This is an MIT Sloan Management Review article. Should coworkers have sex with each other? Should employers try to stop them? The answer to the first question is that the question isn't worth answering -because office romance is inevitable anyway. The answer to the second is more interesting. And due to recent shifts in the legal climate, for companies, it's also more scary. There is a misunderstanding at the epicenter of the office romance debate, even as it attracts increasing scrutiny due to famous examples such as the recent episode involving CBS's "Late Show With David Letterman" host. Contrary to some commonly misread signals, managers are not interested in stamping out employee dating. However, sexual relationships and romances change office dynamics in potentially problematic ways, presenting legal challenges such as allegations about sexual harassment and a hostile work environment, and those challenges need to be managed skillfully This article explores the changing legal and managerial landscape regarding office romance, and explains what practices companies should take to avoid trouble.
This is an MIT Sloan Management Review article. Many companies see customers' product returns as a major inconvenience and an eroder of profits. But recent studies have begun illuminating the potential benefits of allowing customers to return products with impunity. This research finds that when a company has a lenient product-return policy, which allows customers to return almost any product at any time, customers are more willing to make other purchases, thereby raising the company's revenues from sales. The authors' own research extended these studies by exploring the trade-offs between the costs of product returns -particularly when customers deem such experiences satisfactory -and their long-term benefits to the company. Analyzing six years of purchase, product-return and marketing-communications data from "Company 1"-a large national catalog retailer that sells apparel and accessories -they confirmed that ignoring product return behavior, or even trying to discourage it directly by not marketing to customers who return products (such as by not sending them catalogs), would be a mistake. In fact, managers should embrace customers' product-return behavior and offer them a satisfactory experience. In a field experiment with a second catalog retailer, "Company 2,"which sells footwear, apparel and other accessories through the Internet and mail-order catalogs, the authors found that under a lenient product-return policy, customers' purchases, induced profits and referrals were greater than under a strict policy (which discourages and limits product returns). These measures could be raised even further through a catalog-mailing strategy that takes into account the expected future profits from each customer and the relationship between purchases and product-return behavior -i.e., through an optimal allocation strategy.
This is an MIT Sloan Management Review article. Editor's Note: MIT Sloan Management Review first published "Business Crime: What to Do When the Law Pursues You" in our spring 2000 edition. In the article, author John L. Akula examined the state of how white-collar crime was being prosecuted in the United States. Given recent changes in both regulatory and legal standards affecting managers, we asked the author to explain how the landscape has changed for managers. His additions are published here alongside the 2000 article, annotating the original text.
Companies have long prospered by ignoring what economists call externalities - the various impacts that a business has on its broader milieu but is not obliged to pay for. (Pollution is the classic example.) Now, claim companies must adopt a very different stance, thanks to growing industrial scale, better sensors, and heightened sensibilities. Increasingly, business impacts are laid at companies' doorsteps. The best companies don't react defensively but apply their energies to mitigating the problems they contribute to. Using an externalities-based framework will help managers deal with rising - and often competing - demands for corporate responsibility in a way that is defensible to all stakeholders.
The problem with medicine, the author writes, is people like him: Fifty-something doctors trained in an era of autonomous hero-practitioners. These lone cowboy physicians may work hard, but they don't provide the best possible care, because they're embedded in a fragmented, chaotic, performance-blind system. Fixing this will require a new kind of leader who can organize doctors into teams, measure their performance not by how much they do but by how their patients fare, deftly apply financial and behavioral incentives, improve processes, and dismantle dysfunctional cultures. Drawing on examples from best-practice institutions such as the Cleveland Clinic, Seattle's Virginia Mason Medical Center, Intermountain Healthcare in Utah, and his own organization, Partners HealthCare System of Boston, Lee shows how a "new breed of leader" is orienting strategy around patients' needs (a more radical idea than it might sound) and raising the quality, efficiency, and value of care. A sidebar written by Partners strategy director Kelly W. Hall looks at how peer pressure can drive improved performance.
The surgeon and best-selling author readily concedes his own limitations as he explains how doctors-and health care generally-could do better. In his latest book, The Checklist Manifesto, Atul Gawande describes how asking a set of simple questions before the surgery starts-things like "Did we give the patient her antibiotic?" and even "Did we introduce ourselves to one another?"-can reduce infections and deaths by nearly half. As simple as this exercise is, it's often met with hostility, because it challenges beloved notions about doctors' status, autonomy, and expertise. In this edited interview Gawande discusses what checklists reveal about the culture of medicine and how its dysfunctions might be fixed.
In the United States and around the world, there have been plenty of proposals for curing what ails health care. All of them-new organizational forms, alternative payment systems, and free-market competition-aim to tackle a universal challenge: improving the quality of care and reducing, or at least curbing, its cost. But the reality is that regardless of what happens to the many experiments and reform efforts, including the one in Washington, the basic structure of the health care system in the United States and most other countries will remain in place for the foreseeable future. The only realistic hope for substantially improving care delivery is for the old guard to launch a revolution from within. Existing providers must redesign themselves. They must revamp core clinical processes and the organizational structures, management systems, and cultures supporting them so that they excel at performing three discrete tasks simultaneously: rigorously applying scientifically established best practices for diagnosing and treating diseases that are well understood; employing a trial-and-error process to deal with complicated or poorly understood conditions; and capturing and applying knowledge generated by day-to-day care. Some organizations - such as Intermountain Healthcare, the Cleveland Clinic, and Istituto Clinico Humanitas - have already redesigned themselves in ways that improve quality and lower costs. But no single dominant design exists; each organization has its own environment, structure, and history. More important than the specific designs are the four principles on which they are based: focus on the decisions, tasks, and workflows crucial to optimizing patient care; separate high- and low-variability care; reconfigure the supporting infrastructure and practices to match redesigned clinical processes; and design structure and processes to help organizations learn from their daily work.
This infographic offers a data-driven look at five reasons U.S. health care is so expensive-out-of-control pricing; payment schemes that reward excess; too many specialists; a few people cost a lot; and small practices, fractured care-and suggests some remedies.
As you enter your recently promoted colleague's office, you notice a photo of his beautiful family in their new vacation home. He casually adjusts his custom suit and mentions his upcoming speech in Davos. On one hand, you want to feel happy for him and celebrate his successes. On the other, you hope he falls into a crevasse in the Alps. Envy-the distress we feel when others get what we want-is universal. It affects people at all levels, and it can damage your organization's performance by disrupting teams and undermining knowledge sharing. Research demonstrates that people would much rather learn about ideas that come from other companies than from their internal rivals-and that leads to inefficiencies and missed opportunities. But envy harms the person who feels it most of all. When you're obsessed with someone else's success, your self-respect suffers, and you may neglect or even sabotage your own performance and even your career. Though it isn't easy to manage this emotion, it is possible to prevent yourself from being consumed by it and even harness it to your advantage. A few tested techniques can help you recognize destructive thoughts and behaviors and refocus them into more generous, productive ones. With the right managerial approach, you can also tamp down envy on your team.
When companies face financial shortfalls and market pressures-as virtually all of them have over the past two years-they typically slash innovation cycles, cut personnel, and raise performance goals. They often succeed brilliantly at doing more with less-for a time. But when employees are pushed to work at a fevered pitch every day, month after month, their energy fails. Error rates rise, exhaustion and resignation blanket the company, the best employees defect, and the company's performance suffers. To escape from this acceleration trap, declare an end to the current high-energy phase and have employees abandon less important tasks. And to avoid the trap in the future, institute stop-the-action initiatives, limit the company's goals, and require that project-management systems put the kibosh on mediocre ideas. Equally important is to change the company's accelerated culture: Focus on just one thing for a specified period of time, institute time-outs to give employees time for rejuvenation, and mandate periods of calm between crises.
You may think that the biggest political risk to your assets in a developing country is outright seizure by its government. Not so. Other, less overt policy weapons have become the main threats, and it takes political deftness to anticipate and outwit the players who wield them. Wharton's Witold J. Henisz and Duke's Bennet A. Zelner discuss the tools, both human and technological, that businesses can use to outmaneuver the forces that put their foreign profits at risk. They also share success stories of companies such as the Italian oil giant Eni, which has managed overseas risk by balancing operational efficiency with political capital, mastering the art of political spin, and hitting the pressure points of local stakeholders. Together, the authors' insights constitute a set of best-practice guidelines for assessing the landscape abroad and for modeling political decision making.
China grew by 8.5% in 2009 and is poised to expand by more than 11% in 2010. That makes it a wonderfully attractive market. But it is also the most competitive and complex market on the planet. Chinese and foreign companies battle ferociously in almost every industry, and profit margins are lower there than anywhere else. Moreover, the Chinese government can intervene whenever it wants to and does so in unpredictable ways-as the January 2010 tussle with Google demonstrated. Some might think that only the brave or the foolhardy would rush into the country, but the author disagrees, claiming that no company can afford to ignore China anymore. In fact, he argues, CEOs have to integrate their China business with their international operations, so that the country can provide them with a global competitive advantage. Companies that don't make the shift will be elbowed aside by those that use China to transform their competitive positions.
British consumer goods company Reckitt Benckiser has very low corporate brand recognition-but its results speak volumes. In the past few years the company's growth has outperformed that of its competitors P&G, Unilever, and Colgate-even during the downturn. RB's CEO outlines what he thinks is the real reason for the company's strong performance: its unique culture of globe-trotting expats.
The conventional wisdom holds that the best way to develop global leaders is to circulate talent through positions overseas. Expose promising managers to new cultures, the thinking goes, and they'll grow and thrive. Unfortunately, that approach isn't enough. Plenty of smart, talented executives fail spectacularly in expatriate assignments. So what does prepare people to thrive in leadership roles abroad? Years of research by the Thunderbird School of Global Management, involving more than 5,000 managers around the world, reveals that success abroad hinges on something called a global mind-set. This mind-set allows executives to cope with the challenges of working in unfamiliar cultures and helps them influence stakeholders who are unlike them. It has three main components: intellectual capital (global savvy, cognitive complexity, and a cosmopolitan outlook); psychological capital (passion for diversity, thirst for adventure, self-assurance); and social capital (intercultural empathy, interpersonal impact, and diplomacy.) It can be measured-with a diagnostic developed at Thunderbird. And it can also be measurably improved-through a development plan that focuses on building each kind of capital.
Liana, a product developer-turned-entrepreneur, is invited back to her old company to take over her former boss's job. She's excited about the prospect of trying out some new ideas there, and the CEO says he's eager to see what she can do, but Liana wonders how receptive to change he and the rest of the executive committee will really be when projects are on the line-and whether her reputation as someone who'd previously quit will harm her ability to lead her old team. Two experts comment on this fictional case study in R1004M and R1004Z. Claudio Fernandez-Araoz, a senior adviser at Egon Zehnder International, thinks Liana should conduct a thoughtful, proactive job search rather than jump at this opportunity. Rosario Vaina, a vice president in the financial services practice at AlixPartners, argues that Liana's familiarity with the company, combined with the start-up experience and fresh perspective she's acquired since she left, will give her the tools she needs to succeed in the role.
A graphic look at how the United States stacks up against other countries in the Organisation for Economic Cooperation and Development on health care expenditures and life expectancy.
Liana, a product developer-turned-entrepreneur, is invited back to her old company to take over her former boss's job. She's excited about the prospect of trying out some new ideas there, and the CEO says he's eager to see what she can do, but Liana wonders how receptive to change he and the rest of the executive committee will really be when projects are on the line-and whether her reputation as someone who'd previously quit will harm her ability to lead her old team. Two experts comment on this fictional case study in R1004M and R1004Z. Claudio Fernandez-Araoz, a senior adviser at Egon Zehnder International, thinks Liana should conduct a thoughtful, proactive job search rather than jump at this opportunity. Rosario Vaina, a vice president in the financial services practice at AlixPartners, argues that Liana's familiarity with the company, combined with the start-up experience and fresh perspective she's acquired since she left, will give her the tools she needs to succeed in the role.
Liana, a product developer-turned-entrepreneur, is invited back to her old company to take over her former boss's job. She's excited about the prospect of trying out some new ideas there, and the CEO says he's eager to see what she can do, but Liana wonders how receptive to change he and the rest of the executive committee will really be when projects are on the line-and whether her reputation as someone who'd previously quit will harm her ability to lead her old team. Two experts comment on this fictional case study in R1004M and R1004Z. Claudio Fernandez-Araoz, a senior adviser at Egon Zehnder International, thinks Liana should conduct a thoughtful, proactive job search rather than jump at this opportunity. Rosario Vaina, a vice president in the financial services practice at AlixPartners, argues that Liana's familiarity with the company, combined with the start-up experience and fresh perspective she's acquired since she left, will give her the tools she needs to succeed in the role.
Don't pin your hopes on the rising savings rate. Consumers aren't going to spend the cash and reinvigorate the economy; instead, they're using it to pay off their enormous debts.