Further "Up the Organization"

Encourage Treason

Whenever anyone says he's been offered a job by another company, don't get possessive. Encourage him to review seriously what he isn't getting out of his present job (and what he is) and see if he can better himself enough to warrant a change.

If he decides to stay, he'll buckle down and work more effectively than ever. The result is worth the week or so of inattention. And your objectivity and friendliness will help him come to a better decision sooner.

You can wince, but if you're genuinely interested in your people, how can you do anything but rejoice if they get an offer you can't match?

Distrust Your Instincts

With whom would you least like to have a nice long shoptalk?

Right. The fellow who's working on about your level over in that other division; the one who keeps getting in your hair.

So go see him. Right now. It'll be the best thing you do today.

Instincts were designed to help us survive the climb from the primordial slime, not to guide us through the day in a modern bureaucracy.

Ask yourself two questions every morning:

Chances are they'll be your top priorities for that day.

Rubber Chicken

You're sitting in the middle of the Waldorf-Astoria grand ballroom. It's ten P.M. and the Great Man is drawing to a close with an appeal that we all pull together.

Not bloody likely.

For four and a half hours, you've had more elbows stuck into you than a professional hockey player in a full season. You've been fed two weak drinks, four helpings of inane conversation (two on either side) and a year's supply of carbohydrates (you ate two rolls and the baked Alaska out of desperation). It'll take you an hour to get home. You feel like you're coming down with a cold. And now you're looking around at a room full of idiots like yourself who are looking around, wondering how in hell they got roped into this thing again.

Can we abandon these barbaric bores?

A tempting thought; but, instead, let's make them more enjoyable and productive.

If you were a visitor from another planet, had never been to one of these affairs and were asked to make it reasonably useful, what would you do?

Abolish the dais.

Label prominent people (normally on the dais) with puce (for prominent) tags and place one at each table.

Schedule the speech at seven P.M. sharp, before dinner.

At intervals, during dinner, introduce puce tags and conduct all the necessary ritual, if any. Mostly, however, there should be a discussion of the speech at each table, hopefully enlivened by the presence of a seminal mind.

After dinner, a five-minute break for the departure of those who know by now that this speaker isn't going to challenge or inform them.

Question-and-answer period. Blunt. Real questions. At some point, the chairman should tell everybody that they can go home unless they want to participate in the further grilling of the speaker until he calls it quits.

The times of the speech and the Q.-and-A. session should be indicated on the invitation--and abided by. Otherwise, a lot of late arrivals will wind up with just ritual and rubber chicken.

The Business Lunch

People seem to be afraid to meet one another except over a meal. The result is that two busy executives who need to see each other tomorrow can't get together for the next three weeks.

Solution: 1. Don't make lunch dates. 2. When you want to see someone, call and ask if you can go over now or later today or tomorrow morning. Invite people who want to see you to do likewise.

And think of all you can accomplish between twelve and two, while your friends buck traffic and stretch their weight belts.

First Prize: Two Weeks in Philadelphia

If you become an outstanding performer, your corporate reward may be a ticket to oblivion. Not intentionally. It's just because top managements, in between golf games, outside board meetings and charity drives, spend their time assigning their best people to problems instead of to opportunities.

If you do a spectacular job with Time, therefore, you may be asked to save Life. But before you accept, satisfy yourself that the job you're being offered is (A) doable and (B) worth doing.

Lots of stars have accepted mission-impossibles and wound up whistling, "Who knows where the time goes?" in the company cemetery.

Top managements, be warned: After Hercules cleaned out the stables, he slew Augeas for asking him to do it.

Organization Charts and Rectangular People

Don't print and circulate organization charts. They mislead you and everybody else into wasting time conning one another. Anyway, you probably spend a major fraction of your time dealing directly with people who aren't really above or below you on the chart. Don't let yourself be conned into thinking you relate only up or down and sideways to peers.

If people are off to one side but below you on the chart, you may be tempted to ignore them, summon them to your office or at least assume they'll do whatever you want. In your own self-interest, to avoid their attack, or to enlist their required support in advance, you should go to them at their convenience to explain and persuade.

The head of the mail room or the chief telephone operator may hold your destiny someday. Figure out who's important to your effectiveness and then treat him (or her) that way.

It wouldn't hurt to assume, in short, that every man--and woman--is a human being, not a rectangle.

The Sure-Fire Townsend Innovation Test

If you come up with a new idea for your department or division, you can get an almost infallible early reading on it.

Campus Recruiting

Send the people who can't go.

To convert a corporate liability into an asset overnight, fire the recruiters and put together a group of the most active, enthusiastic and successful people at work in your company, at all levels. Make them the campus recruiters. Their job: to be honest, not to sell or persuade.

The young prospects will spot the difference. Your man, who is on top of a job that he believes in, will be worth 40 personnel-department zombis who improvise answers and deal in images.

Your part-time recruiters will plead that they're too busy to take on this chore, but it's worth it to persuade them. They'll come back freshened up by their trip behind the Beard Curtain. Who knows, they may pick up an idea.

When their recruiting starts to pay off, make them into an ad hoc committee on how to turn the graduates loose on real jobs--to find out which ones weren't turned into sullen slaves by 20 years of classroom dictatorship.

By the way, fire the training department. These baby sitters in the corporate kindergartens can turn any job into busy seatwork.

Money at the Top

The best boss to work for--if you can find him--is one who's made enough keeping money (over $1,000,000 after taxes) by his own efforts so that he can walk out the door if he gets pushed too hard from upstairs in a direction he knows is wrong. He runs his outfit like he owns it.

Too much inherited keeping money (over $5,000,000) is a birth defect. It produces high and visible insecurity. When concentrated in outrageous amounts, it tempts Daddy to buy control of U.S. Environment Corporation for Sonny to play with. That's not all bad, because it makes a bleeding genius out of whoever follows Sonny. But, in a way, it's unfair. Edgar Bronfman, for example, may be a great chief executive at Seagrams. Nobody'll ever find out.

A family megafortune guarantees a chief executive two deadly plagues for life:

Moral: If your company gets bought for Sonny--hang in there. If Sonny is lucky, he'll be out on his ass and some genius--why not you?--will be sitting in his office in no time at all.

Hot Air From Cold Salesmen

Pity the poor salesman. He's out there with nothing but his talent and your product and he has to come back to write a sales report. If he hasn't made it, he has to say why. That's when the worst salesmen become the best experts on product redesign.

They've got plenty of ideas to draw on, too. No salesman ever makes the circuit without hearing: "We would buy your product if it were:

So when the bullshit salesman makes his no-sales report, he must do one of two things: (A) admit, in effect, that he's lousy, or (B) offer excuses: "The whole trouble is product design.... "

As product redesigners, marketing vice-presidents are twice as dangerous as salesmen, which is the second reason you shouldn't have any (for the first, see Up the Organization, page 105). They talk the marketing language of the Harvard Business School, a peculiar jargon full of practical-sounding "unit margins" and "bottom-line pay-offs." It makes hot air sound like hard sense. Worse yet, marketeers love to have lunch with the kind of media supermarketeers whose by-lines appear over fatuous forecasts in industrial trade journals and newsletters. Any one of these natural gassers can fill your marketing v.p. with enough random farts to blow the whole Common Market apart, let alone your pitiful little company.

The Sabotage of Free Enterprise

If you're going to function effectively in our organizational society, it's important that you have a healthy contempt for our major institutions, public and private--and especially for their leaders. These clowns are not entitled to the respect they get as the vestal virgins of our society.

It's not clear to me exactly when "free enterprise" became a joke. Was it after the Civil War, when big business, big government and the Supreme Court formed an unholy alliance to exploit the American farmer and laborer? Or was it later, when big labor got a partnership? Or when big military elbowed up to the trough? Or when big education cut itself in on the deal?

Whenever it was, the heart of the conspiracy today against the American consumer is the New York--Washington axis, and our real adversaries are big lawyers, top Government officials and high officers of big corporations.

When the American system falls, it won't be Communists who bring it down. We aren't in any danger of being destroyed from the outside; we've perfected do-it-yourself methods.

Our blowup will come when the American housewife discovers that Clark Clifford arranged for her to pay half of the punitive-damage fines General Electric got socked with for conspiring to defraud the American housewife. He persuaded the IRS to accept the fines as tax deductions. This is the moral equivalent of letting the meat packers deduct as an ordinary business expense the cost of the ingredient they use to make putrescent meat look healthy, so they can still sell it to you.

It's no wonder you can't get senior partners of major law firms to work weekends. I sympathize with them. If I were doing to America what they're doing to it from ten to six Monday through Friday, I'd have to get stoned on Saturday and Sunday, too.

Protecting the Guilty

A typical company agrees to indemnify its officers and directors. That is, if I'm sued and convicted as an officer of a drug company for knowingly letting a harmful drug murder or deform a few thousand people, my company will pay the $2500 fine and my legal expenses and deduct them from income (for tax purposes) as ordinary business expenses. (Judging by the Allison case, where a known defective airplane engine caused the death of 38 people, corporate manslaughter costs about $200 a head.)

So the Government subsidizes murder.

All officers and directors should pay their own fines and legal expenses, and the amounts paid should be reported in proxy statements along with salaries (now reported) and expense accounts (not now reported).

You may have noted that this modest proposal does not come to grips with the main problem--the double standard by which the law protects a corporate agent from the responsibilities normally weighed against a private citizen. If I shoot my neighbor, chances are I'll be severely punished for my crime. But if, in my job, I'm convicted of withholding information about a dangerous product that leads to the death of thousands of my neighbors, the most I'll get is a civil suit that amounts to a slap on the wrist.

This is because our brightest lawyers have been working for years to preserve the myth (which their antecedents created) that criminal law doesn't apply to what I do as a corporate executive; that's covered by the civil code. (In Britain, corporate signatures end in "Ltd." That means "limited liability." The Latins are more poetic and descriptive: They use "S.A."--Sociedad Anónima, or Society of the Nameless. It all adds up to the same thing: When the cops come, there's nobody home.)

This legal anomaly has led to all sorts of aberrant corporate behavior.

Insurance companies, for example, don't disclose auto-accident statistics by make of vehicle, which would tend to warn their customers against the more dangerous cars and thus reduce bloodshed.

All that's required is one honest insurance-company chief executive:

This is only one example.

Hey, you out there! Think of the most important area where your industry would be serving the public interest if it had one honest chief-executive officer.

Does it alarm you to know that your industry doesn't have a single honest chief executive?

Me, too.

Cutback

When the squeeze is on, call in all the people who report to you--in one room, if possible, so they'll all get the same message.

Tell them, "Don't answer this now. Come in tomorrow with the answer in pencil on a piece of paper, so the secretaries don't start a panic":

If you had to eliminate some activities under your control (not just cut them back), in which order would you eliminate them?

I want a ten percent reduction in expenses from everybody. No hanky-panky. Don't eliminate an activity by transferring it to a different department.

This is painful, but it can be turned to an advantage. You probably have some vital activities that are understaffed. If you can chop fifteen percent instead of ten percent, you can have the extra five percent to feed your starving tigers.

Use this emergency to pull up all your weeds. If it's done now, the organization won't go into shock. Give me a legitimate ten percent expense reduction and plow the rest back wherever you think it should go, or save it until you know where it should go.

I know this sounds like the old Hoosier saw, "When they hand you a lemon--make lemonade," but the capacity of people to find answers, if they know it's worth the trouble, has never been tested to its practical limits.

Before you call your people in, make sure you've got the answer for your own office--and tell them what it is--even if it's just a ten percent cut in your own salary. You can't expect to be taken seriously if you're sitting there with three secretaries and two assistants playing grab-ass outside your office. Don't pull an L.B.J. at the light switch, either--unless you, too, want to be a joke.

Growth Fever

Almost everybody subscribes to the myth that a company has to keep growing. "If you stand still, you die," they say.

I don't know which idiot first carved this imperative on the tablet.

If your company comes to a plateau in earnings, take the time to look around and get your bearings. You may discover a whole new direction.

You don't necessarily have to spend your life trying to extend last year's graphs.

The typical corporate reaction to a leveling off in earnings comes perilously close to the knee jerk that philosopher George Santayana warned about: "Fanaticism consists in redoubling your efforts when you have forgotten your aim."

Acquisitions I: How to Pick 'Em

The best acquisitions will look overpriced and you'll be tempted to veto them on that score. Don't--not if everything else looks right.

The bag of snakes will come disguised as an ever-loving blue-eyed bargain.

Acquisitions II: Lock Up the Lawyers

Memorandums of intent are devilish devices that boost legal fees and cut the chances of a deal's going through.

When two companies have reached an agreement, the two principals and their lawyers, accountants and other necessary associates should meet and start drawing up the final contract--not a memorandum of intent to agree.

I don't know how much time and effort I wasted before discovering that deals aren't usually blown by principals; they're blown by lawyers and accountants trying to prove how valuable they are.

If nobody gets to go home for dinner or if the possibility arises of having to cancel that Saturday-morning golf game, you'll be surprised how quickly problems are solved.

If the two groups split up for the weekend, their lawyers will have dreamed up enough bright ideas by Monday morning to take them miles apart--even though the deal was actually in the bag on Friday night.

If everyone stays in the same room, each smart-ass idea will be rejected or negotiated while the contract is being written.

(continued on page 164)"Up the Organization(continued on page 90)

This concept is even more important in the present era of instant disclosure. When you walk out of a locked-door closing, you announce that a deal was done. Let your lazy lawyers talk you into a memorandum of intent and all you announce to the world is that if anybody wants to queer this agreement, he'd better get moving.

Don't forget the corporate seals, round-the-clock typists and a notary public. You can't go home until that document is signed, witnessed and notarized.

Brevity

The usual way to sell an idea to a board of directors is to produce a stack of bulky reports in brown, red, black, or gray leatherette binders and hand them out to anyone who might be concerned. Days later, when the subject comes up for discussion, one third of those present won't have read the report, one third will have read enough to induce merciful black-out and the remaining third, those opposed to the project, will have read carefully and assembled enough arguments to kill it outright or delay it indefinitely.

The next time you have to make a pitch in a board room, try it without notes, charts, handouts or assistants. Remember:

Why not help them out? When you know your subject cold and have a conviction, make the pitch orally. Stay under a minute. Avoid all props and end with a request for action.

No-Nos; Pissing in the Soup

Do It Now

The telephone is still underused. How many times have you read something and said to yourself: "I need to talk to him"? You may never meet him, but chances are you can talk to him. Pick up the phone. Now.

You'll discover that, in this respect, the world is divided into self-important asses and authentic humans. You won't be able to get through to the former, and that's a pretty good indication they're not worth talking to. The others will be surprisingly easy to reach--and happy you called. Who isn't pleased to learn that somebody out there cares?

But call him now. While the urge is on you. Otherwise, you'll just be adding to that giant trash can of good ideas you once had but never acted on.

Polaroid Power

If you're responsible for a group of hamburger stands, service stations, banks, nursing homes or supermarkets, where appearance is critical, take a Polaroid camera along on your trips. If you see an obsolete sign, a dirty counter or a slovenly employee, take a picture. Show it to the manager. Tell him it will be prominently featured in your rogues' gallery back home until he sends you a picture of the new look.

Worth a thousand words? More like a million.

Mercy Misplaced

The average leader avoids prescribing corporate euthanasia for a limping company operation. Why? Not because he can't read the numbers--he's sharp enough with those. Because he came up through a system that excessively rewards the ability to get along with other people.

Mercy may help him get along for the moment. But misplaced mercy is seldom merciful. As a result of his soft-headed decision, bright, able people get trapped in an obsolete division. They bust their humps fighting to salvage a lost cause.

The standard performance-appraisal sheet offers a constant reminder of how far off the track we are with respect to the qualities we need in our leaders. It emphasizes the self-serving skills of the corporate politician who can't come up with hard decisions that are truly merciful in the long run.

"Flexibility," "Adaptability," "Gets along well with others." I don't believe they're what's needed today if we're going to force our institutions to adapt to us--which is our central problem.

The Ottoman Turks for over six centuries produced an unbroken succession of able leaders. Their performance-appraisal sheet would have looked like this:

Please note--justice, 100. Without that, they would have been nothing.

May I suggest that if you don't start developing your own Ottoman Turks, pretty soon they'll be coming over the walls?

Swing Low, Sweet Supplicant

Who do you think gets the approval first?

This applies to working with all bureaucracies, inside and outside your company. I just picked regulatory agencies as an example.

A Healthy Fear of Success

People tend to learn from failure. When success arrives, however, they don't ask why and they don't try to learn from it. They go home and tell their wives how smart they are.

Take an unaccountable, unexplained and excessive run-up in the price of your stock.

For years, you've been wooing security analysts. Then one day, they all discover your stock. In a month, it runs up from 20 to 50 times earnings.

That's success! The ultimate pay-off! Wow!

What you should do, of course, instead of congratulating yourself, is call a press conference and tell the world you think the run-up is silly, that you don't know of anything to justify it and that you personally plan to sell some of your stock, if the price holds.

Instead, however, you'll probably accept the telephone congratulations of your directors, and then, in a panic, you'll look around for something--anything--that might justify the new price of the stock.

That new merger you didn't like now looks good.

That half-baked new product line might be the answer.

Maybe that big computerization program will cut costs.

Goodbye, baby.

Your successor will pick up the pieces. And all because you didn't have the guts to say you thought your own stock was overpriced.

Corporate Image

Among the many serious blows American business has suffered, none was more devastating than that delivered by the public-relations man who first applied the word image to a corporation and its executives. The result has been a massive misapplication of national energy and assets roughly rivaling the cost of a moon shot. Grown men who should be engaged in more serious activities have been spending millions of dollars and whole careers on silly speeches, institutional advertising and annual reports that look like a Sunday supplement.

Repent, for the Day of Judgment is never far away. Whatever appeal may be created by a corporate-image campaign will fade fast and sure. The only image you should care about is the smile on the face of your customer as he enjoys your product or service, or on the face of your stockholder as he scans the company profits.

Vanity, All is Vanity: The Annual Report

Take away the words and numbers required by the SEC, N.Y.S.E. and the C.P.A. firm as the price of their clean certificate. What's left? A picture of chairman J.P. Bloat and president B. Lemuel Phat, faces twisted into unwonted grins, congratulating each other on having gotten away with it for another year.

Next come a few expensive pictures of "operations" with black employees on the job--both of them hauled out of the basement, dressed up in clean uniforms and placed prominently in the left foreground. The numbers and pictures float around a badly written, one-sided puff piece.

If all the U.S. dollars wasted in the past five years on this corporate flatulence had been devoted to rebuilding the ghettos, white businessmen would be lunching in Harlem and taking the wife and kids to Watts for vacations.

But, as William F. Buckley, Jr., must have said, altruism is not the corporate bag.

So here is a viable alternative: Let corporations give really creative support to the graphic arts. Suppose the Z Corporation, at the beginning of its fiscal year, hired a good struggling writer, a good struggling artist and a good struggling photographer and said to them, "We want a 25,000-word report to the stockholders, employees and customers of our company that will give them the absolute truth about us--the good, bad, sad and funny--and the real heroes and villains of the year just beginning. And if we catch you accepting threats or bribes from anyone, you will be summarily dismissed."

Think of it! The picture in front would show the tired but happy bunch of physicists who unlocked the secret of one-coat, quick-drying lifetime paint. And a little box on the page would note the early retirement of vice-president Harry ("Iron Duke") Kelly, who tried to bury the discovery because it would put the company paint division and all of its competitors out of business in three years.

Anybody got the guts to try it? If so, I urge you to make it a three-year project, with a different team each year.

And don't choke if you have a bad year. Your annual report may well be the best thing you produce.

The Author of the Number-One Best Seller and Former Head of Avis Continues his Assault on the Dehumanizing and Unprofitable Practices of Big Buisness ...... and Offers the Executive Echelon a Handsome Dividend of Refreshingly Iconoclastic Commandments for Getting Down to the No-Nonsense Nitty-Gritty of Corporate Health