Friday, May 30, 2014

Zappos Eliminates Job Postings: Is This a Good Idea?

Several days ago, online retailer Zappos announced that it was eliminating job postings.  According to the Washington Post,

"It has started a program called Zappos Insider, which it says is “like a special membership” for people who want to learn more about the company and its distinctive culture. Participants will get to chat with Zappos Ambassadors and are promised “top consideration” for job openings. It’s an approach that sounds like it favors prospective employees who are most deeply engaged with the brand. The people likely to take the time to enroll as Zappos Insiders are not the ones who are robo-sending résumés for every opening they see on"

Naturally, Zappos received a ton of positive press about this bold and unique move.  Zappos has become a favorite of those who are looking for companies that are taking innovative approaches to organization, culture, and leadership.   I've visited Zappos myself, and I love many of the things that they do.  On this one, though, I have to admit that I am a bit puzzled.  I'm glad that I'm not alone.  Suzanne Lucas has written a good column for Inc. about Zappos' new initiative.   Lucas writes:
Now, I totally agree that online résumé systems are recruiting black holes, but that's not because of job postings. It is because most recruiters stink. Yep. They don't know much about the jobs they are recruiting for, and so they are just playing a matching game. This is why I'll tell candidates to skip over the recruiters, if at all possible, and get to the hiring manager personally. Networking works better than submitting a résumé online. No doubt... Zapar (Zappos' social recruiting leader) says that job postings are conversation killers. I'd say the opposite is true. If a person wants a new job, having a job description is immensely helpful as a conversation starter.

Lucas makes a good point.  Job postings don't seem like the essence of the recruiting problem.  The process has many flaws, but taking away valuable information that may exist in a well-crafted job posting seems counterproductive.   Are some job postings too vague or otherwise flawed?  Certainly.  However, most do convey some information about the type of opportunities available at the company.  Lucas questions the time and resources that will be necessary to operate Zappos Insider as well.   Karen Bleier of the Washington Post does the same.  Both wonder how Zappos will handle the volume of activity that may arise here.  

I would note several additional concerns.  Hiring for cultural fit is wonderful.  However, does Zappos' initiative increase the likelihood that insiders will hire others who are quite similar to them in many ways?  Are certain people simply not going to engage with the firm on this platform, and therefore, will Zappos be missing out on some great talent?   Will the best people be presented other opportunities during the time required to cultivate a relationship on Zappos Insider, and perhaps not be willing to wait for an offer from Zappos that may never materialize? 

Thursday, May 29, 2014

Running a Better Meeting

We have all been stuck in terrible, unproductive meetings.   The discussion rambles on, and people constantly move off topic.  The agenda is unclear.  The meeting comes to a close without clear action items and assignments of responsibility.   How can we improve meetings?  We have all heard the typical advice.  Set a clear agenda.  Distribute key documents for review in advance of the meeting.  Select the attendees carefully.  And so on...  

Today, though, I read one piece of advice that I think bears emphasizing here.  Inc.'s Laura Garnett recently interviewed Dave Kashen, co-founder MeetingHero, a startup that has developed a cloud-based meeting tool.   Kashen offered several tips of making meetings  more productive.  I found one tip a bit different than the usual advice, and I'm going to apply it in my own work:

During the meeting, periodically summarize the discussion.
Kashen's suggestion: "Great facilitators instinctively do this. They stop every now and then to let people know where they are in the process and what has happened so far. This helps to ensure everyone is on the same page (and makes it easier to resolve inconsistencies if not), and frees people up to focus on the next part of the conversation. We realized that this function can largely be served by allowing the group, or a designated notetaker, to create a real-time meeting summary as it's going. That way the whole group knows where they are, and the summary can be sent out immediately after the meeting instead of someone having to go back through a set of notes and remember what happened."

Wednesday, May 28, 2014

Recruiting People with Grit

What is grit?   University of Pennsylvania Professor Angela Duckworth defines grit as "perseverance and passion for long-term goals."  Duckworth has studied grit extensively in her academic career.  She has found that intelligence is not always a good predictor of academic or professional success.  Grit matters.  For instance, she has found that, at West Point, a cadet's grit score is the best predictor of success in "Beast Barracks" – the incredibly challenging, six week summer training regimen that all new cadets must endure. Grit predicted success more so than intelligence, leadership ability or physical fitness. 

Now Josh Jarrett and Kristen Hamilton have launched a new startup, Koru, that leverages the concept of grit to help companies find great employees.    According to this Fortune article written by Erin Griffith, "Koru seeks out recent college graduates who possess grit, or tenacity, or resilience, but lack real-world experience, and help them land jobs at fast-growing companies. Koru does that by through intensive four-week training programs, hosted at by the companies looking to recruit raw talent."   

In short, Koru identifies students who appear to have a high level of grit, puts them through an intense, but short, program to both train them and test their determination and perseverance.  Part of the training involves working on short-term projects with real companies looking to recruit individuals with grit.  Ultimately, Koru tries to match these high grit individuals with employers seeking people with this crucial trait.  Koru makes money both from fees collected from hiring companies as well as tuition collected from recent college graduates who enroll in their four-week program.  Hamilton comments, "Hiring mistakes are expensive.  We realized a degree and GPA is not a good signal. We're looking to be that signal."

Reverse Mentoring

In 2009, I wrote about the very new concept of reverse mentoring in my book, Know What You Don't Know.  I'm very glad to see that the approach has begun to take hold in many companies.  Here's a new video created by the Wall Street Journal about the value of reverse mentoring:

Tuesday, May 27, 2014

Do Unmarried CEOs Take More Risk?

Wharton Professor Nikolai Roussanov and Temple Professor Pavel Savor have written a new paper titled “Status, Marriage and Managers’ Attitudes to Risk.” They examined the question:  Do unmarried CEOs take more risk in their business decisions than married CEOs?   Here's an excerpt from Knowledge@Wharton, in which Roussanov describes the findings from this research:  

We looked at … the risk-taking decisions of CEOs of public companies in the U.S. We collected data [about the] marital status of CEOs of the 1,500 largest public companies and looked at the differences in behavior of these firms — of the firms that were led by CEOs who were single and those who were married... What we found was that firms led by single CEOs engaged in much more aggressive investment behavior, along the lines of capital expenditures, as well as innovation activity, research and development, and acquisitions to some extent, than companies led by CEOs who were married. These differences translated also into greater riskiness of the firms led by single CEOs as measured by the stock return volatility.

The findings are rather interesting, and the scholars intend to extend this research in the future.  What's the next stream of research for them?  Roussanov reports that he would like to examine how marital status affects the decisions of money managersWe look forward to seeing those findings.

College is Worth It

Everywhere you look these days, you see articles questioning the value of a college education.  Yes, college is incredibly expensive.  Yes, the student debt burden is incredibly worrisome.   I think higher education needs to change.  There is no question in my mind.  However, I do not agree with those who are questioning whether a college education is necessary.   Here's some interesting new data published in the New York Times: 

The pay gap between college graduates and everyone else reached a record high last year, according to the new data, which is based on an analysis of Labor Department statistics by the Economic Policy Institute in Washington. Americans with four-year college degrees made 98 percent more an hour on average in 2013 than people without a degree. That’s up from 89 percent five years earlier, 85 percent a decade earlier and 64 percent in the early 1980s.... And the unemployment rate in April for people between 25 and 34 years old with a bachelor’s degree was a mere 3 percent.

Tuesday, May 20, 2014

Engage Your Employees By Helping Them Solve Customers' Problems

Mark Lukens, Founding Partner of consulting firm Method 3, has a good article on employee engagement at Fast Company. Lukens makes the point that senior executives often "throw perks" at employees in hopes of increasing engagement. It does not work. Boring work, a lack of autonomy, and inadequate feedback from managers cannot be overcome simply by offering a few perks. Lukens argues that we can increase employee engagement by helping our front-line works serve customers more effectively. Here's an excerpt:

Employees at the frontline collectively have the best knowledge of what customers want and what bothers them. This is what they care about. If they can satisfy those customers then they will be satisfied in their jobs, feeling like they’re achieving something. To create real engagement start by talking with those workers about what their customers want and the obstacles to their satisfaction. Empower your customer-facing employees to solve these problems whenever possible, and as they feel more successful and deal with happier customers, they’ll also feel more engaged.

Monday, May 19, 2014

Do entrepreneurs who "fail early" have a better chance of future success?

James Surowiecki has a terrific column on entrepreneurship in the New Yorker this month.   In the article, he asks why so many entrepreneurs continue to launch start-ups despite the low probability of success.   Here's one excerpt that I found interesting.  In this excerpt, Surowiecki questions whether an early failure leads the type of learning that can generate future success: 

There’s a widespread tendency to treat failure as a badge of honor: “Fail fast, fail often” is a familiar mantra in Silicon Valley. There’s now a regular FailCon, where people come to hear other entrepreneurs tell about the hard times they endured and about how starting a business and failing actually makes you more likely to succeed in the future. It’s a comforting message, but the evidence suggests that past failure really just predicts future failure. A 2009 study of venture-backed firms found that entrepreneurs who had failed in the past were not much more likely to succeed in new ventures than first-time entrepreneurs were—some eighty per cent of those who had failed before failed again. A later study of more than eight thousand German ventures came to an even grimmer conclusion: founders who had previously failed were more likely to fail than novices.

Friday, May 16, 2014

Beware the Maximizing Mindset: The Dangers of High Expectations

Kellogg School of Management's Neal J. Roese and Jingjing Ma have conducted some new research on consumer expectations.  They have shown that marketing professionals need to be aware that creating high expectations in consumers' minds can be dangerous.   Roese and Ma compare two different consumer mindsets:  the maximizing mindset (searching for something that is "best") vs. the satisficing mindset (searching for something that is "good enough").   In their experiments, they found that those in the maximizing mindset are more thorough in their evaluation of alternative products.  However, they also found that those in the maximizing mindset were more likely to experience "greater regret and lower satisfaction" than those in the satisficing mindset.    Marketers, therefore, must be cautious about setting unrealistic expectations for their product, thereby pushing the consumer into a maximizing mindset.  They may find that those consumers are very difficult to satisfy.   Ultimately, they may spend a great deal to acquire those customers, only to see them defect quickly. 

Thursday, May 15, 2014

Hiring for Attitude and Cultural Fit

You arrive at a company and are escorted to a room for your interview.  The interviewer arrives with a notebook in hand along with a cup of water for you.  When you leave the room, what do you do with the cup?  Do you put it in the trash?   Hmmm... why does it matter?  Well, at HubSpot, Chief Product Officer David Cancel uses this simple technique to help assess cultural fit.  If a person disposes of the trash, he looks favorably upon them. If he or she leaves the trash behind, he begins to wonder if that individual will fit in an organization that looks for effective and humble team players.  For more on Cancel's approach, check out this article at Fast Company by Rebecca Greenfield

Over the years, Cancel has found that the usual interview questions, as well as a variety of tests or brainteasers, do not always lead to the best hires.  Those various interview methodologies simply do not help determine if someone will fit the culture and serve as an effective team player.   Instead, small techniques such as the cup/trash test help him develop a better understanding of how people with interact with others in the organization.  

Others in the organization have begun to create their own techniques for ascertaining cultural fit. For instance, according to the article, "Meghan Keaney Anderson, a director on the product marketing team, asks people what they like to read and why. She wants to attract people who love to learn and are curious enough to invest their time outside of work in learning."  

What's the result of this effort to hire better for cultural fit?  Apparently, employee engagement and employee retention have risen since HubSpot began implementing this approach.  

Tuesday, May 13, 2014

JetBlue: Stuck in the Middle?

Let me start by acknowledging that, as a customer, I love JetBlue.  Their service stands out in an industry known for, quite frankly, a pretty awful customer experience.  Having said that, I've always worried that they run the risk of being "stuck in the middle" in terms of their strategic position.  They are not a low cost player in the industry, but on the other hand, they cannot command a premium price either as a truly differentiated player.   Now the Wall Street Journal reports that CEO Dave Barger is under fire, as financial performance has been subpar.  The paper notes, "Meanwhile, excluding fuel and profit-sharing, unit cost—the cost to fly a seat a mile—rose by 6.3%, and labor expenses were up about 15% on a unit-cost basis, the biggest jump ever year over year."  

What's the diagnosis in this article?  Wall Street Journal writer Susan Carey explains, "But many analysts and investors believe that JetBlue is marooned in an industry middle ground, between much larger, full-service carriers like Delta Air Lines Inc. that are improving their service and profitability, and successful ultra-discounters like Spirit Airlines Inc. that go after passengers who don't want perks—just rock-bottom fares. JetBlue has been profitable since 2009, but only marginally so and it often disappoints on quarterly profits."   That sure sounds like a company stuck in the middle, doesn't it?  

Monday, May 12, 2014

Hiring and Retention at High-Status Companies

Management scholars Matthew Bidwell, Ethan Mollick, Roxana Barbulescu, and Shinjae Won have written a new paper titled, “I Used to Work at Goldman Sachs! How Firms Benefit From Organizational Status in the Market for Human Capital.”  Their results are not surprising, though their paper is admirable for the rigor with which they document the relationship between company status and talent attraction/retention.   The study finds that top talent will accept lower total compensation if they have an opportunity to land a job at a high-status firm.  That won't shock anyone.   Interestingly, though, the hiring advantage at high-status companies then turns rather quickly into a retention challenge.   Once those employees gain some experience, they become rather difficult to retain.   These employees at high-status firms view themselves as very attractive to other companies, and therefore, they demand higher compensation, better benefits, promotions, etc.   The advantages of status, therefore, dissipate perhaps a bit more quickly than firms would prefer. 

Friday, May 09, 2014

Whole Foods Suffers Large Drop in Share Price

Whole Foods experienced a dramatic drop in its share price this week.  The shares fell 20% as the company projected slower growth in the future.   What's affecting the company's growth rates?  Many new rivals have emerged, including conventional grocers who are allocating much more shelf space and attention to the organic food category.  Moreover, Whole Foods has tried to emphasize value more so than in the past, so as to compete more effectively with these conventional, lower-priced rivals.  The company, after all, does have a reputation as "Whole Paycheck."  Whole Foods also has felt pressure to emphasize value as it has moved into new geographic markets within the US where customers are not as affluent.  The emphasis on value, i.e. lower prices, naturally has a short term negative impact on sales growth (as each item generates less revenue), though it may help bolster growth in the long run.  

What's the danger here for Whole Foods?   If they drop prices and emphasize value in a big way, they may take away from their high quality, high service, differentiated positioning.   If they don't pay attention to value at all, they may sacrifice growth and lose market share in the organic category.     In short, Whole Foods faces a conundrum many differentiated, premium players encounter as they begin to saturate their original niche and as new rivals emerge.  Whole Foods would be well-advised to take great care that they don't allow a desire for growth and market share to cause them to dilute a strong brand and to hurt a premium image.  Many other premium niche players have made that mistake, and they have learned that it is very hard to recover from such an error. 

Thursday, May 08, 2014

Encourage Your Workers to Reflect on Their Work: Their Performance Will Improve!

Scholars Francesca Gino, Gary Pisano, Giada Di Stefano, and Bradley Staats have published an interesting new working paper titled "Learning by Thinking: How Reflection Aids Performance."  The paper describes a series of experimental studies conducted by these researchers.  In one study, they conducted a field experiment at Wipro, an outsourcing firm based in India.  The scholars worked with employees experiencing a multi-week training program.  They broke the employees into three groups.  First, they had a "reflection" group.  They asked these workers to spend the final 15 minutes of each day reflecting on what they had learned.  Second, they had a "sharing" group.  These employees spent 15 minutes reflecting, and then they shared their thoughts with a peer for approximately 5 minutes.  Finally, the control group did not engage in any closing activity at the end of each day's training. 

What were the results of this field experiment?   The employees in the reflection group performed 22.8% better than the control group on a test administered at the end of the training program.  The workers in the sharing group experienced a similar advantage over the control group employees. 

The results should not surprised you at all.   Some of you are probably wondering why we needed an experiment to prove the obvious!  However, think for a moment about the work that you and your colleagues do in your organization.  How busy is your typical day?   Have you set aside 15-20 minutes for reflection and sharing from time to time?  In many cases, we don't allocate time to this important activity.  Yes, we do it informally, perhaps during a drive home from work or while working out at the gym.   In many instances, though, we get so busy in the day-to-day work that we allow far too many days to pass while we are not reflecting and sharing appropriately. 

Wednesday, May 07, 2014

The Customers You Do Not Want

New product launches often do not succeed.   That's the unfortunate reality facing many business leaders.  Strong early sales presumably are a leading indicator of a profitable success story to unfold in the near future.  However, some new research suggests that not all early sales, and all early customers in particular, are a positive thing.  Scholars Eric Anderson, Song Lin, Duncan Simester, and Catherine Tucker have conducted a new study examining new product launches.  They have identified a set of customers that they call "harbingers of failure."   If these customers are buying your new product, you might not want to celebrate... you may want to become concerned, quite concerned.   Here's an excerpt from Kellogg Insights: 

The researchers found that just 40 percent of new products are still in stores three years later, a number in line with previous estimates. But critically, a product’s chances of succeeding depend not only on how much is sold but also on who is buying.  The surprising finding is that when sales increase to a segment of consumers whom the authors label “harbingers of failure,” then the new product is more likely to fail.  This finding contradicts nearly every metric of new-product success: How can more sales signal that your product is about to fail?  

Who are these harbingers of failure?  Apparently, there are a set of consumers who consistently demonstrate unique niche tastes.   Their preferences clearly fall outside the mainstream.   According to Kellogg Insights, "Harbingers with a history of making four or more repeat purchases of a failed product are nearly twice as likely as other customers to buy another product that fails."  If these harbingers are involved in your early market research, they may convince you to launch a product that is ultimately going to fail.  So, you have to be on the lookout for harbingers long before launch.   The scholars suggest talking to consumers about the OTHER PRODUCTS that they like, not just the product that you are launching.  If they like mainstream popular products, you are probably on solid ground.  If they cite other niche products that have not become hits, you should be cautious.  They might be harbingers of failure. 

Monday, May 05, 2014

Michelle Peluso Has No Office

Michelle Peluso, CEO of Gilt Groupe, spoke at the Bryant University Women's Summit in March 2008.  I was quite impressed, as were the more than one thousand women in attendance.   At the time, Peluso served as the CEO of Travelocity.   About one year ago, she became the CEO of Gilt Groupe, an online shopping site that offers flash sales of designer apparel and accessories.  In the New York Times Corner Office column several weeks ago, Peluso described her leadership style.  Here's a terrific excerpt:

I don’t have an office. When I started at Gilt, I wanted to get to know the various teams, so I’d set up and work with them for a week. I joined their meetings and tried to do their work. When you’re sitting in the open with everybody, you pick up a lot. That was my schedule the first eight weeks, but I just loved it, and more than a year later, I haven’t stopped. I never want to be sitting in an ivory tower surrounded by people who tell me what I want to hear, or feeling that I don’t really understand how people feel and what’s going on.

Wouldn't it be great if other CEOs followed her example?   Peluso clearly understands how isolated senior executives can become.   She understands how easy it is for leaders to find themselves surrounded by sycophants.   Her strategy keeps her finger on the pulse of the business, well-connected to front-line employees throughout the organization.   

Friday, May 02, 2014

Mentorship Mistakes

Fortune's Katherine Reynolds Lewis has written a good column titled "Five Mentor Mistakes to Avoid."    She makes two particularly strong points worth emphasizing here.  First, consider selecting a mentor who is not similar to you.  In many cases, people select mentors with whom they share some key things in common (perhaps educational background, gender, functional expertise, race).   However, Lewis suggests that picking someone similar to you may be a crucial mistake.  A mentoring relationship may deliver more fruit if you can learn from someone whose background and expertise enables them to offer you a different perspective.  Here's one excerpt:

When technology executive Sharon Meers, co-author of Getting to 50/50, was a vice president at Goldman Sachs, the women's network discovered that all the male vice presidents were playing basketball with the senior leaders. They asked the partners to create a program that would match women with senior men as mentors. A number of women who participated advanced to become managing directors.

Second, Lewis recommends thinking about mentoring as a two-way relationship.   I have written about that point several times, including on this blog.   Senior leaders should not only impart advice in a mentoring relationship.  They should use the opportunity to learn from their younger colleagues.  Making the mentoring relationship a two-way street can be incredibly beneficial.