f you read this column much at all, you probably have figured out a very simple
truth about me: I am strangely fascinated by bad management.
It’s not that I like bad management, mind you, but I seem
to be drawn to accounts of criminally dumb management practices the way freeway
drivers are drawn to a terrible car crash. No matter how much you try not to look,
you just can’t help yourself.
I was thinking about this recently when I came across a 2005
Advertising Age column by Rance Crain, one of the owners of Crain Communications,
the corporate parent of Workforce Management. He made the case that if you have
to choose, scandalous management was always preferable to bad management.
"Crooked top management can be cleaned up by throwing a few
managers in jail, passing legislation like Sarbanes-Oxley, and scaring boards into
having a little more backbone," he wrote. "Stupid and insular top management, on
the other hand, is harder to root out. It’s more entrenched and harder to identify."
And that’s where the Stupidus Maximus Award comes in. The
world loves to recognize forward-thinking management initiatives—as we do here at
Workforce Management with our annual Optimas Awards. But there is little that shines
a light on the other side: the regressive, ham-fisted policies and actions that
cripple and diminish the work of fine people in the workforce. That’s why I’ve offered
up the Stupidus Maximus, "for the most ignorant, shortsighted and dumb workforce
management practice of the year."
I’ve written about a lot of bad management this past year,
both here and in my Business of Management blog.
Probably the biggest challenge in picking an honoree for the inaugural Stupidus
Maximus Award is separating bad management actions from bad management practices.
There are lots of "bosses behaving badly," as I put it in
my blog, but that’s very different from a bad management decision that affects much
or all of the workforce. That’s why Circuit City and its CEO, Philip Schoonover,
win the inaugural Stupidus Maximus Award for the decision to fire 3,400 experienced
salespeople, or 9 percent of its workforce, because they were making too much money,
replacing them with cheaper, less-experienced personnel.
Generally, experience is a good thing in a workforce, and
that is especially true for an electronics retailer, where experience translates
into the ability to talk with customers, answer their questions and, ultimately,
get them to buy.
But as The Wall Street Journal wrote last month, "Efforts
[at Circuit City] to cut expenses and improve results by reassigning some store
employees and replacing 3,000 higher-paid workers backfired last year as sales of
higher-margin home-theater systems, warranties and accessories declined in the hands
of a less-experienced sales staff. Instead of an expected upturn, the company now
sees a ‘modest loss’ for the fourth quarter that ended Feb. 29 and a pretax loss
of between $100 million and $200 million for the full year."
It doesn’t take a genius to know that getting rid of your
most experienced and productive workers is not only a terribly shortsighted strategy,
but incredibly dumb. Shareholder activists are now aggressively (and rightly) pushing
for changes at Circuit City, including changes in company man- agement that will
probably cost Philip Schoonover his job.
That’s not any big loss. I don’t like to see anyone get dumped
from their job, but Schoonover needs to go. He will undoubtedly get compensated
nicely for his failure and will walk out the door, as so many other CEOs have, with
a bag full of money, richly rewarded for his shortsighted management and terrible
decision-making.
He’ll also have his Stupidus Maximus Award, a symbol of the
bad judgment, poor decision-making and flawed strategic thinking that has led his
company to the brink. He has set a standard for other top managers that will be
hard to beat.
Workforce Management, April 7, 2008, p. 34
-- Subscribe Now!
= Member Only
