popular_business SvyatoslavBiryulin People Management

Svyatoslav Biryulin, born in the Soviet Union, worked for many years senior management positions. Svyatoslav’s total management experience exceeds 25 years, 14 of which he worked as CEO of large.

This book is written not from the point of view of an HR-director, but rather from the position of a person who has led people most of his life. The book is a comprehensive exploration of the management experience, including the honest narrative of his own mistakes and failures.

08.04.2020 en
SvyatoslavBiryulin Ridero 08.04.2020 07315f97-8a62-4c69-b14e-0387793c102e 1.0
<p>People Management</p> <p>How to manage people?</p> <empty-line/> <p>Svyatoslav Biryulin</p>

Translator Dmitry Beschetny

Editor Nick Sabin

© Svyatoslav Biryulin, 2020

ISBN 978-5-0050-4310-8

Created with Ridero smart publishing system

<p>Author’s Profile</p>

Svyatoslav Biryulin, born in the Soviet Union, worked for many years in Russia in senior management positions. Svyatoslav’s total management experience exceeds 25 years, 14 of which he worked as CEO of companies with an annual turnover of 200+ million euros ($200+ million US dollars) and a staffing level of more than 1,000 people.

His managing experience was acquired in the former countries of the Soviet Bloc in Eastern Europe and this distinguishes his books from standard American textbooks written mostly for U.S. readers. However, when managing people, one must consider local specifics including cultural characteristics and values that are not always the same as those of the U.S.

Since 2014, Svyatoslav has been developing its own consulting company operating in Russia, Slovenia and the ex-Soviet Union countries. Since 2016, he has lived in Ljubljana, Slovenia. The company is engaged in consulting in the field of strategy. In Slovenia, it works under the KVAN Svetovanje brand.

Svyatoslav Biryulin has already published four books in Russian. All of them are devoted to strategy and organization management. Here we are presenting you one of those books which addresses issues of leadership and people management.

This book is devoted to human resources management, but it is written not from the point of view of an HR-director, but rather from the position of a person who has led people most of his life. The book is not a compilation of popular industry theories, but rather a comprehensive exploration of the management experience, including the honest narrative of his own mistakes and failures.

The book is addressed to a wide range of managers, i.e., people who manage other people. The number of subordinates does not matter. It will surely be interesting both for beginners and experienced directors.

Translator — Dmitry Beschetny

Editor — Nick Sabin

<p>Chapter 1. Introduction. Are Books Useful?</p>

There are thousands, or perhaps even tens of thousands, of HR books in the world. This comes as no surprise. Peter Drucker said that people and money are the two main sources of resources for business. People bring ideas and competencies that, with money, become tangible and intangible assets. All other resources are obtained by some combination of these two. All the major business books are either financial or human.

You have to read these books. Many popular HR books have great ideas that you can use in your work. Many books have published millions of copies in Russian.They have sold well and, apparently, have been at least partially read.

However, in my life I have met only a few or maybe a few dozen people, whom I can definitely refer to as really professional leaders. During my tenure as a manager and general director of large industrial and trade enterprises, the biggest one of which had more than 3,600 employees, I hired and fired dozens of top-managers, and only a few of them were true professionals. In my life, I have met many businessmen and CEOs who managed major companies but only a few of them really taught me something.

My own experience of effective people management also consisted of trials and extremely painful mistakes, rather than “book” knowledge. Why is that the case?

A lot of books are written in the U.S.

We, liberal and educated people, like the idea that all people are equal. Including me. We are outraged when people are harassed because they belong to a particular group, whether it is a group based on skin color, place of residence, eye shape, religion, or political opinion. We like a world in which every homo sapiens has a complete collection of human rights, which they enjoy within the rule of law.

But equality of rights does not mean similarity of souls, minds, views and characters. Nature didn’t make us the same. It made us equal in rights, but not identical in personage. We should all, whatever happens, have the right to express our views on elections, to choose the gender of our partner and to move freely around the world. But these rights do not yet make a man and a woman the same: a Japanese and a Brazilian, a Russian programmer and a Swiss watchmaker, a Serbian journalist and a New York artist. God made us different, and that’s good. Of course, we are almost identical biologically, but our way of thinking and behaving was much influenced by our parents, our societies and the cultural environment in which we were born and raised. And not only the cultural environment of the country, but also that of the city, family or community in which we grew up. For example, I was born in Russia, so the Russian language is my native language, but I do not feel comfortable in every community in my home country.

But not only is each individual person different. People living in different countries have different characteristics. I have lived, visited and worked in different countries and I know for a fact that every country, despite the fact that it is usually inhabited by millions of different people, has its own peculiarities. In particular, the peculiarities of doing business and how to behave at work. Doing business with the Chinese is not the same as doing business with the Poles or Germans. Not in the sense that some of them do business badly and one of them does business properly, but in the fact that they do it differently. They don’t treat their jobs the same way either.

I like to read American human resources literature. Some books describe the relationship between subordinates and superiors that I would love to build myself. I used to build it as a young MBA graduate full of fresh ideas and illusions. But life has made a drastic adjustment to my ideas about human resources management around here, and I will share this experience in the book. Of course, I never fully believed that all companies in the U.S. are set up like Google, or that Google’s top managers are driven exclusively by humanism. Some of the corporate scandals that broke out clearly indicate that it is not the angels who run the place either, and not the lambs who work there. However, on the whole, the average American employee’s working capacity and responsibility are higher than those of employees in the countries of the ex-Soviet Union. The approach to work of European employees is different than those in the USA. And the experience accumulated by American managers cannot always be applied on our soil.

This does not mean that reading foreign literature, particularly American literature, is useless. In some ways people from Connecticut are different from people from Zagreb, but in other ways, they are similar. Good American books have something to teach, which we will talk about below. But one cannot blindly accept everything written in them as a guideline written in stone. You should parse the ideas outlined in them through your own experience and through the culture of your country.

<p>Chapter 2. The Most Important Lifehack in Human Management</p>

The most important lifehack in human management is that there are no lifehacks in human management. And if you’re offered one, don’t believe it! There are many useful (and not very useful) hacks, but the techniques for applying them depend on the specific team you manage and the situation you are in. In other words, you can master hundreds of techniques related to human resources management, e.g. feedback, goal management, non-financial incentives through competitions, but this is not enough. You need to be experienced, intelligent and wise enough to understand which one is appropriate and effective at the given moment in time. And that’s very, very difficult.

Why is this the case? Because all people are different. This assertion often irritates entrepreneurs who think that all people are the same, just one lazier or more motivated than the other, but they are wrong.

If you’ve been running a construction company and you’ve been doing it very effectively, your experience isn’t good for managing a team of programmers. If you managed a young, ambitious and creative team, your experience and self-confidence might be shattered when you take on the team of pre-retirement managers. If you read at least a hundred of the best books, it will be of little help to you if you are moved from the office in the capital’s metropolis to the backwoods.

As it was mentioned in Chapter 1, all people are different. Each of them has their own interests and background which is different from yours. Each of them has been influenced by their own environment, and if one of them has completed a florist’s course somewhere in Berlin and the other one in Mathematics and Cybernetics in Belgrade, they have different views on many issues. There’s no single lifehack to run this whole motley crue.

A manager who tries to apply his previous experience in completely different conditions will fail. Managing people is a separate science, a specialty that you will have to study for life. Each new team, each new generation will, if not overturn your previous experience, then at least significantly expand it, and, no matter how successful you have been before, new management situations can raise questions to which you have no answers.

Moreover, the bad news is that even the same team will have changed over the years, and the methods that have been applied for 20 years may not work now. Once, we advised a company that was created by an ambitious student who hired a number of guys who were just as hungry for success. Together, they created one of the most successful companies in their industry, turning the market upside down with their innovative ideas. But now the founder of the company lives abroad most of the time, and his top managers, who have grown passive, only pretend to agree that change is necessary, yet internally they strive to preserve the status quo and hamper any conceivable reforms. The team is almost the same, but the people in it are not the same anymore.

The good news is that, despite everything, management experience tends to accumulate. A man who has led people for over 20 years adapts faster to a new team than an inexperienced one. But this is not because he has more managerial life skills or methods in his head, or at least not only because of that. He just, as a more experienced and wise man, already understands that all people are different, and spends more time supervising subordinates and trying to understand their inner motives and attitudes than forcing them to his own comfortable patterns of behavior. He listens more than he speaks, and he looks for ways to use the strengths of the team he has been given, rather than fighting their weaknesses”.

In other words, he understands human nature.

What is, in essence, human management? It’s an influence on people to get them to act in the desired way. And if you don’t live in an era of slavery, there are very few ways to force people to do what you want them to do. They can easily disobey your orders, write a resignation letter and leave, and it is not yet known which one of you will be worse off. That is why the formal control levers, such as position, status, a “Director” sign on the office door are of less and less importance. Moreover, the situation is deteriorating. We are still accustomed to discipline, and subordination to leadership is in our DNA. We’re easy to manage. But teenagers argue even in schools with teachers, questioning their knowledge and experience. We wouldn’t dream about doing that when we were their age. And when they grow up, they will argue with you and your leadership, and your exclamations of “Well, who are you to argue with me?” will be answered with, “Well, who are you to be in charge of me?”, as they sign their resignation notice.

One day, I left the company where I had put together one of the best teams in my career. I had worked hard to create an atmosphere of open dialogue there, and we had tried to avoid bureaucracy wherever possible. I had a small office, and my staff often came in to seek advice or discuss a work-related issue.

At my new job I was given a room the size of the Piazza San Marco in Venice, one of my assistants (there were three of them) brought me a cup of coffee on a gold tray, and papers to sign in a red velvet folder with the letters “CEO” engraved on the cover in gold.

I wasn’t a very experienced director at the time, but I was smart enough to realize that any altruistic offering of democracy here would be interpreted in exactly the opposite way. In the eyes of the staff, the director was supposed to be lazy, self-confident and a bit of a jerk. Of course, I gradually managed to change some of the local culture, but it took a long time.

The art of human resources management, unfortunately, will have to be mastered for the rest of our lives. Not forgetting that yesterday’s experience can be erased in a new country, in a new city or just in a new company.

<p>Chapter 3. A Person Cannot Be Trained</p>

Cats don’t submit to training. Well, at least that’s what the experts say. I have never personally tried to train cats, but I have tried to train people, and I can say with authority that this activity is absolutely empty and pointless. People don’t submit to training either.

What I am talking about in this chapter may seem obvious at first glance, and many experienced managers know it for sure. But personally, I have spent many hours trying to get people to act in a beneficial way that they are not accustomed to, so you might find it useful.

An important caveat concerning not only this chapter, but also the entire book, is that I’m not asking you to be saint-like. You don’t have to be Mahatma Gandhi to be a good manager. Personally, I am not against a degree of healthy cynicism in management. We can dislike some of our subordinates, be of a not very good opinion about their mental abilities, but still effectively manage them and achieve results.

If you are an entrepreneur and manager, what is more important for you to achieve results or to be in harmony with others? If the latter, in my opinion, you’d better change your field. And if the first, you will have to accept the idea that one of your subordinates will not make you feel greatly admired. If you, according to the classic management theory, have six to eight subordinates, one of them will inevitably be less sympathetic to you. But you must still influence them so that they act in the company’s best interest.

Another thing is that managing people who make you feel depressed just with their presence, is exhausting. In such a case it really is better just to let them go. And from a practical point of view, you will not be able to effectively influence the employee you want to eliminate. But in general, you need to get used to the fact that some of your subordinates will be difficult for you to communicate with.

An inexperienced manager puts more emphasis on formal staff management tools: orders, staffing and instructions. They try to squeeze the employees into the box of the organizational structure, to force them to act in accordance with the job descriptions but not their personal nature. This method can also be effective, but only when it comes to junior staff, especially in a large company. You would not delve into the family difficulties or personal life of each cashier, if you own a network of supermarkets. You would instead require them to strictly comply with the company rules and regulations. But it is vital for you to understand, on an interpersonal level, your top managers. You must clearly see their strengths and weaknesses, understand their inner psychological motivations, and set them tasks that do not contradict their attitudes. Once again, not for the sake of humanity, but for practical effectiveness. If your subordinate is an introvert, do not set them a task that requires a bright leadership behavior, they could not cope with it. And it is useless to offer people who would rather socialize and spend their time with idle chatter the opportunity to head the project office as it requires consistency and perseverance. This task is guaranteed to fail.

We’ll be talking about this a lot throughout the book, but if you’re a businessman or a top manager, you’ll have to spend more mental energy understanding the personalities of your subordinates than any other issue. After all, business is made by people, and if you are surrounded by the wrong type of people, in terms of your personality and your ideas, no matter how powerful your strategic vision is, it will be difficult to succeed. You need to know the internal motives of subordinates. What motivates them? The position? Their bonus? Their status? Personal praise? You should know what they do well and what they don’t do well, and if possible, entrust them with only the first one, and not the second one. You need to understand what’s keeping them in your company, apart from natural inertia. Because if they’re really quality managers, you probably don’t want to lose them.

Examine your employees, closely observe them, and organize their tasks according to their personal characteristics. The task assigned to a staff member with the appropriate talent will be accomplished both faster and more efficiently.

<p>Chapter 4. Everyone Around Here Is the Same, Except for Me</p>

If you have managerial experience, you have already faced a situation where your instructions have been interpreted in a bizarre way that you would never have thought of. I, too, have been in a few such situations, especially at the beginning of my career as a director. I was left grabbing my head, seeing the consequences of actions taken by my direct subordinates who misinterpreted my words in the instructions given to them by e-mail or orally.

“How could I have been so misunderstood?!” I was distraught. At the time, I thought I was surrounded by mentally incompetent people. Although, in fact, I had no one else to blame but myself.

Once I watched (thankfully from the outside) as a supervisor berated a subordinate, and not just a subordinate, but his closest ally and deputy named Vadim. The business was a chain of restaurants, and they were preparing a new café, which was due to open a week later after the completion of renovations. The work was led by Vadim.

“Vadim,” said the supervisor, “I don’t understand. Is this what you think quality is?” The entrepreneur was indignant, digging up an extractor grille with his fingernail, which he didn’t think was level enough. “And what about this, is this good quality?” He was pointing to a paper towel container. From my personal point of view, the container was like an ordinary container. “Vadim, we’ve said a hundred times that we should maintain good quality in our company. Is that good quality?” He was pointing to what I thought was a pretty decently painted wall. Vadim’s confused rather than guilty face showed that he clearly had a different understanding of the terms “good quality.” Their dialogue has clearly upset both of them.

At the dawn of my career, I was also such a leader — on the move, in the corridor between projects, typing a short note or a text message, making orders, and then angry that my orders were executed incorrectly. I once, sensing the high seasonal demand for Czech cornices, instructed my purchasing department to double the usual rate of purchase. They did that honestly. But the cornice wasn’t sold without a special bottom bar. For those who assembled and sold the units, the word” cornices” meant a set of” cornices + bottom bar”. But the purchasing department worked with individual items, and for them the “cornices” meant just cornice. And the bottom bar is the bottom bar — a separate piece. And that’s why they didn’t double the volume of purchases, and we failed the season.

I was also very frustrated if the employees who were in difficult, unforeseen situations did not do what I would have done myself, if I had been in their shoes. The way I would have chosen to solve the problem seemed to me quite natural and the only one possible, but for some reason people acted differently. It was only after many conversations with people in an attempt to get a deeper understanding of what was happening, of exactly what motivated them to make certain decisions, that I gradually realized that each person has their own system of values and references in their head which is different from mine.

It is common for a person to be convinced that all the people around them are the same as they are, but not as perfect. It seems to them, especially because of inexperience, that the people around them have the same “play” in their heads as they do. And that is why he or she expects others to behave according to their roles in the play, which, however, is written exclusively in their own head, and played in a completely separate theater. This is how a marriage usually breaks up — we “write” a role for our spouse, but they have their own plays, within which they have their own roles, and they have the starring role. Worse yet, they have written roles for us too, and our life companions want us to play them in strict accordance with their scenario, not in the way we want to play them. If the conflict between these roles becomes protracted, relationships either end or become only artificially maintained. In a similar scenario, there are conflicts between parents and children as parents write an imaginary role for children that they refuse to play.

An experienced and wise leader understands that each of his subordinates has their own drama playing in his head, with their own heroes and villains, princesses and dragons, princes and beggars. And if the manager wants to join this drama as one of the main actors, they will have to make some efforts to try and convey to the subordinate their thoughts, ideas, expectations and demands in an understandable language.

This is where the managers often interrupt me with indignant questions “Why are we the ones who have to adjust to the subordinates? They’re the ones who have to adjust to us since we’re paying them money, right? Did Steve Jobs adjust to his subordinates?”

Let’s look at this from a hypothetical point of view. You are a manager, your task is to guide the project, develop the business or launch a successful startup. You won’t do it alone, you’ll be surrounded by people who will do this project with you. However, let’s say that you are hesitant to try to build dialogues with them in a mutually-shared language, and you demand instead that they totally adapt to you. In practice, this means that by the expression in your eyes, by your short emails (and we do not like to write long messages, it is too time consuming, and therefore we reduce the text as much as possible, always to the detriment of the content and intent), and by the fragments of your phrases they are supposed to be able to perfectly recreate the picture in your head, and then translate it into reality.

The problem is that most of them are not so much unwilling as unable to do so, and their efforts to achieve your vision could turn into a nightmare. They’ll try to guess your expectations, and they’ll often be wrong about what’s causing your anger. Your anger will make them nervous, the number of guessing errors will only increase, and everything will loop in a vicious cycle.

I know what I’m talking about. I had the opportunity to work for an entrepreneur who sincerely believed that he was the only one who knew how to do business properly, but he refused to share his understanding with the team. He was sincerely convinced that his subordinates completely understood what he was looking for, and didn’t elaborate on his vision when asked to provide details. He literally would not even answer their emails. However, if the subordinates did not guess what he wanted correctly (which was usually the case), he was very good at turning their lives into a nightmare. Almost nobody worked for him for a very long time.

If you need to complete a project, develop or create a business, but you refuse to share your vision with your subordinates, you will not succeed. The same thing will happen if you share it with them, but only in a language that no one but you understands. If your pride prevents you from learning to communicate in a way that employees can understand, you are unlikely to achieve anything. Leadership is not only a status, regalia, personal secretary and high income. It is hard work, 90% of which is spent on building a dialogue with your team. If you fail at a project, fail to create or develop a business, no one will accept an explanation that your employees have refused to learn your language.

To better illustrate the problem, I will give a brief excerpt from a book on Yuri Lotman’s Semiotic Theory. In particular, it describes the mechanism of information transfer from person to person, which I will present here in a much-simplified form.

When you think about an idea, it’s not a word in any particular language. It is a set of electronic impulses in your brain that you visualize at best as images, but not as words. It is only when you need to share your thoughts with someone that you begin to use language. Language is not an instrument of thinking, but a way of communicating. Language is nothing but a code, a way to encode a complex and multifaceted idea with words. Verbally, using words, we are only transmitting a small amount of information. Therefore, face-to-face meetings or video meetings on Skype are better than a telephone conversation or correspondence. We need to see the other person. Our communication system was invented by nature long before the invention of the phone or WhatsApp. The bad news, however, is that when we encode information from brain to word, we lose a huge layer of information. Any language system in the world is poorer than our thoughts. We feel it acutely in moments when we perceive our own inability to express in words what is happening in our souls. But even when we talk about such prosaic things as a budget or a week’s plan of events, we could stumble over the inefficiencies of our language.

So, when we put the idea into written words, we lose 50%, if not more, of the important information along the way. If we speak in person, we have the chance to compensate for the loss by adding mimics and gestures to our message, which often arise involuntarily. But if we just have a written dialogue, then we fail to fully convey all the information due to the extra effort of writing. As a result, if the person we’re communicating with understands even 30% of our information in writing, it can be considered a great success.

But that’s not the whole problem. When information reaches the ears or eyes of someone you talk to, the reverse mechanism — decoding — starts. The conversation partner translates the information received in the form of code(s) back to electronic impulses in their brain.

The problem is that as long as we use the same language, we believe that our words are decoded according to the same principles that they were encoded. But that’s not true. Each person has their own individual coding and decoding system. This system was formed in childhood, under the influence of environment, education, read (or unread) books, schools, etc. And it is not compatible with other peoples’ systems, especially those that have grown up in another environment.

As proof, I suggest you remember your arguments with the opposite sex. Did you ever get the feeling that your dialogue sometimes resembles a conversation between a Japanese and an Irishman, even though you both speak the same language? That your words are being misinterpreted and that you are unable to communicate to the other side a message that you personally think is so simple? And in disputes with someone of the same-sex, the situation is not much better. We use an extremely imperfect tool called language to communicate with others. How did we humans manage to negotiate and develop as a species?

Once during corporate training I asked top managers of a company to continue writing on a piece of paper the rest of the phrase: “A successful company is…". And the team was lively, active, and young. Then I collected the sheets of paper and wrote out the answers on a flipchart, trying to find intersections and common ideas. All employees agreed that a successful company should be financially healthy, but otherwise they totally disagreed. As a result, the motley and heterogeneous picture was an unpleasant surprise to the owner. Unfortunately, the opinions of individual employees did not add up to the overall picture in the owner’s head, but more often than not contradicted it. The owner was convinced that his subordinates’ heads somehow magically, by themselves, should have formed a picture that was completely identical to his own. But that did not happen.

The Whole World Seems to Be Made of Nails to a Person with a Hammer

During my management career, I have come to the following conclusions:

1. Communication with subordinates is the task of a manager. If your subordinates don’t understand you, it’s your problem, not theirs. As someone wise once said, “The truth is not in the mouth of the speaker, the truth is in the ears of the listener.”

2. Your task (not that of your subordinates) is to convey information to them in such a way that it is understood and understood by them as fully and specifically as possible. And when talking to different subordinates, you should use different metaphors, definitions, vocabulary and terminology. It is necessary to set a task for a construction foreman and the head of a programmers’ working group in different ways.

3. Remember that other people’s heads aren’t acting in the same play as yours. These people see the world differently, they have different values, priorities and interests. They may interpret abstract concepts such as “quality”, “values”, “fairness” or “customer focus” differently. The more you use such vague notions in your dialogues with them, without specifying what you are expecting from them, the greater the chance they will misunderstand what you want, even if they nod at you vigorously.

4. Time spent explaining your position to an employee always pays off. It’s better to spend two hours explaining what you want from him or her and from the company as a whole, than to deal with the consequences of his or her misunderstanding. That’s why I’ve always loved to go on business trips with my staff. You have plenty of time to talk on the road and you have a chance to better synchronize their vision with yours.

5. If possible, never only use written means of communication, i.e. messages and letters, to discuss important things. Find a way to communicate in person. Use the written form then as a a confirmation and reinforcement of the discussion.

6. If you are faced with a subordinate’s misunderstanding, pause before you get angry with them. Remember it’s your own fault. Think about what went wrong and how you can avoid similar problems in the future.

7. If a subordinate truly does not understand you, and all your attempts to establish a dialogue with them are in vain, it is better to let them go. Your processing systems are too different, and the cost to build a working dialogue is too great. Firing them is actually better for both of you.

<p>Chapter 5. Human Management Is a Profession</p>

In order to learn how to fix electrical appliances, a person needs at least one year of special education. It would be nice to have a basic technical education, at least a secondary one.

Doctors are allowed to perform operations only after years of practice as assistants. In the United States, a psychoanalyst is not eligible for private practice until he or she has worked in the profession for at least ten years. If you start operating on or treating the human psyche without proper authorization, you will be punished in strict accordance with the law. Driving a modern car with an automatic transmission, especially in a country with quiet, law-abiding traffic and without snowfalls, can be learned by a youngster. But in order to drive without breaking the law, you need to be trained and pass an exam.

But there are two things in the world that for some reason can be done legally without any training and experience: giving birth to children and managing others. The birth of children is outside the framework of this book, but we are very interested in the management of people. Of course, few people hire other people who have no experience in high-ranking positions, but legally it is quite acceptable. There is no law in the world that would prohibit you from taking charge of a company, even if you were only in charge of yourself before, and not too successfully. Especially if they are the owner of this company.

For some reason, it is believed that the art of managing people is learned by itself, that if a person sat for many years in a comfortable leather armchair in a separate office, it made them a wise and experienced leader. Alas, the manager is a profession that needs to be mastered separately and purposefully. That is true for the owner of the business, too.

However, the entire education system in most countries is aimed at producing specialists rather than managers. At schools and universities, we are given awards for individual achievements, not for our abilities to work well in team efforts. An egocentric or introverted person may receive a gold award at the school, but if they make a career to become a boss their future subordinates could indeed be unlucky.

Business schools, as much as they can, try to fix this by focusing on group work and case study. But how much, objectively speaking, can such group work teach you? Owners and directors of different companies sit around the same table and decide cases together, but tomorrow they will return to their offices, where they will be alone with their subordinates, in real life. I have two degrees in business, but it was my own experience — reading books on psychology and natural observation — that gave me more insight into people management than those schools, although a formal education was extremely useful.

If a person who had previously worked happily as an ordinary subordinate is suddenly promoted to a senior management position, even if he or she leads only one subordinate, their life changes suddenly, and will never be the same again. And, except for the larger paycheck, it might change for the worse.

Previously they were only responsible for the results of their own work, and the burden of bigger decision-making rested on their boss’ shoulders. Now the results of the project depend to a great degree on the work of their subordinates. Do they possess the skills to motivate their subordinates? Should they force their subordinates to do it? They may not listen. Scream at their subordinates? They’ll quit. Threaten to get them fired? That could be worse for everyone.

Perhaps the recently promoted worker had naively believed that the boss was the one who, after a good night’s sleep, gave instructions to their subordinates and merely shouted at them from time to time so as not to relax them. In reality, it is the subordinates who come to the office cheerful and having slept well, and greet their wrinkled and gloomy boss who, after a sleepless night, sits drinking coffee in their office. They didn’t sleep well because although the subordinates may work on the project, they would in fact be responsible for its results. As a subordinate, he or she only supervised the work of their own hands and head. But now they have to command other people’s hands and heads, while having no education in how to do so.

When I myself had just started climbing the career ladder, it seemed to me that the CEO was the freest man in the company. But when, ten years later, I finally sat down in the director’s chair, I felt like I had been a victim of an illusion for many years. It turned out that not only does a supervisor depend on their subordinates, but the subordinates depend greatly on their supervisor. And the more subordinates there are, the less chance the director has of influencing each of them personally. In a large company, a director does not have a chance to meet each of his or her subordinates face to face, but any one of these subordinates could suddenly turn the life of the director upside down if he or she sticks their hand into a machine, sells confidential data to competitors, or simply fails to implement a sales plan.

Contrary to stereotypes, a manager depends more on subordinates than on upper management. Entrepreneurs, strictly speaking, have no supervisors at all, but they are also acutely dependent on their employees, especially when their companies have a management hierarchy, and they cease to control each employee personally. Achieving maximum efficiency, dedication, loyalty and honesty from subordinates is extremely difficult, because many subordinates do not think it is fair that you sit in the office and earn more than they do. They don’t think it’s because you worked harder and risked more than they did. They think you’re just lucky and they’re not.

Most managers lack only one thing to successfully manage people: the ability to look at subordinates not as functioning machines, but as a community of people different from themselves. Many entrepreneurs are egocentrics and visionaries, which is very useful for a successful business. Therefore, it is difficult for them to think about some things other than themselves and their ideas. However, they will have to try to make themselves understood at least by their immediate subordinates. To start, you can answer a few simple questions about each of your direct subordinates:

1. Who is he or she? What kind of person are they? What are their main character traits? What is their life situation? How does this get in the way or help the job?

2. What are his or her strengths and weaknesses? What prevents them from being successful and what helps them to achieve success?

3. What kind of tasks does he or she cope with successfully and what kind of problems are they unable to cope with, or only cope with great difficulty?

4. What kind of behavioral strategy do I have to adopt in relation to him or her? Does the employee fit in with their position? Should I send them for extra training? Which tasks should they be assigned and which should they not be assigned? Are they ready to work in a team, and if they are not ready, how much of a hindrance is it to the overall work?

The ability to understand people is the primary skill of any manager. And the path to excellence in this area begins with regular exercises to observe staff members and try to get beyond their words and into their motivations, fears and expectations. People rarely say what they think. More often they say what they think they should say, or what they think you want to hear. Jeremy P. Shapiro, a human resources theorist, said, “If you can’t measure it, you can’t control it.” He was referring to human resource metrics, but it’s also true for people. You can only control something (or someone) if you understand how it (or they) works.


In the book “Execution: The Discipline of Getting Things Done” by Larry Bossidy, one of the world’s most acclaimed CEOs, the author says a manager should spend up to 70—80% of their time talking to their subordinates. If they joined this company recently, it should be up to 90%. And not just during formal meetings; chatting over coffee or during lunch can be equally valuable.

The importance of communication cannot be overestimated. You do two important things in the course of communication. First, you communicate your expectations, goals, objectives, requirements and guidelines to your subordinates, and this is very important for them because it reduces their anxiety and increases their productivity. We will talk about this later. Second, you listen, and therefore you understand them better. Only in the course of a quiet conversation can a subordinate relax and begin to speak out loud about his or her difficulties, problems, ideas and views. Like a marriage, business is the union of people working together for the sake of common professional interests and requires daily work to synchronize goals, expectations, ideas and points of view. And there is no better way to do that than talking. Leave emails and messages in messengers to discuss simple technical tasks. If you’re the boss, your main tools are ears and language. And ears are the most important.

Read books and articles on psychology

I once read the idea that a manager does not need to read business books at all, he or she needs to read fiction instead. The idea is probably too radical, although there is some common sense in it. In business literature and business periodicals you won’t find many answers to the question of how to understand subordinates and to distinguish, by the use of their words, beneath the layers of their masks, their true motives and aspirations. The best way to do that is through psychological literature. I am referring to serious works, not just books on personal growth.

A good leader must have a strong personality. But this alone is not enough. Contrary to the stereotype that employees must understand the motivations of their supervisor, the supervisor, in fact, must constantly learn to understand the hidden motives of subordinates (and people always hide them, even if they are very noble motives), and be able to talk to them in the same language. If it is boring to read psychological literature, read fiction, but not just as entertainment. Analyze the motives of the heroes and try to understand them. Think how you would build a relationship with them when you meet them in real life.

A man burdened with his own mental health problems, who has not found himself, who is captive to his own fears and doubts, will not be able to be a good leader. A good leader thinks more about others than about himself, but a person who is crushed by inner fear or phobias, has all of their thoughts directed inward. So, if you have a lot of unresolved internal problems, try to solve them. The path to a solution is often complex and always unique to the individual, but I have seen that many managers are well helped by passing a career skills analysis at an assessment center, which can be done in any city, and at least a few conversations with a professional coach. You will better evaluate your strengths and weaknesses, which is very important for a leader. A leader must understand who they are, and not fight with their shortcomings, but develop their virtues. If you have a weakness, find yourself an assistant for whom it will be a strength. For example, if you don’t like to deal with numbers, find yourself an assistant for whom numbers will cause pure delight, and trust their calculations. Don’t forget to think about your strengths, not only in terms of how they can be developed for the sake of your own growth, but also for the sake of increasing the efficiency of your work with your team.

Raising children is an excellent management school. Therefore, in particular, I never tried to take childless staff to top management positions. Children are subordinates who cannot be fired and cannot be punished too severely. In many cases, however, you want them to do what you expect them to do — what you think is right. At the same time, limited leverage over these “subordinates” significantly complicates the management task. We will talk about the similarity of managing people and raising children in a separate chapter, but we will only point out that you can learn a lot from your parental experience. Note which techniques work and which do not. Also, hire experienced parents for senior positions.

The higher you get, the more important your management skills are

The higher an individual ascends the career ladder, the less his or her professional skills play a role, and the more important their managerial skills are. You can be an average financier, but a great financial director. You don’t have to memorize all the diameters of the nuts used in the shop floor, but you can be an effective production director. It’s not a benefit if you’re the only one who knows how to do the work of your department. Your department will work as fast as you can to think about all the problems and make all the decisions, that is, at a slow speed. What you are able to accomplish is limited by the 24 hours that are in a day. Wouldn’t it be better to hire subordinates who are superior to you in some way? Then they’ll do some of the work themselves, and often better than you would. The result is the main goal.


The “Head-and-Hands” System

Unfortunately, not many people think that way. Many of the people who formally occupy managerial positions are, in fact, highly paid professionals. They don’t have basic human management skills. In reality, their departments are theatres starring one actor, led by fiery professionals, surrounded by sluggish, inactive and faithful vassals with medium abilities, blindly devoted to leadership. Such “directors” build a system of “head-and-hands”, in which they assign themselves the role of a thinking center, and subordinates are nothing but executive adjutants.

To see if you have this type of manager in your company, walk around the office after 6:00 p.m. If you see bosses sitting down, finally, to work, when their subordinates long ago went home, then you know it’s this type of manager, that is, an inefficient manager. If you do this yourself, you are an inefficient manager, unfortunately.

I have been thinking a lot about why leaders, instead of providing themselves with a comfortable existence and making their subordinates work (which is their true job function), work hard on their own, destroying their own health, family harmony and self-esteem. And why did I myself do that some time ago? I came to the following conclusions:

1. The system of upbringing and then school and university education are too focused on individual, not team, results. “I don’t care what grades the other kids get, it’s important to me that you get an A again!” And it’s firmly embedded in us. Many leaders still try to please their symbolic “fathers” (their bosses), and diligently “fill in the form”, counting on an award and individual praise. They try to work harder so that the leadership will appreciate their diligence. However, an effective leader is not the one who works the hardest, but the one who achieves the best results.

2. The KPI (Key Performance Indicators) system in many companies is also structured in such a way as to encourage personal achievements rather than those of departments or services.

3. Managing other people is hard. These are scary, incomprehensible, unpredictable creatures, with their own secret thoughts, motives and desires. It is tempting to avoid the challenge of mastering the art of this difficult science by trying to do everything by ourselves, not realizing that we’re doing irreparable damage to our company in this way. We often don’t even think that in the end our entire department, or more broadly our entire company, is working at the top speed of our individual ability to process information and make decisions, but not faster. And that if other people had been involved in this process, the final result would have been better, and would have come sooner.

4. Such leaders are deeply proud of their hard work, boosting their own self-esteem with their late night vigils in the office. They feel that their value in the eyes of others grows in proportion to the hours spent at work. In one of our consulting projects, a CFO, at every opportunity, as if by chance, emphasized how much she worked. “I was working on this document until 1:00 a.m.” At the same time, she had a whole brood of cheerful employees, leading a busy life during working hours, dedicated to the discussion of gossip and Instagram feeds.

5. If the leaders are not sure of themselves, they have the syndrome of “liar’s manager” (I refer those interested to the book “The Leader on the Couch. Clinical Approach to Changing people and Organizations” by Manfred Kets de Vries). They feel they don’t really deserve their position and their salary. It’s common for educated people in general, and we try to hire such people in leadership positions. As a consequence, subconsciously, these leaders recruit their subordinates knowingly weaker than themselves, so as not to create competition for themselves.

Did you recognize yourself in one of these descriptions? If so, it’s time to rethink your priorities. If you do the work of your subordinates, you risk your career, success and, first of all, your reputation. As one of my very first managers taught me, if you fail because you didn’t task your subordinates enough and get fired, your subordinates won’t compensate you for your material losses as a sign of gratitude for taking care of them. If you fail in your business or career because you have worked too hard on your own and provided too few challenges for your employees, your employees will not appreciate it, they will shrug their shoulders and forget about you faster than you do about them.

But that’s not enough. If you want to be an effective leader, it’s important that you don’t just become one. It is necessary that all managers, both under your direct and indirect supervision, are also effective leaders, otherwise your entire business will resemble a large heavy barge, which is pulled by two or three enthusiasts.

If you see that your subordinate walks with bags under his or her eyes, exhausted and overburdened, unable to meet deadlines and trying to hide their eyes that are twitching from the stress, do not be in a hurry to show compassion. That’s exactly what they expect you to do. They are already prepared a space on their shelf for the award they’re certain you’re going to give them. And with compassion, they expect you to absolve them of all their sins, like how the project is behind schedule despite how hard they’ve worked! But a truly professional and responsible manager does not plan to die at work. He or she adequately evaluates the qualifications and motivation of their subordinates, motivates the weak, dismisses the lazy, distributes the work according to the situation, and organizes and inspires. And if there are not enough resources (it happens, but less often than it seems), they look for a way to solve the problem differently: for example, to transfer a part of the work to outsourcing, or discusses the allocation of additional funds or people with management. They realize that life in the heroic mode can last a couple of weeks, after which the productivity of the employees could be zero. Their goal is to solve the tasks that have been set, keeping the employees in a mission-capable mode.

How to make managers recruit full, active, self-motivated subordinates and then develop them? I don’t know a better way to proceed than the next sequence of actions:

1. Global staff assessment by HR department and, possibly, external specialists. You may know your subordinates well, but you probably don’t know the subordinates working for them further down the employee chain.

2. Based on the assessment, department heads, together with HR, should draw up plans for change. Someone may need to be let go. Sometimes it’s the leader himself. Someone, including, of course, the manager himself, needs to extend his learning and development. Move someone to a different position, entrust them with a task they would be able and happy to perform. It’s all very expensive, the entrepreneurs will exclaim. Yeah, it’s not cheap. But it’s a necessary expense to increase the efficiency of your work.

3. The result of the development program is obligatory certification to ensure that the employee has really learned something. And if the results of certification in the department are terrible, do not hurry to dismiss employees, start with the head. If he didn’t pay enough attention to the development of his subordinates, why do you need him?

I once read about a very important rule that I had the opportunity to experience myself during my management career: class A managers hire class A subordinates; class B managers hire class C subordinates. If you go into a department and see the employees there that are energetic, cheerful, lively and happy, then the head of this department is in their proper place. But if you see sluggish, inactive subordinates in the department, always ready to explain why the tasks they face are impossible, gently escort the head of this department out the door and wish them all the best.

Human management skills can be developed and learned. There are various courses and training for this purpose, including mine. But the main thing in this training (as, by the way, in any other) is to take on the role of a student. If you or your subordinate believes that you have nothing to learn, that you are practically a teacher, even Marshall Goldsmith himself will not teach you anything. But if you think you always have something to learn, you will find useful information in any educational course.

<p>Chapter 6. A Shareholder Is Also A Profession</p>

Any sensible business owner understands that to have a successful business it is important that the company employ a professional staff, from the CEO to the loader driver. But not all owners think that they, too, should be professionals, and not necessarily in finance, marketing or production. They must be professionals in business management from the position of creator and owner (or co-owner).

Many owners in Eastern European countries have set up a business without knowing or learning anything about it, with pure enthusiasm, energy and will. Some of them have succeeded and made a mistake in concluding that education is useless. Of course, their vast experience has made them wiser and smarter. But the growth of professional competency in business management from the standpoint of the owner requires conscious intellectual efforts and purposeful actions, not just life experience. Ownership is a profession that requires a separate book or course like mine. Let me summarize the main points in this chapter in a concise manner.

To begin with, the entrepreneur should determine what role they want to play in the business. An entrepreneur can be a CEO of the company, an inspirer of ideas, an integrator or a silent investor. The CEO de facto manages all processes, from budgeting to strategy. The inspirer of the idea is more focused on marketing, they are in a constant search for new ideas for development, transferring daily management to operational managers. The integrator passes on the strategic and operational management responsibilities to managers, leaving only the task of maintaining the right spirit in the team, ensuring continuity, following the mission and established values, and preserving the corporate spirit, he or she can serve as a living symbol for employees. Finally, the silent investor fully transfers management to the board of directors, leaving mainly the control functions to himself.

The worst role possible is the role of a leader who suffers the so-called seagull syndrome. The leader of such a company pretends to depart from operational management, and even hires managers with administrative skills who can bring order to the chaos they created. But in fact, he or she, like a stubborn seagull, bursts into the office from time to time without warning, and, flying through the corridors and offices, stuns employees with their sarcastic comments in a style like, “no one here wants to work, everyone in the offices just sits on their ass! I would never let it be like that.” Then just as suddenly they disappear, leaving behind despondency and demotivation but not making the company any more effective.

Let’s get back to the roles. The owner must determine what role they need to play in the life of the company. Similarly, the owner must be very clear and unambiguous about what roles he or she will not play. And the list of such roles should also be published and internally accepted. Internal acceptance is the most difficult part in this case. After all, when we consciously give up any role, we must accept the idea that, since this role is important to the company, it must be played by someone else. And that someone else should have everything they need to do it.

Both list of roles to be accepted and list of roles to be rejected must be written. Keeping it in one’s head doesn’t count. Only a written list, printed out, will be useful. The best way to write a list is by hand, not by typing. Scientists have proven that handwritten text is about 10 times more memorable than typed on a keyboard.

Create a grid, and in each cell corresponding to the role you want to play, and the one you plan to reject, write down exactly which personal qualities will allow you to perform some of the intended roles, and which personal qualities make you reject others. How can you be sure that you will be able to deal effectively with, for example, strategic development? Why don’t you see yourself as the CEO? I would recommend that you discuss this list with your mentor. And if you don’t have one, I recommend you find one.

After the list of roles has been drawn up, we need to:

1. Draw up a list of job responsibilities based on what you plan to perform and what you plan to reject;

2. Think about whether you have all the skills you need to perform the functions you have assigned yourself. If you do not have enough competency in the skills you need, make a personal plan to get them;

3. Think about what information you need to do your job and which employees you will involve. Will these employees do anything else in the company, or will you use them for a full workday?

4. Who will perform the functions that you have marked as “not your own”? Are there appropriate people in the company? Do they have relevant competencies, abilities, knowledge, personal skills? If not, how, where and when to get these people?

5. What can you do so that you draw a clear path to passing the responsibilities you want to pass to others and leave everything you want for yourself? Should you issue an order? How would this be best done in your company environment?

6. How to build a mechanism of remote control, without constant intervention, over processes and results that you do not plan to deal with personally? After all, the company is still yours, and even if you let go of the reins of power, the reins of control should still be there. How to better build control? How often to get reports, and from whom? Remember that to make subordinates report to you personally every day is not “to let go of the reins of power”. Do not lie to yourself. Make sure you receive your reports regularly, but not more than once a month, for example. Otherwise employees will never believe that you really don’t want to deal with these issues. And if they don’t, they’ll never start doing it themselves.

7. Make a habit of not interfering with the situation, even if the first report already differs from the expected one, otherwise you will spend the rest of your life personally dealing with these issues. Give people a chance to fix the problem. And if they don’t fix it, don’t fix it for them, just take care of the people. Why can’t they succeed by themselves? What are they missing? Is it possible that they might have to be replaced?

8. Marshall Goldsmith claims to have an employee who calls him every night and to whom he has to report whether he did what he was supposed to do during the workday and whether he did what he chose not to do. It increases his self-discipline during the day. Let your mentor ask you from time to time (preferably from a checklist) if you have violated the boundaries of personal responsibility and authority that you were supposed to have given up?

9. Be prepared to violate these boundaries in the event of a real crisis, internal or external, but only until the crisis has passed. And work not only on dealing with the consequences of the crisis, but also on how to make the system work again independent of you when the crisis is over.

If you’re an entrepreneur, you’re a living person, too. This means that not only will you be happier and more relaxed, but you will also be much more effective if you do what you do well and what you really love. If your business is successful and does not experience a great lack of funds, then for all the other tasks you can always hire brilliant professionals who will perform them better than you, which will be better for you, and for them, and for the business. Don’t forget about the control, but do not allocate more time for it than necessary.

<p>Chapter 7. Employees as Fellow Travelers</p>

The main reason for the breakdown of most marriages is the different expectations each spouse has when they enter into the marriage. The decision to marry (or to live together) is often made at the euphoric stage of a relationship, when we are overwhelmed by feelings and all small differences of opinion seem easily surmountable. The reality, however, is that we bring different attitudes and expectations into marriage, and in the long run it is the difference in expectations that destroys the most beautiful, easy and promising relationship.

Marriages between young people break up more often than those of older adults. The secret is that older people are more comfortable with their own expectations and are more willing to be flexible. They simply understand intuitively or consciously that their own expectations are better communicated aloud as early as possible. If you’re not happy with something, you don’t have to create a huge fight, or, conversely, tolerate it in silence until there’s an explosion. It is better to sit down and talk about the difference in expectations, and try to find a compromise, if possible without fights and hysteria. If both sides have the wisdom to discuss their expectations calmly, they spend less time cursing and more time having fun.

Alliances between supervisors and subordinates are also a sort of marriage. We may not share a household or sleep in the same bed with our subordinates, but in reality, we spend more time with them than with our spouses and children. A supervisor and a subordinate should therefore talk to each other as often as possible and discuss their expectations in an open and sincere manner to strengthen their working relationship.

Offense has no room in business

During my career as CEO, I have resigned several times on my own initiative. In at least two cases, I made this decision because I realized that the relationship between me and the shareholders became far too complicated. We are all human beings, and no matter how professional we are at work, there is mutual understanding, shared values, a relative unity of approach and strategy at least. When it seemed to me that such an understanding was disappearing, I always thought it was best to leave, so as not to continue a painful and counterproductive relationship. At the same time, considering the fact that I have always tried to leave in a professional manner, it seemed to me that I was also taking a burden off of my employers. I expected them to thank me deep down for not having to prepare for a difficult conversation with me, explain their decision, etc. What do I usually read in their eyes, hear in their words and voice instead? Nothing but offence.

What’s an offence? It’s a disappointment. You were expecting a new bike under the Christmas tree only to find a boring book there. Everybody’s been invited to the school party except for you. Your own mother supports your spouse in a family dispute. Kids dream of going to Grandma’s for the weekend, not staying with us. The offence is always very personal. The offence tends to swell and grow in our souls, devouring us from the inside.

It’s an offence to the souls of entrepreneurs and managers at other levels when their subordinates suddenly quit — and after all we’ve done for them! And in return they’ve failed to meet our expectations, conspired against us, formed alliances or behaved in a way that seems unfair to us. If you look at it with the cold detachment of an outside observer, it looks ridiculous. Adults spend a lot of time formalizing their relationships — writing job descriptions, drawing organizational structures, formalizing plans, inventing KPIs — and all this still fails to prevent us from sulking at each other like small children.

If you are a leader, and especially if you are an entrepreneur and you feel now or have recently felt offended by subordinates, you urgently need to change your inner attitude. You have come to this “marriage” with wrong expectations, and if you do not change them immediately, you will not ever see any success or satisfaction from work.

All employees are fellow travelers

Imagine a train. Would it occur to the conductors to resent some of the passengers for not driving with them to the final station? Will they be upset that almost none of them are interested in the conductors’ names and life goals? Will the conductors be saddened by the fact that all of the passengers used them for their own purposes, and once the passengers arrive at their station they immediately leave, forgetting about the conductors forever? They haven’t spent much time together, have they? They were completing a project together: going from Point A to Point B. They depended on each other: the passengers relied entirely on the conductors’ experience and knowledge, and the conductors hoped that the passengers would all buy tickets and not break the seats or doors. And then suddenly, at the end of the project, the passengers went out at their station, and didn’t even take the conductors’ phone numbers to congratulate them on Railroad Worker’s Day.

Many years ago, I was the head of a plant in the Moscow region. I was young, most of my employees were older than me. I thought I had a good relationship with them, based on mutual respect, and I created comfortable working conditions for them whenever possible. But then my shareholders bought the premises a hundred kilometers away from the previous one and announced the relocation of the plant. It was obvious that the old employees would have to be fired as it was unthinkable to commute 3—4 hours to the plant and back. The moment came when it became clear that most of them would leave the company within a month or two. I was displeased by the changed attitude of my employees towards me, even my direct subordinates, with whom I thought we were connected not only by professional ties, but also by personal sympathy. There was no trace of yesterday’s warmth, they bargained coldly and harshly for the financial conditions of termination of their employment, clearly understanding that the force was on their side. Many of them left before the move, which put me in a very difficult position, because I counted on their help in moving, for some reasonable compensation in return for my investment in them. But none of them thought about my difficulties, and had no sympathy. They tried to solve their own problems, not mine. Almost nobody wished me luck in the new place and said goodbye to me, saying, “It was great working together!” Moreover, many of them openly accused me, as a representative of the company, of having made it very difficult for them to live their lives, depriving them of a comfortable and well-paid job near their homes.

My feelings at that moment can only be attributed to my inexperience, both in life and in the professional world. Why did I actually think these people would put the problems of the company they were just working for ahead of their own? Why should they make concessions in a situation where they are de facto fired, with unclear job prospects? Why should they be sympathetic to me, because I, unlike them, kept my job? That’s what any employee in any company would do if it happened to them. In fact, the employees of the company are your temporary companions. These are the fellow travelers on the train, and somewhere in the future there is a station where they will get off. Maybe it’s not going to be a long journey, maybe you’ll find exciting tasks and great teamwork along the way. But sooner or later, you’ll have their resignations on your desk. And it’s possible that you yourself may insist on their resignation.

Some entrepreneurs who build open, trustworthy, even friendly relationships in their companies may disagree with me at this point. But in general, the only difference is whether you let your employees into your “Captain’s Bridge”, into your driver’s cabin, whether you let them drive, or whether they sit in the car in silence. The train is still yours, and the staff are the passengers who will get off sooner or later. You can spend wonderful years together, fighting against failures and achieving great heights of success, but most of them are still with you only for a while.

And don’t be deceived: their first concern is to solve their personal problems, not yours, at least as long as they remain hired employees. Yes, your strategic interests may coincide for a while and sometimes for a long time, but they will always be fundamentally different. If you are a shareholder, you will care about the value of the company and their own value in the labor market. In management theory, this is called an “agency problem” and no effective way to overcome it has been invented yet. At some point, your interests will cease to coincide, and you will part. I’ve had to lose a lot of employees, and I’ve put a lot of effort into the relationship with them. Most of the time, they left at a bad time. And in general, if an employee is valuable and important to the company, there isn’t really a “good time” for them to leave. At first, I was very upset until I realized that investing my energy in people without preparing “Plan B” in advance was nobody’s mistake but my own personal managerial mistake.

Losing an employee does not necessarily mean a conflict. Today, the employee is enthusiastic about his or her work, and tomorrow he or she remarries and moves to a new location. Emigrating abroad. Leaving to look for his or her way of life on Goa beach. Becoming pious. Tired and burned out. Many parents change their life priorities dramatically after the birth of their first child — from now on, children play a major role in their lives, and who will blame them for that?

Does this mean that we should not invest in building a climate of compassion in our relationships with our employees? No, we still should. Companies of the future will be less and less like military barracks, and instead be teams of people who trust each other more or less. The trend is obvious — the entrepreneur, the director, must be more and more an integrator and less a boss.

But no matter how cynical it may seem at first glance, you must always keep in mind that such a carefully built relationship can end at any time, and be ready for it. If any of your company’s teams have a bright leader who is achieving results — encourage him or her in every way, help them, talk to them, support them. But, at the same time, be careful to ensure that you grow their potential replacement, the future leaders, even if they are not yet experienced. Build the system in such a way that each employee feels like a significant person, but reduce the importance of each individual in the company’s overall dependence.

Twice in my life I had the opportunity to hire people who previously held top positions in multinational companies operating in the FMCG (Fast Moving Consumer Goods) market. Both led huge structures in the past. Both of them happily remembered how they went to the team meetings to the headquarters in Europe, how the leaders of the companies were able to ignite enthusiasm and faith in success. However, both were very mediocre managers and, having found themselves in a small and fast-growing company after their European plum jobs, quickly felt lost and were dismissed. It turned out that in reality their powers in European companies, despite their status, office, secretary and huge salary, were very limited. They didn’t make most of the decisions. I have thought a lot about this, and I have concluded that the transnational giants do not want to put local markets entirely in the hands of local managers. On the surface, the Europeans skillfully gave the local leaders the impression that they themselves determined the fate of huge markets, but beneath the surface it was in fact the Europeans who gently controlled every action of the local boss. And I’m sure that when those guys left their big offices, nothing changed in the life of these multinational companies.

European headquarters understand that it is not possible to make the company’s results dependent on one person, no matter how high-ranking they may be. Even if this person is a founder of the company. A major company, holding on to one leader, is like a big round table, standing on one leg. And that’s why companies are carefully building management systems that are based on regulations, algorithms, principles, numbers, and not on the enthusiasm and intuition of one person, no matter how bright they are. Startups need a charismatic leader, but when the war for the market moves from a lower guerrilla phase to higher positional battles, the company must become an organized unit, in which the bubbling energy of the leader is balanced by the wisdom of the staff.

Like unhappy marriages, relationships between people in the company often fall apart because of misgivings about each other. Company founders and sometimes top managers expect their subordinates to be loyal and willing to put the interests of the business ahead of their own. But why on earth would they do that? Each of them lives his or her own life, and they do not live it to make your business more successful. Yes, I have met people who have been working in the same company for 25 years and who are loyal to the founders. In general, this happens when there is a special “chemistry” between the entrepreneur and his subordinate, a relationship of trust that cannot even be fully described as simply a working relationship. But this is not always the case. It is unplanned, and there are never many such employees. And it’s not a fact that these employees are so effective.

Respect your employees, support them, help them to achieve their potential, create an atmosphere for them to do their best. But at the same time, remember that they are not connected to you by an oath of allegiance, and sooner or later, they will leave you — or you will let them go yourself. And it’s better to be ready for that.

<p>Chapter 8. Being Yourself or Myths of Leadership Styles</p>

It’s taken me many years of experience, which I’ve paid for at the cost of many mistakes, to learn the following truth: It is better not to fight your shortcomings, but instead to develop your merits. This strategy will improve the quality of both your business and personal life.

It’s harder than it looks to accept that. All our childhood we were taught to act in the opposite way. Got a bad evaluation? Fix it, give it back. You’re not doing so well, are you? We have to try and try again and again until we do better. We have seldom been taught to ask ourselves whether this is a task for us to try at all. After all, if we make significant efforts to solve a problem that we like, that we are interested in, that inspires us, the effect of such efforts will be many times greater than the repeated attempts to find the solution to a problem in which we have no interest or passion. Of course, life is not just a pursuit of doing what interests us, where we can exclusively enjoy completing our favorite tasks. Life requires a variety of skills, and sometimes poses questions that we have to solve by clenching our teeth. But if we attempt to manage our life and improve its quality, then one of the tools of such management is to reduce as much as possible the number of “other people’s” tasks in it, and pass the tasks that are better suited for others on to them. I am sure that the most successful people in life are not hard working ants, who stubbornly persist based solely on a sense of duty, but instead are self-aware people who focus only on interesting things.

If you are a company manager, especially if you are the CEO (i.e., you define the culture of the organization, its strategy and goals), this rule is extremely important for you. By developing your strengths, you can significantly increase the speed of your company’s development. If you have talents in marketing, sales and manufacturing, allocate the major part of your working time for it. And for the other functions that are less interesting to you, find people who are talented in them. Don’t you like to read contracts? Hire a good lawyer. Don’t like to mess with the budget? You’ll need a good financier. But never forget the following:

1. The principal must have a good understanding of their product. You may not be a recognized industry expert in technology, but you need to have a clear understanding of your product features, key capabilities and limitations of production, sales and marketing.

2. Even if you’re not a marketer, keep in touch with your key customers. This doesn’t mean you shouldn’t trust marketing analytics, but talking to customers will help you understand the market better, may give you interesting insights and the opportunity to look at your organization from the outside.

3. People to whom you entrust your “unloved tasks” must be true professionals in their areas of expertise.

4. You can be fervently fond of one function and hate the rest, but a company director or entrepreneur must have at least an average knowledge of marketing, sales, production and finance. At least in order to find high-quality experts for those functions and to be able to supervise their performance.

5. In any case, the tasks of human resources management cannot be fully delegated to the HR department. An entrepreneur or manager is much more efficient if they have an experienced HR director working next to them, but it is impossible to blame the HR director for managing people, especially direct subordinates. You must be a leader for the whole team and a leader for direct subordinates, and you can only do it personally.

6. If you’ve hired a really good specialist for functions you don’t want to do yourself, you should trust their judgment and listen to their suggestions.

7. Trust does not mean lack of control. If your organization follows a strategic plan with key performance indicators for each department, and if these are clearly defined, transparent, and verifiable by an independent auditor (such as an internal audit or controlling service), trust and control can coexist peacefully with each other. Especially if all relations are negotiated in advance and all contentious issues are resolved using numbers and facts.

To be yourself

Sometimes children seem to have a supernatural instinct. They so skillfully manipulate us, so cleverly know how to ask for a new gift, so artistically manage to make us feel sorry that we begin to suspect them of superpowers. There’s nothing unusual about that, actually. It’s just that we broadcast a lot of information through nonverbal, i.e., non-linguistic channels of communication — mimics, intonation and gestures — and children read them better than adults. The language of mimics and gestures appeared much earlier than spoken language, and is a direct continuation of our human nature, our gestures are natural, our mimics are involuntary. In contrast, language is a more artificial means of communication. Gestures and facial expressions are inherent to us from birth, they are unconditional reflexes, and it takes us several years to learn to speak. A lot of gestures and facial expressions are multicultural, that is, they are understood in different countries, say, frowned eyebrows or a smile, will be treated approximately the same everywhere, but languages are very different. Children have a poor command of language and more trust in information that we unwittingly transmit through the expression of our face, through intonation or gestures. Then, as we grow up, we begin to rely more and more on language, and the ability to understand facial expressions and gestures, although it never completely disappears, loses some of its meaning.

We will talk about how subordinates resemble children by their behaviour patterns in the relevant chapter. What is important to us now is that subordinates, like children, are very sensitive to any signals from their supervisors, including non-verbal ones. Especially since the supervisor is always in the spotlight. When I was 25 years old, I was in charge of a factory. I was shocked when I discovered a few years later, that every step, gesture, and piece of clothing I wore was closely monitored and discussed by the employees, who also created a selection of ridiculous rumors that circulated within the group. If you’re the leader of a large company, believe me, it’s the kind of thing that’s within your team, too, whether you like it or not.

Such interest in your personal habits is due to the high degree of dependence your employees have on you. They have come to work for your company to provide their family with a stable and predictable income and are therefore closely monitoring you and their supervisors to watch for any potential threat to this stability. After all, if you are unstable or not a professional director, you could capriciously fire them, or destroy the company with your ridiculous decisions, and, consequently, their stable life. Conversely, your skillful actions and effective solutions are sources of hope for a stable tomorrow. Like a scared gazelle in an African savannah, subordinates are subconsciously continuously scanning the workspace in search of signals of danger. And as soon as those signals come up, they become a prime center of attention. By the way, that’s why subordinates criticize their superiors more often than admire them. After all, just as bad news about possible danger is more important than good news for survival, your mistakes (signals of possible danger), real or imaginary, become a rich source of gossip.

This kind of attention to your personal habits, where each of your gestures is studied, analyzed, interpreted, disassembled and discussed by employees, ruins any attempt on your part to look different from who you really are. If you’re not a college theater graduate, and not gifted with an ability to play a role worthy of an Oscar award, then don’t try to pretend in front of your subordinates, you’ll still be exposed. After reading books on leadership, we often try to emulate the patterns of behavior that we have drawn from them, trying to seem tougher or more democratic than we really are. We draw inspiration from interviews with leaders of large companies, trying to get managment ideas from them. But if you’re not Elon Musk, Richard Branson or Jack Welch, don’t even try to pretend to be them. Be yourself — this is the best leadership strategy.

There’s nothing more ridiculous than a manager trying to imitate some character traits they do not possess. Once I attended a meeting held by a director and owner, who was a soft and intelligent person by nature. But his company was going through difficult times, and he decided that the moment had come to be a “tough manager”. The meeting resembled a bad performance as the director was extremely ineffectual in pretending that he was strictly reprimanding his subordinates, and the subordinates skillfully pretended that they were very, very afraid of his anger. After the meeting, everyone went to their cubicles. The director was very satisfied with himself, and the subordinates, as if nothing had happened, returned to their usual duties.

While studying at the Institute of Directors (London, UK), my classmates and I studied leadership styles. We were taught that our leadership style needs to be adapted to the circumstances around us. That in times of crisis it is necessary to take your own company under authoritarian control, and in prosperous times it is necessary to be democratic and wise, as Master Yoda. We had even been given a table with leadership styles and instructions on which of them is most applicable.

The table and textbook were developed by smart and experienced people. And, undoubtedly, the very idea of adapting one’s own behavior to external circumstances had some merit. I went through this school myself in 2008 when the company for whom I was working, which until then had only grown and hired people, cultivating a generally democratic atmosphere in the team, had to reduce almost 40% of the staff, and, however difficult it may be for me personally, I had to do it. A few years later, I took over an extremely neglected business from the previous management team, and I was struck by an unprecedented combination of dense unprofessionalism and unbelievable conceit. There was no time for reflection, and although I am not usually a supporter of sudden movements, after a month and a half most the former managers were in the labor market.

But in the everyday routine of a business, the most effective style of leadership is the one that is most natural for you and is inherent by virtue of your personality traits. If you’re a tough person, be tough, if you’re soft, be soft. The only leadership style that is probably not acceptable to a modern leader is folly, injustice and inconsistency. I had the chance to communicate with the founder of a large company, who was a very uncomfortable person to communicate with — tough, demanding, devoid of sentiment. But he attached great importance to fairness in his relationships with his subordinates, always setting clear goals and remembering what he had promised or expected from his subordinates, and the promises and expectations never changed over time. It was very difficult to attend his meetings. He did not tolerate unprofessionalism and empty words. He trusted the figures and facts, demanded clarity and specificity in the presentation. But he always kept his promises and never accused his subordinates unfairly. Once, when the company made a serious strategic mistake, he admitted that since he was also involved in project discussions and decision-making, he also felt responsible for the failure and was therefore going to focus on finding a way out of the situation rather than looking for scapegoats. As a result, over the years his team has been made up of people with deep respect for him and who find it unacceptable that they could let the boss down. They were professionals in their field, and it was a pleasure to communicate with them. Whatever leadership style you choose for yourself, fairness and consistency should be inherent in any leader.

A company becomes an extension of its leader. All employees who do not fit in with the culture are sooner or later let go, and only those who are comfortable with it remain. Whatever your leadership style, eventually the appropriate team will gather around you. And if you are fair and consistent, it may well be a strong team capable of reaching dizzying heights.

<p>Chapter 9. Teal Utopias</p>

People love beautiful ideas. Especially those promising to change the world. At the beginning of the 20th century, the intellectual world was filled with ideas of socialism, nihilism, anarchism and so on. At the end of the 20th century, it was filled with the Internet which really changed the world, however, not quite as it was initially thought. Now, another idea has taken hold of the mind: “teal organizations”. The book “Reinventing Organizations: A Guide to Creating Organizations Inspired by the Next Stage of Human Consciousness” by Frederick Laloux and Ken Wilber has gained unprecedented popularity, unexpected for a former totalitarian society disguised by ideas of universal equality and brotherhood.

Personally, I believe that Laloux and Wilber are probably quite accurate in describing the organizations as they will be in the future. In my opinion, it is not yet the right time to use the book’s ideas in practice. In general, I agree that organizations as forms of social life evolve with society, and I agree with the general direction of evolution proposed in the book. However, I believe that we as a society are still too far from the “teal” stage, and therefore it is premature to put the author’s ideas into practice. Unless, of course, you’re planning on living forever.

The road to a teal future is still long and thorny for us. It is believed that teal organizations will free the world from “office slavery”, allowing each employee to realize his or her personal and professional potential, choosing his or her favorite occupation and submitting, de facto, only to himself or herself. But for this purpose, it is necessary for people to want to leave office slavery, while most employees are quite satisfied with it. As I write these lines, my own consulting company is looking for new employees due to our expansion. We are looking for young people without a lot of experience, to whom, in our opinion, we offer ideal incentives: the opportunity to study, a flexible timetable, interesting and different projects. True, we do not promise a great salary at the start, but the career growth can be almost vertical, and the work carries a high level of responsibility and independence. I think you can guess what explanation we hear most often when candidates refuse: that they have received an offer from a large company, where they will be simple contractors playing in accordance with other people’s rules, but with a stable salary and a nice office desk. There is a joke: ironing boards are snowboards that have betrayed their dreams and found a stable job. Young candidates more often see themselves as ironing boards than snowboards. If the majority younger generation already view themselves as ironing boards, you can imagine how few snowboards are left among the older generation. To prove my words, I also cite the results of an annual Russian survey — Gazprom and Google are the leaders in the rating of Russian employers, with a stable and noticeable gap between them and their pursuers. I’ve never worked for these organizations, but I’m unlikely to make a big mistake if I say that the major part of their employees are tiny cogs in a huge machine whose career is in anyone’s hands but their own. And this is the limit of the dreams of millions of workers.

The only person who can be emancipated from office slavery is someone who really wants to be emancipated. The majority of hired employees are quite satisfied with office slavery and will resist any attempt to emancipate them. Because freedom implies responsibility. Why would they want it? Those who chose responsibility have long since launched their own business. According to the statistics of 2018, in the U.S., perhaps the most entrepreneurial country in the world, there are 27 million people who already own or are starting their own business. This is an impressive figure, but only 163 million economically active people live in the United States, i.e., 16% of them are doing business or trying to do it. What does the rest of the economically active population do? They’re employed.

<p>Chapter 10. Myths of Motivation</p>

The Egyptians believed in the afterlife, and the Hindus believed that nails could not be cut at night. Entrepreneurs and managers believe that material motivation (KPI, bonuses, etc.) can solve their tasks for them, i.e., in some magical way this will make their subordinates self-organize and succeed. And this belief is not capable of being destroyed despite years of unfulfilled plans and failed projects. “Apparently, we have not developed a motivation system which is good enough!” sigh the managers as they look for a miraculous bonus formula, like a philosopher’s stone.

The KPI and related incentive systems for employees have been criticized for a long time, and not without reason. If an employee’s income is highly dependent on KPI, the employee often tries to get it, even if it is harmful to the company or its customers. For example, one major bank has introduced the following KPI: An employee must spend no more than three minutes per client on average. It was done for good reason as there were always queues in the bank, and the bank’s management puzzled over how to reduce them. What really happened? The most frequent answer of the bank’s checkout clerks to all the questions of the clients was the phrase: “You can do it on our website”. But if a person prefers to sit in a queue in the office of the bank, then his or her problem cannot be solved on the website! Or he or she already tried to solve it there, but failed to understand the complicated interface.

According to an international survey by the Gallup Institute in 2013, only 13% of employees like their work, and 63% work only for the sake of money, almost on autopilot. The rest of the study participants are “actively disengaged"workers who simply dislike what they do. Imagine that you are trying to motivate the 87% of your employees who perform their duties without enthusiasm, to do more, to perform KPIs and thus earn more. What will be the employee’s behavioral strategy? Most likely, he or she will try to achieve the KPI at any cost, without paying attention to the interests of colleagues, the company and its clients.

The very idea of linking results and rewards is logical and can be used as an incentive. The problem arises when a company’s financial motivation is the only management tool. Instead of doing their job, i.e., organizing the work of subordinates, managers simply pay off their subordinates with bonuses, like careless parents pay off their children with gifts. This is what we call “managerial impotence”.

Believing that managers will develop your company for a bonus is like hoping that your child will learn to play the violin for the new iPhone.

Human nature

The history of the 20th century has clearly shown that any measures of influence on a person that contradict his or her nature, sooner or later lead to failure. When asked about the meaning of our lives or jobs, we often respond with a high regard for personal growth or even social responsibility. Living your life solely for an extra million dollars (even if we don’t have it yet) seems primitive and empty to us. But when we roll up our sleeves to invent a new motivation for our subordinates, we proceed from the illusory notion that they, like an animal fighting for a bone, are ready to fight and die for every extra dollar.

The word “motivation” is sometimes replaced by the word “stimulation”. It comes from “stimulus”, a Latin word which was used to denote a sharp wooden stick, which bull and mule riders used to motivate a stubborn work animal. Poking the stick into some sensitive places, the driver managed to motivate the animal, and quite effectively, as the bull is a primitive creature, and his functional duties were also simple. Managers and entrepreneurs who manage employees through material motivation are like those drivers armed with a single, and moreover, Stone Age tool. They do not achieve results, they are surprised by the stubbornness of their subordinates, they are angry at them, they change the “motivation system”, but the situation does not change. Many leaders spend years looking for the Holy Grail in the form of an “effective system of motivation”.

It’s time to admit I was that manager, too. I also spent hundreds of hours looking for the perfect “motivation system” before I finally realized that the problem wasn’t that I wasn’t looking hard enough, but that I was looking in the wrong place. I will share my conclusions in this and other chapters below.

If we want to drive, we take a driver’s education course. If we want to operate the dishwasher, we read the instructions. To manage people, you need to know at least the basic fundamentals of their nature. What do you think is the main, key, basic psychological value of any hired employee? I often ask this question during seminars, and unfortunately, I hear the right answer less often than I would like to. The correct answer is stability. This does not mean that all employees are concerned only with this goal, some also want to be satisfied with their work, to grow professionally and financially, some care about their social status, and so on. But stability is a basic goal, and it is pursued by everyone without exception, from the call-center operator to the general director. At the same time, stability should not be understood in the narrow sense of getting a paycheck twice a month. Stability is the stability of the company, clear tasks and instructions of the management, predictability of the situation around it. Employees want to understand the challenges they face, how and by whom they will be assessed, and need a clear understanding of what their income depends on. The subordinate expects that the rules of the complex game in which they are involved in the workplace will be clear and unchangeable, and that they will be observed by the rest of the participants in the game, including leadership.

We will continue to talk about stability in other chapters. For now, we know that the need for stability is the need for security, that stability is the fundamental goal of any employee, even if he or she does not realize it. The so-called “resistance to change” does not arise because the employees are rebels and frontline workers in nature, but because any changes encroach on this basic value and undermine stability. Gazprom is so popular with applicants not because it pays huge salaries to clerks or offers paradisiacal working conditions, but because it is a state gas monopoly, i.e., a stable organization living by more or less predictable rules. I haven’t worked at Gazprom, but I have no doubt that, as in any large office, order is maintained with the help of a bureaucratic machine, which is certainly clumsy and ineffective. Somebody can be mad about such a routine, but the employees of Gazprom, apparently, are quite satisfied with it. After all, game rules that are clear, even if cumbersome, are considered a sign of stability.

Managers who rely on motivation as the primary, or even the only tool to influence their subordinates, have not learned their management lesson well. Any system of remuneration that does not guarantee a fixed amount of money twice a month, encroaches on the basic need of employees, and therefore it must be used very carefully, to the extent and only where it is justified and meaningful. The more an employee’s pay is tied to results, the more uncomfortable the situation is for them. As it is in our nature to be drawn to stability, performance bonuses are less attractive to employees. That doesn’t mean that everyone in the company has to work for the same salary. But to use motivation as the only instrument of influence is to plunge employees into discomfort, without any benefit to the business.

The homo sapiens irrational

Richard Thaler won the Nobel Prize in 2017 for proving that homo sapiens is not a rational being. A person does not walk around with a calculator in his hands, and does not rationally calculate most of their solutions including, incidentally, financial ones. I recommend that you read his book “The New Behavioral Economy”. The fact that a person is much less rational, including in terms of monetary decisions, was discussed in literature earlier, but Thaler generalized all the ideas in a scientific work, backed by numerous experiments. For example, one group of students was asked to choose whether to go across the city for a discount of $10 when buying a T-shirt worth $20. Most of them definitely agreed to spend an hour or two. Another group was offered to decide whether to go across the city to buy a laptop for $990, if you can buy it near the house for 1000. And although the discount was the same as $10, most people definitely refused.

A man is willing to do a lot less for the sake of money than he usually thinks. Think of all the cases in your practice where financial motivation (such as performance bonuses) did not work, where employees did not achieve their goals, even if it promised them a decent financial reward. Even worse, financial incentives don’t work in cases where a person already receives a more or less satisfactory income, and they are offered to earn extra money by receiving a bonus for going the extra mile. Thaler’s book is not about material motivation, but about complexity, irrationality, tortuous ways of making money and other decisions by reasonable (at first sight) inhabitants of the planet Earth. And irrationality arises everywhere, even when it comes to seemingly rational issues, such as buying a home. But we continue to believe that there is a linear relationship between the level of income and the vigor of employees.

More about human nature: no more than 15% of people are ready to do more to get more. Those who are often become entrepreneurs or make quick and successful careers. The remaining 85% are constantly looking for a way to get the same amount, while doing less. It’s not from Thaler’s book anymore, it’s from my own unscientific observations. Remember that number, we’ll need it later.

The main rule of motivation

The main rule of motivation is: you always get what you pay for. If you pay for the margin profit, you get the margin profit. If you pay for the growth of market share, you get only the growth of market share. We are often naive to expect our employees to develop a range of products, increase the customer base, improve product quality, and improve customer relations. Why on earth would they do that? Do we pay them for this? No, we only pay them for volume. And they think only of it, respectively.


“You don’t know anything about sales,” Victor shouted, blushing with anger. “Don’t yell at me, young man,” Elvira, the CFO, said coldly. “Understanding sales is your job, young man, because you’re like a commercial director.” “Yes, I am!” shouted the angry Victor, “And I need a budget for staff training, which I’ve been coordinating! Without it, I’m not gonna make the sales plan! My employees need training!” Elvira looked at him calmly over her glasses. “Did you, Victor, hit the sales targets for September? No? So, what’s your training budget then? If you follow the plan, I’ll give it to you”. Victor nervously dismantled the branded pen in anger and stared at the spring that flew out of it senselessly. “But I won’t make it without spending money on training! I have a bonus which depends on it,” he said. Elvira took off her glasses, “I have a bonus which depends on my saving money for the company.”

KPIs in companies are usually based on the merchant being responsible for the sales figures, the financier for the capital indicators, and HR for, for example, being responsible for labor productivity. At first glance, this seems logical, but in reality, it only works if these KPIs are strategically based. KPIs should not be simple indicators of employee or department performance, as the very notion of “efficiency” is meaningless in isolation from the overall business strategy. For example, logistics efficiency may be measured as a unit cost per shipment (or per cubic meter or kilogram of transported cargo), or may be measured as meeting delivery deadlines. The answer to the question, “Which of these indicators is more important?” depends on whether the company follows a strategic course with a focus on low costs or service level. In some industries, a high rate of staff turnover is a disaster, as it takes a long time for a new employee to be trained. But in retail, high turnover is normal, and it’s more important to standardize processes and quickly train newcomers. KPIs for HR services will also vary from industry to industry.

In reality, KPIs do not serve to evaluate the performance of employees, let alone to pay (or not pay) them bonuses. First of all, KPIs are needed to assess the speed and correctness of the company’s movement along the chosen strategic course. This is a company management tool, and the second way to motivate employees. Unfortunately, in many countries the meaning of KPI has been significantly distorted — it is often considered instead as a simple management tool. Managers believe that if they build the KPI system correctly, everything will work by itself. I once believed that, too, until reality sobered me up and dispelled those dangerous illusions.

<p>Chapter 11. Who Are All These People?</p>

One day, one of my clients, who later became a friend of mine, complained to me about his subordinates. He put a lot of effort into communicating his vision and values, setting them on fire with his enthusiasm and involving them in the workflow. But, despite all his efforts, he told me bitterly, the employees worked badly, were frivolous with the most important tasks and did not show a glimpse of desire to work harder, neither for bonuses nor for promotion.

I listened to him carefully and said:

— Okay, but these employees didn’t come to you from Mars. You’re the one who hired them, and you keep them on.

He looked at me empathetically in silence for a minute, then nodded slowly. Apparently, this obvious thought hadn’t occurred to him before.

Who among us didn’t curse our destiny when we found out that our employees failed an important project again, lost an important client, or failed to fulfill the sales plan? Who hasn’t been desperate to visit their own branches, warehouses or shops, especially if our visit is unannounced? Who wasn’t disappointed each time, expecting the staff to be smart and full of initiative, but instead were apathetic and lazy?

If you’re familiar with these feelings, I have two news items for you, one bad news, the other good news. The bad news is that all of these people were hired by you or by the people that you had hired before you. And their behavior is a continuation of the management system you created. Or the absence of one. Employees who are rough with customers, careless about the equipment, or late for duty did not come to you from outer space, intentionally destroying your business. You hired them yourself, even if not personally. And if you’ve been furious with another stupid mistake by your subordinates, take your time throwing lightning.

Any company is an extension of the identity of its leader (or leaders). If you are the leader and you don’t like any particular person in your office, you should realize that this person is also a continuation of your own personality, even if you personally don’t like them at all. And their presence in your office is a direct consequence of your actions, or inactions.

But you don’t have to hurry to kick such subordinates out. This is the simplest, but not necessarily the most effective solution. First of all, we need to figure out why you hired these people. Everything in the world has a reason, and if you have ineffective employees coming to you over and over again or become ineffective when working with you, it’s not an accident either. Therefore, before you jump to a conclusion, think about what you need to change in yourself, so that the dismissed employees will be replaced by qualitatively different subordinates.

Second, remember the 85% who want to do less with the same salary. The likelihood that you’ll make a team out of the remaining 15% is close to zero. But there is also good news, which we have already talked about: people are happy to work by the rules. This means that by creating clear and unchangeable (or at least not changing too often) rules, regulations, and standards of work, you can easily compensate for the lack of internal competencies of employees with a high level of work organization.

But the company will still remain a continuation of the identity of its creator or the leader who performs his or her functions. And sometimes to change the company, he or she will have to change. The principles that the business owner conveys to their employees by the company’s leader have the strongest influence on how the company operates. As an example, I’ll give you the story of two owners. I won’t name companies or personalities, but believe me, the whole description is based on a true story.

One of them, let’s call him John, created his own company from scratch, and was the sole employee during the initial period. The business idea was a success, and the company grew rapidly. At first, John hired simple performers because he didn’t have the money for top managers at the time. Accordingly, John had to make his own decisions. As expected at this stage of business formation, he worked a lot, having developed a habit of answering the questions sent by email at night. Coming to work in the morning, the sleeping staff already knew what was waiting for them in their inbox.

As time went on, the business grew and it added so many new hires that John stopped remembering their names. Along with business, his wife’s fatigue and frustration increased. She wanted to see her husband thinking about something other than another business problem all the time. As a result, highly paid top managers appeared in the office. They spent most of their working hours trying to find out what their responsibilities were and what powers they had. But John wasn’t in a hurry to share that precious information with them. More precisely, he did not know it himself, because he did not consider himself obliged to do such things, believing that it must somehow work itself out. And it wasn’t just a case of managerial unprofessionalism — I suspect that in his heart he didn’t want to share power. Although he always complained loudly about the lack of independence of his subordinates. As a result, all the working questions still flowed to him, and the vigil at the computer did not end. However, now John periodically attacked his subordinates with reproaches that they, even though highly paid, addressed him on every small issue. They continued to do so, knowing that if they did otherwise, he would fall upon them with reproaches for making important decisions without his participation. As a result, it seemed to me that the subordinates were more focused on successfully maneuvering between his mood swings of the chief than they were on working efficiently and independently.

Such a fight club where employees were looking for power and favor of the boss had provoked the exodus of really worthy top managers from the company. Their place was occupied by middle-aged people, who were already consciously trying to pass all the decisions to the bosses, which put John on edge. He is in a vicious circle that only he himself can break. But I have doubts that he’s capable of it.

Another businessman, let’s call him Victor, started building his business empire with the purchase of a big loss-generating factory, with old-fashioned Soviet equipment and old-fashioned Soviet employees. He literally lived in the factory, gradually turning it into a profitable and modern enterprise. That experience taught him a lot, and in the future he was building factories, buying fully automated equipment and introducing lean manufacturing methods, which allowed him to be less dependent on ordinary staff.

It was time for him to invest in top managers, which he began to understand when he bought a second factory, and further strengthened this opinion when the number of factories exceeded five. His enterprise was rapidly becoming a large, branched structure, which could not be managed by him alone. The plants were located in different regions, and even if he had abandoned his family completely, he would not have been able to devote enough time to each of them. At the same time, the labor market in those years was no better than today.

Very quickly the company developed a training system. It was obvious that factory directors should be efficient not only in production, but also in finance, human resources management and project management. Training has become an integral part of the work of any employee. Last year, the company celebrated its 25th anniversary, and now its numerous factories, scattered throughout the country and several foreign countries, are united through several divisions. Each division manager runs a large production and distribution network, and there are not many companies in Eastern Europe that are larger than they are. But even they are constantly learning, because it is impossible to learn everything.

At the same time, Victor understood from the very beginning the simple truth that it is impossible to manage without trust. It is impossible to create a huge company alone (and soon after the purchase of the very first factory he realized that he wanted to create a huge company). So, he needs like-minded people, those he can trust. It cannot be said that he does not control them. Special internal audits constantly check the activities of departments. However, each manager is given sufficient authority to achieve the goals set out in the firm’s strategy. In this situation, under the influence of the owner, a spirit of high achievement was created in the team. And that is why the company grew even in all crisis periods in 1998, 2008 and 2014. At the same time, the company almost does not take managers from the open market, but rather grows them from the inside, and all top managers of the company have been working in it for more than 15 years.

There’s a big difference between John’s and Victor’s businesses. But it is determined first of all by the difference between them.

<p>Chapter 12. There Is No Way to Do Business without Strategy</p>

This chapter is included in the book not because the main activity of our company is the development of strategies. It is included because we have seen in practice that it is impossible to build a personnel management system without a full-fledged strategy.

Talking about what a general strategy is will take more than one book. But what is a strategy in the light of human resources management? Why, without it, does human resources management become a much more difficult task than with it? Strictly speaking, business management in general without strategy is a very difficult task, but personnel management is a particularly difficult task.

After all, why does the company need staff? The staff is not just hands doing the job, especially since most hands will eventually be replaced by smart mechanisms and algorithms. The staff is, first of all, embodiment of the company’s competence and experience, which not only allows the founders of the company the freedom from having to do everything themselves as their time resources are limited, but also to significantly expand their own expertise for the cost of hiring employees. If you don’t know how to do something yourself, you buy the ability on the labor market.

But what competencies will the company need to develop? How deep are these competencies supposed to be? Do you need an IT director with experience in using artificial intelligence and neural networks, or do you need a system administrator who will ensure the smooth operation of the server? Do you need a CFO with IPO experience, or do you just need a competent person to give you clear reports? Do you need an employee with experience of living and working abroad if you plan to export, or do your existing employees have enough knowledge?

Competencies have one very important problem — they are acquired and accumulated very slowly, much slower than it seems, if they’re acquired at all. We have seen revolutionary strategies related to the development of new markets, new sales channels and new product lines fall apart because of the lack of necessary knowledge. During my term as CEO, one of my competitors couldn’t stop thinking about the Alibaba glory. So, he decided to turn his business into an electronic B2B site. Of course, the low level of e-commerce in B2B played a role in its bankruptcy, but the main reason for the collapse was the complete lack of competence of his team. Of course, he hired several people with relevant experience, but in order to realize his dreams it was necessary for all departments and divisions of the company to join the project. But it was difficult and incomprehensible to them, and as a result, the team of “aliens” from the IT-industry could not create anything that worked properly.

Another entrepreneur, whom I personally knew, also started with distribution, but he didn’t want to integrate “backwards” into production, but rather “forward” into retail. For the construction of the retail network, working capital was withdrawn from the main wholesale business. But the retail project, like a hungry monster, only consumed precious finances, and did not rush to pay off. The owner threw money into it like a black hole, million after million, exhausting the core business — the warehouses were empty and the accounts payable were growing dangerously. Later analysis showed that all the mistakes that were possible to make in retail construction were made. The mistakes included a wrong choice of sales outlets, unsuccessful product assortment, wrong positioning and poorly trained personnel. And the reason for all this was that at the start of the project no one in the company had competencies in retail trade, despite the fact that they tried to enter a very competitive market.

“Strategy without tactics is the slowest route to victory. Tactics without strategy is just the noise before defeat”. Sun Tzu

Strategy is a comprehensive development plan for a goal. The strategy is based on marketing, answering the question of how the company will develop in the market — what advantages and values for the consumer it will create, who will be the target consumers and what exactly will be the uniqueness of the offer. But it is not enough to declare a strategy. In order to implement it, it is necessary to carefully plan financial and human resources, as well as all-in-one manufacturing. This includes answering the question of what competencies the company will be required to implement the strategy and where to get them. Do your employees have enough of them? If not, how do you make up for it? Can your employees be trained, or will you have to outsource?

In addition, the strategy sets priorities. If, for example, you are betting on a low price for your product, perhaps the most effective HR strategy will be the maximum abandonment of personnel, i.e., maximum automation and mechanization. If your strategy is to grow rapidly, you need to standardize your processes. Rapid business growth also means rapid growth in the number of employees, which is often accompanied by a decline in the quality of processes. The more processes are standardized, the less you risk. For example, if in a large retail network, a cashier offers the customer a “product deal of the day”, it is not because the cashier gets a “bonus” for the sale of that item. The cashier is obliged to do this, and they also know that any buyer can be a “mystery shopper”, so it is better not to risk it and stick to the rules instead.

If you see your strategic future behind major projects, you may need very qualified managers. In this case, you need to think in advance about how to look for them in the labor market, how to teach them, how to motivate and retain them. And if your employees work with end users, and the major part of their actions are standardized, it is better to invest not in managers, but in scripts, standards, CRM, chatbots and artificial intelligence.

And yes, you will have the appropriate KPI system. More precisely, even the Balanced Scorecard. The difference between simple KPIs and Scorecards is that all indicators, for example, related to personnel, will be linked to commercial or production indicators. Strategy is a way — and, by the way, it is the only way — to connect marketing and commercial tasks with all the rest. The HR Department can’t just recruit “good people” or “great specialists” for you. They can and should look for the kind of people you need to achieve your strategic goals, or to nominate them from the existing staff, if you have a talent pool system, of course. We’ll talk about the Balanced Scorecard separately at the end of this book.

<p>Chapter 13. Formal and Informal Techniques of Influence</p>

Who among us wouldn’t like to see all heads turning in our direction, voices silencing, the subordinates obeying the slightest movement of our eyebrows when entering the room? Of course, it is very nice to see them holding their breath and catching our every word, and hurrying to follow our orders before the ink dries on them. We all want to be influential, because modern management essentially consists of one thing. The system of slavery is a thing of the past, and our employees not only have the right to leave us at any time if they do not like us, but also actively exercise that right. We are not in the army, we cannot shoot subordinates under the laws of war, and their dismissal as a sign of disagreement is often more damaging to us than to them. They’ll find a new job, but it is still unknown how soon we’re going to repair the damage to our working process. Not to mention the cost of repairing that damage.

Any leader has two levers of influence, i.e., two “pedals” upon which they can press to control subordinates: a formal lever and an informal one. The formal lever is embodied in the organizational chart, door signs, corporate parking spaces and job titles. Informal ones are in the form of the ability to exert psychological influence on subordinates. And if you are an experienced manager, then you know that the first one has much less weight than the second one.

It’s hard to influence people. As we said earlier, they are fellow travelers, most of whom know in advance that they will get off sooner or later. They don’t owe loyalty to us, they have their own lives, and their lives are more important to them than their work. This is a fact, regardless of how surprising it may be to some of their supervisors who are discouraged when employees prefer to see their children instead of spending the night in the office. At any moment, subordinates can raise their eyebrows and ask us, “What are you actually doing with my life?” And it’s not going to be easy for us to answer that question. The justification is that we’re paying their salaries? But there are things that are more valuable than any amount of money, and they can get a paycheck elsewhere.

But there’s good news. As we have said before, most people feel comfortable at the lower and middle levels of the social hierarchy, and many even enjoy the routine work, especially if it follows clear rules. They see stability in this predictable routine which is, let me remind you, the main value of any employee, and they are quite satisfied with that. They happily integrate themselves into the hierarchy, blend into the environment and without internal resistance, giving their supervisors the right to give them orders and instructions and to influence their lives in general. This is in exchange for stability, predictability, protection and freedom from the need to make independent decisions.

Many years ago, I read a book, the name and author of which, alas, I do not remember, and I never found it on the Internet. Apparently, it wasn’t reprinted anymore. It was a curious sociological study of human communities, cut off from the “big” society for various reasons. These were lost tribes living far from civilization for centuries, and artificially isolated communities, such as prison inmates. The author of the book argued that, despite minor differences in the variants of social arrangements, in general a traditional, familiar pyramid structure was formed in all these micro-societies, with the leader at the top surrounded by the “pillar of the regime”, i.e., the faithful vassals, and the majority living on the lower floors of the hierarchy, generally agreeing with this state of affairs. This structure of society stems from the structure of human psychology, which has been repeatedly confirmed by other studies. People tend to aspire to a place in the social hierarchy, which they have chosen for themselves for one reason or another. Some will not rest until they climb up the social ladder. Some, and there are always more of these kinds of people, are quite satisfied with the quieter lower rungs. Elliott Jaques, one of the researchers of organizational behavior and the author of the “Requisite Organization: A Total System for Effective Managerial Organization and Managerial Leadership for the 21stCentury”, argues that the traditional, pyramid organizational structure suits everyone who is in it. Jaques draws his conclusions from surveys of many employees of companies in different countries. Although many theorists and other schools consider Jaques a quack, I personally agree with him.

On the Internet, there are a lot of references to authoritative research on this topic, proving that social hierarchy is not something imposed on our society, but a continuation of our human nature. One article, in particular, states: “Social hierarchy is a characteristic feature of human and other types of communities. Hierarchical structures… can be formed spontaneously in groups, determining the position of individuals by their physical and other qualities. They are associated with evolutionary mechanisms aimed at group efficiency, resource allocation and the survival of the most prominent representatives. Animals pay attention from an early age to the signs of status — even without any training. It is assumed that such abilities are also a consequence of evolution. If hierarchy is important (e.g., in accessing resources).”

It is important to learn to recognize it as early as possible. The article is about an experiment in which children up to one year old participated. It turns out that even at this age, a youngster has initial ideas about the hierarchy. To quote again: “In another experiment, children of 17 months old and over expected that a doll that had demonstrated superiority over another would receive more toys. We were surprised if that didn’t happen, perhaps by linking this behavior to the reward.” And here’s another quote: “In an experiment conducted by researchers from the University of California, a group of children aged 2—3 years were shown a sketch: two figures met on the road, one bowed and yielded, allowing you to pass, the second continued the way. Then they were asked to choose one of the figures, and most of the participants chose the ‘dominant’ one. Children from birth appreciate the power, success, and want to communicate and be friends with those who are stronger. It is interesting that if in experiments with children the ‘successful’ character behaved aggressively towards the less successful who’s been pushed, beaten, etc., children did not like him or her and they chose the weaker one. And if force was used for good deeds, for example, to remove an obstacle from the road, it was considered a positive quality by children.”

There are people in society who want to dominate, and there are many who agree to be second, third, tenth, eightieth and so on. At the same time, the task of a leader is not to suppress the subordinates but to bend them to their will. That is too energy-consuming and inefficient. The task is to find those who are happy to take the proposed position in the hierarchy, and make their stay in it satisfying at least. It’s faster and easier.

I started as a manager at the age of 22 when I was appointed to the position of Head of Mounting and Installation Department. The youngest of my employees was 15 years older than me. They were hardened factory workers, who were forced to switch to a simpler, but better paid job during difficult perestroika times in Russia. And I was really afraid of them. How could I, a fifth-year student, manage these men, some of whom had children a little younger than me? Every time we met, I read a snarky irony in their eyes. They knew I made more money than they did, even though I was sitting in the office when they were in the freezing cold mounting metal structures.

It was then that my personal system of influence began to develop, intuitively, which I then further developed. I don’t know how it happened, but I quickly realized that in order to increase my influence, which I won gradually and not without difficulty, it was important not to make major mistakes, i.e., not to pay too much attention to myself, not to try to bribe subordinates with “fair treatment”, not to build relationships based on “love” and not to remind subordinates that you are their boss.

Not about myself

We all sometimes feel that it is difficult for us to influence our subordinates as they, like a piece of soap, slip out of our control. We feel our orders hanging in the air like a morning mist. Of course, the more experienced we are, the less often it happens, but sometimes it still happens. After all, in addition to our subordinates, we also have other objects of influence, including children, officials from whom we need to get something, or partners. And even if you are an obvious team leader, you may find yourself in a situation where not everyone around you is influenced by your charisma.

When that happens, we usually wonder what we need to change about ourselves. We start to work on ourselves. We use a commanding voice, try to look more confident, try to persuade and influence our employees using rational arguments. You think that if this works, it won’t take too much effort and won’t take too long. However, when you’re trying to pretend to be someone you’re not, you’ll be exposed instantly and the effect will be the opposite. We’ve already talked about it. As a rule, those conscious and conscientious obey, and our exhortations will not make a big impression on the others. And I would like to remind you that according to some estimates, the verbal channel of communication (words and rational arguments), transfers no more than 30% of information. If you want to influence someone, you have to think not about yourself, but about the object of influence. That is, pay less attention to your thoughts and more attention to the thoughts of subordinates or other people you need to influence. Influence is not about telling people what we want to tell them. Influence means telling them what they want to hear.

Remember the scene from the iconic “Evita” movie when Eva Peron advises her husband, Argentinean dictator Peron, to take off his jacket when he is going to perform in front of the crowd from the balcony? “These people don’t wear jackets,” said the wise woman. Why are some people successful in influencing us? Why do we want to listen to them? Because their words inspire us with faith and hope, peace and confidence. Dictators all over the planet build their empires primarily on the promise of protection from enemies, fictional and real, because they know that security is what their audience wants to hear. Why are we attracted to people who exude strength and confidence? Because next to them we subconsciously feel safe and the need for security is the most important thing in human life.

What does a worker expect from a supervisor? Who does the worker willingly listen to, whose tasks do they wish to perform? Someone who gives them a sense of security and stability. But you don’t have to flex your muscles and wear a revolver in your belt. Of course, it’s better if you exude the energy of inner strength, then you’re automatically recognized as a leader. It is possible to develop this energy, but it will take a lot of time and experience. But you might not have that time available, and if you are a manager then you have a job to do here and now. Among the best leaders I have ever met, not everyone had the charisma of James Bond or Churchill’s eloquence. Most of them spoke with smooth, calm voices and did not make historical speeches from the balcony. Their strength was that they understood their subordinates well, and that made them stronger. And more influential.

I want to emphasize that understanding does not mean accepting the subordinate’s side, being friends with them or loving them. And especially does not mean indulging their every desire. A good leader is not the one who drinks beer with his subordinates after work. Understanding means listening and getting one’s message across in a way that the other person understands.

Truth is not in the mouth of the speaker, truth in the ears of the hearer.

Let’s suppose you need to convince your employees to work on Saturday. What arguments will you choose?

Possibly: “It’s very important that we work on Saturday to meet our quarterly profit plan.” It may inspire a top manager, especially one who receives a profit bonus, but it is unlikely to motivate an ordinary employee. He wasn’t the one who created the situation, at least they don’t think so, and they’re not going to benefit from the profit sharing plan. What would make them work on Saturday with pleasure?

What about, “We need to work on Saturday, and you’ll get extra money for that.” That’s a bad argument, too. Of course, you have to pay for Saturday’s work. But this is seen by employees as a norm, not as a gift from the employer. If you want your employees not only to come out on Saturday, but also to work hard, you need to come up with a stronger argument. In addition (and this is well known to all parents), if you promise a reward for every request, soon they will refuse to get up from their chairs at all for free.

Unfortunately, there is no one miraculously effective argument you can make. The choice of a specific argument depends on whom you are talking to, the art of the manager, and the ability to find the key motivator for each employee. An employee careerist can be lured on Saturday by a hint of a breakthrough that will open up unique opportunities for them personally, and not for you and not for an abstract “company”. The conscientious and responsible may be affected by the request to help or not to let you down personally, or to not let the team down as the majority of people who come to work every day realize a sense of belonging, as Maslow would say. Those who value praise (which is important to everyone) should be praised for agreeing to work on Saturday, and next time they are more likely to volunteer themselves.

You’re going to say it’s manipulation? Well, if that’s what you’re shocked about, you’re probably not ready for a supervisor’s job yet. We can call it “influencing” or “manipulating”, but in one way or another, managing is influencing other people in our own interest. And this process implies, if not a direct lie (which should be avoided if possible), then at least some shift of emphasis. Being a manager doesn’t necessarily mean telling the “truth.” Supervisors often have to keep a secret about the truth, give it in a muted way or in a slightly different light from reality. That’s the duty of any leader, and if you want to become one, you’ll have to accept it. Would you call a parent who praises his child’s crooked scribbles a liar? No, we call them a wise parent, though from a purely technical point of view it’s not telling the truth. As we have already mentioned in this book, the difference between raising children and managing a factory is not that big.

Imagine your company in distress. You’re running out of money, clients are leaving. Your business is still salvageable, but it requires the overwhelming efforts of your entire team. You’re going to be performing in front of the team. What are you going to tell them? I’m sure there are some of you who think you need to be honest about it, to say that the company has difficulties, but that they can be overcome by rallying around you, its leader.

Such a strategy can work, but only if you have a small team, each member of which is sincerely devoted to you personally and to the company as a whole. In this case, your sincerity and openness will be good for the cause. But if you have a large company where most of its employees have never met you in person, this kind of behavior will only lead to one thing — when you come to the office tomorrow, you’ll see tables empty and PCs turned off. Perhaps there is a company somewhere in Eastern Europe whose ordinary employees are willing to sacrifice themselves to help the company, but I have personally seen very few such companies. I guess it’s not that easy in the Western world either. For example, take a letter to employees from Stephen Elop, former Nokia CEO in 2011, in which he compared the company to a “burning platform”. This is a very sincere and open letter, but if Stephen Elop was hoping to inspire his employees to fight by honestly admitting that the company was dying, he did the opposite, sowing panic in the company staff. And the letter itself has already been included in management textbooks as an epic management failure. Needless to say, the story did not end well for Nokia.

A leader must exude strength and confidence, and inspire hope of salvation. A boss running around on the deck of a sinking ship shouting, “We’re all going to die!” isn’t exactly going to bring the team together. And even if we do most likely all die, in the figurative sense, it is worth thinking twice before rushing to report it to subordinates. And that’s why sometimes a leader has to use a poker face when the cards don’t look good and exude confidence, even if he or she feels panic inside. That’s a lie, isn’t it? But it depends on how you look at it.

For each employee, a good leader finds just the right word that has a maximum psychological impact. But how can you learn that skill? From my unscientific point of view, two things are needed: natural talent and observation. The natural talent of empathy, or “emotional intelligence”, which is not yet precisely defined, is necessary for any leader. If you know how to get along well with people, I mean really get along, i.e., come to mutually-agreed upon solutions, then you have it. It’s also easier than it would seem to develop observation. Most of us are so obsessed with ourselves that it doesn’t occur to us to think about our subordinates. It seems to us that if we are wearing an officer’s uniform, then everyone around us should automatically stand at attention. But if your subordinates do not want to do as you expect, or agree with you in words but in practice do things differently, do not be in a hurry to get angry. Of course, you can fire them all and replace them with others, you can exhort them or you can raise your voice. However, all these methods will be equally ineffective until you understand why they do this. And if you do, you might think of a way out. Maybe you won’t. But if you don’t understand, you won’t know exactly.

It doesn’t matter what you say. From the point of view of your subordinates, the energy and sense of command you exude as a leader is more important than the words you may speak.

When we start to think that each of our subordinates has a “theater” in their heads, we start to make amazing discoveries and to find that they respond very well to our overtures if we try to at least understand their thoughts and feelings. Employees are loyal to those supervisors who project a sense of strength, that is, they symbolically promise protection. Understanding on the part of the manager is also a sign of stability, security, predictability, i.e., the “currency” which is very valuable for the employee. As a man who has worked for many years under the guidance of egocentrics who believe that the planet Earth revolves around them, I know what I’m talking about. And if you also recognize the subordinate’s achievements and successes, you can win their hearts for a long time. Is that manipulation? I don’t think so. If your employee is happy to work in your company under your supervision, and it benefits both of you, what is wrong with it?

Other routes to nowhere

I had several subordinates in my life who secured the loyalty of their subordinates by being too kind, too helpful, and too lenient in their performance expectations from them. They established a kinship with them that bordered on adoration. One day, the chief financial officer decided to leave my company to start her own business. She did it in a very civilized and dignified way. She warned me in advance, which allowed us time to find a replacement for her. She handed over the case files, and we gave her a touching farewell ceremony. However, at the ceremony, her staff members, or rather her “girls” as she called them, shed a whole ocean of tears and all, as one, expressed their desire to quit. Of course, none of them left in the end as the price of such promises is a penny. But it soon became clear that the enthusiasm of the “girls” held on to the loyalty of a particular person, and, apparently, because of this loyalty, the departed boss turned a blind eye to some of the professional shortcomings of the employees. Anyway, the department had to be changed almost completely in the end. If you are a professional manager, your department will work with you, without you, and after you.

It is possible to try to win the hearts of employees by behaving fairly with them, but it is necessary to do it very carefully. Of course, a manager must be fair. But if you don’t feel like a leader among your employees, don’t try to persuade them to side with you, showing an exaggerated attention to their difficulties and forgiving them for their faults even to the detriment of the company. “Vassily, I see that you’ve failed to complete the project, but maybe you haven’t had enough time, or we haven’t taught you well enough, so go home with a light heart and don’t worry about anything.” Of course, if you really didn’t give Vassily enough time or he wasn’t competent enough, you don’t have to hurry to reprimand Vassily. But if such an attitude towards Vassily is only a subconscious attempt to win his loyalty, it will lead you in the opposite direction. Vassily will see your behavior as a weakness and an indulgence to all his future failures. In fact, he’s already been forgiven in advance, and he can keep failing on projects.

And the last thing is that if you aren’t able to effectively influence employees using other methods, you can always remind them that you are actually the boss. That might work, but only once. If you need to motivate employees by saying, “Obey me, I’m the boss!” then you’ve lost their respect for your authority. After that, your influence on them, if it once existed, will disappear completely.

<p>Chapter 14. Parents and Children</p>

Imagine you bought a train ticket. You arrived at the station on time, your tickets and documents are in order, you have taken your place, opened your book and are going to spend time reading with pleasure. But as soon as you get comfortable, your compartment is broken into by the train manager who is angry to find that you are relaxing, and says that you should be serving evening tea to the train passengers. What reaction would that kind of behavior from a boss cause in you? Probably outrage. Why should you do something that is not part of the passenger’s duty? Where does it say that serving the evening tea is your responsibility? On what grounds does the manager file a complaint with you? And who is he or she, anyway?

Now imagine you’ve heard similar claims from your supervisor. Of course, you’d be outraged, too. But will indignation be the only reaction to unfounded claims? I doubt it. I think there’s going to be some offence taken. I’ve heard words from leaders in my life that I thought were offensive. I’m sure my employees have heard them from me, too. At least once, I know this for a fact, my employee wept bitterly in their office after talking to me.

If you look at these grievances from a distance, through the eyes of an impartial outsider, the situation may seem absurd. The resentment of a loved one’s unjust reproaches can be explained. But the supervisor is, in fact, an outsider with whom we have a temporary and sometimes quite formal relationship. But even if we only meet with our manager in a formal setting, and our working relationship does not go beyond the scope of business correspondence and dialogue at meetings, his or her words can hurt us deeply at the personal level. You take them to heart. To heart, not to reason. And if you are a manager or an entrepreneur, remember that your words can hurt your employees deeply. More deeply than you can sometimes imagine.

I did not discover this with scientific research, but I was convinced of its truth many times in practice. In the relationship between managers and employees the first unconsciously take on the role of parents, the second ones of children. And the gender of the first does not matter, the role of the father in the “boss-employee” relationship may well be performed by a woman. The parent/child nature of relations between managers and employees should be considered when managing employees. Our leader is our “parent” even if he or she is younger than us. The nation’s leader in some countries, albeit unconsciously, plays a paternal role for the majority of the country’s population. Dr. Eric Berne in his famous book “People Who Play Games” called it “ego-states”. He claimed that people take turns taking on the roles of “child”, “adult” and “parent”. The “child” is capricious and complaining, the “parent” fights and orders, and only the “adult” behaves like a real adult — thinking, balancing advantages and disadvantages, making decisions. When we read American human resources books, we may think for a second that all offices are full of “adults”. But that’s not true. All over the world, offices of any organization are full of “parents” and “children”.

Social relations (and any collective of people constitutes a society) have not undergone any significant changes in many thousands of years, and despite our smart gadgets and flights into space, relations between people are still very archaic. There are many studies that show that men of higher stature, for example, are more likely to become leaders, and that any human group, even those gathered 10 minutes ago, is rapidly forming leaders and followers. You can write as much as you like about “inverted hierarchical pyramids”, where the leader is more likely to be a coach or a teacher than a commander, but the parent-child relationship framework is ingrained in us as human beings and will always be present.

What are we expecting from our parents? We expect protection, stability and security first and foremost. We ask our biological parents, if we have the opportunity as children, for protection. We expect our parents, at least in more traditional societies, to take care of our three meals a day, our material well-being, and key family issues. Our supervisor also serves (or at least should serve) as a source of confidence in our future. Employees want to have confidence that the supervisor will help them get their expected wealth, and protect them from enemy raids and the attacks of neighboring hostile tribes, that is, adjacent departments and departments. We expect them to give us praise and acknowledgement. I once saw the director of a huge department of a large company barely conceal his enormous pride when his boss, the company’s CEO, publicly praised his services as outstanding. Remember when we talked about executives who were willing to sit up to midnight on a computer instead of employees? It is important for them not only to work hard, but also to be noticed and appreciated by their superiors.

In return, we give parents some exclusive rights. Like the right to tell us what to do. The right to punish us, even if it’s offensive and unpleasant. You’ve probably seen your boss, especially the entrepreneur, talk to your subordinates in a slightly patronizing, strict, or edifying tone, and they listen and nod like obedient children. And it is not only court flatterers and plotters who do so; subconsciously, quite serious and experienced and educated people who are not inclined to any intrigue fall into the “children’s” role. Both sides subconsciously begin to play this role without noticing it.

We tend to be jealous of who our “parent” is paying attention to and offended if other “children” receive more attention than we do. We change our behavior in the presence of “parents”, and sometimes we do things that we would never do otherwise. For example, one of my employees, according to other top managers, easily found common ground to the benefit of the business when they talked face-to-face. But at the general staff meetings, in my presence, she changed her behavior dramatically, becoming aggressive and intolerant of any words that even remotely reminded her of criticism. As soon as someone hinted at the fact that she might be wrong about something, she immediately turned to attack and criticize, sometimes completely unjustly. Being criticized face-to-face with others and being criticized in the presence of the “parent” are two very different things. In my presence, she was in a state of evaluation, she knew I was watching her, and she was ready to make an ugly scandal so as not to lose points in my eyes.

By the way, you must have experienced something like this in your ordinary life. In private, especially during rest hours, we can easily sing a pop song or lie on the couch with pulp fiction, but in the presence of people of importance to us, we will not agree to anything less than Shostakovich or James Joyce. In the working environment, when our stability and our status in the eyes of the management are at stake, such things are amplified many times.

What conclusions can we draw from this as managers? First of all, employees, like children, are very happy with praise. Even the oldest white-haired employees who have seen all kinds of things, blossom before our eyes when their merits are recognized by leadership, especially publicly. Praise in general is a very effective and simple tool, but for some reason we will often skimp on it, as if we will pay a fortune for every good word. Probably, it comes from childhood, when we listened to the strictest educators and teachers, and unconsciously adopted their model of leadership.

Secondly, employees are incredibly sensitive to criticism and do not perceive it objectively at all. Whatever the misconduct of the employee, and no matter how deeply he or she personally realized the severity of what they did, your reproaches will upset them even more. Especially in front of others. If you really want to scold an employee, you’d better do it one-on-one, and if the employee is valuable to you, try not to destroy him or her with your criticism, no matter how fair it may be. A worker who has been scolded in the presence of colleagues will not recover soon, and at least for a few days will be wandering around a dull, sleepless creature incapable of creative work. Will your business benefit from a demotivated subordinate?

Third, remember that your “children” always struggle subconsciously, and sometimes quite consciously, for the most precious resource in your office, which is your attention and recognition, for “access to the parent”. Everybody wants “access”, and those who say they don’t need it are just trying to convince everyone around them of their contemptuous attitude towards what they really cannot achieve. And the employees do it not because they love intrigue, it is subconscious and quite normal, at least a natural instinct, inherent to all without exception. Therefore, if possible, distribute the rays of your attention and favor more or less evenly.

Fourth, employees subconsciously try to please you, and do it in different ways, just like kids. Someone’s bullying to get attention. Someone’s playing Atta girl. Someone usurps the role of an older brother or sister, and begins, without any right, to shout at others. Others demonstrate “the best kid’s syndrome”, some try to substitute “brothers and sisters” to look better against their background. Your task is to distinguish the imaginary from the real, to understand exactly what is underlying the actions of your subordinates. It’s not easy, but as one of my ex-bosses used to say, it’s hard to be a boss, but it pays more.

I have always tried to discuss important issues with my employees, if possible, one-on-one. Except, of course, those matters that can only be discussed collectively. In a personal conversation, employees behave a little more naturally, they have no one to fight for your attention at this moment. I tried not to work with those who fought too hard and aggressively for my attention, as an excessive desire to please the “father” indicates acute insecurity, while the top manager must be mature.

But the best way to shift an employee’s focus from wanting to monopolize the attention of their “parent” and over to constructive business tasks is by strategy. The strategy, among other things, makes it possible to set priorities and identify key indicators that make the company more sustainable and stronger in the long term. And if you have a strategy (a real one, with a balanced system of indicators, values, mission, priorities), you can demonstrate to your subordinates at every opportunity that you value above all not personal devotion and individual achievements, but strict adherence to goals and achievement of targets.

In a company where there is no strategy, the only reference point, the only North Pole where the compass points, is the supervisor. And the main task of the employees is to guess the supervisor’s mood at that moment, to catch and to anticipate the course of their thoughts. In such a toxic management environment, success is not achieved by the most professional, but by the most sensitive and flexible employees. However, in an organization where there is a strategy, the role of the “main boss” and his personal attitude towards subordinates is sharply reduced. We once helped a major international company in which the Director of the office for Russia and Ukraine reported to the Director for Eastern Europe in Prague, the Director for Eastern Europe reported to the Director for Europe, the Director for Europe reported to the Director of the Division in the USA, and only the Director of the Division reported to is the General Director, who is accountable to the Board of Directors. And there is no “main boss” (in the format of the former USSR countries) in this company, as 90% of shares are traded on the stock exchange. It’s all about hiring directors. And I was very surprised by the business and atmosphere in the office, a high level of motivation and focus on results. When I asked them how they do it, the director for Russia and Ukraine answered simply: “We have a strategy, we know exactly what we need to do”.

<p>Chapter 15. Employees Take More Risk</p>

“For example, I’m risking my capital,” complained a co-owner of a company with an office in downtown Moscow. There is a perception among entrepreneurs that wage earners do not take any risks, and this determines their behaviour which, from the point of view of entrepreneurs, is not active enough. Employees, they say, sit in the trenches, while they, the entrepreneurs, are forced to go on the attack every day. In fact, such an attitude is more a reflection of the entrepreneur’s failure to understand that everyone is different, and what motivates them as an entrepreneur may not be what motivates the employees in the trenches.

For a pensioner, the risk of losing $50 is a disaster, while for an entrepreneur that is nothing. The owner of a large company signed a budget of $20 million right in front of me to launch a “pilot version” of a new idea so as “not to risk and not to invest billions at once”. In his view, the risk was insignificant, but for some cities in his country it was the equivalent of a monthly operating budget. Most employees will never be able to manage such sums in their lives, not because they are “wrong”, but because they have different priorities. People are different. Someone is ready to give up everything to move to Silicon Valley and try to launch a startup there. And someone else is afraid to move from the village to a big city, even if they are offered a stable job there.

Entrepreneurs are often irritated by the attitude of their employees towards risks, which differs from their own. Sometimes, they are angry with the willingness of employees to spend millions without properly calculating the possible consequences, and sometimes, on the contrary, gets pissed off when the entrepreneur has decided to act and is ready to charge forward yet his staff is still adding up the numbers and calculating the options. Even more upsetting for entrepreneurs is the resignation of employees at a time when they are most needed. For example, when a company experiences financial difficulties and employees, instead of rallying around the boss, update their resumes on the internet. But instead of irritation, which is harmful to health, it is better to take for granted the fact that the measure of risk is a subjective value for each person. And the energy spent on irritation is better redirected to a more productive purpose.

Let’s put ourselves in the shoes of an employee, your subordinate. A week ago, he or she was at your interview, and today they crossed the threshold of your office for the first time in the status of an active employee. You probably believe that fate gave them this unique opportunity, and they should be grateful for it. Does the employee also think so? It’s possible, yes. But even if they do, they’re still going to be nervous. If they have life experience, they have already seen a lot of things, including companies with bright signs, where employees are treated as slaves, or do not pay the promised bonuses, in one way or another, violating the employment agreement. Of course, among the employees there are also eternal optimists, but most consider a job not only as a source of income, but also as a source of risk to lose it. At the same time, in their personal system of values, the risks they face are often higher, or at least not lower, than the subjective risks of the entrepreneur.

The entrepreneur risks large sums of money, reputation and their business. But the entrepreneur not only assumes responsibility, but also has control of how to dispose of these assets, at their own discretion, possessing all or almost all the powers to do so. Whereas an employee actually entrusts his most precious asset - his salary — into the hands of unfamiliar people. And no matter how much it may seem to entrepreneurs, a staff member’s income is not, at least in their own eyes, “guaranteed” to the extent that they can fully relax. Of course, they expect to receive the agreed upon amount twice a month. But no employee can be completely sure that on a given day the right amount will arrive. For example, they could be fired. The company in which they work may fail because of the mistakes or deliberate actions of the entrepreneur owners. They have very little control over these possibilities, which makes them nervous.

Of course, there are some companies whose employees are confident in the future and do not doubt the integrity of management. But at the first sign of danger, employees try to mitigate the risks, and who can blame them? I was once asked by the commercial director of a competitor company if they could have a job interview. To say the least, I was very surprised. The competitor was about twice as large, and developed very aggressively and confidently. When I asked him what brought him to my office, the commercial director sincerely replied that he saw two of his company’s owners arguing in the hallway. Since the entire market knew that these guys were not easy to handle, the director found the quarrel to be sufficient reason to seek a Plan B.

The majority of employees have no savings, and in the event of a sudden loss of a source of income they are in a very difficult position - no less difficult (again, from his personal, subjective point of view) than an entrepreneur who has lost his business. This may seem wrong to many entrepreneurs, as the extent of losses will obviously vary. But, as we have already said, the extent of the loss is purely subjective and relative. Being left penniless is equally stressful to those who have lost the amount of seven hundred euros as it is to those who have lost their fortune.

Employees are more afraid of being fired than they usually think, even if they realize deep inside that they won’t be out of work for long. One morning, by coincidence, I fired an employee who had already prepared his resignation and was about to hand it over to me in the evening. I was only hours ahead of him, but that was enough for him to get depressed and walk around the office in a dark shadow. Quitting on your own isn’t the same as getting fired.

If a dismissal occurs suddenly, it causes severe psychological damage to the subordinate. And this is not only a blow to the ego. It is also a loss of stability, fear of the unknown, a feeling of loss of control over one’s own destiny. In the depths of their heart an employee may not like their work very much, and even think about changing jobs, but they want to change jobs of their own volition. The employee may have a family, or a mortgage loan, and a sudden dismissal raises a number of very difficult questions. From their personal point of view, these issues will not be any easier than the problems of a business owner who has lost billions. In the financial crisis of 2008, my boss lost a very large amount of money invested by him in securities, which became dust after the bankruptcy of Lehman Brothers. At the same time, his company, which I was in charge of at the time, was also not firmly standing on its feet, and at that time it did not seem obvious that it would survive until the spring of 2009. When the chief told me about his losses, I felt sorry for him. We had (and still have) a good relationship. But I clearly remember that what I was most concerned about was my own financial outlook. Everyone lives in the middle of their own universe.

Don’t expect your employees to share the risks with you — it’s better to spend time making your business more sustainable and risk-independent, which is why it’s a good idea to create a list of risks, rank them, and work through them methodically during strategy development. Do not blame employees if they leave at the very moment when you are most counting on them — it is better to build a business so that the role of each individual person (including, incidentally, you personally) does not undermine the entire design. Don’t blame employees for the fact that, as one of my former bosses used to say (luckily it turned out to be a short acquaintance), “They are only responsible for their briefcase”. It’s your business, if you’re an entrepreneur, so you’re responsible for it. And if you want to share responsibility with them, share both stocks and dividends. If you’re the director, you’re responsible for the entire result, and that’s what you get paid for. In addition, your words about what a huge responsibility you have and what risks you bear will impress few people. They have their own lives, their own responsibilities, their own risks.

<p>Chapter 16. Fear Is the Best Way to Ruin Everything</p>

In terms of the power of impact on people, there is probably no more effective motivator than fear. Fear can make a person do things that would horrify them should they be in a quiet emotional state. Sometimes fear inspires you to do something positive, or at least not sit idle. It is still unknown whether many people on the planet would agree to get up before dawn and hurry to work, if not for fear of leaving children without bread or not to pay the mortgage on time. At the same time, fear is a very powerful medication, which is accompanied by severe side effects, so it is necessary to use it very carefully and in small doses.

According to Frederick Laloux, author of “Reinventing Organizations”, the world is evolving from organizations of various shades of red to turquoise. The red color was not chosen as a metaphor by chance — it is the color of fear, including fear of death. Fear was the key cementing substance of governance structures until very recently. Recall any dictator of the 20th century and his methods will certainly include fear. Laloux predicts organizations will no longer be based on fear in the future, but be “whole, self-governing and evolutionary”. Who knows what may really happen in the future, but until a different future arrives, fear appears in our relationship with our subordinates in one way or another, and this cannot be ignored.

I wouldn’t be in a hurry to categorize fear as a negative emotion. For example, what is, in essence, responsibility? That’s also a kind of fear. The employee sits working through the night and completes the project, because they are afraid to disappoint the top managers, afraid to be punished, afraid to look frivolous in the eyes of others. They’re scared, but we’d rather say they’re a dedicated worker. The form of fear associated with responsibility we tend to encourage in others and cultivate in ourselves, although it is still a fear. A workaholic businessman who jumps from bed before dawn to be the first to arrive at the office, and then to manage everything and everyone until the middle of the night, to control all the processes, can be called a hero who forgets his own future, or a neurasthenic, who is so afraid of possible failures that he or she cannot sleep well. Elon Musk, a technology entrepreneur, investor, engineer and millionaire, has moved completely to the office of Tesla Inc., and sometimes doesn’t come to it for days in a row and does not sleep without pills. What makes him do it if he is not afraid to disappoint those who believe in him, from employees to investors?

No self-governing organization can exist without employees with a high psychological threshold of responsibility. If the employees at 5:00 p.m. are ready to slip away from the office, joyfully chirping, leaving the unfinished business and projects, such a company will not last for a long period of time. On the contrary, only a highly-organized person can work without job descriptions and without the whip of a driver. I mean, in other words, such a person is afraid to let the others down. As long as we are alive, so are our fears, some of which help us to survive and some of which prevent us from developing.

“Death is very likely the single best invention of Life.” Steve Jobs

The dual nature of fear, especially the fear of death, was described, in particular, by Irwin D. Yalom in his book “Existential Psychology” and other works. On the one hand, he said, the consciousness of our own mortality can’t help but grieve and frighten us. On the other hand, it gives us a clear understanding that our lives will not be eternal, and if we want to make our life interesting and meaningful, we need to hurry up. Mr. Yalom studied the emotions of people on the verge of death, in particular cancer patients. He said that this terrible discovery often awakened more life in them than it did in them when they thought they were healthy. Let’s remember Steve Jobs’ famous speech at Stanford: “Remembering that I’ll be dead soon is the most important tool I’ve ever encountered to help me make the big choices in life. Because almost everything — all external expectations, all pride, all fear of embarrassment or failure — these things just fall away in the face of death, leaving only what is truly important. Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart…. Death is very likely the single best invention of Life. It is Life’s change agent. It clears out the old to make way for the new. Right now, the new is you, but someday not too long from now, you will gradually become the old and be cleared away. Sorry to be so dramatic, but it is quite true”.

At the same time, fear is the oldest and perhaps the strongest of emotions. In a state of fear, stress and panic, we can’t think clearly, we can’t feel love, we can’t make balanced decisions as fear overshadows reason. If it hadn’t existed, humanity wouldn’t have survived, because it was fear that stopped our ancestors on the doorstep of the dark cave and suggested that we shouldn’t pull the tail of the saber-toothed tiger, even if we really wanted to. Fear, or the instinct of self-preservation, has allowed us to live to the happy moments as when I write these lines and you read them. But, on the other hand, it is fear that prevents people from moving from the hopeless Briar Patch to the city, changing jobs, starting their own business, and finally burying long-dead relationships.

As mentioned at the beginning of the chapter, fear is a potent substance. It is like fuel. It can rush your car up the slope of the mountain, or it can explode, burying both you and others under you. Fears are divided into “toxic” and “effective”. The art of human leadership is to use the latter to achieve one’s own goals, and to exclude the first ones, if possible, from communication with subordinates.

What do I mean?

Of course, employees should be afraid of failing their jobs. At the first signs of employee laziness, I am concerned, and then I make tough but fair decisions. By the way, the opposite of laziness, which is hysterical panic about deadlines, scares me too. The normal level of “responsibility fear” is a helpful fear in homeopathic doses. I’m not shy about letting you know how I feel about the deadline, and yes, I guess my employees are afraid to let me and my clients down. But I’m also afraid to let my clients down, I don’t see anything terrible in it, and I treat it as an “effective” fear.

But to deal with the “toxic” fears, it is necessary to remember that the main value of any employee is stability, and to find out how they understand this concept. One of the best books I’ve ever read about human resources management is called “First, Break All the Rules. What the World’s Greatest Managers Do Differently”, which has survived more than one reprinting in different languages. The book is based on in-depth interviews by the Gallup Organization of over 80,000 managers in over 400 companies in the U.S., the largest study of its kind which was ever undertaken, and helped to shed light on the factors that employees value the most. As you have probably already guessed, wages are not among an employee’s top priorities. Of course, no one is ready to work for free, and the salary must correspond to the contribution that the employee subjectively makes to the work. But the level of salary does not answer the question of why employees in the same company, with the same system of remuneration, may work in completely different ways.

For details, I refer you to the original source, and I will only give you the most important thoughts here. For example, by studying a large retail chain spread across the U.S. and trying to understand why different stores, which are in approximately equal conditions, show very different results with the same system of remuneration, the researchers concluded that the main factor affecting the effectiveness of the employee is the work of the direct supervisor. This may sound like a banality, but how many of us have a clear idea of what level of management people have in common with their subordinates? Do we know well not only our direct subordinates, but also their subordinates, who are also managers?

Many years ago, when I first started running a company with a large number of employees, I developed a formula for myself: “The war is won by sergeants.” I would like to emphasize that no matter how strategic the general staff breakthroughs are, the orders are given by sergeants to the rank-and-file. And if they twist these orders or just forget about them, then your staff plans will remain on the staff cards and won’t be put into practice. And no perfect electronic system for setting and monitoring tasks can help. Later, I supplemented the formula: “The war is won by strategy and sergeants.” And in the last few years of my employment, I had already put together the final formula: “The war is won by good strategy, execution discipline and smart sergeants.” If any of the company’s divisions fail to make plans on a regular basis, the first thing to do is to try and figure out who is in charge of them. Ask your HR department to test its management competencies. If the department is headed by an incompetent manager (and, let me remind you, first of all, they must be competent in managing people), it does not matter who else works in the department — it will never be effective.

In the book “First, Break All the Rules…” there are, in descending order, a list of factors that have a psychological impact on the employee and critically affect his or her work:

· Do I know what’s expected of me at work?

· Do I have the materials and equipment I need to do my job properly?

· Do I have the opportunity at work to do what I do best every day?

· Have I received thanks or approval in the last seven days for a job well done?

· Do I have the feeling that my supervisor or someone else at work cares about me as a person?

· Do I have a person at work who encourages my growth?

· Do I get the feeling that my opinion is considered at work?

All factors, no doubt, are important. But I would like to draw your attention to the first one, in line with the theme outlined at the beginning of the chapter. An employee who does not know what his supervisor wants from him lives in a state of anxiety, permanent “toxic” fear. I know exactly what I’m talking about. I have worked as a hired CEO for 12 years, under the direct supervision of business owners, who, most often, did not bother their subordinates with a clear statement of tasks and expectations. One of them, when I came to him on his first working day with a work planner in my hands and asked what tasks were in front of me, even resented my question: “Do I have to set the tasks for you to make your life easier?” He wanted me to guess what he wanted me to do. But the owners didn’t hold back if I did something they didn’t like. That’s how I found out about the rules: only when I was punished for breaking them.

Imagine a road with no rules. Is it possible to enjoy driving it? Would you look forward to getting out of the garage every morning and joining in this stormy, chaotic, dangerous stream? It’s the same feeling employees working in companies where there are no clear sets of rules, a system of setting tasks, criteria for evaluating the results of work, and a transparent system for calculating wages. Failure to provide clarity of objectives and assessment of the results of work across the entire vertical of power, from director to janitor, creates unnecessary, unconstructive and counterproductive tension in the team. This fear has nothing to do with responsibility. It’s the fear of a gazelle in a savannah that can’t relax for a minute, constantly scanning for danger.

As I have said many times before, an employee’s mental comfort cannot be the employer’s goal (in my system of values, anyway). But also, unnecessary mental discomfort, a state of anxiety, is not a tool to improve efficiency either. A staff member who clearly understands the rules of the game can focus on their job. An employee who lives in fear isn’t up to the task — they’re always trying to guess where the danger may come from.

During the financial crisis in the autumn of 2008, we had to cut back 40% of our employees. Most of the layoffs were on Friday, and I got a call from a shareholder on Monday. When he heard about the cuts, he expressed the hope that the rest of the people who remained would now work twice as hard to keep their jobs. But listening to him, I was looking out the window at our smoking room, where, in the middle of the day, almost all the employees were standing, both smoking and non-smoking. Without even hearing them, I knew that they were talking about the Friday night events. Then I finally realized that toxic fear does not motivate, but paralyzes. Afraid of being fired, they felt like soldiers in whose trench a shell had just exploded, killing, in front of their eyes, a few of their colleagues. And instead of hard work, they were standing in the smoking room, discussing how long it would last and who would be “killed” next.

Over my many years of management practice, I have concluded that nothing increases motivation in the team as much as clear rules of the game. You may not be a saint, but if you are fair, i.e., you set rules and then follow them, and your employees are more likely to work with pleasure. The absence of rules encroaches on stability, which means it creates anxiety. Make sure your company has strict rules. Let’s make them demanding and make people work a lot. Let the workers have to sweat to get their bonuses. But these rules must be understood by all and remain the same in the short term.

I often hold strategic sessions, which is an integral part of the strategic process. And probably there hasn’t been a single session during which the employees didn’t mention the absence of “rules of the game” when assessing the company’s weaknesses. They name it in different ways — lack of regulation, lack of clear division of powers, etc., but all these weaknesses are the same. It is generally accepted that the lack of a “healthy organization” causes the main damage to the quality of work because decisions are made slowly and are implemented inefficiently. Issues and problems get stuck in a confusing system of informalized relations between departments and are not solved for months. But I believe that the fear generated by the administrative chaos is a much greater detriment to overall inefficiency. Without understanding the boundaries of personal responsibility, employees try to avoid any decisions or actions that they are not sure of.

The absence of regulations during the sessions is noted not by the owners and general directors, who are upset by the low level of organizational maturity, but by top managers and middle managers. Even these people, who occupy the highest positions in the organizational hierarchy, need to know the rules of the game. We naturally want to be free from “office slavery”, but we don’t want to be so free that we replace structure with chaos.

Don’t alarm the staff without good reason, as this undermines their sense of stability. If you fire an employee and don’t tell the other employees the reason why, then they’ll think they’ll be kicked out soon, too. Claim someone else’s success, denigrate a subordinate publicly for failing to complete an assignment you have not given, change the rules retroactively, or introduce new criteria for the quality of work in the middle of the project, and soon your team will be left with no one but the dull little dummies who wouldn’t even dare to change the job, preferring to remain under the leadership of a petty tyrant.

From my point of view, eliminating unstructured, useless fears by setting clear rules not only improves the atmosphere in the team and reduces staff turnover, but also increases the efficiency of work. It brings quite pragmatic results. And here it would be useful to remind ourselves that the company’s strategy should also be the rule for those at the highest level of management. The strategy is a roadmap for top and middle managers. It allows you to set goals and priorities and inform your subordinates what’s important and what’s not. Describe the expected quality of work and products. Create performance criteria, and yes, if you need to, develop a system of indicators that can also be used to motivate employees. The strategy, as the main law of the company, will allow the development of other “laws and regulations” including job descriptions, regulations, rules and standards. After all, standards and rules of work are not created without good reason. They should support the strategy and direct the work of employees in order to achieve the highest goals of the organization.

Corporate laws and traditions in Europe and America can seem very difficult to do business by. To get rid of an employee by shouting “You’re fired” in his or her face, is possible only in the movies. In practice, even the dismissal of an obvious lazy employee in the U.S. can turn into a continuous problem for the company, in the form of significant financial compensation and lawsuits. The processes of many companies seem too bureaucratic and complicated to us. It’s much different for our dynamic countries, where the business strategy today depends on the book read by the owner the day before. But if we compare the results, we can see that the game is more efficient when it’s played by the rules. The regular army wins over guerrilla troops in the long run, also because it is easier to hire and retain “soldiers” as they feel more confident there.

<p>Chapter 17. Paralysis in Decision-Making</p>

One day, my client asked me to attend an operational meeting of his team but without him present. I managed to sit in a corner almost unnoticed, and the participants of the meeting quickly stopped paying attention to me, relaxed, so it flowed in its normal course. The team was implementing, or rather tried to implement, a large and complex project. A lot of issues were raised at the meeting but to my surprise not a single decision was made. Moreover, there was no reason to believe that decisions would be made, say, in the near future, as the participants were arguing and expressing their opinions, but no one even tried to find a solution that would suit everyone. As a result, the same decision was made on all agenda items: to get additional information. I got the feeling that even if the collection of data takes years, the decisions will not be made. At the same time, all the participants of the group, together and separately, had repeatedly listened to the reproaches from the boss for their slowness in making decisions, which obviously had no impact.

To be fair, I myself had to deal with this at the beginning of my career as CEO. Even meetings with my participation were not much more productive, as everybody exchanged opinions and sluggishly argued while all decisions had to be made by me in the end. And if I wasn’t there, there would almost be no chance of any decisions being made. I was angry with my subordinates, not knowing exactly what to do about it. I blamed their inability to make decisions on laziness and tried to accept the idea that from now on I would have to make all the decisions myself. But that was a bad idea!

If your team is unable to make a simple (as it appears) decision, then there are some reasons. In most cases, the reason is not a specific inability of employees to take responsibility, as their angry bosses often mistakenly believe. As with everything that happens in the firm, you are also to blame for this paralysis of decision-making. Let’s figure out how it happens and why.

The paralysis of decision-making, which sometimes involves subordinates, does not necessarily stem from their personal inability to decide, nor from irresponsibility, although I have met people in my life who were able to masterfully escape decision-making like a piece of soap from wet hands. Most likely, when choosing between two or more possible options, they see that making any decision is worse for them than making no decision at all. Even if they’re punished for refusing. Deep inside, the consequences of any other decision seem even worse to them.

Take, for example, that group of top managers from the beginning of the chapter. The owner assembled it to implement the project, but did not allocate any roles or responsibilities. There was no hierarchy within the group, everyone worked on the same horizontal. What happens in any group of people, regardless of their status? Struggle for influence, including getting the attention and favor of the boss. And this struggle is fueled by the ancient instincts that were formed long before the word “management” was invented. Add to this the fact that the project, quite predictably, has not been described, the criteria for the quality of work have not been defined and the standards have not been set. The owner just wanted to make sure everything was done properly. He had a very clear vision of the project but unfortunately, he did not have the superpowers to wirelessly transmit this vision to his subordinates.

And take, for example, someone in the group suggesting an idea. In some other cases, the other members of the group might find it quite reasonable. But in this situation, they consider the possible risks to be too high. They have two options: either to accept the proposal or to disagree, that is, to suspend the situation. They know for sure that in the second case, they will be reprimanded by the boss for delaying the deadline. But in the first case, they subconsciously think they’ll lose even more. First, accepting another member’s point of view is tantamount to accepting his or her informal leadership, which they cannot do. Let me remind you what we talked about in one of the previous chapters: subordinates compete for the attention of managers like children competing for the favor of parents. Secondly, in the absence of clear criteria for the quality of the work, the proposed solution could then be criticized by the Director General. Especially if it is not only put forward, but is already implemented. And if one of the top managers accepted a colleague’s proposal and became an accomplice to a mistake, the sword would fall on his head. Facing such a difficult choice, top managers subconsciously choose the least of the evils as under one pretext or another they avoid making any decisions. They’ll be punished for that, too, but they don’t think it’s that harsh.

If a task is not understood by the subordinates, they will subconsciously look for a reason to avoid it.

Of course, these calculations and comparisons of several options do not take place at the rational level, but this does not mean that they do not occur. Similar situations do occur in individual relationships. If you have set a task for your subordinate, and a week later you are surprised to find out that they haven’t started it yet, it’s probably not clear to them. When I was a young and inexperienced leader, I loved to set tasks on the fly, i.e., in short letters, in the corridor, in meetings. They seemed so understandable to me that I had no idea how others might not be aware of all the requirements of the project. At first, I blamed my subordinates for the failure to perform their tasks, and I was in a hurry to change them. Step by step, I realized that if the task is not completely clear to the staff, 80% will not do it at all, and 20% will complete it as they understand it, even if they are not sure they understand it completely and are too afraid to ask questions. And then I learned for myself another law of people management: the time spent creating a clear statement and explanation of the task always pays off. If a subordinate clearly understands what the boss wants them to do, they work with a light soul, having fun and with a twinkle in one’s eye.

With group tasks, the situation is similar. If the group does not deeply understand a problem and if the project’s specifics are not defined as much as possible and accurately written down, if roles in the project are not defined, then only few players can organize themselves and reach the purpose. As a rule, these will be teams that have been working together for a long time i.e., psychological roles have long been established and settled, and the task they are working on is familiar and understandable.

If you set a new task for the group, especially if the group itself has not worked in such a way before, the time spent on setting the task and describing the project is invaluable. When I first started studying project management, it seemed incredibly boring to me. It seemed to me that with this approach, the team would spend more time on paperwork than on the project itself. It was only after a multitude of unsuccessful projects that I realized the importance of planning and preparation. A well-planned project may not end up being completed, but a poorly prepared project can only be completed by a miracle. Do not be too seduced by Agile and other technologies of flexible project management. They have their strengths, but they are not suitable for all tasks. Nothing in the near term will replace the good old Gantt chart.

In addition, do not forget that everything new, even the most dizzyingly interesting new projects, at first will cause a negative reaction from subordinates, as well as any changes. It’s your job to soften the rejection.

Practical advice:

1. Make sure the group understands the task. Hold as many meetings as you need;

2. Hold separate individual meetings with those who doubt or do not quite understand;

3. Encourage everyone to express their fears and concerns about the project;

4. Appoint someone to take on the role of project manager, or take on this role yourself. Ensure that all work is described in detail, and that timelines and responsibilities are defined. Make sure that each participant has their own tasks and that each project task has a leader;

5. Explain to the members of the group what their personal benefits from participating in the project are. A project a company needs, but one that is not needed by its employees, will not be implemented on time;

6. If you encounter resistance, give your subordinates some time to accept the inevitability of the project. This time will pay off as if they get used to the idea that they will have to do it, and they will work faster;

7. If your group is unable to make decisions, then you have not assigned roles or fully formulated the task. Fear of making a mistake is high, and it causes decision-making paralysis. Stop being mad at your employees and take the situation into your own hands. Believe me, as soon as the project is well described and the employees understand what they are responsible for, the problem will disappear by itself.

<p>Chapter 18. The Dunning-Kruger Effect</p>

The Dunning-Kruger Effect can be described as follows: people who are well-educated tend to reflect on their successes and failures; they recognize that other people can be more successful, smarter and more professional than they are. As a result, they are prone to self-development, but often underestimate their abilities and suffer from a lack of self-confidence, considering others more competent. This attitude can prevent them from becoming successful entrepreneurs. At the start of any business, a healthy reassessment of one’s own strengths and capabilities plays a useful role in motivating one to take risks and start a business, while attempts to think of every obstacle, calculate and weigh all possible risks in advance, will reduce the chance of ever actually launching the business. That’s why intellectuals are rarely found among businessmen.

Conversely, people with a low level of education make erroneous conclusions, make unsuccessful decisions and at the same time are not able to realize their mistakes due to their low level of qualification. In other words, smart people suffer from low self-esteem, but are constantly becoming even smarter, and fools who do not realize their own stupidity, remain fools.

The Eastern European market opened late for business compared to Western countries. Since the 1990s, the markets for goods and services have grown many times faster than the qualifications of candidates in the labor market. Salaries increased rapidly, and careers were made rapidly. As a consequence, people with qualifications of clerks took over the director’s chairs. The pressure for companies to buy insufficiently qualified workforce at an excessive price has created inadequate perceptions of the quality and value of their work among labor market participants, thus depriving them of incentives for further development. There are many candidates for senior positions who are not aware of the fact that they are actually under -qualified. From my personal extensive experience of hiring top managers I know that the labor market is full of candidates for top managers with the thinking and managerial skills of middle managers. And there is no hope that they will realize their own need for development as they understand that, due to the shortage of qualified labor, sooner or later they will find a job with the desired salary.

In practice, this means that companies should not hope for improvements in the labor market. The number of competent, experienced and motivated employees in the labor market will not increase in the coming years. The only way employers can provide themselves with skilled personnel is to train their employees on their own. True, there’s a good chance that some of the employees will leave after the training. But it is better for a company to train its employees at risk of future loss than to try to survive in a market with insufficiently qualified personnel.

In addition, the Dunning-Kruger effect suggests that not all employees are worthy of promotion to senior management positions. If, for example, a staff member too often explains their own failures by coincidence, or by the lack of resources at their disposal, this person is unlikely to be the first candidate for promotion. In addition, the Dunning-Kruger effect encourages us not to criticize those responsible for the mistakes made. After all, if a subordinate is responsible in character, they belong to the category of people who blame themselves for everything. They have already “punished” themselves a thousand times for their mistake, and the additional punishment from your side will only reduce their self-esteem, which is not useful for business.

<p>Chapter 19. The Comfort Zone</p>

There is an internet joke that all the books on personal growth eventually come down to an owner of a luxury Beverly Hills mansion advising an impoverished man from a small village to leave their comfort zone. We think it’s funny, but only because we tend to misinterpret the very notion of “comfort zone”. In fact, the comfort zone can be not only uncomfortable, it can actually be awful. But we still don’t want to leave it.

In some ex-Soviet countries, there are many women living with unworthy husbands. Women continue to live with alcoholics, with those who beat and humiliate them, or with those who cheat on them all the time, even when their children have grown up, the last reason to stay together has already disappeared. If you discuss the behavior of such a woman with your acquaintances, and it seems logical to you and them that it is better to live all alone than with such a companion. Moreover, even if you discuss it with the woman herself, she’ll agree to it, too. In words. In fact, she’s going to stay with him 99% of the time.

The comfort zone is not necessarily a cozy sofa from which to get up for the sake of great deeds. The comfort zone is any state that we do not want to leave even when it is contrary to logic. It’s a place that’s scary to leave, even on a subconscious level.

What are the motives of a person living with an alcoholic? Or a person who continues to live with an oppressive partneror an authoritarian parent? What are the motives of the employees who have been working for years for a rude and ungrateful boss who demeans the results of their work? What are the motives of a person who wants to start his own business, but still works as an employee? The motives of all these people are the same: fear of leaving the comfort zone.

Jack Knetsch, an American psychologist, once conducted an interesting experiment. First, he asked various groups of students in the classroom to choose a cup of coffee or a chocolate bar as a gift. Preferences were always shared more or less 50/50. But then he made the task more difficult as he offered students a cup of coffee, and a few minutes later he offered to exchange it for a chocolate bar. He gave chocolate bars to other groups and in a few minutes offered to exchange them for a cup of coffee. In both the latter cases, 90% of students preferred to keep what they had (coffee or a bar, respectively) and only 10% agreed to the exchange.

It’s called “decision paralysis.” The brain does not like to make decisions, especially difficult ones, and therefore refuses to do so whenever possible, or drags it out as long as possible. The brain uses about 25% of all energy consumed by the body, while its weight is less than 2% of total body weight, so the body tries to avoid its hard work at every opportunity. Partly because of this, a person values what is available much more than what they might hypothetically possess, so there is no need to do complicated mental work and make decisions. Street vendors know how important it is to get a person to pick up a future purchase. They know that if the buyer touches the item, its value in their eyes will increase.

What does all this have to do with alcoholic wives? They are in a state of choice, and, as we have discussed repeatedly in previous chapters, choose from two evils what seems to be the least of them. They value what they have (even if it is a very questionable value in the eyes of others) more than a lonely life. They’re more afraid to be alone than to live with such a partner. Forty-year-old mama’s sons may be very uncomfortable under tight tutelage, but their independent life scares them even more. We work with stupid and willful leaders because we are afraid we might not find a job elsewhere. We do not start our own business, spending our talents for the benefit of strangers because we are afraid to lose our salary, stability and confidence. The future is obviously uncertain, and that’s why it’s scary.

How’s all this popular psychology related to business? Most directly, it’s because business is people first, and then technology. People’s business relationships with themselves and the relationship between supervisors and subordinates have a crucial influence on the development of companies.

Suppose you’re the boss, or you have your own business. If you’re naturally brave and have an easier time than others to overcome the barriers of comfort zones, it doesn’t mean that everybody around you, and first of all your hired employees, are the same. If these people are employed, it’s very likely that this is their comfort zone. And if you embark on bold reforms, decide to restructure the company’s management structure, optimize production, launch a new product or enter a new sales channel, then don’t expect them to support you, at least immediately. Your ideas invade their comfort zone, increasing the level of uncertainty and danger, from their point of view. After all, any changes in the company can jeopardize their positions, their powers, the very fact that they exist in the company. Change can bring new challenges with it or new responsibilities, which are also perceived as an extremely negative factor.

There are many articles explaining why there are so few people in countries that have only recently emerged from the totalitarian regime who are willing to take responsibility and leave the comfort zone. You, as a manager working with such people, will have to consider this. Don’t be mad at employees for not being enthusiastic about change, it’s their nature. Instead, it is better to prepare carefully for how you will tell them about innovations. Many executives, in reporting change, focus on how it will benefit the company. But the employees are much more concerned about their own destinies, and the wise leader will focus on what benefits it will bring them personally, trying to mitigate the painful departure from the comfort zone.

But even if you are a top supervisor, an outstanding entrepreneur and a brave person, it does not mean that you do not have your own comfort zone. If you are facing a difficult decision that you cannot make for a long time, it is likely that it indicates a struggle between the mind and the comfort zone. For example, we do not want to leave the comfort zone, insisting on continuing the work on a project that we have invented, but which has clearly demonstrated its unviability. One of our clients, an entrepreneur, didn’t want to part with the brand, the sales of which left much to be desired for a long time, just because he invented it himself and launched it a few years ago. Instead of directing all the efforts and means to strengthen successful brands, he forced employees to try and bring the dying brand back to life over and over again.

We fight to stay in our comfort zone, giving an employee who should be fired another chance, avoiding an unpleasant but necessary conversation. But firing an employee, searching for a new one, getting used to each other, is a discomfort that we subconsciously try to avoid. Procrastination, or the habit of constantly putting off important things for later, is also a fear of leaving the comfort zone. Important matters often involve change, change is about the future, and the future is uncertain and fearful.

How to improve the quality of life and work by considering the comfort zone factor? This is a psychological problem, and the solution of any psychological problem begins with the recognition of the very fact of its existence. Get used to the idea that both you and your subordinates have a comfort zone, which is extremely painful and unpleasant to leave. If you have to push your employees out of it, think about how to do it as painlessly as possible. Try to find words that will calm them down and reduce their anxiety. If you are determined and implement the reforms you have planned, sooner or later the employees will get used to the new environment and it will become a new zone of comfort for them. But if you soften the transition, minimize their fear, it will be easier for them and you.

It’s always a little more complicated than that, of course. However, if you are convinced that the fear of leaving the comfort zone prevents you from making an important decision or moving forward, it is worth stopping for a while, taking a pause and reflecting on the origins of this fear. What exactly are you afraid of? What scares you? How justified is this fear, how dangerous is the future? It is quite possible that if you are honest with yourself, you will get a clear and precise answer. In this case, you will not have to overcome your fear, you will simply reduce its intensity and make it easier for yourself to transition to a new environment.

The comfort zone may be a very uncomfortable place, but we are afraid to leave it because the alternatives seem more terrifying to us. Often this leads to erroneous decisions or the rejection of potentially profitable customers, and our natural fear of uncertainty overcomes the arguments of reason. It’s a natural problem, a part of human nature. Fear, the strongest emotion capable of drowning out any other, was given to us by nature as part of the instinct of self-preservation. But a reasonable person, including a manager, should know about it, understand the nature of this phenomenon and be able to manage it, both in themself and in others.

<p>Chapter 20. Culture Eats Strategy, or Vice Versa?</p>

Malcolm Gladwell’s book “The Tipping Point” describes and scientifically substantiates an interesting phenomenon, which, among other things, is called the “broken window effect”. The author proves, on the basis of several cases, that we mistakenly consider some people to be working, others to be lazy, some evil, others kind, some open and others closed. Gladwell shows that a person’s behavior is very much dependent on his or her environment, and that, once in different situations, a person can radically change their behavior. This is not just a question of borderline situations, such as severe stress or dangers. The “broken window effect”, in particular, is that if people notice that a broken shop window hasn’t been repaired in a few days, if they see new graffiti that nobody is painting, if they notice garbage that nobody is cleaning, they start to think it’s the local norm. They begin to think (or rather feel) that such behavior is unpunishable, socially acceptable in the area, and begin to behave in the same way. For example, cigarette stubs and cigarette packs are thrown straight down the sidewalk or lawn. Ultimately, this plunges the area into chaos and can even lead to an increase in local crime. And vice versa, where it’s very clean, the same people will throw garbage in the trash can. As a rule, nobody forbids us to speak loudly in a museum, but we instinctively lower our voice there. And vice versa, the wild atmosphere in the bar encourages us to do risky things, and it’s not just because of the alcohol. In his book, Gladwell tells a very interesting case that the New York City police won the fight against crime in the subway, regularly covering up all the graffiti on the cars. When the thugs got tired of applying fresh graffiti every day, the subway gradually became clean and tidy, the number of manifestations of so-called “deviant” behavior (or, in other words, hooliganism) in the subway has decreased, and with it, gradually, crime has left the subway. From the experiences described in the book, we can draw a clear conclusion. Creating an atmosphere of trust and openness in the company will contribute to the fact that the gloomiest employees will begin to communicate pleasantly with colleagues. Conversely, a poisonous, toxic environment that encourages snitching and “everyone’s against everyone else” will force the most friendly and trusting employees to form alliances and intrigues.

In general, I fully agree with Gladwell’s conclusions. I myself watched a couple of times as the employees I fired for incompetence and laziness in other companies blossomed and achieved unprecedented success. And I observed the opposite as the high-achieving “stars”, who believed that they had outgrown my company, left to dissolve without a trace in large organizations.

In general, this does not negate my belief that an open and trusting office environment is better than a bureaucratic swamp, open hostility or behind the scenes gaming. However, an open atmosphere should not become synonymous with universal welfare, giving employees no reason to work and achieve their goals. And the most effective tools that can solve both problems at the same time, I consider to be the strategy and culture of the organization. But in order to employ them, it is necessary to understand the meaning and interpenetration of strategy and culture.

Peter Drucker once said, “Culture eats strategy for breakfast”. Based on this phrase, at least one book and many articles have been written. The meaning of the phrase, from my point of view, is the following: if a culture of high-achievement is not inculcated in the company, then active work, community atmosphere and focus on results, and whatever is written in the strategy developed in the headquarters, will not be implemented. In a viscous, bureaucratic, sedentary environment, it is difficult to implement even the simplest reforms, not to mention a serious turnaround.

But at the same time, building a corporate culture without developing a strategy is a waste of time. The strategy is primary. Culture must support the strategy, and it is the strategy that defines its requirements. Harmful chemical production requires strict discipline, and it is very important that discipline and responsibility become part of the corporate culture, i.e., the internal policies of most employees. A young IT startup can afford some discretion in discipline (to a certain extent), and value creativity and teamwork in employees more than following instructions. But any effort to “build a corporate culture” without developing a strategy and reaching the level of organizational maturity corresponding to it will be in vain.

Imagine a private company that was once very successful in the era of market growth and has grown to an impressive size. The company has a sluggish atmosphere, which Ichak Adizes would refer to as the “death” stage of the life cycle, and most of the processes in it are not regulated and are carried out “according to tradition”. The company faces fierce competition from powerful local and transnational players. The company’s shareholders understand that it will have to either change or die, and invite a new director who is given the task of significant growth.

For simplicity, let’s omit the psychological difficulties that the new director will face in such a team. Let’s imagine for a moment that the top management of the company as a whole supports it, but the top management is not the whole company, and the director understands that they have to fight with the dense, stuffy atmosphere in the field. However, they know from their own experience that changing a few, even key figures will not be enough. For change, it is necessary to accumulate a critical mass of employees who agree with the change (according to my estimates, if just 25% of the most proactive members of your team share your views, it is enough to begin the change, and the rest will eventually follow.

There is a Russian proverb: “If you put fresh cucumbers in a jar with pickles, then the pickled cucumbers won’t ‘freshen up’, but the fresh cucumber will become salty.”

The Director has three tasks to do at the same time:

1. Develop a new strategy and communicate it to employees;

2. Raise the level of corporate culture;

3. Raise the level of organizational development;

If any of the items fails, the task will not be achieved. Let’s see how it works.

· A director can develop a strategy and even enforce (with the help of new loyal supporters) a new culture in a company, but without increasing the level of organizational development there will be little sense in doing so. It is good if a company can find new ways of development and has an appropriate atmosphere for it, but if the processes are not smooth, if the performance discipline is limping, the culture is not able to pull it out. The company’s going to be good at planning, but it’s going to be bad in implementing;

· In an organization with a clear strategy and good execution discipline, but without a corporate culture, will have all plans executed formally, and any adjustment of the plan (and any plan will have to be corrected sooner or later) will require a lot of effort and resistance;

· An organization with a healthy corporate culture and clear execution discipline, but without a strategy, can make a profit in its current state, but has no potential for growth.

Therefore, any attempt to “optimize the business processes” or “build an effective team” in isolation from strategy is an inefficient waste of precious resources. No manager can afford to focus on just one or even two of the three aspects, so you’ll have to work on all at once, but first on strategy. It is the strategy that will give you an understanding of what type of culture and the quality of internal processes you need to implement. But if, based on our experience, at least some companies think about organizational development and corporate culture, most companies neglect the strategy, and this is wrong.

There are companies in the world that cope with the task of organizing a healthy and efficient work environment without a formal strategy. But I have seen only small firms, up to 50—60 people, who have accomplished this task (there may be other exceptions, but I have not personally encountered them). Also in “The Tipping Point”, Malcolm Gladwell writes that informal methods of management, i.e., management based on trust, on the oral form of information transfer and on personal influence, are suitable only for organizations of up to 150 people, and it does not matter whether it is a military organization, a non-profit partnership or a regular business. As soon as the number of personnel exceeds 150, it is impossible for the supervisor to control everything by themself. Instead it requires management techniques such as planning, empowerment, delegation and so on to properly manage the situation.

Many years ago, desperate to turn a sloppy gang of top managers into some kind of regular army, I sent them to team-building training and went there myself. The coach was good, and he sincerely tried, but the most important thing that I took from there is that team building will not help in my specific case. No wizard could rally that team, because the team needed to unite around something, the best of all-around strategic goals.

At the same time, strategic goals allow us to understand whether a team is able to implement them in a principled manner. And these goals should not be formulated too abstractly, they should be weighty, with visible indicators. If strategic goals are set correctly, every top manager, and better yet the head of the middle management, can clearly answer what they and their department should do strategically in the next month, quarter or year. In my case, the goals were set, but, as I now understand, not sufficiently specific, which served as the basis for unnecessary conflicts and disputes between top managers, because everyone understood them in their own way.

As the Englishmen taught us at the Institute of Directors, “Strategy without performance is a dream”.

I love strategic management and the strategic document itself for its universality. It covers all aspects of the company’s activity and allows turning large market objectives (market share, revenue, EBITDA, etc.) into simple and concrete measures, planning resources for them and setting priorities. It answers questions about what competencies the company needs and where to get them. It tells us what formal structures should be used to support its implementation. And it’s capable of bringing people together. I don’t know any better tool.

<p>Chapter 21. Late Arrivals and Social Media</p>

About ten years ago, I was struggling with employees who showed up late for work within my company. After trying a lot of methods, I gave up — all of them gave at best a short-term effect, and then the delays resumed. I no longer struggled with social media at work, knowing that there are probably no effective ways to do so. And then I realized that it makes no sense to fight against delays and social networks as such. Doing so is simply fighting a symptom of the underlying problem without addressing the root issue.

Let’s solve a simple mathematical problem:

1. The working day in your company is 8 hours, plus an hour for lunch;

2. You know that employees are on average 15 minutes late a day, at least 10 minutes per working hour are spent on social media networks, and another 5 minutes are usually delays from lunch.

How much time do you lose? Approximately 100 (15+10*8+5) minutes lost from the total operating time (60*8=480) will be 20.8%.

That’s a terrible figure, isn’t it? 20.8% of your payroll is spent on activity that will not bring you a single cent of extra income. What is the reaction of any manager if they see such mathematics in their company? Repression, accounting, control, demonstrative dismissals.

But let’s look at the problem from a different angle. How did you know employees were being late for work? Probably from the access control system. What about social media? Will you find that from the I.T. Director? So, it turns out that your employees spent 20.8% on nothing, and you wouldn’t have noticed it if there weren’t a proper control system?

I would suggest formulating the question in the following way: How does the system of planning and problem solving work in my company, if my employees spend one fifth of their time on fun, and it does not become obvious at the end of work in the first month? Do we, frankly speaking, have a system of planning and problem solving? Not a sales plan, but an action plan to implement it? Not the budget, but the action plan to implement? The following answers are valid:

· The company does not have a system of planning, there are only conditional “job duties” that do not allow to clearly and unambiguously determine whether each individual employee worked for a month or was fooling around;

· The company has a system of planning, and in general, the set tasks have been achieved. And the fact that the employees are late and use social networks shows that the plans they have made leave them enough time to do so, i.e., the plans are not too ambitious. They can be done while reading the Facebook feed;

· The company has a planning system, but plans are not being implemented. The leadership is generally dissatisfied with the situation, but does not see any way to change it, and the plans are not being implemented anymore. Meetings are held, and occasionally someone is fired, but the whole picture is still the same.

Only by asking in this way, will you have a chance to start working on the cause. If you’re formulating the question: “How can I eradicate delays and social media networks in my company?” then you’re only working with the consequence. There are four ways to improve discipline — motivation, control, planning and organization. The first two without the second two are completely useless.

The first (and main) reason for the delays and time lost through social media networks is the availability of free time for employees.

How do you spend those boring minutes waiting for a plane? What do you do while waiting for a meal at the restaurant? You probably browse social networks, read books, and respond to messages, including personal messages. If your employees are late or communicate in messengers on personal matters, then they have time to spare at the expense of other things, such as being productive at work. And if you don’t want that to happen, take all of their time on the job and plan their work. By the way, you have every right to do that because you pay them for eight hours. Are employees to blame for leaving them enough time to be idle? Is it worth expecting employees to take the initiative and take on a higher level of commitment by performing all their direct duties? The saying “initiative is punishable” was invented in Russian-speaking countries.

Your employees are probably complaining that they are late because of traffic jams or poor transport. But are they late for the plane? The train? I doubt it. I think that when the day of departure for their vacation comes, they leave home early enough. Are your departments complaining that they don’t have enough time to complete their work on schedule? But I suppose your accounting department is trimester after trimester, year after year, successfully filing all the reports on time. Is it because the accountants are more responsible than everyone else? No. Just because the deadline is clear and obvious, the punishment is obvious and inevitable. Accountants have a “plan” that is too scary to disrupt, so it is usually implemented.

From the laws of physics, it is known that air, like any gas, fills all the volume provided to it. Employees will also find something to fill the day, and if you block social networking sites but don’t have 8 hours of work for them to do, they’ll find something else to do. In doing so, they will try to seem busy. During the 2008 financial crisis, I continued the employment of only two employees out of seven previously working in the same department. I had no choice as I couldn’t afford seven employees any more. At first, these two complained that they would not be able to cope with the work as, despite the crisis, the amount of work in the department was not reduced. But gradually they somehow started to cope, despite the fact that none of them left the office after 6 p.m. Looking at them, I was sad to realize how ineffective the department was before. Of course, it was a “crisis” method of solving the problem. But if in peacetime you feel that the department works in a relaxed atmosphere, you can safely raise the load level. Set more tasks, require deadlines, and do not listen to complaints.

Warren Buffett said that only when the tide goes out do you discover who’s been swimming naked. In companies where there is organizational chaos, where there is no planning of work, where there is no tradition to establish and then to meet deadlines, there are always those who (trying to please the “parent”) work to the bone, and those who sit back. Distinguishing between the two can only be done by building a system of end-to-end planning of tasks, processes and projects.

It’s a lot easier to say than to do. It can take years. But it is better to spend several years to improve the activity than to pay 20.8% of the payroll in the form of a “tax on idleness”. Everything starts, of course, with a strategy which defines key objectives and priorities. Then in the second phase all processes and projects, one after the other, are organized in such a way as to meet the strategic goals and requirements as much as possible. Only in the third phase can these processes and procedures be optimized in a way that makes them more efficient. In my opinion, business in general consists more of routine procedures than of searching for strategic insights.

In a very large and very successful company, managers at all levels are obliged to annually improve all key performance indicators including labor productivity, equipment load, energy efficiency, scrap rate, etc. Thanks to many years of experience, the company has already learned how to set tasks so that they cannot be performed to the detriment of other results. For example, by reducing staff or increasing output (in order to increase productivity), neither the quality of the product nor the speed of output can be compromised, and this will become apparent instantly. The company has been living in this mode for many years. Every year, getting new tasks to improve efficiency, managers are afraid, because it seems to them that there is no room to be more effective. But it is not customary to argue with the owner about this. Doing so only wastes time and won’t achieve results in this company. In turn, the company is ready to provide local managers with all the necessary resources to solve the problem. Do we have to go to foreign enterprises and learn from them? I think we definitely should. Should I send the staff for training? Sure. Need to get new knowledge? Go ahead. Need to exchange experience with colleagues from other plants of the company? Yes, it’s necessary. Year after year, and so far, the company has been able to increase its labor productivity annually. And when labor efficiency is so high, people just don’t have time for social networks.

In some businesses (however, I think they are in the numerical minority) it is extremely difficult to time or regulate the work of employees. These are some creative workshops, IT software development companies and so on. We, for example, develop strategies, and each strategy is a unique project. In such organizations, the result is much more important than the process as it is not so important whether the employee arrives at 9 a.m. It is more important whether or not they completed necessary tasks by 6 p.m. And if you have such an organization and you still don’t want your employees to be stuck in social media during their working day, you can make their job more interesting for them. If they have a better job than Facebook, they’ll be working, not scrolling the news feed. That’s what we do. Our employees are very interested in working for us. Or they’re not working for us at all.

<p>Chapter 22. Rebellion on the Ship</p>

One day, employees of one of my directors rebelled against him. They came to me and, sitting in my office, accused him of incompetence and offered to fire him, placing one of them in charge of the department. Otherwise, they threatened to quit. Having listened carefully to them, I said that, unfortunately, I couldn’t satisfy their request, so they would have to leave, which they eventually did. Soon after, waiting for a short pause, I fired the boss they rebelled against.

I think you know why I did this, but I’ll explain just in case. First of all, I couldn’t let them blackmail me. No one should ever, under any circumstances, blackmail you in your company or in your department. If such an attempt has been made, fire the employee immediately, regardless of his or her value to the company. Israel does not negotiate with terrorists, I do not negotiate with blackmailers. You can try to blackmail me once, 10 minutes before you write your resignation. Negotiating with a blackmailer will bring down your credibility so much that you will never be able to restore it.

Secondly, I could not decide in favor of my supervisor’s subordinates. As soon as these “negotiators” showed up in my office, the fate of that director had already been decided, but at that point I was demonstratively supportive. If I had done otherwise, I wouldn’t have a single director on my team tomorrow. Each of them would be afraid that tomorrow their subordinates, considering the success of their predecessors, might try to overthrow him or her. By supporting the rebels, I would jeopardize the authority of top management as a whole.

Third, I couldn’t afford to keep an employee in a team who had started an internal conflict in his team to such an extent. He was a good specialist, but he clearly lacked management skills. And the secret to effective leadership is not only to be effective on your own. You need to hire effective leaders.

As you may have already guessed, after the director’s dismissal, my HR director and I examined this situation in detail. I tried to find out what mistake I made in hiring that subordinate, as the CEO is in charge of everything, and how to avoid this in the future.

Rebellion on the ship is a sign of weak managerial competences of the captain of this ship. In any case, a leader must be the one who inspires confidence in the team that a secure future will be provided. Rebellion, on the other hand, means an extreme degree of dissatisfaction — usually subordinates quit quietly, so open resistance indicates a high degree of emotion under the lid. With regard to a person who has allowed an uprising in his department, you may have only one question which is at what point is it better to fire him or her, based on the situation: right now or a little later? If your direct subordinates’ rebel, it’s your fault. You should have felt, discovered and corrected the problem long before the armed uprising.

No matter how fast we, as a society, are rushing towards a “teal” future, we are still pretty far from it as I write these lines. Which, in turn, means that the primitive so-called “pack law” which is an ancient group survival instinct, developed in us thousands of years ago, unfortunately, is still stronger than the thin, barely discernible layer of civilization that has developed over the past couple of hundred years. And although rudeness, sexism, boorishness, humiliation gradually, albeit with a terrible creak, fades into the past (yes, I am upbeat), the basic laws remain unchanged, like the postulates of Newtonian mechanics. It’s common for people to get into a pack and a pack needs a leader. A weak leader is displaced by the strong one. It sounds like a quote from a zoology textbook, but it’s true. The role of the pack can be played by a circle of friends, a football fans’ club, a political party or a labor collective. The Earth revolves around the Sun, the Moon revolves around the Earth, and the Team revolves around its Boss.

I’m often invited to give lectures on human management. And I’m often being asked how people can develop their leadership skills. After all, if we return to the title of the chapter, the revolution is organized in departments, the leaders of which lack leadership skills. A temptingly simple answer would be “there is no way” — to say instead that leadership qualities are either given by nature or they do not exist and will never appear. At the same time, I clearly developed them in myself — I wasn’t exactly a “pack leader” in my school years. How did I go from a shy boy from a Leningrad scientific family to a man who is not afraid to talk to anybody, be it a bus driver or the president of the club of the most influential business people of the country?

I believe that the growth of inner confidence, which made me a true leader, happened thanks to my natural observations. I have always wondered what happens in the skull of people next to me, including my classmates, colleagues and executives. I’ve always wanted to find the key to them, to find the words they’ll listen to. It was a subconscious desire. I got carried away with books on sociology and psychology much later. I’ve been moving in this direction by trial and error. Every success and mistake enriched my experience, and gradually, many years later, I gained the confidence that no matter to whom I spoke, I would be listened to. I’m still making mistakes, and I guess I’ll never stop doing that, but their numbers are definitely down.

In general, from my personal, deeply unscientific point of view, strong leaders are distinguished by the following. They:

1. Search for an understanding of what’s going on in other people’s minds and souls;

2. Have the ability to, consciously or subconsciously, speak to others in a language they understand.

3. Are able to radiate confidence or mask uncertainty. Every leader will at least once find themselves in a situation in which they are no less confused than their subordinates. But they have no right to show that.

Leadership is a heavy burden. I realized this in 2008, when all my subordinates were waiting for a miracle, a rescue, and confidence from me. If I’d shared my real thoughts with them, I wouldn’t have had any subordinates left. I had to stretch my shoulders, inflate my cheeks and be as optimistic as possible. I don’t know how successful I was, but the crew didn’t abandon the ship and the ship didn’t sink. Remember the movie “One Flew Over the Cuckoo’s Nest” by Milos Forman? McMurphy, the hero played by Jack Nicholson, becomes, quite unexpectedly for himself, the leader of an unusual “pack”, the hero of sick people, squeezed under the pressure and iron discipline of Nurse Ratched. At some point, the situation goes too far, and McMurphy understands how it will end for him, but he cannot stop being a leader, cannot fail his “pack”, and goes on to the very end.

But I don’t think that a leader is necessarily a bright charismatic person. And it’s not just about having a strong spirit, although leadership is impossible without it. I believe that a leader is someone who understands (or feels intuitively) what is going on in people’s hearts and heads around them, and skillfully adapts their behavior to the situation. Sometimes leadership means leading people into attack, other times it means sharing with them all the hardships and burdens of hard work. Sometimes, it’s just talking to a subordinate or praising them for a job well done.

<p>Chapter 23. Testing</p>

One of our former clients, the owner of the company from St. Petersburg, who was tired of the low quality of candidates in the labor market, decided to save the time and efforts of HR-services employees and introduced an absolute rule: before the HR-services employee spends an hour or two on the candidate, the candidate must pass a professional test on knowledge of the basics of the profession. The practice has taken hold. The test system gradually became more complex, but as it became more complex, it worked better and better. As a result, the candidates, whose skills of self-representation exceeded their professional competence, did not reach the interviews and did not waste the energy of the company’s employees. The client is rightfully proud of their system, and their very professional staff.

I have not had many interviews in my life, and the first of them could only be called interviews with a great stretch. There were people on both sides of the table who didn’t know anything about skillful interviewing techniques. One didn’t know what to ask, the other didn’t know what to tell. Experienced HR directors remember that time nostalgically. Awkward, inexperienced candidates were like open books.

It’s different now. Every CV or resume is like a poem, a well-written piece of art. Every interview is like auditioning for a Hollywood role. Candidates behave at interviews in such a way that it becomes uncomfortable for you to take precious time from such serious people. Judging by their CV and interview responses, one of them has invented marketing, the second one is a God or Goddess of Sales, and the third one is the Creator of the Internet. These people are definitely good at selling, but only selling themselves. Whether these people are able to sell, say, soups or cleaning services or your product? Well, it’s a big question.

The tests for candidates are divided into two categories: professional and psychological. As to the latter, I don’t know much about it, and I don’t have a competent opinion on it. I can, if you like, share my incompetent opinion: I take them with caution. Many of the tests have been translated from foreign languages, and it is unclear what benefits have been lost along the way. And the very idea of measuring different people with the same ruler makes me intuitively reject it. Perhaps in this matter, my deep convictions can be easily carried away by professional arguments. I won’t insist.

I like the idea of professional tests much better, but the scope of their application is rather narrow. For example, the entrepreneur from St. Petersburg is testing accountants and engineers, among others. It’s relatively simple. If an accountant doesn’t know what a “balance currency” is, and an engineer doesn’t understand how tangential tensions differ from equivalent tensions, don’t waste time on them. How, for example, to test the logistics director? After all, as we said, the higher a person goes up the career ladder, the less important their professional knowledge is, and the more important their managerial experience becomes. In a Russian branch of a Western company, the sales directors was made an IT director on the simple grounds that they had built up a good system of work in the commercial service, and therefore would be able to cope with any other department as well. And the fact that they knew no more about computers than a dance school graduate does about the structure of the atom did not embarrass anyone. “There are specialists enough in the IT Department,” they said. But a good manager is definitely missing. So, is it possible to identify a “good manager” with the help of tests?

Personally, I hadn’t heard of tests for top managers, so I “tested” candidates right at the interview. For example, I asked them this question: “Imagine that tomorrow you are to hand over an important project to the CEO, and today at 5:30 p.m. your employee in charge of the key part of the project reports that nothing is ready yet. Your actions?”

It is important to me how the other person thinks. Most people were trapped and said exactly what they were going to do with the employee, right now or after the project was completed. But they had to start with themselves, not the employees. How is it that an important project is not planned in such a way as to make it known long before the deadline? Why weren’t they in control of the stages? In some cases, trusting employees is an effective strategy, but it is better to trust when all the work is planned and the employees have been tested in previous projects. In any case, the manager is responsible for the results of the work, so I would be glad to hear the following answer: “Since I have to hand in the project tomorrow, I will now buckle down and do the work myself, because ultimately this is my mistake one way or another. But after submitting the project, I will analyze my mistakes and draw conclusions to avoid this situation in the future”. Mistakes are made by everyone, including me, but the best of us do not make them again.

By the way, just a small digression: somewhere I read that the phrase “to learn from mistakes” describes the mechanism of learning incorrectly. Mistakes cause stress, success is happiness. So, success in terms of learning and development is much more effective than mistakes. Whenever we succeed, albeit insignificantly, our brains receive a dose of “hormones of happiness”: dopamine, serotonin and endorphins, which we subjectively perceive as “joy”, “happiness” and “euphoria”. The brain wants another drop of these hormones as much as a junkie wants a dose of drug. And that’s why the brain is constantly adjusting its behavioral strategy to get more joyful hormones. It remembers the moments when the injection was received and tries to repeat that moment. This is how we learn to walk, talk, drive, charm people and make money. Of course, the brain also does not like to face stress, but in terms of the strength of rewards, the hormone of joy is much stronger. Therefore, study your success much more closely than your failures, so you will grow faster and more effectively.

Understanding subordinates’ tasks is the concern of the supervisor, not the subordinate.

Let’s get back to the tests. I like to ask how candidates put their jobs in the hands of subordinates and how they control it. How are the results evaluated? Of course, many well-read candidates give textbook answers, but if you are persistent enough and ask a lot of questions, sooner or later the candidate will be unprepared, and then you will find out what they really think. In particular, I believe that correctly setting the task is 80% of its successful implementation (and not trying to personally control every aspect of the project), and the supervisor should work carefully on the project scope. I am ready to ask about it meticulously. But the questions about achievements, which are very much loved by some HR people, seem to me useless. Who in their right mind would answer all questions with 100% honesty? I know I wouldn’t, and everyone lies, or at least sugarcoats their past achievements to some extent.

In my personal management piggy bank, for example, there were the following situations in which I asked the candidate to look into:

— Your best specialist came to you, quite unexpectedly, with a letter of resignation, and he hints that he does not mind staying, but for a salary increase;

— A fight broke out between two very valuable employees. Your actions?

— The subordinate does not systematically perform the tasks. At what point do you have to think about firing them?

There are no predetermined answers to any of these questions, but as I said earlier, it is important to me how the employee thinks. And, by the way, how do I articulate my point of view, because I firmly believe that “Those who think clearly, express their thoughts clearly”.

I also like to ask the question:

— You have a weak employee and a strong one. Which one will you pay more attention to?

The dear reader can find the answer to this question in the next chapter.

<p>Chapter 24. Good Employee, Bad Employee</p>

You have two employees. One of them periodically undermines deadlines and performs poorly, but they are not so bad that you want to fire them immediately. The other one over-fulfills the plans and completes the projects ahead of schedule with the required quality. Who will you dedicate more of your precious management time to? I don’t know how you just answered this question, but in practice, most managers will spend more time with the first employee. And that’s a big mistake.

It’s not just my idea. In the book “First, Break All the Rules. What the World’s Greatest Managers Do Differently”, the authors develop the idea in relation to employees. In “Managing for Results”, Peter Drucker speaks about it in a broader sense, in respect to weak projects and products, to which managers tend to allocate more resources (funds for advertising, time of the best specialists, etc.) than successful projects, believing that the successful employees are already good enough. Drucker even introduced the term “investments in management ego” for failed projects proposed by high-ranking executives or even owners, when all the employees are working to save the company, although it would be cheaper and faster to close it down. But the “management ego” does not allow the boss to admit that he screwed up, and in the end the team “kicks a dead horse”.

The most expensive resource of the company is the working time of its best employees.

By helping weak employees or saving convulsing projects, we invest our most precious resource, time (the only irreplaceable economic resource), in non-viable things. At the same time, our best employees, our most successful products and our breakthrough projects, are left without attention, and sometimes without money. This mistake is characteristic of everyone without exception, except for the very old and wise leaders. This book is about managing people, so let’s focus on them.

A project that you don’t pay enough attention to may become worse than planned. And employees you don’t devote enough time to may just walk away. The best — ambitious, demanding and hard-working — will leave, and the office monkeys will remain. Imagine yourself in the shoes of an ambitious employee. They just completed a complex project, or achieved something outstanding. What form of praise will they likely receive from the leadership? A nod at an operational meeting, and a small amount of money added to their salary. And what do they see their boss wasting their time on? Talking to an obviously weaker colleague in order to help them work better.

When I was a kid, I had a friend, a good boy and an excellent student. You can’t say he wasn’t loved by his parents, of course he was. But he was the first child born to a young couple unplanned, when they were also, in a sense, children themselves. And six years later, they consciously produced a daughter, my friend’s sister. At the same time, the friend studied well from the first grade, but the sister had a harder time studying. All parental attention was focused on the sister. Not only was their son’s success at school taken for granted, but he had been tasked with the responsibility to help his sister constantly. He was helping, and didn’t consider it to be a burden. But he was very saddened by the lack of attention to himself, as if he had worked in his own family as a hired tutor for his sister. In his heart, he considered this situation unfair, and it deeply hurt him, but he did not try to argue with his parents.

Of course, my friend was just a teenager at the time. His dad and mom were his parents, and we always expect a lot from our parents. But let’s remember that subordinates take on the role of children, giving the bosses the authority and attributes of parents. One day, my employee quit when I didn’t expect it. Most of all, I was not upset by the fact that they left. I have always believed that no matter how valuable an employee who left you is, it should only be regarded as an excuse to find even better. What’s the reason to mourn about something that cannot be changed? It turns out that I had completely overlooked, absorbed by my deeds and thoughts, their gradual burnout, and disgust for the work and for me, apparently, personally. And it had been going on for weeks. And I watched it. I was proud of my ability to feel any change in the behavior of my employees to the point where I twice won arguments with my HR directors, accurately predicting the departure of employees who seemed to be forever with the company! Many people consider despondency to be the gravest of mortal sins, but pride is clearly not far from it.

I was sure we had an understanding with that employee. Sometime before they left, we often traveled on business trips, communicating on the way about work and non-work topics. But then I got other problems in the spotlight, and we started to talk less often. Of course, that’s not why they quit, there were some other reasons. But if I hadn’t stopped paying attention to them, I would have noticed the disturbing signs at an early stage and probably managed to turn the situation in my favor.

There are many people working in your organization and you have to deal with a lot of tasks. If you’re a leader, you know how hard it is to prioritize sometimes. And that most of our time is spent on urgent tasks, not important ones (according to Eisenhower’s matrix) and weak employees. But strong employees suffer without your attention. They need your approval. Your support. Your advice. Your attention. Try to at least distribute your time equally, so that strong employees do not feel abandoned. Invest your time and energy in them. This investment will pay off.

<p>Chapter 25. Non-material Motivation</p>

Last year, we were approached by a company with a request to “build a system of non-financial incentives”. My partner carried out the initial diagnostics of the company, from which it became clear that the company needed “non-financial motivation” as much as a dying thirsty man needs a Thai massage.

Due to the specifics of the activity, i.e., utilizing equipment of its own production, the company had a very large sales department, with several layers of inner hierarchy. The sales curve has been depressed for several years now, and everyone in the company has blamed everyone but themselves, of course. The Sales Department blamed everything on the production of outdated models. The Production Department blamed the Sales Department for not being able to sell products. The Financial Department blamed both of them for not having any money in the bank. The only department not blamed was the Marketing Department, because there was no Marketing Department in the company.

At the same time, the system of financial motivation (bonuses dependent on the results of work) in sales was so complex and confusing that I, a graduate of the School of Physics and Mathematics, and the Faculty of Applied Mathematics of St. Petersburg State University, had to sweat to understand it. Sales managers had long since abandoned attempts to try and understand how and for what they received money. At the same time, the management tried to reverse the sales trend by setting “ambitious goals” for the managers, who sincerely considered them unfeasible. If the company hadn’t been, by the standards of its town, the largest employer, all the staff would have left long ago. The company was in a state of despondency, apathy, mistrust and anger. Each department of the company was a “princedom of the country”, with its leader in charge. The principalities waged a protracted internecine war against all and for the favour of the supreme ruler, i.e., the owner.

When we asked who had the idea of adding non-financial motivation to this management hell, the HR Department employees answered simply that it was the owner’s idea. At the same time, we were unable to reach the owner for clarification. Every sales rep had a salary, but to motivate them to sell even more, the HR department suggested organizing (and the owner agreed to it) a contest between them with some nice extra prizes, such as a new iPhone or something like that. The best sales rep got the biggest commission, and an iPhone on top. We felt it was necessary to clear the stables in Augean, i.e., develop a strategy, switch to market rails, update the product range, review the sales strategy, etc. Our arguments were generally agreed upon by the HR Department, but in this company, it was not accepted to argue with the owner. We ended up giving up resigning from this project. I assume that some less principled specialists have developed a “system of non-financial motivation”, and poor sales managers were also faced with competitions and team building.

In general, I have nothing against non-material motivation. I am slightly skeptical about it, though. But regardless, it should only be implemented in a company with a strategy, a healthy corporate culture and well-functioning processes, clear goals and objectives. I myself tried to implement, 13 years ago, after reading about it in business books, a “non-material motivation” system in my company, desperate to overcome the differences between the departments. At the time, I didn’t realize that disagreements arose as a defensive reaction to management chaos. In a situation where the tasks are unclear, the powers are not delineated, the responsibility is blurred, any leader, no matter how well they are guided by their good intentions, will seek to pupate in his department, defending it like a fortress, from any attempt to penetrate from the outside.

I am convinced that with a well-organized company, you can win the war with weak “officers”. And vice versa, in chaos, even genius managers will be of little use. If you hear that your subordinates are arguing with each other in meetings, finding out who is to blame and who needs to do a particular task, it is not because they are naturally contentious. They’re defending their tribe because they’re naturally reacting to chaos. Constant squabbling in the staff meetings is a symptom of severe organizational dysfunction and should be dealt with first. It is useless to look at the labor market in search of magic “team players” who will rally and lead the company to new heights. In chaos, team building training does not work, and any “system of non-financial motivation” will be ineffective. Teamwork arises where there is a team, and the team emerges first of all where there are clear goals, clear, understandable objectives and a leader in whom the team can trust. When none of this is present, any “team player” tries to sit in their trench, defending and not letting anybody in.

Cats love boxes because they feel safe there. For example, a middle manager in a company where chaos reigns instinctively looks for a “box”, a place in which they will feel safe. It’s usually their own department. They set the rules there, they are able to maintain control there. If they are tasked with participating in cross-functional projects, for example, logistics and sales service are tasked with improving customer service together, then they get into a very uncomfortable area as they may not fully understand what their task is, what authority they have been granted, where their responsibility ends and the responsibility of their colleagues begin. The only thing they know for sure is that they’ll be punished if they fail. And you need to be a person of great personal courage not to try to “jump off” and evade the project, finding a thousand good reasons to do that. And no “non-financial motivation” will help the case.

Non-material motivation can serve the purpose of increasing the level of employee involvement in work. To raise it, but not to create it. If your subordinates go to work as if they had been sentenced to hard labor in jail, and after each management initiative that comes from above they compete in who will be able to ridicule it the most angrily, then running in bags or rope training at team building exercises will not help. That will only have the opposite effect. If employees in the office are unable to meet their basic needs for security, stability, and inclusiveness, then no competition will make them work faster or better. To paraphrase Drucker, we can say, “managerial chaos eats motivation for breakfast”.

<p>Chapter 26. Success that Causes Failure</p>

A certain entrepreneur (let’s call him Robert) established his own company about 20 years ago. At first, he was carrying goods from Western Europe and earned a good profit from them, then he saw the Chinese emerging economic power in time and switched to purchasing products from the East, and his business grew even more. Robert was never lazy, worked hard, and the results of his honest work let him afford a house in the suburbs, a villa in Cyprus, two prestigious brands of cars and his son’s studies in the U.S. Robert’s business wasn’t gigantic, but it wasn’t small and it was firmly standing on its feet.

What happened next, Robert describes as “increased competition.” On the one hand, many people started to carry goods from China, including two of its former top managers. On the other hand, end users have been lured by large retail chains. The margin profit went from three-digit, to double-digit, and then fell to 15%. The business hadn’t failed, but it had gone way down. The warehouse shrank and moved from the city center to the outskirts. The office didn’t move, but the business center, where it was located, suddenly found itself far from the most prestigious area of the city. The owner of the business center lived in the Emirates and did not invest in his real estate. Soon it was no longer convenient to invite big clients to the office.

The increase in competition explains a lot, but not how some competition managed to build an effective and fast-growing business in a few years right in front of Robert’s eyes. How much did they earn compared to Robert? Using his business connections he got the information, looked at how much they import, and felt depressed. The last time he saw those kinds of good numbers in his own business was 12 years ago. Even so, Robert did not give up, he was still awake and energetic. So why couldn’t he hit the same numbers?

You remember our discussion about the fact that a person does not learn from his mistakes, but from his successes? What’s the brain’s hormonal “dose” for each success, which it then tries to repeat? Thanks to this feature, the world gets virtuoso violinists, IT heroes who create business empires from nothing, and exceptional professionals in their field. They enjoy doing what they do, and they want to do it more and more. The more they do it, the better they are able to do it, the bigger their “dosage” is and the more they want to continue. Of course, it’s a significantly simplified model. Everything is more complicated in life. But success generates success. That’s a fact.

But the other fact is that success can also lead to failure. Robert’s competitors didn’t invent anything supernatural. They chose a more modern business model, placed their bets on online trading and automation, systematized sales, and succeeded. The real question is, what kept Robert from doing the same thing? And the fact is that the belief in the strategy that once brought him success was too strong for him to give it up.

I’ve personally seen many examples like Robert. Eight years ago, a businessman who built an “empire” in his own region, as he himself said, assured me that in some five years even the federal scale would be small for him. So far, it has entered the market of only one region, a neighboring one, and then not without difficulties. He’s smart too, he’s energetic too, despite being over 50 years old, but he believes too blindly in old proven methods.

I have pretty good business experience, too, but sometimes I worry about my knowledge becoming outdated. And that’s why I’m constantly trying to study. For example, now I’m taking a correspondence course in internet marketing at an American university, and I try to read a few articles a day and a few books a month. Business and governance in today’s world is a constant erosion of one’s own past experience, at least in part. Understand that the most successful strategy of yesterday could become only be a memory today.

And the same thing is true about the management of people. People change all the time. People change themselves. A person in his 40s is different from a 20-year-old. Different generations are very different from each other. Recently, my 52-year-old acquaintance was furious that his subordinate, a young man, missed a meeting, as it seemed to him, without excuse. The young man, as it turned out later, thought otherwise. He had a force majeure, and he warned his supervisor, sending him a message to all the known messengers and, just in case, also an SMS. But my friend got out his old Nokia to call his wife, didn’t read any of his texts or look at any of his messengers. This friend of mine did not understand how it was possible to give warnings by sending an SMS. His subordinate had no idea that it was possible not to use messengers in contemporary life.

In the late 1990s, when the labor market was dominated by the “hungry generation”, financial incentives worked well, and people were generally more willing to work harder to earn more. I don’t have statistically reliable data in my hands, but from everything I see around me, I conclude that new generations of workers are more willing to choose leisure time over additional earnings. You can’t ignore all that if you’re the boss. If you’re the boss, you have to talk to your subordinates in a language they understand.

Another guy I know owned a household goods factory. Successfully selling his goods, he then decided to invest in an IT startup. Since he couldn’t sit around without a job, he ran this startup personally. Later on, he told me that all his managerial experience at the factory was completely useless when he hired young software developers. They each worked in their own mode, did not want to “march to orders” and did not like to be spoken to in a rude way. Setting them tasks and controlling them had to be completely different. Gradually, he and his subordinates developed an understanding of each other, but my acquaintance felt he had to change more than they did.

You should be prepared to change your human management strategy if the situation requires it. For example, when I look at the generation of my youngest children, I am very happy that I probably won’t have to manage them. In about 10 years, they will graduate from universities and enter the labor market. They learn less through written information, preferring videos. As they grew up with a smartphone in their hands, they don’t use our social networks. Many of them visited more countries in the first 10 years of their lives than their parents in the first 40. Their brains work faster, but they’re only willing to spend their energy on something they’re interested in. I don’t think it’s some horrible or “lost” generation, not at all. I just see that they are different, and by their adulthood the difference between our generations will only increase. I guess if I have one of those employees in 10 years I’m going to have to hire an interpreter.

Draw experience and knowledge from your success, but do not let success replace common sense and the ability to look at things broadly. And remember that if you encounter a new type of generation of subordinates, it is tantamount to moving to another country. If you want them to understand you, you need to learn their language!

<p>Chapter 27. Training and Talent Pool</p>

There is an old management joke attributed to various authors. The Director General discusses with the Deputy Director the possibility of training employees. “What if they learn and leave?” the deputy asks doubtfully. “What if they don’t learn and stay?” says the director.

There are few good managers in Eastern European labor markets. They’ve just been out of demand for too long which makes the supply go away. For many years, in the period of post-socialist growth, companies have hired amateurs in top management positions who are actually not well versed in both their direct professions and in human management. This was due to the fact that the markets for goods and services grew then by tens of percent per year, and, on the one hand, it created a stir-frozen demand for specialists. On the other hand, it allowed companies to grow and earn even with the staff available.

That doesn’t mean, of course, that all the managers were amateurs. There were also professionals, those who were constantly learning, reading, and developing themselves. But it was difficult to catch them in the murky foam of pretentious CVs on the labor market, as they were clearly not in the majority.

However, times have changed now. Markets have approached natural saturation, and demand has fallen in almost all countries, for various reasons. The level of competition has increased dramatically, and the need for professionals of the highest standard, respectively, has increased, but there is a lack of suitable professionals available on the labor market. If a true professional is working in a strong company, the company makes some effort to keep them in the company. Thus, real experts rarely enter the labor market. And if a company is growing, and does it at a fast pace, it needs a lot of experts.

Quote from a forgotten book: “The growth rate of a business is determined by its ability to attract and retain great people”.

The only way out of this situation is to train staff. All the strong, growing, firmly standing on their feet companies that I have seen, have spared no time or effort in training. At the same time, I absolutely do not like it when the costs of staff training are called “costs”. These are long-term investments that, with the right approach, pay off more than they cost.

Of course, there is always the risk that the employee trained at the company’s expense will leave. Of course, you can keep such employees for a while with a contract on “amortization” of training, but the knowledge pays off slowly, and if a trained employee leaves after 12 months, it is still a loss for the company. But if that happens, and it’s not a one-time thing, then it’s a reason to analyze what is happening. Why does a smart, intelligent, purposeful employee leave the company that helps them develop? Why would they leave a company that values them and invests in them? Probably not enough training, or something else went wrong in the Kingdom. In other words, maybe there’s something wrong with your team?

The goal of any shareholder is to increase the value of their business, even if they do not plan to sell it. The goal of an employee is to increase their value in the labor market, even if they do not plan to change their job. For good employees (probably it is better to get rid of the inadequate ones), training serves as a very good “non-financial motivation”, the same one we talked about in one of the previous chapters. Not only does the employee understand that their value is growing, but they see the company’s willingness to invest in them and as recognition of their merits, which is very important for any hired manager. We constantly train our employees, clearly understanding that sooner or later they will get off our train. It’s inevitable and right, because they have their own vital interests. But we would like to make the joint “trip” interesting and useful for all its participants. And learning is one of the best ways to do that.

But even if you don’t highly value creating a sense of heightened interest in your staff, training is something you’ll still have to invest in, otherwise you’ll simply have no one to work with. You can try to find diamonds in piles of slag in the labor market, but this is difficult with unpredictable results. A professional who has done a brilliant job in one company can sour and not take root in another. If you read something about sports, you’ve come across stories about how the players who collected lots of medals in one team, and then, after being sold for huge millions of dollars to other teams, did not do anything outstanding there. Lionel Messi, who rarely left the pitch without a goal at Barcelona, rarely scored for the Argentina national team. Business, like football, is a team sport, and not all tasks in it are solved by inviting titled players to join the team. The team of 11 strong teammates who play well together will show a better result than one star surrounded by 10 mediocre players.

My view of corporate training is this:

1. You have to learn all the time. For example, each director faces many challenges, so they need to be a specialist in many areas. Thus, top managers always have something else to learn.

2. Sometimes, 2—3 short courses per year, with constant practical training, are better than a long, in-depth course.

3. Everyone has to learn, not just some. Knowledge must be shared more or less evenly within the company. It is necessary to train not only top managers, but also, to a greater or lesser extent, all employees.

4. Where possible, it’s best to teach everyone with the same coach or school. Otherwise, there is a risk that graduates of different schools in your company will use different terminology and different approaches, and it will take a lot of time and effort to synchronize the activities.

5. It is necessary to teach not only professional skills including finance, logistics, accounting, etc., but also managerial skills in equal proportion.

6. All top and middle managers should have a basic knowledge of strategic management. This is also true for managers in the field of finance and accounting.

7. All top managers should have a basic knowledge of marketing.

8. In some cases, specialists within the company are quite capable of conducting small seminars themselves. For example, in one of the companies where I worked, the CFO held good seminars on management accounting for non-financial professionals, and it was very useful.

Even if the specialists in your company have been working for a long time, their knowledge becomes obsolete. Life constantly poses challenges to them that they have not solved before, and their past knowledge may not be enough. In addition, the training helps you to come out of the management bustle and look at yourself, your job and your subordinates from outside. From time to time, it just needs to be done.

Talent pool

Another powerful source of growth for the business and motivation for employees can be the talent pool program. Of course, such a program is suitable for medium and large companies, as well as fast-growing businesses, where employees always have opportunities for career growth. In short, the program assumes that employees wishing to be promoted must complete a professional training program within a specified period of time, either internally or externally, and if successfully completed, they are enrolled in the so-called “talent pool”. In practice, this means that they are the first candidates for certain positions in the company, and as soon as these positions open, they take over.

Of course, things aren’t usually so smooth in life. It’s not enough for an employee to want to grow. For example, let’s say an employee wants to evolve from a performer to a manager, or from a small manager to a big one. But are they capable? Do they have the necessary skills and talents? The performer should be tested for management capability, and the middle manager must first prove their managerial effectiveness in their place. Of course, the talent pool program applies only to employees who have worked in the company for some time and have worked successfully.

There are some dangerous sides to this venture. For example, if an employee has completed the training and met all the conditions of the program, but has not received a promotion within a year, the effect may be the opposite as they may burn out, become disillusioned and leave. After all, they tended to be trained outside working hours, and didn’t invest their own money, but they did invest their own time and effort, and they may be offended if their investment was in vain. They may find a way to use their education, but it may not be in your company.

When joining the program, it must be very clear which positions the employee will be able to apply for and whether or not they will have a choice. For example, after training, a company may send them to another city to open a branch office. It is better to say this in advance and ask the staff member to sign a document in which they agree to this option rather than to face future mutual disappointment.

Building a talent pool programme can be a powerful motivator for a company’s employees, but the company must have an atmosphere of trust to do so. The HR Director of a rather large company told me how he had launched a talent pool program at the request of shareholders, but nobody wanted to join it voluntarily. The shareholder had a very strict style of management, and the employees did not believe that, even after training, they would be able to count on a promotion. Having looked at all this and listened to a number of reproaches about the bad organization of the program, the HR Director decided to leave the company. If your company has a talent pool program in place, but the participants need to be dragged into it with a snare, your company is in big trouble.

<p>Chapter 28. A Few Brief Thoughts</p>

This chapter contains a few brief thoughts that may not actually warrant their own chapter, but are still worth mentioning.

Powers are delegated, responsibilities are not.

As a young man, I was struck by the television news that the U.S. Secretary of Defense had resigned. I was amazed at the reason for the resignation, which was the shooting by a literally crazy infantryman at a remote military base. A soldier suffering from a mental illness grabbed a combat weapon and shot down his fellow soldiers. Sitting in Washington, D.C., the Minister of Defense was hundreds of miles away from the scene, saw neither the soldier himself, nor most of his superiors, as the chain of command stretched a long way from his position to that of some distant private. One would think he would have stayed. He wasn’t the one who put the soldier on duty, he wasn’t the one who trusted him with a combat weapon and he wasn’t the one who pulled the trigger. But if something goes wrong in the kingdom, you’re going to have to answer for it. And the Secretary of Defense had to leave his warm office and honorary position.

Remember that authority, i.e., decision-making authority, can be delegated, but responsibility cannot be delegated, it remains the responsibility of everyone who is listed as a manager in your organization. Most adequate managers are well aware of this when it comes to their subordinates. But if it comes to related departments, it’s not that obvious. For example, the sales manager has an ambitious revenue growth target. To meet the target, they need new employees, who are being sought by the HR department. Does the sales manager have the grounds to justify department failures by saying that the HR department had found the wrong employees, or did it too slowly? I don’t think so. If I’m supposed to have a task, I’m supposed to do it. And if I have delegated a part of the task to the relevant department, this does not relieve me of responsibility. I have to do everything within my authority to complete the task. And if I don’t have the authority, I have to go to someone who does.

If you want to yell at a subordinate.

If you have an overwhelming desire to yell at your subordinate, which happens to everyone from time to time, then you hired the wrong person. This is especially true if it happens often. An employee with such strong emotions is most likely to be critically incompatible with you. Either they’re too incompetent, or you speak too many different languages and your encoding systems don’t match. In most cases, it is not possible to establish a normal dialogue.

But the opposite is also true: if you want to yell at all your subordinates, or if you have the feeling that you are surrounded by mentally deficient people, the problem is yourself. The problem is always with you, but in this case, especially you. Either you’ve recruited incompetent employees (and it’s you who’s recruiting them), or you can’t get your thoughts across to them.

Difficult tasks should be set verbally only.

If you give a difficult task to a staff member, one which they did not solve before, do not do so in writing. The wide range of written communication tools, including mail, corporate and personal messengers and collaboration planning programs, offer a variety of written communication opportunities to the pleasure of introverted executives. This is convenient, but only for short, simple messages and tasks. If you’re setting a difficult or new task, don’t be lazy and instead talk to your subordinate in person, on the phone or Skype, give them a detailed explanation and ask them to repeat back to you what they’ve heard. It is not harmful to write down an oral order, but it is dangerous to explain the task in a letter. The subordinate will either not perform the task or will perform it as understood. The truth is not in the mouth of the speaker, but in the ears of the listener. If you are misunderstood, it is your problem.

By the way, conflicts and disputes cannot be solved in writing either. Writing, especially on the screen of a smartphone, is difficult, so we subconsciously shorten it, i.e., we simplify our speech, impoverishing it and reducing the quality of our arguments. But the remoteness of the other person drives us to written acuteness, writing things which we would never say in their face. If you have a conflict with colleagues, subordinates or management, find a way to talk to them in person. If your mailbox is filled with the squabbling of your subordinates who have been trying to figure out the relationship by email for a long time, then put them, physically, in a meeting room and make them agree in person. At the same time, think about whether you really want them on your staff if they do not have the courage to talk face-to-face. Instead of bickering, they should be looking for a way to resolve issues.

The power of praise.

I don’t know why we’re so stingy with praise and compliments, because it’s so effective, simple and free. A good word is nice for the cat or the locksmith, and the CEO too. This tool has almost no side effects, and you are unlikely to “overdo” your subordinates. At the same time, timely payment of wages and even issuing a bonus to the employee cannot, unfortunately, be considered a form of praise, as it is perceived by the employee as due since they earned this money through work. Praise is a spiritual motivator, and a powerful one. Respect, praise or recognition (but only when genuine) are much more effective ways to influence people than threats or criticism.

Employees come in to join the company and quit to leave the people.

In most cases, when people get a job, they don’t know anyone at the company. They may have been fascinated by their future manager at the interview, but one way or another, first of all they assess the company, including its stability. They take the risk of refusing other offers and agreeing to exchange their working hours for a promise of timely and fair payment of wages.

But employees seldom leave because they were lured away by other competitors. Most often the trigger to change jobs is dissatisfaction with the existing one. People are actually much less willing to change jobs than they seem. In today’s companies, they may not be satisfied with everything, but a new job is a new risk, a step into the unknown. And if an employee took such a step and wrote a resignation letter, then it means that there were significant reasons, from their point of view. Most of the time, it’s the direct supervisor who causes their dissatisfaction.

Of course, if your organization regularly delays wages and treats people without respect, it is no surprise that there is a steady flow of resignations. But if, on the whole, more people leave one department than the other in a healthy team, that’s a reason to be wary. And if you’re the head of this department, you’re going to want to be twice as wary. An effective manager does not desire frequent changes of subordinates, which increases the burden on them and introduces possible risks. Too frequent dismissals of subordinates are a sign that the manager is unable to select, retain and motivate subordinates. Most of the time, both of these signs are present. Is this an ineffective leader, and do you really need them on your team?

Hire effective people.

As already mentioned in another chapter, it is important not only to be an effective leader yourself, but also to hire effective leaders. It is not their professional qualities that should be evaluated. A good production manager is not one who remembers by heart the thread diameters of each bolt, but who has order and respect in the shop. All managers in a company should first of all be professional humanists, and only after that should they be financiers, programmers or marketers.

Remote work.

For many years, I have been managing branch networks, and I have developed the following formula for myself: The quality of branch management is inversely proportional to the distance to it. In the absence of management and control, even the most responsible employees will sooner or later relax. Honest subordinates themselves admit that working at home or “at a distance” in a cafe is very difficult because there’s always too much temptation for distraction. I’m very cautious about large teams working from home. Our employees work mainly remotely, but we don’t have many of them, and we carefully choose them all — individually?. If you don’t have such an opportunity and you can’t avoid remote work, control and monitoring tools will pay off.

“Don’t throw good money after bad.”

This can also be understood as, “don’t spend any more money on something that obviously doesn’t work anymore. It’s more difficult than it seems to get out of a loss-making project in time or to stop producing a product that hasn’t started to make a profit. Scientists call it sunk cost fallacy, or “the emotional trap of irrecoverable losses”. In particular, it makes players in the casino continue to play after big losses, in the desperate hope of recovering the loss. The more we have invested in something, the harder it is for us to accept it as a failure, to record losses and to move on. It’s not just about the money. Often, people continue to maintain a relationship based on a simple but false idea: “We’ve been together for so long that we can’t end the relationship like this.” In fact, the length of a relationship in the past does not say anything about its quality in the present. If you’ve lived together for twenty years, and now it’s hard for you to survive even twenty minutes, your relationship probably won’t come to life anymore, no matter how many good things you’ve had in the past two decades.

The same is true for subordinates. The more energy, emotion and money we put into an employee, the harder it will be for us to fire them, even if they have not performed their duties for a long time. We say to ourselves, “So it was all for nothing?” But it’s hard for us to admit that we’ve wasted so much energy, and we keep giving people “second chances”. And the more ambitious and prouder a person is, the more difficult it is for them to accept losses, including emotional ones. Therefore, completely useless employees often work for many years near bright, charismatic entrepreneurs. They fail in project after project, entrepreneurs get angry, but still do not fire them, do not record losses. If you are a leader, you should avoid the “emotional trap of irrecoverable losses” and think twice before giving someone a “second chance”.

<p>Chapter 29. How to Manage Top Managers</p>

People who have climbed to the top of the hierarchy and made a career there are ambitious people who require special attention. Personally, I believe that respect for subordinates of any level is a sign of a healthy management culture. Managing people you don’t respect means burning your own life in vain with no result and no pleasure. But top managers or members of the board of directors, in this sense, stand apart, and their management requires separate efforts.

As I have said several times throughout this book, you don’t have to be a saint. You can be a misanthrope, an introvert, a nasty guy with bad manners, that’s your right. But if you want to build a big company, you can’t do it alone. You will need not only specialists, but also people capable of organizing the work of many specialists, to make sure that every daily effort of any employee is at least one step closer to the company’s strategic goals.

It may seem that this idea contradicts the previous thesis that it is better for a manager not to try to act as someone that they are not by nature. But it is possible, however, to remain true to your nature and to be an effective leader at the same time.

I once witnessed a pretty sad scene. The owner of a company, who did not take part in operational management, suddenly decided to attend a two-day regular event, which was held by the CEO with the heads of all regional and foreign departments. The owner was very upset by what he saw and heard there, and it seemed to him that the company was not moving forward and developing. He, being a straightforward and inflexible man, did not hesitate to inform the director of this perception, and in a very indelicate way. The humiliation of a top manager is not the most effective way of motivating them at all, but humiliating them in the presence of their subordinates is all the more so. The director listened silently, clenched his teeth, and the next morning they came to the closed part of the meeting with their resignation. When they made their announcement, I watched the owner closely. He was clearly discouraged and upset, even though he was trying not to show it. Now he was, in a way, humiliated in the presence of colleagues and subordinates. I can’t say that the outgoing director seemed to me to be a very valuable acquisition for the company, but their abrupt departure in the middle of the season threw the business back farther than it seemed to be to the owner the day before.

Manage people you don’t respect — burn your own life for nothing, no result, no pleasure.

Why did this happen? Because the owner, who was very self-confident in appearance but clearly in a state of severe internal irritation, boiling with reproach from the subordinate, could not even imagine what he felt. Partly because he had never worked for a day in his life, he never had a boss himself, so he had never heard any offending words from his superiors. Partly because he didn’t even think about how he felt. At the same time, he, the owner, is far from being stupid, and I am sure that if he had given himself a moment to think about the effect his words might have on others and subordinates, he would have tried to change his behavior. But he didn’t even think in that direction.

It’s useless to pretend to be a soft-hearted person if you’re a strict one, as well as the other way around. But if your words offend or humiliate subordinates, shouldn’t you try to change the way you talk? How else can you attract and retain real professionals? The solution is to remain true to your nature while changing your attitude. Changing your attitude will result in a change in your behavior. It’s a lot harder, but it’s also more effective. Because if you’re mad at your subordinates, you’re actually mad at yourself. If you don’t know what you look like from the outside, and you’re afraid you look worse than you think, it’s best to have someone you trust with you. It could be a good and experienced HR director. This may be a mentor from outside, not necessarily a great entrepreneur, but an experienced and wise person, who, having been with you at several meetings, will give you an understanding of what your subordinates feel when you are not tuned into them.

Losing their best people is not something a company can afford to have happen. Moreover, the creation of unbearable working conditions for professionals, as well as the employment of those for whom nothing matters, has negative consequences. Therefore, creating a respectful working atmosphere in the meeting room is the most important task of the principal of the company. The atmosphere does not have to be complacent or relaxed. For some time, I was an advisor to an owner, at meetings with subordinates, each of whom managed an impressive structure. If they came even five minutes late, the delay was considered a disgrace. Most often the owner talked to his subordinates in a businesslike manner, occasionally abruptly. He did not forgive negligence and laziness, which he always talked about openly, and he did not hesitate to part with those whom he did not understand. But he was very much respected and valued for his fairness and consistency.

The principal needs motivation, too.

Let’s suppose you are the owner of a company and the company has a hired general operating director. Who is responsible for ensuring that employees are motivated to work actively? The CEO. Who’s responsible for keeping the CEO motivated? With this question I once puzzled a business owner. “Do I have to take care of his motivation? But why is that? Nobody motivates me because I’m highly self-motivated. He should be just like me.” Of course, it is best to hire people with an inner passion for the cause, someone ambitious, willing to prove something to the world. But that doesn’t mean they still won’t have to be motivated. Motivation comes from a work environment that has clearly defined goals and expectations, with trust, support, and respect provided for the employees, including the right to make mistakes. For many years, I have looked at the director’s relationship with the “shareholder-director” and I can say with certainty that surveillance, distrust, deception, and creating a network of spies and snitches behind the backs of subordinates is not the best method of increasing labor enthusiasm and motivation.

The same is true for top managers. During my years as CEO, I have formulated a personal list of principles regarding the recruitment and management of top managers, which I have tried to follow:

1. Every single one of my employees has to be stronger than me in what they do. For example, a financier should know finances better than me, a marketer should be better at marketing than me, and so on;

2. If I hire a person more competent than I am, it’s stupid not to listen to their point of view. Otherwise, why else would I hire him? The labor market is full of simpler and cheaper individuals;

3. In addition to being skilled and knowledgeable about their particular department, a top manager must also be skilled in management. For example, a financial director must be good in finance and management at the same time;

4. I’m never close friends with my top managers, but I treat them with respect. I trust them because you can’t work with someone you don’t trust. Trust, however, does not mean relinquishing control. If I stop trusting an employee, I stop working with them;

5. I give my subordinates broad powers, but I expect them to achieve their goals;

6. My task is to set goals, answer questions and provide employees with the necessary resources to achieve them;

7. If a senior manager is faced with a lack of resources, they cannot use this as an excuse for not achieving the goal. They should come to me and ask for additional resources. If the manager doesn’t come for them, then I assume they have enough of them. If they don’t have enough, but they don’t come for more, then they’re not a top manager;

8. Everybody can be wrong. Including me. My employees can be wrong. The ability to admit mistakes and to spend less time on excuses than on correction is a key component of the top manager’s competence;

9. If I’ve decided to fire the top manager, I’ll fire them as soon as I’m ready. If they have not stolen money from the company or have not grossly breached any of the other clauses of their contract, they will receive everything that is due to them under the contract;

10. The best motivators are trust and gratitude. Trust your subordinates and openly praise their merits, and you will have no problem with their loyalty. Trust is not the opposite of control. If you trust a subordinate’s judgment and decisions, it does not contradict a warehouse inventory or cash flow control in accordance with clearly established rules;

11. All the rules of the game should be discussed in advance, and never be changed retroactively or in a one-way contract. If, for example, the actions of your subordinates are to be verified by independent auditors, you should notify the employee during the hiring process and provide details of the verification process, with the verification itself being conducted openly and according to previously agreed upon rules;

12. You have to recruit people who want to learn and grow. The desire to learn begins with the awareness of the student that they actually have something to learn. I’m an eternal student, there’ll always be something I don’t know. I would like to have students on my team, too;

13. It doesn’t matter who did what, how hard someone worked, or how much work they did. What matters is the end result.

<p>Chapter 30. Conclusion</p>

The conclusion, like the introduction, should be short. Everything is told between these two parts of the book. I only give you a short summary here:

· The path to the top of the leadership profession begins with the first and simple but important step which is the need to stop thinking that everyone is just like you, only a poorer version, and to realize that you are surrounded by people who have their own interests and points of view;

· Managing is about explaining to people what you want them to do. But you can only do this if you speak the language they understand;

· Learning how to manage people is actually learning how to manage yourself. Rather, it is not a search for ways of influencing other people, but a way of tuning one’s perception to their frequency;

· You can’t control what you don’t understand, including other people;

· In general, most people have nothing against being a subordinate;

· It matters less what you say to your subordinates than whether or not they have granted you the right to speak to them;

· Formal leadership methods do not work if the informal ones are inactive;

· Money, in terms of remuneration for work, plays a much smaller role than one would think;

· The higher an individual goes up the career ladder, the less important their professional skills are, and the more important their managerial skills become;

· A good leader can’t help but be fair. But being kind and fair to subordinates is not enough for effective leadership;

· Whatever’s going on in the company, it’s the manager’s fault. And if you’re in charge of your company, it’s your fault.

I hope that the thoughts and experiences I have shared in this book will help you in solving the difficult task of managing people. Good luck to you and your business!


Svyatoslav Biryulin

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