Corporate Scarcity – The manager’s mindset

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In previous posts I talked about the history of corporations and the contributors mindset. In this post I will discuss the mindset and challenges of being a manager in a corporate environment.

The manager, whether that is project, product, program or resource manager, is continually faced with the prospect of knowing the directions the team or teams is to go, but must turn that vision into a strategic plan as to how to get there. This is primarily done with either too few or barely enough resources to get the job done. During this execution the manager must fend off the pushes and pulls of peers and higher ups, which always want more, if it’s going to have an adverse effect on the teams immediate goals.

When looking at the manager’s perspective it is important to also note that they still have most, if not all, the scarcity aspects of the contributors. On top of that they must also face the challenge of productivity management, resource allocation, aligning and prioritizing varying objectives, positioning and communicating their teams value and finally being a knowledgeable and effective leader.

Productivity Management

Productivity management is assembling, cultivating and maintaining a team to achieve a specific role in an organization. The more productive a team is, the better it, and its management, look. The limiting factor here is that the team size is limited to often being just enough to get the job done. This creates a scarcity environment where individuals are held to a standard mold of expectation of productivity. An individual’s value therefore is based primarily on how well they match the mold, with a secondary basis on their talent.

One place I worked at was a highly political environment, where perception of success was more highly regarded than actual success. In this environment those whom were adept at political maneuvers, even at the contributor level, were regarded as the most successful.  At another company, the definition of success was based on how well you worked with others. A third company I worked at based success on how much you produced as an individual. These are just examples of how varied the mold’s expectations can be.

Hiring

Having a team understaffed or improperly staffed leads to failure of projects and future assignments going elsewhere, or existing direct reports feeling overworked and leaving. As a manager you are expected to hire the right individuals for your team, which often means a specific skill set, a compatible mindset to your team and organization, the right amount of relevant experience and willing to work for the amount the company is willing to give. This makes finding the right people in a timely manner that much more important. This often limits the talent pool making the job that much harder. Add to this that the manager usually has to use an interview system which gives only a fraction of the information needed to make the “right” decision, and a vision as to the perfect fit can become a crapshoot. Many interviewing strategies have been developed, but there are still huge risk factors which can include: how well the candidate interviews, the type of stresses the candidate is under external to the interview, and what preconceived notions you and the other interviewers have. This tends to result in an interview system which results in a period of uncertainty for the company’s productivity, and the individual being hired. In the worst scenarios, the company sinks a lot of money into the individual, with very little productivity and fires the individual, resulting in financial troubles for the individual as well.

Cultivating

As a manager it is not enough to just hire and fire, you are expected to cultivate the team’s talent as well. Lack of talent growth by the team members tend to cause them to look elsewhere to gain those talents, and ultimately can cause them to leave the team. Another consequence a manager faces here is that they are only given a limited headcount, which is one of their largest scarcity aspects, which must be capable and talented enough to handle their role in the company. Growing talent is one way to fill in the skills needed without requiring more hiring. Managers challenge and grow the individuals on the team, aligning skills needed with people they already have.

The difficulty here is that the number of “challenging” projects are often seen as desirable by the entire team, but tend to be outside the team’s primary responsibilities. This creates an aspect of scarcity as you much choose how to grow individuals without creating discontentment with the rest of the team. In rare cases you may run across a scenario where the a team member feels entitled to one of these projects, but doesn’t have the skillsets required, or isn’t chosen. This results in the same discontentment even if they have other opportunities.

Another aspect of cultivation is performance reviews. Depending on the company you work for, performance reviews hold a lot of sway as to the employees’ compensation and future. The problem with reviews at most companies is that artificial limitations are placed on teams and organizations as to how many people can be evaluated as excelling or failing. These limitations once in the organization then get divvied out based off of team perception and politics. This ultimately can lead to a scenario where individuals don’t feel adequately compensated for their contributions, and if the philosophy is made public, an environment where someone’s success hurts others come review time.

One company I worked for had a review come around, and a limitation that worked out to only one individual being given an exceeds expectation grade. The past year I had saved a project, got a multi million dollar deal, and played the key point person for a large international customer, while not being paid for most of these responsibilities. Due to the project, which previously had been seen as a failure, with a customer super cautious about who it worked with, created a scenario where another’s achievement were seen as more desirable than my own. Ultimately the project I turned around became the primary project of the company, but by then it was too late for me. This scenario happens a lot, both from the reviewee and the reviewer side. As a reviewer you must make decisions as to whom you’re going to reward and who you’re not. Often times these decisions are made based off of fear of losing resources, rather than purely a review of the individual.

Over time discontentment turns into turnover, which a manager is expected to limit. A failure to limit higher than normal turnover can cause the manager’s manager to question their ability to lead a team.

Maintenance

Maintaining a team can be challenging. This is probably one of the few aspects which is not scarcity related. Working with people to get better cooperation, help with personal and interpersonal issues can be very rewarding. The difficult part comes in when its time for someone to move on. While this isn’t necessarily scarcity based, it does have aspects of loss aversion. This can create scenarios where someone is under performing or out of alignment is retained longer than they should be. If not let go, the team loses morale and respect for leadership, if let go then a contributing resource is lost or possibly other consequences based off of social circle fallout as well.

Resource allocation & prioritizing objectives

One aspect of a manager is to allocate people’s time according to new projects, initiatives and maintenance. Due to the nature of business there is never enough collective time to do everything. This creates a scarcity aspect around resource skillsets and time. New projects tend to gain more visibility and political points, but increase the required maintenance in order to stay afloat. Initiatives, either peer or directed, help with longer term organizational goals. Maintenance comes with little visibility and political points, but lack of it will lead to epic failure given enough time.

Managers must then balance all of these, communicating what is necessary, and understanding when it’s more prudent to use a pocket veto (not opposing, but taking no action to fulfill). As a manager this is where a lot of time is spent, navigating the various expectations and agendas.

Positioning & communicating team value

In business, perception is reality. While in an ideal world, there’s never enough time for directors and above to fully understand all the details. Rather they rely on the manager to communicate those aspects they need to know. If a team meets objectives, but is never heard about, then evaluation, promotions, bonuses and increases in salary will be distributed eslewhere. Part of being a manager is evangelizing the problem space your team is in, the value they produce and the individuals who excel.

Being a knowledgeable, effective leader

One of the biggest misnomers which contributors expect from a manager is that the manager is an expert in all aspects the contributor is expected to work in. While this may be true in some cases its often artificially created by the manager’s hiring choices, choosing people who aren’t beyond their own comprehension in aspects they’re less knowledgeable about themselves. The other way managers manage those more skilled than them is limiting the comments and involvement in those areas. By not commenting or interacting, the reports assume they’re in agreement and therefore don’t lose respect.

Another aspect which contributes to effectiveness is the ability to lead appropriately. This means understanding how to lead different people differently. Distance of power is used to describe how people expect to be managed, on a sliding scale with extremes being low distance of power and high distance of power.

People expecting a high distance of power want to be told what to do, and in some cases how to do it. They perceive that their manager is an expert in what they do, and any suggestion they have to make is a failure of their manager’s ability to lead. Often times these people respond better to being told their suggestion is wrong, even if the outcome is not as optimal.

People expecting low distance of power perceive their manager as an equal, with a different set of responsibilities. They tend to self manage more, and expect that their suggestions are a contribution to their environment, and not a failure of their manager. If a good suggestion is ignored then the individual starts questioning their ability to lead.

A brief history of Corporations

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A very brief history of the modern corporation

The modern corporation is founded on a rich history, and evolving philosophies, dating back to Rome.  Originally the term corporation comes from corpus meaning body, or body of people.  These were legal entities the Roman Empire used to manage everything from business to religion.  Even the government itself was considered a corporation, although none of these exactly match what we currently know as corporations.

Europe went through a dramatic change after the fall of the Roman Empire, falling into feudal society, where the governing of people and the oversight and management of the generation of value and goods were combined.  Those in charge were responsible for both the generation of goods in addition to the well being of those they ruled. The educated, connected and noteworthy would rise to the top taking prominent positions, the rest would do what they could to put food on the table. Those positions would ultimately be based off of birthright, political prowess, and ability to lead and produce profits. But as the world’s philosophies on government changed, so to did the notions behind how goods were managed and ultimately the profits were distributed.

The simplest transition for those who were in positions of power in this new world, while still maintaining their status quo, was for those with money to invest in groups, and provide general direction.  In return the profits from these organizations would then be distributed based off of the shares these investors had, along with those shares retained by the individuals who created it in the first place.  This transition allowed the previous feudal elite to maintain their positions to some degree, while allowing the government to change around them.

The corporation, unlike the feudal government, was only partially responsible for the employee’s well being and generally led to the corporation taking advantage of those who worked for them.  Ultimately the government had to step in on the side of the employees.  The positive aspect of the corporation is that the individuals who work for them tend to have a stable source of income, independent of the profit fluctuations the company goes through.  Over time, shares in companies became publicly traded as commodities themselves.

The structure of a corporation

A corporation can be broken down into five classes of individuals: Shareholders, the board of directors, executives, middle management and finally the workers.  These entities work together, performing different roles, in order to predict and produce an overall increase in value in comparison to previous quarters and years.

Shareholders

Shareholders have a financial stake in the company, having paid for the privilege of holding stock.  The goal of the shareholder is for the stock to increase in value and/or to get paid dividends from the profits gained.  The shareholders as a whole own the company.  Their ability to influence though is limited to being able to elect those who will be on the board of directors.

Board of Directors

The board of directors provides more direct influence over the executives, providing oversight of those running the company, as well as making final decisions on large decisions including dividends, compensation policies, executive salaries and hiring and firing of executives.

Executives

The executive class provides oversight, direction and strategy for the corporation.  These responsibilities require a deep understanding of how businesses work. The result is a holistic understanding of how to direct different disciplines to work together to produce value which results in profits.  This manifests in the form of corporate vision and direction, or the why and where the company is going.

Middle management

Middle management takes on the tactical aspects of business.  These individuals have to balance the why and where, with the how and what is currently being made.  The ultimate value these individuals provide is the ability to work with contributors to allow the adjustments in order to align with the executive’s vision, but in a way which doesn’t sacrifice what is currently paying everyone’s paychecks.

The other role of these individuals is to keep things running smoothly, providing oversight, handling personnel issues and a source of day to day decision making when properly empowered.

Contributors

Contributors are those who create the value.  They work in different disciplines, but are the ones who actually perform those functions which contribute directly towards revenue.  In most corporations these individuals are highly specialized and silo-ed, having little interaction with members from the other disciplines.

The value of corporations

The Corporation has become a staple of society today.  Most businesses you’ve heard about is some type of corporation.  They tend to provide reliable employment, and structures which allow individuals to contribute in meaningful ways with a limited understanding of business.  No business entity has had more success, or grown as large, as the modern day corporation.  Many corporations also provide benefits to their employees which may include health, transportation, life insurance and various others.  These benefits provide a higher quality of life for those working for the corporation.