The emerging concept of corporate citizenship entails membership in a global community where citizens have duties to respond to the needs of their fellow citizens. The author puts forth a 'statement of a minimal moral obligation' (SMMO) for firms in industries such as pharmaceuticals, who have the ability to address rampant health risks in developing countries. He defines corporate obligation as consisting of three elements, and argues that the emerging concept of corporate and business citizenship supports recognition of the duty established in his SMMO. By supporting the global community, he argues, firms will be helping to maintain a supportive environment for business activity.
In the sports arena as in the workplace, leaders can decrease counterproductive behavior by fostering organizational commitment and perceptions of fairness. Traditionally, job performance has been measured in terms of specific task-related statements and behaviors: did the employee accomplish the list of tasks set out in the job description? Current approaches pay attention to a much broader range of behaviors that, when present, can add value to an organization by helping it achieve its goals and contributing to the social and psychological work environment. By studying performance data from the NBA and NHL, the author comes to the conclusion that managers can increase organizational citizenship behavior and decrease counterproductive behavior by focusing on engendering employee satisfaction, organizational commitment, perceptions of fairness, and trust in leadership, all of which create an environment that encourages altruistic acts.
Edward Bennett has done wonders at Astar Enterprises. In the 15 years he's been CEO, the company has more than tripled in size through product line extension and disciplined acquisitions and is now distributing its cleaning, personal hygiene, and skin care products nationwide. But Astar's chief executive is 64 years old, and while all his attention is taken up with a new strategy to expand into international markets, board members are becoming increasingly worried about the issue of succession. Bennett wants none of it, arguing that if he were to die suddenly, his second in command, Tom Terrell, could take over. Besides, after much prodding, Bennett, former vice-chairman Vincent Dalton, and longtime HR head Gail Thompson have already come up with a list of four possibilities. "When will these guys back off?" Bennett complains to Thompson. "I've told them who the candidates are. Why do we need to talk about it?" Thompson knows, however, that the board chairman, Tom Calloway, considers Terrell a nonstarter without the requisite skills to take over in anything more than an interim capacity. As for the other three candidates, only one is even known to the board, and none has any significant international experience. Calloway is well aware of how critical Bennett is to Astar. But he's equally certain that the board risks failing in its fiduciary responsibilities if it doesn't create a viable succession plan. What should Calloway and the board do if Bennett refuses to cooperate? Commenting on this fictional case study in R0609A and R0609Z are John W. Rowe, the executive chairman of Aetna; Edward Reilly, the president and CEO of the American Management Association; Jay A. Conger, a professor at Claremont McKenna College and London Business School; Douglas A. Ready, a visiting professor at London Business School; and Michael Jordan, the CEO of EDS.
Edward Bennett has done wonders at Astar Enterprises. In the 15 years he's been CEO, the company has more than tripled in size through product line extension and disciplined acquisitions and is now distributing its cleaning, personal hygiene, and skin care products nationwide. But Astar's chief executive is 64 years old, and while all his attention is taken up with a new strategy to expand into international markets, board members are becoming increasingly worried about the issue of succession. Bennett wants none of it, arguing that if he were to die suddenly, his second in command, Tom Terrell, could take over. Besides, after much prodding, Bennett, former vice-chairman Vincent Dalton, and longtime HR head Gail Thompson have already come up with a list of four possibilities. "When will these guys back off?" Bennett complains to Thompson. "I've told them who the candidates are. Why do we need to talk about it?" Thompson knows, however, that the board chairman, Tom Calloway, considers Terrell a nonstarter without the requisite skills to take over in anything more than an interim capacity. As for the other three candidates, only one is even known to the board, and none has any significant international experience. Calloway is well aware of how critical Bennett is to Astar. But he's equally certain that the board risks failing in its fiduciary responsibilities if it doesn't create a viable succession plan. What should Calloway and the board do if Bennett refuses to cooperate? Commenting on this fictional case study in R0609A and R0609Z are John W. Rowe, the executive chairman of Aetna; Edward Reilly, the president and CEO of the American Management Association; Jay A. Conger, a professor at Claremont McKenna College and London Business School; Douglas A. Ready, a visiting professor at London Business School; and Michael Jordan, the CEO of EDS.
Surveys reveal that 80% of Americans don't trust corporate executives and--worse--that roughly half of all managers don't trust their own leaders. Mergers, downsizing, and globalization have accelerated the pace of change in organizations, creating a crisis of trust that didn't exist a generation ago. Leaders who understand how trust is built can actively influence its development, resulting in a more supportive and productive work environment and, not incidentally, a competitive advantage in the war for talent. Building on research in social psychology, and on his 15 years of experience consulting on trust, the author has developed a model for predicting whether trust or distrust will be chosen in a given situation. The model helps managers analyze 10 factors at play in the decision-making process. Hundreds of top executives have used it to diagnose and address the root causes of distrust in their work relationships. Some of the factors in the model relate to the decision maker: How tolerant of risk, how well-adjusted, and how relatively powerful is he or she? Others relate to the specific situation: How closely aligned are the interests of the parties concerned? Does the person who is asking to be trusted demonstrate competence? Predictability and integrity? Frequent and honest communication? Sue, a relatively new VP of sales, used the trust model to manage her relationship with Joe, an employee nearing retirement who was not performing well in a new sales role. Fearing for his job, Joe wasn't initially inclined to trust her. Sue took concrete steps to communicate openly with Joe, explore other options for him, and show concern for his well-being. When Joe was transferred, he let his former colleagues know how pleased he was with Sue's handling of the situation. As a result, the level of trust increased in Sue's department, even through a major change.
Executives have developed tunnel vision in their pursuit of shareholder value, focusing on short-term performance at the expense of investing in long-term growth. It's time to broaden that perspective and begin shaping business strategies in light of the competitive landscape, not the shareholder list. In this article, Alfred Rappaport offers 10 basic principles to help executives create lasting shareholder value. For starters, companies should not manage earnings or provide earnings guidance; those that fail to embrace this first principle of shareholder value will almost certainly be unable to follow the rest. Additionally, leaders should make strategic decisions and acquisitions and carry assets that maximize expected value, even if near-term earnings are negatively affected as a result. During times when there are no credible value-creating opportunities to invest in the business, companies should avoid using excess cash to make investments that look good on the surface but might end up destroying value, such as ill-advised, overpriced acquisitions. It would be better to return the cash to shareholders in the form of dividends and buybacks. Rappaport also offers guidelines for establishing effective pay incentives at every level of management; emphasizes that senior executives need to lay their wealth on the line just as shareholders do; and urges companies to embrace full disclosure, an antidote to short-term earnings obsession that serves to decrease investor uncertainty, which could reduce the cost of capital and increase the share price. The author notes that a few types of companies--high-tech start-ups, for example, and severely capital-constrained organizations--cannot afford to ignore market pressures for short-term performance. Most companies with a sound, well-executed business model, however, could better realize their potential for creating shareholder value by adopting the 10 principles.
Legal and cultural changes over the past 40 years ushered unprecedented numbers of women and people of color into companies' professional ranks. Laws now protect these traditionally underrepresented groups from blatant forms of discrimination in hiring and promotion. Meanwhile, political correctness has reset the standards for civility and respect in people's day-to-day interactions. Despite this obvious progress, the authors' research shows that political correctness is a double-edged sword. Although it has helped many employees feel unlimited by their race, gender, or religion, the PC rule book can hinder people's ability to develop effective relationships across race, gender, and religious lines. Companies need to equip workers with skills--not rules--for building these relationships. The authors offer the following five principles for healthy resolution of the tensions that commonly arise over differences: Pause to short-circuit the emotion and reflect; connect with others, affirming the importance of relationships; question yourself to identify blind spots and discover what makes you defensive; get genuine support that helps you gain a broader perspective; and shift your mind-set from one that says, "You need to change" to one that asks, "What can I change?" When people treat their cultural differences--and related conflicts and tensions--as opportunities to gain a more accurate view of themselves, one another, and the situation, trust builds and relationships become stronger. Leaders should put aside the PC rule book and instead model and encourage risk taking in the service of building the organization's relational capacity. The benefits will reverberate throughout every dimension of the company's work.
Intel and Microsoft neither buy from nor sell to each other directly, but they are undeniably in business together. They are probably the world's most widely known pair of complementors--companies that independently provide complementary products or services to mutual customers. Complementors increase the value of each other's offerings and the size of the total market. So it's not surprising that so many just assume that their interests are aligned. Nothing could be further from the truth. Discord can develop in many areas, such as pricing, technology, standards, and control of the market--both in terms of which company has the most influence over customers and which one gets the biggest slice of the pie. The issue of pricing perfectly captures this tension. Ideally, you'd like to price your goods high while your complementors price theirs low. Airlines, for instance, would be happy to see vacation lodgings go for a song, while destination resorts could raise rates and still fill their rooms if customers could fly there for free. The first step in managing relationships with complementors is to develop a deep understanding of their economics, their strategies and goals, their existing capabilities, their incentives for cooperation, and any potential areas of conflict. Then, to gain the upper hand, companies can use a variety of tools that fall into two main categories: hard power (inducements or coercion to get what you want) and soft power (persuasion through indirect means to get others to want what you want). The authors explain how to build both hard power and soft, illustrate the strengths and limits of each, and offer guidelines for choosing one over the other. Conflict among complementors is inevitable, but together, hard and soft power can help companies manage the dark side of complementor relationships and take full advantage of the opportunities that cooperation should create.
After graduating from Harvard Business School with highest honors, Jane rapidly moved up the corporate ladder at a large advertising firm, racking up promotions and responsibilities along the way. By the time she became the company's creative director, she was, in everyone's estimation, an A player--one of the organization's most gifted and productive employees. But although she received an extraordinarily generous pay package and had what some people considered to be one of the most stimulating jobs in the company, Jane felt underappreciated and was talking to headhunters. Eventually, she was lured away to a competing company that, by her own admission, offered less challenging work. Both Jane and the advertising firm she left behind lost out. Of course, not all A players are as vulnerable as Jane. Some superstars soar to stunning heights, needing little or no special attention, and have the natural self-confidence and brilliance to stay at the top of their game with elegance and grace. But as every manager knows, megastars with manageable egos are rare. Far more common are people like Jane, who are striving to satisfy an inner need for recognition that is often a sign of irrationally low self-esteem. According to the author--an executive coach, management consultant, and former faculty member of the department of psychiatry at Harvard Medical School--if you do not carefully manage the often unconscious need A players have for kudos and appreciation, they will burn out in a way that is damaging to them and unproductive for you. The key is understanding what makes your A players tick. The author suggests that you assist your stars by offering them authentic praise, helping them set boundaries, and teaching them to play nicely with subordinates. In the process, you can turn these high performers into even more effective players.
In this follow-up piece to his article "Hardball: Five Killer Strategies for Trouncing the Competition" (HBR, April 2004), George Stalk Jr. of the Boston Consulting Group offers another approach for prevailing over rivals. Strategic hardball is about playing rough and tough with competitors; strategic curveball is about outfoxing them. It involves getting rivals to do something dumb that they otherwise wouldn't (that is, swing at a pitch that appears to be in the strike zone but isn't) or not do something smart that they otherwise would (that is, fail to swing at a pitch that's in the strike zone but appears not to be). Stalk describes four types of curveball: First, draw your rival out of the profit zone. Lure competitors into disadvantageous areas--for example, by competing for, but intentionally failing to win, the business of less profitable customers. Second, borrow techniques from unexpected places. Using the hardball tactic of plagiarizing good ideas, put rivals off balance by importing techniques from other industries--for example, employing the retailer's hard sell in the stodgy world of retail financial services. Third, disguise how you attain your success. Veil your methods by achieving an advantage through unlikely means--for example, generating product sales through your service operations. Finally, let rivals misinterpret the reasons for your success. Allow them to act on conventional but incomplete explanations for your success--for example, squeezing costs rather than aggressively utilizing assets. The author provides extended examples of these curveball strategies in action at companies such as the industrial-cleaning chemical supplier Ecolab and the Australian airline Jetstar.
For years, sales managers at many companies have relied on top performers and sheer numbers of sales reps to stay competitive. But while they may have squeaked by on this wing-and-a-prayer technique, their sales teams haven't thrived the way they once did. Today's most successful sales leaders are taking a more scientific approach. Savvy managers are reshaping their tactics in response to changing markets. They are reaching out to new customers in innovative ways. And they are increasing productivity by helping the reps they already have make the most of their skills and resources. Leaders who take a scientific approach to sales force effectiveness have learned to use four levers to boost their reps' productivity in a predictable and manageable way. First, they systematically target their firms' offerings, matching the right products with the right customers. Second, they optimize the automation, tools, and procedures at their disposal, providing reps with the support they need to boost sales. Third, they analyze and manage their reps' performance, measuring both internal processes and results to determine their teams' strengths and weaknesses. Fourth, they pay close attention to sales force deployment--how well sales, support, marketing, and delivery resources are matched to customers. These four levers can help sales leaders increase productivity across the board, the authors say, though they have the greatest impact on lower ranked performers. The overall effect of increasing the average sales per employee can be exponential; it means a company won't have to rely on just a few talented individuals to stay competitive. This is especially important because finding and keeping star salespeople is more difficult than ever. What's more, managers who optimize the sales forces they already have can see returns they never thought possible.
PC maker Lenovo started out as a distributor of equipment made by IBM and other companies; now it has formed a joint venture with IBM and will eventually affix its own logo to its computers. Shanghai Automotive Industry Corp. (SAIC) started out manufacturing vehicles for Volkswagen and GM; now it's preparing to sell its own cars in China, Europe, and North America. Lenovo and SAIC represent a host of formerly anonymous makers of brand-name products that are breaking out of their defined roles and pushing the brands themselves aside. In this article, the authors explore the double-edged relationships original equipment manufacturers (OEMs) forge with their contract manufacturers (CMs). On the one hand, an OEM can reduce its labor costs, free up capital, and improve worker productivity by outsourcing all the manufacturing of a product. The company can then concentrate on value-adding activities--research and development, product design, and marketing, for instance. On the other hand, an OEM that retains a CM may find itself immersed in a melodrama replete with promiscuity (the ambitious CM pursues liaisons with other OEMs), infidelity (the OEM's retailers and distributors shift their business to the upstart CM), and betrayal (the brazen CM transmits the OEM's intellectual property to the OEM's rivals or keeps it for itself when the contract is up). OEMs cannot simply terminate their outsourcing arrangements--they need CMs to keep specializing, adding value, and staying competitive. But OEMs can manage these relationships so that they don't become weak or the CMs too strong. Doing so requires modesty about revealing trade secrets; caution about whom one consorts with; and a judicious degree of intimacy, loyalty, and generosity toward partners and customers.
Edward Bennett has done wonders at Astar Enterprises. In the 15 years he's been CEO, the company has more than tripled in size through product line extension and disciplined acquisitions and is now distributing its cleaning, personal hygiene, and skin care products nationwide. But Astar's chief executive is 64 years old, and while all his attention is taken up with a new strategy to expand into international markets, board members are becoming increasingly worried about the issue of succession. Bennett wants none of it, arguing that if he were to die suddenly, his second in command, Tom Terrell, could take over. Besides, after much prodding, Bennett, former vice-chairman Vincent Dalton, and longtime HR head Gail Thompson have already come up with a list of four possibilities. "When will these guys back off?" Bennett complains to Thompson. "I've told them who the candidates are. Why do we need to talk about it?" Thompson knows, however, that the board chairman, Tom Calloway, considers Terrell a nonstarter without the requisite skills to take over in anything more than an interim capacity. As for the other three candidates, only one is even known to the board, and none has any significant international experience. Calloway is well aware of how critical Bennett is to Astar. But he's equally certain that the board risks failing in its fiduciary responsibilities if it doesn't create a viable succession plan. What should Calloway and the board do if Bennett refuses to cooperate? Commenting on this fictional case study in R0609A and R0609Z are John W. Rowe, the executive chairman of Aetna; Edward Reilly, the president and CEO of the American Management Association; Jay A. Conger, a professor at Claremont McKenna College and London Business School; Douglas A. Ready, a visiting professor at London Business School; and Michael Jordan, the CEO of EDS.
In this executive leadership case, the activist superintendent of Virginia's affluent Fairfax County public school district, Daniel A. Domenech, is faced with a complex, politically-loaded policy dilemma. At issue is admissions policy for the county's popular and prestigious magnet high school, the Thomas Jefferson High School for Science and Technology (TJ). TJ is so highly sought-after that only one in six applicants is accepted. The case is set in 2001. In the past 16 years, the admissions policy at TJ has made a pendulum swing: heavy reliance on a single standardized exam in 1985; the addition of an affirmative action program in 1990; the elimination of that program in 1998, in the face of political pressure and anxiety over a "reverse discrimination" law suit. As the case opens, TJ is fast losing diversity. The liberal-leaning School Board has instructed Domenech to come up with a way to restore that diversity, but without sacrificing the school's strong academic reputation or making the school system legally vulnerable. After painstaking effort, Domenech and his administrative team have come up with a plan that aims at geographic diversity within the county, rather than racial and ethnic diversity per se. But, faced with an angry reaction from parents from the "overrepresented" neighborhoods, the Board has quickly backed away from the plan. That leaves Domenech back at square one, trying to find a solution that will broaden the range of students at Jefferson in a way that is fair, effective, and legally safe-but also politically palatable.
Follows on from the cases Istituto Clinico Humanitas (A) and (B). Describes the design and running of the new Humanitas Emergency Department. Istituto Clinico Humanitas has developed a very efficient operating system for dealing with elective (largely surgical) patients. By opening an emergency room, however, the institution is now called upon to care for complex and highly variable medical patients. Asks if the previous operating system is appropriate for this new patient population and in what ways might it require modification to meet these patients' unique needs. The concept of hospital-within-a-hospital is central to Humnitas' new design, and the case examines if this is feasible in this setting.
Designed to explore recognition issues in the context of a potential market downturn. In late 2000, Lucent Technologies reports multiple revisions to its recent financial results due to revenue recognition problems, leading to a dramatic decline in its stock price. This disclosure comes in the wake of a period of spectacular growth for the communications equipment industry during the 1990s. From the perspective of a securities analyst covering the industry, are the troubles at Lucent indicitive of larger revenue recognition issues throughout the industry? Facilitates a discussion of potential early warning signs of the risks faced by Lucent's competitors.
Work groups are the building blocks of organizations. They are found in all areas of an organization, from research and development to customer service, and at all levels, from the executive suite to the factory floor. Some are incredibly successful, while others are dismal failures. Team work is hard work, and all too often groups do not live up to their potential. Provides a framework for analyzing work groups so that group leaders and members can identify actions that will enhance their effectiveness. Helps provide insight into the factors most profoundly shaping the development, dynamics, and effectiveness of task-performing groups and, in particular, group culture, its antecedents, and consequences. To illustrate how the framework is used, it looks at and analyzes an actual work group: the new product team of the Merit Corporation. Examines the impact of leadership style on group culture and outcomes and describes how one leader's individual style can affect the way teams operate and perform.