Raindrops Keep Falling On My Head (Part 1)
The UK Government’s ‘fiscal event’ last week heralded the return of ‘Trickle Down Economics’, (although they absolutely denied that it was ‘Trickle Down Economics’ because they know that we all know that it’s a big con and doesn’t work).
In organisational life we have its corporate offspring, ‘Trickle-Down Management’.
There are two symptoms of this.
The first is runaway Executive pay. At a time when wages and salaries have been suppressed for over a decade, it’s happy days in the boardroom where there are pay rises and bonuses to die for (and some of you are, trust me).
This is driven by the myth of the super-star CEO, who is going to single-handedly turn around the fortunes of the business. He (and it mostly is) is the all-conquering hero, our champion, and so must be showered with riches to be tempted to work his magic on our enterprise.
The myth is fuelled by the constant lionising of these guys in the business press, who succumb to positivity-bias by attributing all sorts of things to the person who happens to be sitting the chair when these things happen, without explaining how they caused them to happen (because they didn’t, most of the time).
Then there’s a self-serving myth cycle between the board, the remuneration committee, and the other executives who all benefit from this upward spiral of pay that drags up and justifies their own inflated reward packages.
A veneer of justification is achieved by focusing on narrow and very short-term financial measures of success, like profit and the share price (or some variant of these). There is no consideration of value-creation outside the financials, or over the long term.
So we get a merry-go-round of CEOs and Execs who hit their numbers by damaging the long-term health and resilience of the organisation (share buy-backs instead of investment in new plant/ventures; cutting back on safety or quality; stopping the training and development of staff; or any one of hundreds of ways to plunder the future. Not to mention financial engineering (Don’t mention financial engineering!)). Or they crash and burn. Sometimes both.
But as each Chief dies in battle, no-one can admit that the strategy was always doomed and they played a part in the failure, and so they quickly hail the new Chief, give everyone a pay rise, and start again.
One day, they tell us, it will deliver a thriving business and we can all share in the bounty. But not now, there’s a pay freeze because we need to hit this year’s numbers.
I’ve mentioned this before but a study of the impact of Football managers on their teams results showed that it was less than 10%. That’s in what Robert Coase would call ‘a finite game’, with defined parameters and rules and a clear and measurable objective. It’s very easy to see what the impact is and, indeed, to measure the value the manager has brought. Business is an ‘infinite game’, it is a mass of indistinct variables and unknown connections and it is extraordinarily hard to determine cause and effect. It is impossible to tell how the actions and decision of a CEO have an impact on value creation (or, one might argue, any impact at all) and yet that is exactly what we are being asked to believe is being done to prove the value of their astronomical pay levels.
Jack Welch was hailed as a business genius for his leadership of GE but we found out afterwards that much of the success was a factor of being in the right place at the right time, i.e. a long-term stable and rising market. In fact, it could be argued that Welch destroyed value with his policies like rank-and-yank and his successors struggled when tougher market conditions came along (although they still got mightily rewarded for their failure).
Still, maybe one day a few crumbs from the board room table will fall in your lap, eh?
Raindrops Keep Falling On My Head (Part 2)
The other symptom of ‘Trickle-Down Management’ is the waterfall of information and the waves of change initiatives, strategic objectives, mission statement and other gobbledegook that flows down onto you in ever-increasing volume.
Most of it might as well be written in Klingon of the all the sense it makes. Somehow, you have to find a way to sort through all this to find the odd bit that is a)intelligible and b)useful and also to spot the bits that you have to deal with or you’ll be in trouble.
These imperatives are where you have to bring your ninja-level management-wrangling skills to bear, where you have to convert this nonsense into something that might actually work but at least something that your team can actually do. Then you have to take the results and turn it into a story that sounds like what you think senior management are expecting to hear, a plausible explanation as to how you’ve delivered the vague outcomes that you think they said they wanted.
The ‘Trickle-Down’ doesn’t refer to this raging torrent of bullshit but to the meaningful direction and purpose that is hidden within it. You have to function as a massive sieve, with Blue Whale-like capacity for gulping down vast quantities of water for the minute bits of life-sustaining krill suspended in it.
And then, when you’ve done all that, with the small reserves of energy and the even smaller amount of time you have left, you’re supposed to do your job.
‘Trickle-Down Management’ - when they piss on your heads and then tell you it’s raining.
And then try to sell you an umbrella. That’s got the company logo on it.
Separate Lives
I wrote a post on LinkedIn this week about how Kwarteng’s ‘mini-budget’ had all the hallmarks of your standard corporate board room SNAFU. You know, groupthink, believing your convictions about how the world works are reality, ignoring contradictory advice, failing to think through the consequence, not having any plan B (or C, D and all the rest). Blindly walking into an obvious disaster that even your average 10-year old would have foreseen.
A lot of the comments got tied up in the politics (not surprisingly, I guess) but that wasn’t really the point I wanted to make. Many ‘leadership teams’ are dangerously divorced from reality and fail to listen to the people in the organisation who are connected to the everyday reality. They lead completely different lives to their employees, in no small part because they earn several multiples more in income, in the order of 10x or even 100x. Consequently, they live in different areas, they mix in different social circles, they go to different schools and universities, they have different life choices and opportunities.
We see this in the latest study about ‘Return to the Office’. 8 out of 10 bosses believe employees are less productive working at home whilst 8 out of 10 employees believe they are more productive. This is in line with a host of studies showing a disconnect between how these two groups think about and perceive work (and, indeed, life).
This disconnect is incredibly dangerous on two fronts.
Firstly, it supports the dehumanising of employees in the eyes of management. It rapidly becomes an ‘us’ and ‘them’ environment, where the ‘us’ has the power and therefore are right and the ‘them’ are wrong and have to be coerced. This drives the psychopathic behaviours the system already encourages and rewards. It’s much easier to get rid of people you have no real connection with and think are wrong-headed. It’s much harder to have empathy for people when you don’t share their life experiences, their values and opinions, their perspectives and motivations.
Secondly, it leads management teams to doggedly follow strategies that are doomed to failure and that may lead to the demise of the business. To use my friend Geoff Marlow’s model of sense-making, decision-making and action-taking loops, if the first two are confined entirely to the management team then groupthink will dominate and they will be, to say the least, sub-optimal.
I’m sure many of us have been in organisations where the latest strategy plan is handed down to complete puzzlement of those who actually do stuff in the business, prompting comments like “How the hell did they dream this up?”, “What planet are they on?” and “This will never work in a month of Sundays”.
I think this disconnect will prove fatal to some companies. We see it reaching a crisis as they struggle with the post-COVID reality and the need to embrace modern, distributed working practices, as they struggle to stem the flood of talent leaving their organisations for more enlightened and progressive ones. We hear in their ‘railing at the moon’ pieces in the business pages, lamenting the turning of the planet and rising of the sun.
Feels like we’re entering some sort of end game here. Stock up on popcorn.
On The Inside
I mentioned earlier the ‘ninja-level management-wrangling skills’ that you need if you are in a large organisation, particularly if you are a team leader or a middle manager.
If you recognise these in yourself, there’s some good news. These are exactly the skills you need to be a ‘Pirate in the Navy’, to start to decrapify work from within the system. Instead of only applying them to what management want to happen, you can apply them to what YOU want to happen i.e. a less crappy workplace.
If you can do one thing and make it look like you are doing something else, then you can do what you think is the right thing and make it look to management like you are doing what they want. Then you have the power to make real change happen.
You can make your work experience, and that of your team and the people you regularly work with, better and you don’t need any permission, because it looks like you’re doing what you should be doing. If they do find out that you’re ‘interpreting’ the rules, you can just point to the better results you’re getting and how much happier everyone is.
If you think you are already operating as a ‘Pirate in the Navy’, I’d love to hear how you are doing it and the challenges you are facing. I’ve got a few ideas based on my own and others’ experience and I might be able to help you, so get in touch by email or DM and we’ll have a chat
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