Wednesday, February 11, 2009
In response to congressional scrutiny of lavish travel perks for top executives, many in the travel industry are pointing out that meetings and incentive travel are an important part of the economy.
Yes - and no. Yes, meetings are still the most effective way for people to network, communicate and learn, because face-to-face meeting will always have higher bandwidth than any other form of meeting (or at least for the forseeable future). Yes, incentive travel is a very efficient way to motivate employees who are performing well.
No, because, at the most outrageous level, some incentive travel is going to people who need very little in the way of incentives. I'd be happy to be in the executive suite of one of the nation's top banks - and AT THAT LEVEL I wouldn't expect any incentives unless the bank was doing well. At the C-level, incentives should go up and down with the company's stock - and a company getting massive government bailout money shouldn't hand out incentives at the C-level until that money is paid back in full. An executive in a troubled company who accepts this kind of perk - with a cost that exceeds the income of some employees - should be completely prepared to have a PR nightmare on his or her hands.
This is DEFINITELY NOT THE CASE when you go to lower levels of any organization. A manager who is delivering top performance in a business unit, and increasing bottom-line performance for his or her company, should obviously be well-rewarded for that effort - especially now. So I'm particularly concerned to see Wells Fargo adopt an across-the-board elimination of incentive travel, since that is obviously a case of throwing the baby out with the bath water. What is the likely effect of this kind of misguided reaction? Loss of Wells Fargo's best performers to competing banks who will (appropriately) continue to reward their employees who are performing well. Let's put this another way: a hard-working mortgage producer who meets measurable goals this year and makes the bank a million dollars more absolutely deserves a trip to Hawaii - and I would applaud this move, as a shareholder.
Obviously, Wells Fargo and similar organizations don't face this issue at the top level where the most egregious over-incenting was taking place. No one will cry if the executives responsible for the bank's current position jump ship - and it's unlikely another bank would want them right now. Perhaps the most difficult part of being responsible for incentive travel is looking employees - even executive level employees - in the eye, and telling them why it doesn't make economic sense for them to go to meetings, when others are going. A true test of a great manager is his or her courage to do exactly this - and I hope the folks at Wells Fargo will show that kind of courage instead of the one-size-fits-all easy way out they have taken.
Meetings and incentive travel are, in fact, a critical part of the economy. Shutting them down will have a long-term negative effect on productivity growth. Let's not hamper economic recovery just because the ROI is too difficult to measure.
Monday, February 09, 2009
Some audience members at my speeches have asked me if it really makes sense to continue with their strategic planning activities during a recession. My first reaction is "of course!", but let's take a closer look at the reasons why you might not start strategic planning (or continue it...) during a recession.
1. Strategic planning takes resources.
This argument is part of the general "downward spiral" attitude - cut everything that costs money, the conventional wisdom goes, and you will end up with a profitable business. I suspect the airlines have been trying to figure out how to get rid of passengers for years, since they cost money...and that is exactly the point. Almost everything worthwhile in your business requires time and money to maintain its value. The same is true of your strategy. This is not less true during a recession - in fact, there is no better time to look for strategic opportunities as your competitors make their strategic choices based on fear and knee-jerk reactions. True, you may want to spend LESS on your strategic planning than in the past - but that is a good reason to use the SSP framework.
2. Strategic planning focuses your attention on the big picture when you need to worry about staying in business.
If you are in imminent danger of insolvency, this is absolutely true. If you can continue operations, then now is the best time to look at the big picture. Many strategic resources - people, technology, capital resources and acquisition targets - are more available and cheaper now than they have been in years. If you can take advantage of the opportunities, this is the perfect time to examine your strategy and pursue those that truly fit your business.
Beyond that, if your business model is truly broken, you have a very short window of opportunity in which you can completely change it in order to resume growth in the new business environment.
3. Strategic planning may limit you from pursuing opportunities when you need every nickel to turn a profit.
Again - if you absolutely have to have every dollar you can get in the door, you may need a very different look at your strategy. But if you are going to survive, the choices you make to get those dollars today will affect your business for a long time to come. Making good choices today will help you build healthy growth for the future - and not get you into the downward spiral of trying to be all things to all people as your company resumes growth.
The Center for Simplified Strategic Planning has a number of processes designed for every level of resource availability. My clients are CONSISTENTLY outperforming their competitors in a wide range of industries, right now. If you are concerned about your ability to plan effectively this year, please contact me to find out how we can design a schedule that will fit your situation, and better prepare you for the years ahead.