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MANAGEMENT NOTES
Don’t Hire Jerks
Building the civilized
workplace.
Nasty people don't just make others feel
miserable; they create economic problems for their
companies.
Lars Dalgaard is CEO and co-founder of
SuccessFactors, one of the world’s fastest-growing
software companies—and the fastest with revenues
over $30 million. Dalgaard recently listed some
milestones that his California-based company
passed in its first seven years:
- the use of its software by more than two million
employees at over 1,200 companies around the world
- the use of its software by employees speaking 18
languages in 156 countries
- growth three times that of the company’s nearest
competitor
- enthusiastic recommendations of the product by
nearly all customers
- dramatically low employee turnover
- employing no jerks
That’s right—no jerks—although the word
SuccessFactors really uses (except on its Web site) is
a mild obscenity that starts with the letter A and sort of
rhymes with “castle.” All the employees
SuccessFactors hires agree in writing to 14 “rules of
engagement.” Rule 14 starts out, “I will be a good
person to work with—not territorial, not be a jerk.” One
of Dalgaard’s founding principles is that “our
organization will consist only of people who absolutely
love what we do, with a white-hot passion. We will
have utmost respect for the individual in a
collaborative, egalitarian, and meritocratic
environment—no blind copying, no politics, no
parochialism, no silos, no games, —just being good!”
Dalgaard is emphatic about applying this rule at
SuccessFactors because part of its mission is to help
companies focus more on performance and less on
politics. Employees aren’t expected to be perfect, but
when they lose their cool or belittle colleagues,
inadvertently or not, they are expected to repent.
Dalgaard himself is not above the rule—he explained
to me that, given the pressures of running a rapidly
growing business, he too occasionally “blows it” at
meetings. At times, he has apologized to all 400-plus
people in his company, not just to the people at the
meeting in question, because “word about my
behavior would get out.”
As Dalgaard suggests, there is a business case
against tolerating nasty and demeaning people.
Companies that put up with jerks not only can have
more difficulty recruiting and retaining the best and
brightest talent but are also prone to higher client
churn, damaged reputations, and diminished investor
confidence. Innovation and creativity may suffer, and
cooperation could be impaired, both within and
outside the organization—no small matter in an
increasingly networked world.
The problem is more widespread than you might
think. Research in the United Kingdom and the United
States suggests that jerk-infested workplaces are
common: a 2000 study by Loraleigh Keashly and
Karen Jagatic found that 27 percent of the workers in a
representative sample of 700 Michigan residents
experienced mistreatment by someone in the
workplace. Some occupations, such as medical ones,
are especially bad. A 2003 study of 461 nurses found
that in the month before it was conducted, 91 percent
had experienced verbal abuse, defined as
mistreatment that left them feeling attacked, devalued,
or humiliated. Physicians were the most frequent
abusers.
There is good news and bad news about
workplace jerks. The bad news is that abuse is
widespread and the human and financial toll is high.
The good news is that leaders can take steps to build
workplaces where demeaning behavior isn’t tolerated
and nasty people are shown the door.
How workplace jerks do their dirty
work
Researchers who write about psychological
abuse in the workplace define it as “the sustained
display of hostile verbal and nonverbal behavior,
excluding physical contact.” At least for me, that
definition doesn’t quite capture the emotional wallop
these creeps pack. The workplace jerk definition I use
is this: do people feel oppressed, humiliated, de-
energized, or belittled after talking to an alleged jerk?
In particular, do they feel worse about themselves?
Workplace jerks do their dirty work in all sorts of
ways; I’ve listed 12 common ones—the dirty dozen—
to illustrate the range of these subtle and not-so-
subtle moves, which can include physical contact.
Researchers who study workplace abuse and bullying
have identified scores of others. I suspect you can add
many more that you’ve seen, personally experienced—
or committed.
The Dirty Dozen
- Personal insults
- Invading coworker’s personal territory
- Uninvited physical contact
- Threats and intimidation, verbal and nonverbal
- Sarcastic jokes and teasing used as insult
delivery systems
- Withering e-mails
- Status slaps intended to humiliate victims
- Physical shaming or status degradation rituals
- Rude interruptions
- Two-faced attacks
- Dirty looks
- Treating people as if they were invisible
Lists like these are useful but leave a sterilized
view of how workplace jerks act and the damage they
inflict. Stories, often painful ones, are necessary to
understand how workplace bullies demean and de-
energize people. Consider the story of this victim of
multiple humiliations:
“Billy,” he said, standing in the doorway so that
everyone in the central area could see and hear us
clearly. “Billy, this is not adequate, really not at all.” As
he spoke he crumpled the papers that he held. My
work. One by one he crumpled the papers, holding
them out as if they were something dirty and dropping
them inside my office as everyone watched. Then he
said loudly, “Garbage in, garbage out.” I started to
speak, but he cut me off. “You give me the garbage,
now you clean it up.” I did. Through the doorway I
could see people looking away because they were
embarrassed for me. They didn’t want to see what
was in front of them: a 36-year-old man in a three-
piece suit stooping before his boss to pick up
crumpled pieces of paper.
The damage done
The human damage done by that kind of
encounter is well documented—especially the harm
that superiors do to their subordinates. Bennett
Tepper studied abusive supervision in a
representative study of 712 employees in a
midwestern city. He asked them if their bosses had
engaged in abusive behavior, including ridicule, put-
downs, and the silent treatment—demeaning acts that
drive people out of organizations and sap the
effectiveness of those who remain. A six-month follow-
up found that employees with abusive supervisors
quit their jobs at accelerated rates. Those still trapped
felt less committed to their employers and
experienced less satisfaction from work and life, as
well as heightened anxiety, depression, and burnout.
Dozens of other studies have uncovered similar
findings; the victims report reduced levels of job
satisfaction, productivity, concentration, and mental
and physical health.
Nasty interactions have a far bigger impact on the
mood of people who experience them than positive
interactions do. Recent research shows just how
much. Theresa Glomb, Charles Hulin, and Andrew
Miner did a clever study in which 41 employees of a
manufacturing plant in the Midwest carried palm-size
computers for two to three weeks. At four random
intervals throughout the workday, each employee had
to report any recent interaction with a supervisor or a
coworker and whether it was positive or negative, as
well as their current mood. The researchers found that
negative interactions affected the moods of these
employees five times more strongly than positive
ones.
All these factors suggest an effect on costs. One
reader of a short article I wrote on workplace jerks felt
that more companies would be convinced if they
estimated “the total cost of jerks,” or TCJ. If you want to
develop a rough estimate of your company’s TCJ, take
a look at my list of possible costs and attach your best
monetary estimate to each, as well as to any other
factors you regard as relevant. This exercise can help
you face up to the damage that jerks do to your
organization. When I told a Silicon Valley executive
about the TCJ method, he replied that it was more
than a concept at his company. Management had
calculated the extra costs generated by a star
salesperson—the assistants he burned through, the
overtime costs, the legal costs, his anger-
management training, and so on —and found that the
extra cost of this one jerk for one year was $160,000.
Finally, if word leaks out that your organization is
led by mean-spirited jerks, the damage to its
reputation can drive away potential employees and
shake investor confidence. Neal Patterson, the CEO of
Cerner, learned this lesson in 2001 when he sent an
e-mail intended for just the top 400 people in this
health care software company. Patterson complained
that few employees were working full 40-hour weeks
and that “as managers—you either do not know what
your employees are doing; or you do not care.”
Patterson said that he wanted to see the employee
parking lot “substantially full” from 7:30 AM to 6:30 PM
weekdays and “half full” on Saturdays. If that didn’t
happen, he would take harsh measures. “You have
two weeks,” he warned. “Tick, tock.” Patterson’s e-
mail was leaked on the Internet, provoking harsh
criticism from management experts, including my
Stanford colleague Jeffrey Pfeffer, who described it
as “the corporate equivalent of whips and ropes and
chains.” Pfeffer went a bit overboard for my taste. But
investors weren’t pleased either: the company’s stock
value plummeted by 22 percent in three days.
Patterson handled the aftermath well: he sent an
apology to his employees and admitted that he
wished he had never sent the e-mail. The share price
did bounce back. Patterson learned the hard way that
when CEOs come across as bullies, they can scare
their investors as well as their underlings.
Enforcing the no-jerks rule
Continued next week
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Greetings!
April 16th Monday Report - Don't Hire
Jerks
- That’s right—no jerks—although the word really
used is a mild obscenity that starts with the letter A
and sort of rhymes with “castle.” All the employees
agree in writing to 14 “rules of engagement.” Rule 14
starts out, “I will be a good person to work with—not
territorial, not be a jerk.”
“our organization will
consist only of people who absolutely love what we
do, with a white-hot passion. We will have utmost
respect for the individual in a collaborative, egalitarian,
and meritocratic environment—no blind copying, no
politics, no parochialism, no silos, no games, —just
being good!”
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| OPPORTUNITIES? |
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“Movie Eateries” Provide An Upscale
Remake to Sagging Cinemas
The old conception of a night at the
movies has died.
Digital downloads, video on demand and DVD
rent-by-mail combined with increasingly theater-like
home-entertainment setups are leading more
customers to think twice before plopping down $10 for
tickets, then shell out more for flat sodas and stale
popcorn, only to be stuck with a theater full of
screaming kids and unruly teens. No wonder the
grownups stay home.
Since hitting a 16-year high in 2002 with 1.6 billion
moviegoers and $9.52 billion in receipts, attendance
has dropped four of the past five years, according to
the National Association of Theater Owners (NATO).
Attendance did increase some to 1.45 billion
moviegoers in 2006 from 2005. Meanwhile, box office
receipts came in at $9.48 billion last year. In 2007,
things have been a little brighter, with box office gross
up 6.2 percent per screen and attendance up 4.2
percent, year to date, but even keeping up that pace
will only just get the industry back to where it was five
years ago.
How to woo adults back to the megaplex? Enter a
slew of new concepts that put a new spin on the
old “dinner and a movie” idea. Entrants such as
Studio Movie Grill, Movie Tavern and Cinebarre (a unit
of Regal Cinemas), are building venues that offer
some combination of reserved seating, alcoholic
beverage service, made-to-order dinners and theaters
that include leather seating all while projecting the
latest films via state-of-the art digital projection
systems.
“We are primarily an adult experience – we are
not cannibalizing from the traditional theaters, but
targeting people who are at home watching their
DVDs,” says Terrell Braly, the former CEO of Austin
Drafthouse Cinemas and now CEO of Cinebarre.
In March, Movie Tavern signed to open a location
in Williamsburg, Va., the latest in its plans to open
eight locations by 2008 (giving it 20 in all). Studio
Movie Grill earlier this month announced plans to
open its fifth location in Arlington, Texas as it ramps
up an effort to open 75 properties in the next five years.
Meanwhile, Regal Cinemas recently unveiled its own
Cinebarre concept and plans to open its first location
in July.
NATO has not yet started tracking statistics for
movie eateries, but the segment “is growing rapidly,”
according to Patrick Corcoran, director of media and
research with NATO
The idea is that these new concepts may help
stem the tide of move theaters disappearing at an
alarming clip. In the past nine years, the number of
theaters in the U.S. has dropped 21 percent,
according to the association from 7,798 in 1996 to
6,114 in 2005.
“It’s one way exhibitors are trying to make the
movie-going experience different from the home
viewing experience,” Corcoran says.
Retail real estate developers are embracing the
movie eateries because they complement the
clientele at the lifestyle centers that have become so
popular in recent years. They also make excellent
anchors, drawing in neighborhood residents and
tourists alike, according to Daniel W. Aston, partner
responsible for the Mid-Atlantic region with the
Roseland Property Company, a developer based in
Portsmouth, Va.
“Everyone thinks that teenagers are the backbone
of the movie-going experience, but concepts like Movie
Tavern expand your audience instead of making you
rely on just one segment,” says Aston.
Roseland recently signed Movie Tavern as a
tenant at its 55-acre, mixed-use High Street
development in Williamsburg, Va. That Movie Tavern,
which will anchor the 250,000-square-foot retail
village at High Street, is scheduled to open in August
2008.
Another advantage of movie eateries, which range
from 20,000 square feet to 40,000 square feet, is that
they require fewer parking spaces than the
multiplexes because there are less seats per square
foot. With the addition of a full-service kitchen and
dining tables, seating capacity at such venues ranges
from a 100 to 1,000 seats, less than half of the
seating capacity of multiplexes.
For example, Movie Tavern’s patrons are primarily
baby boomers and families with children, with median
household incomes of at least $60,000. That upscale
demographic is coveted by developers of lifestyle
centers, says Jeffrey Benson, Movie Tavern’s CEO.
Also based in Dallas, Studio Movie Grill currently
operates five locations, primarily in Texas, in
communities where annual household incomes top
$85,000. The company wants to position itself in
lifestyle centers, alongside retail tenants such as
Barnes & Noble, Banana Republic and the
Cheesecake Factory.
“We are interested in working only with
developers who create the best retail environment,”
says company co-owner and founder Brian
Schultz. “Our major focus is on families, which is very
synergistic with what upscale lifestyle centers are
looking for.”
Studio Movie Grill sites, which are approximately
40,000 square feet, almost rival the multiplexes. But
boutique operators are not the only ones pursuing the
movie eatery concept.
Regal Entertainment Group, which operates 6,386
movies screens throughout the United States, is
developing Cinebarre in a joint venture with Braly.
Cinebarre theaters will serve casual food, including
pizza and chicken wings along with beer and wine,
during screenings of first run films. They will also offer
specialty programming and celebrity events, including
appearances by movie stars and theme events
centered around popular flicks.
The first Cinebarre is scheduled to open at the
493,000-square-foot Biltmore Square Mall in Ashville,
N.C. in July, and an announcement is pending on a
second unit. If the venture is successful, Regal will
expand the rollout to 20 theaters nationwide over the
next five years. Cinebarre executives are planning to
renovate outdated Regal properties in areas with
annual household incomes of $70,000, a median age
of 35 and populations of 200,000 people within a five-
mile-radius.
“Going to the traditional movie theater is not
relaxing anymore and Cinebarre will meet a definite
need in the community,” says Brian Jennings,
marketing manager for Biltmore Square, which is
managed by Jones Lang LaSalle. “We are trying to put
a lifestyle component into the mall and that’s why
Cinebarre was such a great fit.”
Muvico, which operates 12 multiplexes, has also
launched a concept called the “Premier Experience” at
some of its theaters. For twice the price of a normal
ticket, adults can reserve seats in the balconies that
are connected to its Premier Bistro & Bars. The ticket
price includes valet parking and free popcorn. The
Premier Experience has been introduced at theaters
in Boca Raton, Tampa and West Palm Beach, Fla.
and is scheduled to come to the Xanadu
Meadowlands in Bergen County and to Aviation Plaza
in Linden, N.J.
Source: Retail Traffic, 2007
Black Hole or Window of Opportunity?
Understanding the Generation Gap in
Today's Workplace
What motivates you at work? Being respected,
valued, needed? Or having freedom, independence
and interaction with other bright people? What
motivates you at work, and how you approach work,
may have more to do with when you were born than
you think. Different generations value work and think
about work differently. Today, for the first time in
U.S. history, we have four generations laboring side-
by-side in workplaces everywhere. At work, these
differences can affect everything - recruiting, dealing
with change, rewarding and producing.
Understanding how different generations act and
interact can aid in addressing workplace conflict and
motivating employees to work better and smarter.
Click here for the complete report.
by Angela Stefaniak, CPPA and Clayton Vetter,
Planned Parenthood Los Angeles
Source: Center for Public Policy & Administration,
University of Utah, 2007
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| Economic Notes: |
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- Treasury Budget
- The unified deficit for March was $96.3 billion,
slightly larger than the CBO’s preliminary estimate of
a $95 billion deficit. The federal government has run a
deficit of $258 billion through the first half of fiscal year
2007; this is 17% smaller than the deficit during the
first half of fiscal year 2006.
- Creditforecast.com Quarterly Household
Credit Report
- Credit quality deteriorated further in the first
quarter as borrowing moderated. The aggregate
dollar delinquency rate jumped to its highest level in
over five years. The deterioration in credit quality last
year was led by mortgages. There was some
improvement in credit quality in auto and bankcards in
the first quarter. Borrowing in the quarter was led by
student loans and second mortgages. Subprime
lending continued to lead.
- IMF predicts fifth year of strong global
expansion
- The world economy is on course for a fifth year of
solid expansion despite recent stock market volatility
and the US downturn. The IMF cut its 2007 growth
forecast for the US economy by 0.7 percentage points
to 2.2 per cent, citing a sharper than expected
downturn in housing. It also reduced its forecast for
next year to 2.8 per cent. While warning that the
housing correction still has a way to run and had the
potential to trigger a deeper and more prolonged
slowdown or even a recession in the US, with
potential spill-overs to other countries, its central view
remained that a growth pause still seemed more
likely than a recession.
- International Business Confidence
- Business sentiment has improved measurably
since the beginning of the year and is now consistent
with global growth that is equal to its potential. On a
four-week moving average basis confidence is now
as strong as it has been since late July of last year.
Confidence is strongest in Asia and South America
and among high-tech firms; it is softest in Europe and
among vehicle manufacturers. Hiring intentions have
improved sharply in recent weeks and the inventory
drawdown among manufacturers appears to be
winding down. Expectations regarding the six-month
outlook have strengthened, suggesting economic
growth will accelerate later this year.
- Import and Export Prices
- The U.S. Import Price Index increased 1.7% in
March. The increase followed a 0.1% rise in February
and was led by a 9% decrease in petroleum prices.
Export prices rose 0.7% in March, after increasing by
the same amount in the previous month.
- MBA Mortgage Applications Survey
- Mortgage demand decreased 0.4% in the week
ending April 6. Purchase applications increased 2.7%
and refinance applications decreased 4.0%. The
increase in purchases is less than to be expected if
the housing market was recovering, considering the
low numbers last week. Therefore, these numbers
indicate that housing is still slowing domestic growth.
- Chain Store Sales
- Chain store sales grew 5.9% in March, up from
2.5% in February and the best growth since last April,
according to the ICSC chain store index. Results were
lifted by an earlier Easter and generally favorable
weather, meaning April will be far weaker. In addition,
a number of drags are building including rising
gasoline prices, housing market weakness and
deteriorating credit quality.
- Manufacturers Alliance/MAPI Survey
- The Manufacturers Alliance/MAPI composite index
increased slightly to 58 in March from a reading of 54
in December. The index points to slowing but
continuing expansion of manufacturing activity in the
coming quarter.
- Oil and Gas Inventories
- Crude oil inventories inched higher by 0.7 million
barrels for the week ending April 6, according to the
Energy Information Administration, well below
expectations of a 1.5 million barrel build. Gasoline
stocks fell by 5.5 million barrels, far greater than the
1.4 million barrel draw expected. Refinery activity
improved to over 88%, while crude imports
moderated, feeding the less than expected crude
build. Distillate inventories inched higher against
expectations of a mild drop. Yet another sharp draw in
gasoline and the weak build in crude oil makes this a
bullish report for prices.
- Weekly Natural Gas Storage Report
- Underground storage of natural gas increased by
23 billion cubic feet during the week ending April 6.
This was in line with expectations. Inventories are now
28.4% above the five-year average. This report is likely
to have a neutral effect on prices.
Source: Economy.com
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| This Weeks Leads: |
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- Ruth’s Chris Steak House
- Ruth’s Chris Steak House, Inc. trades as Ruth’s
Chris Steak House at 103 locations nationwide and
internationally.
- The high-end steak and seafood
restaurants occupy spaces of 11,000 sq.ft. in
freestanding locations and mixed-use centers.
- Plans call for 20 openings in the existing markets
during the coming 18 months.
- Typical leases run
10 years with four, five-year options.
- A vanilla shell
and specific improvements are required. Preferred
demographics include a population earning an
average household income of $90,000.
- A land
area of two acres is required.
- For more
information, contact
- Phil Demena,
- Ruth’s
Chris Steak House, Inc.,
- 5318 Northwest 77th
Terrace,
- Parkland, FL 33067;
- Web site:
www.ruthschris.com.
- Merlos Cutlery and Merlos Cutting Edge
- Merlos Cutlery, Inc. trades as Merlos Cutlery and
Merlos Cutting Edge at 21 locations throughout AZ,
CA, ID, NC, OR, TN and TX.
- The stores, selling
housewares, kitchen and sporting knives and gifts,
occupy spaces of 500 sq.ft. to 800 sq.ft. in lifestyle and
specialty centers and malls.
- Plans call for three to
six openings throughout the existing markets during
the coming 18 months.
- A vanilla shell and specific
improvements are required.
- Preferred cotenants
include Lord & Taylor.
- Preferred demographics
include a population of 300,000 in a 15-mile radius
earning an average household income above
$55,000.
- Typical leases run 10 years.
- For
more information, contact
- David Merlo,
- Merlo's Cutlery, Inc.,
- 318 East Oak Street,
- Santa Maria, CA 93454;
- Web site:
www.merloscutlery.com.
- Eblens Casual Clothing & Footwear
- Eblen’s, Inc. trades as Eblens Casual Clothing &
Footwear at 28 locations throughout CT, MA and RI.
- The shops, selling men’s and women’s apparel
and footwear, occupy spaces of 5,000 sq.ft. to 6,000
sq.ft. in strip centers and urban/downtown areas.
- Plans call for three to five openings throughout the
existing markets with representation by New England
Retail Properties, Inc. during the coming 18 months.
- Typical leases run five years with options.
- A
vanilla shell and specific improvements are required.
- Preferred cotenants include A.J. Wright, Burlington
Coat Factory, T.J. Maxx and video stores.
- Send
site submittals to:
- Matt Halprin,
- New
England Retail Properties, Inc.,
- 150 Hartford
Avenue,
- Wethersfield, CT 06109.
- Lucy Activewear
- Lucy Activewear operates 40 locations throughout
AZ, CA, CO, IL, OR, TX, VA and WA.
- The women’s
active wear stores occupy spaces of 2,000 sq.ft. to
2,500 sq.ft. in freestanding locations and
urban/downtown areas.
- Growth opportunities are
sought throughout the San Francisco bay area in CA
during the coming 18 months, with representation by
Metropolis Retail, Inc.
- Preferred demographics
include a population of 100,000 within five miles
earning $80,000 as the average household income.
- For more information contact
- Jim Bradley,
- Metropolis Retail, Inc.,
- 2017 Mountain
Boulevard, Suite 1,
- Oakland, CA 94611.
- Windsor
- Windsor operates 37 locations throughout AZ, CA,
CT, MI, NJ, NV, NY and TX.
- The shops, offering
apparel and accessories for juniors, occupy spaces of
4,200 sq.ft. to 5,000 sq.ft. in malls.
- Growth
opportunities are sought throughout AZ, CA and FL
during the coming 18 months. Typical leases run 12
years.
- A vanilla shell and specific improvements
are required.
- Preferred cotenants include
Nordstrom and Macy’s.
- Preferred demographics
include a population of 200,000 within four miles
earning $60,000 as the average household income.
- Competition is cited as Ann Taylor Loft and
Bebe.
- For more information, contact
- Ed
Zorehkey,
- Zorehkey & Associates,
- 30021
Tomas, Suite 300,
- Rancho Santa Margaurita, CA
92688.
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