive in order to meet the needs of this two-speed world.

Two Worlds, Stark Differences

A close look at high- and low-growth countries reveals sharp differences that can have a major impact on supply chain management, notes Pierre Mercier, BCG partner and leader of the firm's supply chain group. For instance, the more mature, low-growth economies have well-developed infrastructures, while emerging high-growth countries -- with the exception of China -- tend to lack the highways, bridges and airports needed to transport goods efficiently.

Developed economies also have more mature distribution systems and highly developed retail industries. In the U.S, for example, major retailers such as Costco and Wal-Mart are configured for high volumes of goods. Huge loading bays and elevated platforms allow forklifts to load pallets of merchandise onto 18-wheel tractor-trailers that take the goods directly to stores -- often with thousands of square feet of retail space -- where the lion's share of sales occur. In India, by contrast, goods can be delivered to very small retailers through a chain of wholesalers that keep decreasing in size. "There's a whole cascade of distribution, where trucks keep getting smaller and smaller. In some cases, the ultimate delivery vehicle might be a bicycle," Mercier says.

Because "mom and pop" stores still tend to be a huge part of high-growth-rate economies, distribution involves delivering small quantities of products to a staggering number of locations. Large consumer products companies can have millions of delivery points in India compared with just a few thousand in their more developed markets.        

Meanwhile, the more fragmented distribution systems and the undeveloped nature of high-growth economies affects forecasting ability, says Senthil Veeraraghavan, a professor of operations and information management at Wharton. Companies operating in those countries lack up-to-the-minute sales metrics generated by the computerized supply-chain-management systems of more developed economies. "In Western countries, you get a lot of aggregated data from retail centers with which you make informed decisions. In developing countries there is less reliable data available," says Veeraraghavan. "You have to do a lot of guesswork and legwork. I can tell you how many Droid phones were sold in Philadelphia with certainty. I can't say that of certain regions in India."

This difference in planning capabilities dramatically changes service expectations among companies and their customers. The typical proprietor of a mom-and-pop store in an emerging economy is quite flexible about schedules and delivery, Mercier says. But retailers in mature economies demand speedy delivery of specific quantities at specified times -- and companies that want to hold on to market share must provide good service.

It helps that highly skilled third-party logistics providers are readily available at a reasonable cost. But developing markets generally lack service providers with sufficient expertise. Increasing service levels in these countries calls for either using Western providers or working closely with suppliers to get them up to speed, says Mercier.

Moreover, a company selling in a mature economy can expect to send and receive invoices electronically, order components in advance, share demand forecasts with its suppliers or customers and pay retailers to stock certain goods and carry inventory. In emerging economies, however, businesses stick to the basics and companies are likely to pay C.O.D., buying right off a delivery truck instead of pre-ordering.

These stark differences leave little opportunity for synergy between supply chains of low- and high-growth economies, Mercier says. Synergies are hard to find even just within emerging markets, given the significant variations among economies, says Morris A. Cohen, a professor of management at Wharton who focuses on supply-chain issues. There's no one-size-fits-all strategy. "Each country has its own unique flavor, with differences in infrastructure, distribution and retail systems. This diversity calls for different supply chains."

Price, Customization and Service in Mature Economies

So how can companies adapt their supply chains to a two-speed world? In mature, low-growth economies, strategic pricing is integral to profitability. "If you want to make more money without selling more, then you have to maintain or increase price levels," Mercier says. "Better service and more innovative products allow you to charge a premium." To that end, companies must be able to move quickly, working with the best suppliers, developing the right products and getting them to market faster than the competition.

Because of these needs, sourcing from low-cost countries isn't always the best solution. Many companies are rethinking their sourcing networks and looking at "near shore" production. Making or buying goods closer to end markets may cost more, but shorter supply chains result in greater speed, responsiveness, and flexibility -- and less risk. Weighing the trade-offs can be complex, however, and companies need to analyze the economics, Mercier says. China or India may be a good source for easily transported goods or those with high labor content. But when factors such as weight, bulk, or shelf life are considered, the conclusion might be to source closer to home. He points to Mattel, which makes its miniature Hot Wheels cars in China and its larger, bulkier Fisher Price ride-on cars -- which are more difficult and costly to ship -- in Mexico.

Another factor to consider is the degree of customization that a product requires. A commodity-like product can be made in high volume at a large-scale plant in a low-cost country. "But high-end customized products should be made in a local facility that can react quickly to changes in demand," Veeraraghavan says. A San Francisco-based manufacturer of messenger bags has a dual manufacturing and sourcing strategy. It produces most of its products in a low-cost country, but it uses a local facility for high-end U.S. customers willing to pay a premium for customized products.

In mature economies, efficiencies can also come from combining forces with other companies, Mercier says. Several years ago, two consumer products companies, working through a European logistics group that helps members identify others with similar distribution routes, discovered that 93% of their combined products were being delivered to the same 127 drop-off points. In a pilot effort, they set up shared delivery schedules and created a shared warehouse to supply inventory to their plants and, in turn, to provide finished products for retailers' distribution centers. The combined volume justified an investment in warehouse automation to reduce handling costs. The result: Inventory fell by 65%, out-of-stocks decreased by 30% and costs were dramatically reduced.

Another part of the equation in mature economies is the need to provide higher levels of service to retailers and end-customers as cost-effectively as possible. "In developed countries, where growth is slow and consumers have many choices, you need to make sure retailers sell your product," Mercier says. "If you're not there, your competitors will be." One solution is to improve systems and processes that can boost service levels. For example, computerized demand-forecasting systems can better determine appropriate inventory levels, lowering costs and creating greater efficiency. Another approach is to communicate more closely with customers and suppliers. This allows you to monitor demand signals more effectively and make the right trade-offs regarding where to re-supply and when, says Mercier. He points to Procter & Gamble, which has a sizable number of employees stationed near Wal-Mart's Bentonville, Arkansas, headquarters. By collaborating with Wal-Mart's team on planning and promotions, for instance, P&G is able to respond more effectively, readily increasing or decreasing the supply of particular products as needed.

Emerging, High-growth Economies: Wringing Costs from the System

In low-wage, developing countries, the average consumer cannot afford expensive products, so cost and value are very important. A company's supply chain must reflect that reality. "In emerging economies, you need a very low-cost, streamlined supply chain," says Mercier. "If you deliver a truckload of cookies that you sell at 10 cents a pack, it better cost you less than it does to deliver a truckload of cookies that sell for $3 a pack."

That makes it essential to wring as many costs out of the system as possible. "You need the lowest possible delivery cost because the consumer can't pay a premium for a product," Mercier says. One solution is to strip away processes and procedures that work in Western markets but are unnecessary in high-growth areas. "There's no need for invoicing systems if retailers pay cash on delivery, for instance." Even pallets -- a staple in developed economies for a century -- may be an unnecessary investment in developing economies where labor costs are low.

Multinationals also face a growing threat from ambitious local companies, creating even more urgent pressure to tailor systems to local markets, Mercier says. Many of the factories that companies set up in low-cost countries were replicas of their high-cost domestic plants. By not capitalizing on local conditions and capabilities, they never achieved all of the potential savings. "You can use your old manufacturing and sourcing processes for a while, as long as your competition is like you. But if you're still operating with a largely Western model in a low-cost country, you won't win against local competitors," he says.

When wages are relatively low, for instance, companies can create labor-intensive processes to reduce the cost of equipment, technology and automation. Further savings can come from rethinking product design, choosing fewer and simpler features that better suit the market instead of over-engineering. "You can't change an industrial footprint and supply chain overnight," says Mercier. "Western companies are still struggling with legacy systems, while local competitors are unencumbered."

Another way foreign companies can cut costs is to use local suppliers, who pay less for raw materials, labor and other inputs --and can therefore charge less for their parts and components than Western suppliers. But industries with highly complex products or stringent safety requirements face a greater challenge since most suppliers in emerging economies fall short of the quality standards and process excellence of suppliers in the developed world. "In these cases, the risks of using sub-standard inputs far outweigh any potential cost savings," notes Stefan Mauerer, a BCG principal based in Munich. "Given the need to squeeze out costs, the solution may be to develop the capabilities of key suppliers in these emerging economies." A focused development program can lead to major improvements in processes, productivity, quality and costs. "Local suppliers can be a source of innovations as well as cost-saving ideas, so building closer relationships can be well worth the effort," adds Mauerer. Gain-sharing programs can provide an incentive. "When any savings are shared in an equitable way, everyone has an incentive to contribute and collaborate," Mercier says.

Playing to Local Strengths

Foreign companies should also explore approaches to distribution that play to local market strengths. To reach small villages in India, for example, Hindustan Unilever Limited taps women's self-help groups. The company provides training in sales and bookkeeping to help these women become direct-to-consumer distributors for Unilever's soaps and shampoos. About 45,000 agents serve 3 million consumers in 100,000 villages spread out over 15 states.

According to Wharton's Cohen, the effort involves "one of the most sophisticated supply-chain systems in the world. The company is able to do statistical analysis through sophisticated modeling and access to complex, timely data about goods being sold in remote villages. And so while state-of-the-art data-aggregation systems may not be the norm, innovative thinking can sometimes combine best practices from both mature and developing and economies, further underscoring the need to tailor efforts to local markets.

Increasingly, multinationals may need to think about supply chains in emerging, high-growth economies both as routes into local markets and a source of parts and finished goods to be distributed globally. Again, though, local conditions should dictate the approach. In China, Wal-Mart has two supply chains -- one for sourcing and distribution within China, the other for sourcing just about everywhere else, according to Marshall L. Fisher, a management professor at Wharton whose research focuses on China. Wal-Mart China sells products from thousands of small, local farmers to 187 stores in-country, while Wal-Mart Global Sourcing supplies tens of billions of dollars worth of private label goods to Wal-Mart each year, Fisher says. "It's not a slam dunk to pull this off. It's easier to move products 20 miles to a port and then ship them to the U.S. than to supply hundreds of Wal-Mart stores in China that want to buy locally," he says.

Because of the stark differences between slow-growth and fast-growth economies, supply chain synergies will be hard to come by. Moreover, the increasing interdependence of countries in the global marketplace and the lingering uncertainties of the recent downturn present ongoing challenges. The key is for companies to scan the horizon, keep their options open, and respond quickly to opportunities as they present themselves. "A multinational with a truly global strategy can make, buy or sell wherever the customers, talent or resources are, and wherever it makes the most sense from a cost, quality or efficiency standpoint," says Mercier. "That's why a flexible, adaptable supply chain is so critical."

Thanks to Knowledge@Wharton / Wharton School of the University of Pennsylvania

8725 Results For "Supply Chain Management" In Books


Manufacturing In A Two-Speed World

With a sticker price of up to $1.6 million, MRI machines were not affordable across much of the developing world in 2007. After all, household incomes are considerably lower than in developed countries, and in India, for example, there is no formal health insurance system to compensate providers for MRI exams. Indian physicians charge about $150 for an MRI procedure, compared to $1,000 and up in the United States.

Yet, the Indian market (and others throughout the developing world) is enormous -- and the demand is real. But a scaled-down, low-quality MRI unit was out of the question for GE Healthcare. For one thing, Indian physicians know the state of the art of western technology. "They attend conferences here, they have family here," says Jim Davis, vice president and general manager of GE Healthcare's Magnetic Resonance business, who is based in the United States. "Some of them trained here." Besides, he says, "We are on a mission to provide quality care in all markets. A human being is a human being. We don't want to discriminate. We want to bring the same diagnostic tools to India as the U.S."

So GE Healthcare began development of the Brivo 355 and its sister product, the Optima 360, MRI machines for technicians using the technology for the first time. Designed, developed, and built in India and China, the machines don't compromise quality but do have an easier-to-read user interface and are easy to operate by technicians who may lack the degree of training they would receive in the developed world. Davis calls them "the right machines for emerging markets." And at $700,000 to $900,000, they are the right price.

GE Healthcare is currently selling its budget-priced MRI machines in India. Since the company began taking orders in January 2010, according to Davis, "sales have surpassed our expectations by at least 50%."

Interestingly, the units -- designed and built lean -- are awaiting FDA approval for sale in the U.S. "We'll maintain our manufacturing footprint in China and India," says Davis, "and sell it in the U.S. as well" After all, the U.S. has pockets of underserved populations that can benefit from the budget-priced devices that were manufactured in the developing world, where labor and development costs are lower than in the U.S. GE Healthcare's strategy is a departure from the traditional model where no-frills products that were built for the developing world stayed in the developing world.

Lower cost, stripped-down products that can be sold both in high-growth and slow-growth markets are one example of how companies are addressing "the new normal" -- a two-speed world with two types of markets, each with different characteristics. On the one hand are the high-growth economies such as China, India, and Brazil. With growth rates of 8% to 12% and some 2.6 billion people, these markets are hard to ignore, despite their low average household incomes. On the other hand are the slow-growth economies --the U.S. and Western Europe, for example -- with growth rates ranging from 1% to 4%, but relatively high average household incomes.

In this article, experts from Wharton and The Boston Consulting Group (BCG) consider some of the key challenges that global manufacturers face as they attempt to synchronize their worldwide operations to meet the needs of these two very different markets.

The Need to Be Lean

To grow, multinationals from the slow-speed, developed economies must target fast-growing, emerging markets. But to compete against local companies, they need to drive out costs, sharply improve quality -- or both. In these high-growth markets, the challenge for manufacturers is to maintain flexibility and responsiveness while keeping costs down.

Whether competing in high-growth or slow-growth markets, companies need lean products and systems, contends BCG partner and managing director Hal Sirkin. "In the slow-growth world, you need low costs and the ability to respond quickly to customer needs," he says. "And in the high-speed world, you need to be lean to lower your costs, customize products for emerging segments and create the capacity to grow." Companies that cut out waste through lean products and systems have lower costs and are more responsive, with shorter cycle times and higher quality.

Rethinking Manufacturing

Benjamin Pinney, a principal in BCG's Shanghai office, says that some manufacturers from the slow-growth world are responding to market demand in emerging economies by defining a shared platform for production of high-end and low-end products, often at the same facility. Typically, the high end gets shipped to slow-growth Western markets and the low end to high-growth, emerging markets. But production can start at the same factory -- even on the same assembly line -- with components common to both models. The specifics change by industry and market, says Pinney. "With automobiles, the common components can be subassemblies or the partly completed chassis. In pharma, it's the intermediate chemicals. With assembled goods like mobile phones, it can be partially kitted parts. With electrical equipment, it can be mechanical components for switchgears."

Almost all the automotive manufacturers are doing this, notes Pinney. In med-tech, many companies are leveraging "split models" for sales aimed at both worlds. Bicycle manufacturers are doing it too, and in the appliance sector, LG is producing frost-free and non-frost-free refrigerators -- the former for low-speed countries, the latter for high-speed.

A New Level of Complexity

The growing consumer market across the high-speed world is hard to ignore. For instance, analysts say that some 70% of future business for big pharma over the next few years will be in developing countries, says BCG partner and managing director Adam Farber. But it's not simply a matter of making more or different drugs in their current plants for shipment to these emerging economies. Instead, global pharma companies are searching for new ways to organize their go-to-market model in the new, two-speed world.

One challenge is how to reconstruct their networks to serve the local markets. "Brazil and Russia require that pharma companies have local manufacturing operations to access the market," says Farber. "In several countries, governments say it is critical to the public's health and wellness or to create jobs." So, in addition to knowledge of local customs and culture, drug makers and other manufacturers need to steep themselves in the relevant laws. In some countries, a global producer is not allowed to manufacture unless it brings on a local partner. "The global model," says Farber, "means more languages, more rules, and different duty, tax and patent issues -- a new level of complexity that has to be managed."

Considering the degree of localization required, bringing a local partner on board might be a good idea even if the law didn't require it. The local companies know the market and know their way around. And some are ripe for acquisition. "It's a 'think local, act global' thing," notes Farber. "There are regulatory, packaging, and cultural differences. You need to understand local markets and how distribution works." Of course, this has been true all along for multinationals seeking to capitalize on low labor costs by manufacturing in developing nations. But it's even more important now that these emerging economies are not just manufacturing hubs but real growth markets -- and now that there's a greater number of small, local companies to compete against.

Marshall L. Fisher, a Wharton professor of operations and information management, agrees that what's new is that these emerging economies are becoming attractive markets, not just manufacturing bases. "The emergence of consumer markets is interesting," says Fisher, noting that one of the missions of the Communist Party in China is to develop the country's internal economy. "They think people are saving too much money. Whatever problems the U.S. has, China has the reverse." The Chinese government's desire to grow the internal economy and increase the percentage of income that people spend in China creates opportunities for non-Chinese companies to make inroads there. "That's heightening the interest," says Fisher, who adds that the megabrands in the U.S. such as Nike, Wal-Mart, and Amazon are not the top brands in China. "Maybe it suggests that you don't need to be #1" to be big enough there. China, according to Fisher, tends to be a more fragmented market. In the U.S., only the top firms have global share. But China's potential market is so big, there is room to be #10 -- and still make money.

But China also has huge companies with very little global name recognition -- yet. Fisher points to Foxconn, a $40 billion company with 300,000 employees and a 10-square-mile campus. The company makes products for Apple and Motorola, largely for export. "They'd be Fortune 25 in the U.S. but no one has heard of them." Fisher is interested to see what happens to Foxconn as the internal Chinese economy develops. "They could use the emerging home market to develop new skills," he says, or to begin developing more affordable products for local consumers -- and for global export. Clearly, this is a company to keep on the radar screen.

More Than Just Low Labor Costs

Companies face a range of challenges as they formulate a two-speed strategy for manufacturing, says Michael Zinser, BCG partner and global co-leader of the firm's manufacturing group. "Yes, labor costs are lower in developing economies. But companies need to balance the low cost of labor with the added logistical costs and the risks inherent in lengthier supply chains," he notes. Add to that the rising expectations of buyers. "Customers don't just want the lowest cost, they want to get their products quickly too!" The best solution may be for companies in slow-growth, developed markets to manufacture in low-cost, high-growth markets and sell to local consumers as well as to Western buyers. That way, the slower sales growth in the developed markets and the higher logistics costs would be offset by the robust local sales. But it's easier said than done.

"When companies first started manufacturing in Asia there were tax incentives, labor rates that were among the lowest in the world, and excess capacity," says Zinser. But some of those incentives have gone away, labor rates are rising (as they are at Foxconn), and logistics costs are higher. "That said, the cost savings are still there," he notes, "but you need to be clear about what your objectives are." For instance, if a company is based in North America and just wants to cut its production costs, it might be better off going to Mexico or to some parts of the U.S. "But if you want to tap into the fast-growing markets of the developing economies, you might want to set up manufacturing operations there -- and local sales channels too," he adds.

Keep in mind, too, that the no-frills products made for emerging markets might also be embraced by consumers in the developed world. Again, this can create more complexity, but more opportunity too. Zinser gives the example of a U.S.-based manufacturer of lawn-care products that competes against domestic companies with high-end products and against companies from India and other emerging economies with low-cost products. "But a segment of U.S. consumers will always want lower-priced products," he says. In order to provide both premium and low-end products to the domestic market, the company has migrated some production to Mexico. But it has also started manufacturing in Southeast Asia to capitalize on the low labor costs and Asia's growing consumer markets.

Many companies set up overseas operations to take advantage of lower labor costs, but don't take the opportunity to rethink their production processes with an eye toward cutting costs and reducing complexity. Others let quality, health or safety standards slip, says Zinser. A hands-off approach in unknown markets can lead to problems. The best way to avoid these problems is to be on site, not on the other side of the world. "There is no alternative to having feet on the ground," he stresses. "You have to be there and see exactly what's going on. Otherwise, you can end up with massive recalls and a PR nightmare," he says. "You have to do your due diligence, and you can't make assumptions. I've seen companies working with contract manufacturers on the other side of the world and forgetting to ask them what their production schedules looks like." But when you're there on the shop floor, you can look around, kick tires, ask questions and learn a lot more than you would in a meeting.

Wharton management professor Morris A. Cohen was recently in India meeting with Unilever executives. There was some discussion of the difference between selling in India and in the U.S. "There is not much need for marketing in India," he says. "There is so much demand that companies feel if they can just get their product in front of the customers, they'll buy it. It's not worth spending on marketing." Instead, Unilever in India spends on distribution and consumer education. In some cases, he says, Indian people don't know how to use bottles that contain consumer products. "So Unilever sets up stores run by women in the local villages. It's a combination of technology and outreach that meets the local market's needs." And knowing what the local market needs at a granular level requires a local presence.

Cohen points out that India has significant barriers to entry, such as ownership rules that determine how much of a local company can be owned by a foreign corporation. Other challenges are structural. "India's is an informal economy with lots of little shops by the road, so distribution is an enormous problem," notes Cohen. He recalls meeting with the CEO of a large Indian cell phone company that uses Wal-Mart as a distributer, not a retailer, because the Wal-Mart name isn't well-known in India. The distribution challenges are compounded by the country's substandard roads and infrastructure. "China has done a better job of managing infrastructure than India," he says. "Local markets are more easily penetrated because it is easier to transport goods there."

Much depends on where you are selling, says Sirkin. "You can produce in these markets, sell for less, get your costs down, and take advantage of local market knowledge. Or you can do what Apple does: design in the U.S. and outsource production to companies that are cheaper." Of course, Apple can design its products in the U.S. and make them in China because, unlike GE Healthcare's budget MRI machines, Apple products are the same whether you're buying them in New York, London, Mumbai or Shanghai. There is no budget-priced iPad designed for developing economies. GE Healthcare, though, has gone through the process of customer segmentation -- drilling down, analyzing the market data, and coming to a deeper understanding of its target customers' buying habits, favorite brands, and -- perhaps most important -- their aspirations.

Bottom Line on a Two-speed World

According to Pinney, "Companies that are thriving in this two-speed world are really good at managing both mass production and just-in-time production. They're able to make fast adjustments up and down the value chain in response to changing market dynamics. And they make smart use of subcontracting to manage capital commitments against different production steps."

Manufacturers that want to optimize their operations in the two-speed world can learn from those that faced tough economic restraints in the past. "Necessity is the mother of invention," says Sirkin. "The Japanese had to compete. They had to keep costs down and eliminate all the waste they could." The companies that got lean produced low-cost, high-quality products that changed the rules of competition. Case in point: the U.S. auto industry. When the big three automakers were producing big cars, Toyota came in with a low-end product and tailored it for the U.S. market, and then moved up the value chain to higher-end models.

"Any country or company that is resource-constrained will figure out how to do more with less, as China and India have proven," says Sirkin. "In competitive markets, if your company doesn't come up with a better value proposition, someone else will."

Thanks to Knowledge@Wharton / Wharton School of the University of Pennsylvania

180076 Results For "Manufacturing" In Books


When Your Job Makes You Sick: Employees Find Little Leverage In Today's Workplace

Consider these signs of the times:

-- The Gallup-Healthways Well-Being Index registered 47.1 in August for the category titled "work satisfaction" -- the lowest it has been since the measurement was introduced in January 2008. The number means that less than half the respondents surveyed last month answered "yes" to four questions: Are you satisfied with your job; are your natural aptitudes aligned with the job you are asked to do; does your supervisor treat you like a partner, and does he or she create an environment that is trusting and open? "We thought we had reached the bottom back in the latter half of 2010 when we were in the 47 and 48.5 range," says Dan Witters, the Index's research director. "I would be surprised to see it go much lower than it is right now, but I've been wrong before."

-- Judith McKenzie, director of clinical practice, occupational medicine, at the Hospital of the University of Pennsylvania, treats workplace injuries ranging from broken bones to back sprains to repetitive motion injuries. Over the past few months, she has noticed two trends: First, some injured employees are taking longer to seek medical attention. Second, injured employees often insist on going back to work sooner than advised because they want to protect their jobs. "They are worried that if they lose their job, they won't find another," McKenzie says. "They don't want to draw attention to themselves as being injured in the event of a downsizing by their employer. They don't want to be on [anyone's] radar."

-- Massive layoffs once again dominate the headlines -- 12,000 jobs cut at Merck, 30,000 at Bank of America, 120,000 sought by the United States Postal Service, and 1,000 (if not more) at Goldman Sachs, to name a few. Smaller layoffs are more frequent and usually pass unnoticed: In the space of one month this spring in the Philadelphia area, Sara Lee announced 62 local layoffs; J.C. Penney announced 109; specialty chemicals company Cognis laid off 30, and Liberty Resources, a non-profit advocacy group for the disabled, cut 112.

-- According to a Wall Street Journal article this summer, the founder of Square, a mobile payments company based in San Francisco, not only asked employees to give up vacations, but also told an engineer to skip his own bachelor party so he could help meet a new-product deadline. In an article commenting on the Journal story, Business Insider wondered whether the "skewed work-life balance" at Square would help beat the competition, or lead to employee burnout.

With millions of people looking for employment, the workplace these days is an increasingly unhealthy environment for those who still have, and are trying to keep, their jobs. One key reason -- a stagnant economy that reduces the leverage employees typically have when they attempt to negotiate improved working conditions, move up in their organization or find better jobs outside the company.

"It used to be that when there were layoffs, things didn't change much for the people still employed," says Peter Cappelli, director of Wharton's Center for Human Resources. "But now everybody is worse off. The company doesn't just lay off a few people and leave you alone. They increase your responsibilities, increase your work hours, and cut your pay and benefits. It's pretty obvious why people are stressed and dissatisfied."

Studies looking at employee health in the workplace approach this issue from many different angles. One of the best-known examples is the Whitehall Study, conducted over 10 years beginning in 1967, which looked at heart disease and mortality rates among 18,000 British male civil servants. The researchers found that men in the lowest job grade level -- messengers, doorkeepers, etc. -- had a mortality rate three times higher than that of men in the highest grade level (administrators). In other words, "being at the bottom of the hierarchy can make you sick," says Cappelli.

More recently, a study published this year titled, "Work-Based Predictors of Mortality: A 20-Year Follow-Up of Healthy Employees," led by Tel Aviv University professor Arie Shirom, looked at the workplace's effect on employees' health. Its main conclusion: The risk of mortality was significantly lower for those reporting high levels of peer social support -- i.e., the support of their co-workers. The study also found that high levels of job control -- defined as "the perceived freedom permitted ... in deciding how to meet the demands" of the job -- also reduced the mortality risk for men (but increased it for women, a finding the study's authors say may be caused by differences in the types of jobs held by men versus women).

While higher death rates are clearly the most extreme evidence of workplace stress and job dissatisfaction, mental and physical ailments are also increasingly common, ranging from high blood pressure and heart disease to depression, ulcers and Alzheimer's. Employees faced with long hours, demanding bosses, unsupportive colleagues and unfulfilling work are typically advised to change supervisors, find another job, start their own company or consider other decisive moves. Today, because of the economy, these options are much less realistic.

When the economy turns sour and companies feel heightened pressure to perform well, this typically means two things, according to Wharton management professor Iwan Baranky: First, employees are required to do certain jobs even if they don't like them. Second, employees may be told to come up with something new and to make sure it is an immediate success, even though the constrained environment does not allow the luxury of conducting additional research or engaging in trial and error. "This puts a lot of stress on an employee. It's like hiring an artist and telling him to make a masterpiece. That's unlikely to happen."

And when employees feel they have little autonomy in their jobs and little hope of leaving to find new ones, the result is that "firms have more purchasing power than the employees," says Baranky. "The companies, in the lingua of economists, purchase labor on the market to [fill job openings]. They have a lot of bargaining power compared to their employees." For example, an employee looking for a new job could have significant costs associated with that search. Managers "can exploit that. They know they don't have to accommodate the desires and dissatisfactions of the employees because they know it is costly for them to find an alternative. Employees are in a weak bargaining position."

If stressed employees cannot vote with their feet, the question becomes: What can they do to make their workplace less toxic?

The Importance of Small Wins

Wharton management professor Adam Grant has done extensive research on the importance of designing work that provides individuals with a sense of control, a feeling of autonomy and the ability to develop specialized skills. He has also demonstrated how a person's knowledge that his or her work has meaning and impact on others can result in increased well-being and productivity. One example: Lifeguards who read stories about other lifeguards saving people's lives worked harder than those who were given stories to read about lifeguarding as a way to advance personal goals.

Grant recently co-authored an opinion piece for Knowledge@Wharton, along with management professor Jitendra Singh, in which they blame excessive reliance on financial incentives for many of the corporate scandals and ethical lapses that have weakened the U.S. economy. Grant cites author Daniel Pink's book, Drive: The Surprising Truth About What Motivates Us, as providing a good summary of the evidence that intrinsic motivation -- rather than extrinsic motivation, such as financial incentives -- is often supported by three key factors: autonomy, mastery and purpose. Grant also cites the importance of a fourth factor: a sense of connection with other people.

In Grant's words, autonomy "involves freedom of choice in what to do, when to do it, where to do it and how to do it." Numerous studies, he notes, "have shown that allowing employees to exercise choices about goals, tasks, work schedules and work methods can increase their motivation and performance." Mastery, he says, "involves the chance to develop specialized knowledge, skills and expertise," which leads to employees "naturally pursuing opportunities to learn and contribute." And purpose involves "the experience of contributing to a meaningful effort or cause."  

Baranky agrees with the need to find ways that employees can more actively shape their jobs. Much of the research on happiness, he points out, looks at factors -- such as income -- that help explain variations in employees' subjective well being. But the one factor "that comes out very robustly is whether people have any autonomy over their workplace -- in other words, some discretion about how their work is done and what they can focus their energies on."

Achieving that in a sluggish economy suggests the need for a more proactive approach on the part of employees. Grant points to research being done by Justin Berg and others on the subject of job crafting, which Berg, a PhD student at Wharton, defines as "active changes that employees make to their jobs to better suit their own motives, strengths and passions, resulting in more engaging and fulfilling work."

Easier said than done, but Berg offers a visual framework that asks employees to think about the tasks in their job as a set of building blocks, and then to reconfigure the blocks to emphasize productive aspects of the job and reduce sources of stress and dissatisfaction. The process opens people's eyes to opportunities for small changes that "can go a long way, especially if they are small wins," he says. An example of a small change would be limiting the amount of time spent on an unappealing task, thereby freeing up time and energy for more desirable tasks. Another example would be carving out some time each day or week to work on something new.

Employees can also benefit from reframing how they think about their jobs. Berg cites one research study by Harvard psychologists Alia Crum and Ellen Langer that divided hotel room cleaners into two groups: One group was asked to look at their work as exercise, the other as just a regular cleaning job. After a month, members of the group who viewed their work as exercise actually had better objective health outcomes than those who didn't, including a decrease in weight, blood pressure, body fat and body mass index. Yet, the two groups carried out the exact same behaviors at work; the only difference was the meaning they ascribed to the job.

One of Berg's research studies, co-authored with Grant and University of Michigan professor Victoria Johnson, is titled, "When Callings Are Calling: Crafting Work and Leisure in Pursuit of Unanswered Occupational Callings." It looks at how people fold interests from "unanswered callings" -- or occupations that have long intrigued them -- into their current jobs. People can be "very creative and clever about incorporating their unanswered callings into what they do now," Berg notes. "A lawyer who always wanted to be a teacher, for example, might take on the training of new employees or mentor an intern."

In the interviewing process for his research, Berg turned up other cases of employees pursuing "unanswered callings" through job crafting. One factory mechanic who has always wanted to be a process engineer pitches ideas for improving processes to top management, even though his job is equipment maintenance. A brand manager pursues her calling to be a stand-up comic by using humor in her marketing campaigns. A university lecturer reframes his teaching to be like a musical performance, allowing him to pursue his calling to be a rock star. "By job crafting, these employees did not have to switch jobs to fulfill their unanswered callings," says Berg. "They found a way to work in a different occupation without leaving their current one."

Organizational politics, of course, are always a concern whenever the workplace status quo is challenged. Berg advises anyone engaged in job crafting to beware of encroaching on someone else's territory. "You want to do the opposite. You want to think about how to job craft in ways that are good for you and others, including not just managers but also co-workers." Indeed, employees should explain to others "the kinds of changes they want to make and the rationale behind them," Berg says. Even if all the suggestions are not approved, "again, a few small changes can make a big difference." For high-level jobs that are already quite complex, he adds, "the strategy should be to not only reduce the number of undesirable tasks, but also to add projects and develop new skills to help those projects succeed. This allows for bigger, more meaningful changes."

Speaking Up, or Not

Nancy Hanrahan, a professor in the University of Pennsylvania's School of Nursing who specializes in healthy work environments, suggests that "the magnitude of the work-stress problems is much worse than it has ever been before." Nurses are burned out "by hospitals that do not have sufficient support in place for them to do the practices they have been taught." The consequences of that for patient healthcare are obvious.

Hanrahan is studying five areas that hospital managers can focus on to help nurses better cope with stress as well as improve patient outcomes. Two are applicable to any workplace environment. First: Involve employees in policy discussions so that they understand what they are being asked to do. This also makes people feel that they are important members of the decision-making team. "Many hospitals have dropped that approach by the wayside," Hanrahan says. Second: Ensure that managers "are trained and educated." Unskilled and uninformed managers can add to the stress of an already understaffed workplace. "The environments are so complex and intense, and the volume [of work] is so high," according to Hanrahan, "that you need someone there who is making logical decisions."

Yet even when employees can help shape the meaning and nature of their work, a depressed job market limits their options. For example, employees stuck working with too many unproductive or incompetent colleagues may find little relief. "The fact is, sometimes there is nothing you can do about it," says Cappelli. "You could try going to your supervisor and saying, 'This person is not doing his job.' But there is likely to be some reason your supervisor doesn't want to [take any action]. So it comes down to Eastern religious notions of 'letting go' and accepting that this is not your problem."

In circumstances where an employee feels overloaded with work, "it's easy to say you should just speak up, but the problem is, you are in a down economy," Cappelli adds. "People are getting laid off all around you. You need to find a way to phrase your [complaint] in a positive way. Say something like, 'Here is what I think would help me do a better job.'"

Whether people actually do make such suggestions may be related to whether, and under what circumstances, employees are motivated to speak up. David Lebel, a PhD student at Wharton, studies "interpersonally risky proactive work behaviors -- those that may come with negative consequences and risk for the individual despite being intended to benefit the organization." An example would be employees who offer suggestions of how to improve the workplace but find that that their bosses or co-workers resent or disagree with these suggestions.

A focus of Lebel's research is exploring how emotions and organizational conditions influence whether employees voice their concerns and also to whom they voice them. Existing research, Lebel says, suggests that workplaces marked by fear and distrust will lead employees to remain silent. His own research, however, challenges that assumption by exploring the conditions under which fear may lead to an increase in employees' willingness to speak up.

Lebel's main finding so far is that when employees are worried about their jobs, they will, in fact, voice their concerns -- but only when their boss is supportive. "It's what we would expect," Lebel notes. "People are comfortable speaking up when there is support to counteract feelings of fear."

It is hard to overstate the benefits of having such conversations, Lebel adds. Speaking up, even if one's idea is never implemented, "gives one a sense of control, and of coping. You are also expressing some of the negative emotion, even if you are not speaking up for yourself but for a team member."

In tough economic times, says Berg, thinking in new ways is crucial. "A bad economy makes everything harder. We live in less abundance and it's difficult to switch jobs. That makes job crafting more important but also more risky.... The key is to do things in your current job, even small things, that make the most of what you have. That is fundamentally what job crafting is all about."

Thanks to Knowledge@Wharton / Wharton School of the University of Pennsylvania

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