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A Right Recruiting Newsletter, 4/2007
Management performance can be judged in many ways. Depending upon discipline (engineering, finance, sales, marketing, etc) or industry (capital intensive, services, high-tech), the metrics used to gauge are manager’s performance can vary. Some of these metrics can include cost savings, budget management/predictability, sales growth and scads of others.
However, managers sometimes forget that even within an industry or company these metrics can change. It can be devastating to be caught flat-footed when business conditions change the way your performance is evaluated. This disconnect sometimes happens at certain times in the economic cycle. We are at such a point now, which means you may need to re-evaluate what it takes to be a good manager now, and to get yourself some bonus money and a raise.
First, let’s briefly analyze the last turning point in management metrics. The best example I can give is from IT in mid-2001. Up to that point IT managers had had a 5-year upward run where new products were being developed and purchased and the metric was consistent. Managers were judged on speed – how many lines of code could your group write and how quickly. Cost, within reason, was not a big issue at the time because, for 5+ years, budgets had increased. Not being a team player and abrasiveness were forgivable offenses as long as the project was completed quickly. That changed, sometimes around May 2001, and it caught a lot of managers unaware.
Here is an example. It’s a situation I saw at a distance. Names have been changed to protect the innocent and not so innocent. You can change the discipline from IT to anything else and the situation will be similar.
Joe Jones managed a software group for a company in South Jersey. While they were not an IT company, the software that his group developed was a key part of a planned upgrade that was being directed towards new services for their clients. For 3 years, Joe got everything he wanted and was considered the office prima donna. Of course, he thought he and his group were indispensable. He got good reviews because his group got things done quickly. If there was turnover in his group he filled the empty desk and got the person up to speed ASAP. If there was someone good that he wanted to hire and salary was a problem, he pounded on his boss’s desk until he got his budget increased.
However, by Summer of 2001, the world had changed. Joe Jones’s projects had been completed and the economy was soft. Budgets for IT systems were being cut and the CEO wanted to see a good ROI on Joe’s projects before talking about any new initiatives. Unfortunately, Joe missed the writing on the wall. One of his developers left. He began interviewing for a replacement with the assumption, as always, that the position would be approved. He identified a candidate and went to HR to get position and salary approval. He was shocked when he was told that he would not be allowed to fill the opening.
Joe did not think things through. His next step was fatal but predictable. It was time to pound on the CEO’s desk. As you can imagine, the CEO was unimpressed by Joe’s arguments. Over the next several weeks, Joe continued his campaign. In doing so, he alienated the CEO and other management team members. His mistake was obvious. A year earlier Joe was judged by his ability to deliver complex systems on time. He did not know the rules had changed. Joe was now being judged on his ability to maintain systems using a small budget. He was also being judged on his ability to be a team player. Within a year Joe’s position was eliminated.
Timing is everything and, right now, your management metrics may be changing. We’ve had 5+ years of static budgets and a culture where cost control is king. That started changing last year as more and more companies saw the opportunity to grow, both here and overseas.
Since 2001, you’ve probably been judged on your ability to control the bottom line and meet budgets. That criteria has been at the top of the list in most management job descriptions we have seen and budgets have been pounded into your head every year. However, the cycle has changed and it’s time to make sure you are ahead of the curve. The management specs we are receiving are changing to reflect a new reality. It is possible that your effort may be evaluated differently too.
In a growing economy, results are king. New products, new services and new sources of revenue are driving factors now. If it takes you 6 extra months to get a product ready for production, that is 6 months of revenue you’ve lost for your company. Delayed completion of a marketing plan may mean that you may miss a key selling season. You get the point. In your next review, don’t be the person that, while you saved the company $2,000 by not approving overtime, you cost the company an early shot at a $10,000,000 contract or product line. While you are patting yourself on the back for saving money, the VP of Sales may be cursing you every time he goes to a tradeshow and sees a competitor’s booth loaded with new products that you couldn’t develop. Penny wise, pound foolish is written on many management gravestones.
Since we are a recruiting firm, we see this often in our daily business. Three years ago, if you had an opening and were allowed to fill it, you had the twin luxuries of time and an employment market tilted in your favor. Not only was the pace of your business slower, there were more candidates from which to choose. There was less pressure on you to make a speedy decision and more of a selection.
You have the opposite of that now. Here is a scenario to avoid. From Joe Jones we can now visit Steve Smith. Steve runs a marketing group. His company just got a new CEO who sees some opportunity to grow. For the last 4 years, Steve has gotten a lot of praise for keeping his group lean and for getting 110% out of a small group. If projects took an extra month or two, no big deal.
Three months ago Steve got a new initiative to develop a marketing plan for a new product launch scheduled to occur three months from now. In other words, he was given a critical six month project. His team of 5 people had been doing the work of 8 people because he had not replaced people who had retired over the last 4 years. Steve has badly miscalculated his situation.
A month ago one of his people quit. The market is better, she got a better offer and was tired of doing the work of two people. Steve drew up a set of specs that were very tight and budgeted a salary to replace the incumbent. He sat back as HR did the work. As resumes appeared Steve went into his default mode. Anyone who wasn’t perfect would need training, more thankless work for him. Anyone too expensive would affect his budget. No one who wasn’t both perfect and cheap was considered, which means that after a month he had only interviewed one person and hired none.
Remember Joe Jones fatal mistake of pounding on the CEO’s desk? Now it’s Steve’s turn. In a project status meeting with the CEO and other executive team members, Steve is asked how his project is going. It becomes clear from his answers that his part of the project is behind schedule. Not only that, Steve seems unconcerned when the CEO starts to drill into him about the reasons he is behind. Steve is missing an undercurrent of tension - others managers have been counting on his group to deliver and he is hurting them all. When asked why he is late, Steve is shocked because he still thinks he is judged by his ability to stay below budget. He seems uncaring that others have focused on their end of the project while he is focused on saving postage.
Steve is on the spot. People on the spot often do one thing - they blame someone else. Steve blames HR for not providing him the right person. Here is where things start to unravel for Steve. His next meeting is with the CEO and the HR person. The CEO wants to know who is at fault here. It quickly becomes obvious that Steve is blaming the HR person for his inadequacies. Steve is reminded by the CEO of his project commitment and is shocked to hear that it is his job to build the best group that he can as quickly as possible. It is Steve’s job as a manager to deal with the employment market. If that means broadening specs and getting his team to help bring people up to speed, so be it. Steve is also told that part of his job is to get out of his office and help his team do their jobs.
Steve is in a new world now. He now has a forward thinking CEO who sees opportunity, not a defensive CEO who needs to focus on costs. There is a reason that companies hire different CEO’s for different periods in their growth cycle. Make sure you understand what your new managerial criteria area for 2007 and beyond. If you have been operating under the old rules, here are some things to consider:
- You can’t blame HR for not providing you with candidates. When you write specs, you need to remember there is a severe skilled labor shortage. If you write job specs that only apply to 2 people in the country, they are probably a tad too tight. Filling jobs quickly may be very very important now.
- If you lost an employee who was making $60,000 because they took a job somewhere else at $70,000, don’t budget $60,000 to replace them with the same skill set. The company that hired your ex-employee has established a new market rate.
- If you have found someone who you want to hire and they give you their salary goals in a range, don’t default to the lowest number on the range unless you absolutely must. The goal of extending a job offer is to get an acceptance, not to win a bargaining game. While you are trying to save $500, another company may be extending them an offer that trumps yours. Remember, their current salary is not as important as what other companies may offer them for their services.
- Don’t sit back in your office and tell your HR rep that everyone you have seen is not good enough. That tactic is basically saying to your boss, either me or HR is incompetent. Do you really want your career to depend on a 1 out of 2 chance of a good result from the CEO’s evaluation of that equation?
- Learn how to motivate positively or, put more bluntly, fear is no longer a managerial tool. The only people in your department afraid of losing their jobs are your weakest people. Turnover now can create a big problem for you. It can limit your ability to get results. If fear has been in your management tool kit, you may get shot back at via an exit interview.
Remember, being a manager in good times can be more difficult than in bad times. Don’t assume that the goals you had in 2004 are the same as you have now. Jobs change and expectations change. Make sure you are changing with them. Thanks for your time. Jeff
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